Exhibit 10.1

 

Execution Version

 

 

 

Amended and Restated

 

lIMITED PARTNERSHIP aGREEMENT

 

OF

 

TEXMARK TIMBER TREASURY, L.P.

 

Dated as of June 24, 2020

 

 

 

Pursuant to Item 601(b)(10)(iv) of Regulation S-K, certain identified
information marked with [***] has been excluded from the exhibit because it is
both (i) not material and (ii) would be competitively harmful if publicly
disclosed

 

 

 

 

TABLE OF CONTENTS

Page

Article 1 FORMATION AND ORGANIZATION 2    Section 1.1. Formation 2    Section
1.2. Basic Rights of Partners 2    Section 1.3. Name 2    Section 1.4. Term 3   
Section 1.5. Business 3    Section 1.6. Principal Place of Business; Registered
Office and Agent 3    Section 1.7. Certificated Interests 3    Section 1.8.
Currency 4  Article 2 CAPITAL CONTRIBUTIONS; EXPENSES 4    Section 2.1. Capital
Contributions 4    Section 2.2. Treatment of Defaulting Partner 6    Section
2.3. Return of or on Capital Contributions 9    Section 2.4. Return of
Distributions 9    Section 2.5. Fees and Expenses 10    Section 2.6. Partnership
Interests 11    Section 2.7. No Additional Partners or Issuances 12    Section
2.8. Sole Benefit 12    Section 2.9. Waiver of Certain Rights 12  Article 3
DISTRIBUTIONS 12    Section 3.1. Timing; Working Capital Reserves; Notice 12   
Section 3.2. Distributions with Respect to Shortfall Return Interests 13   
Section 3.3. Distributions with Respect to Preferred Return Interests 13   
Section 3.4. Distributions with Respect to Common Return Interests 13    Section
3.5. Distributions of Remaining Distributable Cash Flow 13    Section 3.6.
Disposition of Cash Proceeds from Subsidiary REIT 14    Section 3.7. Form of
Distributions 14  Article 4 MANAGEMENT OF PARTNERSHIP 14    Section 4.1.
Management of the Partnership 14    Section 4.2. Partnership Board 15    Section
4.3. Composition of the Board 15    Section 4.4. Resignation, Removal and
Replacement of Board Members; Transfers of Appointment Rights 18    Section 4.5.
Meetings of the Board 19    Section 4.6. Action of the Board without a Meeting
20    Section 4.7. Compensation of Board Members 20    Section 4.8. Actions of
the Partners 20    Section 4.9. Operations of the Partnership and the Subsidiary
REIT 21    Section 4.10. Major Decisions 22 

 

 

 

 

  Section 4.11. Annual Budget 25     Section 4.12. Transactions with Affiliates
26     Section 4.13. Removal of the General Partner 27     Section 4.14.
Leverage 28     Section 4.15. Property Sale Right of First Opportunity 28    
Section 4.16. Forced Sale 30     Section 4.17. No U.S. Trade of Business;
Commercial Activity 30     Section 4.18. Permitted HBU Sales 31     Section
4.19. No Direct Ownership of Property, Real Estate Assets or Timber 31    
Section 4.20. Disposition of Subsidiary REIT Units 31     Section 4.21.
Amendment of Subsidiary REIT Agreement 31     Section 4.22. Disposition of
Property or Real Estate Assets 31   Article 5 TRANSFERS OF PARTNERSHIP INTERESTS
31     Section 5.1. Transfers 31     Section 5.2. Admission of Transferees as
Substituted Partners 37     Section 5.3. Right of First Offer 38     Section
5.4. Tag-Along Right 41     Section 5.5. Preemptive Rights 42     Section 5.6.
Call Right on Preferred Partners 43     Section 5.7. Permitted Financing
Transaction 45     Section 5.8. Pledging of Partnership Interests 45     Section
5.9. Permitted Recapitalization Transactions 46   Article 6 RIGHTS AND DUTIES OF
PARTNERS 47     Section 6.1. Relationship of Partners 47     Section 6.2.
Limitation of Authority 48     Section 6.3. Other Activities 48     Section 6.4.
Confidentiality 48     Section 6.5. Limitation of Liability of Partners and
Affiliates 50     Section 6.6. ERISA Status 50   Article 7 LIABILITY;
INDEMNIFICATION 50     Section 7.1. Liability of the Indemnified Parties 50    
Section 7.2. Indemnification by the Partnership 51   Article 8 FINANCIAL AND
ACCOUNTING MATTERS 53     Section 8.1. Books and Records 53     Section 8.2.
Audit and Reporting 53     Section 8.3. Valuations 55   Article 9 TAX AND
REGULATORY MATTERS 56     Section 9.1. Taxation as Partnership 56     Section
9.2. Capital Accounts; Tax Allocations 56     Section 9.3. Partnership
Representative 57     Section 9.4. Tax Returns 58  

 

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  Section 9.5. Tax Advances and Obligations 59     Section 9.6. Limitation of
Liability of Partners and Affiliates 60   Article 10 TERMINATION; DISSOLUTION
AND WINDING UP 61     Section 10.1. Termination 61     Section 10.2. Effect of
Termination 61     Section 10.3. Survival 61     Section 10.4. Dissolution of
the Partnership 61     Section 10.5. No Partition 62   Article 11 NOTICES 63    
Section 11.1. Notices 63     Section 11.2. Change of Address 63   Article 12
MISCELLANEOUS 63     Section 12.1. Entire Agreement 63     Section 12.2.
Amendments 63     Section 12.3. Governing Law; Jurisdiction 64     Section 12.4.
Successors and Assigns 65     Section 12.5. No Third-Party Beneficiaries 65    
Section 12.6. Severability 65     Section 12.7. Enforceability 65     Section
12.8. No Waiver 65     Section 12.9. Captions 66     Section 12.10. Further
Assurances 66     Section 12.11. Counterparts 66     Section 12.12. PDF
Signature 66     Section 12.13. Time of the Essence 66     Section 12.14. Usury
Savings 66     Section 12.15. Waiver; Privilege 66  

 

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EXHIBITS AND SCHEDULES

Exhibit A Definitions; Rules of Interpretation Exhibit B Partners; Capital
Commitments; Capital Contributions Exhibit C-1 Initial Annual Budget Exhibit C-2
Budget Development Protocol Exhibit C-3 Shortfall Example Calculations Exhibit
C-4 Operating Metrics Exhibit D Capital Accounts; Tax Allocations Exhibit E
Notice Addresses Exhibit F Asset Management Agreement Exhibit G Competitors
Exhibit H Form of Certificate of Partnership Interest Exhibit I Technical
Forestry Advisory Services Agreement Exhibit J Illustrative Distribution
Examples Exhibit K Subsidiary REIT Agreement Exhibit L REIT Opinion Schedule
2.5(a)(ii) Fees and Expenses Schedule 5.6(b) Call Right Purchase Price Multiples
Schedule 5.7 Permitted Financing Transactions Schedule 8.3(b) Approved Appraisal
Firms

 

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AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT

 

OF

 

TEXMARK TIMBER TREASURY, L.P.

 

This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) of
TexMark Timber Treasury, L.P., a Delaware limited partnership (the
“Partnership”), is dated effective as of June 24, 2020 (the “Amendment Effective
Date”) and is made by and among Triple T GP, LLC, a Delaware limited liability
company, as general partner (the “General Partner”), Creek Pine Holdings, LLC, a
Delaware limited liability company, as limited partner (“CTT Partner” and,
together with the General Partner, the “Common Partners”), each of IMC RRIF C US
Inc., a Canadian corporation, IMC RRIF M US Inc., a Canadian corporation, IMC
RRIF PS US Inc., a Canadian corporation, IMC RRIF T US Inc., a Canadian
corporation, IMC RRIF WS US Inc., a Canadian corporation, IMC RRIF H US Inc., a
Canadian corporation, and bcIMC (WCBAF REKYN) Investment Corporation, a Canadian
corporation, as limited partner (each, a “BCI Partner” and, collectively, “BCI
Partners”), Caddo TIG Newco L.P., a Delaware limited partnership, as limited
partner (“TIG Partner”), Caddo Investors Holdings 1 LLC, a Delaware limited
liability company, as limited partner (“Medley Partner”), each of Highland
Floating Rate Opportunities Fund, NexPoint Strategic Opportunities Fund and
NexPoint Real Estate Strategies Fund, as limited partner (each, a “Highland
Partner” and, collectively, “Highland Partners”) and JAWS Capital, LP, a
Delaware limited partnership (“JAWS Partner” and, together with Medley Partner,
BCI Partners, TIG Partner and Highland Partners, the “Preferred Partners” and,
together with the Common Partners, the “Partners”).

 

Exhibit A sets forth the definitions of capitalized words and phrases used in
this Agreement as well as rules for interpreting other words and phrases.

 

 

RECITALS:

 

WHEREAS, the Partnership was formed as a limited partnership under and pursuant
to the provisions of the Act, pursuant to the Limited Partnership Agreement of
the Partnership, dated as of July 6, 2018 (the “Effective Date”), as amended by
the First Amendment thereto, dated as of February 25, 2019 (the “Original
Agreement”), and by the filing of the Certificate of Limited Partnership of the
Partnership (the “Certificate”), as filed in the office of the Secretary of
State of the State of Delaware on May 29, 2018 (the “Formation Date”);

 

WHEREAS, the Partnership was formed to invest in Creek Pine REIT, LLC, a
Delaware limited liability company that will continue to be classified as a
corporation and taxed as a REIT under the Code (the “Subsidiary REIT”);

 

WHEREAS, the Partnership and the Subsidiary REIT were formed to acquire one
hundred percent (100%) of the ownership interests of Crown Pine Timber 1, L.P.,
which owns (directly and indirectly) approximately 1.1 million acres of
timberland in east Texas (the “Property”), pursuant to that certain Crown Pine
Purchase Agreement, dated as of May 14, 2018 (the “Crown Pine Purchase
Agreement”), by and among Crown Pine Parent, L.P., Crown Pine REIT, Inc., CPT1
LLC, Crown Pine Timber 1, L.P. and Creek Pine Holdings, LLC (the “Acquisition”);

 

WHEREAS, the parties hereto desire to amend and restate the Original Agreement
on the terms and conditions herein in connection with the amendment and
restatement of the Second Amended and Restated Sawtimber Supply Agreement by and
between Georgia-Pacific WFS, LLC and Crown Pine Realty 1, Inc.; and

 

WHEREAS, on the Amendment Effective Date, in connection with the GP WSA
Amendment, CTT Partner is investing an additional Five Million Dollars
($5,000,000) in exchange for five million (5,000,000) additional Common
Interests set forth on Exhibit B and on the same terms and conditions as such
Common Interests issued to the CTT Partner on the Effective Date (the
“Additional CTT Capital Contribution”).

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are acknowledged, the Partners agree to amend and restate the
Original Agreement as of the Amendment Effective Date on the following terms and
conditions:

 

Article 1

 

FORMATION AND ORGANIZATION

 

Section 1.1.          Formation. The Partnership was formed as a limited
partnership on the Formation Date by the filing of the Certificate with the
office of the Secretary of State of the State of Delaware under and pursuant to
the applicable provisions of the Act. For all purposes hereunder, the General
Partner shall be considered the sole “general partner” of the Partnership within
the meaning of Section 17-101(5) of the Act.

 

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Section 1.2.          Basic Rights of Partners. The Partners hereby enter into
this Agreement to set forth certain rights and obligations of the Partners, the
procedures for managing and operating the Partnership and related matters. The
Partners intend and agree that this Agreement is for all purposes the
“partnership agreement” of the Partnership as defined in the Act. Except to the
extent otherwise provided in this Agreement, (a) the rights and obligations
(i) of the Partnership and the Partners and (ii) between and among the Partners
and (b) the management, operation, termination and dissolution of the
Partnership, in each case, shall be governed by the provisions of the Act.

 

Section 1.3.          Name. The business of the Partnership shall be conducted
under the name “TexMark Timber Treasury, L.P.” or such other name as the General
Partner may hereafter determine; provided, that any such other name shall not
include any Partner’s name or any variation thereof without such Partner’s prior
written consent.

 

Section 1.4.          Term. The term of the Partnership (the “Term”) commenced
on the Formation Date and shall continue (unless the Partnership is sooner
dissolved, liquidated and terminated as provided herein) until the tenth (10th)
anniversary of the Effective Date.

 

Section 1.5.          Business. The business of the Partnership is to, through
one or more Subsidiaries, (a) acquire, own, manage, finance, develop and hold
for investment and ultimately dispose of or otherwise invest in or engage in
activities related to investment in the Property or such other Real Estate
Assets as may be acquired by the Partnership or its Subsidiaries; (b) acquire,
own, hold for investment and ultimately dispose of general and limited partner
interests, limited liability company member interests (including the Subsidiary
REIT Units) and stock, warrants, options or other equity and debt interests in
entities, and exercise all rights and powers granted to the owner of any such
interests; (c) engage in any and all other activities relating to, and
compatible with, the purposes set forth herein; and (d) take such other actions,
or do such other things, as are necessary, appropriate, proper, advisable,
incidental to or convenient for the furtherance and accomplishment of the
purposes and business described herein and for the protection and benefit of the
Partnership.

 

Section 1.6.          Principal Place of Business; Registered Office and Agent.
The principal place of business of the Partnership shall be located at 702 North
Temple Drive, Diboll, Texas 75941, or such other place or places as the General
Partner may hereafter from time to time designate. The registered office of the
Partnership in the State of Delaware, and the registered agent for service of
process on the Partnership at such registered office, shall be as set forth in
the Certificate, as amended from time to time.

 

Section 1.7.          Certificated Interests.

 

(a)          Each Partnership Interest in the Partnership shall constitute a
“security” within the meaning of, and governed by, (i) Article 8 of the Uniform
Commercial Code (including Section 8-102(a)(15) thereof) as in effect from time
to time in the State of Delaware (the “UCC”) and (ii) Article 8 of the Uniform
Commercial Code of any other applicable jurisdiction that now or hereafter
substantially includes the 1994 revisions to Article 8 thereof as adopted by the
American Law Institute and the National Conference of Commissioners on Uniform
State Laws and approved by the American Bar Association on February 14, 1995.

 

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(b)         The Partnership Interests in the Partnership shall be evidenced by
certificates in the form of Exhibit H and each such certificate shall be
executed by the General Partner on behalf of the Partnership.

 

(c)          The Partnership shall maintain books for the purpose of registering
the Transfer of Partnership Interests in the Partnership. Subject to compliance
with Article 5, a Transfer of a Partnership Interest in the Partnership shall be
effected by the Partnership registering the Transfer upon delivery of an
endorsed certificate representing the interest being Transferred.

 

(d)          Notwithstanding any provision of this Agreement to the contrary, to
the extent that any provision of this Agreement is inconsistent with any
non-waivable provision of Article 8 of the UCC, such provision of Article 8 of
the UCC shall control.

 

Section 1.8.          Currency. All Capital Contributions to the Partnership and
cash distributions made by the Partnership shall be made in Dollars and the
books and records of the Partnership will be maintained in Dollars for all
reporting purposes.

 

Article 2

 

CAPITAL CONTRIBUTIONS; EXPENSES

 

Section 2.1.          Capital Contributions.

 

(a)          Capital Contributions. Each Partner shall be deemed to have
contributed on the Amendment Effective Date to the Partnership the Capital
Contributions set forth opposite such Partner’s name on Exhibit B as of the date
indicated thereon. Such Capital Contributions have been made to fund the
purchase price for the Acquisition and an additional amount has been used to
fund costs associated with the closing of the Acquisition (the “Closing”), debt
origination fees, amendments to certain agreements and a pre-funding of Expenses
of the Partnership.

 

(b)         Additional Capital Contributions Regarding Cumulative Net Shortfall.
The Partners acknowledge that the Capital Contributions made on the Effective
Date to the Partnership included an additional amount intended to cover, among
other items, certain shortfalls in Net Operating Income of the Subsidiary REIT
and its Subsidiaries and to cover the payment of the Asset Management Fee (as
such term is defined in the Asset Management Agreement), in each case, for each
Fiscal Quarter as shown on Exhibit C-1 attached hereto. If, as of the end of any
given Fiscal Quarter on or after the fourth full Fiscal Quarter following the
Effective Date, the Partnership generates a Cumulative Net Shortfall that is
less than Zero Dollars ($0), any such Cumulative Net Shortfall shall be funded
as follows:

 

(i)                 First, by deducting from the Opening Bank Balance an amount
equal to the lesser of (x) the absolute value of the Cumulative Net Shortfall
and (y) the Opening Bank Balance (the amount, if any, by which the absolute
value of the Cumulative Net Shortfall exceeds the Opening Bank Balance, the
“Cumulative Net Shortfall, Post-Bank, Pre-AM Fee Deferral Amount”);

 

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(ii)              Second, any Asset Management Fee due and payable, with respect
to such Fiscal Quarter, shall be deferred in an amount equal to the lesser of
(x) the absolute value of such Cumulative Net Shortfall, Post-Bank, Pre-AM Fee
Deferral Amount for such Fiscal Quarter and (y) the Asset Management Fee due and
owing for such Fiscal Quarter (the amount as determined pursuant to clause (x)
or clause (y), as applicable, plus any additional amounts of Asset Management
Fees deferred with respect to such Fiscal Quarter pursuant to Section 4.3(c),
the “Deferred Asset Management Fees”), which Deferred Asset Management Fees
shall not bear interest or other penalty. Any Deferred Asset Management Fees
shall continue to be deferred until the earlier of (i) the liquidation of the
Partnership, (ii) termination of the Agreement in accordance with its terms and
(iii) any Fiscal Quarter in which the Cumulative Net Surplus is greater than
zero ($0); provided, that the Partnership shall pay the lesser of (1) the
Cumulative Net Surplus and (2) the Deferred Asset Management Fees Balance, in
each case, only until the Deferred Asset Management Fees Balance is reduced to
zero ($0) (any such amount of Deferred Asset Management Fees paid in accordance
with this proviso, with respect to any Fiscal Quarter, the “Recovered Asset
Management Fees”);

 

(iii)            Third, if the amount of the Cumulative Net Shortfall is not
funded in full by actions taken pursuant to clauses (i) and (ii) above, then, at
the option of the Common Partners, the Common Partners may make additional
Capital Contributions to the Partnership to fund the amount of the remaining
Cumulative Net Shortfall;

 

(iv)             Fourth, if the amount of the Cumulative Net Shortfall is not
funded in full by actions taken pursuant to clauses (i), (ii) and (iii) above,
then, at the option of each Preferred Partner, a Preferred Partner may make
additional Capital Contributions (“Shortfall Contributions”) to the Partnership
to fund the amount of the remaining Cumulative Net Shortfall, which Shortfall
Contributions shall not reduce the funding Partners’ respective Remaining
Capital Commitments (it being understood that the Partnership shall deliver, or
shall cause to be delivered, any such Shortfall Contributions to the Subsidiary
REIT as a “Shortfall Contribution” (as such term is defined in the Subsidiary
REIT Agreement)). Shortfall Contributions shall be made on a pro rata basis
based on the Preferred Partners’ relative Percentage Interests; provided, that
to the extent any Preferred Partner elects not to fund their pro rata portion,
the other Preferred Partners that elected to fund their pro rata portions shall
be offered the opportunity to fund the remaining Shortfall Contributions needed
to fund the full amount of the remaining Cumulative Net Shortfall as set forth
below; and

 

(v)               Fifth, if the amount of the Cumulative Net Shortfall is not
funded in full by actions taken pursuant to clauses (i), (ii), (iii) and (iv)
above, then, at the option of the Common Partners, the Common Partners may make
additional Capital Contributions to the Partnership to fund the amount of the
remaining Cumulative Net Shortfall.

 

An example calculation of Cumulative Net Shortfall is set forth on Exhibit C-3.
The General Partner shall cause any Cumulative Net Shortfall amounts funded by
the Partners pursuant to this Section 2.1(b) to be funded by the Partnership to
the Subsidiary REIT in accordance with Section 2.1 of the Subsidiary REIT
Agreement.

 

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(c)          Shortfall Notices. The General Partner (x) may, at its option,
provide notice to the Partners of any forecasted Cumulative Net Shortfall for a
Fiscal Quarter that is not able to be funded from the Pre-Funded Expense Account
(as such term is defined in the Subsidiary REIT Agreement) for such Fiscal
Quarter if the General Partner becomes aware of the possibility of such
Cumulative Net Shortfall and (y) shall, forty-five (45) days following the end
of each Fiscal Quarter, provide notice to the Partners of any actual Cumulative
Net Shortfall during such Fiscal Quarter (each notice delivered under clause (x)
or (y), a “Shortfall Notice”). Each Shortfall Notice shall include (1) the total
Cumulative Net Shortfall (or forecasted Cumulative Net Shortfall, as the case
may be) and the applicable Fiscal Quarter, (2) the amount of Asset Management
Fees to be deferred pursuant to Section 2.1(b)(i) and Section 2.1(b)(ii) in
respect thereof, (3) the amount of any additional Capital Contribution being
made by the Common Partners pursuant to Section 2.1(b)(iii) in respect thereof,
and (4) the remaining amount of the Cumulative Net Shortfall after giving effect
to funding pursuant to Section 2.1(b)(i), Section 2.1(b)(ii) and Section
2.1(b)(iii), as applicable. For the avoidance of doubt, any Asset Management
Fees deferred, Capital Contributions made by the Common Partners or use of or
any diminution of the Opening Bank Balance or Ending Bank Balance, as
applicable, pursuant to Section 2.1(b) or Section 4.3(c) shall be considered to
occur with respect to the applicable Fiscal Quarter, notwithstanding that they
may be made following the end of such Fiscal Quarter.

 

(d)         Offering Period for Shortfall Contributions. The Preferred Partners
shall then have ten (10) Business Days following the date of such Shortfall
Notice with respect to Section 2.1(b)(iv) (the “Initial Offering Period”) to
elect whether to provide their share of Capital Contributions pursuant to
Section 2.1(b)(iv) to fund such remaining Cumulative Net Shortfall. To the
extent that any Preferred Partner elects not to fund their pro rata portion of
the remaining Cumulative Net Shortfall, the General Partner shall provide a
reoffer notice to the other Preferred Partners that elected to fund their pro
rata portion of the applicable Shortfall Contribution, and such other Preferred
Partners shall have the right to fund all or a portion of such remainder (based
on the amount of such remainder that each such Preferred Partner elected to
purchase relative to all electing Preferred Partners) within five (5) Business
Days after receipt of such reoffer notice (the “Additional Offering Period”).
Any failure by a Preferred Partner to make an election within the relevant time
periods set forth in this Section 2.1(d) shall be deemed to be an election not
to fund any portion of the remaining Cumulative Net Shortfall under Section
2.1(b)(iv) and the relevant Shortfall Notice. Following the end of the Initial
Offering Period or, if applicable, the Additional Offering Period, the General
Partner shall be permitted to issue a Capital Call Notice pursuant to Section
2.1(e) in respect of the amounts elected to be funded under Section 2.1(b)(iv).
Following the end of the Additional Offering Period, if total funding after
giving effect to funding pursuant to Section 2.1(b)(i), Section 2.1(b)(ii),
Section 2.1(b)(iii) and Section 2.1(b)(iv) is insufficient to fund the
Cumulative Net Shortfall, the Common Partners may (but shall not be required to)
make additional Capital Contributions under Section 2.1(b)(v) to the Partnership
to fund the amount of the remaining Cumulative Net Shortfall.

 

(e)          Capital Call Notices. With respect to each Capital Contribution
that a Partner elects to make pursuant to Section 2.1(b)(iii) or Section
2.1(b)(iv), the General Partner shall issue a written capital call notice (a
“Capital Call Notice”) to each applicable Partner setting forth the following
information: (i) the total amount of capital to be contributed by the Partners;
(ii) the amount that such Partner must contribute in respect of such Capital
Call Notice, noting the provision of this Agreement under which such amount is
being called; (iii) the purpose for such Capital Contribution; and (iv) the date
on which such Capital Contribution must be made, which date (1) shall be a
Business Day and (2) shall not be less than ten (10) Business Days following the
date of such Capital Call Notice. To the extent there exists a Cumulative Net
Shortfall for a Fiscal Quarter and the General Partner does not provide a
Shortfall Notice to the other Partners as required by clause (y) of Section
2.1(c) within sixty (60) days following the end of such Fiscal Quarter, a
majority of the Board Members appointed by the Preferred Partners may direct the
General Partner to issue (or may otherwise cause to be issued) such Shortfall
Notice (and the corresponding reoffer notice pursuant to Section 2.1(d), as
applicable), as well as any Capital Call Notice contemplated by this Section
2.1(e), in respect of such Cumulative Net Shortfall.

 

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Section 2.2.          Treatment of Defaulting Partner.

 

(a)          Default. If any Partner fails to fund any Capital Contribution that
a Partner elects to make pursuant to Section 2.1(b)(iii), Section 2.1(b)(iv) or
Section 2.2(b), within the period set forth in the applicable Capital Call
Notice, such Partner shall be considered a “Defaulting Partner” but only to the
extent such Partner has received a subsequent Failure to Fund Notice and has not
funded its share of the applicable Capital Contribution within three (3)
Business Days of receipt of such Failure to Fund Notice. Other than as set forth
in the immediately preceding sentence, a Partner that has become a Defaulting
Partner shall not be entitled to any additional grace period in which to cure
the default and pay its required Capital Contribution. The portion of such
Capital Contribution that such Defaulting Partner was required to make and did
not actually fund is referred to herein as the “Unfunded Amount.”

 

(b)         Remedies Generally. Unfunded Amounts may be funded as follows:

 

(i)                 First, each Preferred Partner that fully funded its required
Capital Contribution that is not an Affiliate of the Defaulting Partner (each, a
“Contributing Partner”) shall have the right (without obligation), within thirty
(30) days from notice from the General Partner of an outstanding Unfunded
Amount, to elect to make, with respect to an Unfunded Amount that relates to a
failure to fund under Section 2.1(b)(iii) or Section 2.1(b)(iv), a Capital
Contribution of all or a portion of the payment of the Unfunded Amount (any such
amount contributed under (x) or (y), a “Replacement Contribution”) to the
Partnership to fund such Unfunded Amount, which Replacement Contributions shall
not reduce the Contributing Partners’ respective Remaining Capital Commitments.
If more than one Contributing Partner elects to make a Replacement Contribution
pursuant to this Section 2.2(b)(i), such Contributing Partners will fund up to
their pro rata share, based on the Preferred Partners’ relative Percentage
Interests (taking into account only the Capital Contributions of the
participating Preferred Partners), of such Replacement Contribution, in an
aggregate collective amount equal to the Unfunded Amount. If only one
Contributing Partner elects to make a Replacement Contribution, the electing
Contributing Partner shall fund the Replacement Contribution in the applicable
amount proposed by such Partner for the Replacement Contribution. Any failure to
make an election within the relevant time period set forth in this Section
2.2(b)(i) shall be deemed to be an election not to make a Replacement
Contribution in respect of the applicable Unfunded Amount under the relevant
notice. To the extent that all of the Preferred Partners do not elect to make
Replacement Contributions pursuant to the preceding sentences of this Section
2.2(b)(i), the General Partner will offer the Preferred Partners who elected to
make Replacement Contributions, within five (5) days of the expiration of the
thirty (30)-day period above, the option to make the remainder of the
Replacement Contributions (based on the amount of such remainder offered
relative to the other such participating Preferred Partners) within ten (10)
Business Days after receipt of such offer.

 

(ii)              Second, if no Preferred Partner elects to fund a Replacement
Contribution in respect of such outstanding Unfunded Amount pursuant to Section
2.2(b)(i) or the aggregate amounts funded in connection with such Replacement
Contributions are less than the Unfunded Amount, and if none of the Common
Partners is the Defaulting Partner or an Affiliate thereof, the Common Partners
shall have the right (without obligation) to make a Replacement Contribution to
the Partnership or to permit a third party to make a Replacement Contribution to
the Partnership to fund the remaining amount of the Unfunded Amount, which
Replacement Contribution shall not reduce the Common Partners’ Remaining Capital
Commitments (without the need for approval as a Major Decision).

 

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(c)          Default Date and Default Period. The day that a Partner becomes a
Defaulting Partner is referred to herein as the “Default Date.” The Defaulting
Partner shall be deemed to have cured the default at such time as if Replacement
Contributions were made in respect of such default pursuant to Section 2.2(b)(i)
or Section 2.2(b)(ii), if (i) each Contributing Partner actually receives from
the Defaulting Partner full repayment of any Replacement Contributions made by
such Contributing Partner; and (ii) each Contributing Partner actually receives
from the Defaulting Partner (A) an amount of interest equal to ten and
one-quarter percent (10.25%) per annum, compounded on the last day of each
calendar year, on such Contributing Partner’s Replacement Contributions, and
(B) an amount of interest equal to twenty percent (20%) per annum over the
Reference Rate, compounded on the last day of each calendar year, on such
Contributing Partner’s Replacement Contributions, in each case, for the Default
Period taking into account the amount of Replacement Contributions remaining
unpaid on each day of such period (such amounts payable under this clause (ii)
of this Section 2.2(c), the “Default Return”; the applicable date of repayment
under clauses (i) and (ii) of this Section 2.2(c), the “Cure Date”; and the
period from the Default Date until the Cure Date (if applicable), the “Default
Period”).

 

(d)         Action for Breach of Contract. The rights and remedies provided for
in this Section 2.2 shall be in addition to, and not in limitation of, any other
rights available to the non-Defaulting Partners or the Partnership under this
Agreement or at law or in equity. In addition, neither such Defaulting Partner
nor any other Partner shall be relieved of its obligation to make any Capital
Contributions then or thereafter due. The Partnership shall have the right to
immediately institute legal action against the Defaulting Partner for monies due
to the Partnership under this Agreement, plus all costs and attorneys’ fees
reasonably incurred by the Partnership in the institution and prosecution of
such action.

 

(e)          Termination of Rights. During the Default Period, if applicable,
(i) if the Common Partners are the Defaulting Partners, then the Common Partners
shall not be entitled to exercise the rights set forth under Section 4.15,
(ii) a Defaulting Partner and its Affiliates shall not be entitled to
participate in the right of first offer under Section 5.3 or the tag-along
rights under Section 5.4, (iii) a Defaulting Partner and its Affiliates shall
not be entitled to participate in any Shortfall Contribution, and (iv) a
Defaulting Partner and its Affiliates shall forfeit to the Partnership (for the
account of the Contributing Partners in repayment of the Replacement
Contributions made thereby in respect of such Defaulting Partner and the Default
Return thereon) and shall not be entitled to participate in any distribution
with respect to Shortfall Return Interests, Preferred Return Interests, Common
Return Interests or Residual Interests. The Partnership shall distribute to the
Contributing Partners, pro rata in proportion to their relative Replacement
Contributions in respect of such Defaulting Partner, any amounts otherwise
distributable to the Defaulting Partner which have been forfeited under
clause (iv) of this Section 2.2(e).

 

8

 

(f)          Matters Relating to Default.

 

(i)                 Notwithstanding the foregoing provision of this Section 2.2,
in the event that the General Partner or any Affiliate thereof is the Defaulting
Partner, then, for purposes of the application of this Section 2.2, any action
to be taken or determination to be made by the General Partner pursuant to this
Section 2.2 shall instead be taken or made by a Person to be designated by a
majority of the Board Members appointed by the Preferred Partners.

 

(ii)              During the Default Period, (1) the Defaulting Partner and its
Affiliates shall not be entitled to participate in any vote, consent or decision
of the Partners that is required or permitted pursuant to this Agreement or the
Act, including for purposes of amendments of this Agreement, and any such vote,
consent or decision shall be tabulated or made as if such Defaulting Partner
were not a Partner, and its then-current Board Members shall not be entitled to
take any action in such capacity and shall not be counted towards quorum
requirements, (2) the Defaulting Partner and its Affiliates shall not be
entitled to appoint Board Members pursuant to Section 4.3, and (3) any actions
taken by the Board while a Partner which has rights to appoint one or more Board
Members is a Defaulting Partner shall be taken by the Board as if each Board
Member appointed by such Partner were not a Board Member.

 

(iii)            Notwithstanding any provision herein to the contrary, if the
General Partner, CTT Partner or any of their respective Affiliates acquires any
Preferred Interests from any of the Preferred Partners, then such Party shall
not be entitled to vote with respect to such Preferred Interests hereunder or to
designate any Board Members with respect to such Preferred Interests.

 

(g)         Remedies Reasonable. Each Partner acknowledges and agrees that the
remedies described in this Section 2.2 bear a reasonable relationship to the
damages that the Partners estimate may be suffered by the Partnership and the
non-Defaulting Partners by reason of the failure of a Defaulting Partner to make
a required Capital Contribution in accordance with Section 2.1 and that the
election of any or all of the above-described remedies is not unreasonable under
the circumstances existing as of the Effective Date. The election to pursue any
remedy provided in this Section 2.2 shall not be a waiver or limitation of the
right to pursue an additional or different remedy available hereunder or of law
or equity with respect to any subsequent default. Each Partner specifically
agrees that it shall not have any legal cause of action against any
non-Defaulting Partner or any Board Member appointed by a non-Defaulting Partner
on account of its good faith selection of or failure to select any one or more
remedies.

 

Section 2.3.         Return of or on Capital Contributions. Except as expressly
provided in this Agreement, (a) no Partner shall receive any return or
distribution of its Capital Contributions, (b) no Partner shall receive any
interest or other return on or with respect to its Capital Contributions, and
(c) no Partner shall be entitled to withdraw any part of its Capital
Contributions.

 

Section 2.4.          Return of Distributions.

 

(a)          Except as required by the Act or other applicable Law, or in the
case of manifest error in calculation, no Partner shall be required to repay to
the Partnership, any Partner or any creditor of the Partnership all or any part
of the distributions (including liquidating distributions) made to such Partner
pursuant to this Agreement.

 

9

 

(b)         If, notwithstanding anything to the contrary contained herein, it is
determined under the Act or other applicable Law that any Partner has received a
distribution which is required to be returned to or for the account of the
Partnership or any creditor of the Partnership, then the obligation of such
Partner to return all or any part of a distribution made to such Partner shall
be the obligation of such Partner and not of any other Partner; provided, that
to the extent any Partner is required by the Act or other applicable Law to
return to the Partnership any distributions made to it and does so, such Partner
shall, to the maximum extent permitted by Law, have a right of contribution from
each other Partner similarly liable to return distributions made to it under the
Act or other applicable Law to the extent that such Partner has returned a
greater percentage of the total distributions made to it and so required to be
returned by it than the percentage of the total distributions made to such other
Partner and so required to be returned by it.

 

(c)          Any amount returned by a Partner pursuant to this Section 2.4 shall
not be treated as a Capital Contribution for purposes of this Agreement, but
shall be treated as if such returned amount was not previously distributed to
such Partner; provided, that such returned amount shall not be treated as
accruing a return hereunder while such amounts were held by the Partner.

 

Section 2.5.          Fees and Expenses.

 

(a)          The Partnership shall bear all reasonable fees, costs and expenses
incurred by the Partnership, the General Partner (in its capacity as such) or
other Persons authorized by the General Partner to act on the Partnership’s
behalf relating to the activities and operations of the Partnership that are
permitted to be incurred in accordance with this Agreement (“Expenses”), whether
such costs and expenses were incurred prior to or following the Effective Date,
including:

 

(i)                 all costs and expenses incurred in connection with the
formation of the Partnership;

 

(ii)              taxes of the Partnership, fees, costs and expenses of
auditors, appraisers, counsel and other advisors of the Partnership, insurance
costs of the Partnership and litigation costs and indemnity expenses of the
Partnership, to the extent not allocated to one or more Partners pursuant to
Section 9.5(a);

 

(iii)            administrative expenses related to the operation of the
Partnership, including the fees and expenses of accountants, lawyers and other
professionals incurred in connection with the Partnership’s annual audit,
financial reporting, legal opinions and tax return preparation, as well as
expenses associated with the distribution of reports and Capital Call Notices to
the Partners and expenses associated with valuations of the Property and other
Business Assets as required by this Agreement, including the fees and expenses
of any independent appraiser;

 

(iv)             interest expenses, brokerage commissions and other investment
costs incurred by or on behalf of the Partnership;

 

(v)               costs of travel and travel-related expenses with respect to
the business of the Partnership; provided, that the cost of airfare shall not
exceed commercial fares and, for the avoidance of doubt, shall not include costs
associated with first-class, private or charter air travel;

 

10

 

 

(vi)             subject to Section 2.5(d), all taxes and license fees levied
against the Partnership or its assets or operations;

 

(vii)            insurance costs incurred in connection with the operation of
the business of the Partnership and its Subsidiaries; and

 

(viii)           amounts to be contributed or advanced to any Subsidiary for the
purpose of such entity paying any cost of the type described in the foregoing
clauses (i) through (vii).

 

(b)               To the extent any Expenses are paid by the General Partner or
other Persons (including the Asset Manager) authorized to act on the
Partnership’s behalf by the General Partner, such Expenses shall be reimbursed
by the Partnership (or one of its Subsidiaries, as appropriate).

 

(c)               In addition to the foregoing, the Partnership (or its
Subsidiaries, as applicable) shall bear as Expenses, and shall reimburse the
Partners for such Expenses, all reasonable third-party legal and due diligence
costs and expenses incurred by (i) the Partners in connection with their
investment in the Partnership in each case, prior to the Closing (including, for
the avoidance of doubt, amounts payable by CTT or its Affiliates to certain
potential investors in the Partnership) and (ii) the Partners in connection with
the Additional CTT Capital Contribution and the GP WSA Amendment.

 

(d)               Notwithstanding Section 2.5(a) and Section 2.5(b), the General
Partner and its Affiliates shall bear the costs and expenses incurred by such
Persons in providing for their normal operating overhead, salaries of their
employees, rent, utilities, expenses of office furniture, computers and other
office equipment and other expenses incurred in maintaining their place of
business (collectively, “Administrative Expenses”), and neither the General
Partner nor any of its Affiliates shall be entitled to reimbursement from the
Partnership or any of its Subsidiaries for any Administrative Expenses.

 

Section 2.6.          Partnership Interests. Partnership Interests shall be
issued by the Partnership to the Partners in the classes and with such rights as
are set forth in this Section 2.6.

 

(a)               Shortfall Return Interests. The Partnership shall be
authorized to, but has issued no, “Shortfall Return Interests”. The Partnership
shall issue Shortfall Return Interests to any Preferred Partner that makes a
Shortfall Contribution in proportion to the amount of Shortfall Contributions
made by such Preferred Partner (relative to other Preferred Partners). Upon the
issuance by the Partnership of any Shortfall Return Interests to the Preferred
Partners, the Partnership shall cause the Subsidiary REIT to issue to the
Partnership a number of Shortfall Return Units (as such term is defined in the
Subsidiary REIT Agreement) equal to the aggregate cash consideration paid by
such Preferred Partners in consideration of such Shortfall Return Interests. In
addition to the rights provided under this Agreement with respect to any
Partnership Interests, Shortfall Return Interests shall entitle the holder
thereof to the distributions provided in Section 3.2 hereof.

 

11

 

 

(b)              Preferred Return Interests. The Partnership has issued to the
Preferred Partners such number of “Preferred Return Interests” as are provided
on Exhibit B. In addition to the rights provided under this Agreement with
respect to any Partnership Interests, Preferred Return Interests shall entitle
the holder thereof to the distributions provided in Section 3.3 hereof.

 

(c)               Common Return Interests. The Partnership has issued to the
Common Partners such number of “Common Return Interests” as are provided on
Exhibit B. In addition to the rights provided under this Agreement with respect
to any Partnership Interests, Common Return Interests shall entitle the holder
thereof to the distributions provided in Section 3.4 hereof.

 

(d)               Residual Interests. The Partnership has issued to the Partners
such number of “Residual Interests” as are provided on Exhibit B. Such Residual
Interests shall either be classified as “Residual Interests (Preferred)” or
“Residual Interests (Common)”. Residual Interests shall entitle the holder
thereof to the distributions provided in Section 3.5 hereof.

 

Section 2.7.          No Additional Partners or Issuances. Except as provided in
Article 5, no additional Partners shall be admitted to the Partnership and no
additional Partnership Interests shall be created or issued.

 

Section 2.8.          Sole Benefit. Except as stated in this Agreement or as
otherwise agreed by all of the Partners, no Partner shall be required or
permitted to make any additional Capital Contribution or loan to the Partnership
or the Partners with respect to the Partnership. It is expressly acknowledged
and agreed that the provisions of this Agreement relating to the rights and
obligations of the Partners to make any Capital Contributions or to make any
loans to any Partner are for the sole benefit of the Partnership and the
Partners and may not be exercised on behalf of the Partners or the Partnership
or invoked or enforced for any other purpose by any other Person, including by
any creditor of the Partnership or trustee in a bankruptcy proceeding.

 

Section 2.9.        Waiver of Certain Rights. The Partners have (a) no right
under Section 17-602 of the Act (in the case of the General Partner) or
Section 17-603 of the Act (in the case of the Partners other than the General
Partner) or otherwise to withdraw or resign and receive the fair value of their
Partnership Interests and (b) no right to demand or receive any distribution
from the Partnership in any form other than cash and in accordance with the
provisions of this Agreement concerning distributions.

 

Article 3

 

DISTRIBUTIONS

 

Section 3.1.          Timing; Working Capital Reserves; Notice.

 

(a)               No later than forty-five (45) days following the end of each
Fiscal Quarter, the General Partner shall cause the Partnership to make
distributions with respect to all Shortfall Return Interests, Preferred Return
Interests, Common Return Interests and Residual Interests with respect to such
Fiscal Quarter as provided in this Article 3. With respect to any Capital Event,
the General Partner shall use commercially reasonable efforts to make
distributions with respect to all Shortfall Return Interests, Preferred Return
Interests, Common Return Interests and Residual Interests representing Capital
Event Proceeds with respect to such Capital Event within forty-five (45) days
after receipt of such Capital Event Proceeds as provided in this Article 3.

 

12

 

 

(b)               In connection with any distribution being made pursuant to
this Article 3, the General Partner shall deliver written notice to the
Preferred Partners reasonably in advance thereof providing a calculation of the
amounts being distributed pursuant to each section and subsection of this
Article 3.

 

(c)               The distributions pursuant to this Article 3 with respect to
any Fiscal Quarter or any Capital Event shall be made in the following order of
priority: (i) Shortfall Return Interests, (ii) Preferred Return Interests, (iii)
Common Return Interests and (iv) Residual Interests.

 

Section 3.2.          Distributions with Respect to Shortfall Return Interests.
Distributions of cash shall be made to the Preferred Partners pro rata based on
relative Shortfall Return Interests and on the basis of and solely to the extent
of cash distributions actually paid to the Partnership with respect to the
Shortfall Return Units (if any).

 

Section 3.3.          Distributions with Respect to Preferred Return Interests.
Distributions of cash shall be made to the Preferred Partners pro rata based on
relative Preferred Return Interests and on the basis of and solely to the extent
of cash distributions actually paid to the Partnership with respect to the
Preferred Return Units (as such term is defined in the Subsidiary REIT
Agreement).

 

Section 3.4.          Distributions with Respect to Common Return Interests.
Distributions of cash shall be made to the Common Partners pro rata based on
relative Common Return Interests and on the basis of and solely to the extent of
cash distributions actually paid to the Partnership with respect to the Common
Return Units (as such term is defined in the Subsidiary REIT Agreement).

 

Section 3.5.          Distributions of Remaining Distributable Cash Flow.

 

(a)               The Partnership shall distribute such distributions actually
paid to the Partnership with respect to Residual Units (“Remaining Distributable
Cash Flow”), as provided in this Section 3.5; provided, however, that to the
extent distributions are actually paid to the Partnership pursuant to Section
3.2(a) of the Subsidiary REIT Agreement such amounts shall be retained by the
Partnership for purposes of paying expenses and not distributed to the Partners.

 

(b)               Remaining Distributable Cash Flow shall be allocated into two
categories: (i) “Early Satisfaction Amounts” and (ii) “Subsequent Satisfaction
Amounts.” This allocation will be made pro rata based on the aggregate amount
debited from the Initial Preferred Distribution Balance at the Subsidiary REIT
(x) in the case of the Early Satisfaction Amounts, amounts debited or deemed
debited from the Initial Preferred Distribution Balance at the Subsidiary REIT
on a Distribution Date occurring on or prior to the second (2nd) anniversary of
the Effective Date, if any, and (y) in the case of the Subsequent Satisfaction
Amounts, amounts debited or deemed debited from the Initial Preferred
Distribution Balance at the Subsidiary REIT on a Distribution Date occurring
after the second (2nd) anniversary of the Effective Date, if any. Following such
allocation, the Early Satisfaction Amounts and the Subsequent Satisfaction
Amounts shall be distributed as follows:

 

13

 

 

(i)               Early Satisfaction Amounts shall be distributed (1) twenty
percent (20%) with respect to the Residual Interests (Preferred), pro rata among
the Preferred Partners based on the Preferred Partners’ relative Percentage
Interests, and (2) eighty percent (80%) with respect to the Residual Interests
(Common), pro rata among the Common Partners based on the Common Partners’
relative Percentage Interests.

 

(ii)              Subsequent Satisfaction Amounts shall be distributed:

 

(1)               First, (A) seventy percent (70%) with respect to the Residual
Interests (Preferred), pro rata among the Preferred Partners based on the
Preferred Partners’ relative Percentage Interests, and (B) thirty percent (30%)
with respect to the Residual Interests (Common), pro rata among the Common
Partners based on the Common Partners’ relative Percentage Interests, until the
balance of the Additional Preferred Return Account at the Subsidiary REIT is
reduced to zero ($0); and

 

(2)              Thereafter, (A) fifty percent (50%) with respect to the
Residual Interests (Preferred), pro rata among the Preferred Partners based on
the Preferred Partners’ relative Percentage Interests, and (B) fifty percent
(50%) with respect to the Residual Interests (Common), pro rata based on the
Common Partners’ relative Percentage Interests.

 

Exhibit J sets forth illustrative calculations of distributions with respect to
Shortfall Return Interests, Preferred Return Interests, Common Return Interests
and Residual Interests pursuant to the provisions of this Article 3.

 

Section 3.6.          Disposition of Cash Proceeds from Subsidiary REIT. Cash
proceeds from the disposition of any of the Partnership’s interests in the
Subsidiary REIT shall be distributed as if such amounts had been distributed by
the Subsidiary REIT in accordance with the Subsidiary REIT Agreement. Cash
available for distribution from any other source shall be distributed in a
manner determined by the Board as a Major Decision.

 

Section 3.7.         Form of Distributions. No Partner has any right to demand
and receive any distribution from the Partnership in any form other than money,
nor shall any Partner be required to accept any distribution from the
Partnership in any form other than money. No Partner shall be obligated to
accept any in-kind distributions without that Partner’s written consent. Any
Partner(s) to whom the General Partner makes an in-kind distribution shall be
deemed to have been distributed an amount equal to the amount agreed upon by the
receiving Partner and the General Partner (and approved by the Board) as the
fair value of the property distributed (after any indebtedness assumed or to
which the distributed property is subject). Any in-kind distribution shall
require that the unanimous prior written consent of all Board Members.
Notwithstanding anything to the contrary contained herein, the Partnership shall
not make any distribution if such distribution would (i) violate the Act or
other applicable Law or (ii) violate the terms of any credit agreement, pledge,
hypothecation or other collateral or security agreement to which the Partnership
(or any Subsidiary of the Partnership) is a party or bound by, including the
Senior Credit Documents (each, an “Indebtedness Document”), so long, in the case
of each Indebtedness Document other than the Senior Credit Documents, as such
Indebtedness Document has been entered into in accordance with the terms of this
Agreement.

 

14

 

 

Article 4

 

MANAGEMENT OF PARTNERSHIP

 

Section 4.1.          Management of the Partnership.

 

(a)               Authority of the General Partner.

 

(i)              Subject to Section 4.2, the management, control, operation and
policy of the Partnership are vested exclusively in the General Partner, which
is authorized and empowered on behalf and in the name of the Partnership to
carry out any and all of the objects and purposes of the Partnership and to
perform all acts and enter into and perform all contracts and other
undertakings, consistent with the provisions of this Agreement and in conformity
with the Annual Budget and other terms and conditions of this Agreement, that
the General Partner may in its discretion deem necessary, advisable or
incidental thereto.

 

(ii)              The General Partner shall at all times perform its duties and
responsibilities in compliance with all applicable Laws and this Agreement. To
the maximum extent permitted by applicable law, the General Partner may delegate
to any Affiliate or third party all or any of the powers, rights, privileges,
duties and discretion vested in it under and subject to this Agreement and the
Act, and such delegation may be made, in all cases subject to this Agreement and
the Act, upon such terms and conditions as the General Partner may determine in
its discretion.

 

(iii)             The Subsidiary REIT has entered into the Asset Management
Agreement, pursuant to which the duties and obligations set forth therein and in
Section 4.12(a) shall be performed by the Asset Manager.

 

(b)               Restrictions on Management. Except as otherwise specifically
provided herein, no Partner (other than the General Partner in its capacity as
the general partner of the Partnership), employee or other agent of the
Partnership will participate in the management of the Partnership or have any
control over the Partnership business or have any right or authority to act for
or to bind the Partnership or to incur any expenditure on behalf of the
Partnership. Except for the authority expressly granted to any Partner in this
Agreement, and subject to the Board’s rights under this Agreement, no Partner,
employee or other agent of the Partnership shall have any authority to bind or
act for the Partnership or any other Partner in carrying on their respective
businesses or activities.

 

Section 4.2.          Partnership Board.

 

(a)               Notwithstanding anything to the contrary set forth in Section
4.1, the General Partner may not act on behalf or in the name of the Partnership
without the consent of the board of the partnership (the “Board”) as provided
herein.

 

15

 

 

(b)               The sole duty of each Board Member to the Partnership and to
the Partners shall be to comply in good faith with the terms of this Agreement
in a manner that does not constitute fraud, misappropriation, gross negligence
or willful misconduct. It is the express intention of the Partners that the
provisions of this Agreement, to the extent that they restrict or eliminate the
duties of the Board Members to the Partnership or to any Partners otherwise
existing at law or in equity, replace such other duties and liabilities;
provided, that the foregoing shall not restrict the implied covenants of good
faith and fair dealing.

 

Section 4.3.          Composition of the Board.

 

(a)                The Board shall be composed of seven (7) individuals, and
shall include three (3) individuals to be appointed by the CTT Partner, one (1)
individual to be appointed by BCI Partners, one (1) individual to be appointed
by Medley Partner, one (1) individual to be appointed by TIG Partner, and one
(1) individual to appointed by Highland Partners. Each individual so appointed
is referred to herein as a “Board Member”. As of the Amendment Effective Date
the Board Members shall be John Capriotti, Brian Davis and Todd Reitz (each
appointed by CTT Partner), Sameer Jinnah (appointed by BCI Partners), James
Frank (appointed by Medley Partner), Gerrity Lansing (appointed by TIG Partner),
and James Dondero (appointed by Highland Partners). Other than instances in
which the Board is operating under the Alternative Voting System, each Board
Member appointed by (i) CTT Partner shall have one and two-thirds votes,
(ii) BCI Partners shall have one (1) vote, (iii) Medley Partner shall have one
(1) vote, (iv) TIG Partner shall have one (1) vote, and (v) Highland Partners
shall have one (1) vote, in each case, on each matter before the Board. The
rights of the Partners to appoint Board Members pursuant to this Section 4.3(a)
are subject to Section 2.2(f). Each Board Member shall hold office until his or
her successor is appointed, or until his or her earlier resignation or removal,
in each case in accordance with Section 4.4. Each Board Member shall be an
individual. Upon written notice to the other Board Members, the Board Member
appointed by any BCI Partner may send an alternative representative on its
behalf to meetings of the Board, which representative shall have full ability to
vote on behalf of such Board Member appointed by such BCI Partner at such
meetings.

 

(b)               Notwithstanding anything in this Agreement to the contrary
(other than Section 4.3(c)), the Alternative Voting System shall permanently
become effective upon delivery by a majority of the Board Members appointed by
the Preferred Partners of a written notice delivered within ninety days (90)
days of the earliest to occur of any of the following events:

 

(i)               the fourth (4th) anniversary of the Effective Date;

 

(ii)              a Liquidity Event has occurred;

 

(iii)            on or after the end of the fourth full Fiscal Quarter following
the Effective Date, the occurrence of any three consecutive Fiscal Quarters in
which the sum of the amount of the Quarterly Net Shortfall for (x) each of the
three full Fiscal Quarters immediately preceding such Fiscal Quarter and (y)
such Fiscal Quarter is, in the aggregate, equal to an amount that is less than
zero ($0), which occurrence has not been cured pursuant to Section 2.1(b)(i),
Section 2.1(b)(ii), Section 2.1(b)(iii) or Section 4.3(c); and

 

16

 

 

(iv)             the removal of the General Partner as the general partner of
the Partnership pursuant to Section 4.13.

 

An example calculation of the Quarterly Net Shortfall (and related definitions)
is attached as Exhibit C-3.

 

(c)                For purposes of this Section 4.3, if, with respect to any
Fiscal Quarter, the Cumulative Net Shortfall is greater than zero ($0) and the
Quarterly Net Shortfall is less than zero ($0), the Common Partners may, by
written notice to the Partnership on or prior to forty-five (45) days following
the end of such Fiscal Quarter, cure such Quarterly Net Shortfall by taking any
or all of the actions listed in this Section 4.3(c):

 

(i)               at the option of the Common Partners, the Common Partners may
elect to deduct from the Opening Bank Balance an amount equal to the lesser of
(x) the absolute value of such Quarterly Net Shortfall or (y) the Opening Bank
Balance;

 

(ii)              at the option of the Common Partners, the Common Partners may
elect to defer any Asset Management Fee due and payable with respect to such
Fiscal Quarter in an amount equal to the lesser of (x) the absolute value of
such Quarterly Net Shortfall and (y) the Asset Management Fee due and owing for
such Fiscal Quarter; and/or

 

(iii)              at the option of the Common Partners, the Common Partners may
make additional Capital Contributions to the Partnership to fund any remaining
amount of the Quarterly Net Shortfall.

 

(d)               The Partnership, as holder of the Subsidiary REIT Units, shall
cause the Board Members to be appointed or elected from time to time as
necessary as members of the board of managers of the Subsidiary REIT (the
“Subsidiary REIT Board”), including any changes in the composition of the Board
Members in respect of any appointment, resignation or removal made in accordance
with the terms hereof. Notwithstanding anything herein to the contrary
(including Section 4.10), the Subsidiary REIT Board shall have the sole and
exclusive authority to manage the operations of the Subsidiary REIT and its
Subsidiaries and it shall not be in breach or contravention of this Agreement if
the Subsidiary REIT or any of its Subsidiaries takes any action (or fail to take
any action) approved by the Subsidiary REIT Board in accordance with the
Subsidiary REIT Agreement.

 

(e)               The Partnership (and/or its Subsidiaries, as applicable) shall
maintain, at the expense of the Partnership, directors and officers liability
insurance with limits and deductibles, and other terms applicable thereto,
covering the Partnership, the Board and the Subsidiary REIT Board, as approved
by the Board as a Major Decision.

 

17

 

 

(f)                Each Partner that has the right hereunder to appoint a Board
Member and so long as that right is in effect shall be entitled to designate one
(1) individual (each a “Board Observer”) to attend and participate in, strictly
as non-voting observers, any meeting of the Board, either in person or by
telephone conference. The Partnership shall provide any Board Observer with
written notice of each meeting of the Board at the same time and in the same
manner as notice is provided to the Board Members. Any Board Observer shall be
entitled to receive all written materials and other written information
(including minutes of all Board meetings) provided to the Board in connection
with such meeting at the same time such materials and information are provided
to the Board and prompt notice of any action taken by written consent of the
Board; provided, that notwithstanding anything herein to the contrary, the
Partnership may withhold any documents, materials or other information from, or
exclude from any meetings of the Board (or portions thereof), any Board Observer
if the Board determines on the advice of counsel that access to such information
or attendance at such meeting would, or may be reasonably likely to, adversely
affect the attorney-client privilege between the Partnership and its counsel to
preserve the confidentiality of the Partnership’s trade secrets, know-how or
other confidential information of or relating to the Partnership that would give
such Board Observer an unfair competitive advantage. Each Board Observer shall
be an individual, but need not be a Partner or officer or an employee,
consultant, independent contractor or agent of the applicable Partner.

 

(g)               In the event that any Preferred Partner (a “Transferring
Preferred Partner”) Transfers, in one or in a series of related transactions, a
portion of its Initial Holdings on a basis that is not pro rata with all other
Preferred Partners, resulting in the remaining Initial Holdings of such
Transferring Preferred Partner being equal to or less than 75% of the remaining
Initial Holdings of the Preferred Partner with the largest remaining Initial
Holdings, then the Transferring Preferred Partner shall lose its right to
appoint a Board Member; provided, however, that if immediately after such
Transfer another Preferred Partner owns a smaller percentage of the outstanding
Preferred Interests than such Transferring Preferred Partner and such other
Preferred Partner has the right to appoint a Board Member, then such
Transferring Preferred Partner shall retain its right to appoint a Board Member
pursuant to Section 4.3. Notwithstanding anything herein to the contrary, unless
otherwise agreed by all Board Members, the total number of the Board Members
designated by the Preferred Partners shall not be greater than four (4). For the
avoidance of doubt, at any time that the numbers of Board Members designated by
the Preferred Partners is reduced to two (2), then any applicable provisions of
this Agreement requiring the consent of a majority of the Board Members
designated by the Preferred Partners shall continue in full force and effect and
any applicable decision shall require the consent of both such Board Members
designated by the Preferred Partners.

 

(h)               If the individual appointed by [***] is not [***] (or any
appointed successor as approved pursuant to this Section 4.3), such individual
shall be subject to the approval of a majority of the other Board Members
appointed by the Preferred Partners. Such other Board Members shall work in good
faith with [***]to agree on an individual proposed by [***]acceptable to such
other Board Members to replace [***] (or any approved successor as approved
pursuant to this Section 4.3); provided, that if the parties cannot reach
agreement on such individual within ninety (90) days, [***]shall lose its right
under Section 4.3 to appoint a Board Member.

 

Section 4.4.          Resignation, Removal and Replacement of Board Members;
Transfers of Appointment Rights 

 

(a)               Any Board Member may resign from office at any time by giving
written notice to the Partnership. The resignation of any Board Member shall
take effect upon the Partnership’s receipt of such notice or at such later time
as shall be specified in the notice. Unless otherwise specified in the notice,
the acceptance of the resignation shall not be necessary to make the resignation
effective. The resignation of a Board Member who is also a Partner shall not
affect such Person’s rights as a Partner.

 

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(b)               A Board Member shall be removed from office automatically upon
his or her death. A Board Member may be removed from office with or without
cause by the Partner(s) who appointed the Board Member. Additionally, at such
time as any Partner no longer holds a Partnership Interest in the Partnership,
there shall be a deemed delivery of notice of removal of the Board Members
appointed by the former Partner.

 

(c)               Any vacancy occurring on the Board may be filled only by an
appointment by the Partner who appointed the Board Member formerly filling such
vacancy.

 

(d)               In connection with any Transfer to a Transferee permitted
pursuant to this Agreement, each transferring Preferred Partner that is entitled
to appoint a Board Member hereunder shall be permitted to transfer its rights to
appoint Board Members pursuant to this Article 4 so long as the Transferee,
after giving effect to any proportionate Transfers of the Percentage Interests
made by all the Preferred Partners, would own at least 75% of the Initial
Holdings of the Preferred Partner with the largest Initial Holdings.

 

Section 4.5.          Meetings of the Board 

 

(a)                The Board shall meet on the schedule as determined by the
Board from time to time. Unless otherwise determined by the Board, the Board
shall meet at least quarterly on a schedule to be determined by the Board and
the agenda for each such meeting shall include substantive review and discussion
of the financial and operating condition of the Partnership and other relevant
strategic matters pertaining to the Partnership. Subject to Section 2.2(f), any
Board Member shall have the power to call special meetings of the Board. A
special meeting of the Board shall be held on the date and at the time set by
the party calling the special meeting. All meetings of the Board shall be held
at the principal office of the Partnership or at such other place as may be
designated by the Board. If approved by the Board, individuals who are not Board
Members or Board Observers may be invited to observe or participate in meetings
of the Board in an advisory, non-voting capacity. Board Members may participate
in a meeting by means of a conference telephone or other communications
equipment if all persons participating in the meeting can hear each other at the
same time. Participation in a meeting by these means shall constitute presence
in person at the meeting. The Board Members appointed by the Preferred Partners
may request reasonably in advance that a meeting of the Board be held with the
individual presence of the Board (i.e., other than by conference telephone or
other communications equipment by which such persons participating in the
meeting can hear each other at the same time), and the General Partner and the
Board Members appointed by the CTT Partner shall cause such meeting to be
scheduled promptly and have the Board Members appointed by the CTT Partner in
attendance in such manner.

 

(b)               No notice is required of regular Board meetings held in
accordance with such schedule as may be established by the Board from time to
time. It shall be sufficient notice to a Board Member of a special meeting to
send notice by overnight courier or e-mail at least ten (10) Business Days
before the meeting addressed to such Board Member at his or her usual or last
known business or residence address or e-mail address, as applicable, or to give
notice in person or by telephone at least ten (10) Business Days before the
special meeting. Notice of a special meeting need not be given to any Board
Member if a written waiver of notice, executed by him or her before, after or at
the special meeting, is filed with the records of the meeting, or to any Board
Member who attends the special meeting without protesting prior thereto or at
its commencement the lack of notice to him or her. Neither notice of a special
meeting nor a waiver of a notice need specify the purposes of the special
meeting. Notice of any special meeting shall be deemed to be delivered, given
and received (i) on the date of receipt if delivered personally or by telephone,
(ii) on the next day if delivered by overnight courier or (iii) on the date of
transmission if transmitted by e-mail.

 

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(c)                Subject to Section 2.2(f), all Board Members appointed by CTT
Partner and a majority of the Board Members appointed by the Preferred Partners
shall be present in person (by telephone conference or by other communications
equipment if all persons participating in the meeting can hear each other at the
same time as described under Section 4.5(a)) or by proxy at any meeting of the
Board in order to constitute a quorum for the transaction of business at such
meeting; provided, that if the Board is operating under the Alternative Voting
System, the presence of a majority of the Board Members appointed by the
Preferred Partners shall constitute a quorum. If such quorum shall not be
present at any meeting of the Board, the Board Members present shall adjourn the
meeting and promptly give notice of when it will be reconvened. Action or
consent of the Board for purposes of this Agreement shall require the
affirmative vote of Board Members holding at least a majority of the votes
entitled to be cast by all Board Members, or such other vote as is otherwise set
forth under this Agreement (including with respect to Major Decisions).

 

(d)               Subject to Section 2.2(f), each Board Member may vote either
in person or by a proxy which such Board Member has duly executed in writing. No
proxy shall be valid after one (1) year from the date of its execution unless a
longer period is expressly provided in the proxy. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
Board Member may revoke any proxy which is not irrevocable by attending the
relevant meeting and voting in person or by filing an instrument in writing
revoking the proxy, or another duly executed proxy bearing a later date, with
the Partnership. Participation in a meeting by proxy in accordance with this
Section 4.5(d) shall constitute presence in person at the meeting.

 

(e)                The Board may adopt procedures and methods designed to permit
the business of the Partnership to proceed in an orderly and prompt manner,
notwithstanding the necessity of Board approvals required hereunder.

 

(f)                The Board may appoint one or more Board Members to serve as
the chairman or co-chairman of the Board. Such chairman or co-chairmen shall
preside at all meetings of the Board at which he or she is present and shall
perform such other duties as from time to time may be assigned to him or her by
the Board.

 

(g)               Except to the extent otherwise set forth in this Agreement
(including Section 4.10), action or consent requiring approval or action by the
Board Members appointed by the Preferred Partners for purposes of this Agreement
shall require the affirmative vote of Board Members appointed by the Preferred
Partners holding at least a majority of the votes entitled to be cast by all
Board Members appointed by the Preferred Partners. Any action required or
permitted to be taken by the Board Members appointed by the Preferred Partners
may be taken without a meeting, without prior notice and without a vote, if
consented to in writing by all Board Members appointed by the Preferred
Partners.

 

Section 4.6.          Action of the Board without a Meeting. Any action required
or permitted to be taken by the Board may be taken without a meeting, without
prior notice and without a vote, if consented to in writing by all Board
Members.

 

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Section 4.7.          Compensation of Board Members. Board Members shall not
receive any compensation or other remuneration from the Partnership for their
services to the Partnership as Board Members; provided, that the Partnership
shall reimburse Board Members for reasonable travel and other expenses incurred
in connection with meetings or other functions of the Board.

 

Section 4.8.          Actions of the Partners. Any action required or permitted
to be taken by the Partners may be taken without a meeting, without prior notice
and without a vote, if consented to in writing by the Partners required to
achieve consent of the Partners for such action by applicable law or under this
Agreement.

 

Section 4.9.          Operations of the Partnership and the Subsidiary REIT.

 

(a)         The Partnership will conduct all of its revenue-producing activities
and own the Property through the Subsidiary REIT other than de minimis
administrative activities of the General Partner or except as unanimously
approved by the Board. The General Partner caused Alston & Bird, LLP (or other
nationally recognized tax counsel acceptable to the Preferred Partners) to
deliver a written opinion, dated as of the Effective Date, and in the form as
set forth on Exhibit L, concluding (subject to customary assumptions,
qualifications and representations) that the Subsidiary REIT will be organized
in conformity with the requirements for qualification as a REIT under the Code
and its proposed method of operations will enable it to meet the requirements
for qualification and taxation as a REIT under the Code. The General Partner
shall use reasonable best efforts to enforce Section 5.1(f) to ensure that the
Partnership’s ownership of the Subsidiary REIT will not cause the Parent REIT to
fail to qualify as a REIT for federal income tax purposes. All Capital
Contributions received by the Partnership will be promptly contributed to the
Subsidiary REIT to the extent not used to fund expenses of the Partnership or
held in cash as reserves for such expenses. For the sake of clarity and
notwithstanding anything to the contrary in this Agreement, the Subsidiary REIT
will be managed by the Subsidiary REIT Board within the meaning of Section
856(a)(1) of the Code and no right under this Agreement shall be interpreted in
a manner that interferes with such requirement. Notwithstanding anything herein
to the contrary, the Partners acknowledge that the Partnership’s only power to
manage the affairs of the Subsidiary REIT will consist of its right, as the
holder of the Subsidiary REIT Units, to elect the members of the Subsidiary REIT
Board in accordance with Section 4.3(b). Each Partner agrees to provide such
reasonably requested information as is reasonably determined to be necessary by
the Partnership and the Subsidiary REIT (in consultation with their tax
advisors) in order to maintain the Subsidiary REIT’s compliance with the REIT
Requirements, to determine whether the Subsidiary REIT is a “domestically
controlled qualified investment entity” within the meaning of Section
897(h)(4)(B) of the Code, and to ensure compliance with the transfer
restrictions contained in Section 5.1(f) hereof.

 

(b)          Upon request by any Partner, the General Partner will provide any
information in its possession (or obtainable without undue burden or expense)
requested by such Partner relating to whether the Subsidiary REIT is a
“domestically controlled qualified investment entity” within the meaning of
Section 897(h)(4)(B) of the Code.

 

(c)          The Partners acknowledge that the CTT Partner is indirectly owned
by an entity (the “Parent REIT”) that is taxed as a REIT and that the assets and
income of the Partnership will affect the Parent REIT’s qualification to be
taxed as a REIT. For so long as the CTT Partner or an Affiliate thereof is a
Partner, the General Partner shall operate the Partnership so as to avoid (i)
generating gross income that would not be qualifying income for purposes of
Sections 856(c)(2) and 856(c)(3) of the Code (other than interest income on
reserves), (ii) generating gains from “prohibited transactions” within the
meaning of Section 857(b)(6) of the Code or (iii) acquiring assets that would
not be qualifying assets for purposes of Section 856(c)(4)(A) of the Code.

 

21

 

 

(d)         The Partnership and the Partners agree that it would be desirable
that the Subsidiary REIT continue to qualify as of the Amendment Effective Date
as a “domestically controlled qualified investment entity” within the meaning of
Section 897(h)(4)(B) of the Code (a “D-REIT”). Further to such intention, the
Partnership shall use commercially reasonable efforts to maintain the Subsidiary
REIT’s status as a D-REIT at all relevant times. In the event that the
Partnership determines that the Subsidiary REIT does not qualify as a D-REIT or,
upon a contemplated change of direct or indirect ownership of Partnership
Interests (pursuant to a permitted assignment under Section 5.1(b) or
otherwise), would cease to so qualify, the Partnership shall provide prompt
notice of such actual or anticipated change to the Partners. The Partners and
the Partnership agree that upon receipt of such notice from the Partnership,
they will use commercially reasonable efforts and cooperate in good faith to
permit the Partners to restructure the ownership of their Partnership Interests
so as to mitigate any adverse tax impact of such change on the Partners or their
direct or indirect owners. For the avoidance of doubt, such commercially
reasonable efforts shall be deemed to include consent and cooperation in
allowing a Preferred Partner to Transfer its Partnership Interest to an
Affiliate or a continuing Preferred Partner prior to the time the Subsidiary
REIT would otherwise cease to qualify as a D-REIT; provided, that such Transfer
would not cause the Subsidiary REIT to cease to qualify as a REIT (as determined
by the General Partner in its reasonable discretion).

 

(e)         The Partners intend that the amendment to the rights, obligations
and other terms of the Subsidiary REIT Preferred Units resulting from the
amendment of the Subsidiary REIT Agreement as of the Amendment Effective Date
would not be treated as an exchange of the existing Subsidiary Preferred Units
for new Subsidiary REIT Preferred Units for U.S. federal income tax purposes and
hereby agree not to take any position contrary thereto in any tax filing or tax
proceeding unless approved as a Major Decision.

 

Section 4.10.       Major Decisions. The following are major decisions with
respect to the Partnership (“Major Decisions”) that require the approval of a
majority of the total votes of all Board Members entitled to vote on such
matters; provided, that such majority shall include a majority of the Board
Members appointed by the Preferred Partners voting on such matter:

 

(a)          Causing the Partnership to acquire any additional Business Asset or
Real Estate Asset (other than the Property), except as otherwise provided for in
any approved Annual Budget and except for assets being acquired for less than
$100,000 individually or $250,000 in the aggregate with any related
transactions.

 

(b)        Executing and delivering any guaranty, indemnity or similar agreement
on behalf of the Partnership or any of its Subsidiaries other than (x) in
connection with the Senior Credit Documents and (y) with respect to indemnities
only, any indemnity which would not reasonably be expected to result in material
liability to the Partnership that is entered into in the ordinary course of
business of the Partnership.

 

22

 

 

(c)         Entering into, amending or modifying any swap, hedge, collar, other
interest rate protection agreement or other derivative instrument or agreement.

 

(d)         Creating any liens or encumbrances on all or a portion of the
Property or any other Business Asset, other than (i) those related to any
permitted Indebtedness and (ii) any Permitted Encumbrances, and approving the
form of any documentation in respect thereof (including any amendment or
modification of any such documentation), other than in connection with the
Senior Credit Documents.

 

(e)         Establishing reserves, determining reserve levels or making any
distributions from any such reserves pursuant to Section 10.4(a)(ii).

 

(f)          Entering into any agreement by the Partnership with the General
Partner, the Asset Manager or any Affiliate thereof (each a “Related Party
Agreement”) other than pursuant to Section 4.15 or amending or modifying any
agreement set forth in Section 4.15.

 

(g)         Issuing ownership interests in the Partnership or its Subsidiaries
or any admission of any partner of the Partnership after the Effective Date,
other than the issuance of Partnership Interests to the Partners or pursuant to
a Transfer of Partnership Interests, in each case, that is permitted pursuant to
this Agreement (including Article 5).

 

(h)         Formation of any new Subsidiary of the Partnership (including
entering into any joint venture with one or more third parties) other than
formation of wholly owned Subsidiaries of the Partnership to the extent
necessary to consummate the Acquisition.

 

(i)           Paying, compromising, litigating, arbitrating or otherwise
amending any claim or demand of or against the Partnership or any of its
Subsidiaries where the amount of the individual claim or demand exceeds $100,000
and the claim or demand is not an ordinary course claim or demand related to
payables or receivables, other than where the Partnership’s insurance carrier,
in accordance with terms of the Partnership’s insurance policy, is prosecuting
or defending the claim or demand and has not disputed any portion of the claim
or demand.

 

(j)           Approving any settlement of a claim subject to indemnification
pursuant to Section 7.2(e).

 

(k)          Taking any action or a series of related actions or refraining from
taking or approving any action or a series of related actions relating to
remediation of hazardous substances that is estimated by the Partnership to cost
the Partnership in excess of $100,000 as a result of a single underlying event,
other than to obtain studies and reports and conduct (or arrange for)
evaluations and analyses thereof if there is a reasonable basis to believe that
such assets have been affected by hazardous substances.

 

(l)           (i) Dissolving, liquidating, or reorganizing the Partnership or
any of its Subsidiaries (other than the Subsidiary REIT or its Subsidiaries),
(ii) merging, consolidating or otherwise selling all or substantially all of the
interests in, or all of the assets of, the Partnership or any of its
Subsidiaries (other than the Subsidiary REIT or its Subsidiaries), or
(iii) filing any voluntary bankruptcy petition for the Partnership or any of its
Subsidiaries (other than the Subsidiary REIT or its Subsidiaries), or seeking
the protection of any other federal or state bankruptcy or insolvency law or
debtor relief statute.

 

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(m)         Appointing Liquidators pursuant to Section 10.4.

 

(n)          Amendment or modification of this Agreement (other than in
accordance with Section 12.2), the Subsidiary REIT Agreement or any other
governing documents of the Partnership or its Subsidiaries except to the extent
necessary to consummate the Acquisition.

 

(o)          The Partnership (i) directly employing any Person or (ii) entering
into any collective bargaining agreement or similar agreement.

 

(p)         Making any change in the accounting principles of the Partnership or
its Subsidiaries (other than the Subsidiary REIT and its Subsidiaries) or
making, revoking or failing to make any material Tax election or determination
(including, without limitation, any determination to allocate any income, gain,
loss or deductions in respect of the Preferred Return Interests, or to treat the
return thereon as a guaranteed payment, other than as set forth in Section
1.3(f) of Exhibit D).

 

(q)        Selecting or determining any insurance plans, carriers or coverages
to be purchased and maintained by or on behalf of the Partnership, or in respect
of the Property or any other Business Asset, including with respect to directors
and officers liability insurance under Section 4.3(e).

 

(r)           Hiring counsel, professional advisors, accountants or sales
brokers on behalf of the Partnership when the expected expenditure would exceed
$50,000 in a calendar year.

 

(s)          Hiring or changing the independent auditors of the financial
statements of the Partnerships.

 

(t)           Waiving any obligation of any Partner under Section 6.4.

 

(u)         Making adjustments to Gross Asset Values in the circumstances set
forth in the definition of such term.

 

(v)         Changing the state of the principal place of business of the
Partnership.

 

(w)        Permitting any Transfer by the Partnership of any equity securities
issued by the Subsidiary REIT other than in connection with the Senior Credit
Documents.

 

(x)          Taking any of the foregoing actions, matters or decisions described
in this Section 4.10 taken by a Subsidiary of the Partnership which would
constitute a Major Decision if taken by the Partnership.

 

24

 

 

The enumeration of the foregoing rights shall not diminish or affect the
existence or exercise of other rights expressly granted to the General Partner
under this Agreement. Notwithstanding the immediately preceding sentence, the
General Partner shall not, and shall not cause the Partnership or any Subsidiary
of the Partnership, as applicable, to take any of the actions listed in this
Section 4.10, unless such action has been previously approved by the Board
pursuant to this Section 4.10; provided, however, that the General Partner may
take such actions as reasonable and necessary with respect to emergency
situations to protect the health, safety and welfare of people or property;
provided, that the General Partner promptly gives notice to the Board Members of
such emergency actions (and any related emergency expenditures). The General
Partner shall implement fully each Major Decision approved in accordance with
the terms of this Agreement, and may take such action or actions as necessary or
desirable as determined by the General Partner to implement any Major Decision
approved pursuant to this Section 4.10, which actions may be taken as General
Partner, including exercising the voting rights of the Partnership as the holder
of the Subsidiary REIT Units, so long as such action or actions are consistent
with such approval, and are not otherwise restricted under this Agreement.
Notwithstanding anything herein to the contrary, to the extent that any of the
Major Decisions is specifically set forth or described in an Annual Budget
approved in accordance with this Agreement and enumerated as a Major Decision
therein, the approval of such Annual Budget shall constitute prior approval of
such Major Decision for purposes of this Section 4.10 and no additional approval
or consent with respect to such Major Decision shall be required.

 

Section 4.11.        Annual Budget.

 

(a)          The initial Annual Budget for the remainder of calendar year 2018
for the period beginning on the Effective Date and ending on December 31, 2018,
including the related variances, is attached hereto as Exhibit C-1 (the “Initial
Annual Budget”). For each Fiscal Year thereafter, the General Partner shall be
responsible for preparing and submitting to the Board for approval as a Major
Decision a proposed updated Annual Budget, including the related variances.
“Annual Budget” means a budget approved in accordance with this Agreement. The
Annual Budget shall be prepared by the General Partner in accordance with the
Budget Development Protocols (including the preparation of the back-up materials
on the timetable set forth therein) set forth in Exhibit C-2. The Annual Budget
for each Fiscal Year shall be prepared with the same detail and line items as
set forth in the Initial Annual Budget and such other detail as Board Members
appointed by the Preferred Partners may reasonably request. In connection with
the review of a proposed Annual Budget, the Board Members appointed by the
Preferred Partners may reasonably request additional information regarding the
materials supporting the proposed Annual Budget or such other information as is
necessary or desirable to enable review of such proposed Annual Budget, and the
General Partner shall provide such requested information. The Board Members
appointed by the Preferred Partners shall consent to or reject the proposed
Annual Budget, or request additional information, within ten (10) Business Days
following (i) receipt of such proposed Annual Budget or (ii) receipt of all
additional information that is, in the determination of the Board Members
appointed by the Preferred Partners, necessary or desirable to enable review of
such proposed Annual Budget. The Annual Budget shall be prepared and submitted
annually by the General Partner no later than December 10 for the next Fiscal
Year. The Annual Budget for each Fiscal Year shall include the projected use of
the Pre-Funded Expense Account, including as shown on Exhibit C-1 for the four
Fiscal Quarters comprising such Fiscal Year. In connection with the submission
of the Annual Budget, the General Partner shall also prepare and submit to the
Board an annual business plan for the Partnership and its Subsidiaries including
a responsible five-year forecast for the Partnership’s operations including the
operating metrics set forth in Exhibit C-4. The Board Members appointed by the
Preferred Partners, or their designated representative, shall be provided
reasonable access to all information, data, reports, models, and analyses relied
on in developing the Annual Plan (including, for the avoidance of doubt, all
financial and silvicultural assumptions, constraints, supporting stand level
data, merchantable timber volumes, pre-merchantable acres by species and age
class, and acres by land classification).

 

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(b)         The General Partner shall manage the business of the Partnership and
its Subsidiaries in accordance with the approved Annual Budget and shall at all
times act in a manner consistent with the Annual Budget; provided, however, that
the General Partner may in its discretion expend funds for Non-Controllable
Expenses not otherwise reflected in the Annual Budget. In implementing the
Annual Budget, the General Partner may in its discretion vary material line
items in the applicable Annual Budget within the applicable variances provided
therein (such variances being referred to herein as “Allowable Variances”).

 

(c)          In the event the General Partner is unable to obtain the approval
of the Board of any Annual Budget prior to the intended period for such Annual
Budget, then a “Budget Impasse” shall be deemed to exist, until such time as
such Annual Budget is approved in accordance with this Agreement. During any
Budget Impasse, the General Partner shall operate and cause to be operated the
Partnership and its Subsidiaries, and the Property, in accordance with the most
recently approved Annual Budget, except, in each case, that (i) the General
Partner may make or cause to be made any expenditure not contemplated by such
Annual Budget which is (1) an emergency expenditure to protect the health,
safety and welfare of people or property (in which event the General Partner
shall notify the Partners immediately), (2) an expenditure to satisfy (A) any
outstanding taxes and related fees, costs and expenses, (B) any obligations for
interest, principal, escrows, fees and expenses due under the Senior Credit
Documents and any other indebtedness approved as required under this Agreement
or (C) premiums for insurance required under this Agreement, the Asset
Management Agreement, any Senior Credit Document, any loan document relating to
indebtedness approved as required under this Agreement or any other contract to
which the Partnership or any of its Subsidiaries is a party that are entered
into in accordance with this Agreement or (3) an expenditure to satisfy an
obligation of the Partnership that is due and owing under any of the Wood Supply
Agreements, seedling agreements or other agreements previously approved as Major
Decisions (such expenses, “Non-Controllable Expenses”), and (ii) the General
Partner acting alone shall otherwise have no authority to make any other
expenditure without the approval of the Board as a Major Decision, as
applicable.

 

(d)         If, at a time when the Alternative Voting System is not effective,
either (i) the Board is in good faith unable to make any decision in respect of
a Major Decision or (ii) there are two attempts (including any adjournment) to
have a special meeting called for the purpose of discussing a Major Decision
where quorum is not obtained, and if such failure continues for five (5) days
after the date of the meeting called to discuss the approval (or in the event of
the second quorum failure, the date of such second quorum failure), then the
Board Members shall be deemed to be deadlocked in the matter in question (each,
a “Deadlock”). In the event of any Deadlock involving a Major Decision, such
Deadlock shall result in no resolution in respect of such decision until such
time as the Board agrees regarding such decision.

 

Section 4.12.        Transactions with Affiliates.

 

(a)        Retention as Asset Manager. As of the Amendment Effective Date, the
parties hereto acknowledge and agree that CatchMark TRS Creek Management, LLC
(the “Asset Manager”) and the Subsidiary REIT have entered into an amended and
restated asset management agreement with respect to the Property in the form
attached hereto as Exhibit H (the “Asset Management Agreement”).

 

(b)         Exercise of Rights under Related Party Agreements. The Board Members
appointed by the Preferred Partners, acting without the consent or approval of
any other Board Member or any Partner, shall have the sole and exclusive right
and authority to direct the General Partner, acting on behalf of the Partnership
and its Subsidiaries, to take any of the following actions on the part of the
Partnership or its Subsidiaries, all at the expense of the Partnership or the
applicable Subsidiary, with respect to the Asset Management Agreement and any
other Related Party Agreement, in each case, in accordance with the terms of
such Related Party Agreement: (i) implement, enforce or take any termination or
other enforcement action that arises under any Related Party Agreement, in each
case in accordance with such Related Party Agreement; (ii) make any approval,
consent, decision or waiver under or in connection with any Related Party
Agreement or take any other action by or on behalf of the Partnership or any
Subsidiary under or in connection with any Related Party Agreement; (iii) give
notice of default or termination in accordance with terms of such Related Party
Agreement; (iv) terminate all Related Party Agreements in accordance with the
terms of the applicable Related Party Agreement upon notice to the other parties
thereto and, subject to Major Decisions, replace it with an agreement with
another Person who is not an Affiliate of any Partner; (v) enforce the
provisions of any Related Party Agreement against the other parties thereto by
all appropriate methods, including the commencement of legal or other
proceedings against such parties; or (vi) enter into any amendment or
modification of any provision or right arising under any Related Party
Agreement. Neither the Partnership nor any Subsidiary shall, nor shall the
General Partner acting on behalf of the Partnership, enter into any Related
Party Agreement (x) without the prior written consent of a majority of the Board
Members appointed by the Preferred Partners and (y) unless such Related Party
Agreement specifically acknowledges the rights of the Board Members appointed by
the Preferred Partners under this Section 4.12(b), and the General Partner shall
cause any Related Party Agreement with the General Partner (or its Affiliate) to
so provide.

 

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(c)          Technical Forestry Advisory Services Agreement. The parties hereto
acknowledge that, as of the Effective Date, the Partnership and TTG Forestry
Services, LLC entered into that certain Technical Forestry Advisory Services
Agreement in the form attached hereto as Exhibit I (the “Technical Forestry
Advisory Services Agreement”). In accordance with the Technical Forestry
Advisory Services Agreement, the Partnership previously appointed TTG Forestry
Services, LLC as the technical forestry advisor of the Partnership to manage
certain activities related to timberland interests, subject to the terms and
conditions of the Technical Forestry Advisory Services Agreement.

 

Section 4.13.        Removal of the General Partner. The Partners shall have the
right to remove the General Partner as provided in this Section 4.13.

 

(a)         At any time, a majority of the Board Members appointed by the
Preferred Partners may, by Notice to the General Partner, remove the General
Partner for Cause (which Notice shall specify the alleged event of Cause). In
connection with a removal for Cause under this Section 4.13, the Asset
Management Agreement shall, pursuant to its terms, be immediately and
automatically terminated concurrently with the effectiveness of such removal
hereunder. Upon the exercise of such removal right, (i) the General Partner
shall cease to have the powers and authorities granted to it as a general
partner under this Agreement and (ii) the Board (as adjusted pursuant to Section
4.3(b)) shall have the power and authority to propose and unilaterally approve
all actions which would otherwise constitute Major Decisions without the
necessity for obtaining any consent or approval of the former General Partner or
any Affiliate of the General Partner (or its Board Members), including hiring a
replacement to serve as the General Partner. The foregoing notwithstanding, the
former General Partner shall continue to have all other obligations and rights
of a Partner hereunder, including the obligation to fund any required capital
calls, and nothing contained in this Section 4.13 shall relieve the former
General Partner from any liabilities of, or obligations to, the Partnership or
any creditor thereof, or to any Partner, in each case, incurred or arising on or
prior to the effective date of the removal of the former General Partner, and
the former General Partner shall remain liable for the same until the expiration
of the applicable statute of limitations.

 

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(b)         In the event of a removal of the General Partner pursuant to this
Section 4.13, the distributions to be made to the Common Partners under Section
3.5 shall be reduced by twenty-five percent (25%), and any distributions to
which the Common Partners remain entitled to under this Agreement shall be
subject to being held by the Partnership as a reasonable reserve for damages
finally adjudicated against the Partnership and/or the other Partners to the
extent caused by the former General Partner.

 

(c)          Upon removal of the General Partner pursuant to this Section 4.13,
the removed General Partner and its Affiliates shall cause all its appointees to
the Subsidiary REIT Board and any other Subsidiary of the Partnership to resign.

 

Section 4.14.        Leverage.

 

(a)          The General Partner is authorized to cause the Subsidiaries (other
than the Subsidiary REIT and its Subsidiaries) of the Partnership to assume,
enter into or guarantee Indebtedness in accordance with the leverage policy set
forth in this Section 4.14. Any such Indebtedness, and the documentation in
respect thereof, shall be subject to review and approval by the Board as a Major
Decision pursuant to Section 4.10.

 

(b)         Without limiting the foregoing, in connection with any financing or
refinancing of Indebtedness, other than in respect to the Senior Credit
Documents, the General Partner shall not cause the Subsidiaries of the
Partnership to assume, enter into or guarantee Indebtedness unless the
documentation in respect thereof contains an option exercisable by the Preferred
Partners to purchase the obligations thereunder at par upon (i) the acceleration
of any obligations under the Indebtedness, (ii) certain events of default that
continue for a period of time, in each case, designated by the Preferred
Partners in connection with the negotiation of the Indebtedness, or (iii) the
commencement of any voluntary or involuntary bankruptcy or insolvency proceeding
under the applicable Indebtedness, subject to usual and customary terms and
conditions for second lien credit facilities, as determined by the Board Members
appointed by the Preferred Partners. The Board Members appointed by the
Preferred Partners shall have the right to review and approve any documentation
in respect of the foregoing rights.

 

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Section 4.15.        Property Sale Right of First Opportunity.

 

(a)         The Partners acknowledge that any election by or on behalf of the
Partnership (which, for purposes of this Section 4.15, shall be deemed to
include the Subsidiary REIT and its Subsidiaries) to list, offer to sell or sell
or otherwise dispose of all or a portion of the Property (any such sale, a
“Proposed Sale”) or other Real Estate Asset (the “Designated Real Property”)
shall be subject to approval as a Major Decision as set forth in Section 4.10 or
shall be subject to the provisions set forth in Section 4.15 of the Subsidiary
REIT Agreement. In connection with any Proposed Sale, so long as the General
Partner has not been removed for Cause as the general partner hereunder and does
not constitute a Defaulting Partner hereunder, the Common Partners or any
designated Affiliate thereof (collectively, the “Common Partner Related
Parties”) shall have the option for ten (10) calendar days from the date on
which a determination has been made to pursue a Proposed Sale of Designated Real
Property (the “Exercise Period”) to present an initial offer to the Board
Members appointed by the Preferred Partners to acquire such Designated Real
Property (the “Right of First Offer”) at a purchase price no less than the most
recently appraised value thereof and in accordance with this Section 4.15;
provided, that if such most recently appraised value for all or a portion of the
Designated Real Property was completed on a date that is more than three (3)
months from the expiration of the Exercise Period, or if the Board Members
appointed by the Preferred Partners otherwise request, the Partnership shall
cause new appraisals of such Designated Real Property to be completed by a
Qualified Appraiser in connection with the Right of First Offer process
hereunder. The Common Partner Related Party may exercise its Right of First
Offer in its sole discretion by delivery of a written offer to the Board Members
appointed by the Preferred Partners (the “Offer Notice”) within the Exercise
Period. The Offer Notice shall include the proposed purchase price (which shall
not be less than the most recently appraised value of the Designated Real
Property), the proposed transaction structure, the assumption of any related
indebtedness, if applicable, and the other material terms and conditions of the
proposed acquisition as determined by the Common Partner Related Party (the
“Common Partner Offer”). The Board Members appointed by the Preferred Partners
may accept or reject the Common Partner Offer on behalf of the Partnership in
its sole discretion within thirty (30) calendar days of its receipt of the Offer
Notice by delivering written notice thereof to the Common Partner Related Party.
If the Board Members appointed by the Preferred Partners accept the Common
Partner Offer on behalf of the Partnership, the Common Partner Related Party
will acquire the Designated Real Property, at the price and on the other terms
and conditions set forth in the applicable Common Partner Offer.

 

(b)         If, in connection with a Proposed Sale, no Common Partner Offer is
made with respect to the Designated Real Property, the Board Members appointed
by the Preferred Partners reject any Common Partner Offer or the Common Partner
Related Parties are not otherwise entitled to a Right of First Offer, the
Partnership shall institute a marketing process in order to offer for sale the
Designated Real Property. For so long as General Partner has not been removed
for Cause pursuant to Section 4.13 hereunder and does not constitute a
Defaulting Partner hereunder, the Common Partner Related Parties will be
entitled to participate as a potential purchaser in such marketing process;
provided, that to the extent any Common Partner Related Party elects to
participate in such marketing process, the Board Members appointed by the
Preferred Partners will have the authority to conduct such marketing process on
behalf of the Partnership in lieu of the General Partner, and the Common Partner
Related Party will not be entitled to accept or review any purchase offers or
receive any other information in respect thereof, and the Board Members
appointed by the Preferred Partners shall have the right to cause the
Partnership to effect any resulting sale on behalf of the Partnership and its
Subsidiaries (without the approval of any other Person, including the Board
Members appointed by CTT Partner). The Common Partner Related Parties shall give
written notice to the Board Members appointed by the Preferred Partners within
ten (10) calendar days of the Partnership’s election to institute any such
marketing process in respect of a Designated Real Property and, immediately upon
delivery of such notice, the General Partner shall no longer have the authority
to conduct such marketing process on behalf of the Partnership.

 

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(c)          The Person conducting any such marketing process in respect of a
Designated Real Property on behalf of the Partnership is referred to herein as
the “Real Property Advisor.” To the extent that the Common Partner Related
Parties elect to participate in any such process, the Common Partners
nevertheless agrees to actively assist the Real Property Advisor in marketing
the Designated Real Property to third parties. In connection therewith, the
Common Partners will, among other things, (a) prepare and provide all customary
financial and other information as reasonably requested by the Real Property
Advisor with respect to the Common Partners and the Designated Real Property,
including but not limited to financial projections, budgets and related
financial information, (b) at reasonable times to be mutually agreed upon by the
Common Partners and the Real Property Advisor, and upon reasonable prior notice,
conduct property tours and cruises and make available to prospective purchasers
relevant members of the Common Partners’ senior management and advisors, and
(c) assist the Real Property Advisor in the preparation of customary marketing
materials to be used in connection with the sale of the Designated Real
Property.

 

(d)          If the Partnership is in the process of dissolution pursuant to
Section 10.4, the Common Partner Related Parties’ Right of First Offer under
Section 4.15(a) and right to participate as a potential purchaser in the
marketing process pursuant to Section 4.15(b) shall not apply. For the avoidance
of doubt, the Common Partner Related Parties shall continue to assist in
marketing Designated Real Property to third parties pursuant to Section 4.15(c).
For the avoidance of doubt, this Section 4.15(d) shall not limit the ability of
the Common Partner Related Parties to participate as a purchaser of the assets
of the Partnership and its Subsidiaries upon (and subject to) the dissolution of
the Partnership.

 

Section 4.16.        Forced Sale. Notwithstanding anything herein to the
contrary, the Board Members appointed by the Preferred Partners (without the
approval of any other Person, including the Board Members appointed by CTT
Partner) shall have the right, at any time following the date that is the fourth
(4th) anniversary of the Effective Date, to direct the General Partner to cause
the Partnership and its Subsidiaries (including the Subsidiary REIT and its
Subsidiaries for all purposes under this Section 4.16) to list or offer to sell
the Property and all other Real Estate Assets; provided, that if the Alternative
Voting System is in effect at such time, then the Board Members appointed by the
Preferred Partners (without the approval of any other Person, including the
Board Members appointed by CTT Partner) may appoint a Person other than the
General Partner to cause the Partnership and its Subsidiaries to list or offer
to sell the Property and all other Real Estate Assets and to manage all aspects
of the offering and sale process. Upon any such exercise of the right hereunder,
any marketing process and resulting sale shall be subject to the terms of
Section 4.15(a), Section 4.15(b) and Section 4.15(c); provided, that
notwithstanding anything herein to the contrary, the Board Members appointed by
the Preferred Partners shall have the right to conduct such marketing process
and effect any resulting sale on behalf of the Partnership and its Subsidiaries
(without the approval of any other Person, including the Board Members appointed
by CTT Partner).

 

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Section 4.17.       No U.S. Trade of Business; Commercial Activity. Further to
Section 1.5 and Section 4.9, the Partnership and the General Partner shall use
commercially reasonable efforts to conduct the Partnership’s affairs so as to
ensure that (a) it is not, and is not deemed to be, engaged in “commercial
activity” (as defined in Treasury Regulations Section 1.892-4T issued under the
Code, as such regulations may be amended from time to time and, to extent that a
taxpayer may rely upon them, any applicable proposed Treasury Regulations) and
(b) it does not have, and is not deemed to have, a trade or business within the
United States, in each case for U.S. federal income tax purposes at any time
during the taxable year (for the avoidance of doubt, determined without regard
to the application of Section 897 of the Code).

 

Section 4.18.        Permitted HBU Sales. Notwithstanding anything herein to the
contrary, it is acknowledged and agreed that the Subsidiary REIT may engage in
Permitted HBU Sales (as such term is defined in the Subsidiary REIT Agreement),
in accordance with Section 4.10 of the Subsidiary REIT Agreement.

 

Section 4.19.        No Direct Ownership of Property, Real Estate Assets or
Timber. Without the unanimous consent of the Board, the Partnership shall not
acquire, own or dispose of the Property or any Real Estate Assets or conduct any
HBU Sales (subject to Section 4.18) (or acquire, own or dispose of any other
assets generating gain described in Section 631(b), Section 631(c) or Section
897(a) of the Code) other than by or through sales of interests in or an
acquisition, ownership or disposition (as applicable) conducted by of one or
more Subsidiaries classified as corporations for U.S. federal income tax
purposes, including for the avoidance of doubt, any REIT.

 

Section 4.20.       Disposition of Subsidiary REIT Units. Notwithstanding
anything herein to the contrary other than Section 5.6, Section 5.7 and Section
5.8 without the unanimous consent of the Board, the Partnership shall not
Transfer to any third party any Subsidiary REIT Units.

 

Section 4.21.        Amendment of Subsidiary REIT Agreement. Notwithstanding
anything herein to the contrary, the General Partner shall not have the
authority to amend or cause the amendment of the Subsidiary REIT Agreement
except with the written approval in writing by (x) a majority of the Percentage
Interest of the Partners holding Common Interest and (y) a majority of the
Percentage Interest of the Partners holding Preferred Interest.

 

Section 4.22.        Disposition of Property or Real Estate Assets. If the
Partnership directs a forced sale pursuant to Section 4.16, or a Liquidator
determines to conduct a sale of the Property or Real Estate Assets pursuant to
Section 10.4, the Partnership shall provide reasonable notice and cooperation to
a Partner in order to enable the Partner to restructure its ownership of
Partnership Interests so as to mitigate any adverse tax impact of the
liquidation of the Property or Real Estate Assets on the Partner or its direct
or indirect owners.

 

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Article 5

TRANSFERS OF PARTNERSHIP INTERESTS

 

Section 5.1.          Transfers.

 

(a)               Restrictions on Transfer. No Partner shall, directly or
indirectly, sell, assign, pledge, hypothecate, transfer by gift, exchange or
otherwise dispose of or encumber all or any portion of its Partnership Interests
by operation of law or otherwise (all of the foregoing being referred to
hereinafter as a “Transfer”), except in accordance with this Section 5.1 or
Section 5.8. Any Transfer and the rights of the Transferee (as hereinafter
defined) with respect to the Transferred Partnership Interest shall be subject
to Section 5.2. Any Transfer made in contravention of this Agreement shall be
null and void and the transferee shall receive no right, title or interest in or
to any Partnership Interest as a result of such Transfer made in violation of
this Agreement. In addition, any Transfer otherwise permitted by this Agreement
shall be null and void unless (i) in respect of a Transfer of a direct
Partnership Interest, the permitted transferee (the “Transferee”) agrees to
adopt and be bound by the terms of this Agreement and other relevant documents
as if the Transferee had been an original party hereto, (ii) the Transfer would
not result in any violation of, or trigger any change of control provisions with
respect to, Indebtedness Documents of the Partnership or its Subsidiaries, (iii)
the Transferee completes reasonable “know your customer” requirements of the
lenders to the Partnership and its Subsidiaries and (iv) the Transfer would not
result in any violation of Section 5.1(f). The parties acknowledge that a direct
or indirect Transfer of the ownership interests in CatchMark Timber Trust, Inc.
(“CTT”) or a Transfer of the direct or indirect ownership interests in any
vehicle Controlled, managed or advised by BCI Partners, Medley Partner, TIG
Partner, Highland Partners, JAWS Partner or any of their respective Affiliates,
other than the vehicle that holds interests in the Partnership, shall not
constitute a Transfer for purposes of this Agreement. For the avoidance of
doubt, Transfers among BCI Partners or to or among Affiliates of BCI or
Affiliates of the BCI Partners in accordance with the terms of this Agreement
shall be permitted Affiliate Transfers under Section 5.1(b) of this Agreement.

 

(b)               Permitted Transfers. A Partner may Transfer all or any portion
of its Partnership Interest (x) to an Affiliate of such Partner; provided, such
Transfer shall be permitted only to the extent such entity continues to be an
Affiliate of such Partner; provided, further, that in respect of a Transfer to
an Affiliate of the Common Partners, such Affiliate is directly or indirectly
wholly owned by CTT, or (y) to a third-party purchaser; provided, that any
proposed Transfer pursuant to this clause (y) (A) by any Partner shall be
subject to a requirement that the Partner proposing to sell its Partnership
Interests first offer such Partnership Interests to the other Partners pursuant
to Section 5.3 and (B) by any Preferred Partner shall be subject to the right of
the other Preferred Partners to participate in such sale pursuant to Section
5.4; provided, further, that to the fullest extent permitted by Law,
notwithstanding anything herein to the contrary, unless in the case of
clause (ii)(2) of this Section 5.1(b) is waived by the General Partner in its
discretion, any Transfer shall be null and void if such Transfer:

 

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(i)              may require filing a registration statement under the
Securities Act or would otherwise violate any federal or state securities or
Blue Sky laws (including any investment suitability standards) or regulations
applicable to the Partnership or the Partnership Interests;

 

(ii)           is to a Transferee that:

 

(1)               is not a “qualified purchaser” as that term is defined in
Section 2(a)(51)(A) of the Investment Company Act, as certified or established
to the reasonable satisfaction of the Partnership;

 

(2)               is a competitor of the Common Partners listed on Exhibit G;
provided, that the restrictions set forth in this Section 5.1(b)(ii)(2) shall
not apply if, as of the date of such Transfer, (x) a Liquidity Event has
occurred and continues to be occurring as of such date, (y) a majority of the
Board Members appointed by the Preferred Partners (acting without the consent of
any other Board Members) has the right to terminate the Asset Management
Agreement or to remove the Asset Manager in accordance with the terms of the
Asset Management Agreement or (z) on or after the end of the fourth full Fiscal
Quarter following the Effective Date, the occurrence of any three consecutive
Fiscal Quarters in which the sum of the amount of the Quarterly Net Shortfall
for (i) each of the three full Fiscal Quarters immediately preceding such Fiscal
Quarter and (ii) such Fiscal Quarter is, in the aggregate, equal to an amount
that is less than zero ($0), which occurrence has not been cured pursuant to
Section 2.1(b)(i), Section 2.1(b)(ii), Section 2.1(b)(iii) or Section 4.3(c);

 

(3)               is named on an OFAC List, is a prohibited country, territory,
Person, organization, or entity under any economic sanctions program
administered or maintained by OFAC or otherwise is a prohibited party under any
Law of the U.S. federal government, any state government or any political
subdivision thereof;

 

(4)               to the extent the applicable Partnership Interest related to a
Remaining Capital Commitment, is not able to reasonably satisfy the Common
Partners of the ability of the Transferee to fund such Remaining Capital
Commitment; provided, that the Common Partners shall be deemed satisfied if the
Transferee is a “qualified purchaser” as defined in Section 2(a)(51)(A) of the
Investment Company Act;

 

(5)               does not provide such information and documentation as the
General Partner shall reasonably require, including, in the case of a non-US
Transferor, certification that the Transferee has satisfied any obligations
under Section 1446(f) of the Code;

 

(iii)          could constitute a non-exempt prohibited transaction under the
Plan Asset Regulations or could cause any portion of the assets of the
Partnership to be considered Plan Assets or to become subject to the provisions
of ERISA or Similar Law, or could subject the Common Partners to regulation
under ERISA;

 

(iv)          may cause the Partnership to cease to be classified as a
partnership for federal or state income tax purposes;

 

(v)           may cause the Partnership to become a “publicly traded
partnership” as such term is defined in Section 469(k)(2) or Section 7704(b) of
the Code;

 

(vi)          may cause the Partnership to fail to meet the “private placement”
safe harbor or any other safe harbor from treatment as a “publicly traded
partnership” selected by the Common Partners, as described in Treasury
Regulations 1.7704-1(h); or

 

(vii)         may cause the Subsidiary REIT to no longer qualify as a REIT,
would violate Section 5.1(f) or would subject the Subsidiary REIT to any
additional taxes under Section 857 or Section 4981 of the Code;

 

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provided, that if, as a result of any Transfer (in one or in a series of related
transactions) by any of the Common Partners or their Affiliates in accordance
with this Section 5.1(b), the General Partner, CTT Partner, the Asset Manager or
any Affiliate thereof that (directly or indirectly) holds equity interests in
the Partnership undergoes a Change of Control, then a majority of the Board
Members appointed by the Preferred Partners may, by written consent, determine
to remove the General Partner as the general partner hereunder.

 

(c)               Successors to a Partner. If a Partner becomes bankrupt, the
trustee or receiver of the estate shall have all of the rights of such Partner
solely for the purpose of settling the estate and such power as the bankrupt
Partner possessed to Transfer all or any part of the Partnership Interest and to
join with the Transferee thereof in satisfying conditions precedent to such
Transferee becoming a substituted Partner. The Bankruptcy of a Partner in and of
itself shall not dissolve the Partnership or cause any successor to such Partner
to become a substituted Partner.

 

(d)               Recognition of Transfer. The Partnership will not be obligated
to recognize for any purpose any Transfer of any Partnership Interest unless
(i) there shall have been filed with the Partnership a duly executed and
acknowledged counterpart of the instrument making such Transfer signed by both
the Transferring Preferred Partner and the Transferee and such instrument
evidences, inter alia, the written acceptance by the Transferee of all of the
terms and provisions of this Agreement and represents that such Transfer was
made in accordance with all applicable Law (including investment suitability
standards) and (ii) such a Transfer is permitted under this Article 5.
Irrespective of whether or not any successor to a Partner or a purported
Transferee of a Partner’s Partnership Interest hereunder provides the aforesaid
instruments, any such Person shall be bound by the terms and provisions of this
Agreement. As a condition to any voluntary Transfer of a Partnership Interest,
the General Partner may require that the Transferring Preferred Partner or the
Transferee of the Partnership Interest or their respective representatives
provide to the Partnership information that is reasonably requested by counsel
to the Partnership to enable such counsel to determine that such Transfer is not
prohibited by this Article 5.

 

(e)               Continued Obligations. In no event shall a permitted Transfer
be deemed to relieve the Partners who Transfer their Partnership Interests from
their obligations and liabilities under this Agreement, including their
obligations with respect to Capital Contributions (including Remaining Capital
Commitments), except obligations that first arise from and after the date that a
Partner Transfers its Partnership Interests and the permitted Transferee becomes
a substituted Partner in accordance with Section 5.2. Subject to the preceding
sentence, if all or a portion of the Partnership Interests of a Partner is
Transferred in accordance with the terms of this Agreement, the Transferee shall
succeed to the Commitment Percentage of the Transferring Preferred Partner to
the extent it relates to the Transferred Partnership Interests. If all or a
portion of the Partnership Interests of a Partner is Transferred in accordance
with the terms of this Agreement, the Transferee shall succeed to the Percentage
Interest of the Transferring Preferred Partner to the extent it relates to the
Transferred Partnership Interests.

 

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(f)                REIT Protections. In the event of any conflict between this
Section 5.1(f) and any other provision of this Agreement (other than Section
5.8), this Section 5.1(f) shall control.

 

(i)                 Restrictions on Transfer.

 

(1)               Until the Restriction Termination Date, any purported Transfer
that, if effective, would prevent the Subsidiary REIT from meeting any of the
REIT income requirements under Section 856(c) of the Code shall be void ab
initio as to the Transfer of the Partnership Interests that would prevent such
income from so qualifying, and the intended transferee shall acquire no rights
in such Partnership Interests.

 

(2)               Until the Restriction Termination Date, any Transfer that, if
effective, would result in the Subsidiary REIT being “closely held” within the
meaning of Section 856(h) of the Code shall be void ab initio as to the Transfer
of the Partnership Interests which would cause such result, and the intended
transferee shall acquire no rights in such Partnership Interests.

 

(ii)              Excess Interests.

 

(1)               If, notwithstanding the other provisions contained in this
Section 5.1(f), at any time, until the Restriction Termination Date, there is a
purported Transfer or other change in the capital structure of the Partnership
(as a result of a direct or indirect transfer or otherwise) which, if effective,
would cause the Subsidiary REIT to become “closely held” within the meaning of
Section 856(h) of the Code or otherwise fail to qualify as a REIT, then the
Partnership Interests that are the subject of such Transfer or other event which
would cause the Subsidiary REIT to fail such requirement shall constitute
“Excess Interests” and shall be treated as provided in this Section 5.1(f). Such
designation and treatment shall be effective as of the close of business on the
Business Day prior to the date of the purported Transfer or change in capital
structure.

 

(2)               If, at any time prior to the Restriction Termination Date,
notwithstanding the other provisions contained in this Section 5.1(f), there is
an event (a “Prohibited Owner Event”) which would result in the disqualification
of the Subsidiary REIT as a REIT by virtue of Beneficial Ownership or
Constructive Ownership of units of the Subsidiary REIT, then Partnership
Interests which result in such disqualification shall be automatically exchanged
for an equal number of Excess Interests to the extent necessary to avoid such
disqualification. Such exchange shall be effective as of the close of business
on the Business Day prior to the date of the Prohibited Owner Event. In
determining which Partnership Interests are exchanged, Partnership Interests
owned directly or indirectly by any Person who caused the Prohibited Owner Event
to occur (such Person, a “Purported Record Transferee”) shall be exchanged
before any Partnership Interests not so held are exchanged. If similarly
situated Persons exist, such exchange shall be pro rata.

 

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(iii)             Prevention of Transfer. If the Partnership shall at any time
determine in good faith that a Transfer has taken place in violation of Section
5.1(f)(i) or that a Person intends to acquire or has attempted to acquire
beneficial ownership (determined without reference to any rules of attribution)
or Beneficial Ownership of any Partnership Interests in violation of Section
5.1(f)(i), the Partnership shall take such action as it deems advisable to
refuse to give effect to or to prevent such Transfer, including, but not limited
to, refusing to give effect to such Transfer on the books of the Partnership or
instituting proceedings to enjoin such Transfer; provided, however, that any
Transfers or attempted Transfers in violation of Section 5.1(f)(i) shall
automatically result in the designation and treatment described in Section
5.1(f)(ii), irrespective of any action (or non-action) by the Partnership.

 

(iv)             Notice to the Partnership. Any Person who acquires or attempts
to acquire Partnership Interests in violation of Section 5.1(f)(i), or any
Person who is a transferee such that Excess Interests result under Section
5.1(f)(ii), shall immediately give written notice or, in the event of a proposed
or attempted Transfer, shall give at least fifteen (15) days prior written
notice to the Partnership of such event and shall provide to the Partnership
such other information as the Partnership may request in order to determine the
effect, if any, of such Transfer or attempted Transfer on the status of the
Subsidiary REIT as a REIT.

 

(v)              Information for Partnership. Until the Restriction Termination
Date, each Partner hereby covenants that it shall, upon request, provide the
Partnership with all information, certifications, representations and covenants
reasonably requested by the Partnership (x) to ensure or ascertain the
qualification of the Subsidiary REIT as a REIT, (y) to determine the status of
the Subsidiary REIT as a “domestically controlled qualified investment entity”
within the meaning of Section 897(h)(4)(B) of the Code and (z) to determine
compliance with the ownership limits and covenants set forth in this Section
5.1(f).

 

(vi)             Other Action by Partnership. Nothing contained in this Article
5 (other than Section 5.8) shall limit the authority of the Partnership to take
such other action as it deems necessary or advisable to protect the Partnership
and the interests of their respective members by preservation of the Subsidiary
REIT’s status as a REIT.

 

(vii)           Ambiguities. In the case of an ambiguity in the application of
any of the provisions of this Section 5.1(f), including any definitions used
therein, the Board shall have the power to interpret and determine the
application of the provisions of this Section 5.1(f) with respect to any
situation based on the facts known to the Board.

 

(viii)           Trust for Excess Interests. Upon any purported Transfer that
results in Excess Interests pursuant to Section 5.1(f)(ii), such Excess
Interests shall be deemed to have been transferred to the Excess Interests
Trustee, as trustee of the Excess Interests Trust for the exclusive benefit of
the Charitable Beneficiary. Excess Interests so held in trust shall be issued
and outstanding Partnership Interests. The Purported Record Transferee shall
have no rights in such Excess Interests except as provided in Section
5.1(f)(ix).

 

(ix)             Distributions on Excess Interests. Any distributions (whether
as periodic distributions, distributions upon liquidation, dissolution or
winding-up or otherwise) on Excess Interests shall be paid to the Excess
Interests Trust for the benefit of the Charitable Beneficiary. Upon liquidation,
dissolution or winding-up, the Purported Record Transferee shall receive the
lesser of (i) the amount of any distribution made upon liquidation, dissolution
or winding-up or (ii) the price paid by the Purported Record Transferee for the
Membership Interests, or if the Purported Record Transferee did not give value
for the Membership Interests, the Excess Interests Price of the Partnership
Interests on the day of the event causing the Partnership Interests to be held
in trust. Any such distribution paid to the Purported Record Transferee in
excess of the amount provided in the preceding sentence prior to the discovery
by the Partnership that the Partnership Interests with respect to which the
distribution was made had been exchanged for Excess Interests shall be repaid by
the Purported Record Transferee to the Excess Interests Trust for the benefit of
the Charitable Beneficiary.

 

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(x)               Voting of Excess Interests. The Excess Interests Trustee shall
be entitled to vote the Excess Interests for the benefit of the Charitable
Beneficiary on any matter. Subject to Delaware law, any vote taken by a
Purported Record Transferee prior to the discovery by the Partnership that the
Excess Interests were held in trust shall be rescinded ab initio. The owner of
the Excess Interests shall be deemed to have given an irrevocable proxy to the
Excess Interests Trustee to vote the Excess Interests for the benefit of the
Charitable Beneficiary.

 

(xi)              Non-Transferability of Excess Interests. Excess Interests
shall be transferable only as provided in this Section 5.1(f)(xi). At the
direction of the Partnership, the Excess Interests Trustee shall Transfer the
Partnership Interests held in the Excess Interests Trust to a Person whose
ownership of the Partnership Interests will not violate, and for whom such
Transfer would not be wholly or partially void pursuant to Section 5.1(f)(i).
Such Transfer shall be made within sixty (60) calendar days after the latest of
(i) the date of the Transfer which resulted in such Excess Interests and (ii)
the date the Board determines in good faith that a Transfer resulting in Excess
Interests has occurred, if the Partnership does not receive a notice of such
Transfer pursuant to Section 5.1(f)(iv). If such a Transfer is made, the
interest of the Charitable Beneficiary shall terminate and proceeds of the sale
shall be payable to the Purported Record Transferee and to the Charitable
Beneficiary. The Purported Record Transferee shall receive the lesser of the
price paid by the Purported Record Transferee for the Partnership Interests or,
if the Purported Record Transferee did not give value for the Partnership
Interests, the Excess Interests Price of the Partnership Interests on the day of
the event causing the Partnership Interests to be held in trust, and the price
received by the Excess Interests Trust from the sale or other disposition of the
Partnership Interests. Any proceeds in excess of the amount payable to the
Purported Record Transferee shall be paid to the Charitable Beneficiary. It is
expressly understood that the Purported Record Transferee may enforce the
provisions of this Section 5.1(f)(xi) against the Charitable Beneficiary.

 

(xii)            Unenforceability. If any of the foregoing restrictions on
Transfer of Excess Interests is determined to be void, invalid or unenforceable
by any court of competent jurisdiction, then the Purported Record Transferee may
be deemed, at the option of the Partnership, to have acted as an agent of the
Partnership in acquiring such Excess Interests and to hold such Excess Interests
on behalf of the Partnership.

 

(xiii)           Representation. Each of the Partners represents that, as of the
date of its acquisition of a Partnership Interest, no Individual with a direct
or indirect interest in such Partner will Beneficially Own more than 9.8% of the
Partnership and will immediately advise the General Partner if and when such
representation is no longer true. For these purposes, the term “Individual”
means an individual, a trust qualified under Section 401(a) or 501(c)(17) of the
Code, a portion of a trust permanently set aside for or to be used exclusively
for the purposes described in Section 642(c) of the Code, or a private
foundation within the meaning of Section 501(a) of the Code; provided, that
except as set forth in Section 856(h)(3)(A)(ii) of the Code, a trust described
in Section 401(a) of the Code and exempt from tax under Section 501(a) of the
Code shall be excluded from this definition.

 

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Section 5.2.          Admission of Transferees as Substituted Partners.

 

(a)               Requirements for Admission. No Transferee of a Partner’s
Partnership Interest, whether or not such Transfer is permitted under Section
5.1, shall be entitled to become a substituted Partner unless:

 

(i)              The Transferee shall have agreed in writing to be bound by and
shall have accepted, adopted and approved in writing all of the terms and
provisions of this Agreement, as the same may have been amended, and executed a
power of attorney similar to the power of attorney granted in this Agreement;
and

 

(ii)             The Transferee shall pay or obligate itself to pay all
reasonable expenses incurred in connection with his admission as a substituted
Partner.

 

(b)               Effect of Transfer. If a Partner Transfers all of its
Partnership Interest in accordance with the provisions of this Article 5, it
shall cease to be a partner of the Partnership as of the date that such Transfer
is given effect by the Partnership in accordance with the terms of this Article
5. A purported Transfer of a Partnership Interest not in accordance with the
provisions of this Article 5 shall not be given effect for any purpose.

 

(c)               Rights of Transferee. Any Person who is a permitted Transferee
of any of the Partnership Interest of a Partner in accordance with the terms of
this Article 5, but who does not become a substituted Partner shall be entitled
to all the rights of a Transferee of a Partnership interest under the Act,
including the right to receive distributions from the Partnership and the share
of net profits, gain, net losses, loss and any special allocated items
attributable to the Partnership Interest Transferred to such Person, but shall
not be deemed to be the owner of a Partnership Interest for any other purpose
under this Agreement. In the event any such Person desires to make a further
Transfer of any such Partnership Interests, such Person shall be subject to all
the provisions of this Article 5 to the same extent and in the same manner as a
Partner.

 

(d)            Notification of Transfer. If a Partner Transfers or exchanges all
or any portion of its Partnership Interest, it must notify the Partnership of
such Transfer or exchange. Such notification must be in writing and must be
given within fifteen (15) days after the Transfer or exchange. Such notification
must include the names and addresses of the transferor and transferee, the
taxpayer identification numbers of the transferor and the transferee, the date
of the Transfer or exchange and any other information required by the
Partnership.

 

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Section 5.3.          Right of First Offer. If any Partner (the “Offering
Partner”) should desire to Transfer all or a portion of its Partnership Interest
to any Person other than an Affiliate of such Partner as permitted by Section
5.1(b)(x), then the other Partners (the “Offeree Partners”) shall have a right
of first offer as follows:

 

(a)               Offer. The Offering Partner shall submit to the Offeree
Partners a binding written offer (the “Offer”) to sell to the Offeree Partners
the portion of its Partnership Interest proposed to be Transferred (the “Offered
Interest”), which shall be designated by the Initial Liquidation Value thereof
if a Preferred Interest (or, in respect of an Offered Interest other than a
Preferred Interest, Capital Contributions relating thereto). The Offer shall
include the cash price of the Offered Interest and any other terms of the
proposed Transfer. Each Offeree Partner that is a Preferred Partner may provide
a written notice (an “Offer Acceptance Notice”) to the Partnership within
fifteen (15) Business Days after receipt of the Offer, specifying all or a
portion of such Offeree Partner’s pro rata share of the Offered Interest, based
on its Percentage Interest relative to the Percentage Interests of all Offeree
Partners that are Preferred Partners, that such Offeree Partner wishes to
purchase on the terms of the Offer. To the extent that all Offeree Partners that
are Preferred Partners do not elect to purchase their full pro rata share of the
Offered Interest pursuant to the immediately preceding sentence, the remainder
of the Offered Interest will be reoffered within five (5) Business Days to
Offeree Partners that are Preferred Partners who elected to purchase their full
pro rata share, and such Offeree Partners that are Preferred Partners shall have
the right to purchase all or a portion of such remainder (based on the amount of
such remainder that each such Offeree Partner offers to purchase relative to the
other such electing Offeree Partners) within ten (10) Business Days after
receipt of such reoffer. To the extent that the Offeree Partners that are
Preferred Partners do not elect to purchase all of the Offered Interest pursuant
to the preceding sentence, the remainder of the Offered Interest will be
reoffered to Offeree Partners that are not Preferred Partners (and including,
for the avoidance of doubt, the Common Partners) (a “Secondary Reoffer”). Each
Offeree Partner that is not a Preferred Partner may provide an Offer Acceptance
Notice to the Partnership within one (1) day after receipt of the Secondary
Reoffer, specifying all or a portion of such Offeree Partner’s pro rata share of
the Offered Interest, based on its Percentage Interest relative to the
Percentage Interests of all Offeree Partners that are not Preferred Partners,
that such Offeree Partner wishes to purchase on the terms of the Offer. Any
failure to make an election within the relevant time periods set forth herein
shall be deemed to be an election not to purchase any portion of the Offered
Interest under the relevant Offer, reoffer or Secondary Reoffer.

 

(i)                 If the Offeree Partners elect to purchase the entire Offered
Interest pursuant to the Offer Acceptance Notices (including the reoffer
responses, if applicable), then the accepting Offeree Partners shall be required
to purchase the entire Offered Interest in the amounts determined by the process
described above.

 

(ii)               If the Offeree Partners do not elect to purchase the entire
Offered Interest, then, subject to compliance with the other terms of this
Agreement, the Offering Partner shall be free to sell the entire Offered
Interest to any Person at a price equal to or in excess of ninety-five percent
(95%) of the price set forth in the Offer, during a period of one hundred and
eighty (180) days after the date of the Offer; provided, that to the extent that
the Common Partners provided an Offer Acceptance Notice specifying their desire
to purchase a portion, but not all, of the Offered Interest, the Offering
Partner shall use good faith efforts to request that the proposed purchase of
such Offered Interest permit the Common Partners to participate in the purchase
up to the amount of the Offered Interest specified in such Offer Acceptance
Notice; provided, that the Offeree Partner shall have no obligation to allow the
Common Partners to participate in the purchase of the Offered Interest if
(A) the proposed purchaser of the Offered Interest declines to permit the Common
Partners to so participate, or (B) such participation would adversely affect the
terms (including price) of the proposed purchase. Except for Transfers to an
Affiliate of such Partner, any subsequent Transfer by the Offering Partner, or
any Transfer by the Offering Partner after such one hundred and eighty (180)-day
period must comply with this Section 5.3 with a new Offer.

 

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(b)               Closing.

 

(i)                 Closing Date. The closing of the sale of the Offered
Interest to the Offeree Partner(s) pursuant to this Section 5.3 shall be held on
the date designated by the Offering Partner that is no later than sixty (60)
days after the delivery of the Offer. The purchase price shall be paid by wire
transfer of immediately available federal funds. The closing of the sale of the
Offered Interest to the Offeree Partner(s) pursuant to this Section 5.3 shall be
on an “as is” and “where is” basis with no representations or warranties other
than a representation from the Offering Partner that (1) it owns the Offered
Interest being transferred free and clean of all liens, claims or encumbrances,
other than liens that have been approved by the Partners pursuant to this
Agreement, (2) it has full right and authority to sell the Offered Interest and
that the sale has been duly authorized, (3) the assignment document has been
duly authorized, executed and delivered, (4) the consummation of the
transactions contemplated thereby will not violate the terms of any agreement to
which the Offering Partner is a party, or any order, judgment or decree
applicable to the Offering Partner, including this Agreement, and (5) no
consent, approval or authorization of or designation, declaration or filing
with, any governmental authority or other Person is required on the part of the
Offering Partner in connection with the consummation of the transactions
contemplated hereby or, if required, has been obtained.

 

(ii)              Required Documents. Prior to or at the closing of the sale of
the Offered Interest to the Offeree Partner(s) pursuant to this Section 5.3, the
Offering Partner shall supply to the Offeree Partner(s) all documents
customarily required (or reasonably required by the Offeree Partner(s)) to make
a good and sufficient conveyance of the Offered Interest to the Offeree
Partner(s), which documents shall be in form and substance reasonably
satisfactory to the Offeree Partner(s) and the Offering Partner.

 

(iii)            Conditions Precedent to Closing. The obligation of the Offeree
Partner(s) to pay the purchase price in connection with a sale of the Offered
Interest pursuant to this Section 5.3 shall be conditioned upon the Offered
Interest being transferred free and clear of all liens, claims and encumbrances,
other than permitted liens, claims and encumbrances that were waived by the
Offeree Partner(s) and deducted in determining the applicable price of the
Offered Interest and permitted liens, claims and encumbrances securing
indebtedness of the Partnership or its Subsidiaries. This condition is for the
sole benefit of the Offeree Partner(s) and may be waived by the Offeree
Partner(s) in whole or in part in each of their sole discretion.

 

(iv)             Brokerage. No brokerage fees or commissions shall be payable by
the Partnership in connection with any purchase pursuant to this, and each
Partner shall indemnify and hold harmless the Partnership and the other Partners
from and against any such claims made based upon the actions of such Partner,
including any fees and expenses in defending any such claims.

 

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(c)               Termination of Rights and Obligations. Upon the effective date
of any transfer of the Offered Interest pursuant to this Section 5.3, the
Offering Partner’s rights and obligations under this Agreement shall terminate
with respect to such transferred portion of the Offered Interest, except as to
indemnity rights or obligations of such Partner under this Agreement
attributable to acts or events occurring prior to the effective date of such
transfer. For the avoidance of doubt, a purchaser of any Preferred Interest that
is transferred pursuant to this Section 5.3 shall be entitled to all future
distributions made in respect of such Preferred Interest, including those in
excess of the Initial Liquidation Value of such Preferred Interest pursuant to
Section 3.3 and Section 3.5.

 

(d)               Notice Requirements. To the extent the notices delivered
pursuant to this Section 5.3 are sent by e-mail, a confirmatory notice shall be
sent immediately thereafter by overnight courier or first-class mail, postage
prepaid, pursuant to Section 11.1.

 

(e)               Defaults.

 

(i)                 If an Offeree Partner should default in its obligation to
purchase its portion of the Offered Interest it agreed to in an Offer Acceptance
Notice in accordance with this Section 5.3, such defaulting Offeree Partner
shall not be entitled to participate in the right of first offer in respect of
any future Offered Interests offered in accordance with this Section 5.3.

 

(ii)              If the Offering Partner should default in its obligation to
sell all or a portion of the Offered Interest in accordance with this Section
5.3, any other transfer of such Offered Interest shall be null and void and the
Offeree Partner(s) shall be entitled to seek specific performance of the
Offering Partner’s obligations under this Section 5.3, the Partners hereby
acknowledging and agreeing that other remedies at law for breach of the
obligations of the Offering Partner under this Section 5.3 would be inadequate.

 

The rights and remedies provided for in this Section 5.3(e) shall be in addition
to, and not in limitation of, any other rights available to the non-defaulting
participants at law or in equity.

 

Section 5.4.          Tag-Along Right. If (i) any Preferred Partner (the
“Tag-Along Offering Partner”) desires to Transfer all or any portion of its
Preferred Interest to any Person other than an Affiliate of such Partner as
permitted by Section 5.1(b)(x) and (ii) the Offeree Partners that are Preferred
Partners did not accept the Offer to purchase the entire Offered Interest
proposed to be sold by the Tag-Along Offering Partner (as the Offering Partner)
pursuant to Section 5.3, then, if the Tag-Along Offering Partner proposes to
Transfer all or a portion of the Offered Interest (the “Tag-Along Interest”) to
a third party or the Common Partners pursuant to Section 5.3(a)(ii) (a
“Tag-Along Transfer”), then:

 

(a)               Offer; Tag-Along Right. The Tag-Along Offering Partner shall
provide written notice to the other Preferred Partners other than any Offeree
Partners that are purchasing Offered Interests pursuant to Section 5.3 (the
“Tag-Along Notice”) setting forth (i) the material terms and conditions,
including consideration, pursuant to which such Tag-Along Offering Partner
proposes to make such Tag-Along Transfer (the “Tag-Along Terms”) and (ii) the
identity of the third party or the Common Partners (the “Tag-Along Purchaser”)
to whom it proposes to make such Tag-Along Transfer. Subject to Section 5.4(c),
each Preferred Partner other than any Offeree Partners that are purchasing
Offered Interests pursuant to Section 5.3 shall have the right to Transfer to
the proposed transferee its pro rata share of the Tag-Along Interest for the
same form and amount of consideration and on the same terms and conditions as
the Tag-Along Offering Partner (the “Tag-Along Right”).

 

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(b)               Response. Within ten (10) days after delivery of a Tag-Along
Notice, each other Preferred Partner (other than any Offeree Partners that are
purchasing Offered Interests pursuant to Section 5.3) shall give written notice
to the Tag-Along Offering Partner stating whether it wishes to exercise the
Tag-Along Right and to sell its pro rata share of the Tag-Along Interest in the
Tag-Along Transfer on the Tag-Along Terms. Any Preferred Partner electing to
sell its Preferred Interest pursuant to this Section 5.4 (a “Tag-Along Seller”)
(i) shall be bound to sell to the Tag-Along Purchaser on the Tag-Along Terms and
(ii) shall take all actions reasonably necessary to do so, including executing a
contract of sale (which contract shall be no more onerous to the Tag-Along
Seller(s) than the contract of sale executed by the Tag-Along Offering Partner).
Notwithstanding the foregoing, in order to be entitled to exercise its right to
sell its Preferred Interest in the Tag-Along Transfer pursuant to this Section
5.4, each Tag-Along Seller, if requested by the Tag-Along Offering Partner or
the Tag-Along Purchaser, (x) shall agree to the same covenants as the Tag-Along
Offering Partner agrees to in connection with the Tag-Along Transfer to the
extent applicable, (y) shall be obligated to join on a pro rata (but not joint
and several) basis (based on the proceeds received by such Tag-Along Seller
compared with the proceeds received by the Tag-Along Offering Partner and all
Tag-Along Seller(s) in connection with the Tag-Along Transfer) in any
indemnification that the Tag-Along Offering Partner agrees to provide in
connection with the Tag-Along Transfer (other than in connection with
obligations that relate to a particular Partner such as representations and
warranties concerning itself for which each Partner shall agree to be solely
responsible), and (z) shall make such representations and warranties (on a
several, but not joint basis) as the Tag-Along Offering Partner shall make in
connection with the Tag-Along Transfer, except that any representations or
warranties made by the Tag-Along Offering Partner concerning itself and the
Tag-Along Interest to be sold by it in connection with such Transfer shall only
be made by a Tag-Along Seller with respect to itself and its share of such
Tag-Along Interest. Each Tag-Along Seller shall be responsible for funding its
proportionate share of any adjustment in purchase price or escrow arrangements
in connection with the Tag-Along Transfer and for its proportionate share of any
withdrawals from any such escrow, including any such withdrawals that are made
with respect to claims arising out of agreements, covenants, representations,
warranties or other provisions relating to the Tag-Along Transfer.

 

(c)               Closing. The Tag-Along Offering Partner shall be permitted
(but not required) to consummate the Tag-Along Transfer within one hundred and
eighty (180) days following the end of the ten (10)-day period described in
Section 5.4(b) (and the period described in Section 5.3(a)(ii) shall be extended
such that it expires on the same date as the period under this Section 5.4(c)),
but only if the Tag-Along Purchaser(s) acquire the “Allocable Share” of the
Preferred Interest of each Tag-Along Seller in exchange for the Allocable Share
of the total consideration (net of the aggregate expenses incurred by the
Tag-Along Offering Partner in the Tag-Along Transfer) paid by the Tag-Along
Purchasers. The “Allocable Share” of the Tag-Along Offering Partner and each
Tag-Along Seller will equal (i) the Preferred Interests that the Tag-Along
Purchaser(s) are to acquire multiplied by (ii) a fraction, the numerator of
which is its Percentage Interest and the denominator of which is the aggregate
Percentage Interest of the Tag-Along Offering Partner and all Tag-Along Sellers.

 

42

 

 

 

(d)               Notice Requirements. To the extent the notices delivered
pursuant to this Section 5.4 are sent by e-mail, a confirmatory notice shall be
sent immediately thereafter by overnight courier or first-class mail, postage
prepaid, pursuant to Section 11.1.

 

Section 5.5.          Preemptive Rights. The Partnership and its Subsidiaries
shall not issue (an “Issuance”) debt interests (other than the Senior Credit
Debt and other senior Indebtedness that is secured by the assets of and/or the
equity interests of the Partnership) or equity interests in the Partnership or
its Subsidiaries (including the Subsidiary REIT), other than (a) the issuance of
Partnership Interests to the Partners or pursuant to a transfer of Partnership
Interests, in each case, that is permitted pursuant to this Agreement (including
Article 5), (b) the issuance of Subsidiary REIT Units to the Partnership and the
issuance of the Subsidiary REIT Preferred Units, (c) any issuance of ownership
interests in a Subsidiary so long as all of the ownership interests in such
Subsidiary remain directly or indirectly wholly owned (other than the Subsidiary
REIT Preferred Units) by the Partnership following such issuance or (d) the
incurrence of Indebtedness under a credit facility otherwise permitted pursuant
to this Agreement, to any Person with designations, preferences or relative,
economic, participating, optional or other special rights, powers or duties that
are preferential to the Preferred Interests, without offering to the Preferred
Partners the opportunity to purchase any such debt or equity interests. The
General Partner shall notify each Preferred Partner in writing of the proposed
Issuance (the “Issuance Notice”) and grant to each such Preferred Partner the
right (the “Preemptive Rights”) to subscribe for and purchase its pro rata
share, based on the Preferred Partners’ relative Percentage Interests, of the
preferential debt or equity interests to be issued in the proposed Issuance at
the same price and upon the same terms and conditions to be issued in the
proposed Issuance. In order to exercise the preemptive rights granted to it
pursuant to this Section 5.5, a Preferred Partner must deliver notice of its
election to purchase such preferential debt or equity interests to the General
Partner within fifteen (15) Business Days of receipt of the Issuance Notice. A
failure to deliver such notice by a Preferred Partner will constitute a waiver
by such Preferred Partner of its preemptive rights under this Section 5.5 with
respect to the applicable Issuance. To the extent that all of the Preferred
Partners do not elect to exercise their Preemptive Rights pursuant to the
preceding sentences of this Section 5.5, the remainder of the debt or equity
interests subject to the Issuance will be reoffered to the Preferred Partners
who elected to exercise their Preemptive Rights within five (5) days of the
expiration of the period to deliver notice of an election, and such Preferred
Partners shall have the right to purchase all or a portion of such remainder
(based on the amount of such remainder offered relative to the other such
electing Preferred Partners) within ten (10) Business Days after receipt of such
reoffer. For the avoidance of doubt, the Common Partners shall not have
Preemptive Rights in accordance with this Section 5.5.

 

Section 5.6.          Call Right on Preferred Partners.

 

(a)               Notwithstanding anything herein to the contrary (including
Section 4.10, Section 5.3, Section 5.4 and Section 5.5), the Common Partners
shall have the right (but not the obligation) to purchase (or have purchased)
all of the outstanding Preferred Interest (and not a portion thereof), including
rights in future distributions of Remaining Distributable Cash Flow pursuant to
Section 3.5 (each, a “Remaining Interest”) by paying cash (or having paid cash)
to each Preferred Partner in an amount equal to the purchase price of the
applicable Remaining Interest in accordance with this Section 5.6 (the “Common
Partner Call Right”). The Common Partners may exercise the Common Partner Call
Right with respect to the Remaining Interests by delivering written notice
thereof to the Preferred Partners (the “Common Partners Call Notice”), and such
notice shall represent a binding obligation of the Common Partners to purchase
all Remaining Interests of the Preferred Partners; provided, that such right
shall only be available if such Common Partners Call Notice is delivered (x)
prior to the second (2nd) anniversary of the Effective Date or (y) after the
second (2nd) anniversary of the Effective Date if, in the case of this clause
(y), the balance of the Initial Preferred Distribution Balance under the
Subsidiary REIT Agreement is reduced to zero ($0) on or prior to the second
(2nd) anniversary of the Effective Date (including pursuant to Section 5.7
hereof).

 

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(b)               The purchase price in respect of the Remaining Interests of a
Preferred Partner shall be the greater of (i) an amount equal to (A) (1) the
applicable multiple set forth on Schedule 5.6(b) of this Agreement determined as
of the closing of the sale of the Remaining Interests multiplied by (2) the
Initial Liquidation Value of the applicable Preferred Partner’s Preferred
Interests as of the Effective Date, less (B) the aggregate amounts previously
distributed to the Preferred Partner pursuant to Article 3 (including as a
result of the General Partner’s exercise of its rights under Section 5.7 of this
Agreement) and (ii) the Appraised Residual Value. The “Appraised Residual Value”
in respect of a Remaining Interest shall mean the aggregate amount that would be
distributed to the Preferred Partner in respect of its Remaining Interest if the
Property and the other Business Assets were sold at their Appraised Value and
the proceeds therefrom were distributed pursuant to Section 10.4 in a
liquidation of the Partnership (with no reserves or other amounts retained by
the Partnership). If the Common Partner Call Right is exercised, the Common
Partners (on the one hand) and the Preferred Partners holding, in the aggregate,
more than fifty percent (50%) of the Preferred Interests (excluding any
Defaulting Partners) (on the other hand) shall each appoint a Qualified
Appraiser within five (5) calendar days after receipt of the Common Partners
Call Notice and shall require each Qualified Appraiser to perform a valuation of
the Property and other Business Assets of the Partnership and to provide the
gross value thereof in a report furnished to the Partnership and the Preferred
Partners no later than thirty (30) calendar days after such appointment. If the
valuations of the Property and the other Business Assets set forth in the
reports delivered by the Qualified Appraiser designated by the Common Partners
and the Qualified Appraiser designated by the Preferred Partners in accordance
with this Section 5.6(b) differ by an amount that is less than five percent (5)%
of the higher valuation, the average of the two valuations shall be the gross
value of the Property and other Business Assets of the Partnership. If the
valuations differ by an amount equal to five percent (5)% of the higher
valuation or more, then unless the Common Partners and Preferred Partners
holding more than fifty percent (50%) of the Preferred Interests (excluding any
Defaulting Partners) agree to a gross value of the Property and the other
Business Assets, the initial two Qualified Appraisers shall appoint a third
Qualified Appraiser who shall provide its final valuation no later than thirty
(30) calendar days after its appointment. After the third Qualified Appraiser
has completed its final valuation, the gross value of the Property and the other
Business Assets shall be deemed to be equal to the arithmetic average of the two
appraisals that are closest together, which deemed gross value shall be binding
on the Common Partners and the Preferred Partners as the “Appraised Value” of
the Property and other Business Assets for purposes of clause (ii) of this
Section 5.6(b).

 

(c)               Closing Date. The closing of the sale of the Remaining
Interests to the Common Partners (or a Person designated by the Common Partners)
pursuant to this Section 5.6 shall be held on a date designated by the Common
Partners that is no later than ten (10) days after the final determination of
the Appraised Value of the Property and the other Business Assets. The purchase
price shall be paid by wire transfer of immediately available federal funds from
the Common Partners to each applicable Preferred Partner. The closing of the
sale of the Remaining Interests to the Common Partners (or a Person designated
by the Common Partners) pursuant to this Section 5.6 shall be on an “as is” and
“where is” basis with no representations or warranties other than a
representation from the Preferred Partner that (i) it owns the Remaining
Interest being transferred free and clean of all liens, claims or encumbrances,
other than liens that have been approved by the Partners pursuant to this
Agreement, (ii) it has full right and authority to sell the Remaining Interest
and that the sale has been duly authorized, (iii) the assignment document has
been duly authorized, executed and delivered, (iv) the consummation of the
transactions contemplated thereby will not violate the terms of any agreement to
which the Preferred Partner is a party, or any order, judgment or decree
applicable to the Preferred Partner and (v) no consent, approval or
authorization of or designation, declaration or filing with, any governmental
authority or other Person is required on the part of the Preferred Partner in
connection with the consummation of the transactions contemplated hereby or, if
required, has been obtained. In connection with the exercise of the Common
Partner Call Right, (x) the Common Partners may structure the Common Partner
Call Right as a redemption of the Remaining Interest by the Partnership
(including redemption in connection with an equity issuance by the Partnership
or a sale of all or part of the Property or other Real Estate Assets by the
Partnership to generate cash proceeds necessary to consummate the such
transaction; provided, that such redemption or sale results in aggregate
proceeds equal to or greater than the purchase price as determined in accordance
with Section 5.6(b)) and (y) the Common Partners may only take such actions as
are reasonable and necessary on behalf of the Partnership to consummate such
transaction.

 

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(d)               Termination of Rights and Obligations. Upon the effective date
of any purchase of the Remaining Interest pursuant to this Section 5.6, the
Preferred Partner’s rights and obligations under this Agreement shall terminate,
except as to indemnity rights or obligations of such Preferred Partner under
this Agreement attributable to acts or events occurring prior to the effective
date of such transfer.

 

Section 5.7.          Permitted Financing Transaction. Notwithstanding anything
herein to the contrary (including Section 3.6, Section 4.10 (and including
obtaining waivers or consents under Indebtedness Documents), Section 5.3,
Section 5.4 and Section 5.5), but subject to any consent (if any) required under
the Senior Credit Documents, so long as no Alternative Voting System is in
place, CTT Partner, in its sole and absolute discretion, may engage (but shall
not be obligated to engage) in a transaction or a number of related transactions
from time to time on the terms and subject to the conditions set forth in
Schedule 5.7 (a “Permitted Financing Transaction”) in which the entire net
proceeds of such Permitted Financing Transaction are used to make distributions
until the balance of each Initial Preferred Distribution Balance under the
Subsidiary REIT Agreement is reduced to zero on a Distribution Date occurring on
or prior to the third anniversary of the Effective Date. In connection with the
consummation of a Permitted Financing Transaction, the General Partner may only
take such actions as are reasonable and necessary on behalf of the Partnership
to consummate such transaction.

 

Section 5.8.          Pledging of Partnership Interests.

 

(a)               Notwithstanding anything contained in this Agreement to the
contrary (including anything in this Article 5), the Common Partners and their
Affiliates shall be permitted to pledge, hypothecate or otherwise assign as
collateral any or all of its direct and indirect Partnership Interests
(collectively, the “Pledged Collateral”), no matter how characterized, in the
Partnership, including, all economic control (including, voting and management),
and status rights, privileges and powers as a Partner, all other rights,
privileges and powers vested in the Common Partners and their Affiliates under
this Agreement and all rights, privileges and powers with regard to the
Partnership Interests of the Common Partners or their Affiliates, other equity
interests in the Partnership of the Common Partners and their Affiliates and all
certificates evidencing or documenting the same, to any lender to the Common
Partners or their Affiliates or any agent acting on such lender’s behalf, and
any transfer of such Pledged Collateral pursuant to any such lender’s (or
agent’s) exercise of remedies in connection with any such pledge, hypothecation
or other assignment as collateral shall be permitted under this Agreement with
no further action or approval required hereunder.

 

(b)               Notwithstanding anything contained in this Agreement to the
contrary (including anything in this Article 5), upon a default under financing
giving rise to any pledge, hypothecation or other assignment as collateral of
the Pledged Collateral:

 

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(i)                any lender (or agent) thereunder, shall have the right, as
set forth in the applicable credit agreement, pledge, hypothecation or other
collateral or security agreement, and without further approval of the
Partnership or any other equity holder of the Partnership and without becoming a
shareholder, member or partner of the Partnership, as applicable, to exercise
the Common Partners’ and their Affiliates’ voting and other consensual rights,
as well as any other rights, privileges and powers vested in the Common Partners
and their Affiliates under this Agreement; provided, that no lender (or agent)
thereunder shall be entitled, without the consent of a majority of the Preferred
Interests, to become the general partner hereunder; provided, further, that with
respect to any Partnership Interests of the General Partner, the foregoing shall
not limit the rights of the Board Members appointed by the Preferred Partners to
remove such General Partner pursuant to Section 4.13(a); and

 

(ii)              without complying with any other procedures set forth in this
Agreement, upon the exercise of remedies in connection with the applicable
pledge, hypothecation or other assignment as collateral in the form of a sale or
other disposition or other Transfer of the Pledged Collateral, (x) the purchaser
or other transferee shall become a shareholder, member or partner (as
applicable) under this Agreement and shall succeed to all of the Pledged
Collateral and shall be bound by all of the obligations, of a member,
shareholder or partner (as applicable) under this Agreement without taking any
further action on the part of such transferee or any other Person, and (y)
following such exercise of remedies, the Common Partners or their Affiliates (as
the pledging equity holder) shall cease to be a shareholder, member or partner
(as applicable) and shall have no further right, privileges or powers under this
Agreement.

 

(iii)            The approval of this Agreement by the Partners shall constitute
any necessary approval under the Act to the foregoing provisions of this Section
5.8. This Section 5.8 may not be amended or otherwise modified so long as the
Common Partners’ or their Affiliates’ (or any other equity holder of the
Partnership’s) interests in the Partnership are subject to a pledge,
hypothecation or other assignment as collateral to any lender to the Common
Partners or their Affiliates or any agent acting on such lender’s behalf without
the prior written consent of any such lender or agent (or the transferee of any
such lender or agent). Each recipient of a pledge, hypothecation or other
assignment as collateral of all or any portion of the Common Partners’ (or their
Affiliates’) Pledged Collateral shall be a third-party beneficiary of the
provisions of this Section 5.8.

 

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(c)               The Partnership agrees that in respect of any Indebtedness of
the Partnership, it will not assign absolutely to a credit party its right to
call Remaining Capital Commitments of a Preferred Partner in such a manner that
would result in such credit party becoming the beneficial owner of the Preferred
Partner’s obligation to fund Remaining Capital Commitments.

 

Section 5.9.          Permitted Recapitalization Transactions. Notwithstanding
anything herein to the contrary (including Section 3.6, Section 4.10 (and
including obtaining waivers or consents under Indebtedness Documents), Section
5.3, Section 5.4 Section 5.5 and Section 12.2), but subject to any consent (if
any) required under the Senior Credit Documents, CTT Partner may cause the
Partnership to consummate (or agree to consummate) one or more Permitted
Financing Transactions between the Amendment Effective Date and April 1, 2021
(or such earlier date as the Common Partners and the Preferred Partners may
mutually agree in writing) (such period, the “Permitted Recapitalization
Period”) that aggregate to total proceeds of [***] or more and that comply in
all respects with the provisions of Schedule 5.7 hereof (a “Permitted
Recapitalization Transaction”). For the avoidance of doubt, the entire net
proceeds of each such Permitted Recapitalization Transaction will be distributed
in accordance with Article 3 hereof. In connection with the consummation of a
Permitted Recapitalization Transaction, the General Partner may only take such
actions as are reasonable and necessary on behalf of the Partnership to
consummate such transaction.

 

Article 6

RIGHTS AND DUTIES OF PARTNERS

 

Section 6.1.          Relationship of Partners. Each Partner agrees that, to the
fullest extent permitted by the Act and except to the extent expressly stated in
this Agreement:

 

(a)               No Partner shall have any fiduciary or other implied duty,
responsibility or obligation to the Partnership or any other Partner except as
otherwise expressly set forth herein.

 

(b)               Notwithstanding any provision of this Agreement to the
contrary (other than Section 4.2(b)), whenever in this Agreement (x) the consent
or approval or any other action of or by any Partner, or any Board Member, is
required for the taking of any action by or on behalf of the Partnership or by
any other Partner and (y) the terms of this Agreement do not explicitly require
that such consent not unreasonably be withheld, such Partner (except the General
Partner), or any such Board Member, (1) shall, in determining whether to grant
such consent or approval or take such action, be entitled to consider any
interests and factors it desires, including its own views, self-interest,
objectives and concerns, (2) shall, to the fullest extent permitted by Law, have
no duty or obligation to give any consideration to any interest of or factor
affecting the Partnership, any Partner or any other Person and (3) may grant or
withhold such consent or approval or take or fail to take such action, in each
case, in its sole discretion. It is further acknowledged that the Partners may
require certain internal approvals in connection with some or all of such
matters. Additionally, except as specifically provided in this Agreement and to
the extent allowed by the Act, notwithstanding anything to the contrary
contained in the Act, no Partner (except the General Partner) or any Board
Member shall have any other obligation or duty to the Partners or any duty
either to grant or to withhold any such consent or approval or take or fail to
take any such action, and no Partner shall have any claims (whether relating to
the fact of such approval or consent being granted or withheld, or such action
being or not being taken, or relating to the consequences thereof) by reason of
any Partner or any Board Member having failed to consent to or approve any
matter that it has the right to consent to or approve, or having taken or failed
to take any action that it has the right to take (except for claims against the
General Partner for breach of its obligations and duties under this Agreement).

 

Section 6.2.          Limitation of Authority. No Partner shall have authority
to bind or act for the Partnership or to incur or assume any obligation on
behalf of the Partnership or to act as the agent, representative or
attorney-in-fact for the Partnership, except to the extent expressly provided in
this Agreement. Except to the extent specifically provided in this Agreement,
this Agreement shall not give any Partner the authority to bind or act for any
other Partner or to incur or assume any obligation on behalf of any other
Partner or to act as the agent, representative or attorney-in-fact for any other
Partner. Except to the extent set forth in this Agreement or the Act, a Partner
shall not participate in the management or control of the Partnership’s
business.

 

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Section 6.3.          Other Activities. Except as specifically provided in this
Agreement, this Agreement shall not be construed in any manner to preclude the
Partners or their respective Affiliates from engaging in any activity whatsoever
permitted by applicable Law. Without limiting the foregoing, except as
specifically provided in this Agreement, the Partnership and each of the
Partners renounces any interest or expectancy of the Partnership and its
Subsidiaries in, or in being offered an opportunity to participate in, business
opportunities, that are from time to time presented to the Partners, their
Affiliates and their Constituent Partners (other than the Partnership and its
Subsidiaries), even if the opportunity is one that the Partnership or its
Subsidiaries might reasonably be deemed to have pursued or had the ability or
desire to pursue if granted the opportunity to do so, and no such person shall
be liable to the Partnership or any of its Subsidiaries for breach of any
fiduciary or other duty, as a Partner, director or officer or otherwise, by
reason of the fact that such person pursues or acquires such business
opportunity, directs such business opportunity to another person or fails to
present such business opportunity, or information regarding such business
opportunity, to the Partnership or its Subsidiaries.

 

(a)               The Common Partners shall provide notice to the other Partners
promptly following any acquisition of timberland assets by the Common Partners
or its Affiliates that are located within 75 road miles of a Specified Delivery
Point or any disposition of timberland assets that are located within 75 road
miles of a Specified Delivery Point (each timberland asset owned as of the
Effective Date or purchased thereafter by the Common Partners or their
Affiliates within such 75 road mile distance of Specified Delivery Points, a
“Qualified Common Partner Property”).

 

(b)               The Common Partners shall promptly provide to the other
Partners the following quarterly weighted average pricing information regarding
each Qualified Common Partner Property for the following products sold (measured
by revenue over the immediately preceding twelve (12) months): Pine Pulpwood,
Pine Chip and Saw, Pine Sawtimber, Hardwood Pulpwood and Hardwood Sawtimber,
unless, in the opinion of third-party legal counsel, the provision of such
information would be restricted by applicable law (including any Antitrust Laws,
if applicable); provided, that Common Partners may aggregate such information so
that individual customer information is not disclosed. The Common Partners shall
be available to discuss with the other Partners the Qualified Common Partner
Properties and any of the information described above.

 

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Section 6.4.          Confidentiality.

 

(a)               Each Partner agrees to, and cause its designated Board Members
to, keep confidential, and not to make use of (other than for purposes
reasonably related to its interest in the Partnership or for purposes of filing
such Partner’s tax returns or for other routine matters required by law) or
disclose to any Person (other than disclosure to the officers, directors,
employees, advisors, representatives, lenders, sellers, investors, prospective
investors, prospective Transferees or attorneys of the Partner and its
Affiliates or the Partner’s shareholders and agents, and to the officers,
directors, employees, advisors and representatives of its shareholders and
agents), any information or matter received from or relating to the Partnership
and its Subsidiaries, the Partners and Affiliates of the Partners, and their
respective affairs and any information or matter related to the Property or
other Business Assets; provided, that a Partner may disclose any such
information to the extent that (A) such information is or becomes generally
available to the public through no act or omission of such Partner, (B) such
information otherwise is or becomes known to such Partner other than by
disclosure by the Partnership or the Partners or one of their Affiliates;
provided, that the source of such information is not bound by a confidentiality
agreement or other contractual, legal or fiduciary obligation of
confidentiality, or (C) such Partner is required by law to disclose such
information (or as may be required in connection with an examination or audit of
a Partner by any governmental agency or regulatory body having regulatory
jurisdiction over such Partner) and complies with the provisions of Section
6.4(b). Notwithstanding the foregoing, Partners (and each employee, agent or
representative of any Partner) may disclose to any and all Persons, of any kind,
the tax treatment and tax structure of an investment in the Partnership and its
Subsidiaries and all materials of any kind (including opinions or other tax
analyses) that are provided to such Partner relating to such tax treatment or
tax structure except to the extent maintaining such confidentiality is necessary
to comply with any applicable U.S. federal or state securities laws.
Notwithstanding the foregoing, the Partners and the Partnership may disclose to
financing sources to such Partners or the Partnership and its Subsidiaries, as
appropriate, such information and material as may be reasonably requested by
such financing sources; provided, that such financing sources agree to keep such
information and material confidential and not to make use of (other than for
purposes reasonably related to their financing of such Partner, the Partnership
or its Subsidiaries (including any exercise of remedies or in any related legal
proceeding) for other routine matters required by law or, with respect to the
Senior Lender, as permitted by the Senior Credit Documents) or disclose to any
Person (other than disclosure to the officers, directors, employees, advisors,
representatives or attorneys of such financing source) such information and
material. The foregoing language is not intended to waive any confidentiality
obligations otherwise applicable under this Agreement except with respect to the
information and materials specifically referenced in the preceding sentence.
Upon designating an individual to the Board, each Partner will cause its
designee to execute an acknowledgement of such Board member’s confidentiality
obligations set forth in this Section 6.4.

 

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(b)               To the extent that a Partner (or an Affiliate thereof or
applicable Board Member designated thereby) is requested or required (by oral
question or request for information or documents in legal proceedings,
regulatory filings, interrogatories, subpoena, civil investigative demand or
similar process) to disclose information subject to the confidentiality
provisions of this Section 6.4 relating to the Partnership, its Subsidiaries
and/or the Property or other Business Assets, such Partner hereby agrees that
such Partner (i) shall give prompt notice of such fact to the other Partners so
that such other Partners may, if one or more such Partners desire, seek a
protective order or other governmental or judicial relief to prevent disclosure
of such information; (ii) shall, to the extent practicable, use commercially
reasonable efforts to assist the other Partners in taking steps to oppose and
prevent the requested disclosure to the extent available under applicable Law;
and (iii) agrees to use commercially reasonable efforts to obtain assurance that
confidential treatment will be accorded the information so disclosed to the
extent available under applicable Law. Notwithstanding the foregoing, nothing in
this Section 6.4(b) shall require BCI Partners to participate directly in any
legal proceedings to oppose requested disclosure.

 

(c)               Any obligation of a Partner pursuant to this Section 6.4 may
be waived by the Board as a Major Decision.

 

Section 6.5.          Limitation of Liability of Partners and Affiliates. Except
as provided by the Act or other applicable Law and subject to the obligations to
make Capital Contributions and to indemnify the Partnership and the other
Partners as provided in Article 7 and as otherwise required by this Agreement or
by applicable Law, no Partner shall have any personal liability whatsoever in
its capacity as a Partner, whether to the Partnership, to any of the Partners or
to the creditors of the Partnership, for the debts, liabilities, contracts or
other obligations of the Partnership (whether arising in contract, tort or
otherwise) or for any of the Partnership’s losses.

 

Section 6.6.          ERISA Status. Each Partner represents and warrants that
such Partner is not, and notwithstanding anything to the contrary in this
Agreement, such Partner shall not at any point in the future be, a “benefit plan
investor” as defined under Section 3(42) of ERISA or regulations promulgated by
the U.S. Department of Labor thereunder, at 29 C.F.R. Section 2510.3-101, or
otherwise.

 

Article 7

LIABILITY; INDEMNIFICATION

 

Section 7.1.          Liability of the Indemnified Parties.

 

(a)               Duty of the General Partner. The General Partner shall act
(i) in good faith and (ii) with the level of skill, care, attention and
diligence which would reasonably be expected of an experienced, prudent and
professional manager performing in a similar capacity in relation to a portfolio
of properties and entities of a similar size, purpose and nature as the Property
and the Partnership and its Subsidiaries located in the United States. The
officers, directors and employees of the General Partner and its Affiliates
shall devote such time, effort and skill as may be reasonably necessary for the
conduct of the Partnership’s business.

 

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(b)               General. Other than any indemnification obligations pursuant
to Section 5.3(b)(iv), no Indemnified Party shall be liable to the Partnership
or to any Partner for any act or omission, including any mistake of fact or
error in judgment, taken, suffered or made by such Indemnified Party; provided,
that such act or omission did not constitute a Bad Act. No Partner shall be
liable to the Partnership or any Partner for any action taken by any other
Partner. Notwithstanding anything herein to the contrary, the provisions of this
Agreement, to the extent that they expressly restrict the duties (including
fiduciary duties) and liabilities of an Indemnified Party otherwise existing at
law or in equity, are agreed by the Partners to replace such other duties and
liabilities of such Indemnified Party.

 

(c)               Reliance. Other than any indemnification obligations pursuant
to Section 5.3(b)(iv), an Indemnified Party shall incur no liability in acting
in good faith upon any signature, certificate or writing believed by such
Indemnified Party to be genuine. Each Indemnified Party may act directly or
through such Indemnified Party’s agents or attorneys. Each Indemnified Party may
consult with counsel, appraisers, engineers, foresters, accountants and other
skilled Persons selected by such Indemnified Party, and, other than any
indemnification obligations pursuant to Section 5.3(b)(iv), shall not be liable
for anything done, suffered or omitted in good faith in reliance upon the advice
of any of such Persons; provided, that such Persons were selected and monitored
in good faith. Other than any indemnification obligations pursuant to Section
5.3(b)(iv), no Indemnified Party shall be liable to the Partnership or any
Partner for any error in judgment made in good faith by a Constituent Partner or
employee of such Indemnified Party; provided, that such error does not
constitute a Bad Act.

 

(d)               Indemnification by the General Partner. Notwithstanding the
foregoing, to the fullest extent permitted by applicable Law, the General
Partner shall and does hereby agree to indemnify and hold harmless and pay all
judgments and claims against the Partnership, any of its Subsidiaries and the
Indemnified Parties, each of which shall be a third-party beneficiary of this
Agreement solely for purposes of this Article 7, from and against any Loss
incurred by them as a result of any act or omission of the General Partner that
constitutes a Bad Act.

 

Section 7.2.          Indemnification by the Partnership.

 

(a)               To the fullest extent permitted by applicable Law, the
Partnership shall and does hereby agree to indemnify and hold harmless and pay
all judgments and claims against any Indemnified Party, each of which shall be a
third-party beneficiary of this Agreement solely for purposes of this Article 7,
from and against any Loss incurred by them for any act or omission taken or
suffered by each Indemnified Party (including any act or omission performed or
omitted by any of them in good faith reliance upon and in accordance with the
opinion or advice of experts, including of legal counsel as to matters of law,
of accountants as to matters of accounting, or of investment bankers or
appraisers as to matters of valuation; provided, that such Persons were selected
and monitored with reasonable care) in connection with the Partnership business,
except that there shall be no indemnification for (i) any act or omission of
that Indemnified Party that constitutes a Bad Act or (ii) any indemnification
obligation of the Indemnified Party pursuant to Section 5.3(b)(iv) or the Losses
related thereto.

 

(b)               Prior to any Indemnified Party seeking indemnification from
the Partnership pursuant to Section 7.2(a) hereof, such Indemnified Party shall
seek payment, to the extent readily available, under any insurance policy of the
Partnership or its Subsidiaries (or which provides coverage to the Partnership
and/or its Subsidiaries), and the General Partner shall reasonably cooperate
with any such Indemnified Party in seeking such payment.

 

(c)               To the extent that a Partner provides indemnification to any
Indemnified Party affiliated with such Partner with respect to any Loss for
which such Indemnified Party otherwise would be entitled to indemnification from
the Partnership pursuant to Section 7.2(a), such Partner shall be entitled to
indemnification from the Partnership for such Losses of such Indemnified Party
as required hereunder.

 

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(d)               Except as otherwise provided herein, the satisfaction of any
indemnification obligation pursuant to Section 7.2(a) or Section 7.2(c) hereof
shall be from and limited to the Partnership’s assets. No Partner shall have any
personal liability on account of the Partnership’s indemnification obligations
pursuant to Section 7.2(a) or Section 7.2(c).

 

(e)               If an Indemnified Party seeks indemnification from the
Partnership pursuant to Section 7.2(a) or Section 7.2(c), it shall provide
Notice thereof to the Partnership and shall present to the Partnership any
proposed settlement arrangement giving rise to the indemnification obligation
under Section 7.2(a) or Section 7.2(c) for the prior written consent of the
Board as a Major Decision. The Partnership shall not be liable to indemnify an
Indemnified Party for any Loss arising from any such settlement arrangement
effected without such prior written consent. If the General Partner receives any
Notice from an Indemnified Party under this Section 7.2(e), the General Partner
will promptly deliver a copy of such Notice to the Board.

 

(f)                Expenses reasonably incurred by an Indemnified Party in
defense or settlement of any claim that may be subject to a right of
indemnification pursuant to Section 7.2(a) or Section 7.2(c) shall be advanced
by the Partnership prior to the final disposition thereof upon receipt of an
undertaking by or on behalf of such Indemnified Party to repay such amount to
the extent that it shall be determined upon final decision, judgment or order
(whether or not subject to appeal) that such Indemnified Party is not entitled
to be indemnified hereunder. Notwithstanding anything to the contrary in this
Section 7.2(f), the Partnership shall not advance expenses to an Indemnified
Party (i) in connection with any action brought by the Partnership to enforce
the obligations of a Partner under this Agreement, or in the case of the General
Partner, under the Asset Management Agreement or any other Related Party
Agreement or (ii) with respect to a proceeding initiated or brought voluntarily
by or on behalf of such Indemnified Party and not by way of defense, except with
respect to a proceeding brought to establish or enforce a right to
indemnification under this Agreement. No indemnification shall be given for
expenses in connection with a proceeding brought by the Partnership to the
extent the Indemnified Party is found liable on any portion of the claims in
such proceeding. The indemnification of any Indemnified Party in respect of its
performance of services for the Partnership or any Subsidiary pursuant to
property management agreements, leasing agreements or other agreements,
including the Asset Management Agreement, shall not permit duplicate recovery by
any such Indemnified Party under such agreement(s) and this Agreement.

 

(g)               If a claim for indemnification or payment of reasonable
expenses hereunder is not paid in full within twenty (20) days after a Notice of
claim therefor has been received by the Partnership, the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expenses of prosecuting such claim.

 

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(h)               The indemnification provided by this Article 7 shall be in
addition to any other rights to which an Indemnified Party may be entitled under
any agreement, pursuant to any action of the Partnership, as a matter of Law or
otherwise, and shall continue as to an Indemnified Party who has ceased to serve
in such capacity.

 

(i)                 An Indemnified Party shall not be denied indemnification in
whole or in part under this Article 7 because the Indemnified Party had an
interest in the transaction with respect to which the indemnification applies,
so long as such transaction did not constitute a Bad Act and was otherwise
permitted, or not restricted, by the terms of this Agreement.

 

(j)                 Any repeal, modification or amendment of any provision of
this Article 7 shall not adversely affect any right or protection of any Person
existing at the time of such repeal, modification or amendment. The
indemnification obligations of the Partnership pursuant to this Article 7 shall
survive termination, liquidation, dissolution and winding up of the Partnership,
and, for purposes of this Article 7, the Partnership shall be treated as
continuing in existence.

 

(k)               The Partnership shall have the power to purchase and maintain
insurance or other financial arrangements on behalf of any Indemnified Party or
any other Person who is or was an agent of the Partnership against any liability
asserted against such Person and incurred by such Person in any such capacity,
or arising out of such Person’s status, as applicable, as an Indemnified Party
or an agent, whether or not the Partnership would have the power to indemnify
such Person against such liability under the provisions of this Article 7 or the
Act.

 

Article 8

 

FINANCIAL AND ACCOUNTING MATTERS

 

Section 8.1.          Books and Records. Proper and complete records and books
of account of the business of the Partnership, including a list of the names,
addresses and interests of all Partners, shall be maintained at the
Partnership’s principal place of business. Except as otherwise expressly
provided herein, such records and books of account shall be maintained on a
basis that allows the proper preparation of the Partnership’s financial
statements and tax returns and shall be kept in United States dollars. Any
Partner, or its duly authorized representatives, shall be entitled, for any
purpose reasonably related to its interest as a Partner of the Partnership, and
subject to Section 6.4, to a copy of the list of names, addresses and interests
of the Partners. Each Partner may, for any reason reasonably related to its
interest as a Partner, examine the books of account, records, reports and other
papers relating to the Partnership and its Subsidiaries not legally required to
be kept confidential or secret, make copies and extracts therefrom at its own
expense and discuss the affairs, finances and accounts of the Partnership and
its Subsidiaries with the General Partner and the independent public accountants
of the Partnership (and by this provision the Partnership authorizes said
accountants to discuss with each Partner the finances, accounts and affairs of
the Partnership and its Subsidiaries), all during regular business hours. The
General Partner shall maintain the records of the Partnership and its
Subsidiaries for six (6) years following termination of the Partnership.

 

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Section 8.2.          Audit and Reporting.

 

(a)               The General Partner shall prepare and deliver, or cause to be
prepared and delivered, to each Partner within forty-five (45) days after the
end of each Fiscal Year, a report as of the end of such Fiscal Year prepared in
conformity with accounting principles generally accepted in the United States
and consistently applied, setting forth (i) a balance sheet of the Partnership
(that will include appropriate footnote disclosure) as of the end of such Fiscal
Year, (ii) an income statement for such Fiscal Year and (iii) statements of
changes in Partners’ capital and changes in financial position. The annual
financial statements referred to in this Section 8.2(a) shall be audited by a
nationally recognized accounting firm in accordance with generally accepted
auditing standards in the United States and consistently applied, and such
accounting firm’s report thereon shall accompany the annual financial statements
delivered to each Partner; provided, that the General Partner shall endeavor to
provide such audited financial statements within the period stated above, but
will not be considered to have breached this Section 8.2(a) if it fails to do
so; provided, that the General Partner (A) is diligently working to produce
audited financial statements within such timeframe or as promptly thereafter as
practicable, (B) provides unaudited financial statements within such forty-five
(45)-day period and (C) provides such audited financial statements as soon as
practicable following such date but in any event no later than ninety (90) days
after the end of such Fiscal Year.

 

(b)               After the end of each Fiscal Year, the General Partner shall
prepare and deliver, or cause to be prepared and delivered, within forty-five
(45) days of the close of such Fiscal Year, a report setting forth in sufficient
detail such transactions effected by the Partnership during such Fiscal Year as
shall enable each Partner to prepare its U.S. federal income tax return and
shall mail such report to (i) each Partner and (ii) each former Partner (or its
successor or legal representative) who may require such information in preparing
its U.S. federal income tax return.

 

(c)               The General Partner shall prepare and deliver, or cause to be
prepared and delivered, to the Partners final versions of the following not
later than forty-five (45) days after the end of each of the first three Fiscal
Quarters of each Fiscal Year:

 

(i)               An unaudited report setting forth as of the end of such fiscal
quarter (i) a balance sheet of the Partnership as of the end of such Fiscal
Quarter and (ii) an income statement for such Fiscal Quarter;

 

(ii)              A calculation of the reserves of the Partnership and the
amount of (x) Base Available Cash, Net Available Cash and Distributable Cash
Flow (as each such term is defined in the Subsidiary REIT Agreement) and (y)
Remaining Distributable Cash Flow;

 

(iii)            A narrative describing the condition of the Property and other
Business Assets and operations of the Partnership and its Subsidiaries during
such Fiscal Quarter;

 

(iv)            A report of any changes in the status of any major service
contracts, any material line item variances from the Annual Budget and any
litigation or other legal issues involving the Partnership or its Subsidiaries
during such Fiscal Quarter; and

 

(v)              A report providing a detailed description of each Permitted HBU
Sale consummated during such Fiscal Quarter.

 

The General Partner shall meet with the Partners on a quarterly basis to discuss
the quarterly reporting and such other topics relating to the business of the
Partnership and its Subsidiaries as the Partners may reasonably request.

 

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(d)               Not later than fifteen (15) Business Days after the end of
each calendar month, the General Partner shall prepare and deliver, or cause to
be prepared and delivered, to the Partners a “flash report” containing the
following: (i) a reconciliation of actual operating results of the Partnership
against the Annual Budget for the most recent calendar month and for the entire
Fiscal Year through the end of the relevant calendar month; (ii) a report of any
changes in the status of any major service contracts, any material line item
variances from the Annual Budget and any litigation or other legal issues
involving the Partnership or its Subsidiaries during the calendar month; and
(iii) a report of the recordable incident rate for employees, agents and
contractors for the prior calendar month.

 

(e)               Promptly following the end of each Fiscal Quarter, but in any
event no later than forty-five (45) days following the end of each Fiscal
Quarter, the General Partner shall provide to the other Partners a report
containing the component amounts described in each clause of the definition of
Unlevered Cash Flow, along with supporting information. The General Partner
shall provide to the other Partners such other information as is reasonably
requested by a Partner in respect of the foregoing report and the calculation of
components set forth therein.

 

(f)                In addition to the reporting requirements set forth above,
the General Partner shall give notice to the Partners of: (i) any items that
will otherwise be reportable under Section 8.2(c)(iv) promptly after the General
Partner becomes aware of the change, anticipated material variance or litigation
or other legal issue, as applicable; (ii) any known or reported non-conformance
with applicable state and local regulations and Sustainable Forestry Initiative
standards or principles as in effect on the Effective Date and as modified from
time to time by Sustainable Forestry Initiative Inc.; and (iii) any proposed
transaction between the Partnership or its Subsidiaries, on one hand, and any
other Person if such transaction would create a potential conflict of interest
on the part of the General Partner in causing the Partnership (or such
Subsidiaries) to enter into such transaction, or any other occurrence in east
Texas or west Louisiana that would reasonably be expected to give rise to a
conflict of interest on the part of the General Partner or its Affiliates in
connection with the management and operation of the business and affairs of the
Partnership and its Subsidiaries.

 

(g)               The General Partner shall provide the Partners information
regarding stand-level activity for the Property and any other Real Estate Asset
that includes site preparation and treatment, planting method, stock type,
planting density, thinning plan, volume removals by product class, and a
detailed inventory plan, and shall include the Partners having access to
Geographic Information Systems (GIS) data for the Property and any other Real
Estate Asset. The General Partner shall prepare, or cause to be prepared, at the
Partnership’s expense, such additional financial reports and other information
as the Partners may reasonably determine are appropriate. Additionally, each
Partner shall be entitled to the same information as may be provided to the
other Partners and to any provider of indebtedness to the Partnership or its
Subsidiaries.

 

(h)              Promptly following the Closing, the General Partner will
develop (or cause to be developed), and submit to the Board and Subsidiary REIT
Board for approval, the following operational policies: (i) a comprehensive
compliance program with respect to workplace environmental, health and safety,
including policies and procedures to be distributed to employees, agents and
contractors regarding workplace environmental, health and safety, (ii) a
comprehensive program to be used by the General Partner to track, report and
manage workplace environmental, health and safety matters, and (iii) a timeline
for the Sustainable Forestry Initiative audits and recertification, as
appropriate.

 

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(i)                Notwithstanding anything herein to the contrary, in the event
that the Asset Management Agreement is terminated pursuant to Section 12,
Section 13(c) or Section 13(d) thereof, the General Partner shall cease to have
any obligations under this Section 8.2.

 

Section 8.3.           Valuations.

 

(a)               The Fair Value of the Property and other Business Assets of
the Partnership and its Subsidiaries shall be determined in accordance with this
Section 8.3 (the “Valuation Policy”).

 

(b)               The Partnership will obtain third-party valuations of each
Real Estate Asset from an independent appraisal firm chosen by the General
Partner from those listed on Schedule 8.3(b) attached hereto as of September 30
of each calendar year and shall deliver such valuations to the Partners not
later than forty-five (45) days after such date each calendar year. The
Partnership will obtain third-party valuations of each of (i) the Partnership,
(ii) the Business Assets and (iii) the Partnership Interests of each Partner
from an independent appraisal firm chosen by the Board as a Major Decision as of
December 31 of each calendar year and shall deliver such valuations to the
Partners not later than sixty (60) days after the end of such calendar year.

 

(c)               The Fair Value of any asset other than the Real Estate Assets
shall be determined by the General Partner taking into account factors that it
determines to be appropriate in good faith under the circumstances (it being
understood that such determination of Fair Value should comply with United
States generally accepted accounting principles, as in effect from time to
time).

 

(d)               Unless otherwise determined by the General Partner, for
purposes of determining the Fair Value of any asset, including any Real Estate
Asset, the value of any Indebtedness shall be equal to its principal outstanding
amount plus any accrued interest.

 

(e)               Notwithstanding anything herein to the contrary, in the event
that the Asset Management Agreement is terminated pursuant to Section 12,
Section 13(c) or Section 13(d) thereof, the General Partner shall cease to have
any obligations under this Section 8.3.

 

Article 9

 

TAX AND REGULATORY MATTERS

 

Section 9.1.          Taxation as Partnership. The Partners intend that the
Partnership shall be treated as a partnership and that the Partners shall be
taxed as partners for U.S. federal, state and local income tax purposes. No
Party shall take any action that would result in the Partnership being taxed as
a corporation for such purposes. The Partnership shall not file any election
pursuant to Treasury Regulations Section 301.7701-3(c) to be treated as an
association taxable as a corporation for U.S. federal income tax purposes. The
Partnership shall not elect, pursuant to Section 761(a) of the Code, to be
excluded from the provisions of Subchapter K of the Code. The Partnership shall
prepare and file with the IRS and other necessary taxing authorities all
documents, if any, necessary to elect, confirm and maintain its status as a
partnership for U.S. federal, state and local income tax purposes.

 

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Section 9.2.          Capital Accounts; Tax Allocations.

 

(a)               Exhibit D attached to this Agreement provides for the
maintenance of Capital Accounts for each Partner and the allocation of Net
Income and Net Loss and other items of income, gain, loss, expense and credit to
the Partners and is incorporated into this Agreement by reference.

 

(b)               No Partner shall be required to pay to the Partnership or to
any other Person the amount of any negative balance which may exist from time to
time in such Partner’s Capital Account, including at the time of liquidation of
the Partnership.

 

Section 9.3.          Partnership Representative.

 

(a)               Partnership Representative. The General Partner is hereby
designated as the “partnership representative” of the Partnership for purposes
of Section 6223 of the Code and the Treasury Regulations promulgated thereunder
(the “Partnership Representative”), and all federal, state and local Tax audits
and litigation shall be conducted under the direction of the General Partner.
The General Partner shall use reasonable efforts to inform each other Partner of
all significant matters that may come to its attention in its capacity as
Partnership Representative by giving Notice thereof and to forward to each other
Partner copies of all significant written communications it may receive in such
capacity. The Partnership Representative shall consult with the Preferred
Partners before taking any material actions with respect to Tax matters,
including actions relating to (i) an IRS examination of the Partnership
commenced under Section 6231(a) of the Code, (ii) a request for administrative
adjustment filed by the Partnership under Section 6227 of the Code, (iii) the
filing of a petition for readjustment under Section 6234 of the Code with
respect to a final notice of partnership adjustment, (iv) the appeal of an
adverse judicial decision and (v) the compromise, settlement or dismissal of any
such proceedings. The Partnership Representative shall not compromise or settle
any Tax audit or litigation affecting the Preferred Partners without the consent
of the Preferred Partners holding more than fifty percent (50%) of the Preferred
Interests (excluding any Defaulting Partners). Any material proposed action,
inaction, or election to be taken by the Partnership Representative (including
the appointment of a successor Partnership Representative) in its capacity as
such, including the election under Section 6226(a)(1) of the Code, shall require
the prior written approval of the Preferred Partners holding more than fifty
percent (50%) of the Preferred Interests (calculated excluding any Defaulting
Partners). For the avoidance of doubt, the financial burden of any imputed
underpayment or other taxes borne by the Partnership shall be treated as a Tax
Advance and shall be allocated amongst the Partners (and the Partnership shall
be indemnified in respect of such Tax Advances) as provided in Section 9.5.

 

(b)               State and Local Tax Law. Subject to Section 4.10, if any state
or local Tax Law provides for a Partnership Representative or Person having
similar rights, powers, authority or obligations, the General Partner shall also
serve in such capacity, subject to the consent procedures described in Section
9.3(a) to the extent applicable. In all other cases, the General Partner shall
represent the Partnership in all Tax matters to the extent allowed by Law and to
the maximum extent not prohibited by Law, subject to the consent procedures
described in Section 9.3(a) to the extent applicable.

 

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(c)               Further Cooperation. Each Partner hereby agrees (i) to take
such actions as may be required to effect the General Partner’s designation as
the Partnership Representative and (ii) to cooperate to provide any information
or take such other actions as may be reasonably requested by the General Partner
in order to determine whether any “imputed underpayment” of the Partnership
within the meaning of Section 6225 of the Code (an “Imputed Underpayment”) may
be modified in a manner consistent with the guidance issued by the IRS under
Section 6225(c) of the Code. A Partner’s obligation to comply with this Section
9.3 shall survive the transfer, assignment or liquidation of such Partner’s
interest in the Partnership.

 

(d)             Expenses of the Partnership Representative. Reasonable expenses
incurred by the General Partner as the Partnership Representative or in a
similar capacity as set forth in this Section 9.3 shall be borne by the
Partnership. Such expenses shall include fees of attorneys and other Tax
professionals, accountants, appraisers and experts, filing fees and reasonable
out-of-pocket costs. For the avoidance of doubt, the incurrence of any such
expenses shall not be deemed a Capital Contribution for purposes of this
Agreement and any reimbursement thereof by the Partnership shall not be treated
as a distribution of the Partnership for purposes of this Agreement.

 

Section 9.4.          Tax Returns.

 

(a)               Subject to Section 9.4(b), the Partnership shall cause its Tax
adviser, at the Partnership’s expense, to prepare and file, prior to the
applicable due date (subject to any applicable extensions), all U.S. federal,
state and local Tax returns of the Partnership for each year for which such tax
returns are required to be filed.

 

(b)              The General Partner shall cause the Partnership to, and shall
cause the Partnership indirectly to cause any Subsidiary of the Partnership to,
prepare and file any U.S. Tax return of the Partnership or such Subsidiary of
the Partnership which is required by applicable Law to be filed.

 

(c)               The General Partner shall prepare, or cause the Partnership’s
accounting firm to prepare, and provide to the Partners the following
information relating to tax matters, which shall be at the Partnership’s
expense:

 

(i)               No later than December 1 of each Fiscal Year (or the first
Business Day thereafter), the General Partner shall provide an estimate of the
Partnership’s taxable income for such Fiscal Year, together with a state
allocation schedule of the Partnership’s taxable income, a schedule of state
apportionment factors, depreciation computations and all other information as
requested that will enable each Partner to timely prepare its own federal,
state, local and non-U.S. tax returns. For the avoidance of doubt, such
estimates will be based on January through October of the applicable year. The
General Partner shall provide an updated estimate to the Partners by January 25
(or the first Business Day thereafter) following the close of such Fiscal Year.

 

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(ii)              No later than forty-five (45) days after the end of each
Fiscal Year, the General Partner shall provide Schedule K-1s for such Fiscal
Year to the Partners.

 

(iii)            The Partnership agrees to provide promptly to any Partner that
so requests any information reasonably available to it and reasonably necessary
or helpful to assist a Partner in reducing or eliminating the withholding taxes
that may be imposed on it under the Code in connection with a Transfer,
including (but not limited to) Sections 1445 or 1446 of the Code. Without
limiting the foregoing, the Partnership shall use commercially reasonable
efforts to provide (or to cause the Subsidiary REIT to provide) to any Partner
that so requests in writing information or evidence maintained pursuant to
Section 4.9(d) and reasonably necessary or helpful to establish the Subsidiary
REIT’s status as a D-REIT in respect of any tax period (including the percentage
of the value of the stock held directly or indirectly by foreign persons at
closing or in respect of any tax period).

 

Section 9.5.          Tax Advances and Obligations.

 

(a)               Tax Advances. To the extent the General Partner determines
that the Partnership is required by law to withhold or to make tax payments on
behalf of or with respect to any Partner and based on the residency, domicile or
other tax state of such Partner (including, for the avoidance of doubt, any Tax
incurred by the Partnership pursuant to Section 6225 or Section 1446(f) of the
Code or FATCA) (“Tax Advances”), the General Partner shall withhold such amounts
and make such tax payments as so required. For this purpose, the General Partner
shall reasonably determine the portion of any Imputed Underpayment attributable
to each Partner or former Partner. All Tax Advances made on behalf of a Partner
(other than by way of withholding on amounts otherwise distributable) shall, at
the option of the General Partner, be promptly paid to the Partnership by the
Partner on whose behalf such Tax Advances were made or be repaid by reducing the
amount of the current or next succeeding distribution or distributions which
would otherwise have been made to such Partner or, if such distributions are not
sufficient for that purpose, by so reducing the proceeds of liquidation
otherwise payable to such Partner; provided, that (i) if the amount of the next
succeeding distribution or distributions or proceeds of liquidation is reduced,
such amount shall include an amount to cover interest on the Tax Advance at the
lesser of (A) the rate of two percent (2%) per annum over the Reference Rate and
(B) the Maximum Rate; provided, that no interest shall be charged unless the
Partnership provides written notice to the Partner of the Tax Advance and the
Member does not repay such Tax Advance to the Partnership within ten (10)
Business Days of receipt of such notice, (ii) should the General Partner elect
to so reduce such distributions or proceeds, the General Partner shall use
commercially reasonable efforts to notify the applicable Partner of its
intention to do so, and (iii) in the event that a Partner pays any such amounts
to the Partnership, such payment shall not constitute a Capital Contribution.
Whenever the General Partner makes any such reduction of the proceeds payable to
a Partner pursuant to the preceding sentence for repayment of a Tax Advance by
such Partner or a Tax Advance is made by way of withholding on amounts otherwise
distributable, for all other purposes of this Agreement, such Partner may be
treated as having received all distributions (whether before or upon
liquidation) unreduced by the amount of such Tax Advance. If a Tax Advance is
required to be made by the Partnership and the General Partner determines that
such amount is allocable to the interest in the Partnership of a Person that is
at such time a Partner, such Tax Advance shall be treated as being made on
behalf of or with respect to such Partner for purposes of this Section 9.5(a)
whether or not the tax in question applies to a taxable period of the
Partnership during which such Partner held an interest in the Partnership.
Unless otherwise agreed to by the General Partner in writing, each Partner shall
indemnify and hold harmless the Partnership and the other Partners from and
against any liability with respect to Tax Advances required on behalf of or with
respect to such Partner. To the extent that any liability with respect to a Tax
Advance relates to a former Partner that has withdrawn or sold, assigned,
pledged, mortgaged, charged or otherwise transferred all or part of its interest
in the Partnership, such former Partner (which in the case of a partial
withdrawal, sale, assignment, pledge, mortgage, charge or other transfer shall
include a continuing Partner with respect to the portion of its interest in the
Partnership so withdrawn, sold, assigned, pledged, mortgaged, charged or
transferred) shall indemnify the Partnership for its allocable portion of such
liability, unless otherwise agreed to by the General Partner in writing. Each
Partner acknowledges that, notwithstanding the withdrawal, sale, assignment,
pledge, mortgage, charge, or other transfer of all or any portion of its
interest in the Partnership, it may remain liable, pursuant to this Section
9.5(a), for Tax Advances with respect to its allocable share of income and gain
of the Partnership for the Partnership’s taxable years (or portions thereof)
prior to such withdrawal, sale, assignment, pledge, mortgage, charge, or other
transfer, as applicable (including any such liabilities imposed under Section
6225 of the Code or Section 1446(f) of the Code).

 

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(b)               Information and Certifications regarding Owners. Each Partner
shall, or shall cause its underlying beneficial owners or any direct or indirect
transferee of its Partnership Interest to, use commercially reasonable efforts
to timely deliver to the Partnership any documentation reasonably required to be
provided under FATCA (including any newly effective versions of IRS Form W-8 and
the documentation required thereunder) or reasonably requested by the
Partnership sufficient for the Partnership to comply with its obligations under
Sections 1441-1474 of the Code, including FATCA. Each Partner (other than the
General Partner or other Partners that are Affiliates of the General Partner)
further consents to any necessary or appropriate disclosure or reporting of such
information by the General Partner to any governmental or taxing authority.

 

(c)               BCI Partners. If the BCI Partners provide to the Partnership
one or more properly executed and completed IRS Forms W-8IMY, W-8EXP and/or
W-8BEN-E or any such other applicable documentation claiming the benefit of an
exemption or reduction of withholding tax, based on the provision of such tax
form, the Partnership and the General Partner, to the extent permitted by law,
will take the foreign government status, qualified foreign pension fund status,
treaty entitlement status and/or domestic tax status of the BCI Partners into
account in determining the amount of withholding taxes to be withheld or
imposed. Other than with respect to income classified as gain from the sale or
exchange of a United States real property interest described in Section
897(c)(1)(A) of the Code (including as a result of the application of Section
897(h)(1) of the Code, as determined by the General Partner) allocated to a BCI
Partner that does not constitute a qualified foreign pension fund or a domestic
entity, the Partnership and the General Partner hereby agree that neither will
withhold on any amounts (or any amount in excess of any claimed entitlement to a
reduced rate) attributable to the BCI Partners or as a result of the BCI
Partners’ interest in the Partnership unless the General Partner has notified
the BCI Partners, in writing, as promptly as reasonably practicable after
becoming aware that any withholding taxes are likely to be withheld or imposed
with respect to any allocation, payment or distribution to the BCI Partners and
agrees prior to withholding any amounts in respect of such BCI Partner to use
reasonable best efforts to consult with the BCI Partner and to work in good
faith with the BCI Partner to minimize any such withholding taxes.

 

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Section 9.6.          Limitation of Liability of Partners and Affiliates. Except
as provided by the Act or other applicable Law and subject to the obligations to
make Capital Contributions and to indemnify the Partnership and the other
Partners as provided in Article 7 and as otherwise required by this Agreement or
by applicable Law, no Partner shall have any personal liability whatsoever in
its capacity as a Partner, whether to the Partnership, to any of the Partners or
to the creditors of the Partnership, for the debts, liabilities, contracts or
other obligations of the Partnership (whether arising in contract, tort or
otherwise) or for any of the Partnership’s losses.

 

Article 10

 

TERMINATION; DISSOLUTION AND WINDING UP

 

Section 10.1.      Termination. Except as otherwise provided, the Term shall
continue until the earlier of (i) the termination of the Partnership’s Term as
set forth in Section 1.4, (ii) the date on which the Partnership has disposed of
and reduced to cash substantially all of its Business Assets, (iii) the date
upon which there are no limited partners of the Partnership, unless the
Partnership is continued in accordance with the Act, (iv) the entry of a decree
of judicial dissolution of the Partnership under Section 17-802 of the Act and
(v) an event of withdrawal of a general partner (including the General Partner)
under the Act; provided, however, that the Partnership shall not be dissolved or
required to be wound up upon an event of withdrawal of a general partner
(including the General Partner) described in clause (v) of this Section 10.1 if
(A) at the time of such event of withdrawal, there is at least one other general
partner of the Partnership who carries on the business of the Partnership (any
remaining general partner being hereby authorized to carry on the business of
the Partnership) or (B) within ninety (90) days after the occurrence of such
event of withdrawal, all remaining partners agree in writing to continue the
business of the Partnership and to the appointment, effective as of the date of
the event of withdrawal, of one or more additional general partners of the
Partnership. The Partnership shall not be dissolved or terminated by reason of
the Bankruptcy, removal, withdrawal, dissolution or admission of any Partner
(including the General Partner).

 

Section 10.2.         Effect of Termination. Except as agreed otherwise by the
Partners, termination of the Term shall be without prejudice to any liability or
obligation in respect of any matters, undertakings or conditions which have not
been observed or performed by each, or the relevant, Partner prior to
termination, or the date on which the relevant Partner ceases to hold any
Partnership Interests.

 

Section 10.3.         Survival. This Section 10.3, and Section 10.4 and Article
11 of this Agreement and all related defined terms shall continue to apply to
all Partners after dissolution of the Partnership, and any other provisions of
this Agreement to the extent relevant to the interpretation or enforcement of or
to give effect to such Section of this Agreement shall continue to apply for an
indefinite period.

 

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Section 10.4.         Dissolution of the Partnership.

 

(a)               On termination of the Term, the Partnership shall continue
solely for the purposes of winding up its affairs in an orderly manner,
liquidating the Business Assets and satisfying the claims of its creditors and
Partners. The General Partner, or if the General Partner has been removed or if
the Alternative Voting System is in effect, a liquidator (the General Partner or
such liquidator, for purposes hereof, the “Liquidator”) as is appointed by the
Board as a Major Decision, shall be responsible for overseeing the winding up of
the Partnership. The Business Assets shall be liquidated only to the extent
determined to be appropriate by the Liquidator or as required under Section 5.7,
and the proceeds thereof shall be applied and distributed by the Liquidator in
the following order:

 

(i)              to creditors of the Partnership (including, if applicable, the
Partners or any of their Affiliates), to the extent otherwise permitted by law,
in satisfaction of liabilities of the Partnership, including any unpaid Deferred
Asset Management Fees (unless this Agreement was terminated for Cause) the
expenses of the winding-up, liquidation and dissolution of the Partnership
(whether by payment or the making of reasonable provision for payment thereof);

 

(ii)              provision for such reserves as the Board deems necessary or
desirable (determined as a Major Decision); and

 

(iii)            the remaining proceeds, if any, plus any remaining Business
Assets of the Partnership, shall be applied and distributed in accordance with
Article 3. For purposes of the application of this Section 10.4(a)(iii) and
determining Capital Accounts on dissolution, all unrealized gains, losses and
accrued income and deductions of the Partnership shall be treated as realized
and recognized immediately before the date of distribution.

 

After such distribution, the Liquidator shall execute, acknowledge and cause to
be filed articles of dissolution of the Partnership under the Act, at which time
the Partnership shall be terminated.

 

(b)               Unless six (6) months prior to the fifth (5th) anniversary of
the Effective Date, a majority of the Board Members appointed by the Preferred
Partners agree to postpone the winding up of the Partnership, the Liquidator
shall take all appropriate actions (including the actions specified in Section
10.4(a)) to arrange for the orderly termination of the Partnership and
liquidation of the Business Assets as of the fifth (5th) anniversary of the
Effective Date.

 

(c)               Unless six (6) months prior to the seventh (7th) anniversary
of the Effective Date, all of the Preferred Partners agree to postpone the
winding up of the Partnership, the Liquidator shall take all appropriate actions
(including the actions specified in Section 10.4(a)) to arrange for the orderly
termination of the Partnership and liquidation of the Business Assets as of the
seventh (7th) anniversary of the Effective Date.

 

(d)               When arranging for the orderly termination of the Partnership
and the liquidation of the Business Assets, the Liquidator shall use
commercially reasonable efforts to structure such orderly termination in a
manner that takes into account the tax consequences to each of the Partners,
including the consequences of structuring the liquidation of the Business Assets
as a sale of shares in the Subsidiary REIT.

 

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Section 10.5.      No Partition. No Partner has any interest in specific
property of the Partnership. Without limiting the foregoing, each Partner
irrevocably waives during the term of the Partnership any right that it may have
to maintain any action for partition with respect to the property of the
Partnership or to require the redemption of its interest in the Partnership. The
Partners acknowledge that irreparable damage would be done to the goodwill and
reputation of the Partnership if any Partner should bring an action in court to
dissolve the Partnership under circumstances where dissolution is not required
by Section 10.4. This Agreement has been drawn carefully to provide fair
treatment of all parties and equitable payment in liquidation of the
Partnership. Accordingly, except where the Liquidator has failed to liquidate
the Partnership as required by Section 10.4, each Partner hereby waives and
renounces such Partner’s right to initiate legal action to seek any partition,
the appointment of a receiver or trustee to liquidate the Partnership or to seek
a decree of judicial dissolution of the Partnership on the ground that (a) it is
not reasonably practicable to carry on the business of the Partnership in
conformity with the Act or this Agreement, or (b) dissolution is reasonably
necessary for the protection of the rights or interests of the complaining
Partner. Damages for breach of this Section 10.5 may be offset against
distributions by the Partnership to which such Partner would otherwise be
entitled.

 

Article 11

NOTICES

 

Section 11.1.      Notices. All notices, requests, demands and other
communications hereunder (each, a “Notice”) shall be in writing and shall be
deemed to have been duly given if sent to a Party at its business address set
forth on Exhibit E hereto (and to its designees if written notice specifying the
Person and address of such designee is provided to the Person required to give
notice). Any notice shall be deemed to have been duly given if personally
delivered or sent by certified, registered or overnight mail or courier or by
confirmed e-mail, and shall be deemed received, (a) if sent by certified or
registered mail, return receipt requested, when actually received, (b) if sent
by overnight mail or courier, when actually received, (c) if sent by e-mail, on
the date sent; provided, that confirmatory notice is sent immediately thereafter
by overnight courier or first-class mail, postage prepaid in respect of notices
provided under Section 2.1(e) or Section 5.3, and (d) if delivered by hand, on
the date of receipt.

 

Section 11.2.      Change of Address. A Party may change the person(s) to
receive Notices or the address to which Notices hereunder are to be sent to it
by giving Notice of such change of address to the Partnership and each other
Partner in the manner provided in Section 11.1.

 

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Article 12

MISCELLANEOUS

 

Section 12.1.      Entire Agreement. This Agreement, including all Exhibits
attached hereto, the Subsidiary REIT Agreement, as well as any and all other
written agreement between the Partnership and a Partner, constitute the entire
agreement among the Parties pertaining to the subject matter hereof. This
Agreement supersedes any prior agreement or understanding among the Parties with
respect to the subject matter hereof, but shall not amend, modify, supersede or
in any way affect any other agreement or understanding among the Parties or
their Affiliates that does not relate to the subject matter hereof.

 

Section 12.2.      Amendments.

 

(a)               Except as otherwise provided in this Section 12.2, and
notwithstanding any contrary provision of the Act, all amendments to this
Agreement shall be in writing and shall be approved by (x) a majority of the
Percentage Interest of the Partners holding Common Interest and (y) a majority
of the Percentage Interest of the Partners holding Preferred Interest; provided,
that no amendment of this Agreement shall (x) without the approval of all
Partners, (1) amend this Section 12.2(a), (2) alter the principal purposes of
the Partnership, (3) change the status of the Partnership as a partnership for
U.S. federal income tax purposes, (4) modify or alter the indemnification
obligations of the Partnership under Article 7 hereof, (5) modify the Term
(including the related provisions of Section 1.4 and Article 10) or (6) modify
any provision of Article 3, Section 4.1, Section 4.2, Section 4.3, Section 4.4,
Section 4.10, Section 4.11 or Section 4.16 or any of the defined terms contained
therein or (y) without the affirmative vote of the affected Partner,
(1) adversely affect the limited liability of a Partner, (2) alter the rights of
a Partner under Article 4 or (3) adversely or disproportionately affect the
economic terms or governance terms or Partnership Interest of a Partner,
including with respect to Net Income, Net Loss, other items or any Partnership
distributions.

 

(b)               Except as provided in Section 12.2(a), the Board, acting by
Major Decision, may cause this Agreement to be amended, by causing an instrument
of amendment to be executed and giving each Partner notice thereof, without the
consent of any Partner:

 

(i)                 to satisfy any requirements, conditions, guidelines or
opinions contained in any applicable opinion, directive, order, ruling or
regulation of any governmental authority (including the U.S. Securities and
Exchange Commission, the U.S. Internal Revenue Service, or any other federal or
state or non-U.S. governmental agency) or in any applicable statute or law
(including any federal or state or non-U.S. statute), compliance with which the
Board deems to be in the best interests of the Partnership and the Partners,
provided, that the Board reasonably determines that such amendment is not likely
to have a material adverse impact on the likelihood that the Partnership will
achieve its investment objectives;

 

(ii)                as may be necessary or advisable to comply with any
anti-money laundering or anti-terrorist laws, rules, regulations, directives or
special measures; and

 

(iii)               to give effect to the admission or withdrawal of any
Partner, or the Transfer, sale or redemption of any Partnership Interest, in
accordance with the terms hereof.

 

(c)               The General Partner may cause this Agreement to be amended, by
causing an instrument of amendment to be executed and giving each Partner notice
thereof, without the consent of any Partner, to give effect to the admission or
withdrawal of any Partner, or the Transfer, sale or redemption of any
Partnership Interest, in each case, in accordance with, and subject to, the
terms hereof (including Section 2.2(b)(ii), Section 4.3 and Section 5.6).

 

(d)               The Partnership will provide each Partner with a copy of any
amendment to this Agreement made pursuant to this Section 12.2 promptly after
such amendment has been made.

 

64

 

Section 12.3.      Governing Law; Jurisdiction. This Agreement and all disputes
or controversies arising out of or relating to this Agreement or the rights of
the Partners and transactions contemplated hereby shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware,
without regard to the laws of any other jurisdiction that might be applied
because of the conflicts of laws principles of the State of Delaware. Each
Partner hereby irrevocably consents and agrees that any action, suit or
proceeding with respect to this Agreement shall be brought and determined only
in the exclusive jurisdiction of the Court of Chancery of the State of Delaware,
the courts of the United States of America for the District of Delaware, and
appellate courts thereof, and each Party hereby consents to the jurisdiction of
the aforesaid courts for itself and with respect to its property, generally and
unconditionally, with regard to any such action or proceeding arising out of or
relating to this Agreement and the transactions contemplated hereby. Each
Partner further agrees that notice as provided herein shall constitute
sufficient service of process and the parties further waive any argument that
such service is insufficient. Each Partner hereby irrevocably and
unconditionally waives, and agrees not to assert, by way of motion or as a
defense, counterclaim or otherwise, in any action or proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby, (a) any
claim that it is not personally subject to the jurisdiction of the courts in
Delaware as described herein for any reason, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise) and (c) that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper or (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts. EACH PARTNER, FOR ITSELF AND ON BEHALF
OF ITS AFFILIATES, HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION,
LAWSUIT, OR PROCEEDING, WHETHER IN CONTRACT OR IN TORT, RELATING TO ANY DISPUTE
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DESCRIBED
IN THIS AGREEMENT OR TO ANY DISPUTE BETWEEN THE PARTIES (INCLUDING DISPUTES
WHICH ALSO INVOLVE OTHER PERSONS).

 

Section 12.4.      Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Parties and their permitted successors and
assigns.

 

Section 12.5.      No Third-Party Beneficiaries. Subject to Section 7.1(d),
Section 7.2, and Section 5.8, the provisions of this Agreement are for the sole
and exclusive benefit of the Parties and their permitted successors and assigns
and shall not be deemed to create any rights for the benefit of any other Person
except as specifically provided herein.

 

Section 12.6.      Severability. If any provision of this Agreement or the
application of such provision to any Party or circumstance shall be held invalid
or unenforceable, the remainder of this Agreement or the application of that
provision to another Party or circumstance shall not be affected thereby.

 

Section 12.7.      Enforceability. It is the intent of the Parties that the
provisions of this Agreement shall be enforced to the fullest extent permitted
by Law. Accordingly, if any particular paragraph(s), subparagraph(s) or
portion(s) of this Agreement shall be held invalid or unenforceable as written
or otherwise determined to be too broad to permit the enforcement of such
paragraph(s), subparagraph(s) or portion(s) to its fullest extent, then such
paragraph(s), subparagraph(s) or portion(s) will be enforced to the maximum
extent permitted by Law, and the Parties hereby consent and agree that such
scope may be judicially limited or modified accordingly in any proceeding
brought to enforce such restriction to the extent necessary to be valid or
enforceable. Such modification shall not affect the remaining provisions of this
Agreement. To the extent any paragraph(s), subparagraph(s) or portion(s) of this
Agreement are found invalid or unenforceable and cannot be modified to be valid
or enforceable, then the Agreement shall be construed as if those paragraph(s),
subparagraph(s) or portion(s) were deleted, and all remaining terms and
provisions shall be enforceable in law or equity in accordance with their terms.

 

Section 12.8.      No Waiver. No waiver by a Party of any default, breach or
violation of this Agreement shall be deemed to be a waiver of any other default,
breach or violation of any kind or nature, whether or not similar to the
default, breach or violation that has been waived, and no failure to enforce a
particular provision in one instance shall not be deemed a waiver or
modification of rights or preclude the enforcement thereafter. No acceptance of
payment or performance by a Party after any such default, breach or violation
shall be deemed to be a waiver of any default, breach or violation of this
Agreement, whether or not such Party knows of such default, breach or violation
at the time it accepts such payment or performance. Subject to any applicable
statutes of limitation, no failure or delay on the part of a Party to exercise
any right it may have under this Agreement shall prevent its exercise by such
Party, and no such failure or delay shall operate as a waiver of any default,
breach or violation of this Agreement.

 

65

 

Section 12.9.      Captions. The captions and headings used in this Agreement
are for convenience only and do not in any way affect, limit, amplify or modify
the terms and provisions hereof.

 

Section 12.10.     Further Assurances. Each Partner shall execute and deliver
any additional documents and instruments and perform any additional acts that
may be reasonably necessary to effectuate and perform the provisions of this
Agreement and the transactions contemplated herein.

 

Section 12.11.      Counterparts. This Agreement may be executed in several
counterparts. If so executed, each of such counterparts shall be deemed an
original for all purposes and all counterparts shall, collectively, constitute
one agreement. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart and photocopies may be
used.

 

Section 12.12.      PDF Signature. Any Party may deliver its signature to this
Agreement, if applicable, or any Notice or other document described in this
Agreement or relating to the Partnership by portable document format (“PDF”) by
electronic mail (and in accordance with Article 11, if applicable) to the proper
recipient. Any document signed by a Party by PDF by electronic mail and
reasonably believed by the recipient to have been sent by or on behalf of that
Party shall (a) be binding upon and fully enforceable against that Party as
though it had delivered a manually signed counterpart to the recipient and
(b) be accepted by any court as equivalent to a manually signed counterpart for
purposes of any evidentiary rule, and no Party will object to the effectiveness
or validity of such PDF signature.

 

Section 12.13.      Time of the Essence. Time is of the essence in the
performance of each and every term of this Agreement.

 

Section 12.14.     Usury Savings. It is intended that any rate of interest
provided herein shall never exceed the maximum rate, if any, which may be
legally charged (“Maximum Rate”), and if the provisions for interest contained
in any provision of this Agreement would result in a higher rate than the
Maximum Rate, interest shall nevertheless be limited to the Maximum Rate, and
any amounts which may be applied toward interest in excess of the Maximum Rate
shall be applied to the reduction of principal, or, at the lawfully exercised
option of the applicable lender, returned to the applicable borrower.

 

Section 12.15.      Waiver; Privilege. The Partnership has selected Alston &
Bird LLP (“Partnership Counsel”) as legal counsel to the Partnership.
Partnership Counsel is, and may continue to be counsel to the General Partner,
the CTT Partner or the Asset Manager and one or more of their respective
Affiliates (including with respect to matters relating to the preparation and
negotiation of this Agreement and the Subsidiary REIT Agreement). The attorneys,
accountants and other experts who perform services for the Partnership may also
perform services for the General Partner, the CTT Partner, the Asset Manager and
any of their respective Affiliates. The General Partner may, without the consent
of any other Partner, execute on behalf of the Partnership and the Partners any
consent to the representation of the Partnership, the General Partner, the CTT
Partner, the Asset Manager and any of their respective Affiliates that
Partnership Counsel may request pursuant to applicable rules of ethics or
professional conduct or similar rules in any applicable jurisdiction (“Rules”).
Each Preferred Partner acknowledges that Partnership Counsel does not represent
any Preferred Partner with respect to the Partnership in the absence of a clear
and explicit agreement to such effect between the Preferred Partner and
Partnership Counsel (and in any case only to the extent specifically set forth
in that agreement), and that in the absence of any such agreement Partnership
Counsel shall owe no duties to a Preferred Partner with respect to the
Partnership, whether or not Partnership Counsel has in the past represented or
is currently representing such Preferred Partner with respect to other matters.
In the event any dispute or controversy arises between any Preferred Partner and
the Partnership, or between any Preferred Partner or the Partnership, on the one
hand, and the General Partner (or any of its Affiliates that Partnership Counsel
represents), on the other hand, then each Preferred Partner agrees that
Partnership Counsel may represent either the Partnership or the General Partner
(or its Affiliates), or both, in any such dispute or controversy to the extent
permitted by the Rules, and each Preferred Partner hereby consents to such
representation. Each Preferred Partner further acknowledges that, whether or not
Partnership Counsel has in the past represented such Preferred Partner with
respect to other matters, Partnership Counsel has not represented the interests
of any Preferred Partner in the preparation and negotiation of this Agreement.
In addition, Partnership Counsel does not undertake to monitor the compliance of
the General Partner, the CTT Partner, the Asset Manager or their respective
Affiliates with the terms set forth in this Agreement or the Asset Management
Agreement, nor does Partnership Counsel monitor compliance with applicable laws.

 

Remainder of page left intentionally blank; signature pages follow.

 

66

 

IN WITNESS WHEREOF, each Party hereby executes this Agreement as of the
Effective Date.

 

 GENERAL PARTNER:      Triple T GP, LLC     By:Creek Pine Holdings, LLC, as Sole
Member

 

By:TIMBERLANDS II, LLC, as Sole Member

 

By:CATCHMARK TIMBER OPERATING PARTNERSHIP, L.P., as Manager

 

By:CATCHMARK TIMBER TRUST, INC., as General Partner

 

By:/s/ Brian M. Davis   Name: Brian M. Davis   Title: Chief Executive Officer
and President

 

[A&R Limited Partnership Agreement of TexMark Timber Treasury, L.P.]

 

 

 CTT Partner:     CREEK PINE HOLDINGS, LLC     By:Timberlands II, LLC, as Sole
Member     By:CATCHMARK TIMBER OPERATING PARTNERSHIP, L.P., as Manager

 

By:CATCHMARK TIMBER TRUST, INC., as General Partner

 

By:/s/ Brian M. Davis   Name: Brian M. Davis   Title: Chief Executive Officer
and President

 

[A&R Limited Partnership Agreement of TexMark Timber Treasury, L.P.]

 

 

 MEDLEY Partner:     CADDO INVESTORS HOLDINGS 1 LLC     By:Medley Capital LLC,
its manager

 

By:/s/ Richard T. Allorto, Jr.   Name: Richard T. Allorto, Jr.   Title:
Authorized Person

 

[A&R Limited Partnership Agreement of TexMark Timber Treasury, L.P.]

 

 

 TIG PARTNER:     Caddo TIG Newco L.P.    By:/s/ Mitchell Kosches   Name:
Mitchell Kosches   Title: Authorized Signatory

 

[A&R Limited Partnership Agreement of TexMark Timber Treasury, L.P.]

 

 

  HIGHLAND PARTNERS:           Highland Floating Rate Opportunities Fund      
By: /s/ Dustin Norris   Name: Dustin Norris   Title: Executive Vice President  
    NEXPOINT STRATEGIC OPPORTUNITIES FUND               By: /s/ Dustin Norris  
  Name: Dustin Norris   Title: Executive Vice President       NEXPOINT REAL
ESTATE STRATEGIES FUND               By: /s/ Dustin Norris   Name: Dustin Norris
  Title: Executive Vice President

 

[A&R Limited Partnership Agreement of TexMark Timber Treasury, L.P.]

 

 

 

  BCI Partners:         IMC RRIF C US INC.         By: /s/ Lincoln Webb   Name:
Lincoln Webb   Title: President         IMC RRIF M US INC.         By: /s/
Lincoln Webb   Name: Lincoln Webb   Title: President         IMC RRIF PS US Inc.
        By: /s/ Lincoln Webb   Name: Lincoln Webb   Title: President         IMC
RRIF T US Inc.         By: /s/ Lincoln Webb   Name:  Lincoln Webb   Title:
President         IMC RRIF WS US Inc.         By: /s/ Lincoln Webb   Name:
Lincoln Webb   Title: President         IMC RRIF H US INC.         By: /s/
Lincoln Webb   Name: Lincoln Webb   Title: President         bcIMC (WCBAF REKYN)
Investment Corporation         By: /s/ Lincoln Webb   Name: Lincoln Webb  
Title: President

 

[A&R Limited Partnership Agreement of TexMark Timber Treasury, L.P.]

 

67

 

 

  JAWS Partner:         JAWS CAPITAL, LP         By: JAWS Estates Capital, LLC,
as its general partner           By: /s/ Michael Racich     Name:  Michael
Racich     Title: Authorized Signatory

 

[A&R Limited Partnership Agreement of TexMark Timber Treasury, L.P.]

 

68

 

 

Exhibit A

 

DEFINITIONS

 

Section A-1. Certain Defined Terms. For the purposes of this Agreement,
capitalized terms used herein and not otherwise defined herein have the meanings
given to such terms as set forth below:

 

“Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §
17-101 et seq., as it may be amended hereafter from time to time, and any
successor statute thereto.

 

“Additional Preferred Return Account” has the meaning ascribed to such term in
the Subsidiary REIT Agreement.

 

“Adjusted Capital Account Deficit” means, with respect to any Partner, the
deficit balance, if any, in such Partner’s Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments:

 

(i)       Credit to such Capital Account any amounts which such Partner is
obligated to restore pursuant to any provision of this Agreement or is deemed
obligated to restore pursuant to the penultimate sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

 

(ii)       Debit to such Capital Account the items described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6).

 

The foregoing definition of “Adjusted Capital Account Deficit” is intended to
comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.

 

“Affiliates” means in relation to a Person, any holding company, subsidiary or
any other subsidiaries of any such holding company, in each case of such Person
and any Person that Controls, is Controlled by or is under common Control with
such Person, except that it shall not include the Partnership or any of its
Subsidiaries in the case where such Person is a Partner.

 

“Alternative Voting System” means a voting construct for the Board such that the
number of votes of the Board Members on each matter before the Board shall be as
follows: the Board Member(s) appointed by (i) CTT Partner shall each have
one-third (1/3) of a vote, for a total of one (1) vote, (ii) BCI Partners shall
have one (1) vote, (iii) Medley Partner shall have one (1) vote, (iv) TIG
Partner shall have one (1) vote, and (v) Highland Partners shall have one (1)
vote.

 

“Antitrust Laws” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and any other laws applicable to the Partnership and its Partners
under any applicable jurisdiction that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.

 

“Bad Act” means, with respect to a Person, gross negligence, bad faith, fraud,
and willful misconduct; provided, that, other than with respect to fraud, if
such breach is curable, then the breaching party will not be deemed to have
caused the occurrence of a Bad Act pursuant to this definition if such party
cures the applicable breach (including for the avoidance of doubt paying or
otherwise remedying any adverse effects resulting from the Bad Act and otherwise
offsetting any Losses suffered by other relevant Partners) within the thirty
(30) days following its receipt of Notice thereof.

 

Exhibit A—Page 1

 

 

“Bankruptcy” of a Person shall be deemed to have occurred upon the happening of
any of the following: (i) the filing of an application by such Person for, or a
consent to, the appointment of a trustee, receiver or liquidator of its assets;
(ii) the filing by such Person of a voluntary petition or answer in bankruptcy
or the filing of a pleading in any court of record admitting in writing its
inability to pay its debts as such debts come due or seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any Law; (iii) the making by such Person of a general assignment
for the benefit of creditors; (iv) the filing by such Person of an answer
admitting the material allegations of, or its consenting to or defaulting in
answering, a bankruptcy or insolvency petition filed against it in any
bankruptcy or similar proceeding; or (v) the entry of an order, judgment, or
decree by any court of competent jurisdiction adjudicating such Person a
bankrupt or appointing a trustee of its assets, and such order, judgment, or
decree continues unstayed and in effect for a period of one hundred twenty
(120) days.

 

“Bare Land Value,” with respect to Property and Real Estate Assets to be sold
Pursuant to an HBU Sale, is equal to [***] multiplied by the number of acres to
be sold pursuant to such HBU Sale; provided, that prior to and until the
completion of any appraisal pursuant to Section 8.3(b), such per-acre value
shall be deemed to be equal to [***] per acre.

 

“BCI” means British Columbia Investment Management Corporation.

 

“Beneficially Own” or “Beneficial Ownership” means ownership of units of the
Subsidiary REIT by a Person who would be treated as an owner of such units
either directly or indirectly for purposes of Section 542 of the Code, including
through the application of Section 544 of the Code, as modified by Section
856(h)(1)(B) and Section 856(h)(3)(A) of the Code.

 

“Budget Development Protocols” means the protocols for preparation of the Annual
Budget and related backup schedules, plans and forecasts described in Exhibit
C-2.

 

“Business Assets” means as the context may require (i) the Partnership’s direct
or indirect interests in its Subsidiaries and Real Estate Assets (including the
Property) and/or (ii) all other assets or property of whatever kind or nature
owned by the Partnership from time to time.

 

“Business Day” means a day which is not a Saturday, a Sunday or any day on which
banks are generally not open for business in the State of New York.

 

“Capital Account” means with respect to any Partner, the Capital Account
maintained for such Partner in accordance with the following provisions:

 

(i)       To each Partner’s Capital Account there shall be credited the amount
of money and the fair market value of any property contributed by such Partner
to Company, such Partner’s distributive share of Net Income allocated pursuant
to Section 1.2 of Exhibit D and any items in the nature of income or gain which
are specially allocated pursuant to Section 1.3 of Exhibit D, and the amount of
any the Partnership’s liabilities assumed by such Partner or which are secured
by any property distributed to such Partner.

 

Exhibit A—Page 2

 

 

(ii)       To each Partner’s Capital Account there shall be debited the amount
of cash and the Gross Asset Value of any property distributed to such Partner
pursuant to any provision of this Agreement, such Partner’s distributive share
of Net Losses allocated pursuant to Section 1.2 of Exhibit D and any items in
the nature of expenses or losses which are specially allocated pursuant to
Section 1.3 of Exhibit D, and the amount of any liabilities of such Partner
assumed by the Partnership or which are secured by any property contributed by
such Partner to the Partnership.

 

(iii)       In the event all or a portion of an interest in the Partnership is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the Transferring Preferred Partner to the
extent that it relates to the transferred interest.

 

(iv)       In determining the amount of any liability for purposes of the
foregoing subparagraphs (i) and (ii) there shall be taken into account
Section 752(c) of the Code and any other applicable provisions of the Code and
Treasury Regulations.

 

The foregoing provisions and other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Treasury Regulations
Section 1.704-1(b) and shall be interpreted and applied in a manner consistent
with such Treasury Regulations.

 

“Capital Commitment” means, with respect to any Partner, the Capital Commitment
set forth opposite such Partner’s name on Exhibit B.

 

“Capital Contributions” means, with respect to any Partner, the amount of money
set forth opposite the name of such Partner (or its predecessors in interest) on
Exhibit B.

 

“Capital Event” has the meaning set forth in the Subsidiary REIT Agreement.

 

“Capital Event Proceeds” has the meaning set forth in the Subsidiary REIT
Agreement.

 

“Capital Expenditures” means an aggregate amount equal to the sum of the
Expenses incurred with respect to (i) “Site Prep – Chemical,” (ii) “Site Prep –
Bedding,” (iii) “Planting” and (iv) “First Fertilization @ Establishment,” in
each case, as such item is denoted on Exhibit C-1.

 

“Cause” means any of the following events:

 

(i)       there has been a final determination by a court of competent
jurisdiction, or an admission by the General Partner or any of its Affiliates,
that the General Partner or any of its Affiliates has committed, in connection
with the performance of its respective duties in respect of the Partnership and
its Subsidiaries, (A) fraud or intentional misappropriation of funds, (B)
willful misconduct, (C) gross negligence, or (D) a breach of this Agreement
resulting in material Losses to the Partnership or any of its Subsidiaries,
taken as a whole; provided, that, such an occurrence shall not constitute
“Cause” to the extent (1) the act or omission is the result of the conduct of an
employee of the General Partner or its Affiliates who is not otherwise a Senior
Officer, (2) such conduct occurs without the prior knowledge of a Senior Officer
or (3) such “Cause” event is cured within thirty (30) days, which cure may
include: (x) the removal of the subject employee from the General Partner or the
applicable Affiliate, as applicable; (y) a comprehensive review by the General
Partner or the applicable Affiliate of its internal policies and procedures to
determine whether additional procedures should be implemented in order to
prevent such act or event by the General Partner (or such Affiliate thereof);
and (z) full restitution and reimbursement is made to the Partnership or the
applicable Subsidiary, or to the Preferred Partners, as applicable, by the
General Partner, for any Losses caused by such Cause event;

 

Exhibit A—Page 3

 

 

(ii)       a Transfer by the General Partner or any of its Affiliates in
contravention of this Agreement that is not cured within thirty (30) days after
the earlier of (x) the General Partner (or CTT Partner) becoming aware of such
Transfer or (y) written notice from a Partner specifying the breach;

 

(iii)       the General Partner has failed to retain certification by or to
obtain recertification from Sustainable Forestry Initiative Inc. with respect to
all of the Property; or

 

(iv)       Bankruptcy of CTT, CatchMark Timber Operating Partnership, L.P., or
any Affiliate thereof that directly holds Partnership Interests.

 

“Change of Control” means, with respect to any Person, any transaction or series
of related transactions which, directly or indirectly, results in (i) the
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)) of
direct or indirect beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of fifty percent (50%) or more of either the
then-outstanding shares of common stock of such Person or the combined voting
power of any other then-outstanding securities of such Person entitled to vote
generally in the election of directors (as applicable with respect to such
Person, the “Outstanding Voting Securities”); or (ii) any merger, consolidation,
reorganization or other similar transaction pursuant to which such Person is
merged with and into or otherwise acquired by another entity; excluding,
however, any such transaction pursuant to which the individuals and entities who
are beneficial owners of such Person’s Outstanding Voting Securities immediately
prior to such transaction will in the aggregate beneficially own, directly or
indirectly, fifty percent (50%) or more of the outstanding shares of common
stock, and the combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from such transaction (including a corporation that as a
result of such transaction owns such Person or all or substantially all of the
assets of such Person, either directly or through one (1) or more Subsidiaries).

 

“Charitable Beneficiary” means, with respect to any Excess Interest Trust, one
(1) or more organizations that is a “United States Person” within the meaning of
Section 7701(a)(30) of the Code designated by the Excess Interests Trustee and
is described in each of Section 170(b)(1)(A) of the Code (other than clauses
(vii) and (viii) thereof) and Section 170(c)(2) of the Code as a beneficiary of
such Excess Interest Trust, and thereafter the organization so designated.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to
time (or any succeeding law).

 

“Commitment Percentage” means, with respect to each Partner, the percentage
determined by dividing such Partner’s Capital Commitment by the aggregate
Capital Commitments made by all Partners.

 

“Company Act” means the U.S. Investment Company Act of 1940, as amended, and the
rules and regulations promulgated thereunder.

 

Exhibit A—Page 4

 

 

“Constituent Partners” means any Person that is an officer, director, member,
partner or shareholder in a Person, or any Person that, indirectly through one
(1) or more limited liability companies, partnerships or other entities, is an
officer, director, member, partner or shareholder in a Person.

 

“Constructive Ownership” means ownership of units of the Subsidiary REIT by a
Person who would be treated as owner of such units either directly or indirectly
through the application of Section 318 of the Code, as modified by Section
856(d)(5) of the Code.

 

“Control” means, in relation to a Person, where a person (or persons acting in
concert) holds or has direct or indirect control of (i) the affairs of that
Person, or (ii) more than fifty percent (50%) of the total voting rights
conferred by all the issued shares in the capital of that Person which are
ordinarily exercisable in a general meeting (or the equivalent) or (iii) a
majority of the board of directors/managers of that Person, and “Controlled by”
and “Controlling” shall be construed accordingly. For these purposes, “persons
acting in concert,” in relation to a Person, are persons which actively
cooperate pursuant to an agreement or understanding (whether formal or
informal), with a view to exercising, obtaining or consolidating Control of that
Person.

 

“Cumulative Bank Utilized” means, with respect to any Fiscal Quarter, an amount
equal to: (a) $4,000,000, minus (b) the Opening Bank Balance for such Fiscal
Quarter.

 

“Cumulative Deferred Asset Management Fees” means, with respect to any Fiscal
Quarter, the cumulative amount of Deferred Asset Management Fees from the
Effective Date through the end of the immediately preceding Fiscal Quarter.

 

“Cumulative Deferred Asset Management Fees Recovered” means, with respect to any
Fiscal Quarter, the cumulative amount all Recovered Asset Management Fees from
the Effective Date through the end of the immediately preceding Fiscal Quarter.

 

“Cumulative Net Shortfall” means, with respect to any Fiscal Quarter, an amount
equal to: (a) Cumulative UCF Variance for such Fiscal Quarter, plus (b)
Cumulative Bank Utilized with respect to such Fiscal Quarter, plus (c)
Cumulative Deferred Asset Management Fees for such Fiscal Quarter, plus (d) the
aggregate amount of all Capital Contributions made by the Common Partners to the
Partnership from the Effective Date through the end of the immediately preceding
Fiscal Quarter, minus (e) the Cumulative Deferred Asset Management Fees
Recovered for such Fiscal Quarter. For all purposes hereunder, if the
“Cumulative Net Shortfall” is equal to an amount greater than zero ($0), it will
be referred to as a “Cumulative Net Surplus.”

 

“Cumulative UCF Actual” means, with respect to any full Fiscal Quarter, the
cumulative amount of Unlevered Cash Flow actually generated by the Property and
other Real Property Assets from the Effective Date through the end of such
Fiscal Quarter.

 

“Cumulative UCF Budget” means, with respect to any full Fiscal Quarter, the
cumulative amount of “Unlevered Cash Flow (Definitional, Excludes HBU Sales)”
set forth on Exhibit C-1 for each Fiscal Quarter from the Effective Date through
the end of such Fiscal Quarter.

 

Exhibit A—Page 5

 

 

“Cumulative UCF Variance” means, with respect to any full Fiscal Quarter, an
amount equal to (x) Cumulative UCF Actual, minus (y) Cumulative UCF Budget.

 

“Deferred Asset Management Fees Balance” means, with respect to any Fiscal
Quarter, an amount equal to (i) the prior Fiscal Quarter’s Deferred Asset
Management Fees Balance, plus (ii) the aggregate amount of Deferred Asset
Management Fees with respect to such Fiscal Quarter, less (iii) the aggregate
amount of Recovered Asset Management Fees with respect to such Fiscal Quarter.
The initial Deferred Asset Management Fees Balance shall be zero ($0).

 

“Depreciation” means, for each Fiscal Year, an amount equal to the depreciation,
amortization, or other cost recovery deduction allowable for U.S. federal income
tax purposes with respect to an item of Business Assets for such Fiscal Year,
except that (i) with respect to any item of Business Assets the Gross Asset
Value of which differs from its adjusted tax basis for U.S. federal income tax
purposes at the beginning of such Fiscal Year and which difference is being
eliminated by use of the “remedial method” as defined by Section 1.704-3(d) of
the Treasury Regulations, Depreciation for such Fiscal Year shall be the amount
of book basis recovered for such Fiscal Year under the rules prescribed by
Section 1.704-3(d)(2) of the Treasury Regulations, and (ii) with respect to any
item of Business Assets the Gross Asset Value of which differs from its adjusted
tax basis for U.S. federal income tax purposes at the beginning of such Fiscal
Year and which difference is being eliminated by a method other than the
“remedial method,” Depreciation shall be an amount which bears the same ratio to
such beginning Gross Asset Value as the U.S. federal income tax depreciation,
amortization, or other cost recovery deduction for such Fiscal Year bears to
such beginning adjusted tax basis; provided, that in the case of the foregoing
clause (ii) if the adjusted tax basis for U.S. federal income tax purposes of an
asset at the beginning of such Fiscal Year is zero ($0), Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the General Partner.

 

“Dollars” and the sign “$” mean Dollars, lawful currency of the United States of
America.

 

“Ending Bank Balance” means, with respect to any Fiscal Quarter, (i) the Opening
Bank Balance with respect to the Fiscal Quarter, minus (ii) the amount deducted
from the Opening Bank Balance pursuant to Section 2.1(b)(i), minus (iii) the
optional amount deducted from the Opening Bank pursuant to Section 4.3(c).

 

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder and interpretations thereof promulgated
by the U.S. Department of Labor, as in effect from time to time.

 

“Excess Interests Price” means the price purportedly paid by a Purported Record
Transferee for Excess Interests.

 

“Excess Interests Trust” any separate trust created and administered for the
exclusive benefit of a Charitable Beneficiary.

 

“Excess Interests Trustee” means the Person designated by the General Partner to
act as trustee of any Trust, or any successor trustee thereof. For the avoidance
of doubt, the Excess Interests Trustee shall be a “United States Person” within
the meaning of Section 7701(a)(30) of the Code and unaffiliated with both the
Partnership and any Purported Record Transferee (and, if different than the
Purported Record Transferee, the Person who would have had Beneficial Ownership
of the interests that would have been owned of record by the Purported Record
Transferee).

 

Exhibit A—Page 6

 

 

“Excluded Loss” means (a) any Losses to the extent the same are reimbursed by
insurance proceeds or indemnities from third parties and (b) any consequential,
special, punitive or exemplary damages to the extent such damages are not owed
to a third party in connection with any third-party claim.

 

“Failure to Fund Notice” means written notice of a Partner’s failure to fund
Capital Contributions within the period of time set forth in this Agreement.

 

“Fair Value” means value of any Property or other Business Assets, valued at
their fair value as determined in accordance with the Valuation Policy.

 

“FATCA” means Sections 1471-1474 of the Code and the Treasury Regulations
thereunder.

 

“Fiscal Quarter” of the Partnership means each three (3)-month period ending
March 31, June 30, September 30 or December 31 of each year; provided, that
(a) the initial Fiscal Quarter shall begin on the Effective Date and (b) the
last Fiscal Quarter shall end on the date that the final liquidation,
dissolution and termination of the Partnership is completed; provided, further,
that if the Partnership is required under the Code to use a taxable year other
than a calendar year, then Fiscal Quarter shall mean each quarter of such
taxable year (and the initial Fiscal Quarter and the last Fiscal Quarter shall
be adjusted accordingly). To the extent any computation or other provision of
this Agreement provides for an action to be taken on a Fiscal Quarter basis, an
appropriate proration or other adjustment shall be made in respect of the
initial and last Fiscal Quarters to reflect that such periods are less than full
calendar quarter periods.

 

“Fiscal Year” of the Partnership means the twelve (12)-month period ending
December 31 of each year; provided, that (a) the initial Fiscal Year shall be
the period beginning on the Effective Date and ending on December 31 of the same
year and (b) the last Fiscal Year shall be the period beginning on January 1 of
the calendar year in which the final liquidation, dissolution and termination of
the Partnership is completed and ending on the date that such final liquidation,
dissolution and termination is completed; provided, further, that if the
Partnership is required under the Code to use a taxable year other than a
calendar year, then Fiscal Year shall mean such taxable year (and the initial
Fiscal Year and the last Fiscal Year shall be adjusted accordingly). To the
extent any computation or other provision of this Agreement provides for an
action to be taken on a Fiscal Year basis, an appropriate proration or other
adjustment shall be made in respect of the initial and last Fiscal Years to
reflect that such periods are less than full calendar year periods.

 

“Government Authority” means (i) a federal or national government, any state
government, any political subdivision thereof, or any local jurisdiction
therein; (ii) an instrumentality, board, commission, court or agency, whether
civilian or military, of any of the above, however constituted; (iii) a public
organization, being an organization whose members are (A) countries or
territories; (B) governments of countries or territories; and/or (C) other
public international organizations and includes the World Bank, the United
Nations, the International Monetary Fund and the OECD; or (iv) any company,
association, organization, business, enterprise or other entity which is owned,
whether in whole or in part, or controlled by any Person listed in (i) to (iii)
above.

 

Exhibit A—Page 7

 

 

“Gross Asset Value” means, with respect to any item of Business Assets, the
item’s adjusted basis for federal income tax purposes, except as follows:

 

(i)       The initial Gross Asset Value of any item of Business Assets
contributed or deemed contributed by a Partner to the Partnership shall be the
gross fair market value of such item, as agreed upon in the applicable
transaction documents;

 

(ii)       The Gross Asset Values of all Business Assets shall be adjusted to
equal their respective gross fair market values, as determined as a Major
Decision, as of the following times: (A) the acquisition of an additional
interest in the Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (B) the distribution by the Partnership
to a Partner of more than a de minimis amount of money or other property as
consideration for an interest in the Partnership; (C) the grant of an interest
in the Partnership (other than a de minimis interest) as consideration for the
provision of services to or for the benefit of the Partnership by an existing
Partner acting in a Partner capacity, or by a new Partner acting in a Partner
capacity or in anticipation of becoming a Partner; and (D) the liquidation of
the Partnership within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to
the foregoing clauses (A), (B) and (C) shall be made only if the General Partner
reasonably determines that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Partners in the Partnership;

 

(iii)     The Gross Asset Value of any item of Business Assets distributed to
any Partner shall be adjusted to equal the gross fair market value of such item
on the date of distribution as reasonably determined by the Partners; and

 

(iv)     The Gross Asset Values of the Partnership’s assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Section 734(b) or Section 743(b) of the Code, but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
clause (iv) to the extent the General Partner determines that an adjustment
pursuant to clause (ii) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
clause (iv).

 

If the Gross Asset Value of an item of Business Assets has been determined or
adjusted pursuant to clause (i), (ii) or (iv) of this definition, such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Income or Net Losses.

 

“HBU Sale” means any disposition through a cash sale of a portion of the
Property or any other Real Estate Asset.

 

“Indebtedness” means all obligations of the Partnership or its Subsidiaries for
borrowed money, including all obligations evidenced by bonds, debentures, notes
or other similar instruments and all Senior Credit Debt.

 

Exhibit A—Page 8

 

 

“Indemnified Party” means any Partner (including the General Partner), any Board
Member, any Board Observer and any Affiliate of any of the foregoing, and their
respective Constituent Partners, employees, managers, consultants and agents,
and any other Person who is authorized pursuant to this Agreement or the
delegation authority contained herein to act on behalf of or in the name of the
Partnership.

 

“Initial Holdings” means, as of any date, with respect to any Preferred Partner
that was a Preferred Partner as of the Effective Date, the initial Partnership
Interests held by such Preferred Partner as of the Effective Date that are still
held by such Preferred Partner. For the avoidance of doubt, such Preferred
Partner’s Initial Holdings shall not include any Partnership Interests obtained
by such Preferred Partner after the Effective Date.

 

“Initial Liquidation Value” means, in respect of the Preferred Interests held by
all Preferred Partners, an amount equal to the Capital Contributions
attributable thereto, calculated based on the aggregate amount of Capital
Contributions made in respect of all Preferred Interests and, in respect of any
individual Preferred Partner, an amount equal to the Capital Contributions
attributable to the Preferred Interests of such Preferred Partner.

 

“Initial Preferred Distribution Balance” has the meaning ascribed to such term
in the Subsidiary REIT Agreement.

 

“IRS” means the U.S. Internal Revenue Service or any successor agency or
department with primary responsibility for adopting, interpreting and enforcing
provisions of the Code.

 

“Law” means any law, statute, act, legislation, bill, enactment, policy, treaty,
international agreement, ordinance, judgment, injunction, award, decree, rule,
regulation, interpretation, determination, requirement, writ or order of any
Government Authority.

 

“Liquidity Event” means, as of the end of any calendar month, that the
Partnership and its Subsidiaries collectively have less than an aggregate amount
of (x) cash and cash equivalents and (y) capacity under the Partnership’s and
its Subsidiaries’ revolving line of credit facility, collectively, equal to
$30,000,000; provided, however, that such amount assumes a normalized level of
net working capital (including with respect to the collection of receivables and
the payment of payables in the ordinary course of business).

 

“Loss” or “Losses” means the dollar amounts of all actual costs, claims, suits,
actions, damages, losses, liabilities, obligations, reasonable fees and expenses
of any kind or nature, including costs and expenses of accountants, attorneys
and other professionals, judgments, fines, penalties, settlements and all other
costs and expenses and disbursements of any nature or type actually paid or
incurred or imposed on or asserted against a specified Person, and all costs and
expenses paid or incurred by the prevailing party or any of its Affiliates in
litigating against any other party or any of its Affiliates, but specifically
excluding in all such cases any Excluded Loss.

 

Exhibit A—Page 9

 

 

“Net Income” and “Net Loss” mean, for each Fiscal Year or other period, an
amount equal to the Partnership’s taxable income or loss for such Fiscal Year or
period, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss) with the following adjustments:

 

(i)       Any income of the Partnership that is exempt from U.S. federal income
tax, and to the extent not otherwise taken into account in computing Net Income
or Net Losses pursuant to this paragraph, shall be added to such taxable income
or loss;

 

(ii)      Any expenditures of the Partnership described in Section 705(a)(2)(B)
of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant
to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and to the extent not
otherwise taken into account in computing Net Income and Net Losses pursuant to
this paragraph, shall be subtracted from such taxable income or loss;

 

(iii)     In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to the definition of “Gross Asset Value” herein, the amount of
such adjustment shall be taken into account as gain or loss from the disposition
of such asset for purposes of computing Net Income or Net Losses;

 

(iv)     Gain or loss resulting from any disposition of any Business Assets or
any other assets of the Partnership with respect to which gain or loss is
recognized for U.S. federal income tax purposes shall be computed by reference
to the Gross Asset Value of the property disposed of, notwithstanding that the
adjusted tax basis of such property differs from its Gross Asset Value;

 

(v)      In lieu of depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such Fiscal Year, computed in
accordance with the definition of “Depreciation”; and

 

(vi)     Any items which are specially allocated pursuant to the provisions of
Section 1.3 of Exhibit D shall not be taken into account in computing Net Income
or Net Losses.

 

“Net Operating Income” means, with respect to the Subsidiary REIT and its
Subsidiaries, an amount equal to: (i) total revenue, consisting of the following
line items: Harvest Revenue, Hunting Revenue, Seedling Revenue, Surface Use
Payments and Other Revenues, less (ii) total operating expenses, consisting of
the following line items: Forestry Management, General and Administrative,
Property Insurance, Property Tax, Legal/Consultant/Audit/SFI Dues, Release,
Second Fertilizer, Road Maintenance, Disruption Fees, and Other Expenses, in
each case as set forth in Exhibit C-1. For the avoidance of doubt, the
computation of Net Operating Income excludes any proceeds from HBU Sales.

 

“Nonrecourse Deduction” has the meaning set forth in Treasury Regulations
Sections 1.704-2(b)(1) and 1.704-2(c).

 

“Nonrecourse Liability” has the meaning set forth in Treasury Regulations
Section 1.752-

 

1(a)(2).

 

“Nursery Disposition Agreements” shall mean that certain (1) Nursery and Seed
Orchard Management Agreement, dated as of November 1, 2018, by and among Crown
Pine Timber 1, L.P., Crown Pine Realty 1, Inc., Crown Pine Leasing, LLC and
ArborGen Inc. (the “Nursery Management Agreement”), (2) Land and Equipment Lease
Agreement with Put Option and Call Option, dated as of November 1, 2018, by and
among Crown Pine Timber 1, L.P., Crown Pine Realty 1, Inc., Crown Pine Leasing,
LLC and ArborGen Inc.; (3) Seed Purchase Agreement, dated as of November 1,
2018, by and among Crown Pine Timber 1, L.P., Crown Pine Realty 1, Inc., Crown
Pine Leasing, LLC and ArborGen Inc.; and (4) Seedling Production Contract, dated
as of November 1, 2018, by and among Crown Pine Timber 1, L.P., Crown Pine
Realty 1, Inc., Crown Pine Leasing, LLC and ArborGen Inc.

 

Exhibit A—Page 10

 

 

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets
Control.

 

“OFAC List” is any list of prohibited countries, individuals, organizations and
entities that is administered or maintained by OFAC, including: (i) the
Specially Designated Nationals and Blocked Persons list; (ii) the Foreign
Sanctions Evaders List, (iii) the Sectoral Sanctions Identifications List;
and/or (iv) any other similar list maintained by OFAC pursuant to any
authorizing statute, executive order or regulation.

 

“Opening Bank Balance” means, with respect to any full Fiscal Quarter, the
Ending Bank Balance as of the end of the previous Fiscal Quarter; provided, that
the initial Opening Bank Balance shall be $4,000,000.

 

“Parties” means each Partner.

 

“Partner” or “Partners” means (i) any Person who or which is so identified on
one (1) or more counterparts of Exhibit B, as attached hereto and as hereafter
modified, supplemented or amended from time to time, so long as such Person has
not ceased to be a partner of the Partnership pursuant to the terms of this
Agreement, and (ii) any Person who or which becomes a substitute partner of the
Partnership pursuant to the terms of this Agreement and has not ceased to be a
partner of the Partnership pursuant to the terms of this Agreement, in each
case, in its or their capacities as partners of the Partnership.

 

“Partner Nonrecourse Debt” has the same meaning as the term “partner nonrecourse
debt” set forth in Treasury Regulations Section 1.704-2(b)(4).

 

“Partner Nonrecourse Debt Minimum Gain” means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if the Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Treasury Regulations Section 1.704-2(i)(3).

 

“Partnership Interests” means the interests of a Partner in the Partnership,
including such Partner’s right: (a) to a distributive share of the assets or
property of the Partnership as set forth in Article 3 and Article 10; (b) to
allocations of items of income, gain, loss, deduction and credit of the
Partnership as set forth in Exhibit D of this Agreement; and (c) to inspect the
books and records of the Partnership as provided in Section 8.1 and such other
rights to participate in the management

 

and operation of the Partnership as are expressly set forth in this Agreement.

 

“Partnership Minimum Gain” has the same meaning as “partnership minimum gain”
set forth in Treasury Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

 

Exhibit A—Page 11

 

 

 

“Percentage Interest” means, (a) generally, with respect to each Partner at any
time, the percentage determined by dividing such Partner’s Capital Contributions
by the aggregate Capital Contributions made by all Partners, (b) when used with
reference to the Preferred Partners, the percentage determined by dividing a
Preferred Partner’s Capital Contributions by the aggregate Capital Contributions
made by all Preferred Partners and (c) when used with reference to the Common
Partners, the percentage determined by dividing a Common Partner’s Capital
Contributions by the aggregate Capital Contributions made by all Common
Partners.

 

“Permitted Encumbrances” has the meaning ascribed to the term “Permitted Liens”
in the Senior Credit Documents.

 

“Person” means an individual or a general partnership, limited partnership,
corporation, professional corporation, limited liability company, limited
liability partnership, joint venture, trust, business trust, unincorporated
organization, cooperative or association or a governmental, administrative or
regulatory agency or any other entity.

 

“Plan Asset Regulations” means the regulations issued by the U.S. Department of
Labor in Title 29, Code of Federal Regulations, Part 2510, Section 101-3, as
modified by Section 3(42) of ERISA.

 

“Plan Assets” has the meaning set forth in the Plan Asset Regulations (as
modified by Section 3(42) of ERISA) or as set forth in the applicable provisions
of any Similar Law.

 

“Preferred Interests” means the Partnership Interests issued to the Preferred
Partners pursuant to this Agreement.

 

“Qualified Appraiser” means an independent appraisal firm selected by the
applicable party from those listed on Schedule 8.3(b) attached hereto.

 

“Qualified REIT Consultant” means a nationally recognized accounting firm, which
may be the Partnership’s audit or tax firm, or a nationally recognized law firm
selected by the General Partner.

 

“Quarterly Current Bank Amount Utilized” means, with respect to any Fiscal
Quarter, an amount equal to: (x) the Opening Bank Balance for such Fiscal
Quarter, less (y) the Ending Bank Balance for such Fiscal Quarter.

 

“Quarterly Deferred Asset Management Fees” means, with respect to any Fiscal
Quarter, the amount of Deferred Asset Management Fees for such Fiscal Quarter.

 

“Quarterly Deferred Asset Management Fees Recovered” means, with respect to any
Fiscal Quarter, the amount of Recovered Asset Management Fees for such Fiscal
Quarter.

 

Exhibit A–Page 12

 

 

“Quarterly Net Shortfall” means, with respect to any Fiscal Quarter, an amount
equal to: (a) the amount equal to (x) the amount of Unlevered Cash Flow
generated by the Partnership for such Fiscal Quarter, less (y) the amount equal
to the amount set forth in Exhibit C-1 in the line item denoted “Quarterly UCF
Budget (Definitional, Excludes HBU Sales)” for such Fiscal Quarter, plus (b)
Quarterly Current Bank Amount Utilized for such Fiscal Quarter, plus (c)
Quarterly Deferred Asset Management Fees for such Fiscal Quarter, plus (d) the
aggregate amount of all Capital Contributions made by the Common Partners to the
Partnership with respect to such Fiscal Quarter (including, for the avoidance of
doubt, any Capital Contributions made after the end of such Fiscal Quarter if
such Capital Contributions are made in respect of such Fiscal Quarter), minus
(e) the Quarterly Deferred Asset Management Fees Recovered for such Fiscal
Quarter. For all purposes hereunder, if the “Quarterly Net Shortfall” is equal
to an amount greater than zero ($0), it will be referred to as a “Quarterly Net
Surplus.”

 

“Real Estate Asset” means any real property asset of the Partnership and its
Subsidiaries, including the Property.

 

“Reference Rate” means the rate of interest announced publicly from time to time
by JPMorgan Chase Bank in New York, New York, as such bank’s prime rate.

 

“REIT” means a real estate investment trust under Section 856 of the Code.

 

“REIT Requirements” means the requirements, as set forth in Section 856 et seq.
of the Code and the related Regulations, for an entity to (a) qualify for REIT
status, (b) maintain REIT status and (c) avoid the imposition of any U.S.
federal income tax or penalty on such REIT.

 

“Remaining Capital Commitment” means, with respect to each Partner, such
Partner’s Capital Commitment less such Partner’s Capital Contributions made
pursuant to Section 2.1(a) (but, for the avoidance of doubt, no reduction shall
be made for Capital Contributions made pursuant to Section 2.2(b)).

 

“Restriction Termination Date” shall mean the first day on which the Subsidiary
REIT Board determines that it is no longer in the best interests of the
Subsidiary REIT to attempt to, or continue to, qualify as a REIT.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Senior Credit Debt” means “Obligations” as defined in the Senior Credit
Documents (or similar definition in the case of a modification or refinancing of
the Senior Credit Documents).

 

“Senior Credit Documents” means that certain Credit Agreement, date on or about
the Effective Date, among the Subsidiary REIT, as borrower, the Subsidiaries
thereof, as guarantors, the Senior Lender, and the financial instructions party
thereto from time to time as lenders, as amended, restated, supplemented and
otherwise modified from time to time, and any refinancings, refundings, renewals
and extensions thereof.

 

“Senior Lender” means CoBank, ACB, or its successors and assigns, as
Administrative Agent under the Senior Credit Documents on behalf of itself and
the other secured parties.

 

“Senior Officer” means a senior officer or director of the General Partner or
its Affiliates.

 

“Similar Law” means any federal, state, local, non-U.S. or other law or
regulation that contains one (1) or more provisions that are (i) similar to any
of the fiduciary responsibility or prohibited transaction provisions contained
in Title I of ERISA or Section 4975 of the Code and/or (ii) similar to the
provisions of the Plan Asset Regulations or would otherwise provide that the
assets of the Partnership could be deemed to include “plan assets” under such
law or regulation.

 

Exhibit A–Page 13

 

 

“Specified Delivery Points” means the delivery point for the wood and fiber
products of the Partnership and its Subsidiaries located in (i) Orange, Texas;
(ii) Pineland, Texas; (iii) Diboll, Texas; and (iv) Dequincy, Louisiana.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company, trust or other entity of which all or any part of the
outstanding equity interests are owned, directly or indirectly, by such Person.
For the avoidance of doubt, the Subsidiary REIT and its Subsidiaries shall be
considered Subsidiaries of the Partnership for purposes of this Agreement.

 

“Subsidiary REIT Agreement” means the amended and restated limited liability
company agreement of the Subsidiary REIT, dated as of the Amendment Effective
Date, in the form set forth on Exhibit K, as it may be amended, modified or
supplemented from time to time in accordance with its terms and subject to
Section 4.10, as applicable.

 

“Subsidiary REIT Preferred Units” means the Class A Preferred Units issued by
the Subsidiary REIT in accordance with the Subsidiary REIT Agreement in an
aggregate amount not to exceed $125,000.

 

“Subsidiary REIT Unit” means the Other Units (as defined in the Subsidiary REIT
Agreement) of the Subsidiary REIT.

 

“Tax” means all taxes, levies, duties, imposts, charges, contributions and
withholdings of any nature whatsoever, including taxes on actual or deemed
income profits on gains, stamp duty and taxes on receipts, sales, use, value
added, transfer, capital and personal property, together with all penalties,
fines, surcharges, charges and interest relating to any of them.

 

“Timber Current Value” with respect to the value of the timber to be sold
pursuant to an HBU Sale is the sum of (i) the product of (A) multiplied by (B),
and (ii) the product of (C) multiplied by (D) (i.e., ((A) x (B)) + ((C) x (D)))
where:

 

(A)       is equal to the per-acre fair market value allocated to timber assets
that are “pre-merchantable” at the time of the applicable HBU Sale;

 

(B)       is equal to the then-current number of acres of with timber that are
“pre-merchantable” being sold pursuant to the applicable HBU Sale;

 

(C)       is equal to the per-ton fair market value by product class allocated
to the individual timber assets that are “merchantable” at the time of the
applicable HBU Sale; and

 

(D)       is equal to the then-current tonnage of the timber that is
“merchantable” by product class being sold pursuant to the applicable HBU Sale.

 

“Timberland Assets Cost” means the methodology pertaining to the valuation of
timberland assets on any Property and Real Estate Asset set forth on Schedule
4.18(ii).

 

Exhibit A–Page 14

 

 

“Treasury Regulations” means the Income Tax Regulations and Procedures and
Administration Regulations promulgated under the Code, as amended from time to
time.

 

“Unlevered Cash Flow” means, for any applicable Fiscal Quarter, an amount equal
to: (a) the Net Operating Income generated during such Fiscal Quarter (for the
avoidance of doubt, such Net Operating Income does not include proceeds
generated from any HBU Sales), minus (b) the amount of Capital Expenditures for
such Fiscal Quarter provided in the then-applicable approved Annual Budget;
provided, that if, during such Fiscal Quarter, there is not an approved Annual
Budget in effect or there is a Budget Impasse, then the amount of Capital
Expenditures for purposes of this clause (b) shall be deemed to be equal to the
amount designated as “Cap Ex” for such Fiscal Quarter in Exhibit C-1; provided,
further, that (w) no Expenses incurred or reimbursed to the Partners pursuant to
Section 2.5(c)(ii) of this Agreement shall be included when calculating the
amount of Unlevered Cash Flow for any period, (x) no Nursery Disposition
Agreement Payments received by or on behalf of the Partnership or any of its
Affiliates shall be included when calculating the amount of Unlevered Cash Flow
for any period, (y) no other Expenses approved by the Board as a Major Decision
to be excluded from the calculation of Unlevered Cash Flow shall be included
when calculating the amount of Unlevered Cash Flow for any period specified by
the Board in such approval and (z) no costs or expenses under or in connection
with Section 5.9 of this Agreement or Section 4.15 of the Subsidiary REIT
Agreement shall be included when calculating the amount of Unlevered Cash Flow
for any period. For purposes of this Agreement, “Nursery Disposition Agreement
Payments” shall include any and all payments received by or on behalf of the
Partnership pursuant to the Nursery Disposition Agreements, including, but not
limited to: (i) lease or rental payments (including any late payment penalties
and interest charges paid in respect thereof); (ii) payments of the purchase
price (or any installment thereof) for any real property, inventory (including
seeds, seedlings and other growing stock) or equipment (including pursuant to
the exercise of any call option in respect of the foregoing); (iii) proceeds
from the sale of any harvested seeds, seedlings, cones or other growing stock;
(iv) real estate tax credits, rebates, refunds, reductions or other adjustments
to taxes shared pursuant to the Nursery Disposition Agreements; (v) any portion
of any security deposit or the delivery of the proceeds from any letter of
credit provided as a replacement therefor; (vi) the proceeds of any insurance
policy maintained pursuant to the Nursery Disposition Agreements; (vii) any
indemnification payments; or (viii) any reimbursements of costs or expenses,
except for the reimbursement (if and as the cash amount of such reimbursements
are received by the Partnership or any of its Affiliates) of (A) costs and
expenses provided for by Sections 2.5 and 2.6 of the Nursery Management
Agreement and (B) third-party transportation costs paid by the Partnership or
any of its Affiliates in connection with the sale of seedlings to outside
customers during the term of the Nursery Management Agreement.

 

“Wood Supply Agreements” means the following agreements: (i) Third Amended and
Restated Sawtimber Supply Agreement (Texas Timberlands) by and between
Georgia-Pacific WFS LLC and Crown Pine Realty 1, Inc. dated as of June 24, 2020;
(ii) Third Amended and Restated Sawtimber Support Agreement by and among
Georgia-Pacific WFS LLC, Creek Pine, LLC, Crown Pine Realty 1, Inc. and Crown
Pine Timber 1, L.P. dated as of June 24, 2020; (iii) Second Amended and Restated
Pulpwood Supply Agreement (Texas Timberlands) by and between International Paper
Company and CPT LogCo, LLC dated as of January 1, 2018, as assigned by CPT
LogCo, LLC to Crown Pine Realty 1, Inc. pursuant to that certain Bill of Sale,
Assignment and Assumption Agreement dated as of July 6, 2018; and (iv) Second
Amended and Restated Pulpwood Support Agreement by and among International Paper
Company, Crown Pine Parent, L.P., and Crown Pine Timber 1, L.P. dated as of
January 1, 2018, as assigned by Crown Pine Parent, L.P. to Creek Pine, LLC
pursuant to that certain Bill of Sale, Assignment and Assumption Agreement dated
as of July 6, 2018.

 

Exhibit A–Page 15

 

 

Section A-2. Table of Definitions. The following terms have the meanings set
forth in the Sections referenced below:

 

Defined Term Section Acquisition Recital Additional CTT Capital Contribution
Recital Additional Offering Period 2.1(e) Administrative Expenses 2.5(d)
Agreement Preamble Allocable Share 5.4(c) Allowable Variances 4.11(b) Amendment
Effective Date Preamble Annual Budget 4.11(a) Annual Harvest Schedule Exhibit
C-2 Annual Plan Exhibit C-2 Appraisal Notice Schedule 5.7 Appraised Residual
Value 5.6(b) Arbitrator Schedule 5.7 Asset Management Agreement 4.12 Asset
Manager 4.12 BCI Partner Preamble BCI Partners Preamble Board 4.2(a) Board
Member 4.3(a) Board Observer 4.3(f) Book Item Exhibit D Budget Impasse 4.11(c)
Capital Call Notice 2.1(e) Certificate Recital Closing 2.1(a) Common Partner
Call Right 5.6(a) Common Partner Offer 4.15(a) Common Partner Related Parties
4.15(a) Common Partners Preamble Common Partners Call Notice 5.6(a) Common
Return Interests 2.6(c) Contributing Partner 2.2(b)(i) Controlled by Exhibit A
Controlling Exhibit A Crown Pine Purchase Agreement Recital

 

Exhibit A–Page 16

 

 

CTT 5.1(a) CTT Partner Preamble Cumulative Net Shortfall, Post-Bank, Pre-AM Fee
Deferral Amount 2.1(b)(i) Cumulative Net Surplus Exhibit A Deadlock 4.11(d)
Default Date 2.2(c) Defaulting Partner 2.2(a) Deferred Asset Management Fees
2.1(b)(ii) Designated Real Property 4.15(a) D-REIT 4.9(b) Early Satisfaction
Amounts 3.5(b) Effective Date Recital Excess Interests 5.1(f)(ii)(1) Exchange
Act Exhibit A Exercise Period 4.15(a) Expenses 2.5(a) Final Partition Plan
Schedule 5.7 Formation Date Recital General Partner Preamble Highland Partner
Preamble Highland Partners Preamble Imputed Underpayment 9.3(c) Indebtedness
Document 3.7 Individual 5.1(f)(xiii) Initial Annual Budget 4.11(a) Initial
Offering Period 2.1(e) Issuance 5.5 Issuance Notice 5.5 Issuer Schedule 5.7
Issuer Partition Notice Schedule 5.7 JAWS Partner Preamble Liquidator 10.4(a)
Major Decisions 4.10 Maximum Rate 12.14 Medley Partner Preamble New Investors
Schedule 5.7 Non-Controllable Expenses 4.11(c) Notice 11.1 Nursery Disposition
Agreement Payments Exhibit A Nursery Management Agreement Exhibit A Offer 5.3(a)
Offer Acceptance Notice 5.3(a) Offer Notice 4.15(a) Offered Interest 5.3(a)
Offeree Partners 5.3 Offering Partner 5.3

 

Exhibit A–Page 17

 

 

Original Agreement Recital Outstanding Voting Securities Exhibit A Parent REIT
4.9(c) Partition Right Schedule 5.7 Partners Preamble Partnership Preamble
Partnership Counsel 12.15 Partnership Representative 9.3(a) PDF 12.12 Permitted
Financing Transaction 5.7 Permitted Recapitalization Period 5.9 Permitted
Recapitalization Transaction 5.9 persons acting in concert Exhibit A Pledged
Collateral 5.8(a) Preemptive Rights 5.5 Preferred Partners Preamble Preferred
Return Interests 2.6(b) Preliminary Budget Exhibit C-2 Prohibited Owner Event
5.1(f)(ii)(2) Property Recital Proposed Sale 4.15(a) Purported Record Transferee
5.1(f)(ii)(2) Qualified Common Partner Property 6.3(a) Quarterly Net Surplus
Exhibit A Real Property Advisory 4.15(c) Recovered Asset Management Fees
2.1(b)(ii) REIT-Owned Acres Schedule 5.7 Related Party Agreement 4.10(f)
Remaining Interest 5.6(a) Replacement Contribution 2.2(b)(i) Residual Interests
2.6(d) Residual Interests (Common) 2.6(d) Residual Interests (Preferred) 2.6(d)
Right of First Offer 4.15(a) Rolling Partner Schedule 5.7 Rollover Proceeds
Schedule 5.7 Rules 12.15 Secondary Reoffer 5.3(a) Shortfall Contributions
2.1(b)(iv) Shortfall Notice 2.1(d) Shortfall Return Interests 2.6(a) Sidecar
Cash Amount Schedule 5.7 Sidecar Entity Schedule 5.7 Sidecar Equity Interests
Schedule 5.7 Sidecar Notice Schedule 5.7 Sidecar Transaction Appraised Value
Schedule 5.7

 

Exhibit A–Page 18

 

 

Sidecar Transaction Call Option Schedule 5.7 Sidecar Transaction Percentage
Schedule 5.7 Sidecar Transaction Purchase Price Schedule 5.7 Sidecar Transaction
Value Schedule 5.7 Subsequent Satisfaction Amounts 3.5(b) Subsidiary REIT
Recital Subsidiary REIT Board 4.3(d) Tag-Along Interest 5.4 Tag-Along Notice
5.4(a) Tag-Along Offering Partner 5.4 Tag-Along Purchaser 5.4(a) Tag-Along Right
5.4(a) Tag-Along Seller 5.4(b) Tag-Along Terms 5.4(a) Tag-Along Transfer 5.4 Tax
Advances 9.5(a) Technical Forestry Advisory Services Agreement 4.12(c) Term 1.4
Thirty-Year Harvest Schedule Exhibit C-2 Three-Year Harvest Plan Exhibit C-2 TIG
Partner Preamble Transfer 5.1(a) Transferee 5.1(a) Transferring Preferred
Partner 4.3(g) UCC 1.7(a) Valuation Policy 8.3(a)

 

Exhibit A–Page 19

 

 

 

RULES OF INTERPRETATION

 

The following rules shall be applied by the Parties and all other Persons
(including judges) in the determination, evaluation, interpretation and
enforcement of the provisions of this Agreement, unless another provision of
this Agreement expressly applies another rule:

 

(a)               The provisions of all Exhibits to this Agreement are
incorporated into and made an integral part of this Agreement as though they had
been fully set forth in the actual text of this Agreement.

 

(b)              Any financial or accounting term used, but not otherwise
defined, in this Agreement shall have the meaning given to it under U.S.
generally accepted accounting principles.

 

(c)               Any reference to a right, benefit, action, decision or other
item or matter in this Agreement is intended to allow its making, taking or
other exercise to the fullest extent permitted by the Partnership or other
applicable law.

 

(d)               The word “including” is not limiting and shall be construed as
meaning “including, without limitation.”

 

(e)               Any provision of this Agreement that gives a Partner or
another Person the right, option or election to take or not take any action in
any manner shall not, and shall not be deemed or construed to, require or
obligate that Partner or Person to take all or any part of such action.

 

(f)                The singular includes the plural, and the plural includes the
singular.

 

(g)               The masculine gender includes the feminine and neuter and vice
versa.

 

(h)               References to a law include any rule or regulation issued
under the law, any amendment to a law, rule or regulation, any successor law,
rule or regulation and all applicable judicial interpretations of any such law,
rule or regulation.

 

(i)                 Unless otherwise specified, references to an Article,
Section or Exhibit mean a reference to an Article, Section or Exhibit contained
in or attached to the Agreement.

 

(j)                 Any reference to “days” means calendar days unless Business
Days are expressly specified. If the date on which any period ends is not a
Business Day, such period shall end on the Business Day immediately following
such date.

 

(k)               The caption headings of Articles and Sections in this
Agreement are for convenience only and do not necessarily define, modify,
extend, limit or describe the scope or intent of any of the terms of this
Agreement.

 

(l)                This Agreement shall be interpreted and enforced in
accordance with its provisions and without the aid of any custom or rule of law
requiring or suggesting construction against the party drafting, commenting on,
or causing the drafting or redrafting of, the provision in question.

 

Exhibit A-Page 20

 

 

Exhibit B

 

Partners; Capital Commitments; CAPITAL CONTRIBUTIONS; partnership interests

 

(As of June 24, 2020)

 

Partner   Capital
Commitment     Shortfall Return
Interests     Preferred Return
Interests     Common Return
Interests     Residual Interests   Common Partners General Partner   $ 0       0
      0       0       0   CTT Partner   $ 205,000,000       0       0      
205,000,000       205,000,000 * Preferred Partners [***]     [***]       [***]  
    [***]       [***]       [***]   TOTAL   $ 930,866,142       0      
725,866,142       205,000,000       205,000,000  *                              
        725,866,142 **

*       Residual Interest (Common)

**     Residual Interest (Preferred)

 

Exhibit B-Page 1

 

 

Exhibit C-1

 

Initial Annual Budget

 

(Cash basis)

 

(See attached.)

 

[***]

 

Exhibit C-1-Page 1

 

 

Project Caddo

REVISED Exhibit C-1: Initial 5-Year Quarterly Cash Flow Projections

($'s, except per acre data)

 

NOTE: BASIS OF PRESENTATION IS ON A CASH BASIS

 

[***]

 

Exhibit C-1-2

 

 

Exhibit C-2

 

BUDGET DEVELOPMENT PROTOCOL

 

·The Asset Manager will produce an annual harvest schedule (“Annual Harvest
Schedule”), taking into consideration (i) the Partnership’s obligations under
the Wood Supply Agreements, (ii) Unlevered Cash Flow requirements, (iii) the
long-term value of the Property, and (iv) Sustainable Forestry Initiative (SFI)
obligations.

 

·The Preferred Partners, by majority vote of the Board Members designated by the
Preferred Partners, may designate a Person to provide reasonable review and
input regarding the following items during the preparation of the Annual Harvest
Schedule: Linear Program (LP) constraints, financial assumptions, silvicultural
assumptions, and harvest volume in excess of or outside of Wood Supply Agreement
obligations. The initial designee shall be TTG Forestry Services, LLC.

 

·Each Annual Harvest Schedule will include a thirty (30)-year harvest schedule
(“Thirty-Year Harvest Schedule”) and a rolling three (3)-year harvest plan
(“Three-Year Harvest Plan”). A written summary of each Annual Harvest Schedule
will be made available to the Partners, including all assumptions, constraints
utilized, and supporting stand level information as may be necessary for a
reasonable evaluation of the Thirty-Year Harvest Schedule and the Three-Year
Harvest Plan. In addition, annual property profiles, including merchantable
timber volumes, pre-merchantable acres by species and age class, and acres by
land class shall be provided.

 

·To the extent necessary to facilitate the Partners’ review of the proposed
Annual Budget, the Asset Manager will also (i) provide the Partners information
regarding tract and stand-level activity for the Property and applicable other
Real Estate Assets (including, for example, site preparation and treatment,
planting method, stock type, planting density, thinning plan, volume removals by
product class, and detailed inventory information), and (ii) furnish the
Partners a copy of the then-current Geographic Information Systems (GIS) data
for the Property and applicable other Real Estate Assets.

 

·The Asset Manager will seek, based on the Three-Year Harvest Plan, to develop a
preliminary version of the Annual Budget (“Preliminary Budget”) and present such
Preliminary Budget to the Board no later than September 10th of each calendar
year for review and consideration.

 

·The Board will provide any comments and feedback regarding the Preliminary
Budget no later than September 25th of each calendar year.

 

·Based on the Preliminary Budget timber volumes (as the same reflects the
comments and feedback of the Board) the Asset Manager will provide the “Annual
Plan” and “Forecast Plan” volumes to the respective counterparties to the Wood
Supply Agreements, as required, on or before September 30th of each calendar
year.

 

Exhibit C-2-Page 1

 

 

·The proposed Annual Budget submitted to the Board for final approval pursuant
to Section 4.11 of the Agreement will reflect any changes required by the
counterparties to the Wood Supply Agreements after review of the Annual Plan
volumes.

 

·The Annual Budget will include the terms pertaining to any Permitted HBU Sale
to be conducted during the applicable Fiscal Year, including (i) a general
description of the potential Property and other Real Estate Assets to be sold,
(ii) the minimum price and (iii) any permissible non-standard commercial terms.

 

Exhibit C-2-Page 2

 

 

Exhibit C-3

 

Shortfall Calculation EXAMPLES

 

(Cash basis)

 

(See attached.)

 

Exhibit C-3-Page 1

 

 

Project Caddo

Exhibit C-3: Asset Management Fee Deferral & Board Flip Exhibit

($‘s, unless otherwise noted)

 

        9/30/18   12/31/18   3/31/19   6/30/19   9/30/19   12/31/19   3/31/20  
  6/30/20     9/30/20     12/31/20     3/31/21     6/30/21     9/30/21    
12/31/21     3/31/22     6/30/22     9/30/22     12/31/22     3/31/23    
6/30/23           Q3   Q4   Q1   Q2   Q3   Q4   Q1     Q2     Q3     Q4     Q1  
  Q2     Q3     Q4     Q1     Q2     Q3     Q4     Q1     Q2           Year 1  
Year 1   Year 2   Year 2   Year 2   Year 2   Year 3     Year 3     Year 3    
Year 3     Year 4     Year 4     Year 4     Year 4     Year 5     Year 5    
Year 5     Year 5     Year 6     Year 6  

CUMULATIVE UCF VARIANCE

 

[***]

  [***]     [***]     [***]     [***]     [***]     [***]     [***]     [***]  
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]       [***]       [***]       [***]       [***]       [***]  

Quarterly UCF Variance

      —       —       —       —       —       —       —         —         —    
    —         —         —         —         —         —         —         —    
    —         —         —    

Cumulative UCF Actual

  Defined Term     [***]     [***]     [***]     [***]     [***]     [***]    
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]  

Cumulative UCF Budget

  Defined Term     [***]     [***]     [***]     [***]     [***]     [***]    
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]      

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative UCF Variance

  Defined Term     —       —       —       —       —       —       —         —  
      —         —         —         —         —         —         —         —  
      —         —         —         —    

QUARTERLY & CUMULATIVE NET SHORTFALL DEFINITIONS

 

Quarterly Net Shortfall

                             

Quarterly Variance

    $ 0   $ 0   $ 0   $ 0   $ 0   $ 0   $ 0     $ 0     $ 0     $ 0     $ 0    
$ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  

Plus: Quarterly Current Bank Utilized

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Plus: Quarterly Deferred Asset Management Fees

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Plus: Quarterly Common Capital Contributions

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Less: Quarterly Deferred Asset Management Fees Recovered

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Quarterly Net Shortfall / Surplus

      —       —       —       —       —       —       —         —         —    
    —         —         —         —         —         —         —         —    
    —         —         —    

Cumulative Net Shortfall

                             

Cumulative UCF Variance

      —       —       —       —         —         —         —         —        
—         —         —         —         —         —         —         —        
—    

Plus: Cumulative Current Bank Utilized

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Plus: Cumulative Deferred Asset Management Fees

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Plus: Cumulative Common Capital Contributions

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Less: Cumulative Deferred Asset Management Fees Recovered

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —        

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative Net Shortfall / Surplus

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Cumulative Net Surplus

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Cumulative Net Shortfall

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

CUMULATIVE NET SHORTFALL FUNDING

 

   

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative Net Shortfall

    $ 0   $ 0   $ 0   $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $
0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0      

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Current Bank

                             

Current Bank Balance Opening

  Defined Term   $ 4,000,000   $ 4,000,000   $ 4,000,000   $ 4,000,000   $
4,000,000   $ 4,000,000   $ 4,000,000     $ 4,000,000     $ 4,000,000     $
4,000,000     $ 4,000,000     $ 4,000,000     $ 4,000,000     $ 4,000,000     $
4,000,000     $ 4,000,000     $ 4,000,000     $ 4,000,000     $ 4,000,000     $
4,000,000  

Quarterly Current Bank Utilized

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Optional Quarterly Current Bank Utilized (1)

      —       —       —       —         —         —         —         —        
—         —         —         —         —         —         —         —        
—        

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Current Bank Balance Ending

  Defined Term     4,000,000     4,000,000     4,000,000     4,000,000    
4,000,000     4,000,000     4,000,000       4,000,000       4,000,000      
4,000,000       4,000,000       4,000,000       4,000,000       4,000,000      
4,000,000       4,000,000       4,000,000       4,000,000       4,000,000      
4,000,000  

Memo: Cumulative Current Bank Utilized

  Defined Term     —       —       —       —       —       —       —         —  
      —         —         —         —         —         —         —         —  
      —         —         —         —        

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative Net Shortfall, Post Bank, Pre-AM Fee Deferral

    $ 0   $ 0   $ 0   $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $
0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0      

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Asset Management Fee Due & Payable

                             

Asset Management Fee Due

      [***]     [***]     [***]     [***]     [***]     [***]     [***]      
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]       [***]       [***]  

Less: Quarterly Deferred Asset Management Fees

  Defined Term     Test Holiday     —       —       —       —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Less: Optional Quarterly Deferred Asset Management Fees (1)

      —       —       —       —         —         —         —         —        
—         —         —         —         —         —         —         —        
—    

Plus: Quarterly Deferred Asset Management Fees Recovered

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —        

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Asset Management Fee Payable

      [***]     [***]     [***]     [***]     [***]     [***]     [***]      
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]       [***]       [***]  

Memo: Cumulative Deferred Asset Management Fees

  Defined Term     —       —       —       —       —       —       —         —  
      —         —         —         —         —         —         —         —  
      —         —         —         —    

Memo: Cumulative Deferred Asset Management Fees Recovered

  Defined Term     —       —       —       —       —       —       —         —  
      —         —         —         —         —         —         —         —  
      —         —         —         —        

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative Net Shortfall, Pre-Common Capital Contribution

    $ 0   $ 0   $ 0   $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $
0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0      

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Quarterly Common Capital Contributions

      —       —       —       —       —       —       —         —         —    
    —         —         —         —         —         —         —         —    
    —         —         —    

Memo: Cumulative Common Capital Contributions

      —       —       —       —       —       —       —         —         —    
    —         —         —         —         —         —         —         —    
    —         —         —        

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative Net Shortfall, Post-Bank, Post-AM Fee Deferral, Post-Common Capital
Contribution

 

$ 0   $ 0   $ 0   $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  
  $ 0     $ 0     $ 0     $ 0     $ 0     $ 0      

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

DEFERRED ASSET MANAGEMENT FEES

 

Deferred Asset Management Fees

                             

Beginning Balance

    $ 0   $ 0   $ 0   $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $
0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  

Plus: Asset Management Fees Deferred

      —       —       —       —         —         —         —         —        
—         —         —         —         —         —         —         —        
—    

Less: Deferred Asset Management Fees Recovered

      —       —       —       —         —         —         —         —        
—         —         —         —         —         —         —         —        
—        

 

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deferred Asset Management Fee Balance

  Defined Term     —       —       —       —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Less: Return of Deferred Asset Management Fees Upon Termination

 

         
Only Upon
Termination  
                    —    

ALTERNATIVE VOTING SYSTEM TRIGGER

 

Alternative Voting System Trigger

                             

Trailing Four Quarters Net Shortfall / Surplus

    $ 0   $ 0   $ 0   $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $
0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  

Alternative Voting System Triggered?

      No     No       No       No       No       No       No       No       No  
    No       No       No       No       No       No  

 

 

(1)

Optional at the Common Partner’s option, and only in cases where Net Shortfall
is negative and Cumulative Net Shortfall is positive.

 

Exhibit C-3-2

 

 

Exhibit C-4

 

OPERATING METRICS

 

1.Recordable incident rate

 

2.Conformity with certification requirements provided by Sustainable Forestry
Initiative Inc.

 

3.Development of managerial talent

 

4.Litigation risk

 

5.Compliance with applicable environmental statutes and regulations

 

6.Technology and information systems infrastructure

 

Exhibit C-4-Page 1

 

 

 

Exhibit D

 

CAPITAL ACCOUNTS; TAX ALLOCATIONS

 

Section 1.1           General Application. The rules set forth below in this
Exhibit shall apply for the purposes of determining each Partner’s general
allocable share of the items of income, gain, loss or expense of the Partnership
comprising Net Income or Net Loss of the Partnership for each Fiscal Year,
determining special allocations of other items of income, gain, loss and
expense, and adjusting the balance of each Partner’s Capital Account to reflect
the aforementioned general and special allocations. For each Fiscal Year, the
special allocations in Section 1.3 of this Exhibit shall be made immediately
prior to the general allocations of Section 1.2 of this Exhibit.

 

Section 1.2           General Allocations.

 

(a)            Hypothetical Liquidation. The items of income, expense, gain and
loss of the Partnership comprising Net Income or Net Loss for a Fiscal Year
shall be allocated among the Persons who were Partners during such Fiscal Year
in a manner that will, as nearly as possible, cause the Capital Account balance
of each Partner at the end of such Fiscal Year to equal the difference (which
may be negative) between:

 

(i)                 the hypothetical distribution (if any) that such Partner
would receive if, on the last day of the Fiscal Year, (A) all the Partnership’s
assets, including cash, were sold for cash equal to their Gross Asset Values,
taking into account any adjustments thereto for such Fiscal Year, (B) all the
Partnership’s liabilities were satisfied in cash according to their terms
(limited, with respect to each nonrecourse liability, to the Gross Asset Value
of the assets securing such liability), and (C) the net proceeds thereof (after
satisfaction of such liabilities) were distributed in full pursuant to Article 3
of the Agreement, over

 

(ii)              the sum of (A) the amount, if any, which such Partner is
obligated to contribute to the capital of the Partnership, (B) such Partner’s
share of the Partnership Minimum Gain determined pursuant to Treasury
Regulations Section 1.704-2(g), and (C) such Partner’s share of Partner
Nonrecourse Debt Minimum Gain determined pursuant to Treasury Regulations
Section 1.704-2(i)(5), all computed immediately prior to the hypothetical sale
described in Section 1.2(a)(i) of this Exhibit.

 

(b)           Determination of Items Comprising Allocations.

 

(i)             In the event that the Partnership has Net Income for a Fiscal
Year,

 

(A)             for any Partner as to whom the allocation pursuant to Section
1.2(a) of this Exhibit would reduce its Capital Account, such allocation shall
comprise a proportionate share of each of the Partnership’s items of expense or
loss entering into the computation of Net Income for such Fiscal Year; and

 

(B)              the allocation pursuant to Section 1.2(a) of this Exhibit in
respect of each Partner (other than a Partner referred to in Section
1.2(b)(i)(A) of this Exhibit) shall comprise a proportionate share of each
Partnership item of income, gain, expense and loss entering into the computation
of Net Income for such Fiscal Year (other than the portion of each Partnership
item of expense and loss, if any, that is allocated pursuant to Section
1.2(b)(i)(A) of this Exhibit).

 

Exhibit D—Page 1

 

(ii)            In the event that the Partnership has a Net Loss for a Fiscal
Year,

 

(A)             for any Partner as to whom the allocation pursuant to Section
1.2(a) of this Exhibit would increase its Capital Account, such allocation shall
comprise a proportionate share of the Partnership’s items of income and gain
entering into the computation of Net Loss for such Fiscal Year; and

 

(B)              the allocation pursuant to Section 1.2(a) of this Exhibit in
respect of each Partner (other than a Partner referred to in Section
1.2(b)(ii)(A)) of this Exhibit shall comprise a proportionate share of each
Partnership item of income, gain, expense and loss entering into the computation
of Net Loss for such Fiscal Year (other than the portion of each Partnership
item of income and gain, if any, that is allocated pursuant to Section
1.2(b)(ii)(A) of this Exhibit).

 

(c)            Loss Limitation. Notwithstanding anything to the contrary in this
Section 1.2 of this Exhibit, the amount of items of Partnership expense and loss
allocated pursuant to this Section 1.2 to any Partner shall not exceed the
maximum amount of such items that can be so allocated without causing such
Partner to have an Adjusted Capital Account Deficit at the end of any Fiscal
Year, unless each Partner would have an Adjusted Capital Account Deficit. All
such items in excess of the limitation set forth in this Section 1.2(c) shall be
allocated first, to Partners who would not have an Adjusted Capital Account
Deficit, pro rata, in proportion to their Capital Account balances, adjusted as
provided in clauses (i) and (ii) of the definition of Adjusted Capital Account
Deficit, until no Partner would be entitled to any further allocation, and
thereafter, to all Partners, pro rata, in proportion to their Percentage
Interests.

 

Section 1.3            Special Allocations. The following special allocations
shall be made in the following order:

 

(a)           Minimum Gain Chargeback. In the event that there is a net decrease
during a Fiscal Year in either Partnership Minimum Gain or Partner Nonrecourse
Debt Minimum Gain, then notwithstanding any other provision of this Exhibit,
each Partner shall receive such special allocations of items of Partnership
income and gain as are required in order to conform to Treasury Regulations
Section 1.704-2.

 

(b)           Qualified Income Offset. Subject to Section 1.3(a) of this
Exhibit, but notwithstanding any other provision of this Exhibit, items of
income and gain shall be specially allocated to the Partners in a manner that
complies with the “qualified income offset” requirement of Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(3).

 

(c)           Deficit Capital Accounts Generally. In the event that a Partner
has a deficit Capital Account balance at the end of any Fiscal Year which is in
excess of the sum of (i) the amount such Partner is then obligated to restore
pursuant to this Agreement, and (ii) the amount such Partner is then deemed to
be obligated to restore pursuant to the penultimate sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), respectively, such Partner
shall be specially allocated items of Partnership income and gain in an amount
of such excess as quickly as possible; provided, that any allocation under this
Section 1.3(c) of this Exhibit shall be made only if and to the extent that a
Partner would have a deficit Capital Account balance in excess of such sum after
all allocations provided for in this Exhibit have been tentatively made as if
this Section 1.3(c) were not in this Agreement.

 

Exhibit D—Page 2

 

(d)           Deductions Attributable to Partner Nonrecourse Debt. Any item of
Partnership loss or expense that is attributable to Partner Nonrecourse Debt
shall be specially allocated to the Partners in the manner in which they share
the economic risk of loss (as defined in Treasury Regulations Section 1.752-2)
for such Partner Nonrecourse Debt.

 

(e)           Allocation of Nonrecourse Deductions. Each Nonrecourse Deduction
of the Partnership shall be specially allocated in accordance with the Partners’
Percentage Interests.

 

(f)            Limited Partners. It is intended that to the maximum extent
possible (i) the Limited Partners holding Preferred Return Interests shall be
allocated income, gain, loss and deductions in the same manner and amounts, on a
cumulative basis, as they would have had they held the Preferred Return Units
directly and (ii) the provisions of this Agreement shall be interpreted in a
manner consistent therewith.

 

The allocations pursuant to Section 1.3(a), Section 1.3(b) and Section 1.3(c) of
this Exhibit shall comprise a proportionate share of each of the Partnership’s
items of income or gain. The amounts of any Partnership income, gain, loss or
deduction available to be specially allocated pursuant to this Section 1.3 shall
be determined by applying rules analogous to those set forth in
subparagraphs (i) through (v) of the definitions of Net Income and Net Loss.

 

Section 1.4           Allocation of Nonrecourse Liabilities. For purposes of
determining each Partner’s share of Nonrecourse Liabilities, if any, of the
Partnership in accordance with Treasury Regulations Section 1.752-3(a)(3), the
Partners’ interests in Partnership profits shall be determined in the same
manner as prescribed by Section 1.3(e) of this Exhibit.

 

Section 1.5           Transfer of Interest. In the event of a transfer of all or
part of an interest (in accordance with the provisions of this Agreement) at any
time other than the end of a Fiscal Year, the shares of items of Partnership Net
Income or Net Loss and specially allocated items allocable to the interest
transferred shall be allocated between the Transferring Preferred Partner and
the transferee in a manner that is not inconsistent with the applicable
provisions of the Code and Treasury Regulations, and as determined under Section
10.4.

 

Section 1.6           Tax Allocations.

 

(a)           Section 704(b) Allocations. Each item of income, gain, loss,
deduction or credit for U.S. federal income tax purposes that corresponds to an
item of income, gain, loss or expense that is either taken into account in
computing Net Income or Net Loss or is specially allocated pursuant to Section
1.3 of this Exhibit (a “Book Item”) shall be allocated among the Partners in the
same proportion as the corresponding Book Item is allocated among them pursuant
to Section 1.2 of this Exhibit or Section 1.3 of this Exhibit.

 

Exhibit D—Page 3

 

(b)           Section 704(c) Allocations. In the event any property of the
Partnership is credited to the Capital Account of a Partner at a value other
than its tax basis (whether as a result of a contribution of such property or a
revaluation of such property pursuant to subparagraph (ii) of the definition of
Gross Asset Value), then allocations of taxable income, gain, loss and
deductions with respect to such property shall be made in a manner which will
comply with Section 704(b) and Section 704(c) of the Code and the Treasury
Regulations thereunder.

 

(c)           Credits. All tax credits shall be allocated among the Partners
consistent with applicable law, as determined under Section 10.4.

 

The tax allocations made pursuant to Section 1.6 of this Exhibit shall be solely
for tax purposes and shall not affect any Partner’s Capital Account or share of
non-tax allocations or distributions under this Agreement.

 

Exhibit D—Page 4

 

Exhibit E

 

Notice Addresses

 

Party Address General Partner

To:                 Triple T GP, LLC
5 Concourse Parkway
Suite 2650
Atlanta, Georgia 30328
Attention: Brian Davis, Chief Executive Officer
Email: brian.davis@catchmark.com

 

with a copy to:

 

Alston & Bird LLP
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Rosemarie A. Thurston
Email: rosemarie.thurston@alston.com

 

CTT Partner

To:                 Creek Pine Holdings, LLC
5 Concourse Parkway
Suite 2650
Atlanta, Georgia 30328
Attention: Brian Davis, Chief Executive Officer
Email: brian.davis@catchmark.com

 

with a copy to:

 

Alston & Bird LLP
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Rosemarie A. Thurston
Email: rosemarie.thurston@alston.com

 

 

Exhibit E—Page 1

 

TIG Partner

To:                 c/o BTG Pactual Timberland Investment Group, LLC
601 Lexington Avenue
57th Floor
New York, New York 10022
Attention: Gerrity Lansing
Email: gerrity.lansing@btgpactual.com

 

with a copy to:

 

Proskauer LLP
Eleven Times Square
New York, New York 10036-8299
Attention: Daniel I. Ganitsky
Email: dganitsky@proskauer.com

 

Medley Partner To:                 c/o Medley Inc.
600 Montgomery Street
35th Floor
San Francisco, California 94111
Attention: John D. Fredericks, General Counsel
Email: john.fredericks@mdly.com BCI Partners To:                 British
Columbia Investment Management Corporation
Infrastructure and Renewable Resources
750 Pandora Avenue
Victoria BC
V8W 0E4, Canada
Attention: Sameer Jinnah
Email: InfrastructureExternal@bci.ca;
sameer.jinnah@bci.ca

 

Exhibit E—Page 2

 

Highland Partners

To:                 Highland Capital Management, L.P.
300 Crescent Court
Suite 700
Dallas, Texas 75201
Attention: Thomas Surgent
Email: tsurgent@highlandcapital.com

 

with a copy to:

 

Winston & Strawn LLP
2501 North Harwood Street
Seventeenth Floor
Dallas, Texas 75201
Attention: Charles T. Haag
Email: chaag@winston.com

 

JAWS Partner To:                 c/o JAWS Estates Capital, LLC
591 West Putnam Avenue
Greenwich, Connecticut 06830
Attention: Michael Racich and Brad Hoffman
Email: BHoffman@Starwood.com

 

Exhibit E—Page 3

 

Exhibit F

 

ASSET MANAGEMENT AGREEMENT

 

(See attached.)

 

Exhibit F—Page 1

 

 

Execution Version

 

Pursuant to Item 601(b)(10)(iv) of Regulation S-K, certain identified
information marked with [***] has been excluded from the exhibit because it is
both (i) not material and (ii) would be competitively harmful if publicly
disclosed

 

AMENDED AND RESTATED ASSET Management Agreement

 

This AMENDED AND RESTATED ASSET MANAGEMENT AGREEMENT (as amended or restated
from time to time, including all appendixes and exhibits thereto, this
“Agreement”), dated as of June 24, 2020 (the “Amendment Effective Date”), by and
between Creek Pine REIT, LLC, a Delaware limited liability company (the
“Company”), Crown Pine Realty 1, Inc., a Delaware corporation (“CPR1”), and
CatchMark TRS Creek Management, LLC, a Delaware limited liability company (the
“Asset Manager”). The Company, CPR1 and the Asset Manager are each referred to
herein as a “Party” and collectively as the “Parties.”

RECITALS

 

WHEREAS, the Parties hereto are parties to that certain Asset Management
Agreement dated as of July 6, 2018, as amended by the First Amendment thereto,
effective as of February 25, 2019 (the “Original AMA”), and the parties to the
Original Agreement desire to amend and restate the Original AMA on the terms and
conditions herein in connection with the amendment of the Second Amended and
Restated Sawtimber Supply Agreement by and between Georgia-Pacific WFS, LLC and
CPR1;

 

WHEREAS, the Company intends to continue to be taxed as a REIT (as hereinafter
defined) for federal income tax purposes;

 

WHEREAS, the Company shall continue to cause CPR1 to undertake certain
activities the income from which would not (or the activities of which would
cause any rents not to) be treated with respect to the Company as “qualifying
income” (within the meaning of Section 856(c) of the Code); and

 

WHEREAS, CPR1 and the Company desire that the Asset Manager provide such
services to the Company and its Subsidiaries (including CPR1) as are set forth
herein, and the Asset Manager desires to render such services in consideration
of the compensation provided for herein.

 

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, and
other good and valuable consideration, the Parties agree to amend and restate
the Original AMA as of the Amendment Effective Date as follows:

 

1.             Defined Terms. Defined terms used in this Agreement shall, unless
the context otherwise requires, have the meanings specified in this Section 1
or, if not so specified, shall have the meanings given to such defined terms in
the Company LLC Agreement.

 

2

 

 

(a)          “Affiliate” means, in relation to a Person, any holding company,
subsidiary or any other subsidiaries of any such holding company, in each case
of such Person and any Person that Controls, is Controlled by or is under common
Control with such Person.

 

(b)            “Agreement” shall have the meaning set forth in the Preamble.

 

(c)            “Allowable Variance” shall have the meaning set forth in Section
3(b).

 

(d)            “Alternative Voting System” shall have the meaning ascribed to
such term in the Company LLC Agreement.

 

(e)            “Amendment Effective Date” shall have the meaning set forth in
the Preamble.

 

(f)             “Annual Budget” shall have the meaning set forth in Section
3(a).

 

(g)           “Annual Harvest Schedule” shall have the meaning set forth on
Schedule B-2.

 

(h)           “Applicable Rate” shall have the meaning set forth in Section
9(a).

 

(i)            “Asset Management Fee” shall have the meaning set forth in
Section 9(a).

 

(j)            “Asset Manager” shall have the meaning set forth in the Preamble.

 

(k)          “Bad Act” means, with respect to a Person, (i) gross negligence,
(ii) bad faith, (iii) fraud, or (iv) willful misconduct; provided, that, other
than with respect to fraud, if the applicable action or circumstance is curable,
then the breaching party will not be deemed to have caused the occurrence of a
Bad Act pursuant to this definition if such party cures the applicable action or
circumstance (including, for the avoidance of doubt, paying or otherwise
remedying any adverse effects resulting from the Bad Act and otherwise
offsetting any Losses suffered by other relevant Persons) within the thirty (30)
days following the receipt of written notice thereof. For the avoidance of
doubt, for purposes of Section 11(c), any Loss in respect of or arising from an
act by the Asset Manager as a fiduciary under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations thereunder shall not
constitute a “Bad Act.”

 

(l)            “Bankruptcy” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(m)          “Base Amount” means $1,524,000,000.

 

(n)           “Beginning Preferred Partner Ratio” shall mean the number equal to
(x) the aggregate amount of all Capital Contributions (as such term is defined
in the Parent LP Agreement) made by the Preferred Partners in accordance with
the Parent LP Agreement as of the Effective Date, divided by (y) the aggregate
amount of all Capital Contributions made by all Partners in accordance with the
Parent LP Agreement as of the Effective Date.

3

 

 

(o)           “Budget Development Protocols” shall have the meaning set forth in
Section 3(a).

 

(p)           “Budget Impasse” shall have the meaning set forth in Section 3(c).

 

(q)            “Business Assets” shall have the meaning ascribed to such term in
the Company LLC Agreement.

 

(r)            “Business Day” shall have the meaning ascribed to such term in
the Company LLC Agreement.

 

(s)           “Capital Contribution” shall have the meaning ascribed to such
term in the Parent LP Agreement.

 

(t)            “Cause” shall mean any of the following:

 

(i)             there has been a final determination by a court of competent
jurisdiction, or an admission by the Asset Manager or any of its Affiliates,
that the Asset Manager or any of its Affiliates has committed, in connection
with the performance of the Asset Manager’s duties under this Agreement, (1)
fraud or intentional misappropriation of funds, (2) willful misconduct, (3)
gross negligence, or (4) a breach of this Agreement resulting in material Losses
to the Parent, the Company or any of its Subsidiaries, taken as a whole;
provided, that, such an occurrence shall not constitute “Cause” to the extent
(1) the act or omission is the result of the conduct of an employee of the Asset
Manager or its Affiliates who is not otherwise a Senior Officer, (2) such
conduct occurs without the prior knowledge of a Senior Officer or (3) such
“Cause” event is cured within thirty (30) days, which cure may include: (x) the
removal of the subject employee from the Asset Manager or the applicable
Affiliate, as applicable; (y) a comprehensive review by the Asset Manager or the
applicable Affiliate of its internal policies and procedures to determine
whether additional procedures should be implemented in order to prevent such act
or event by the Asset Manager (or such Affiliate thereof); and (z) full
restitution and reimbursement is made to the Parent, the Company or the
applicable Subsidiary, or to the Preferred Partners, as applicable, by the Asset
Manager, for any Losses caused by such Cause event;

 

(ii)            a Transfer by the General Partner or any of its Affiliates in
contravention of the Parent LP Agreement that is not cured within thirty (30)
days after the earlier of (x) the General Partner (or CTT Partner (as such term
is defined in the Parent LP Agreement)) becoming aware of such Transfer or (y)
written notice from a Partner specifying the breach;

 

(iii)           the Asset Manager has failed to retain certification by or to
obtain recertification from Sustainable Forestry Initiative Inc. with respect to
all of the Property; or;

 

(iv)           the Bankruptcy of (i) the Asset Manager or (ii) CTT, CatchMark
Timber Operating Partnership, L.P., or any Affiliate thereof that directly holds
equity interests in Parent.

 

4

 

 

(u)          “Change of Control” shall mean any transaction or series of related
transactions which directly or indirectly results in:

 

(i)              the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”)) of direct or indirect beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more
of either the then-outstanding shares of common stock of CTT or the Asset
Manager or the combined voting power of any other then-outstanding securities of
CTT or the Asset Manager entitled to vote generally in the election of directors
(as applicable with respect to CTT or the Asset Manager, the “Outstanding Voting
Securities”); or

 

(ii)            any merger, consolidation, reorganization or other similar
transaction pursuant to which CTT or the Asset Manager is merged with and into
or otherwise acquired by another entity; excluding, however, any such
transaction pursuant to which the individuals and entities who are beneficial
owners of the applicable entity’s Outstanding Voting Securities immediately
prior to such transaction will in the aggregate beneficially own, directly or
indirectly, fifty percent (50%) or more of the outstanding shares of common
stock, and the combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from such transaction (including a corporation that as a
result of such transaction owns CTT or the Asset Manager, as applicable, or all
or substantially all of the assets of CTT or the Asset Manager, as applicable,
either directly or through one or more subsidiaries).

 

(v)            “Closing” shall have the meaning ascribed to such term in the
Parent LP Agreement.

 

(w)           “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(x)           “Company” shall have the meaning set forth in the Preamble.

 

(y)           “Company Account” shall have the meaning set forth in Section 7.

 

(z)           “Company Board” shall mean the board of managers of the Company,
as established and maintained pursuant to the Company LLC Agreement.

 

(aa)         “Company LLC Agreement” means the Amended and Restated Limited
Liability Company Agreement of the Company (as amended or restated from time to
time, including all appendixes and exhibits thereto).

 

(bb)         “Confidential Information” shall have the meaning set forth in
Section 8(b).

 

(cc)         “Constituent Members” means any Person that is an officer,
director, member, partner or shareholder in a Person, or any Person that,
indirectly through one or more limited liability companies, partnerships or
other entities, is an officer, director, member, partner or shareholder in a
Person.

 

5

 

 

(dd)        “Control” means, in relation to a Person, where a person (or persons
acting in concert) holds or has direct or indirect control of (i) the affairs of
that Person, (ii) more than fifty percent (50%) of the total voting rights
conferred by all the issued shares in the capital of that Person which are
ordinarily exercisable in a general meeting (or the equivalent) or (iii) a
majority of the board of directors/managers of that Person, and “Controlled by”
shall be construed accordingly. For these purposes, “persons acting in concert,”
in relation to a Person, are persons which actively cooperate pursuant to an
agreement or understanding (whether formal or informal), with a view to
exercising, obtaining or consolidating Control of that Person.

 

(ee)         “CPR1” shall have the meaning set forth in the Preamble.

 

(ff)           “CTT” shall mean CatchMark Timber Trust, Inc.

 

(gg)         “Deferred Asset Management Fees” shall have the meaning ascribed to
such term in the Company LLC Agreement.

 

(hh)         “Effective Date” means July 6, 2018.

 

(ii)           “Excluded Loss” means (a) any Losses to the extent the same are
reimbursed by insurance proceeds or indemnities from third parties and (b) any
consequential, special, punitive or exemplary damages to the extent such damages
are not owed to a third party in connection with any third-party claim.

 

(jj)           “Expenses” shall have the meaning set forth in Section 10(a)

 

(kk)        “Fiscal Quarter” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(ll)           “Fiscal Year” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(mm)       “General Partner” shall have the meaning ascribed to such term in the
Parent LP Agreement.

 

(nn)         “Government Authority” means (i) a federal or national government,
any state government, any political subdivision thereof, or any local
jurisdiction therein; (ii) an instrumentality, board, commission, court or
agency, whether civilian or military, of any of the above, however constituted;
(iii) a public organization, being an organization whose members are (A)
countries or territories; (B) governments of countries or territories; and/or
(C) other public international organizations and includes the World Bank, the
United Nations, the International Monetary Fund and the OECD; or (iv) any
company, association, organization, business, enterprise or other entity which
is owned, whether in whole or in part, or controlled by any person listed in (i)
to (iii) above.

 

(oo)         “Indemnified Party” shall have the meaning set forth in Section
11(c).

 

(pp)         “Indemnitor” shall have the meaning set forth in Section 11(d).

 

6

 

 

(qq)        “Initial Annual Budget” shall have the meaning set forth in Section
3(a).

 

(rr)         “Key Man” shall mean any person set forth on Schedule A attached
hereto.

 

(ss)         “Key Man Employment Agreement” shall mean the Employment Agreements
listed on Schedule A attached hereto, as such may be amended, restated,
supplemented, modified or otherwise renegotiated.

 

(tt)           “Key Man Event” shall have the meaning set forth in Section 12.

 

(uu)        “Law” means any law, statute, act, legislation, bill, enactment,
policy, treaty, international agreement, ordinance, judgment, injunction, award,
decree, rule, regulation, interpretation, determination, requirement, writ or
order of any Government Authority.

 

(vv)         “Loss” or “Losses” means the dollar amounts of all actual costs,
claims, suits, actions, damages, losses, liabilities, obligations, reasonable
fees and expenses of any kind or nature, including costs and expenses of
accountants, attorneys and other professionals, judgments, fines, penalties,
settlements and all other costs and expenses and disbursements of any nature or
type actually paid or incurred or imposed on or asserted against a specified
Person, and all costs and expenses paid or incurred by the prevailing party or
any of its Affiliates in litigating against any other party or any of its
Affiliates, but specifically excluding in all such cases any Excluded Loss.

 

(ww)        “Major Decision” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(xx)         “Manager Indemnified Parties” shall have the meaning set forth in
Section 11(a).

 

(yy)         “Non-Controllable Expenses” shall have the meaning set forth in
Section 3(c).

 

(zz)         “Original AMA” shall have the meaning set forth in the Recitals.

 

(aaa)       “Parent” shall mean TexMark Timber Treasury, L.P., a Delaware
limited partnership.

 

(bbb)       “Parent Board” shall mean the partnership board of the Parent, as
established and maintained pursuant to the Parent LP Agreement.

 

(ccc)       “Parent Indemnified Parties” shall have the meaning set forth in
Section 11(c).

 

(ddd)       “Parent LP Agreement” means the Amended and Restated Limited
Partnership Agreement of TexMark Timber Treasury, L.P., a Delaware limited
partnership (as amended or restated from time to time, including all appendixes
and exhibits thereto).

 

7

 

 

(eee)      “Parent Partners” shall mean the Partners of the Parent, as defined
in the Parent LP Agreement.

 

(fff)         “Partner” shall have the meaning set forth in the Parent LP
Agreement.

 

(ggg)      “Party” shall have the meaning set forth in the Preamble.

 

(hhh)      “Person” means an individual or a general partnership, limited
partnership, corporation, professional corporation, limited liability company,
limited liability partnership, joint venture, trust, business trust,
unincorporated organization, cooperative or association or a governmental,
administrative or regulatory agency or any other entity.

 

(iii)         “Preferred Board Members” shall have the meaning set forth in
Section 3(a).

 

(jjj)         “Preferred Partners” shall have the meaning ascribed to such term
in the Parent LP Agreement.

 

(kkk)     “Preliminary Budget” shall have the meaning set forth on Schedule B-2.

 

(lll)         “Property” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(mmm)   “Qualified REIT Consultant” means a nationally recognized accounting
firm, which may be the Company’s audit or tax firm, or a nationally recognized
law firm selected by the Asset Manager.

 

(nnn)      “REIT” means a “real estate investment trust” under Section 856 of
the Code

 

(ooo)       “Senior Credit Documents” shall have the meaning ascribed to such
term in the Parent LP Agreement.

 

(ppp)       “Senior Lender” shall have the meaning ascribed to such term in the
Parent LP Agreement.

 

(qqq)       “Senior Officer” means a senior officer or director of the Asset
Manager or its Affiliates.

 

(rrr)        “Services” shall have the meaning set forth in the Section 2(b).

 

(sss)       “Subsidiaries” means, with respect to any Person, any corporation,
partnership, limited liability company, trust or other entity of which all or
any part of the outstanding equity interests are owned, directly or indirectly,
by such Person. For the avoidance of doubt, the Company and its Subsidiaries and
CPR1 shall each be considered a Subsidiary of Parent, and CPR1 shall be
considered a Subsidiary of the Company, for purposes of this Agreement.

 

8

 

 

(ttt)        “Termination Date” shall mean the effective date of any termination
of this Agreement in accordance with the terms hereof.

 

(uuu)      “Thirty-Year Harvest Schedule” shall have the meaning set forth on
Schedule B-2.

 

(vvv)        “Three-Year Harvest Plan” shall have the meaning set forth on
Schedule B-2.

 

(www)     “Timber Manager” shall mean any entity that has been retained by the
Company or a Subsidiary thereof to perform and carry out property management
services at the Property or any other Real Estate Assets.

 

(xxx)        “Transfer” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(yyy)        “Wood Supply Agreements” shall have the meaning ascribed to such
term in the Company LLC Agreement.

 

2.             Appointment and Duties of the Asset Manager.

 

(a)           On the terms and subject to the conditions set forth in this
Agreement, the Company, on its own behalf and on behalf of each of its
Subsidiaries, hereby appoints the Asset Manager to serve as asset manager and to
provide the Services, and the Asset Manager hereby accepts such appointment.
Except as otherwise provided herein or in connection with the termination of
this Agreement, neither the Company nor any of its Subsidiaries shall appoint
any other Person to serve as Asset Manager or to provide the services of the
Asset Manager as set forth in this Agreement, except to the extent that the
Asset Manager otherwise agrees, in its sole and absolute discretion. Whenever in
this Agreement the approval or consent of the Company is required, such approval
shall be obtained through the affirmative action of the Company Board, in
accordance with the terms of the Company LLC Agreement.

 

(b)           The Asset Manager undertakes and agrees to use all commercially
reasonable efforts to provide the Services and to otherwise fulfill its
obligations hereunder. In rendering the Services and otherwise fulfilling its
obligations hereunder, the Asset Manager will at all times (i) be subject to the
supervision, management and direction of the Company Board and any applicable
approvals required by or restrictions imposed by this Agreement, the Company LLC
Agreement or the Parent LP Agreement, (ii) have only such functions and
authority as the Company Board may delegate to it, including the functions and
authority identified herein and delegated to the Asset Manager hereby, (iii) not
take, or cause to be taken, any action that constitutes a Major Decision without
such action having received the required prior approval of the Parent Board or
the Company Board, as applicable, in accordance with the Parent LP Agreement or
the Company LLC Agreement, as applicable, (iv) act in a manner consistent with,
and subject to, the applicable Annual Budget (subject to Section 3 hereof) and
applicable Law and (v) act in good faith as a reasonable expert in managing
forestry investments. Subject to the foregoing, during the term of this
Agreement, the Asset Manager will be responsible for the following
(collectively, the “Services”):

 

9

 

 

(i)            preparing the Annual Budget and presenting the Annual Budget for
approval in accordance with Section 3 hereof and the Company LLC Agreement;

 

(ii)            implementing each Annual Budget following the approval thereof
in accordance with the terms of such approved Annual Budget and Section 3
hereof;

 

(iii)           administering the day-to-day business and operations of the
Company and its Subsidiaries and performing and supervising the performance of
such administrative functions necessary to the management of the Company and its
Subsidiaries as may be agreed upon by the Asset Manager and the Company Board;

 

(iv)           assisting the Company in retaining at all times a Qualified REIT
Consultant and other advisors to advise the Company regarding the maintenance of
the Company’s qualification as a REIT and monitoring compliance with the various
REIT qualification tests and other rules set out in the Code and Treasury
Regulations thereunder;

 

(v)            investigating, selecting, engaging and supervising, on behalf of
the Company and its Subsidiaries, third-party service providers as contemplated
by Section 2(c) hereof;

 

(vi)           overseeing the performance by each Timber Manager of its duties
and making periodic recommendations to the Company Board regarding the
engagement, or termination of, such Timber Managers;

 

(vii)         identifying, investigating, analyzing and originating potential
investment opportunities for the Company and its Subsidiaries, to the extent
directed to do so by the Company Board;

 

(viii)        consulting with the Company Board regarding acquiring, financing,
retaining, selling, restructuring or disposing of Business Assets and
recommending strategies for the same;

 

(ix)           supervising and structuring prospective sales or exchanges of
Business Assets, and conducting negotiations with purchasers, brokers, lenders
and, if applicable, their respective agents and representatives, in each case,
as requested by the Company Board;

 

(x)             identifying, evaluating and recommending sources of financing
for the Company and its Subsidiaries, as requested by the Company Board;

 

(xi)            providing the Company Board with periodic review and evaluation
of the performance of the Business Assets and other customary functions related
to asset management;

 

(xii)          taking required actions on behalf of the Company and its
Subsidiaries to qualify to do business in all applicable jurisdictions and to
obtain and maintain all appropriate licenses;

 

10

 

 

(xiii)        taking required actions on behalf of the Company and its
Subsidiaries in complying with all applicable regulatory requirements with
respect to their business activities;

 

(xiv)         preparing and filing all tax returns and tax elections which are
required by applicable law to be filed or are otherwise advisable and taking all
other action reasonably necessary in connection with such required tax filings
and reports with respect to the Company and its Subsidiaries (subject to the
written approval of the Company and/or its Subsidiaries, as applicable);

 

(xv)           preparing, or causing to be prepared, and delivering (i) the
financial reports and other information set forth in Section 4 hereof (pursuant
to the terms thereof), and, (ii) the information related to tax matters set
forth in Section 5 hereof (pursuant to the terms thereof);

 

(xvi)         preparing and providing for submission to and approval by the
Company Board, prior to approval of the first Annual Budget, health and safety
policies and procedures for employees and contractors (including all reasonably
requested amendments thereto from the Company Board), as well as for tracking,
reporting and managing workplace health and safety;

 

(xvii)         ensuring that the Business Assets are managed in accordance with
Sustainable Forestry Initiative requirements, including all required reporting
and auditing obligations, and forecasting a timeline for audits and
recertification, as applicable, and reporting to the Company Board on the same;

 

(xviii)        complying with the requirements of the Wood Supply Agreements,
including preparing, delivering and obtaining approval of the Annual Plan,
Forecast Plan and Delivery Plan (as each such term is defined in the Wood Supply
Agreements) each year when and as required in the Wood Supply Agreements;

 

(xix)          reporting quarterly to the Company Board any variances in harvest
from the harvest plans for the previous calendar quarter exceeding Allowable
Variance as identified on Exhibit A appended hereto, and shall not exceed any
such Allowable Variance without having first obtained the approval of the
Company Board;

 

(xx)           submitting to the Company Board monthly reports detailing any
recordable incidents for employees and contractors that occurred in the previous
month and any material environmental compliance matters, including violations or
potential violations of Laws and best management practices applicable to the
Business Assets, the Company and its Subsidiaries, and the operation of the
same;

 

(xxi)          preparing, or causing to be prepared, and delivering, or causing
to be delivered, to the lenders or other creditors of the Company or any of its
Subsidiaries, such financial information, reports and other information as is
required pursuant to the terms of any loan or credit agreement between the
Company or any of its Subsidiaries and such lenders or creditors;

 

11

 

 

 

(xxii)      providing such other services (i) related to the foregoing as the
Asset Manager and the Company Board may reasonably agree upon or (ii) set forth
elsewhere herein; and

 

(xxiii)    doing all things reasonably necessary to assure its ability to render
the Services as described in this Agreement.

 

Notwithstanding anything else to the contrary in this Agreement, the Asset
Manager shall, at all times in its provision of the above Services, (A) hold
itself out to the public as a legal entity separate and distinct from the
Parent, the Company and its Subsidiaries, (B) correct any known misunderstanding
regarding its status as a separate entity from the Parent, the Company and its
Subsidiaries, (C) conduct and operate its business in its own name and (D) not
identify itself or any of its Affiliates as a division or part of the Parent,
the Company or its Subsidiaries. Further, the Asset Manager shall not assume any
liability for any obligations of the Parent, the Company and their Subsidiaries
(and shall clearly identify in any action taken on behalf of the Company or
their Subsidiaries that the Asset Manager is acting in the capacity as agent and
not in its individual capacity), and neither the Asset Manager nor the Company
nor any of their Subsidiaries shall hold the Asset Manager out to any third
parties as liable for any of the obligations of the Parent, the Company or any
of their Subsidiaries. For the avoidance of doubt, the immediately preceding
sentence is not intended to modify the liability of any Affiliate of the Asset
Manager that owns equity interests of the Parent, subject to the applicable
provisions of the Parent LP Agreement.

 

(c)               The Asset Manager may investigate, select, recommend, engage
and supervise, for and on behalf of, and at the sole cost and expense of, the
Company or its Subsidiaries, accountants, legal counsel, appraisers, insurers,
brokers, transfer agents, registrars, developers, investment banks, valuation
firms, financial advisors, due diligence firms and such other third party
professionals as the Asset Manager reasonably deems necessary or advisable in
connection with the performance of the Services and its other obligations
hereunder, and the Company or its Subsidiaries shall pay for the reasonable cost
and expenses thereof, including pursuant to Section 7 of this Agreement. Any
such engagement of third-party professionals shall not relieve the Asset Manager
from its obligations hereunder.

 

(d)              Anything in this Agreement to the contrary notwithstanding, but
subject to Section 2(g), the Asset Manager shall refrain from taking any action
which, in its sole judgment made in good faith, would (i) reasonably be expected
to adversely affect the status of the Company as a REIT, (ii) subject Parent,
the Company or any of its Subsidiaries to regulation under the Investment
Company Act of 1940, as amended, or (iii) violate any applicable Law or
otherwise not be permitted by the Company LLC Agreement or the Parent LP
Agreement. If such action shall be ordered by the General Partner, the Parent
Board or Company Board, the Asset Manager shall notify promptly the General
Partner, the Parent Board or Company Board, as applicable, of the Asset
Manager’s judgment of the potential impact of such action and shall refrain from
taking such action. In such event, the Asset Manager shall have no liability for
acting in accordance with the specific instructions of the General Partner, the
Parent Board or Company Board so given. Notwithstanding the foregoing, the
Manager Indemnified Parties shall not be liable to Parent, the Company or any of
their respective Subsidiaries, the General Partner, the Parent Board or the
Company Board, or the members, managers or partners of the General Partner,
Parent, the Company or any of their respective Subsidiaries, for any act or
omission by any Manager Indemnified Parties except as provided in Section 11 of
this Agreement.

 

12

 

 

(e)               In the performance of its obligations and responsibilities
hereunder, the Asset Manager shall not (i) use any corporate funds for any
illegal contributions, gifts, entertainment or other unlawful expenses relating
to political activity, (ii) use any corporate funds for any direct or indirect
unlawful payments to any foreign or domestic governmental officials or employees
or any employees of a foreign or domestic government-owned entity, (iii) violate
any provision of the Foreign Corrupt Practices Act of 1977 or any other
anticorruption Law applicable to the Company or any of its Subsidiaries, (iv)
make, offer, authorize or promise any payment, rebate, payoff, influence
payment, contribution, gift, bribe, rebate, kickback, or any other thing of
value to any government official or employee, political party or official, or
candidate, regardless of form, to obtain favorable treatment in obtaining or
retaining business or to pay for favorable treatment already secured, (v)
establish or maintain any fund of corporate monies or other properties for the
purpose of supplying funds for any of the purposes described in the foregoing
clause (iv) or (vi) make any bribe, unlawful rebate, payoff, influence payment,
facilitation payment, kickback or other similar payment of any nature. The Asset
Manager shall develop and implement an anti-corruption compliance program that
includes internal controls, policies and procedures designed to ensure
compliance with any applicable national, regional or local anti-corruption Law.
The Asset Manager shall report violations or suspected violations of applicable
anti-corruption Law or this Section 2(e) to the Company Board as soon as
practicable after the Asset Manager becomes aware of or suspects a violation.

 

(f)                Without limiting any provision herein, all actions of the
Parent and the Company under this Agreement requiring the consent or approval of
the Company Board shall be subject to the direction of the members of the
Company Board. Asset Manager expressly acknowledges Section 4.12(b) of the
Parent LP Agreement and the Company LLC Agreement.

 

(g)               Asset Manager shall, and shall use reasonable best efforts to
take all actions required to cause the Company to, comply with Sections 4.11 and
5.2 of the Company LLC Agreement.

 

(h)              Asset Manager expressly acknowledges the restrictions on
Parent’s activities pursuant to Sections 4.17 and 4.19 of the Parent LP
Agreement, and understands that the restrictions in Section 4.17 include the
actions of an agent acting on its behalf. Asset Manager acknowledges and agrees
that for U.S. federal income tax purposes it is providing Services to and on
behalf of distinct principals pursuant to this Agreement and agrees that it
shall use reasonable best efforts to take all actions (including avoiding taking
actions) required to cause Parent to comply with such provisions of the Parent
LP Agreement, without prejudice to actions required to be undertaken on behalf
of the Company or its Subsidiaries.

 

13

 

 

3.             Annual Budget.

 

(a)               The Company and its Subsidiaries shall be operated in
accordance with an annual budget, as it may be annually updated from time to
time pursuant to this Section 3 (the “Annual Budget”). The initial Annual Budget
for the period beginning on the Effective Date and ending on December 31, 2018,
including the related variances, is attached hereto as Schedule B-1 (the
“Initial Annual Budget”). For each Fiscal Year thereafter, the Asset Manager
shall be responsible for preparing and submitting to the Company Board for
approval as a Major Decision in accordance with the terms of the Company LLC
Agreement a proposed updated Annual Budget, including the related variances. The
Annual Budget shall be prepared by the Asset Manager in accordance with the
protocols (including the preparation of the back-up materials on the timetable
set forth therein) set forth on Schedule B-2 hereto (the “Budget Development
Protocols”). The Annual Budget for each Fiscal Year shall be prepared with the
same detail and line items as set forth in the Initial Annual Budget and such
other detail as the members of the Company Board appointed by the Preferred
Partners in accordance with Section 4.3(c) of the Parent LP Agreement (the
“Preferred Board Members”) may reasonably request. In connection with the review
of a proposed Annual Budget, the Preferred Board Members may reasonably request
additional information regarding the materials supporting the proposed Annual
Budget or such other information as is necessary or desirable to enable review
of such proposed Annual Budget, and the Asset Manager shall provide such
requested information. The Preferred Board Members shall consent to or reject
the proposed Annual Budget, or request additional information (as provided for
above), within ten (10) Business Days following (i) receipt of such proposed
Annual Budget or (ii) receipt of all additional information that is, in the
determination of the Preferred Board Members, necessary or desirable to enable
review of such proposed Annual Budget. The Asset Manager shall comply with the
Budget Development Protocols regarding the Preliminary Budget for each Fiscal
Year. The Annual Budget shall be prepared and submitted annually by the Asset
Manager no later than December 10 of each year with respect to the following
Fiscal Year. The Annual Budget for each Fiscal Year shall include use of the
pre-funded reserve amounts as shown on Schedule B-3 hereto for the four Fiscal
Quarters comprising such Fiscal Year. In connection with the submission of the
Annual Budget, the Asset Manager shall also prepare and submit to the Company
Board an annual business plan for Parent and its Subsidiaries, including a
responsible five-year operations forecast, including the operating metrics set
forth on Schedule B-4 hereto (the “Annual Plan”). The Preferred Board Members,
or their designated representatives, shall be provided reasonable access to all
information, data, reports, models and analyses relied on in developing the
Annual Plan (including, for the avoidance of doubt, all financial and
silvicultural assumptions, constraints, supporting stand level data,
merchantable timber volumes, pre-merchantable acres by species and age class and
acres by land classification).

 

(b)              Pursuant to this Agreement, the Asset Manager is charged with
implementing each Annual Budget following the approval thereof, in accordance
with the terms of such approved Annual Budget and the terms of this Agreement.
In doing so, the Asset Manager shall at all times act in a manner consistent
with the Annual Budget; provided, however, that the Asset Manager may in its
discretion expend funds for Non-Controllable Expenses (as defined below) not
otherwise reflected in the Annual Budget. In implementing the Annual Budget, the
Asset Manager may in its discretion vary material line items in the applicable
Annual Budget within the variances set forth in Exhibit A appended hereto (such
variances being referred to herein as “Allowable Variances”). Asset Manager
shall not exceed any Allowable Variance without having first obtained the
approval of the Company Board.

 

14

 

 

(c)               In the event the Asset Manager is unable to obtain the
approval of the Company Board of any Annual Budget prior to the intended period
for such Annual Budget, then a “Budget Impasse” shall be deemed to exist, until
such time as such Annual Budget is approved in accordance with this Agreement,
the Parent LP Agreement and Company LLC Agreement. During any Budget Impasse,
the Asset Manager shall perform the Services and otherwise fulfill its
obligations under this Agreement in accordance with the most recently approved
Annual Budget, except that (i) the Asset Manager may make or cause to be made
any expenditure not contemplated by such Annual Budget which is (1) an emergency
expenditure to protect the health, safety and welfare of people or property (in
which event the Asset Manager shall notify the Company Board immediately) or (2)
an expenditure to satisfy (A) any outstanding taxes and related fees, costs and
expenses, (B) any obligations for interest, principal (except at maturity),
escrows, fees and expenses due under the Senior Credit Documents and any other
indebtedness approved as a Major Decision or (C) premiums for insurance required
under this Agreement, the Parent LP Agreement or the Company LLC Agreement, and
Senior Credit Documents, any loan document relating to indebtedness approved as
a Major Decision or any other contract to which the Parent or any of its
Subsidiaries is a party that are entered into in accordance with the Parent LP
Agreement (such expenses, “Non-Controllable Expenses”) and (ii) the Asset
Manager acting alone shall otherwise have no authority to make any other
expenditure without the approval of the Company Board as a Major Decision.

 

4.             Reporting.

 

(a)               The Asset Manager shall prepare, or cause to be prepared, at
the expense of the Company and its Subsidiaries, all reports, financial or
otherwise, with respect to the Company and its Subsidiaries reasonably requested
in order to comply with their respective organizational documents or any other
materials required to be filed with any governmental body or agency, and shall
prepare, or cause to be prepared, all materials and data necessary to complete
such reports and other materials.

 

(b)              Without limiting the generality of Section 4(a), the Asset
Manager shall prepare, or cause to be prepared, and shall deliver to the Company
and the Company Board, at the expense of Company, the following:

 

(i)                 within forty-five (45) days after the end of each Fiscal
Year, a report as of the end of such Fiscal Year prepared in conformity with
accounting principles generally accepted in the United States and consistently
applied, setting forth (A) a balance sheet of Company (that will include
appropriate footnote disclosure) as of the end of such Fiscal Year, and (B) an
income statement of Company for such Fiscal Year; provided, that the annual
financial statements referred to in this Section 4(b)(i) shall be audited by a
nationally recognized accounting firm in accordance with generally accepted
auditing standards in the United States and consistently applied, and such
accounting firm’s report thereon shall accompany the annual financial
statements; provided, further, that while the Asset Manager shall endeavor to
provide such audited financial statements within the forty-five (45)-day period
stated above, it will not be considered to have breached this Section 4(b)(i) if
it fails to do so if the Asset Manager (x) is using commercially reasonable
efforts to produce audited financial statements within such timeframe, (y)
provides unaudited financial statements within such forty-five (45)-day period
and (z) provides such audited financial statements as soon as practicable
following such date but in any event no later than ninety (90) days after the
end of such Fiscal Year;

 

15

 

 

(ii)              not later than forty-five (45) days after the end of each of
the first three Fiscal Quarters of each Fiscal Year, final versions of each of
the following:

 

(A)             An unaudited report setting forth as of the end of such fiscal
quarter (x) a balance sheet of Company as of the end of such Fiscal Quarter and
(y) an income statement of Company for such Fiscal Quarter

 

(B)              A calculation of the reserves of the Company and the amount of
“Base Available Cash,” “Net Available Cash,” “Distributable Cash Flow” and
“Remaining Distributable Cash Flow” as of the end of the relevant Fiscal
Quarter, in each case, as defined in the Company LLC Agreement;

 

(C)              A narrative describing the condition of the Property and other
Business Assets and operations of Company and its Subsidiaries during such
Fiscal Quarter;

 

(D)             A report of any changes in the status of any major service
contracts, any material line item variances of more than ten percent (10%) from
the Annual Budget and any litigation or other legal issues involving the Parent,
the Company or its Subsidiaries during such Fiscal Quarter; and

 

(E)              A report providing a detailed description of each Permitted HBU
Sale (as defined in the Company LLC Agreement) consummated during such Fiscal
Quarter.

 

(c)               In addition to the reporting requirements set forth above, the
Asset Manager shall give notice to the Company Board of:

 

(i)               Any items that will otherwise be reportable under
Section 4(b)(ii)(D) above promptly after the Asset Manager becomes aware of such
item;

 

(ii)              Any known or reported non-conformance with applicable state
and local regulations and Sustainable Forestry Initiative standards or
principles as in effect on the date hereof and as modified from time to time by
Sustainable Forestry Initiative Inc.; and

 

(iii)             Any proposed transaction between the Company or any of its
Subsidiaries, on the one hand, and any other Person, on the other hand, if such
transaction would create a potential conflict of interest on the part of the
Asset Manager in causing the Company or its Subsidiaries to enter into such
transaction, or any other occurrence of a potential conflict of interest on the
part of the Asset Manager or its Affiliates in connection with causing Company
(or its Subsidiaries) to enter into such transaction.

 

(d)               The Asset Manager shall meet with the Partners on a quarterly
basis to discuss the quarterly reporting and such other topics relating to the
business of the Company and its Subsidiaries as the other Partners may
reasonably request.

 

16

 

 

5.                  Certain Tax Matters. The Asset Manager shall, at Company’s
expense, use reasonable best efforts to (i) not later than twenty-five (25) days
from the end of each Fiscal Quarter (including the end of each Fiscal Year),
provide to the Company a report regarding the Company’s compliance with the REIT
asset tests in Section 856(c)(4) of the Code for such Fiscal Quarter reviewed by
the Qualified REIT Consultant, (ii) not later than forty-five (45) days from the
end of each Fiscal Quarter, provide to the Company the quarterly REIT testing
reports regarding the Company reviewed by the Qualified REIT Consultant and
(iii) not later than forty-five (45) days after the end of each Fiscal Year,
provide to the Company the final REIT testing report regarding the Company
reviewed by the Qualified REIT Consultant. The Asset Manager shall provide to
the Company Board and Partners, as soon as is reasonably practicable following
request thereof, any other information reasonably required to determine
compliance by the Company with the requirements under Section 856 et seq. of the
Code and the related Treasury Regulations for the Company to (x) qualify for,
and maintain, status as a REIT and (y) avoid the imposition of any U.S. federal
income tax or penalty on the Company.

 

6.                  Additional Activities. Nothing in this Agreement is intended
to prevent the Asset Manager or any of its Affiliates, officers, directors,
employees or personnel from engaging in other activities, investments or
businesses, including from rendering advice or services of any kind to any other
Person so long as Asset Manager complies at all times with Section 8 and
promptly notifies the Company Board of any such activities that conflict with
its obligations hereunder.

 

7.                  Bank Accounts. At the direction of the Company Board, the
Asset Manager may establish and maintain one or more bank accounts in the name
of the Company or any of its Subsidiaries (any such account, a “Company
Account”), and may collect and deposit funds into any such Company Account or
Company Accounts, and disburse funds from any such Company Account or Company
Accounts for the payment of Expenses, under such terms and conditions as the
Company Board may approve. The Asset Manager shall from time to time render
appropriate accountings of such collections and disbursements to the Company
and, upon the request of the Company Board, to the Company’s auditors. The Asset
Manager shall disburse funds to pay Expenses from the Company Account in the
name of the entity with respect to which such Expenses relate. For the avoidance
of doubt, the Asset Manager’s disbursement of funds from the Company Accounts
for the payment of Expenses or any other amounts shall be subject to the terms
of the applicable Annual Budget and any limitations on specific Expenses set
forth in Section 10(a).

 

8.                  Records; Confidentiality.

 

(a)               The Asset Manager shall maintain and preserve the books and
records of the Company and its Subsidiaries (including accounting and reporting
systems), and such records shall be accessible for inspection by the General
Partner or representatives of Parent, the Company or any of its Subsidiaries at
any time during normal business hours upon reasonable advance written notice.

 

17

 

 

(b)              The Asset Manager shall keep confidential any and all
information regarding Parent, the Company or its Subsidiaries obtained in
connection with the Services rendered under this Agreement (“Confidential
Information”) and shall not disclose any such Confidential Information (or use
the same except in furtherance of its duties under this Agreement) to
unaffiliated third parties except (i) with the prior written consent of Company
Board; (ii) to legal counsel, accountants and other professional advisors; (iii)
to appraisers, financing sources and others in the ordinary course of business
of Parent, the Company and its Subsidiaries; (iv) to governmental officials
having jurisdiction over Parent, the Company or any of its Subsidiaries; (v) in
connection with any governmental or regulatory filings of Parent, the Company or
any of its Subsidiaries or disclosure or presentations to Parent’s equity
holders or prospective equity holders; (vi) as required by applicable Law; or
(vii) to the extent such information is otherwise publicly available.
Notwithstanding anything herein to the contrary, each of the following shall be
deemed to be excluded from the provisions hereof any Confidential Information
that (A) has become publicly available through the actions of a Person other
than the Asset Manager, (B) is released in writing by CTT, Parent, the Company
or any of its Subsidiaries to the public or (C) is obtained by the Asset Manager
from a third party without breach by such third party of an obligation of
confidence with respect to the Confidential Information disclosed.

 

9.                  Asset Management Fee.

 

(a)               For the period prior to the Amendment Effective Date, the
Asset Manager is entitled to receive the Asset Management Fee earned under the
Original AMA, subject to its terms. Subject to Section 9(b), for the period of
time on and after the Amendment Effective Date, the Asset Manager shall receive
from the Company an asset management fee (the “Asset Management Fee”),
calculated and payable quarterly in arrears, in an annual amount equal to (x)
the Applicable Rate (as defined below) for the applicable period of time,
multiplied by (y) the Base Amount, multiplied by (z) the Beginning Preferred
Partner Ratio. The “Applicable Rate” shall mean 1.00%; provided, however, that
if the entire Initial Preferred Distribution Balance has not been reduced to
zero ($0) in accordance with Section 3.3(d) of the Company LLC Agreement, the
Applicable Rate shall (i) be reduced to 0.75% for the three (3) consecutive
Fiscal Quarters beginning with the first full Fiscal Quarter following the third
(3rd) anniversary of the Effective Date, and (ii) be further reduced to 0.25%
for all Fiscal Quarters thereafter; provided, further, that to the extent that
the Applicable Rate has been so reduced, and subsequent to such reduction the
entire Initial Preferred Distribution Balance is reduced to zero ($0) in
accordance with Section 3.3(d) of the Company LLC Agreement, then the Applicable
Rate shall automatically increase back to 1.0% commencing with the day upon
which such return threshold is achieved. The Asset Management Fee, to the extent
due and owing in accordance with this Agreement, the Parent LP Agreement and the
Company LLC Agreement, shall be paid quarterly within forty-five (45) days
following the end of the preceding Fiscal Quarter.

 

(b)              The payment of the Asset Management Fee shall be subject to
deferral as set forth in the Parent LP Agreement and the Company LLC Agreement.
In addition, the Asset Management Fee shall be subject to reduction pursuant to
the terms of Schedule 5.7 of the Parent LP Agreement.

 

(c)               Asset Manager acknowledges and agrees that the Company and its
Subsidiaries will agree upon an allocation between each of them of the Asset
Management Fee based on the relative Services provided to each of them.

 

18

 

 

10.              Expenses

.

(a)               The Company or its Subsidiaries shall bear and pay (including
pursuant to the terms of Section 7), the following third-party fees, costs and
expenses, whether incurred prior to or following the Effective Date
(collectively, “Expenses”):

 

(i)                 all costs and expenses incurred in connection with the
formation of the Company and its Subsidiaries, and all expenses associated with
the issuance of the Subsidiary REIT Preferred Units, including any placement
agent fees associated with such issuance;

 

(ii)              all fees, costs and expenses incurred in evaluating,
negotiating, structuring, acquiring, holding, managing, leasing, financing,
refinancing, disposing of or otherwise dealing with the Property and other
Business Assets, including any reasonable legal and accounting expenses and
other fees and out-of-pocket costs related thereto, and the costs of rendering
financial assistance to or arranging for financing for any assets or businesses
constituting the Business Assets (including the Property);

 

(iii)            fees, costs and expenses of auditors, appraisers, legal counsel
and other advisors of the Company and its Subsidiaries, insurance costs of the
Company and its Subsidiaries and litigation costs and indemnity expenses of the
Company and its Subsidiaries;

 

(iv)             administrative expenses related to the operation of the Company
and its Subsidiaries, including fees, costs and expenses of accountants, lawyers
and other professionals incurred in connection with the Company’s and its
Subsidiaries’ annual audit, financial reporting, legal opinions and tax return
preparation (including, without limitation, any costs and expenses incurred in
connection with the satisfaction of the requirements of Section 5 hereof), as
well as expenses associated with valuations of the Property and other Business
Assets, including the fees, costs and expenses of any independent appraiser;

 

(v)               interest expenses, brokerage commissions and other investment
costs incurred by or on behalf of the Company and its Subsidiaries;

 

(vi)             the Asset Management Fee, subject to the restrictions and
limitations provided in the Parent LP Agreement and the Company LLC Agreement;

 

(vii)          costs of travel and travel-related expenses with respect to the
business of the Company and its Subsidiaries; provided, that the cost of airfare
shall not exceed commercial fares and, for the avoidance of doubt, shall not
include costs associated with first-class, private or chartered air travel;

 

(viii)        subject to Section 10(c), all taxes and license fees levied
against the Company and its Subsidiaries or their assets or operations;

 

(ix)             the costs of annual REIT compliance testing for the Company,
including fees and expenses of the Qualified REIT Consultant;

 

19

 

 

(x)               insurance costs incurred in connection with the operation of
the business of the Company and its Subsidiaries;

 

(xi)             the compensation of the employee identified on, and subject to
the limitations set forth on, Schedule C; and

 

(xii)          amounts to be contributed or advanced to any Subsidiary for the
purpose of such entity paying any cost of the type described in the foregoing
clauses (i) through (xi).

 

(b)              Notwithstanding anything herein to the contrary, the Asset
Manager and its Affiliates shall bear the costs and expenses incurred by such
Persons in providing for their normal operating overhead, salaries (except as
specifically provided in Section 10(a)(xi)), wages or benefits of their
employees, rent, utilities, expenses of office furniture, computers and other
office equipment, taxes (including taxes imposed on the income or gross receipts
of the Asset Manager on account of fees received pursuant to the terms of this
Agreement), other expenses incurred in maintaining their place of business, and
other similar administrative expenses (including all premiums and expense
required in connection with “errors and omissions” insurance policies covering
the officers and employees of the Asset Manager or its Affiliates). Neither
Parent nor the Company nor any of its Subsidiaries shall pay such expenses, and
Asset Manager shall not be entitled to reimbursement from Parent, the Company or
its Subsidiaries for any such expenses.

 

(c)               For the avoidance of doubt, Asset Manager shall not be
reimbursed for any expenses under this Agreement.

 

11.              Exculpation and Indemnification.

 

(a)               The Asset Manager, its Affiliates and their respective
Constituent Members, employees, managers, consultants and agents (collectively,
the “Manager Indemnified Parties”) will not be liable to Parent, the Company or
any of their respective Subsidiaries, the Parent Board, the General Partner, the
Company Board or the members, managers or partners of Parent, the Company or any
of their respective Subsidiaries for any acts or omissions by any Manager
Indemnified Party, pursuant to or in accordance with this Agreement, except for
any acts or omissions by any Manager Indemnified Party constituting a Bad Act.

 

(b)              To the fullest extent permitted by applicable Law, Company
shall and does hereby agree to indemnify and hold harmless and pay all judgments
and claims against any Manager Indemnified Party, each of which shall be a
third-party beneficiary of this Agreement solely for purposes of this Section
11, from and against any Loss incurred by them for any act or omission taken or
suffered by each Manager Indemnified Party (including any act or omission
performed or omitted by any of them in good faith reliance upon and in
accordance with the opinion or advice of experts, including of legal counsel as
to matters of law, of accountants as to matters of accounting, or of investment
bankers or appraisers as to matters of valuation; provided, that such Persons
were selected and monitored with reasonable care) in connection with, in respect
of or arising from any acts or omissions of such Manager Indemnified Party made
in the performance of this Agreement, except that there shall be no
indemnification for (i) any act or omission of a Manager Indemnified Party that
constitutes a Bad Act or (ii) any indemnification obligation of the Manager
Indemnified Parties pursuant to Section 5.3(b)(iv) of the Parent LP Agreement or
the Losses related thereto.

 

20

 

 

(c)               To the fullest extent permitted by applicable Law, Asset
Manager shall and does hereby agree to indemnify and hold harmless and pay all
judgments and claims against Parent, the Company and its Subsidiaries and each
of their respective Constituent Members, employees, managers, consultants and
agents (collectively, the “Parent Indemnified Parties” and together with the
Manager Indemnified Parties, the “Indemnified Parties”), from and against any
Loss incurred by them in respect of or arising from any acts or omissions by any
Manager Indemnified Party pursuant to or in accordance with this Agreement
constituting a Bad Act. Each of the Parent Indemnified Parties (excluding the
Company) shall be a third-party beneficiary of this Agreement solely for
purposes of this Section 11. For the avoidance of doubt, for purposes of this
Section 11(c), any Loss in respect of or arising from an act by the Asset
Manager in its capacity as a fiduciary under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations thereunder shall not
constitute a Bad Act.

 

(d)              The Indemnified Party will promptly notify the party against
whom indemnity is claimed (the “Indemnitor”) of any claim for which it seeks
indemnification; provided, however, that the failure to so notify the Indemnitor
will not relieve the Indemnitor from any liability which it may have hereunder,
except to the extent such failure actually prejudices the Indemnitor. The
Indemnitor shall have the right to assume the defense and settlement of such
claim; provided, that the Indemnitor notifies the Indemnified Party of its
election to assume such defense and settlement within thirty (30) days after the
Indemnified Party gives the Indemnitor notice of the claim. In such case, the
Indemnified Party will not settle or compromise such claim, and the Indemnitor
will not be liable for any such settlement made, without its prior written
consent. If the Indemnitor is entitled to, and does, assume such defense by
delivering the aforementioned notice to the Indemnified Party, the Indemnified
Party will (i) have the right to approve the Indemnitor’s counsel (which
approval will not be unreasonably withheld, delayed or conditioned), (ii) be
obligated to cooperate in furnishing evidence and testimony and in any other
manner in which the Indemnitor may reasonably request, and (iii) be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense. In addition, if the Indemnitor assumes such
defense, the Indemnitor may settle any such claim without the prior consent of
the Indemnified Party if such settlement involves the full release of the
Indemnified Party and does not impose any non-monetary remedies and conditions
on the Indemnified Party without the Indemnified Party’s prior written consent,
which shall not be unreasonably withheld, delayed or conditioned.

 

(e)               Expenses reasonably incurred by an Indemnified Party in
defense or settlement of any claim that may be subject to a right of
indemnification pursuant to Section 11(b) or Section 11(c) shall be advanced by
the Indemnitor prior to the final disposition thereof upon receipt of an
undertaking by or on behalf of such Indemnified Party to repay such amount to
the extent that it shall be determined upon final decision, judgment or order
(whether or not subject to appeal) that such Indemnified Party is not entitled
to be indemnified hereunder.

 

(f)                If a claim for indemnification or payment of reasonable
expenses hereunder is not paid in full within twenty (20) days after a written
notice of claim therefor has been received by the Indemnitor, the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expenses of prosecuting such claim.

 

21

 

 

 

(g)           The indemnification provided by this Section 11 shall be in
addition to any other rights to which an Indemnified Party may be entitled under
any agreement, pursuant to any action of the Company, as a matter of Law or
otherwise, and shall continue as to an Indemnified Party who has ceased to serve
in such capacity.

 

12.          KEY MAN EVENT.

 

(a)            If the employment of any Key Man terminates other than due to
death, Disability (as defined in the Key Man Employment Agreement) or Cause (as
defined in the Key Man Employment Agreement), a “Key Man Event” shall have
occurred. For a period of one (1) year after the occurrence of any Key Man
Event, Company Board and Asset Manager shall discuss, and Company shall
reasonably consider, potential replacements for the relevant Key Man. If, after
such one (1)-year period, no suitable replacement for such Key Man, as
determined by the Company in its reasonable discretion (acting at the direction
of a majority of the Preferred Board Members), is agreed upon by the Asset
Manager and Company (acting at the direction of a majority of the Preferred
Board Members), then the Company (acting at the direction of a majority of the
Preferred Board Members) may, upon written notice to the Asset Manager,
immediately terminate this Agreement.

 

(b)            If the employment of any Key Man terminates due to death,
Disability (as defined in the Key Man Employment Agreement) or Cause (as defined
in the Key Man Employment Agreement), then Asset Manager shall use commercially
reasonable efforts to identify a suitable replacement for such Key Man within a
reasonable period of time thereafter.

 

13.          Term; Termination.

 

(a)           The term of this Agreement shall commence on the Amendment
Effective Date and shall continue until terminated pursuant to Section 12 or
this Section 13.

 

(b)           Notwithstanding anything herein to the contrary, this Agreement
shall automatically and immediately terminate, without the requirement for any
further action by any Party, upon the earliest to occur of (i) the initiation of
the dissolution and liquidation of the Parent pursuant to Article 10 of the
Parent LP Agreement or the Company pursuant to the Company LLC Agreement, (ii)
the removal of the General Partner as the general partner of the Parent pursuant
to Section 4.13 of the Parent LP Agreement or the voluntary resignation of the
General Partner (when such General Partner is an Affiliate of CTT Partner) in
such capacity, (iii) the initiation of any sale process or the initiation of any
other disposition of all or substantially all of the Property and the other Real
Estate Assets pursuant to Section 4.16 of the Parent LP Agreement solely if both
(a) the Alternative Voting System is then in effect pursuant to Section
4.3(b)(ii), (iii) or (iv) of the Parent LP Agreement and (b) a Person other than
the General Partner was appointed to sell the Property and manage all aspects of
the sale process, or (iv) the date that is seven (7) years after the Effective
Date.

 

(c)           The Company, acting at the direction of the Preferred Board
Members and acting without consent or approval of any other members of the
Company Board or any other Person, may terminate this Agreement immediately upon
delivery of written notice of such termination to the Asset Manager (i) in the
event that any Change of Control occurs without the prior written consent of the
Company Board and (ii) for Cause.

 

22

 

 

(d)            Subject to the terms of the “Budget Variance Cure Protocols” set
forth on Exhibit B hereto, the Company, acting at the direction of the Preferred
Board Members, may terminate this Agreement immediately upon delivery of written
notice to the Asset Manager in the event that a Fiscal Year’s actual results (as
determined following the applicable year-end) with respect to a particular Line
Item (as defined in Exhibit B) are outside the applicable Allowable Variance
Limits (as defined in Exhibit B).

 

14.          Payments Due Upon and Following Termination.

 

(a)            Upon the termination of this Agreement pursuant to Section 13(b)
or Section 13(c), the Asset Manager shall not be entitled to any further
compensation hereunder following the Termination Date; provided, however, that
the Asset Manager shall be entitled to receive all accrued but unpaid Asset
Management Fees as of the Termination Date (including Deferred Asset Management
Fees) to the extent that the Company has funds available for such repayment,
unless such termination was consummated pursuant to clause (ii) of Section
13(b).

 

(b)            In the event the Termination Date falls on a day other than the
last calendar day of a Fiscal Quarter, the Asset Management Fee payable with
respect to the Fiscal Quarter in which the Termination Date occurs shall be an
amount equal to the product of (x) the total Asset Management Fee otherwise
payable for such Fiscal Quarter, multiplied by (y) a fraction, the numerator of
which is the number of calendar days between the start of such Fiscal Quarter
and the Termination Date and the denominator of which is the total number of
calendar days in such Fiscal Quarter.

 

15.         SURVIVAL. Notwithstanding anything herein to the contrary, the terms
of Section 8, Section 10, Section 11, Section 14 and Section 16 shall survive
the termination of this Agreement.

 

16.          Miscellaneous.

 

(a)            Nothing in this Agreement shall be construed to make the Company
or any of its Subsidiaries or any other Person, on the one hand, and the Asset
Manager, on the other hand, partners or joint venturers or impose any liability
as such on either of them.

 

(b)           This Agreement, including all schedules and exhibits attached
hereto, constitutes the entire agreement among the Parties pertaining to the
subject matter hereof. This Agreement supersedes any prior agreement or
understanding among the Parties with respect to the subject matter hereof
(including the Original AMA), but shall not amend, modify, supersede or in any
way affect any other agreement or understanding among the Parties or their
Affiliates that does not relate to the subject matter hereof.

 

(c)            This Agreement may be amended, supplemented or waived at any time
and from time to time only by an instrument in writing signed by each Party.

 

23

 

 

(d)           This Agreement and all disputes or controversies arising out of or
relating to this Agreement or the transactions contemplated hereby shall be
governed by, and construed in accordance with, the internal laws of the State of
Delaware, without regard to the laws of any other jurisdiction that might be
applied because of the conflicts of laws principles of the State of Delaware.
Each Party hereby irrevocably consents and agrees that any action, suit or
proceeding with respect to this Agreement shall be brought and determined only
in the exclusive jurisdiction of the Court of Chancery of the State of Delaware,
the courts of the United States of America for the District of Delaware, and
appellate courts thereof, and each Party hereby consents to the jurisdiction of
the aforesaid courts for itself and with respect to its property, generally and
unconditionally, with regard to any such action or proceeding arising out of or
relating to this Agreement and the transactions contemplated hereby. Each Party
further agrees that notice as provided herein shall constitute sufficient
service of process and the Parties further waive any argument that such service
is insufficient. Each Party hereby irrevocably and unconditionally waives, and
agrees not to assert, by way of motion or as a defense, counterclaim or
otherwise, in any action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby, (a) any claim that it is not
personally subject to the jurisdiction of the courts in Delaware as described
herein for any reason, (b) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (c) that (i) the suit, action or proceeding in any such court is brought in
an inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper or (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts. EACH PARTY, FOR ITSELF AND ON BEHALF OF ITS
AFFILIATES, HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION, LAWSUIT OR
PROCEEDING, WHETHER IN CONTRACT OR IN TORT, RELATING TO ANY DISPUTE ARISING
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DESCRIBED IN THIS
AGREEMENT OR TO ANY DISPUTE BETWEEN THE PARTIES (INCLUDING DISPUTES WHICH ALSO
INVOLVE OTHER PERSONS).

 

(e)           This Agreement shall be binding upon and inure to the benefit of
the Parties and their permitted successors and assigns.

 

(f)            The rights and obligations under this Agreement may not be
assigned or delegated (whether by operation of law, merger, consolidation or
otherwise) by any Party without the prior written consent of the other Parties,
and any attempted assignment without such prior written consent shall be null
and void and of no force or effect; provided, however, that the Asset Manager
shall be entitled, without the consent of the other Parties hereto, to assign
its right, title and interest in and to this Agreement to any lender or other
creditor as collateral security for indebtedness of the Asset Manager or its
Affiliates to such lender or other creditor. The Parties hereto hereby consent
and agree that such lender or other creditor has the right to assert and enforce
any or all of the rights of the Asset Manager collaterally assigned to such
lender or creditor in accordance with the terms and provisions of the related
indebtedness. The Parties hereto agree and acknowledge that none of such lender
or other creditor shall be deemed to have assumed any of the obligations or
liabilities of the Asset Manager under this Agreement by reason of such
collateral assignment.

 

24

 

 

(g)           Subject to Section 11, the provisions of this Agreement are for
the sole and exclusive benefit of the Parties and their permitted successors and
assigns and shall not be deemed to create any rights for the benefit of any
other Person except as specifically provided herein.

 

(h)           If any provision of this Agreement or the application of such
provision to any Party or circumstance shall be held invalid or unenforceable,
the remainder of this Agreement or the application of that provision to another
Party or circumstance shall not be affected thereby.

 

(i)             No waiver by a Party of any default, breach or violation of this
Agreement shall be deemed to be a waiver of any other default, breach or
violation of any kind or nature, whether or not similar to the default, breach
or violation that has been waived, and no failure to enforce a particular
provision in one instance shall be deemed a waiver or modification of rights or
preclude the enforcement thereafter. No acceptance of payment or performance by
a Party after any such default, breach or violation shall be deemed to be a
waiver of any default, breach or violation of this Agreement, whether or not
such Party knows of such default, breach or violation at the time it accepts
such payment or performance. Subject to any applicable statutes of limitation,
no failure or delay on the part of a Party to exercise any right it may have
under this Agreement shall prevent its exercise by such Party, and no such
failure or delay shall operate as a waiver of any default, breach or violation
of this Agreement.

 

(j)             The captions and headings used in this Agreement are for
convenience only and do not in any way affect, limit, amplify or modify the
terms and provisions hereof.

 

(k)          This Agreement may be executed in several counterparts. If so
executed, each of such counterparts shall be deemed an original for all purposes
and all counterparts shall, collectively, constitute one agreement. In making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart and photocopies may be used.

 

(l)            Notwithstanding anything herein to the contrary, this may not be
amended or modified in a manner that is material and adverse to the interests of
the Senior Lender (or the other secured parties under the Senior Credit
Documents) without the prior written approval of the Senior Lender.

 

Remainder of page left intentionally blank; signature pages follow.

 

25

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their representatives thereunto duly authorized effective as of the day and year
first above written.

 

  CREEK PINE REIT, LLC       By: TEXMARK TIMBER TREASURY, L.P., its sole member
      By: /s/ John Rasor   Name:   John Rasor   Title:   President

 

[Signature Page to A&R Asset Management Agreement]

 

 

 

 

  CROWN PINE REALTY 1, INC.,   a Delaware corporation       By: /s/ John F.
Rasor     Name: John F. Rasor     Title: President

 

[Signature Page to A&R Asset Management Agreement]

 

 

 

 

  CATCHMARK TRS CREEK MANAGEMENT, LLC       By: CatchMark Timber TRS, Inc., its
sole member       By: /s/ Brian M. Davis   Name:   Brian M. Davis   Title:  
Chief Executive Officer and President

 

[Signature Page to A&R Asset Management Agreement]

 

 

 

 

Schedule A

 

Key Man

 

1.Key Man: Brian M. Davis

 

2.Key Man Employment Agreement: Employment Agreement, dated as of October 30,
2013, by and between CatchMark Timber Trust, Inc. and Brian M. Davis, as amended
by the First Amendment to Employment Agreement, dated December 31, 2018, as
amended by the Second Amendment to Employment Agreement, dated December 19,
2019.

 

 

 

 

Schedule B-1

 

Initial Annual Budget

 

(See attached.)

 

 

 

 

Project Caddo

 

REVISED Schedule B-1 & B-3: Initial 5-Year Quarterly Cash Flow Projections

($'s, except per acre data)

 

NOTE: BASIS OF PRESENTATION IS ON A CASH BASIS

 

[***]

 

 

 

 

 

Schedule B-2

 

Budget Development Protocol

 

·              The Asset Manager will produce an annual harvest schedule
(“Annual Harvest Schedule”), taking into consideration (i) the Company’s
obligations under the Wood Supply Agreements, (ii) Unlevered Cash Flow
requirements, (iii) the long-term value of the Property and (iv) Sustainable
Forestry Initiative (SFI) obligations.

 

·              The Preferred Partners, by a majority vote of the Board Members
designated by the Preferred Partners, may designate a Person to provide
reasonable review and input regarding the following items during the preparation
of the Annual Harvest Schedule: Linear Program (LP) constraints, financial
assumptions, silvicultural assumptions and harvest volume in excess of or
outside of Wood Supply Agreement obligations. The initial such designee shall be
TTG Forestry Services, LLC.

 

·              Each Annual Harvest Schedule will include a thirty (30)-year
harvest schedule (“Thirty-Year Harvest Schedule”) and a rolling three (3)-year
harvest plan (“Three-Year Harvest Plan”). A written summary of each Annual
Harvest Schedule will be made available to the Company Board, including all
assumptions, constraints utilized and supporting stand level information as may
be necessary for a reasonable evaluation of the Thirty-Year Harvest Schedule and
the Three-Year Harvest Plan. In addition, annual property profiles including
merchantable timber volumes, pre-merchantable acres by species and age class and
acres by land class shall be provided.

 

·             To the extent necessary to facilitate the Company Board’s review
of the proposed Annual Budget, the Asset Manager will also (i) provide the
Company Board information regarding tract and stand-level activity for the
Property and applicable other Real Estate Assets (including, for example, site
preparation and treatment, planting method, stock type, planting density,
thinning plan, volume removals by product class and detailed inventory
information) and (ii) furnish the Company Board a copy of the then-current
Geographic Information Systems (GIS) data for the Property and applicable other
Real Estate Assets.

 

·              The Asset Manager will seek, based on the Three-Year Harvest
Plan, to develop a preliminary version of the Annual Budget (“Preliminary
Budget”) and present such Preliminary Budget to the Company Board no later than
September 10th of each calendar year for review and consideration.

 

·              The Company Board will provide any comments and feedback
regarding the Preliminary Budget no later than September 25th of each calendar
year.

 

·              Based on the Preliminary Budget timber volumes (as the same
reflects the comments and feedback of the Board) the Asset Manager will provide
the “Annual Plan” and “Forecast Plan” volumes to the respective counterparties
to the Wood Supply Agreements, as required, on or before September 30th of each
calendar year.

 

·              The proposed Annual Budget submitted to the Company Board for
final approval pursuant to Section 3 of this Agreement will reflect any changes
required by the counterparties to the Wood Supply Agreements after review of the
Annual Plan volumes.

 

·              The Annual Budget will include the terms pertaining to any
Permitted HBU Sale to be conducted during the applicable Fiscal Year, including
(i) a general description of the Property and other Real Estate Assets to be
sold, (ii) the minimum price and (iii) any permissible non-standard commercial
terms.

 

Schedule B-2—Page 1

 

  

Schedule B-3

 

Pre-Funded Reserves

 

(See attached.)

 

 

 

Project Caddo

REVISED Schedule B-1 & B-3: Initial 5-Year Quarterly Cash Flow Projections

($'s, except per acre data)

 

NOTE: BASIS OF PRESENTATION IS ON A CASH BASIS

 

[***]

 

 

 

Schedule B-4

 

Operating Metrics

 

1.Recordable incident rate

 

2.Conformity with certification requirements provided by Sustainable Forestry
Initiative Inc.

 

3.Development of managerial talent

 

4.Litigation risk

 

5.Compliance with applicable environmental statutes and regulations

 

6.Technology and information systems infrastructure

 

 

 

Schedule C

 

Employees

 

1.John Rasor, in the amount of up to $500,000 annually, but only to the extent
he is performing the Services. The Parties acknowledge and agree that this
amount shall be considered by the Company as an expense within the “Forestry
Management” line item of the applicable Annual Budget.

 

 

 

Exhibit A

 

Allowable Variances

 

Item Minimum Maximum Plantation Clearcut Acres [***] [***] Total GP/IP WSA
Volume [***] [***] Weighted Age of Plantation Clearcuts [***] [***] Hardwood
Release [***] [***] Mid Rotation Fertilization [***] [***] Road Maintenance
[***] [***] Site Prep + Plant + Seedlings + Herbaceous Weed Control [***] [***]
Fertilization at Establishment [***] [***] Capital Infrastructure Expenses,
including bridges, culverts and road construction [***] [***]

 

 

 

Exhibit B

 

Budget Variance Cure Protocols

 

1.If the actual results for a Fiscal Year (as determined following the
applicable year-end) reflect a variance (measured against the applicable Annual
Budget) (a “Budget Variance”) above or below the “Minimum” or “Maximum” values
set forth on Exhibit C hereto (the “Allowable Variance Limits”) with respect to
any of the line items set forth on Exhibit C (each, a “Line Item”), then the
Asset Manager will, simultaneously with the delivery of the results of such
Fiscal Year, provide the Company Board with a written notice (a “Budget Variance
Notice”) setting forth in reasonable detail:

 

(i)a description of such Line Item and the amount of the Budget Variance;

 

(ii)the underlying causes of the Budget Variance, including (A) a Force Majeure
Event (as defined below), (B) market issues, (C) regulatory or environmental
compliance, (D) SFI compliance, or (E) such other causes as the Asset Manager
identifies (each, a “Notice Event”); and

 

(iii)if the Budget Variance is due to a Force Majeure Event, recommendations for
reducing or eliminating the amount of the anticipated Budget Variance and the
appropriate cure period (not to exceed the applicable cure period set forth
opposite such Line Item on Exhibit C hereto) (each, a “Proposed Variance Cure”),
including (A) a description of the actions required to implement each Proposed
Variance Cure, (B) the financial implications of each Proposed Variance Cure,
(C) an estimated timeline to implement each Proposed Variance Cure, and (D) the
Asset Manager’s preferred Proposed Variance Cure.

 

As used above, “Force Majeure Event” means any (i) any Change Event (as defined
in the applicable Wood Supply Agreement) under a Wood Supply Agreement or (ii)
the occurrence of a Force Majeure (as defined in the applicable Wood Supply
Agreement) under a Wood Supply Agreement.

 

2.If the Notice Event identified in the Budget Variance Notice is a Force
Majeure Event (in which case such Budget Variance Notice is referred to herein
as a “Force Majeure Budget Variance Notice”), then, subject to the remaining
provisions of this Exhibit B, the Company Board may not immediately terminate
this Agreement pursuant to Section 13(d) with respect to the Line Item
identified in such Force Majeure Budget Variance Notice. If, however, the Notice
Event identified in the Budget Variance Notice is not a Force Majeure Event,
then the Company Board shall have the right to immediately terminate this
Agreement pursuant to Section 13(d).

 

3.Upon delivery of a Force Majeure Budget Variance Notice, the Company Board and
the Asset Manager will work together in good faith for a period of 45 days to
approve a Proposed Variance Cure, either as originally presented in the Force
Majeure Budget Variance Notice or subject to such modifications as the Company
Board and the Asset Manager mutually agree upon.

 

Exhibit B—Page 1

 

 

4.If a Proposed Variance Cure is agreed within the 45-day period set forth in
paragraph 3 above (an “Agreed Variance Cure”), then the Asset Manager shall
implement such Agreed Variance Cure within the applicable cure period. If the
Asset Manager fails to implement the Agreed Variance Cure within the applicable
cure period, then the Company Board shall have the right to immediately
terminate this Agreement in accordance with Section 13(d).

 

5.If a Proposed Variance Cure is not agreed within the 45-day period set forth
in paragraph 3 above, then the Asset Manager will in good faith implement the
Proposed Variance Cure that the Company Board determines is in the best
interests of the Company, taking into account long-term asset value (the
“Company-Determined Variance Cure”). The Company Board shall have the right to
immediately terminate this Agreement if the Asset Manager fails to implement a
Company-Determined Variance Cure within the applicable cure period.

 

6.Notwithstanding anything to the contrary contained herein, (i) all actions of
the Company Board hereunder shall be taken as a Major Decision, and (ii) with
respect to any of the Line Items under the heading “Seasonal Events” on Exhibit
C hereto, if the Asset Manager fails to implement the Annual Budget within the
parameters set forth in the applicable Annual Variance Limits for a period of
two (2) consecutive Fiscal Years (a “Two Year Seasonal Line Item Implementation
Failure”), then the Company Board shall have the right to immediately terminate
this Agreement pursuant to Section 13(d) (notwithstanding any Budget Variance
Notices); provided, however, that if in each of such two (2) consecutive Fiscal
Years, (x) a named hurricane or tropical storm (in each case, affecting at least
10% of the total acres of the Parent and its Subsidiaries by acreage) or (y)
disease, insect infestation, wind, ice or fire (in each case, affecting at least
5,000 acres of harvest units in the current 3-year harvest plan of the Company)
has occurred, and the Asset Manager has delivered Budget Variance Notices that
identify such events as the Notice Events, then the Company Board shall not have
the right to terminate this Agreement with respect to such Two Year Seasonal
Line Item Implementation Failure.

 

7.Notwithstanding anything to the contrary contained herein, if, during a Fiscal
Year, the Asset Manager in good faith determines that it is reasonably likely
that a Budget Variance will exist with respect to a Line Item, then the Asset
Manager may provide the Company Board with a written notice setting forth, in
reasonable detail (1) a description of such Line Item, (2) an estimate of the
amount of the anticipated Budget Variance, and (3) a description of the
underlying Notice Event (an “Expected Variance”), and the Company Board may, as
a Major Decision, approve or disapprove such Expected Variance. If the Company
Board approves an Expected Variance, then, notwithstanding anything to the
contrary contained herein, the Company Board’s right to terminate this Agreement
pursuant to Section 13(d) shall be waived to the extent of such Expected
Variance with respect to such Fiscal Year.

 

All capitalized terms used and not otherwise defined herein shall have the
meanings given to them in the Agreement.

 

Exhibit B—Page 2

 

 

Exhibit C

 

Variance Termination Triggers

 

Non-Seasonal Events Minimum Maximum Cure Period for Force Majeure Event Hardwood
Release + mid rotation fertilization [***] [***] 365 days from end of Fiscal
Year Road Maintenance [***] [***] 180 days from end of Fiscal Year Capital
Infrastructure (incl. bridges, culverts, road construction) [***] [***] 180 days
from end of Fiscal Year   [***] [***]   Seasonal events [***] [***]   Total
GP/IP WSA [***] [***] No cure if outside variance for 2 successive years
Plantation Clearcut Acres [***] [***] No cure if outside variance for 2
successive years Weighted Age of plantation Clearcuts [***] [***] No cure if
outside variance for 2 successive years Site Prep + Plant + Seedlings +
Herbaceous Weed Control [***] [***] No cure if outside variance for 2 successive
years  Fertilization at Establishment [***] [***] No cure if outside variance
for 2 successive years

 

(1)Notwithstanding anything herein to the contrary, variances attributable to
Non-Controllable Expenses (as defined in the Parent LP Agreement) shall not be
counted towards determining whether there is a variance above or below the
Annual Budget.

 

(2)Measured on an annual basis based upon the applicable annual financial and
operational information presented by the Asset Manager to the Company Board
within forty-five (45) days of the end of each Fiscal Year.

 

(3)Cure period for the Line Items under the heading “Seasonal Events” to be
agreed upon by the Company Board and the Asset Manager in accordance with clause
(c) of Exhibit B; provided, that if the cure period cannot be timely agreed
upon, then the cure period shall be as set forth above.

 

 

 

 

 

Exhibit G

 

Competitors

 

The following organizations and their Affiliates or successors:

 

1.[***]

 

2.[***]

 

3.[***]

 

4.[***]

 

5.[***]

 

6.[***]

 

7.[***]

 

8.[***]

 

Exhibit G—Page 1

 

Exhibit H

 

FORM OF CERTIFICATE OF PARTNERSHIP INTERESTS

 

(See attached.)

 

Exhibit H—Page 1

 

NUMBERINTEREST           1*                    *

 

TEXMARK TIMBER TREASURY, L.P.

 

Formed under the Delaware Revised Limited Partnership Act

 

Membership Interest

 

This Certifies that [                                       ] is the owner
of                  fully paid Common Return Interests in TexMark Timber
Treasury, L.P. (the “Company”), transferable only on the records of the Company
by the holder hereof, in person or by a duly authorized attorney-in-fact, upon
surrender of this Certificate properly endorsed or assigned.

 

This Certificate and the membership interest represented hereby are issued and
shall be held subject to all of the provisions of the Company’s Limited
Partnership Agreement (the “Agreement”), and the Delaware Revised Limited
Partnership Act as set forth in the Agreement and such Act, to all of which the
holder of this Certificate, by acceptance hereof, assents.

 

In Witness Whereof, the undersigned has executed this Certificate on behalf of
the Company as of the            day of July, 2018.

 

 GENERAL PARTNER:  TRIPLE T GP, LLC, as General Partner     By:    Name: Bryan
M. Davis  Title: Senior Vice President and Chief Financial Officer

 

 

Exhibit I

 

Technical Forestry Advisory Services Agreement

 

(See attached.)

 

Exhibit I—Page 1

 

EXECUTION VERSION

 

TECHNICAL FORESTRY ADVISORY SERVICES AGREEMENT

 

This TECHNICAL FORESTRY ADVISORY SERVICES AGREEMENT (this “Agreement”), is dated
effective as of July 6, 2018 (the “Effective Date”), and is made by and between
TexMark Timber Treasury, L.P., a Delaware limited partnership (together with its
successors and permitted assignees, the “Company”), and TTG Forestry Services,
LLC, a Delaware limited liability company (the “Technical Forestry Advisor” or
“TIG”).

 

WHEREAS, the Company was formed to invest in Creek Pine REIT, LLC, a Delaware
limited liability company that will elect to be classified as a corporation and
taxed as a REIT under the Code (the “Subsidiary REIT”);

 

WHEREAS, the Company and the Subsidiary REIT were formed to acquire one hundred
percent (100%) of the ownership interests of Crown Pine Timber 1, L.P., which
owns (directly and indirectly) approximately 1.1 million acres of timberland in
east Texas (the “Property”), pursuant to that certain Crown Pine Purchase
Agreement, dated as of May 14, 2018, by and among Crown Pine Parent, L.P., Crown
Pine REIT, Inc., CPT1 LLC, Crown Pine Timber 1, L.P. and Creek Pine, LLC, as
assignee of Creek Pine Holdings, LLC (the “Acquisition”);

 

WHEREAS, the Company seeks to engage the services, on an as-needed basis, of TIG
to assist the Company in managing certain activities related to such timberland
interests (such timberland interests referred to herein as an “Interest” or the
“Interests”); and

 

WHEREAS, TIG is willing to undertake to render such services on the terms and
conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

ARTICLE I

POWERS AND DUTIES OF THE TECHNICAL FORESTRY ADVISOR

 

1.1.            Appointment of Technical Forestry Advisor. The Company hereby
appoints TIG as the Technical Forestry Advisor to manage certain activities of
the Company in respect to the Interests, subject to the terms and conditions of
this Agreement. TIG hereby accepts the appointment as the Technical Forestry
Advisor and agrees to perform its duties set forth herein.

 

1.2.            Standard for Performance. TIG shall use commercially reasonable
efforts to perform each of its obligations under this Agreement. Notwithstanding
the foregoing, the parties acknowledge that TIG possesses special expertise in
the acquisition and management of timberland investments and agree that, in
carrying out its obligations under this Agreement, TIG will adhere to a standard
of care that incorporates the knowledge, skill and diligence that a prudent
expert in managing timberland investments, familiar with the circumstances then
present, would exercise in dealing with the property of another Person;
provided, however, that the level of effort that TIG shall be expected or
required to apply in the performance of its duties hereunder shall be no greater
than the commercially reasonable efforts of a similarly situated provider with
the expertise of TIG..

 

 

1.3.            Duties of the Technical Forestry Advisor. TIG’s responsibilities
under this Agreement may consist of the below services. The Company and TIG
shall mutually agree upon the fees that will be payable to TIG for a service
prior to TIG providing such service.

 

i)Review and analyze wood supply agreements and markets;    

ii)Review and analyze operational and management strategy;    

iii)Review and analyze ESG, risk, certification;    

iv)Periodic site inspections;    

v)Review and validate annual operating plans, budgets and silvicultural plans;
   

vi)Review and validate the annual/5-year wood flow projections (using
proprietary Woodstock model);    

vii)Review and validate annual appraisals;    

viii)Review and report on the annual inventory design, results, and adjustments;
and    

ix)Provide such other reasonably related services that are requested by the
Company and agreed upon by TIG.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

2.1.            Representations and Warranties of the Technical Forestry
Advisor. The Technical Forestry Advisor hereby represents and warrants to the
Company as follows:

 

(a)          TIG is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has the
requisite power and authority to carry on its business as presently being
conducted.

 

(b)          This Agreement, when executed and delivered by TIG, will constitute
a valid and legally binding obligation of TIG, enforceable against TIG in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency, and the relief of debtors, and rules of law governing
specific performance, injunctive relief, or other equitable remedies.

 

(c)           TIG has made, obtained and performed, in any material respect, all
registrations, filings, approvals, authorizations, consents, licenses or
examinations required by any governmental authority, foreign or domestic, in
order to execute, deliver and perform its obligations under this Agreement.

 

2

 

(d)         The execution, delivery and performance of this Agreement by TIG
will not violate, in any material respect, any law, statute, order, rule,
regulation or judgment, order or decree of any U.S. or foreign court or
governmental authority, foreign or domestic, to which TIG is subject, nor
constitute, in any material respect, a breach, violation or default under the
charter, by-laws or other comparable governing instruments of TIG, or the
provisions of any agreement or contract to which it is a party or by which it is
bound.

 

2.2.            Representations and Warranties of the Company. The Company
hereby represents and warrants to the Technical Forestry Advisor as follows:

 

(a)          The Company is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite power and authority to carry on its business as presently being
conducted.

 

(b)          This Agreement, when executed and delivered by the Company, will
constitute a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency, and the relief of debtors, and
rules of law governing specific performance, injunctive relief, or other
equitable remedies.

 

(c)          The Company has made, obtained and performed, in any material
respect, all registrations, filings, approvals, authorizations, consents,
licenses or examinations required by any governmental authority, foreign or
domestic, in order to execute, deliver and perform its obligations under this
Agreement.

 

(d)          The execution, delivery and performance of this Agreement by the
Company will not violate, in any material respect, any law, statute, order,
rule, regulation or judgment, order or decree of any federal, state, local or
foreign court or governmental authority, foreign or domestic, to which the
Company is subject, nor constitute a breach, violation or default, in any
material respect, under the charter, by-laws or other comparable governing
instruments of the Company, or the provisions of any agreement or contract to
which it is a party or by which it is bound.

 

(e)          The Company acknowledges that TIG intends to conduct business other
than the management of the Interests and the Company hereunder (collectively,
“Other Activities”). TIG agrees to act in a manner consistent with its fiduciary
obligation to deal fairly with all clients when taking management actions, if
applicable. Subject to the preceding sentence, the Company agrees that TIG may
give advice and take action in the performance of its duties with respect to the
Other Activities that may differ from the timing or nature of any action taken
with respect to the Interests or the Company.

 

(f)           The Company acknowledges that TIG is not a guarantor of the
financial results of the Interests, and shall not be liable to the Company as a
guarantor for the financial results thereof. The Company realizes that because
of the inherently speculative nature of an investment program such as the
activities that will be undertaken by TIG pursuant to the terms of this
Agreement, the results of operations relating to the Interests may be expected
to vary from month to month and from period to period, and such operations
generally will involve a high degree of financial and market risk that can
result in a significant loss. The underlying owners of the Company’s indirect
investment in the Interests acknowledge that they made their own analysis of the
benefits of such investment. The underlying owners of the Company are
respectively able and will be able to bear the economic risk of such investment
for an indefinite period of time, and such investment will not adversely affect
its overall need for diversification and liquidity.

 

3

 

(g)         The Company (or the person making investment decisions on behalf of
the Company) has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of entering into this
Agreement.

 

(h)          The Company acknowledges that any analyses presented or to be
presented by TIG has been produced pursuant to the market, economic and other
conditions available at the time of its preparation, and the conclusions
presented are subject to variations due to several factors over which TIG exerts
no control. Moreover, considering that such analyses are intrinsically subject
to uncertainties and based on a variety of events and factors that are out of
the control of TIG, TIG shall not be responsible in any manner should the future
results differ from those presented in such analyses, provided that TIG has
complied with the standard of skill and diligence required to be exercised in
connections with its performance of its obligations under this Agreement.

 

(j)           The Company undertakes to grant TIG access to the Interests hereto
and to the relevant documentation reasonably requested by TIG to perform its
obligations hereunder.

 

ARTICLE III

COVENANTS

 

3.1.            Covenants of the Technical Forestry Advisor. The Technical
Forestry Advisor hereby covenants and agrees as follows:

 

(a)          All personnel providing services under this Agreement on behalf of
TIG (i.e., performing duties or obligations of TIG under this Agreement, whether
or not directly employed by TIG) shall be qualified by virtue of education,
training and experience to properly discharge the responsibilities assigned to
them by TIG. TIG shall use commercially reasonable efforts to discharge all of
its obligations under this Agreement in a timely manner and with due skill and
diligence and shall be diligent in the observation of all applicable laws and
regulations in performing its duties under this Agreement.

 

(b)         In rendering the services set forth herein, TIG shall not encumber
(whether through easements, agreements, mortgage or other pledge) any of the
Interests or any part thereof without the prior approval of the Company.

 

4

 

 

3.2.              Covenants of the Company. The Company hereby covenants and
agrees as follows:

 

(a)          The Company shall provide TIG with such powers and authorizations
that are reasonably necessary to properly fulfill its obligations and perform
its duties pursuant this Agreement.

 

(b)          The Company will execute, or cause any third-party to execute, such
further instruments and to take, or cause any third- party to take, such further
actions as may be reasonably required in order to effectuate the provisions,
purposes and intents of this Agreement.

 

ARTICLE IV
FEES

 

4.1.              Compensation. As consideration for the services rendered by
TIG, the Company will pay to TIG such fees as are mutually agreed-upon prior to
the commencement of such services.

 

 

ARTICLE V
INDEMNIFICATION AND TERMINATION

 

5.1.              Indemnification of the Technical Forestry Advisor. To the
fullest extent permitted by law, the Company shall indemnify, defend and hold
harmless, out of the assets of the Company, TIG, its Affiliates, officers,
directors, employees, members, partners and agents (each, a “TIG Indemnified
Person”) from and against any and all claims, losses, damages, liabilities,
costs and expenses (including reasonable fees and expenses of counsel selected
by TIG) (collectively, “Losses”) to which any such TIG Indemnified Person may
become subject, arising from, related to, or in connection with this Agreement,
unless and to the extent that it shall be determined by a court of competent
jurisdiction in a judgment that has become final in that it is no longer subject
to appeal or other review that such Losses were attributed exclusively to the
willful misconduct, bad faith or gross negligence of any such TIG Indemnified
Person in performing any obligation of this Agreement.

 

5.2.              Indemnification of the Company. TIG shall reimburse, indemnify
and hold harmless the Company its Affiliates, officers, directors, employees,
members, partners and agents for all Losses in respect of or arising from any
gross negligence, willful misconduct, fraud, bad faith of TIG.

 

5.3.              Limitations of Liability. IN NO EVENT SHALL THE COMPANY OR TIG
AND TIG INDEMNIFIED PERSONS BE LIABLE HEREUNDER FOR ANY EXEMPLARY, INDIRECT,
PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY NATURE, LOST PROFITS,
DIMINUTION IN VALUE OR ANY DAMAGES BASED ON ANY TYPE MULTIPLE. IN ADDITION TO
THE FOREGOING, TIG SHALL NOT BE LIABLE FOR ANY FINANCIAL, CIVIL, CRIMINAL,
LABOR, ENVIRONMENTAL OR ANY OTHER LIABILITY OF ANY NATURE WHATSOEVER RESULTING
FROM ACTS PRACTICED BY THIRD PARTY CONTRACTORS, OR THE HIRING THEREOF BY TIG.

 

5

 

 

5.4.              Duration and Termination

 

(a)         This Agreement shall commence on the Effective Date and shall
continue for an initial term of five (5) years. Thereafter, such term shall
automatically renew for successive one (1) year periods.

 

(b)         Notwithstanding the foregoing, this Agreement may be terminated at
any time with immediate effect:

 

(i)              by the Company for Cause (as defined below in Section 6.1);
provided that the Company shall promptly provide notice of its intention to
terminate and the basis therefore to TIG, and TIG shall have sixty (60) days to
provide a written response with respect to any such claim and attempt to cure
such defect. No such termination shall be effective until ten (10) Business Days
following the earliest of (x) receipt of TIG’s response of its inability to cure
such defect; (y) receipt of TIG’s written election not to cure such defect; and
(z) expiration of the sixty (60) day cure period referenced in this Section
5.4(b)(i);

 

(ii)               by TIG if there has been a material breach of a material
provision of this Agreement by the Company; provided that TIG shall promptly
provide notice of such intention and the basis therefore to the Company, and the
Company shall have sixty (60) days to provide a written response with respect to
any such claim and attempt to cure such defect. No such termination shall be
effective until ten (10) Business Days following the earliest of (x) receipt of
the Company’s response of its inability to cure such defect; (y)  receipt of the
Company’s written election not to cure such defect; and (z) expiration of the
sixty (60) day cure period referenced in this Section 5.4(b)(ii);

 

(c)          Promptly following termination of this Agreement and in any event
within ten (10) Business Days after termination of this Agreement, TIG shall
reasonably cooperate with the Company and its Affiliates, officers, directors,
employees, shareholders, partners and agents to ensure a smooth transition of
the management of the Interests. Not later than ninety (90) days following the
termination of this Agreement, TIG shall provide the Company and its Affiliates,
officers, directors, employees, shareholders, partners and agents with a final
report of the activities relating to the Interests. In the event that this
Agreement is terminated, TIG shall use commercially reasonable efforts to assist
the Company with transitioning the management of the Interests to the Company’s
designee.

 

(d)          The termination of this Agreement by either party shall not relieve
any party from its obligations hereunder including, but not limited to, the
Company’s obligation to pay TIG any applicable fees due through the date of
termination.

 

6

 

 

ARTICLE VI
GENERAL PROVISIONS

 

6.1.              Definitions. For purposes of this Agreement:

 

“Affiliate” means, with respect to any Person, another Person, directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with such first Person, the term “control”, as used herein,
means, the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.

 

“Cause” means:

 

(i)               there has been a final determination by a court of competent
jurisdiction, or an admission by TIG, that TIG has committed, in connection with
the performance of TIG’s duties under this Agreement, (1) fraud or intentional
misappropriation of funds, (2) willful misconduct, (3) gross negligence; or (4)
a breach of this Agreement resulting in material Losses to the Company and its
subsidiaries, taken as a whole; provided, that, such an occurrence shall not
constitute “Cause” to the extent (1) the act or omission is the result of the
conduct of an employee of TIG and (2) such “Cause” event is cured within sixty
(60) days, which cure may include: (x) the removal of the subject employee from
TIG, as applicable; (y) a comprehensive review by TIG of its internal policies
and procedures to determine whether additional procedures should be implemented
in order to prevent such act or event by TIG; and (z) full restitution and
reimbursement is made to the Company or the applicable subsidiary by TIG, for
any Losses caused by such Cause event; or

 

(ii)              the Bankruptcy (as defined in the Amended and Restated Limited
Partnership Agreement of the Company) of TIG.

 

“Person” means an individual, partnership, fund, joint venture, corporation,
trust, unincorporated association or other entity or association.

 

6.2.            Agency Relationship. TIG shall act as agent of the Company in
fulfilling the obligations of the Company, supervising the performance of
professionals engaged by or on behalf of the Company with respect to the matters
covered by this Agreement, or with respect to such other matters as are
specified by the Company and agreed to by TIG. Nothing herein shall be construed
to make the Company and TIG partners or joint ventures or impose any liability
as such on any of them. The parties expressly do not intend hereby to form a
partnership under the laws of any jurisdiction. TIG is providing its services
hereunder as an independent contractor.

 

6.3.             Amendments and Waiver.

 

The terms and provisions of this Agreement may be modified or amended at any
time and from time to time, but only by written consent of each party. No waiver
of this Agreement or any part hereof and no notice or consent required or
permitted to be given pursuant to this Agreement shall be valid or effective
unless in writing and signed by the party or parties sought to be charged. No
waiver of any breach or condition of this Agreement shall be deemed to be a
waiver of any other subsequent breach or condition, whether of like or different
nature.

 

7

 

 

6.4.              Binding Effects; Benefits; Assignments.

 

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their legal representatives, successors and permitted assigns, as
applicable. The parties may not assign this Agreement without the prior written
consent of the other party.

 

6.5.              Counterparts; Facsimile; Electronic Signature.

 

This Agreement may be executed in any number of counterparts and via facsimile
or electronic signature and by the parties hereto in separate counterparts, each
of which shall be deemed to be an original and all of which together shall
constitute one and the same agreement.

 

6.6.              Governing Law and Dispute Resolution.

 

This Agreement shall be governed by, and construed in accordance with, the laws
of the State of New York, without giving effect to the conflicts of laws
provisions thereof.

 

Any disputes arising out of this Agreement shall be commenced and resolved in
the U.S. district court for the Southern District of New York or, if such court
does not have subject matter jurisdiction, the courts of the State of New York
sitting in New York County. The parties hereto expressly waive any
jurisdictional, venue or inconvenient forum objections to such court.

 

6.7.              Severability.

 

Any term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall be ineffective, as to such jurisdiction, only to the extent
of such invalidity or unenforceability and will not render invalid or
unenforceable the remaining terms or provisions of this Agreement or affect the
validity or enforceability of any of the terms or provisions of this Agreement
in any other jurisdiction.

 

6.8.              Entire Agreement.

 

This Agreement, when executed and delivered by the Company and TIG, shall
constitute the entire Agreement between the parties hereto with respect to the
subject matter hereof and shall supersede all prior oral, written and electronic
agreements between the parties hereto as to the subject matter hereof.

 

6.9.              Notices.

 

Any notice or other communication contemplated by any provision of this
Agreement shall be in writing and may be delivered personally, sent by e-mail
(to include a request for receipt of delivery of email) or commercial courier or
mailed by certified mail, postage prepaid, return receipt requested, addressed
to such party at its address. Notice sent by e-mail shall be deemed given when
confirmation or transmission is received and notice sent by any other means
shall be deemed given when received, at the following addresses:

 

8

 

 

If to the Technical Forestry Advisor:

 

601 Lexington Avenue

57th Floor

New York, New York 10022

Attention: Mitchell Kosches

Email: mitchell.kosches@btgpactual.com

 

If to the Company:

 

TexMark Timber Treasury, L.P.

702 N. Temple Dr.

Diboll, TX 75941

Attention: Jerry Barag

Email: jerry.barag@catchmark.com

 

6.10.              Confidentiality; Use of Name. During the term of this
Agreement and for an additional period of 2 (two) years after the termination of
this Agreement, the parties shall keep confidential, and not reveal to any
third-party, any proprietary or confidential business information concerning the
plans or programs of the other party or any confidential information relating to
their activities under this Agreement, unless otherwise required by law and
regulation a competent court of law or regulatory authority. Each party may
disclose confidential information concerning the other party to its Affiliates,
and its and its Affiliates’ officers, directors, employees, counsel and other
representatives on a need to know basis.

 

6.11.              Force Majeure.

 

No party shall be deemed to be in violation of this Agreement if it is prevented
from performing any of its obligations hereunder by reason of acts of God, acts
of the public enemy, acts of superior governmental authority, rebellion,
sabotage or any other circumstances for which it is not responsible and that are
not within its control.

 

[Signatures appear on the following page]

 

9

 

 

   TTG FORESTRY SERVICES, LLC              By: /s/ Mitchell Kosches    Name:
Mitchell Kosches   Title: Authorized Signatory

 

[Signature Pages to Technical Forestry Advisory Services Agreement]

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

  TEXMARK TIMBER TREASURY, L.P.             By: /s/ John Rasor    Name: John
Rasor   Title: President

 

[Signature Pages to Technical Forestry Advisory Services Agreement]

 

 

 

Exhibit J

 

Illustrative Distribution Examples

 

(See attached.)

 

 Exhibit J—Page 1 

 

 

[tm2023298d1_ex10-1sp15img001.jpg] 

   

 

 

[tm2023298d1_ex10-1sp15img002.jpg] 

   

 

 

Exhibit K

 

Subsidiary REIT Agreement

 

(See attached.)

 

 Exhibit K—Page 1 

 

 

Execution Version

 

 

 

Amended and Restated

 

lIMITED lIABILITY cOMPANY aGREEMENT

 

OF

 

CREEK PINE REIT, LLC

 

Dated as of June 24, 2020

 

 

 

Pursuant to Item 601(b)(10)(iv) of Regulation S-K, certain identified
information marked with [***] has been excluded from the exhibit because it is
both (i) not material and (ii) would be competitively harmful if publicly
disclosed

 

   

 

 

TABLE OF CONTENTS

 

Page

Article 1 FORMATION AND ORGANIZATION 2     Section 1.1 Formation 2 Section 1.2
Basic Rights of Members 2 Section 1.3 Name 2 Section 1.4 Term 2 Section 1.5 
Business 2 Section 1.6  Principal Place of Business; Registered Office and Agent
2 Section 1.7 Certificated Interests 3 Section 1.8 Currency 3       Article 2
CAPITAL CONTRIBUTIONS; EXPENSES; MEMBERSHIP INTERESTS 3     Section 2.1 Capital
Contributions 3 Section 2.2 Fees and Expenses 5 Section 2.3 Membership Interests
6 Section 2.4 No Additional Members or Issuances 8 Section 2.5 Sole Benefit 8
Section 2.6  Waiver of Certain Rights 8       Article 3 DISTRIBUTIONS 8    
Section 3.1 Timing; Working Capital Reserves; Notice 8 Section 3.2 Distributions
of Base Available Cash 9 Section 3.3 Distributions of Net Available Cash 9
Section 3.4 Distributions of Distributable Cash Flow 11 Section 3.5
Distributions of Remaining Distributable Cash Flow 12 Section 3.6 Form of
Distributions 12       Article 4 MANAGEMENT OF COMPANY 12     Section 4.1 Rights
and Powers of the Board; Voting 12 Section 4.2 Composition of the Board 13
Section 4.3 Resignation, Removal and Replacement of Board Members; Transfers of
Appointment Rights 14 Section 4.4 Meetings of the Board 15 Section 4.5 Action of
the Board without a Meeting 16 Section 4.6 Compensation of Board Members 16
Section 4.7 Major Decisions 16 Section 4.8 Annual Budget 20 Section 4.9 
Transactions with Affiliates 22 Section 4.10 Permitted HBU Sales 23 Section 4.11
Qualify as a REIT; Maintaining Qualification as a REIT 24 Section 4.12
Disposition of Membership Interests 24 Section 4.13 Property Sale Right of First
Opportunity 24 Section 4.14 Sidecar 24

 

   

 

 

Section 4.15 Permitted Recapitalization Transaction; Property Sale 24      
Article 5 TRANSFERS OF MEMBERSHIP INTERESTS 25     Section 5.1 Transfers 25
Section 5.2 REIT Protections 25       Article 6 RIGHTS AND DUTIES OF MEMBER 28  
  Section 6.1 Relationship of Member 28 Section 6.2 Limitation of Authority 29
Section 6.3 Confidentiality 29 Section 6.4  Limitation of Liability of Member
and Affiliates 29 Section 6.5 ERISA Status 30       Article 7 EXCULPATION AND
INDEMNIFICATION 30     Section 7.1 Exculpation and Indemnification 30      
Article 8 FINANCIAL, ACCOUNTING and Tax MATTERS 31     Section 8.1 Books and
Records 31 Section 8.2 Audit and Reporting 31 Section 8.3 Valuations 33 Section
8.4 Tax Matters 33       Article 9 TERMINATION; DISSOLUTION AND WINDING-UP 34  
  Section 9.1 Termination 34 Section 9.2 Effect of Termination 34 Section 9.3
Survival 34 Section 9.4 Dissolution of Company 34 Section 9.5  No Partition 35  
    Article 10 NOTICES 36     Section 10.1 Notices 36 Section 10.2 Change of
Address 36       Article 11 MISCELLANEOUS 36     Section 11.1 Entire Agreement
36 Section 11.2 Amendments 36 Section 11.3 Governing Law; Jurisdiction 36
Section 11.4 Successors and Assigns 37 Section 11.5 No Third-Party Beneficiaries
37 Section 11.6 Severability 37 Section 11.7 Enforceability 37 Section 11.8  No
Waiver 38 Section 11.9 Captions 38 Section 11.10 Further Assurances 38 Section
11.11 Counterparts 38 Section 11.12 PDF Signature 38 Section 11.13 Time of the
Essence 38

 

 ii  

 

 

Section 11.14 Usury Savings 38

 

Exhibits Title     Exhibit A Definitions Exhibit B Members; Capital
Contributions; Membership Interests Exhibit C-1 Initial Annual Budget Exhibit
C-2 Budget Development Protocol Exhibit C-3 Shortfall Calculation Examples
Exhibit C-4 Operating Metrics Exhibit D Notice Addresses Exhibit E Illustrative
Distribution Examples Exhibit F Asset Management Agreement Exhibit G Form of
Certificate of Membership Interest Exhibit H Selected Acres Sale Process    
Schedule Title     Schedule 1 Class A Preferred Members Schedule 2.5(a)(ii) Fees
and Expenses Schedule 4.7 Surface Use Agreements Schedule 8.3(b) Approved
Appraisal Firms     Annex Title     Annex A Class A Preferred Units

 

 iii  

 

 

 

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF CREEK PINE REIT, LLC

 

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”)
of Creek Pine REIT, LLC, a Delaware limited liability company (“Company”), is
dated effective as of June 24, 2020 (the “Amendment Effective Date”) and is made
by and among Company and TexMark Timber Treasury, L.P., a Delaware limited
partnership, as a member (“Member”) and the Persons set forth on Schedule 1
appended hereto (“Class A Preferred Members”). Exhibit A sets forth the
definitions of capitalized words and phrases used in this Agreement as well as
rules for interpreting other words and phrases.

 

RECITALS:

 

WHEREAS, Member (in its capacity as the initial member of Company, “Initial
Member”) formed Company as a limited liability company pursuant to the Limited
Liability Company Agreement of Company, dated as of July 6, 2018 (the “Effective
Date”), as amended by the First Amendment thereto, dated as of September 25,
2018, the Second Amendment thereto, dated as of December 7, 2018 and the Third
Amendment thereto, dated as of February 25, 2019 (the “Original Agreement”) and
by the filing of a certificate of formation (as amended from time to time, the
“Certificate”) with the office of the Secretary of State of the State of
Delaware under and pursuant to Section 18-201 of the Delaware Limited Liability
Company Act (as amended from time to time, the “Act”) on May 22, 2018 (the
“Formation Date”);

 

WHEREAS, Company and Member were formed to acquire one hundred percent (100%) of
the ownership interests of Crown Pine Timber 1, L.P., which owns (directly and
indirectly) approximately 1.1 million acres of timberland in east Texas (the
“Property”), pursuant to that certain Crown Pine Purchase Agreement, dated as of
May 14, 2018 (the “Crown Pine Purchase Agreement”), by and among Crown Pine
Parent, L.P., Crown Pine REIT, Inc., GPT1 LLC, Crown Pine Timber 1, L.P. and
Creek Pine Holdings, LLC (the “Acquisition”);

 

WHEREAS, the parties hereto desire to continue to operate Company as a limited
liability company under the Act and to set forth their respective rights and
obligations vis-à-vis Company; and

 

WHEREAS, the parties hereto desire to amend and restate the Original Agreement
on the terms and conditions herein in connection with the amendment and
restatement of the Second Amended and Restated Sawtimber Supply Agreement (the
“GP WSA Amendment”) by and between Georgia-Pacific WFS, LLC (“GP”) and Crown
Pine Realty 1, Inc. (“CPR1”).

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are acknowledged, Member agrees to amend and restate the
Original Agreement as of the Amendment Effective Date on the following terms and
conditions:

 

   

 

 

Article 1

 

FORMATION AND ORGANIZATION

 

Section 1.1           Formation. Company was formed as a limited liability
company on the Formation Date by the filing of the Certificate with the office
of the Secretary of State of the State of Delaware under and pursuant to
Section 18-201 of the Act.

 

Section 1.2           Basic Rights of Members. Member hereby enters into this
Agreement to set forth certain rights and obligations of Member, the procedures
for managing and operating Company and related matters. Member intends and
agrees that this Agreement is for all purposes the “operating agreement” of
Company as defined in the Act. Except to the extent otherwise provided in this
Agreement, (a) the rights and obligations of Company and Member and (b) the
management, operation, termination and dissolution of Company, in each case,
shall be governed by the provisions of the Act.

 

Section 1.3            Name. The business of Company shall be conducted under
the name “Creek Pine REIT, LLC” or such other name as the Board may hereafter
determine; provided, that any such other name shall not include any Member’s
name or any variation thereof without such Member’s prior written consent.

 

Section 1.4           Term. The term of Company (the “Term”) commenced on the
Formation Date and shall continue (unless Company is sooner dissolved,
liquidated and terminated in accordance with Article 9) until the tenth (10th)
anniversary of the Effective Date.

 

Section 1.5           Business. The business of Company is to, directly or
through one or more Subsidiaries, (a) acquire, own, manage, finance, develop and
hold for investment and ultimately dispose of or otherwise invest in or engage
in activities related to investment in the Property or such other Real Estate
Assets as may be acquired by Company or its Subsidiaries, (b) acquire, own, hold
for investment and ultimately dispose of general and limited partner interests,
limited liability company member interests, and stock, warrants, options or
other equity and debt interests in entities, and exercise all rights and powers
granted to the owner of any such interests, (c) conduct its business in a manner
that will enable it to qualify as a REIT under Section 856 et seq. of the Code,
and to maintain such qualification, (d) engage in any and all other activities
relating to, and compatible with, the purposes set forth herein and (e) take
such other actions, or do such other things, as are necessary, appropriate,
proper, advisable, incidental to or convenient for the furtherance and
accomplishment of the purposes and business described herein and for the
protection and benefit of Company.

 

Section 1.6           Principal Place of Business; Registered Office and Agent.
The principal place of business of Company shall be located at 702 North Temple
Drive, Diboll, Texas 75941, or such other place or places as the Board may
hereafter from time to time designate. The registered office of Company in the
State of Delaware, and the registered agent for service of process on Company at
such registered office, shall be as set forth in the Certificate, as amended
from time to time.

 

 2 

 

 

Section 1.7           Certificated Interests.

 

(a)          Each Membership Interest in Company shall constitute a “security”
within the meaning of, and governed by, (i) Article 8 of the Uniform Commercial
Code (including Section 8-102(a)(15) thereof) as in effect from time to time in
the State of Delaware (the “UCC”) and (ii) Article 8 of the UCC of any other
applicable jurisdiction that now or hereafter substantially includes the 1994
revisions to Article 8 thereof as adopted by the American Law Institute and the
National Conference of Commissioners on Uniform State Laws and approved by the
American Bar Association on February 14, 1995.

 

(b)          The Membership Interests in Company, which shall be represented by
Units (as described below), shall be evidenced by certificates in the form of
Exhibit G and each such certificate shall be executed by Member on behalf of
Company.

 

(c)          Company shall maintain books for the purpose of registering the
Transfer of Units in Company. Subject to compliance with Article 5, a Transfer
of Units in Company shall be effected by Company registering the Transfer upon
delivery of an endorsed certificate representing the Units being Transferred.

 

(d)          Notwithstanding any provision of this Agreement to the contrary, to
the extent that any provision of this Agreement is inconsistent with any
non-waivable provision of Article 8 of the UCC, such provision of Article 8 of
the UCC shall control.

 

Section 1.8            Currency. All Capital Contributions to Company and cash
distributions made by Company shall be made in Dollars, and the books and
records of Company will be maintained in Dollars for all reporting purposes.

 

Article 2

 

CAPITAL CONTRIBUTIONS; EXPENSES; MEMBERSHIP INTERESTS

 

Section 2.1            Capital Contributions.

 

(a)           Capital Contributions; Issuance of Membership Interests.

 

(i)              Member shall be deemed to have contributed on the Effective
Date to Company an aggregate amount of Capital Contribution in exchange for
Units which proceeds were used for the purchase price for the Acquisition (the
“Purchase Price”), and an additional amount to fund costs associated with the
closing of the Acquisition (the “Closing”), debt origination fees and a
pre-funding of Expenses of Company.

 

(ii)             At the Effective Date, Company caused (x) $0 to be funded into
one or more bank accounts for purposes of providing initial working capital for
Company and its Subsidiaries as of the Effective Date (such one or more bank
accounts referred to collectively as the “Cash Operating Account”) and
(y) $[***] to be funded into an account set up solely to satisfy shortfalls in
the Cash Operating Account from time to time (the “Pre-Funded Expense Account”),
in each case, out of the proceeds from the Purchase Price. All day-to-day
commercial activities of Company and its Subsidiaries, including the collection
of all revenues and the payment of all costs and expenses of running Company and
its Subsidiaries, including paying all Expenses and Capital Expenditures, shall
be conducted through the Cash Operating Account. The Pre-Funded Expense Account
shall be available to fund any shortfalls in the Cash Operating Account from
time to time in the discretion of Member; provided, that at no point after the
Effective Date may any additional cash be deposited into the Pre-Funded Expense
Account (other than in accordance with the Senior Credit Documents).

 

 3 

 

 

(b)           Additional Capital Contributions Regarding Cumulative Shortfalls.
Member acknowledges that the Capital Contributions made on the Effective Date to
Company included an additional amount that is intended to cover, among other
items, certain shortfalls in Net Operating Income of Company and its
Subsidiaries and to cover the payment of the Asset Management Fee (as such term
is defined in the Asset Management Agreement), in each case, for each Fiscal
Quarter as shown on Exhibit C-1 attached hereto. If, as of the end of any given
Fiscal Quarter on or after the fourth full Fiscal Quarter following the
Effective Date, Company generates a Cumulative Net Shortfall that is less than
zero ($0), Member shall cause any such Cumulative Net Shortfall to be funded as
follows:

 

(i)              First, by deducting from the Opening Bank Balance an amount
equal to the lesser of (x) the absolute value of the Cumulative Net Shortfall
and (y) the Opening Bank Balance (the amount, if any, by which the absolute
value of the Cumulative Net Shortfall exceeds the Opening Bank Balance, the
“Cumulative Net Shortfall, Post-Bank, Pre-AM Fee Deferral Amount”);

 

(ii)              Second, any Asset Management Fee due and payable, with respect
to such Fiscal Quarter, shall be deferred in an amount equal to the lesser of
(x) the absolute value of such Cumulative Net Shortfall, Post-Bank, Pre-AM Fee
Deferral Amount for such Fiscal Quarter and (y) the Asset Management Fee due and
owing for such Fiscal Quarter (the amount as determined pursuant to clause
(x) or clause (y), as applicable, plus any additional amounts of Asset
Management Fees deferred with respect to such Fiscal Quarter pursuant to
Section 4.2(c), the “Deferred Asset Management Fees”), which Deferred Asset
Management Fees shall not bear interest or other penalty. Any Deferred Asset
Management Fees shall continue to be deferred until the earlier of (i) the
liquidation of Company, (ii) the termination of this Agreement in accordance
with its terms and (iii) any Fiscal Quarter in which the Cumulative Net Surplus
is greater than zero ($0); provided, that Company shall pay the lesser of
(1) the Cumulative Net Surplus and (2) the Deferred Asset Management Fees
Balance, in each case, only until the Deferred Asset Management Fees Balance is

  

reduced to zero ($0) (any such amount of Deferred Asset Management Fees paid in
accordance with this proviso, with respect to any Fiscal Quarter, the “Recovered
Asset Management Fees”);

 

(iii)             Third, if the amount of the Cumulative Net Shortfall is not
funded in full by actions taken pursuant to clauses (i) and (ii) above, then,
Member may, at the option of the Common Board Members, make additional Capital
Contributions to Company in respect of its Common Return Units to fund the
amount of the remaining Cumulative Net Shortfall;

 

 4 

 

 

(iv)             Fourth, if the amount of the Cumulative Net Shortfall is not
funded in full by actions taken pursuant to clauses (i), (ii) and (iii) above,
then, Member may, at the option of the Common Board Members, make additional
Capital Contributions to Company in exchange for Shortfall Units (“Shortfall
Contributions”) to fund the amount of the remaining Cumulative Net Shortfall;
and

 

(v)             Fifth, if the amount of the Cumulative Net Shortfall is not
funded in full by actions taken pursuant to clauses (i), (ii), (iii) and
(iv) above, then Member may, at the option of the Common Board Members, make
additional Capital Contributions to Company in respect of its Common Return
Units to fund the amount of the remaining Cumulative Net Shortfall.

 

An example calculation of Cumulative Net Shortfall is set forth on Exhibit C-3.

 

Section 2.2            Fees and Expenses.

 

(a)           Subject to the requirements and limitations in the Senior Credit
Documents, Company (or its Subsidiaries, as applicable) shall bear, and Member
shall pay or shall cause to be paid, all reasonable fees, costs and expenses
incurred by Company or other Persons authorized by the Board to act on Company’s
behalf relating to the activities and operations of Company that are permitted
to be incurred in accordance with this Agreement (“Expenses”), whether such
costs and expenses were incurred prior to or following the Effective Date,
including:

 

(i)              all costs and expenses incurred in connection with the
formation of Company and its Subsidiaries and all expenses associated with the
issuance of Units, including any placement agent fees associated with such
issuance;

 

(ii)              all fees, costs and expenses (including, but not limited to,
those fees, costs and expenses set forth on Schedule 2.5(a)(ii)), if any,
incurred in evaluating, negotiating, structuring, acquiring, holding, managing,
leasing, financing, refinancing, disposing of or otherwise dealing with the
Property and other Business Assets, including any reasonable legal and
accounting expenses and other fees and out-of-pocket costs related thereto, and
the costs of rendering financial assistance to or arranging for financing for
any assets or businesses constituting the Business Assets (including the
Property);

 

(iii)             taxes of Company and its Subsidiaries, fees, costs and
expenses of auditors, appraisers, counsel and other advisors of Company and its
Subsidiaries, insurance costs of Company and its Subsidiaries and litigation
costs and indemnity expenses of Company and its Subsidiaries;

 

(iv)            administrative expenses related to the operation of Company and
its Subsidiaries, including the fees and expenses of accountants, lawyers and
other professionals incurred in connection with Company’s and/or its
Subsidiaries’ annual audit, financial reporting, legal opinions and tax return
preparation, as well as expenses associated with the distribution of reports to
Member and expenses associated with valuations of the Property and other
Business Assets as required by this Agreement, including the fees and expenses
of any independent appraiser;

 

 5 

 

 

(v)              interest expenses, brokerage commissions and other investment
costs incurred by or on behalf of Company and its Subsidiaries;

 

(vi)             the Asset Management Fee, subject to the restrictions and
limitations provided herein;

 

(vii)           costs of travel and travel-related expenses with respect to the
business of Company and its Subsidiaries; provided, that the cost of airfare
shall not exceed commercial fares and, for the avoidance of doubt, shall not
include costs associated with first-class, private or chartered air travel;

 

(viii)           all taxes and license fees levied against Company and its
Subsidiaries or their assets or operations;

 

(ix)             insurance costs incurred in connection with the operation of
the business of Company and its Subsidiaries; and

 

(x)              amounts to be contributed or advanced to any Subsidiary for the
purpose of such entity paying any cost of the type described in the foregoing
clauses (i) through (ix).

 

(b)           Subject to the requirements and limitations in the Senior Credit
Documents, to the extent any Expenses are paid by Member or other Persons
(including the Asset Manager) authorized to act on Company’s behalf by the
Board, such Expenses shall be reimbursed by Company (or one of its Subsidiaries,
as appropriate).

 

(c)           In addition to the foregoing, subject to the requirements and
limitations in the Senior Credit Documents, Company (or its Subsidiaries, as
applicable) shall bear as Expenses, and shall reimburse Member for such
Expenses, all reasonable third-party legal and due diligence costs and expenses
incurred by Member (i) in connection with their investment in Company, in each
case, prior to the Closing and (ii) in connection with the Additional CTT
Capital Contribution and the GP WSA Amendment.

 

Section 2.3            Membership Interests. Membership Interests shall be
issued by Company to Member in the classes and with such rights as are set forth
in this Section 2.3.

  

(a)           Designation and Numbers. Member shall hold units (“Units”) of
Membership Interests in Company, which shall be divided into six (6) classes
(each, a “Class”): “Shortfall Return Units,” “Preferred Return Units,” “Common
Return Units,” “Residual Units,” “Class A Preferred Units” or “Excess Units”.
Units represent, in respect of a Member, the Membership Interest of a Member in
Company at any particular time, whether classified as Shortfall Return Units,
Preferred Return Units, Common Return Units, Residual Units, Class A Preferred
Units or Excess Units. Units are personal property for all purposes and no
Member has any interest in specific real or personal property of Company.
Company shall maintain a register, approved by the Board, of Member’s Units,
which shall be revised and updated from time to time in connection with a
Transfer permitted under this Agreement. Company is authorized to issue
Shortfall Return Units, Preferred Return Units, Common Return Units and Residual
Units (collectively, “Other Units”) to Member or as required by Section 5.7 of
the Member LP Agreement in such number as determined by the Board or this
Agreement. In addition to Other Units, Company is authorized to issue (i) one
hundred twenty-five (125) Units of preferred Membership Interests, having the
rights, preferences, powers and limitations described in this Agreement,
including those described in Annex A (the “Class A Preferred Units”); and
(ii) Units classified as “Excess Units” having the rights, preferences, powers
and limitations set forth in Section 5.2(b). In the event of any conflict
between the terms of the Class A Preferred Units contained in Annex A and any
other provisions in this Agreement, the terms contained in Annex A shall
control. Other Units shall rank junior to the Class A Preferred Units with
respect to certain rights as more particularly described in this Agreement,
including without limitation those described in Annex A.

 

 6 

 

 

(b)          Shortfall Return Units. Company shall be authorized to, but has
issued no, “Shortfall Return Units”. Upon the making of any Shortfall
Contributions, Company shall issue to Member making a Shortfall Contribution a
number of Shortfall Return Units corresponding to the aggregate cash
consideration paid by Member in consideration for such Shortfall Return Units
and, in connection therewith, Company shall record in its books and records and
track the amount of Shortfall Contributions made by Member. Shortfall Return
Units issued at any time that there are then-outstanding Shortfall Return Units
shall be issued at an amount per Shortfall Return Unit equal to the sum of the
(i) Shortfall Contribution Balance per Shortfall Return Unit and (ii) Shortfall
Return Balance per Shortfall Return Unit, and shall be treated as having the
same Shortfall Contribution Balance, Shortfall Return Balance and Shortfall
Return Base as the then-outstanding Shortfall Return Units so that at all times
distributions on the Shortfall Return Units are pro rata based upon the number
of Shortfall Return Units then outstanding. In addition to the rights provided
under this Agreement with respect to any Membership Interests, Shortfall Return
Units shall entitle the holder thereof to the distributions of Base Available
Cash provided in Section 3.2 hereof.

 

(c)           Preferred Return Units. Company has issued to Member such number
of “Preferred Return Units” as are provided on Exhibit B. In addition to the
rights provided under this Agreement with respect to any Membership Interests,
Preferred Return Units shall entitle the holder thereof to the distributions of
Net Available Cash provided in Section 3.3 hereof. In connection with the
determination of the amount of distributions of Net Available Cash with respect
to the Preferred Return Units in accordance with Section 3.3, Company shall
record in its books and records and track the Initial Preferred Distribution
Balances and the Early Satisfaction Premium Balances.

 

(d)          Residual Units. Company has issued to Member such number of
“Residual Units” as are provided on Exhibit B. Residual Units shall entitle the
holder thereof to the distributions of Remaining Distributable Cash Flow
provided in Section 3.5 hereof. In connection with the determination of the
amount of distributions of Remaining Distributable Cash Flow with respect to the
Residual Units in accordance with Section 3.5, Company shall record in its books
and records and track the Additional Preferred Return Account.

 

(e)          Common Return Units. Company has issued to Member such number of
“Common Return Units” as are provided on Exhibit B. In addition to the rights
provided under this Agreement with respect to any Membership Interests, Common
Return Units shall entitle the holder thereof to the distributions of
Distributable Cash Flow provided in Section 3.4 hereof. In connection with the
determination of the amount of distributions of Distributable Cash Flow with
respect to the Common Return Units in accordance with Section 3.4, Company shall
record in its books and records and track the Common Return Balance and the
Common Contribution Balance.

 

 7 

 

 

(f)           Class A Preferred Units. Each Class A Preferred Member issued
Class A Preferred Units shall make at the time of his, her or its admission to
Company an initial Capital Contribution in such amount as the Board shall
determine. Except for such initial Capital Contribution, no holder of a Class A
Preferred Unit shall be required, or have any obligation, to make any additional
Capital Contributions.

 

Section 2.4           No Additional Members or Issuances. Except (i) in respect
of Class A Preferred Members, (ii) as authorized by the Board as a Major
Decision or (iii) a transferee of a Member’s Units as provided herein, no
additional Members shall be admitted to the Company and no additional Membership
Interests shall be created or issued.

 

Section 2.5           Sole Benefit. Except as stated in this Agreement, Member
shall not be required or permitted to make any additional Capital Contribution
or loan to Company. It is expressly acknowledged and agreed that the provisions
of this Agreement relating to the rights and obligations of Member to make any
Capital Contributions are for the sole benefit of Company and may not be
exercised on behalf of Company or invoked or enforced for any other purpose by
any other Person, including by any creditor of Company or trustee in a
bankruptcy proceeding.

 

Section 2.6           Waiver of Certain Rights. Member shall have (a) no right
under Section 509 of the Act or otherwise to withdraw or resign and receive the
fair value of its Membership Interests and (b) no right to demand or receive any
distribution from Company in any form other than cash and in accordance with the
provisions of this Agreement concerning distributions.

 

Article 3

 

DISTRIBUTIONS

 

Section 3.1           Timing; Working Capital Reserves; Notice.

  

(a)           No later than forty-five (45) days following the end of each
Fiscal Quarter, Company shall distribute to the Members all Base Available Cash,
Net Available Cash, Distributable Cash Flow and Remaining Distributable Cash
Flow with respect to such Fiscal Quarter as provided in this Article 3. With
respect to any Capital Event, Company shall use commercially reasonable efforts
to distribute all Base Available Cash, Net Available Cash, Distributable Cash
Flow and Remaining Distributable Cash Flow representing Capital Event Proceeds
with respect to such Capital Event within forty-five (45) days after receipt of
such Capital Event Proceeds as provided in this Article 3. Exhibit E sets forth
illustrative calculations of distributions of Base Available Cash, Net Available
Cash, Distributable Cash Flow and Remaining Distributable Cash Flow pursuant to
the provisions of this Article 3.

 

 8 

 

 

(b)           Company shall establish and maintain reasonable reserves in the
Cash Operating Account measured at the end of each Fiscal Quarter of no more
than $15,000,000; provided, however, that an amount higher than $15,000,000 may
be maintained (i) if necessary to maintain compliance with financial maintenance
covenants in the Indebtedness Documents or (ii) if the Board determines as a
Major Decision that such higher amount is appropriate. At the end of each Fiscal
Quarter, all cash in the Cash Operating Account in excess of the amounts set
forth above in this Section 3.1(b) shall be available for distribution pursuant
to this Article 3. Amounts in the Pre-Funded Expense Account shall not be
available for distribution pursuant to this Article 3 (it being understood that
such amounts shall otherwise be available distribution in connection with any
liquidation or dissolution of Company). Reserves may be distributed or otherwise
used by Company for the purposes set forth in the Annual Budget and as otherwise
permitted hereunder (including any related approvals required hereunder),
subject to the above minimum threshold.

 

(c)           In connection with any distribution being made pursuant to this
Article 3, Company shall deliver written notice to Member reasonably in advance
thereof providing a calculation of the amounts being distributed pursuant to
each section and subsection of this Article 3.

 

(d)           The distributions pursuant to this Article 3 with respect to any
Fiscal Quarter or any Capital Event shall be made in the following order of
priority: (i) Base Available Cash; (ii) Net Available Cash; (iii) Distributable
Cash Flow; and (iv) Remaining Distributable Cash Flow.

 

Section 3.2           Distributions of Base Available Cash. Base Available Cash
shall be distributed with respect to the Residual Units and Shortfall Return
Units to Member as follows:

 

(a)           First, to Member in respect of its Residual Units in an amount
declared by the Board, but not in excess of $500,000 for any three (3) month
period;

 

(b)           Second, to Member in respect of its Shortfall Return Units, in an
amount equal to the balance of Member’s Shortfall Return Balance (if any) and
until such balance is equal to zero ($0);

 

(c)           Third, to Member in respect of its Shortfall Return Units, in an
amount equal to the balance of Member’s Shortfall Contribution Balance (if any)
and until such balance is equal to zero ($0); and

 

(d)           Upon the Shortfall Contribution Balance in respect of a Shortfall
Return Units being reduced to zero ($0), such Shortfall Return Units shall be
deemed cancelled for no additional consideration and no longer outstanding.

 

Section 3.3            Distributions of Net Available Cash.

 

(a)           Company shall distribute Net Available Cash with respect to the
Preferred Return Units as provided in this Section 3.3. “Net Available Cash”
with respect to any Fiscal Quarter or any Capital Event means the amount of Base
Available Cash for such Fiscal Year or Capital Event, less the amounts
distributed pursuant to Section 3.2 with respect to such Fiscal Year or such
Capital Event.

 

 9 

 

 

(b)           Initial Preferred Distribution Balance. Company shall maintain an
“Initial Preferred Distribution Balance” which shall be (i) credited by (A) an
amount equal to the Initial Liquidation Value, plus (B) an amount equal to the
Preferred Return and (ii) debited by an amount equal to distributions made
pursuant to Section 3.3(d)(i)(A), Section 3.3(d)(ii)(A), Section 3.3(d)(iii)(A),
Section 3.3(d)(iv)(A) or Section 3.3(d)(v), as applicable. “Distribution Date”
means each date on which Net Available Cash is distributed; provided, that, if
the Net Available Cash (i) representing Capital Event Proceeds is distributed
within forty-five (45) days following an anniversary of the Effective Date or
(ii) representing proceeds other than Capital Event Proceeds is distributed
within forty-five (45) days following an anniversary of the Effective Date,
then, in each case, the relevant Distribution Date shall be deemed to be the
immediately preceding anniversary of the Effective Date for all purposes of this
Article 3. Distributions of Net Available Cash may be made on multiple
Distribution Dates.

 

(c)           Early Satisfaction Premium Balance. If the Distribution Date in
respect of a distribution of any Net Available Cash by Company occurs on or
prior to the fourth (4th) anniversary of the Effective Date, an early
satisfaction premium (each such amount, an “Early Satisfaction Premium”) shall
be a component of the relevant distribution. No Early Satisfaction Premiums
shall be applicable in connection with distributions of Net Available Cash if
the Distribution Date in respect thereof occurs after the fourth (4th)
anniversary of the Effective Date. Company shall maintain an “Early Satisfaction
Premium Balance” which shall be (i) credited with an amount equal to any Early
Satisfaction Premiums calculated in accordance with Section 3.3(d) and
(ii) debited by an amount equal to distributions made pursuant to
Section 3.3(d)(i)(B), Section 3.3(d)(ii)(B), Section 3.3(d)(iii)(B) or
Section 3.3(d)(iv)(B).

 

(d)           Distribution of Net Available Cash. Subject to Section 3.3(e), Net
Available Cash shall be distributed as follows:

 

(i)              If the Distribution Date occurs on or prior to the first (1st)
anniversary of the Effective Date, then (A) an amount equal to (1) the amount of
the Initial Liquidation Value equal to the amount of Net Available Cash, divided
by 1.325, plus (2) an amount equal to the Preferred Return on the amount
calculated in clause (1), shall be distributed with respect to the Preferred
Return Units, and (B) the remaining amount of Net Available Cash shall be
distributed with respect to the Preferred Return Units as an Early Satisfaction
Premium.

 

(ii)              If the Distribution Date occurs after the first (1st)
anniversary of the Effective Date, but on or prior to the second (2nd)
anniversary of the Effective Date, then (A) an amount equal to (1) the amount of
the Initial Liquidation Value equal to the amount of Net Available Cash, divided
by 1.35, plus (2) an amount equal to the Preferred Return on the amount
calculated in clause (1), shall be distributed with respect to the Preferred
Return Units, and (B) the remaining amount of Net Available Cash shall be
distributed with respect to the Preferred Return Units as an Early Satisfaction
Premium.

 

(iii)            If the Distribution Date occurs after the second (2nd)
anniversary of the Effective Date, but on or prior to the third (3rd)
anniversary of the Effective Date, then Net Available Cash shall be distributed
such that (A) an amount equal to the Net Available Cash, divided by 1.0575, is
distributed with respect to the Preferred Return Units, and (B) the remaining
amount of Net Available Cash is distributed with respect to the Preferred Return
Units as an Early Satisfaction Premium.

 

 10 

 

 

(iv)            If the Distribution Date occurs after the third (3rd)
anniversary of the Effective Date, but on or prior to the fourth (4th)
anniversary of the Effective Date, then Net Available Cash shall be distributed
such that (A) an amount equal to the Net Available Cash, divided by 1.02875 is
distributed with respect to the Preferred Return Units, and (B) the remaining
amount of Net Available Cash is distributed with respect to the Preferred Return
Units as an Early Satisfaction Premium.

 

(v)             If the Distribution Date occurs after the fourth (4th)
anniversary of the Effective Date, then Net Available Cash shall be distributed
with respect to the Preferred Return Units.

 

(e)          Limitations on Distributions of Net Available Cash. Notwithstanding
Section 3.3(d), the following limitations shall apply to distributions pursuant
to Section 3.3(d):

 

(i)             Net Available Cash shall be distributed with respect to the
Preferred Return Units until the Initial Preferred Distribution Balance and the
Early Satisfaction Premium Balance have been reduced to zero ($0).

 

(ii)             To the extent that the aggregate amount of Net Available Cash
available for distribution on a Distribution Date would, if distributed in
accordance with Section 3.3(d)(i)(A), Section 3.3(d)(ii)(A),
Section 3.3(d)(iii)(A) or Section 3.3(d)(iv)(A), as applicable, reduce the
Initial Preferred Distribution Balance below zero ($0), the amount of Net
Available Cash available for distribution on the relevant Distribution Date
shall be deemed reduced to an amount that would result in the Initial Preferred
Distribution Balance being reduced to zero ($0) after giving effect to the
distribution thereof contemplated by Section 3.3(d)(i)(A),
Section 3.3(d)(ii)(A), Section 3.3(d)(iii)(A) or Section 3.3(d)(iv)(A), as
applicable. For the avoidance of doubt, the calculation of any applicable Early
Satisfaction Premiums on the relevant Distribution Date shall be made using the
deemed reduced amount of Net Available Cash.

 

Section 3.4           Distributions of Distributable Cash Flow.

 

(a)          Company shall distribute Distributable Cash Flow with respect to
Common Return Units as provided in this Section 3.4. “Distributable Cash Flow”
with respect to any Fiscal Quarter or any Capital Event means the amount of Net
Available Cash for such Fiscal Quarter or Capital Event, less the amounts
distributed pursuant to Section 3.3 with respect to such Fiscal Quarter or such
Capital Event.

 

(b)          Distributable Cash Flow shall be distributed with respect to Common
Return Units as follows:

 

(i)               First, until the Common Return Balance is equal to zero ($0);
and

 

(ii)              Second, until the Common Contribution Balance is equal to zero
($0).

 

 11 

 

 

Section 3.5           Distributions of Remaining Distributable Cash Flow.
Company shall distribute Remaining Distributable Cash Flow with respect to
Residual Units as provided in this Section 3.5. “Remaining Distributable Cash
Flow” with respect to any Fiscal Quarter or any Capital Event means the amount
of Distributable Cash Flow for such Fiscal Quarter or Capital Event, less the
amounts distributed pursuant to Section 3.4 with respect to such Fiscal Quarter
or such Capital Event. Company shall distribute any Remaining Distributable Cash
Flow with respect to Residual Units as provided in Section 3.1.

 

Section 3.6            Form of Distributions. Member does not have any right to
demand and receive any distribution from Company in any form other than money,
nor shall Member be required to accept any distribution from the Company in any
form other than money. Member shall not be obligated to accept any in-kind
distributions without Member’s written consent. Any such in-kind distribution
shall require the unanimous prior written consent of all Board Members.
Notwithstanding anything to the contrary contained herein, Company shall not
make any distribution if such distribution would (i) violate the Act or other
applicable Law or (ii) violate the terms of any credit agreement, pledge,
hypothecation or other collateral or security agreement to which Company (or any
Subsidiary of Company) is a party or bound by, including the Senior Credit
Documents (each, an “Indebtedness Document”), so long, in the case of each
Indebtedness Document other than the Senior Credit Documents, as such
Indebtedness Document has been entered into in accordance with the terms of this
Agreement.

 

Article 4

 

MANAGEMENT OF COMPANY

 

Section 4.1            Rights and Powers of the Board; Voting.

 

(a)           Management of Company shall be vested in a board of directors of
Company (the “Board”), except to the extent otherwise provided in this
Agreement. Member intends and agrees that the Board is for all purposes the
“manager” of Company as defined in the Act. The Board shall have the power to do
any and all acts necessary or convenient to or for the furtherance of the
purposes of Company as set forth in this Agreement, except to the extent
otherwise provided in this Agreement. The Board may delegate any of its powers
or authority pursuant to this Agreement to any Person or group of individuals,
provided, that no such delegation shall cause the Board to cease to be the
“manager” of Company within the meaning of the Act. Except as expressly set
forth herein, no Member, solely in his or her capacity as a Member, has the
authority or power to act for or on behalf of Company, to do any act that would
be binding on Company, or to incur any expenditure on behalf of Company.

 

(b)           The sole duty of each Board Member to Company and to any Member
shall be to comply in good faith with the terms of this Agreement in a manner
that does not constitute fraud, misappropriation, gross negligence or willful
misconduct. It is the express intention of Member that the provisions of this
Agreement, to the extent that they restrict or eliminate the duties of the Board
Members to Company or to any Member otherwise existing at law or in equity,
replace such other duties and liabilities; provided, that the foregoing shall
not restrict the implied covenants of good faith and fair dealing.

 

(c)           Subject to the express provisions of this Agreement, the Board
shall have full, complete and exclusive right, power and authority to cause the
sale or other disposition of all or substantially all of the assets of Company
or a merger, consolidation, reorganization, business combination or similar
transaction with respect to Company.

 

 12 

 

 

 

 

(d)           Except as may otherwise be required by law or as expressly
provided for in this Agreement, voting power with respect to all matters
requiring Member action shall be vested exclusively in the holders of the
Membership Interests (other than the Class A Preferred Units and the Excess
Units). For the avoidance of doubt, neither the Class A Preferred Units nor the
Excess Units shall entitle the holder(s) thereof to vote on any matters except
as required by law or as expressly provided for in this Agreement.

 

Section 4.2            Composition of the Board.

 

(a)           The Board shall be composed of seven (7) individuals, and shall
include (i) three (3) individuals to be appointed by the CTT Investor, (ii) one
(1) individual to be appointed by BCI Investors, (iii) one (1) individual to be
appointed by Medley Investor, (iv) one (1) individual to be appointed by TIG
Investor and (v) one (1) individual to be appointed by Highland Investors. Each
individual so appointed is referred to herein as a “Board Member” and the Board
Members under clause (i) are referred to herein as the “Common Board Members”
and the Board Members referred to under clauses (ii)-(v) are referred to herein
as the “Preferred Board Members”. As of the Amendment Effective Date, the Board
Members shall be John Capriotti, Brian Davis and Todd Reitz (each appointed by
CTT Investor), Sameer Jinnah (appointed by BCI Investors), James Frank
(appointed by Medley Investor), Gerrity Lansing (appointed by TIG Investor) and
James Dondero (appointed by Highland Investors). Other than instances in which
the Board is operating under the Alternative Voting System, each Board Member
appointed by (i) CTT Investor shall have one and two-thirds votes, (ii) BCI
Investors shall have one (1) vote, (iii) Medley Investor shall have one (1)
vote, (iv) TIG Investor shall have one (1) vote and (v) Highland Investors shall
have one (1) vote, in each case, on each matter before the Board. Each Board
Member shall hold office until his or her successor is appointed, or until his
or her earlier resignation or removal, in each case in accordance with Section
4.3. Each Board Member shall be an individual. Upon written notice to the other
Board Members, the Board Member appointed by any BCI Investor may send an
alternative representative on its behalf to meetings of the Board, which
representative shall have full ability to vote on behalf of such Board Member
appointed by such BCI Investor at such meetings.

 

(b)          Notwithstanding anything in this Agreement to the contrary (other
than Section 4.3(c)), the Alternative Voting System shall permanently become
effective upon the “Alternative Voting System” becoming effective under the
Member LP Agreement.

 

(c)           For purposes of this Section 4.3, if, with respect to any Fiscal
Quarter, the Cumulative Net Shortfall is greater than zero ($0) and the
Quarterly Net Shortfall is less than zero ($0), the Common Board Members by
written notice to Company on or prior to forty-five (45) days following the end
of such Fiscal Quarter, cause to be cured such Quarterly Net Shortfall by taking
any or all of the actions listed in this Section 4.3(c):

 

(i)              The Common Board Members may elect to deduct from the Opening
Bank Balance an amount equal to the lesser of (x) the absolute value of such
Quarterly Net Shortfall or (y) the Opening Bank Balance;

 

13

 

 

(ii)             The Common Board Members may elect to defer any Asset
Management Fee due and payable with respect to such Fiscal Quarter in an amount
equal to the lesser of (x) the absolute value of such Quarterly Net Shortfall
and (y) the Asset Management Fee due and owing for such Fiscal Quarter; and/or

 

(iii)            The Common Board Members may call for additional Capital
Contributions to Company to fund any remaining amount of the Quarterly Net
Shortfall.

 

(iv)            Company (and/or its Subsidiaries, as applicable) shall maintain,
at the expense of Company, directors and officers liability insurance with
limits and deductibles, and other terms applicable thereto, covering Company and
the Board, as approved by the Board as a Major Decision.

 

(v)             Each Member other than a Member holding solely Class A Preferred
Units shall be entitled to designate one (1) or more individuals (each a “Board
Observer”) to attend and participate in, strictly as non-voting observers, any
meeting of the Board, either in person or by telephone conference. Company shall
provide any Board Observer with written notice of each meeting of the Board at
the same time and in the same manner as notice is provided to the Board Members.
Any Board Observer shall be entitled to receive all written materials and other
written information (including minutes of all Board meetings) provided to the
Board in connection with such meeting at the same time such materials and
information are provided to the Board and prompt notice of any action taken by
written consent of the Board; provided, that, notwithstanding anything herein to
the contrary, Company may withhold any documents, materials or other information
from, or exclude from any meetings of the Board (or portions thereof), any Board
Observer if the Board determines on the advice of counsel that access to such
information or attendance at such meeting would, or may be reasonably likely to,
adversely affect the attorney-client privilege between Company and its counsel
to preserve the confidentiality of Company’s trade secrets, know-how or other
confidential information of or relating to Company that would give such Board
Observer an unfair competitive advantage. Each Board Observer shall be an
individual.

 

Section 4.3            Resignation, Removal and Replacement of Board Members;
Transfers of Appointment Rights.

 

(a)          Any Board Member may resign from office at any time by giving
written notice to Company. The resignation of any Board Member shall take effect
upon Company’s receipt of such notice or at such later time as shall be
specified in the notice. Unless otherwise specified in the notice, the
acceptance of the resignation shall not be necessary to make the resignation
effective.

 

(b)          A Board Member shall be removed from office automatically upon his
or her death. A Board Member may be removed from office with or without cause by
the Member who appointed the Board Member.

 

(c)          Any vacancy occurring on the Board may be filled only by an
appointment by the Member who appointed the Board Member formerly filling such
vacancy.

 

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Section 4.4            Meetings of the Board.

 

(a)          The Board shall meet on the schedule as determined by the Board
from time to time. Unless otherwise determined by the Board, the Board shall
meet at least quarterly on a schedule to be determined by the Board and the
agenda for each such meeting shall include substantive review and discussion of
the financial and operating condition of Company and other relevant strategic
matters pertaining to Company. Any Board Member shall have the power to call
special meetings of the Board. A special meeting of the Board shall be held on
the date and at the time set by the party calling the special meeting. All
meetings of the Board shall be held at the principal office of Company or at
such other place as may be designated by the Board. If approved by the Board,
individuals who are not Board Members or Board Observers may be invited to
observe or participate in meetings of the Board in an advisory, non-voting
capacity. Board Members may participate in a meeting by means of a conference
telephone or other communications equipment if all persons participating in the
meeting can hear each other at the same time. Participation in a meeting by
these means shall constitute presence in person at the meeting. The Preferred
Board Members may request reasonably in advance that a meeting of the Board be
held with the individual presence of the Board (i.e., other than by conference
telephone or other communications equipment by which such persons participating
in the meeting can hear each other at the same time), and the Board shall cause
such meeting to be scheduled promptly and have the Board Members appointed by
the CTT Investor in attendance in such manner.

 

(b)          No notice is required of regular Board meetings held in accordance
with such schedule as may be established by the Board from time to time. It
shall be sufficient notice to a Board Member of a special meeting to send notice
by overnight courier or e-mail at least ten (10) Business Days before the
meeting addressed to such Board Member at his or her usual or last known
business or residence address or e-mail address, as applicable, or to give
notice in person or by telephone at least ten (10) Business Days before the
special meeting. Notice of a special meeting need not be given to any Board
Member if a written waiver of notice, executed by him or her before, after or at
the special meeting, is filed with the records of the meeting, or to any Board
Member who attends the special meeting without protesting prior thereto or at
its commencement the lack of notice to him or her. Neither notice of a special
meeting nor a waiver of a notice need specify the purposes of the special
meeting. Notice of any special meeting shall be deemed to be delivered, given
and received (i) on the date of receipt if delivered personally or by telephone,
(ii) on the next day if delivered by overnight courier or (iii) on the date of
transmission if transmitted by e-mail.

 

(c)          All Common Board Members and a majority of the Preferred Board
Members shall be present in person (by telephone conference or by other
communications equipment if all persons participating in the meeting can hear
each other at the same time as described under Section 4.4(a)) or by proxy at
any meeting of the Board in order to constitute a quorum for the transaction of
business at such meeting; provided, that, if the Board is operating under the
Alternative Voting System, the presence of a majority of the Preferred Board
Members shall constitute a quorum. If such quorum shall not be present at any
meeting of the Board, the Board Members present shall adjourn the meeting and
promptly give notice of when it will be reconvened. Action or consent of the
Board for purposes of this Agreement shall require the affirmative vote of Board
Members holding at least a majority of the votes entitled to be cast by all
Board Members, or such other vote as is otherwise set forth under this Agreement
(including with respect to Major Decisions).

 

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(d)               Each Board Member may vote either in person or by a proxy
which such Board Member has duly executed in writing. No proxy shall be valid
after one (1) year from the date of its execution unless a longer period is
expressly provided in the proxy. A duly executed proxy shall be irrevocable if
it states that it is irrevocable and if, and only as long as, it is coupled with
an interest sufficient in law to support an irrevocable power. A Board Member
may revoke any proxy which is not irrevocable by attending the relevant meeting
and voting in person or by filing an instrument in writing revoking the proxy,
or another duly executed proxy bearing a later date, with Company. Participation
in a meeting by proxy in accordance with this Section 4.4(d) shall constitute
presence in person at the meeting.

 

(e)               The Board may adopt procedures and methods designed to permit
the business of Company to proceed in an orderly and prompt manner,
notwithstanding the necessity of Board approvals required hereunder.

 

(f)                The Board may appoint one or more Board Members to serve as
the chairman or co-chairmen of the Board. Such chairman or co-chairmen shall
preside at all meetings of the Board at which he or she is present and shall
perform such other duties as from time to time may be assigned to him or her by
the Board.

 

(g)               Except to the extent otherwise set forth in this Agreement
(including Section 4.7), action or consent requiring approval or action by the
Preferred Board Members for purposes of this Agreement shall require the
affirmative vote of Preferred Board Members holding at least a majority of the
votes entitled to be cast by all Preferred Board Members. Any action required or
permitted to be taken by the Preferred Board Members may be taken without a
meeting, without prior notice and without a vote, if consented to in writing by
all Preferred Board Members.

 

Section 4.5               Action of the Board without a Meeting. Any action
required or permitted to be taken by the Board may be taken without a meeting,
without prior notice and without a vote, if consented to in writing by all Board
Members.

 

Section 4.6               Compensation of Board Members. Board Members shall not
receive any compensation or other remuneration from Company for their services
to Company as Board Members; provided, that Company shall reimburse Board
Members for reasonable travel and other expenses incurred in connection with
meetings or other functions of the Board.

 

Section 4.7               Major Decisions. The following are major decisions
with respect to Company, its Subsidiaries and the Property and other Business
Assets (“Major Decisions”) that require the approval of a majority of the total
votes of all Board Members entitled to vote on such matters; provided, that such
majority shall include a majority of the Preferred Board Members voting on such
matter:

 

(a)             Subject to Section 4.8, approving the Annual Budget and any
amendments or modifications thereto, or making any expenditure that is not in
accordance with the most recently approved Annual Budget, other than in respect
of Allowable Variances as set forth in Section 4.8(b).

 

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(b)               Entering into, terminating, amending or otherwise modifying
(i) any Wood Supply Agreement, (ii) any stumpage sales agreement with (A) a term
in excess of 18 months or (B) where amounts paid or payable would exceed
$500,000, or (iii) any other wood supply agreement, timber sales contract or any
other wood or timber sales contract or agreement in connection with the Property
or any other Business Asset or operations of Company and its Subsidiaries if, in
the case of this clause (iii), (A) the amounts payable would, in the aggregate
with any other amounts paid or payable thereunder (and if not otherwise provided
for in any approved Annual Budget) exceed $500,000, (B) such sales contract or
agreement has a term in excess of eighteen (18) months (unless terminable by
Company and/or its Subsidiaries on ninety (90) days’ notice or less without
penalty or premium) or (C) such sales contract or agreement contains terms that
are outside of the ordinary course for such contracts or agreements or (iv) any
Surface Use Agreements; provided, that entering into, terminating, amending or
otherwise modifying any Surface Use Agreement shall not be a Major Decision if
such Surface Use Agreement was entered into in compliance with an Approved
Surface Use Agreement Interval (it being understood and agreed that the
determination to establish any Surface Use Agreement Interval shall be a Major
Decision); provided, further, that any Surface Use Agreements approved by the
Board and set forth on Schedule 4.7 appended hereto shall be deemed ratified,
approved and confirmed in accordance with this Section 4.7(b).

 

(c)               Entering into, terminating, amending or otherwise modifying
any contract or agreement of Company and its Subsidiaries (other than Wood
Supply Agreements, stumpage sales agreements or other wood supply agreements,
timber sales contracts, or any other wood or timber sales contracts or
agreements in connection with the Property or any other Business Asset or
operations of Company and its Subsidiaries or Surface Use Agreements), if the
amounts payable would, in the aggregate with any other amounts paid or payable
thereunder or under any other related contract or agreement, not otherwise
provided for in any approved Annual Budget, exceed $250,000 individually or
$1,000,000 in the aggregate with any related transactions.

 

(d)              Causing Company or any of its Subsidiaries to acquire any
additional Business Asset or Real Estate Asset (other than the Property), except
as otherwise provided for in any approved Annual Budget and except for assets
being acquired for less than $100,000 individually or $250,000 in the aggregate
with any related transactions.

 

(e)              Changing (i) the use of all or any part of the Property or
other Real Estate Asset outside the ordinary course of business of Company and
its Subsidiaries in any material respect, or (ii) the character of Company’s
business from that which is consistent with the purpose stated in Section 1.5;
provided, that, for clarification, entering into leases or other agreements
which provide for hunting and other recreational use, exploitation of mineral
rights, water rights, carbon rights, conservation rights, or cell tower usage in
the ordinary course of business of Company and its Subsidiaries, shall not
constitute a Major Decision pursuant to this Section 4.7(e).

 

(f)               Listing, offering to sell or selling or otherwise disposing of
all or a portion of the Property or any other Real Estate Asset, including in
respect of HBU Sales, unless (i) part of an involuntary condemnation proceeding,
(ii) part of an approved Annual Budget (including the properties subject to HBU
Sales thereunder) or (iii) pursuant to a Permitted HBU Sale in accordance with
Section 4.10.

 

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(g)               Listing, offering to sell or selling or otherwise disposing
any Business Asset other than a Real Estate Asset, unless part of an approved
Annual Budget and except for assets being listed, offered or sold for less than
$100,000 individually or $250,000 in the aggregate with any related
transactions.

 

(h)               Incurring, refinancing, creating, issuing, assuming,
guaranteeing or otherwise causing Company or any of its Subsidiaries to become
liable for any new Indebtedness and any amendment, modification or refinancing
of any Indebtedness, other than in connection with the Senior Credit Documents.

 

(i)                Executing and delivering any guaranty, indemnity or similar
agreement on behalf of Company or any of its Subsidiaries other than (x) in
connection with the Senior Credit Documents and (y) with respect to indemnities
only, any indemnity which would not reasonably be expected to result in material
liability to Company or any of its Subsidiaries that is entered into in the
ordinary course of business of Company and its Subsidiaries.

 

(j)                Entering into, amending or modifying any swap, hedge, collar,
other interest rate protection agreement or other derivative instrument or
agreement.

 

(k)               Creating any liens or encumbrances on all or a portion of the
Property or any other Business Asset, other than (i) those related to any
permitted Indebtedness and (ii) any Permitted Encumbrances, and approving the
form of any documentation in respect thereof (including any amendment or
modification of any such documentation), other than in connection with the
Senior Credit Documents.

 

(l)               Subject to the proviso set forth in the first sentence of
Section 3.1(b), establishing reserves determining reserve levels, determining to
make reserves at a Subsidiary or making any distributions from any such reserves
pursuant to Section 3.1(b) or Section 9.4.

 

(m)              Entering into any agreement by Company or a Subsidiary thereof
with the General Partner, the Asset Manager or any Affiliate thereof (each a
“Related Party Agreement”) other than pursuant to Section 4.9 or amending or
modifying any agreement set forth in Section 4.9.

 

(n)               Issuing ownership interests in Company or its Subsidiaries, or
any admission of any member of Company after the Effective Date, other than
(i) the issuance of Membership Interests or pursuant to a Transfer of Membership
Interests, in each case, that is permitted pursuant to this Agreement (including
Article 5) or (ii) any issuance of ownership interests in a Subsidiary so long
as all of the ownership interests in such Subsidiary remain directly or
indirectly wholly owned by Company following such issuance.

 

(o)               Formation of any new Subsidiary of Company (including entering
into any joint venture with one or more third parties) other than formation of
wholly owned Subsidiaries of Company to the extent necessary to consummate the
Acquisition.

 

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(p)              Paying, compromising, litigating, arbitrating or otherwise
amending any claim or demand of or against Company or any of its Subsidiaries
where the amount of the individual claim or demand exceeds $100,000 and the
claim or demand is not an ordinary course claim or demand related to payables or
receivables, other than where Company’s insurance carrier, in accordance with
terms of Company’s insurance policy, is prosecuting or defending the claim or
demand and has not disputed any portion of the claim or demand.

 

(q)              Approving any settlement of a claim subject to indemnification
pursuant to Article 7.

 

(r)               Taking any action or a series of related actions or refraining
from taking or approving any action or a series of related actions relating to
remediation of hazardous substances that is estimated by Company to cost Company
or its Subsidiaries in excess of $100,000 as a result of a single underlying
event, other than to obtain studies and reports and conduct (or arrange for)
evaluations and analyses thereof if there is a reasonable basis to believe that
such assets have been affected by hazardous substances.

 

(s)               (i) Dissolving, liquidating, or reorganizing Company or any of
its Subsidiaries, (ii) merging, consolidating or otherwise selling all or
substantially all of the interests in, or all of the assets of, Company or any
of its Subsidiaries or (iii) filing any voluntary bankruptcy petition for
Company or any of its Subsidiaries, or seeking the protection of any other
federal or state bankruptcy or insolvency law or debtor relief statute.

 

(t)                Appointing Liquidators pursuant to Section 9.4.

 

(u)               Amendment or modification of this Agreement (other than in
accordance with Section 11.2) or any other governing documents of Company or its
Subsidiaries except to the extent necessary to consummate the Acquisition.

 

(v)               Company or any of its Subsidiaries (i) directly employing any
Person or (ii) entering into any collective bargaining agreement or similar
agreement.

 

(w)              Making any change in the accounting principles of Company or
its Subsidiaries or making, revoking or failing to make any material Tax
election or determination (including, without limitation, any determination to
settle any material Tax audit).

 

(x)               Selecting or determining any insurance plans, carriers or
coverages to be purchased and maintained by or on behalf of Company or any of
its Subsidiaries, or in respect of the Property or any other Business Asset,
including with respect to directors’ and officers’ liability insurance under
Section 4.2(c)(iv).

 

(y)               Hiring counsel, professional advisors, accountants or sales
brokers on behalf of Company or any Subsidiaries when the expected expenditure
would exceed $50,000 in a calendar year.

 

(z)               Hiring or changing the independent auditors of the financial
statements of Company or its Subsidiaries.

 

(aa)             Making adjustments to Gross Asset Values in the circumstances
set forth in the definition of such term.

 

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(bb)           Changing the state of the principal place of business of Company.

 

(cc)            Taking any of the foregoing actions, matters or decisions
described in this Section 4.7 taken by a Subsidiary of Company which would
constitute a Major Decision if taken by Company.

 

Notwithstanding the foregoing, Company shall not, and shall not cause any
Subsidiary of Company, as applicable, to take any of the actions listed in this
Section 4.7, unless such action has been previously approved by the Board
pursuant to this Section 4.7; provided, however, that the Common Board Members
may take (or may cause to be taken) such actions as reasonable and necessary
with respect to emergency situations to protect the health, safety and welfare
of people or property; provided, that the Common Board Members promptly gives
notice to all Board Members of such emergency actions (and any related emergency
expenditures). Company shall implement fully each Major Decision approved in
accordance with the terms of this Agreement, and may take such action or actions
as necessary or desirable to implement any Major Decision approved pursuant to
this Section 4.7, so long as such action or actions are consistent with such
approval, and are not otherwise restricted under this Agreement. Notwithstanding
anything herein to the contrary, to the extent that any of the Major Decisions
is specifically set forth or described in an Annual Budget approved in
accordance with this Agreement and enumerated as a Major Decision therein, the
approval of such Annual Budget shall constitute prior approval of such Major
Decision for purposes of this Section 4.7 and no additional approval or consent
with respect to such Major Decision shall be required. That certain Timber
Management Agreement proposed to be by and between Company and Forest Resource
Consultants, Inc., a Georgia corporation, in the form as previously agreed to by
the Investors, shall not require Major Decision approval.

 

Section 4.8            Annual Budget.

 

(a)           The initial Annual Budget for the remainder of calendar year 2018
for the period beginning on the Effective Date and ending on December 31, 2018,
including the related variances, is attached hereto as Exhibit C-1 (the “Initial
Annual Budget”). For each Fiscal Year thereafter, the Common Board Members shall
be responsible for causing to be prepared and submitting (or causing to be
prepared and submitted) to the Board for approval as a Major Decision a proposed
updated Annual Budget, including the related variances. “Annual Budget” means a
budget approved in accordance with this Agreement. The Annual Budget shall be
caused to be prepared by the Common Board Members in accordance with the Budget
Development Protocols (including the preparation of the back-up materials on the
timetable set forth therein) set forth in Exhibit C-2. The Annual Budget for
each Fiscal Year shall be prepared with the same detail and line items as set
forth in the Initial Annual Budget and such other detail as Preferred Board
Members may reasonably request. In connection with the review of a proposed
Annual Budget, the Preferred Board Members may reasonably request additional
information regarding the materials supporting the proposed Annual Budget or
such other information as is necessary or desirable to enable review of such
proposed Annual Budget, and the Common Board Members shall cause to be provided
such requested information. The Preferred Board Members shall consent to or
reject the proposed Annual Budget, or request additional information, within ten
(10) Business Days following (i) receipt of such proposed Annual Budget or (ii)
receipt of all additional information that is, in the determination of the
Preferred Board Members, necessary or desirable to enable review of such
proposed Annual Budget. The Common Board Members shall cause to be prepared and
submitted annually the Annual Budget no later than December 10 for the next
Fiscal Year. The Annual Budget for each Fiscal Year shall include the projected
use of the Pre-Funded Expense Account, including as shown on Exhibit C-1 for the
four Fiscal Quarters comprising such Fiscal Year. In connection with the
submission of the Annual Budget, the Common Board Members shall cause to be
prepared or submitted to the Board an annual business plan for Company and its
Subsidiaries including a responsible five (5)-year forecast for Company’s
operations including the operating metrics set forth in Exhibit C-4. The
Preferred Board Members, or their designated representative, shall be provided
reasonable access to all information, data, reports, models, and analyses relied
on in developing the Annual Plan (including, for the avoidance of doubt, all
financial and silvicultural assumptions, constraints, supporting stand level
data, merchantable timber volumes, pre-merchantable acres by species and age
class, and acres by land classification).

 

20

 

 

(b)               The Board shall manage the business of Company and its
Subsidiaries in accordance with the approved Annual Budget and shall at all
times act in a manner consistent with the Annual Budget; provided, however, that
the Board may in its discretion expend funds (or may cause such funds to be
expended) for Non-Controllable Expenses not otherwise reflected in the Annual
Budget. In implementing the Annual Budget, the Board may in its discretion vary
(or may cause to be varied) material line items in the applicable Annual Budget
within the applicable variances provided therein (such variances being referred
to herein as “Allowable Variances”).

 

(c)               In the event the Board does not approve of any Annual Budget
prior to the intended period for such Annual Budget, then a “Budget Impasse”
shall be deemed to exist, until such time as such Annual Budget is approved in
accordance with this Agreement. During any Budget Impasse, the Board shall
operate and cause to be operated Company and its Subsidiaries, and the Property,
in accordance with the most recently approved Annual Budget, except, in each
case, that (i) the Board may make or cause to be made any expenditure not
contemplated by such Annual Budget which is (1) an emergency expenditure to
protect the health, safety and welfare of people or property (in which event
Company shall notify the Preferred Board Members immediately), (2) an
expenditure to satisfy (A) any outstanding taxes and related fees, costs and
expenses, (B) any obligations for interest, principal, escrows, fees and
expenses due under the Senior Credit Documents and any other indebtedness
approved as required under this Agreement or (C) premiums for insurance required
under this Agreement, the Asset Management Agreement, any Senior Credit
Document, any loan document relating to indebtedness approved as required under
this Agreement or any other contract to which Company or any of its Subsidiaries
is a party that are entered into in accordance with this Agreement or (3) an
expenditure to satisfy an obligation of Company that is due and owing under any
of the Wood Supply Agreements, seedling agreements or other agreements
previously approved as Major Decisions (such expenses, “Non-Controllable
Expenses”), and (ii) Member acting alone shall otherwise have no authority to
make any other expenditure without the approval of the Board as a Major
Decision, as applicable.

 

(d)               If, at a time when the Alternative Voting System is not
effective, either (i) the Board is in good faith unable to make any decision in
respect of a Major Decision or (ii) there are two attempts (including any
adjournment) to have a special meeting called for the purpose of discussing a
Major Decision where quorum is not obtained, and if such failure continues for
five (5) days after the date of the meeting called to discuss the approval (or
in the event of the second quorum failure, the date of such second quorum
failure), then the Board Members shall be deemed to be deadlocked in the matter
in question (each, a “Deadlock”). In the event of any Deadlock involving a Major
Decision, such Deadlock shall result in no resolution in respect of such
decision until such time as the Board agrees regarding such decision.

 

21

 

 

Section 4.9            Transactions with Affiliates.

 

(a)           Retention as Asset Manager.

 

(i)               As of the Amendment Effective Date, Company and CatchMark TRS
Creek Management, LLC (the “Asset Manager”) have entered into an amended and
restated asset management agreement with respect to the Property in the form
attached hereto as Exhibit F (the “Asset Management Agreement”), which Asset
Management Agreement is hereby approved by the Board. Asset Manager shall
continue to undertake such obligations and responsibilities as are set forth in
the Asset Management Agreement, including to continue to (i) maintain health and
safety policies and procedures for employees and contractors, as well as for
Asset Manager to track, report and manage workplace health and safety, (ii)
ensure that the Property is managed in accordance with Sustainable Forestry
Initiative requirements, including all required reporting and auditing
obligations, and forecast a timeline for audits and recertification, as
applicable, (iii) comply with the requirements of the Wood Supply Agreements,
including preparing, delivering and obtaining approval of the Annual Plan,
Forecast Plan and Delivery Plan (as each such term is defined in the Wood Supply
Agreements) each year when and as required in the Wood Supply Agreements, (iv)
report quarterly to the Board any variances in harvest from the harvest plans
for previous calendar quarter, and shall not exceed any Allowable Variance
without having first obtained Board approval and (v) submit to the Board monthly
reports detailing any recordable incidents for employees and contractors that
occurred in the previous month and any material environmental compliance
matters, including violations or potential violations of laws, regulations and
best management practices applicable to the Property and the operation of the
same. For the avoidance of doubt, the Asset Manager shall not be reimbursed for
any expenses under the Asset Management Agreement to the extent that an
Affiliate of the Asset Manager was reimbursed for such expenses pursuant to this
Agreement or otherwise.

 

(ii)              The Asset Management Agreement shall have a term of seven (7)
years from the Effective Date unless earlier terminated in accordance with its
terms; provided, that a majority of the Preferred Board Members (acting without
the consent of any other Board Members) may direct Company to terminate the
Asset Management Agreement in accordance with the terms of the Asset Management
Agreement (A) in the event that any Change of Control (as such term is defined
in the Asset Management Agreement) occurs without the prior written consent of
the Board, (B) for Cause (as such term is defined in the Asset Management
Agreement) or (C) as a result of a Key Man Event (as such term is defined in the
Asset Management Agreement).

 

(iii)             For the avoidance of doubt, in the event of any conflict
between the terms of this Agreement and the terms of the Asset Management
Agreement, the terms of the Asset Management Agreement shall control.

 

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(b)               Exercise of Rights under Related Party Agreements. The
Preferred Board Members, acting without the consent or approval of any other
Board Member or any other party, shall have the sole and exclusive right and
authority to direct Company and its Subsidiaries to take any of the following
actions on the part of Company or its Subsidiaries, all at the expense of
Company or the applicable Subsidiary, with respect to the Asset Management
Agreement and any other Related Party Agreement: (i) implement, enforce or take
any termination or other enforcement action that arises under any Related Party
Agreement, in each case in accordance with such Related Party Agreement;
(ii) make any approval, consent, decision or waiver under or in connection with
any Related Party Agreement or take any other action by or on behalf of Company
or any Subsidiary under or in connection with any Related Party Agreement;
(iii) give notice of default or termination in accordance with terms of such
Related Party Agreement; (iv) terminate all Related Party Agreements in
accordance with the terms of the applicable Related Party Agreement upon notice
to the other parties thereto and, subject to Major Decisions, replace it with an
agreement with another Person who is not an Affiliate of any Investor;
(v) enforce the provisions of any Related Party Agreement against the other
parties thereto by all appropriate methods, including the commencement of legal
or other proceedings against such parties; or (vi) enter into any amendment or
modification of any provision or right arising under any Related Party
Agreement. Neither Company nor any Subsidiary shall, nor shall Member acting on
behalf of Company, enter into any Related Party Agreement (x) without the prior
written consent of a majority of the Preferred Board Members and (y) unless such
Related Party Agreement specifically acknowledges the rights of the Preferred
Board Members under this Section 4.9(b), and Member shall cause any Related
Party Agreement with the General Partner (or its Affiliate) to so provide.

 

Section 4.10              Permitted HBU Sales. Notwithstanding anything herein
to the contrary, including Section 4.7 and Section 4.8, Company may, in any
calendar year, consummate any HBU Sale to any Person that is not an Affiliate of
Company or any Investor that either (x) was designated as a property potentially
subject to an HBU Sale as part of an Annual Budget or (y) results in the
consummation of the sale of any of the Property or any other Real Estate Asset
at a per acre purchase price equal to or greater than the sum of (1) (i) Bare
Land Value with respect to such Property or other Real Estate Asset multiplied
by (ii) 133%, and (2) the Timber Current Value with respect to such Property or
other Real Estate Asset (any HBU Sale pursuant to clause (x) or clause (y), a
“Permitted HBU Sale”); provided, however, that Company may not, in any calendar
year, consummate one or more Permitted HBU Sales that, in the aggregate, result
in the sale of more than 1.25% of the Real Estate Assets (as measured in acres)
owned by Company as of such year unless approved as a Major Decision.
Notwithstanding the immediately preceding sentence, in any calendar year,
Company may consummate without approval as a Major Decision one or more
Permitted HBU Sales that, in the aggregate, result in the sale of more than
1.25% of the Real Estate Assets (as measured in acres) owned by Company as of
such year, but solely to the extent (and without any double-counting) that
Permitted HBU Sales in the preceding calendar years resulted in the sale of less
than 1.25% of the Real Estate Assets (as measured in acres) owned by Company as
of such years. In furtherance of the foregoing, Common Board Members may cause
transfer by a Subsidiary to a taxable REIT or subsidiary REIT the portions of
the Property or other Real Estate Asset that may be subject to an HBU Sale.

 

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Section 4.11             Qualify as a REIT; Maintaining Qualification as a REIT.
From the Effective Date (the “REIT Qualification Date”) until the date on which
the Board determines that it is no longer in the best interest of Company to
qualify as a REIT (the “Restriction Termination Date”), which, subject to
Section 8.4(c), the Board may do at any time, the Board will conduct the affairs
of Company in such a manner as to cause Company to qualify as a REIT and to
continue to maintain the Company’s qualification as a REIT under Section 856 et
seq. of the Code and may, in its sole discretion, without any action by the
Members, take such action from time to time as it determines is necessary or
desirable in order to maintain Company’s qualification as a REIT, including to
amend this Agreement. The Board shall use reasonable best efforts to manage
Company so that it can continue to qualify as a REIT for federal income tax
purposes and to timely make an election to so qualify commencing with its first
taxable year and shall use reasonable best efforts to maintain such tax status.
The Board shall use its reasonable best efforts to ensure that Company does not
receive any income from a “prohibited transaction” within the meaning of Section
857(b)(6) of the Code or incur any tax liability under Sections 857(f) or 4981
of the Code. The Members acknowledge that Company may use a “taxable REIT
subsidiary” of Company to own assets or conduct activities that could otherwise
potentially cause a violation of the REIT Requirements or cause Company to be
subject to the prohibited transactions tax of Section 857(b)(6) of the Code.
Notwithstanding the foregoing or anything else contained in this Agreement, no
Board Member or employee, agent or Affiliate of any Board Member shall be liable
under this Agreement for failure to maintain Company’s qualification as a REIT.

 

Section 4.12             Disposition of Membership Interests. Notwithstanding
anything herein to the contrary (other than in connection with transactions
contemplated by Section 4.14 or Section 4.15), without the unanimous consent of
the Board, the Board shall not cause Company to issue any equity interests
(other than the Class A Preferred Units) to any Person other than Member.

 

Section 4.13             Property Sale Right of First Opportunity. Unless
otherwise agreed unanimously by the Company’s Board, the Board shall cause
Company to comply with the provisions set forth in Section 4.15 of the Member LP
Agreement (as such provision is provided as of the Effective Date) with respect
to listing, offering to sell or selling or otherwise disposing of all or a
portion of the Property or other Real Estate Assets.

 

Section 4.14             Sidecar. Unless otherwise agreed unanimously by the
Company’s Board, the Board shall cause Company to comply with the provisions set
forth in Section 5.7 of the Member LP Agreement (as such provision is provided
as of the Effective Date) with respect to issuance of equity interests of, and
distributions from, the Company.

 

Section 4.15            Permitted Recapitalization Transaction; Property Sale.
Unless otherwise agreed unanimously by the Company’s Board, notwithstanding
anything herein to the contrary (including Section 4.7) but subject to any
consent (if any) required under the Senior Credit Documents, the Company’s Board
shall cause Company to, and the Company shall, comply with the provisions set
forth in Section 5.9 of the Member LP Agreement with respect to the consummation
of a Permitted Recapitalization Transaction during the Permitted
Recapitalization Period. The Company shall follow the process set forth on
Exhibit H with respect to sales of certain acres of the Property.

 

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Article 5

 

TRANSFERS OF MEMBERSHIP INTERESTS

Section 5.1            Transfers.

 

(a)               Subject only to the limitations set forth in this Article 5,
all of the equity interests in Company shall be freely transferable by the
holders thereof. Any such Transfer shall be effective only upon provision by the
transferor to the Board of a joinder agreement in form and substance reasonably
satisfactory to the Board, signed by the transferee, and such other
documentation as the Board shall require.

 

(b)               A holder of equity interests in Company shall not Transfer all
or any of its interests in Company (or any economic interest therein), and no
Transfer shall be registered by Company, if the Board determines, based upon the
advice of counsel, such Transfer would or may (x) violate applicable U.S.
federal, state or foreign securities laws or (y) cause Company to fail to
qualify, or to no longer qualify, as a REIT under the Code.

 

(c)               Any transferee of an interest in Company shall succeed to all
rights and be subject to all the obligations of the transferor with respect to
the transferred interest.

 

Section 5.2            REIT Protections.

 

(a)               Restrictions on Transfers.

 

(i)               Until the Restriction Termination Date, any purported Transfer
that, if effective, would prevent Company from meeting any of the REIT income
requirements under Section 856(c) of the Code shall be void ab initio as to the
Transfer of that amount of Membership Interests that would prevent such income
from so qualifying, and the intended transferee shall acquire no rights in such
Membership Interests.

 

(ii)              Until the Restriction Termination Date, any Transfer that, if
effective, would result in Company being “closely held” within the meaning of
Section 856(h) of the Code shall be void ab initio as to the Transfer of the
Membership Interests which would cause such result, and the intended transferee
shall acquire no rights in such Membership Interests.

 

(iii)            Until the Restriction Termination Date, any purported Transfer
that, if effective, would result in Company being beneficially owned by fewer
than one hundred (100) Persons for purposes of Section 856(a)(5) of the Code
shall be void ab initio as to the Transfer of the Membership Interest which
would cause such result, and the intended transferee shall acquire no rights in
such Membership Interests.

 

(b)               Excess Units. If, notwithstanding the other provisions
contained in this Section 5.2, at any time, until the Restriction Termination
Date, there is a purported Transfer or Non-Transfer Event that, if effective,
would (A) prevent Company from meeting any of the REIT income requirements under
Section 856(c) of the Code, (B) result in Company being “closely held” within
the meaning of Section 856(h) of the Code, (C) result in Company being
beneficially owned by fewer than one hundred (100) persons or (D) otherwise
cause Company to fail to qualify as a REIT, then the purported transferee or
resulting holder shall be deemed to be a Prohibited Owner and shall acquire no
right or interest (or, in the case of a Non-Transfer Event, the record owner of
the Membership Interests with respect to which such Non-Transfer Event occurred
shall constitute a Prohibited Owner and shall cease to own any right or
interest) in such amount of Membership Interests, the ownership of which by such
purported transferee or record holder would result in or cause any of the events
described in subsections (A) through (D) above, (y) such amount of Membership
Interests shall be automatically converted into an equal amount of “Excess
Units” and transferred to an Excess Units Trust in accordance with this Section
5.2 and (z) the Prohibited Owner shall submit such amount of Membership
Interests (including the certificates representing such amount of Membership
Interests, if any) to Company, accompanied by all requisite and duly executed
assignments of transfer thereof, for registration in the name of the Trustee of
the Excess Units Trust. Such designation and treatment shall be effective as of
the close of business on the Business Day prior to the date of the purported
Transfer or change in capital structure; provided, that if any partnership
agreement or similar organization document of a Member has a provision
(“Upper-Tier REIT Savings Provisions”) similar to this Section 5.2(b), such
Upper-Tier REIT Savings Provision shall apply immediately prior to this Section
5.2(b).

 

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(c)               Prevention of Transfer. If Company shall at any time determine
in good faith that a Transfer has taken place in violation of Section 5.2(a) or
that a Person intends to acquire or has attempted to acquire beneficial
ownership (determined without reference to any rules of attribution) or
Beneficial Ownership of any Membership Interests in violation of Section 5.2(a),
Company shall take such action as it deems advisable to refuse to give effect to
or to prevent such Transfer, including, but not limited to, refusing to give
effect to such Transfer on the books of Company or instituting proceedings to
enjoin such Transfer; provided, however, that any Transfers or attempted
Transfers in violation of Section 5.2(a) shall automatically result in the
designation and treatment described in Section 5.2(b), irrespective of any
action (or non-action) by Company.

 

(d)               Notice to Company. Any Person who acquires or attempts to
acquire Membership Interests in violation of Section 5.2(a), or any Person who
is a transferee such that Excess Units result under Section 5.2(b), shall
immediately give written notice or, in the event of a proposed or attempted
Transfer, shall give at least fifteen (15) days’ prior written notice to Company
of such event and shall provide to Company such other information as Company may
request in order to determine the effect, if any, of such Transfer or attempted
Transfer on the status of Company as a REIT.

 

(e)               Information for Company. Until the Restriction Termination
Date, Member hereby covenants that it shall, upon request, provide Company with
all information, certifications, representations and covenants reasonably
requested by Company (x) to ensure or ascertain the qualification of Company as
a REIT, (y) to determine the status of Company as a “domestically controlled
qualified investment entity” within the meaning of Section 897(h)(4)(B) of the
Code and (z) to determine compliance with the ownership limits and covenants set
forth in this Section 5.2.

 

(f)                Other Action by Company. Nothing contained in this Article 5
shall limit the authority of Company to take such other action as it deems
necessary or advisable to protect Company and the interests of their respective
members by preservation of Company’s status as a REIT.

 

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(g)               Ambiguities. In the case of an ambiguity in the application of
any of the provisions of this Section 5.2, including any definitions used
therein, the Board shall have the power to interpret and determine the
application of the provisions of this Section 5.2 with respect to any situation
based on the facts known to the Board.

 

(h)               Trust for Excess Units. Upon any purported Transfer that
results in Excess Units pursuant to Section 5.2(b), such Excess Units shall be
deemed to have been transferred to the Excess Units Trustee, as trustee of the
Excess Units Trust for the exclusive benefit of the Charitable Beneficiary.
Excess Units so held in trust shall be issued and outstanding Interests of
Company. The Purported Record Transferee shall have no rights in such Excess
Units except as provided in Section 5.2(j).

 

(i)                 Distributions on Excess Units. Any distributions (whether as
periodic distributions, distributions upon liquidation, dissolution or
winding-up or otherwise) on Excess Units shall be paid to the Excess Units Trust
for the benefit of the Charitable Beneficiary. Upon liquidation, dissolution or
winding-up, the Purported Record Transferee shall receive the lesser of (i) the
amount of any distribution made upon liquidation, dissolution or winding-up or
(ii) the price paid by the Purported Record Transferee for the Membership
Interests, or if the Purported Record Transferee did not give value for the
Membership Interests, the Excess Units Price of the Membership Interests on the
day of the event causing the Membership Interests to be held in trust. Any such
distribution paid to the Purported Record Transferee in excess of the amount
provided in the preceding sentence prior to the discovery by Company that the
Membership Interests with respect to which the distribution was made had been
exchanged for Excess Units shall be repaid by the Purported Record Transferee to
the Excess Units Trust for the benefit of the Charitable Beneficiary.

 

(j)                 Voting of Excess Units. The Excess Units Trustee shall be
entitled to vote the Excess Units for the benefit of the Charitable Beneficiary
on any matter. Subject to Delaware law, any vote taken by a Purported Record
Transferee prior to the discovery by Company that the Excess Units were held in
trust shall be rescinded ab initio. The owner of the Excess Units shall be
deemed to have given an irrevocable proxy to the Excess Units Trustee to vote
the Excess Units for the benefit of the Charitable Beneficiary.

 

(k)               Non-Transferability. Excess Units shall be transferable only
as provided in this Section 5.2(k). At the direction of Company, the Excess
Units Trustee shall transfer the Membership Interests held in the Excess Units
Trust to a person whose ownership of the Membership Interests will not violate
the Ownership Limit and for whom such transfer would not be wholly or partially
void pursuant to Section 5.2(a). Such transfer shall be made within sixty (60)
calendar days after the latest of (i) the date of the Transfer which resulted in
such Excess Units and (ii) the date the Board determines in good faith that a
Transfer resulting in Excess Units has occurred, if Company does not receive a
notice of such Transfer pursuant to Section 5.2(d) if such a transfer is made,
the interest of the Charitable Beneficiary shall terminate and proceeds of the
sale shall be payable to the Purported Record Transferee and to the Charitable
Beneficiary. The Purported Record Transferee shall receive the lesser of the
price paid by the Purported Record Transferee for the Membership Interests or,
if the Purported Record Transferee did not give value for the Membership
Interests, the Excess Units Price of the Membership Interests on the day of the
event causing the Membership Interests to be held in trust, and the price
received by the Excess Units Trust from the sale or other disposition of the
Membership Interests. Any proceeds in excess of the amount payable to the
Purported Record Transferee shall be paid to the Charitable Beneficiary. It is
expressly understood that the Purported Record Transferee may enforce the
provisions of this Section 5.2(k) against the Charitable Beneficiary.

 

27

 

 

(l)                 Invalidity. If any of the foregoing restrictions on transfer
of Excess Units is determined to be void, invalid or unenforceable by any court
of competent jurisdiction, then the Purported Record Transferee may be deemed,
at the option of Company, to have acted as an agent of Company in acquiring such
Excess Units and to hold such Excess Units on behalf of Company.

 

Article 6

 

RIGHTS AND DUTIES OF MEMBER

 

Section 6.1            Relationship of Member. Member agrees that, to the
fullest extent permitted by the Act and except to the extent expressly stated in
this Agreement:

 

(a)               Member shall not have any fiduciary or other implied duty,
responsibility or obligation to Company except as otherwise expressly set forth
herein.

 

(b)               Notwithstanding any provision of this Agreement to the
contrary, whenever in this Agreement (i) the consent or approval or any other
action of or by Member, or any Preferred Board Member, is required for the
taking of any action by or on behalf of Company and (ii) the terms of this
Agreement do not explicitly require that such consent not unreasonably be
withheld, such Member, or any such Board Member, (1) shall, in determining
whether to grant such consent or approval or take such action, be entitled to
consider any interests and factors it desires, including its own views,
self-interest, objectives and concerns, (2) shall, to the fullest extent
permitted by Law, have no duty or obligation to give any consideration to any
interest of or factor affecting Company, Member or any other Person and (3) may
grant or withhold such consent or approval or take or fail to take such action,
in each case, in its sole discretion. It is further acknowledged that Member may
require certain internal approvals in connection with some or all of such
matters. Additionally, except as specifically provided in this Agreement and to
the extent allowed by the Act, notwithstanding anything to the contrary
contained in the Act, neither Member nor any Preferred Board Member shall have
any duty either to grant or to withhold any such consent or approval or take or
fail to take any such action, and no party (including any Investor) shall have
any claims (whether relating to the fact of such approval or consent being
granted or withheld, or such action being or not being taken, or relating to the
consequences thereof) by reason of Member, or any Preferred Board Member, having
failed to consent to or approve any matter that it has the right to consent to
or approve, or having taken or failed to take any action that it has the right
to take.

 

Section 6.2            Limitation of Authority. No Member shall have authority
to bind or act for Company or to incur or assume any obligation on behalf of
Company or to act as the agent, representative or attorney-in-fact for Company,
except to the extent expressly provided in this Agreement. Except to the extent
specifically provided in this Agreement, this Agreement shall not give any
Member the authority to bind or act for any other party or to incur or assume
any obligation on behalf of any other party or to act as the agent,
representative or attorney-in-fact for any other party. Except to the extent set
forth in this Agreement or the Act, a Member shall not participate in the
management or control of Company’s business.

 

28

 

 

Section 6.3            Confidentiality. Member agrees to keep confidential, and
not to make use of (other than for purposes reasonably related to its interest
in Company or for purposes of filing such Member’s tax returns or for other
routine matters required by law) or disclose to any Person (other than
disclosure to the officers, directors, employees, advisors, representatives,
lenders, sellers, investors, prospective investors, prospective Transferees or
attorneys of Member and its Affiliates), any information or matter received from
or relating to Company and its Subsidiaries and their respective affairs and any
information or matter related to the Property or other Business Assets;
provided, that Member may disclose any such information to the extent that
(A) such information is or becomes generally available to the public through no
act or omission of such Member, (B) such information otherwise is or becomes
known to such Member other than by disclosure by Company or one of their
Affiliates; provided, that the source of such information is not bound by a
confidentiality agreement or other contractual, legal or fiduciary obligation of
confidentiality, or (C) Member is required by law to disclose such information
(or as may be required in connection with an examination or audit of a Member by
any governmental agency or regulatory body having regulatory jurisdiction over
such Member) and complies with the provisions of this Section 6.3.
Notwithstanding the foregoing, Member (and each employee, agent or
representative of Member) may disclose to any and all persons, of any kind, the
tax treatment and tax structure of an investment in Company and its Subsidiaries
and all materials of any kind (including opinions or other tax analyses) that
are provided to such Member relating to such tax treatment or tax structure
except to the extent maintaining such confidentiality is necessary to comply
with any applicable U.S. federal or state securities laws. The foregoing
language is not intended to waive any confidentiality obligations otherwise
applicable under this Agreement except with respect to the information and
materials specifically referenced in the preceding sentence. Upon designating an
individual to the Board, each Investor will cause its designee to execute an
acknowledgement of such Board member’s confidentiality obligations set forth in
this Section 6.3. Any obligation of Member pursuant to this Section 6.3 may be
waived by the Board as a Major Decision.

 

Section 6.4            Limitation of Liability of Member and Affiliates. Except
as provided by the Act or other applicable Law and subject to the obligations to
make Capital Contributions and to indemnify Company and the Board Members as
provided in Article 7 and as otherwise required by this Agreement or by
applicable Law, Member shall not have any personal liability whatsoever in its
capacity as a Member, whether to Company, to any of the Investors or to the
creditors of Company, for the debts, liabilities, contracts or other obligations
of Company (whether arising in contract, tort or otherwise) or for any of
Company’s losses.

 

Section 6.5            ERISA Status. Member represents and warrants that Member
is not, and notwithstanding anything to the contrary in this Agreement, Member
shall not at any point in the future be, a “benefit plan investor” as defined
under Section 3(42) of ERISA or regulations promulgated by the U.S. Department
of Labor thereunder, at 29 C.F.R. Section 2510.3-101, or otherwise.

 

29

 

 

Article 7

 

EXCULPATION AND INDEMNIFICATION

Section 7.1            Exculpation and Indemnification.

 

(a)               No current or former Member, Board Member, officer, employee
or agent of Company and no Affiliate, stockholder, officer, director, employee
or agent of Member (collectively, the “Covered Persons”) shall be liable to
Company, Member, any Board Member or any other person or entity who is a party
to or is otherwise bound by this Agreement for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such Covered
Person, unless there has been a final and non-appealable judgment entered by a
court of competent jurisdiction determining that, in respect of the matter in
question, the Covered Person engaged in intentional fraud or intentional
malfeasance.

 

(b)               To the fullest extent permitted by applicable Law, a Covered
Person shall be entitled to indemnification from Company for any loss, damage or
claim incurred by such Covered Person by reason of any act or omission performed
or omitted by such Covered Person in good faith on behalf of Company and in a
manner reasonably believed to be within the scope of the authority conferred on
such Covered Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Covered Person by reason of such Covered Person’s gross negligence or
willful misconduct with respect to such acts or omissions; provided, however,
that any indemnity under this Article 7 shall be provided out of and to the
extent of Company assets only, and Member shall have no personal liability on
account thereof.

 

(c)               To the fullest extent permitted by applicable law, expenses
(including reasonable legal fees) incurred by a Covered Person in defending any
claim, demand, action, suit or proceeding shall, from time to time, be advanced
by Company prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by Company of an undertaking by or on behalf of the
Covered Person to repay such amount if it shall be determined that the Covered
Person is not entitled to be indemnified as authorized in this Article 7.

 

(d)               A Covered Person shall be fully protected in relying in good
faith upon the records of Company and upon such information, opinions, reports
or statements presented to Company by the person or entity as to matters the
Covered Person reasonably believes are within such other person or entity’s
professional or expert competence and who has been selected with reasonable care
by or on behalf of Company, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, or any other
facts pertinent to the existence and amount of assets from which distributions
to Member might properly be paid.

 

(e)               The provisions of this Agreement, to the extent that they
restrict or eliminate the duties and liabilities of a Covered Person otherwise
existing at law or in equity, are agreed by Member to replace such other duties
and liabilities of such Covered Person.

 

(f)                The foregoing provisions of this Section 7.1 shall survive
any termination of this Agreement.

 

30

 

 

Article 8

 

FINANCIAL, ACCOUNTING and Tax MATTERS

 

Section 8.1            Books and Records. Proper and complete records and books
of account of the business of Company shall be maintained at Company’s principal
place of business. Except as otherwise expressly provided herein, such records
and books of account shall be maintained on a basis that allows the proper
preparation of Company’s financial statements and tax returns and shall be kept
in United States dollars. Member may, for any reason reasonably related to its
interest as a member, examine the books of account, records, reports and other
papers relating to Company and its Subsidiaries not legally required to be kept
confidential or secret, make copies and extracts therefrom at its own expense
and discuss the affairs, finances and accounts of Company and its Subsidiaries
with the independent public accountants of Company (and by this provision
Company authorizes said accountants to discuss with Member the finances,
accounts and affairs of Company and its Subsidiaries), all during regular
business hours. Company shall maintain, or shall cause to be maintained, the
records of Company and its Subsidiaries for six (6) years following termination
of Company.

 

Section 8.2            Audit and Reporting.

 

(a)               Company shall prepare and deliver (or shall cause to be
prepared and delivered) to Member within forty-five (45) days after the end of
each Fiscal Year, a report as of the end of such Fiscal Year prepared in
conformity with accounting principles generally accepted in the United States
and consistently applied, setting forth (i) a balance sheet of Company (that
will include appropriate footnote disclosure) as of the end of such Fiscal Year,
(ii) an income statement for such Fiscal Year and (iii) statements of changes in
Member’s capital and changes in financial position. The annual financial
statements referred to in this Section 8.2(a) shall be audited by a nationally
recognized accounting firm in accordance with generally accepted auditing
standards in the United States and consistently applied, and such accounting
firm’s report thereon shall accompany the annual financial statements delivered
to each Member; provided, that Company shall endeavor to provide such audited
financial statements within the period stated above, but will not be considered
to have breached this Section 8.2(a) if it fails to do so; provided, that
Company (A) is using commercially reasonable efforts to produce audited
financial statements within such timeframe, (B) provides unaudited financial
statements within such forty-five (45)-day period and (C) provides such audited
financial statements as soon as practicable following such date but in any event
no later than ninety (90) days after the end of such Fiscal Year.

 

(b)               After the end of each Fiscal Year, Company shall prepare and
deliver (or shall cause to be prepared and delivered), within forty-five (45)
days of the close of such Fiscal Year, a report setting forth in sufficient
detail such transactions effected by Company during such Fiscal Year as shall
enable Member to prepare its U.S. federal income tax return and shall mail such
report to Member.

 

(c)               Company shall prepare and deliver (or shall cause to be
prepared and delivered) to Member final versions of the following not later than
forty-five (45) days after the end of each of the first three (3) Fiscal
Quarters of each Fiscal Year:

 

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(i)               An unaudited report setting forth as of the end of such fiscal
quarter (i) a balance sheet of Company as of the end of such Fiscal Quarter and
(ii) an income statement for such Fiscal Quarter;

 

(ii)              A calculation of the reserves of Company and the amount of
Base Available Cash, Net Available Cash, Distributable Cash Flow and Remaining
Distributable Cash Flow and the amounts in the Cash Operating Account and the
Pre-Funded Expense Account as of the end of the relevant Fiscal Quarter;

 

(iii)            A narrative describing the condition of the Property and other
Business Assets and operations of Company and its Subsidiaries during such
Fiscal Quarter;

 

(iv)            A report of any changes in the status of any major service
contracts, any material line item variances from the Annual Budget and any
litigation or other legal issues involving Company or its Subsidiaries during
such Fiscal Quarter; and

 

(v)              A report providing a detailed description of each Permitted HBU
Sale consummated during such Fiscal Quarter.

 

(d)               Not later than fifteen (15) Business Days after the end of
each calendar month, Company shall prepare and deliver (or shall cause to be
prepared and delivered) to Member a “flash report” containing the following: (i)
a reconciliation of actual operating results of Company against the Annual
Budget for the most recent calendar month and for the entire Fiscal Year through
the end of the relevant calendar month; (ii) an update as to the amount of cash
in each of the Cash Operating Account and the Pre-Funded Expense Account as of
the end of the relevant calendar month; (iii) a report of any changes in the
status of any major service contracts, any material line item variances from the
Annual Budget and any litigation or other legal issues involving Company or its
Subsidiaries during the calendar month; and (iv) a report of the recordable
incident rate for employees, agents and contractors for the prior calendar
month.

 

(e)               Promptly following the end of each Fiscal Quarter, but in any
event no later than forty-five (45) days following the end of each Fiscal
Quarter, Company shall provide (or shall cause to be provided) to Member a
report containing the component amounts described in each clause of the
definition of Unlevered Cash Flow, along with supporting information. Company
shall provide (or shall cause to be provided) to Member such other information
as is reasonably requested by such Member in respect of the foregoing report and
the calculation of components set forth therein.

 

(f)                In addition to the reporting requirements set forth above,
Company shall give (or shall cause to be given) notice to Member of: (i) any
items that will otherwise be reportable under Section 8.2(c)(iv) promptly after
Company becomes aware of the change, anticipated material variance or litigation
or other legal issue, as applicable; (ii) any known or reported non-conformance
with applicable state and local regulations and Sustainable Forestry Initiative
standards or principles as in effect on the Effective Date and as modified from
time to time by Sustainable Forestry Initiative Inc.; and (iii) any proposed
transaction between Company or its Subsidiaries, on one hand, and any other
Person if such transaction would create a potential conflict of interest on the
part of Member in causing Company (or such Subsidiaries) to enter into such
transaction.

 

32

 

 

(g)               Company shall provide (or shall cause to be provided) to
Member information regarding stand-level activity for the Property and any other
Real Estate Asset that includes site preparation and treatment, planting method,
stock type, planting density, thinning plan, volume removals by product class,
and a detailed inventory plan, and shall include Member having access to
Geographic Information Systems (GIS) data for the Property and any other Real
Estate Asset. Company shall prepare, or cause to be prepared, at Company’s
expense, such additional financial reports and other information as Member may
reasonably determine are appropriate. Additionally, Member shall be entitled to
the same information as may be provided to any provider of indebtedness to
Company or its Subsidiaries.

 

Section 8.3            Valuations.

 

(a)               The Fair Value of the Property and other Business Assets of
Company and its Subsidiaries shall be determined in accordance with this Section
8.3 (the “Valuation Policy”).

 

(b)               Company will obtain third-party valuations of each Real Estate
Asset from an independent appraisal firm chosen by the Board from those listed
on Schedule 8.3(b) attached hereto as of September 30 of each calendar year and
shall deliver such valuations to Member not later than forty-five (45) days
after such date each calendar year.

 

(c)               The Fair Value of any asset other than the Real Estate Assets
shall be determined by Company taking into account factors that it determines to
be appropriate in good faith under the circumstances (it being understood that
such determination of Fair Value should comply with United States generally
accepted accounting principles, as in effect from time to time).

 

(d)               Unless otherwise determined by Company, for purposes of
determining the Fair Value of any asset, including any Real Estate Asset, the
value of any Indebtedness shall be equal to its principal outstanding amount
plus any accrued interest.

 

Section 8.4            Tax Matters.

 

(a)               In respect of any period after the Restriction Termination
Date, any tax-related matters shall be decided by the Board.

 

(b)               From the REIT Qualification Date until the Restriction
Termination Date, Company is not intended to be, shall not be deemed to be, and
shall not be generally treated as, a general partnership, limited partnership,
joint venture, or joint shares company (but nothing herein shall preclude
Company from being treated for tax purposes as a corporation).

 

(c)               Company shall elect to be treated as a REIT under Section 856
et seq. of the Code pursuant to the provisions of Section 4.11 from the REIT
Qualification Date until the Restriction Termination Date, and the Board will
make all necessary elections and filings in order to effectuate the foregoing,
including electing for Company to be treated as a corporation on Form 8832
effective as of the REIT Qualification Date. For so long as CatchMark Timber
Trust Inc. directly or indirectly owns an interest in Company, the Board shall
operate the Company so as to qualify for taxation as a REIT and shall not revoke
or otherwise terminate its qualification and status as a REIT.

 

33

 

 

(d)               Upon request by any Member that is a REIT or is directly or
indirectly owned by a REIT, Company shall join with such REIT in filing a
protective TRS election on IRS Form 8875 to take effect only if Company fails to
qualify as a REIT.

 

(e)               Each of the Initial Member and the Class A Preferred Members
hereby represents, warrants and covenants that none of the Initial Member and
the Class A Preferred Members are, and notwithstanding anything to the contrary
in this Agreement, no member of the Company shall at any point in the future be,
a “benefit plan investor” under Section 3(42) of ERISA or regulations
promulgated by the U.S. Department of Labor thereunder, at 29 C.F.R. Section
2510.3-101, or otherwise.

Article 9

 

TERMINATION; DISSOLUTION AND WINDING-UP

 

Section 9.1            Termination. In accordance with Section 18-801 of the
Act, and the provisions therein permitting this Agreement to specify the events
of Company’s dissolution, Company shall be dissolved and the affairs of Company
wound up upon the occurrence of any of the following events: (a) the entry of a
decree of judicial dissolution under Section 18-802 of the Act; and (b) the
election by the Board by Major Decision to dissolve Company. Member hereby
irrevocably waives any and all rights it may have to obtain a dissolution of
Company in any way other than as specified above.

 

Section 9.2            Effect of Termination. Except as agreed otherwise by
Member, termination of the Term shall be without prejudice to any liability or
obligation in respect of any matters, undertakings or conditions which have not
been observed or performed by Member prior to termination, or the date on which
Member ceases to hold any Membership Interests.

 

Section 9.3            Survival. This Section 9.3, and Section 9.4 and Article
10 of this Agreement and all related defined terms shall continue to apply to
Member after dissolution of Company, and any other provisions of this Agreement
to the extent relevant to the interpretation or enforcement of or to give effect
to such Section of this Agreement shall continue to apply for an indefinite
period.

 

Section 9.4            Dissolution of Company.

 

(a)               On termination of the Term, Company shall continue solely for
the purposes of winding up its affairs in an orderly manner, liquidating the
Business Assets and satisfying the claims of its creditors and Member. On behalf
of Company, as a Major Decision, the Board may appoint a liquidator (the
“Liquidator”), which shall be responsible for overseeing the winding-up of
Company. The Business Assets shall be liquidated only to the extent determined
to be appropriate by the Liquidator, and the proceeds thereof shall be applied
and distributed by the Liquidator in the following order:

 

34

 

 

(i)               to creditors of Company (including, if applicable, Member or
its Affiliates), to the extent otherwise permitted by law, in satisfaction of
liabilities of Company, including any unpaid Deferred Asset Management Fees
(unless the Member LP Agreement was terminated for Cause (as defined therein)),
the expenses of the winding-up, liquidation and dissolution of Company (whether
by payment or the making of reasonable provision for payment thereof);

 

(ii)              provision for such reserves as the Board deems necessary or
desirable (determined as a Major Decision); and

 

(iii)            the remaining proceeds, if any, plus any remaining Business
Assets of Company, shall be applied and distributed in accordance with Article
3.

 

After such distribution, the Liquidator shall execute, acknowledge and cause to
be filed articles of dissolution of Company under the Act, at which time Company
shall be terminated.

 

(b)               Unless six (6) months prior to the fifth (5th) anniversary of
the Effective Date, a majority of the Preferred Board Members agrees to postpone
the winding-up of Company, the Liquidator shall take all appropriate actions
(including the actions specified in Section 9.4(a)) to arrange for the orderly
termination of Company and liquidation of the Business Assets as of the fifth
(5th) anniversary of the Effective Date, subject to the applicable restrictions
and limitations in the Senior Credit Documents.

 

(c)               Unless six (6) months prior to the seventh (7th) anniversary
of the Effective Date, a majority of the Preferred Board Members agrees to
postpone the winding-up of Company, the Liquidator shall take all appropriate
actions (including the actions specified in Section 9.4(a)) to arrange for the
orderly termination of Company and liquidation of the Business Assets as of the
seventh (7th) anniversary of the Effective Date, subject to the applicable
restrictions and limitations in the Senior Credit Documents.

 

Section 9.5            No Partition. No Member has any interest in specific
property of Company. Without limiting the foregoing, each Member irrevocably
waives during the term of Company any right that it may have to maintain any
action for partition with respect to the property of Company or to require the
redemption of its interest in Company. Member acknowledges that irreparable
damage would be done to the goodwill and reputation of Company if any Member
should bring an action in court to dissolve Company under circumstances where
dissolution is not required by Section 9.1. This Agreement has been drawn
carefully to provide fair treatment of all parties and equitable payment in
liquidation of Company. Accordingly, except where the Liquidator has failed to
liquidate Company as required by Section 9.1, each Member hereby waives and
renounces such Member’s right to initiate legal action to seek any partition,
the appointment of a receiver or trustee to liquidate Company or to seek a
decree of judicial dissolution of Company on the ground that (a) it is not
reasonably practicable to carry on the business of Company in conformity with
the Act or this Agreement, or (b) dissolution is reasonably necessary for the
protection of the rights or interests of the complaining Member. Damages for
breach of this Section 9.5 may be offset against distributions by Company to
which such Member would otherwise be entitled.

 

35

 

 

Article 10

 

NOTICES

 

Section 10.1         Notices. All notices, requests, demands and other
communications hereunder (each, a “Notice”) shall be in writing and shall be
deemed to have been duly given if sent to a Party at its business address set
forth on Exhibit D hereto (and to its designees if written notice specifying the
Person and address of such designee is provided to the Person required to give
notice). Any notice shall be deemed to have been duly given if personally
delivered or sent by certified, registered or overnight mail or courier or by
confirmed e-mail, and shall be deemed received, (a) if sent by certified or
registered mail, return receipt requested, when actually received, (b) if sent
by overnight mail or courier, when actually received, (c) if sent by e-mail, on
the date sent and (d) if delivered by hand, on the date of receipt.

 

Section 10.2          Change of Address. A Party may change the person(s) to
receive Notices or the address to which Notices hereunder are to be sent to it
by giving Notice of such change of address to Company and each other Member in
the manner provided in Section 10.1.

 

Article 11

 

MISCELLANEOUS

 

Section 11.1        Entire Agreement. This Agreement, including all Exhibits
attached hereto, constitutes the entire agreement among the Parties pertaining
to the subject matter hereof. This Agreement supersedes any prior agreement or
understanding among the Parties with respect to the subject matter hereof, but
shall not amend, modify, supersede or in any way affect any other agreement or
understanding among the Parties or their Affiliates that does not relate to the
subject matter hereof.

 

Section 11.2        Amendments. This Agreement may not be amended, modified or
supplemented in any manner, whether by course of conduct or otherwise, except by
an instrument in writing specifically designated as an amendment hereto,
executed and delivered by Member; provided, that the Board shall be permitted to
amend Annex A without the consent of the Member to the extent the Board
determines such changes are reasonably necessary to issue the Class A Preferred
Units.

 

Section 11.3        Governing Law; Jurisdiction. This Agreement and all disputes
or controversies arising out of or relating to this Agreement or the rights of
Member and transactions contemplated hereby shall be governed by, and construed
in accordance with, the internal laws of the State of Delaware, without regard
to the laws of any other jurisdiction that might be applied because of the
conflicts of laws principles of the State of Delaware. Member hereby irrevocably
consents and agrees that any action, suit or proceeding with respect to this
Agreement shall be brought and determined only in the exclusive jurisdiction of
the Court of Chancery of the State of Delaware, the courts of the United States
of America for the District of Delaware, and appellate courts thereof, and each
Party hereby consents to the jurisdiction of the aforesaid courts for itself and
with respect to its property, generally and unconditionally, with regard to any
such action or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby. Member further agrees that notice as provided
herein shall constitute sufficient service of process and the parties further
waive any argument that such service is insufficient. Member hereby irrevocably
and unconditionally waives, and agrees not to assert, by way of motion or as a
defense, counterclaim or otherwise, in any action or proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby, (a) any
claim that it is not personally subject to the jurisdiction of the courts in
Delaware as described herein for any reason, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise) and (c) that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper or (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such courts. MEMBER, FOR ITSELF AND ON BEHALF OF
ITS AFFILIATES, HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION, LAWSUIT,
OR PROCEEDING, WHETHER IN CONTRACT OR IN TORT, RELATING TO ANY DISPUTE ARISING
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DESCRIBED IN THIS
AGREEMENT OR TO ANY DISPUTE BETWEEN THE PARTIES (INCLUDING DISPUTES WHICH ALSO
INVOLVE OTHER PERSONS).

 

36

 

 

Section 11.4        Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Parties and their permitted successors and
assigns.

 

Section 11.5        No Third-Party Beneficiaries. Subject to Article 7, the
provisions of this Agreement are for the sole and exclusive benefit of the
Parties and their permitted successors and assigns and shall not be deemed to
create any rights for the benefit of any other Person except as specifically
provided herein.

 

Section 11.6        Severability. If any provision of this Agreement or the
application of such provision to any Party or circumstance shall be held invalid
or unenforceable, the remainder of this Agreement or the application of that
provision to another Party or circumstance shall not be affected thereby.

 

Section 11.7        Enforceability. It is the intent of the Parties that the
provisions of this Agreement shall be enforced to the fullest extent permitted
by Law. Accordingly, if any particular paragraph(s), subparagraph(s) or
portion(s) of this Agreement shall be held invalid or unenforceable as written
or otherwise determined to be too broad to permit the enforcement of such
paragraph(s), subparagraph(s) or portion(s) to its fullest extent, then such
paragraph(s), subparagraph(s) or portion(s) will be enforced to the maximum
extent permitted by Law, and the Parties hereby consent and agree that such
scope may be judicially limited or modified accordingly in any proceeding
brought to enforce such restriction to the extent necessary to be valid or
enforceable. Such modification shall not affect the remaining provisions of this
Agreement. To the extent any paragraph(s), subparagraph(s) or portion(s) of this
Agreement are found invalid or unenforceable and cannot be modified to be valid
or enforceable, then the Agreement shall be construed as if those paragraph(s),
subparagraph(s) or portion(s) were deleted, and all remaining terms and
provisions shall be enforceable in law or equity in accordance with their terms.

 

Section 11.8        No Waiver. No waiver by a Party of any default, breach or
violation of this Agreement shall be deemed to be a waiver of any other default,
breach or violation of any kind or nature, whether or not similar to the
default, breach or violation that has been waived, and no failure to enforce a
particular provision in one instance shall be deemed a waiver or modification of
rights or preclude the enforcement thereafter. No acceptance of payment or
performance by a Party after any such default, breach or violation shall be
deemed to be a waiver of any default, breach or violation of this Agreement,
whether or not such Party knows of such default, breach or violation at the time
it accepts such payment or performance. Subject to any applicable statutes of
limitation, no failure or delay on the part of a Party to exercise any right it
may have under this Agreement shall prevent its exercise by such Party, and no
such failure or delay shall operate as a waiver of any default, breach or
violation of this Agreement.

 

37

 

 

Section 11.9         Captions. The captions and headings used in this Agreement
are for convenience only and do not in any way affect, limit, amplify or modify
the terms and provisions hereof.

 

Section 11.10       Further Assurances. Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
reasonably necessary to effectuate and perform the provisions of this Agreement
and the transactions contemplated herein.

 

Section 11.11      Counterparts. This Agreement may be executed in several
counterparts. If so executed, each of such counterparts shall be deemed an
original for all purposes and all counterparts shall, collectively, constitute
one agreement. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart and photocopies may be
used.

 

Section 11.12        PDF Signature. Any Party may deliver its signature to this
Agreement, if applicable, or any Notice or other document described in this
Agreement or relating to Company by portable document format (“PDF”) by
electronic mail (and in accordance with Article 10, if applicable) to the proper
recipient. Any document signed by a Party by PDF by electronic mail and
reasonably believed by the recipient to have been sent by or on behalf of that
Party shall (a) be binding upon and fully enforceable against that Party as
though it had delivered a manually signed counterpart to the recipient and
(b) be accepted by any court as equivalent to a manually signed counterpart for
purposes of any evidentiary rule, and no Party will object to the effectiveness
or validity of such PDF signature.

 

Section 11.13       Time of the Essence. Time is of the essence in the
performance of each and every term of this Agreement.

 

Section 11.14      Usury Savings. It is intended that any rate of interest
provided herein shall never exceed the maximum rate, if any, which may be
legally charged (“Maximum Rate”), and if the provisions for interest contained
in any provision of this Agreement would result in a higher rate than the
Maximum Rate, interest shall nevertheless be limited to the Maximum Rate, and
any amounts which may be applied toward interest in excess of the Maximum Rate
shall be applied to the reduction of principal, or, at the lawfully exercised
option of the applicable lender, returned to the applicable borrower.

  

Remainder of page left intentionally blank; signature pages follow.

 

38

 

 

 

IN WITNESS WHEREOF, each Party hereby executes this Agreement as of the
Effective Date.

 

  MEMBER:       TEXMARK TIMBER TREASURY, L.P.       By: Triple T GP, LLC, its
General Partner       By: /s/ Brian M. Davis     Name: Brian M. Davis   Title:
Chief Executive Officer and President             COMPANY:       CREEK PINE
REIT, llc       By: /s/ John F. Rasor     Name: John F. Rasor   Title: President

 

[A&R Limited Liability Company Agreement of Creek Pine REIT, LLC]

 

 

 

Exhibit A

Definitions

 

Section A-1. Certain Defined Terms. For the purposes of this Agreement,
capitalized terms used herein and not otherwise defined herein have the meanings
given to such terms as set forth below:

 

“Act” means the Delaware Limited Liability Company Act, 6 Del. C. § 18-101 et
seq., as amended from time to time.

 

“Additional CTT Capital Contribution” shall have the meaning set forth in the
Member LP Agreement.

 

“Additional Preferred Return” means an amount computed like interest at a rate
of twelve and one-half percent (12.50%) per annum, compounded on the last day of
each calendar year, on the Additional Preferred Return Base for the period from
the Effective Date through the date of the relevant calculation.

 

“Additional Preferred Return Account” means, as of the date of the relevant
calculation, an account maintained by Company which shall be (i) credited by
(A) an amount equal to the Initial Liquidation Value, plus (B) an amount equal
to the Additional Preferred Return and (ii) debited by an amount equal to
distributions with respect to Preferred Return Units prior to the date of such
relevant calculation pursuant to Section 3.3(d)(i)(A), Section 3.3(d)(ii)(A),
Section 3.3(d)(iii)(A), Section 3.3(d)(iv)(A) and Section 3.3(d)(v).

 

“Additional Preferred Return Base” means, as of the date of the relevant
calculation, the amount obtained by (i) computing for each day in the period to
which the Additional Preferred Return relates (A) the amount of the Initial
Liquidation Value on or before such date, minus (B) the amount distributed by
Company with respect to the Preferred Return Units pursuant to Section 3.3(d),
before such date (and excluding, for the avoidance of doubt, the portion of
amounts distributed with respect to Preferred Return Units pursuant to such
sections corresponding to Preferred Return or Early Satisfaction Premiums),
(ii) adding together all amounts obtained in the foregoing clause (i), and
(iii) dividing the sum obtained in the foregoing clause (ii) by the number of
days in the relevant period.

 

“Affiliates” means in relation to a Person, any holding company, subsidiary or
any other subsidiaries of any such holding company, in each case of such Person
and any Person that Controls, is Controlled by or is under common Control with
such Person, except that it shall not include Company or any of its Subsidiaries
in the case where such Person is a Member.

 

“Alternative Voting System” means a voting construct for the Board such that the
number of votes of the Board Members on each matter before the Board shall be as
follows: the Common Board Member(s) shall each have one-third of a vote, for a
total of one (1) vote, and each of the Preferred Board Members shall have one
(1) vote.

 

“Approved Surface Use Agreement Interval” means a Surface Use Agreement Interval
that has been approved as a Major Decision in accordance with Section 4.7(b).

 

Exhibit A- Page 40

 

 

“Bankruptcy” of a Person shall be deemed to have occurred upon the happening of
any of the following: (i) the filing of an application by such Person for, or a
consent to, the appointment of a trustee, receiver or liquidator of its assets;
(ii) the filing by such Person of a voluntary petition or answer in bankruptcy
or the filing of a pleading in any court of record admitting in writing its
inability to pay its debts as such debts come due or seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any Law; (iii) the making by such Person of a general assignment
for the benefit of creditors; (iv) the filing by such Person of an answer
admitting the material allegations of, or its consenting to or defaulting in
answering, a bankruptcy or insolvency petition filed against it in any
bankruptcy or similar proceeding; or (v) the entry of an order, judgment, or
decree by any court of competent jurisdiction adjudicating such Person a
bankrupt or appointing a trustee of its assets, and such order, judgment, or
decree continues unstayed and in effect for a period of one hundred twenty
(120) days.

 

“Bare Land Value,” with respect to Property and Real Estate Assets to be sold
pursuant to an HBU Sale, is equal [***] multiplied by the number of acres to be
sold pursuant to such HBU Sale; provided, that prior to and until the completion
of any appraisal pursuant to Section 8.3(b), such per-acre value shall be deemed
to be equal to $[***]per acre.

 

“Base Available Cash” as of any date means all cash available for distribution
by Company in accordance with applicable Law and after giving effect to all
appropriate limitations under all Indebtedness Documents, in each case, that is
in excess of the amount of reserves required as of such date determined in
accordance with Section 3.1(b) and any distributions required in respect of the
Class A Preferred Units.

 

“BCI Investors” means IMC RRIF C US Inc., a Canadian corporation, IMC RRIF M US
Inc., a Canadian corporation, IMC RRIF PS US Inc., a Canadian corporation, IMC
RRIF T US Inc., a Canadian corporation, IMC RRIF WS US Inc., a Canadian
corporation, IMC RRIF H US Inc., a Canadian corporation, and bcIMC (WCBAF REKYN)
Investment Corporation, a Canadian corporation.

 

“Beneficial Ownership,” when used with respect to ownership of Membership
Interests by any Person, shall mean ownership of Membership Interests which are
directly or indirectly owned by such Person for purposes of Section 542(a)(2) of
the Code, taking into account the constructive ownership rules of Section 544 of
the Code, as modified by Section 856(h)(1)(B) of the Code; provided, that in
determining the amount of Membership Interests Beneficially Owned by a Person,
no Membership Interests shall be counted more than once. The terms “Beneficial
Owner,” “Beneficially Owns” and “Beneficially Owned” shall have correlative
meanings.

 

“Budget Development Protocols” means the protocols for preparation of the Annual
Budget and related backup schedules, plans and forecasts described in Exhibit
C-2.

 

“Business Assets” means as the context may require (i) Company’s direct or
indirect interests in its Subsidiaries and Real Estate Assets (including the
Property) and/or (ii) all other assets or property of whatever kind or nature
owned by Company from time to time.

 

“Business Day” means a day which is not a Saturday, a Sunday or any day on which
banks are generally not open for business in the State of New York.

 

Exhibit A- Page 41

 

 

“Capital Contributions” means, with respect to Member, the amount of money set
forth opposite the name of such Member (or its predecessors in interest) on
Exhibit B.

 

“Capital Event” means, with respect to Company, the sale, repayment,
refinancing, or other distribution of all or any portion of the Property or
other Business Assets.

 

“Capital Event Proceeds” means all cash proceeds received by Company from a
Capital Event.

 

“Capital Expenditures” means an aggregate amount equal to the sum of the
Expenses incurred with respect to (i) “Site Prep – Chemical,” (ii) “Site Prep –
Bedding,” (iii) “Planting” and (iv) “First Fertilization @ Establishment,” in
each case, as such item is denoted on Exhibit C-1.

 

“Charitable Beneficiary” means, with respect to any Excess Units Trust, one or
more organizations that is a “United States Person” within the meaning of
Section 7701(a)(30) of the Code designated by the Excess Units Trustee and is
described in each of Section 170(b)(1)(A) of the Code (other than clauses (vii)
and (viii) thereof) and Section 170(c)(2) of the Code as a beneficiary of such
Excess Units Trust, and thereafter the organization so designated.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to
time (or any succeeding law).

 

“Common Contribution Balance” means a balance maintained (i) to which shall be
credited the Capital Contributions made (or deemed made) to Company by Member in
respect of the Common Return Units pursuant to this Agreement and (ii) from
which shall be debited the amount of distributions to Member with respect to the
Common Contribution Account pursuant to Section 3.4(b)(ii).

 

“Common Investors” means, collectively, CTT Investor and the General Partner.

 

“Common Return Balance” means, as of the date of the relevant calculation, an
amount equal to the excess, if any, of (i) the Preferred Return that has accrued
through such date with respect to the Capital Contributions made to Company by
Member in respect of the Common Return Units pursuant to this Agreement, over
(ii) the cumulative distributions actually made by Company pursuant to Section
3.4(b)(i) prior to the date of such relevant calculation in accordance with this
Agreement.

 

“Constructive Ownership” means ownership of units of Company by a Person who
would be treated as owner of such units either directly or indirectly through
the application of Section 318 of the Code, as modified by Section 856(d)(5) of
the Code.

 

“Control” means, in relation to a Person, where a person (or persons acting in
concert) holds or has direct or indirect control of (i) the affairs of that
Person, (ii) more than fifty percent (50%) of the total voting rights conferred
by all the issued shares in the capital of that Person which are ordinarily
exercisable in a general meeting (or the equivalent) or (iii) a majority of the
board

of directors/managers of that Person, and “Controlled by” and “Controlling”
shall be construed accordingly. For these purposes, “persons acting in concert,”
in relation to a Person, are persons which actively cooperate pursuant to an
agreement or understanding (whether formal or informal), with a view to
exercising, obtaining or consolidating Control of that Person.

 

Exhibit A- Page 42

 

 

“CTT Investor” means Creek Pine Holdings, LLC, a Delaware limited liability
company.

 

“Cumulative Bank Utilized” means, with respect to any Fiscal Quarter, an amount
equal to: (a) $4,000,000, minus (b) the Opening Bank Balance for such Fiscal
Quarter.

 

“Cumulative Deferred Asset Management Fees” means, with respect to any Fiscal
Quarter, the cumulative amount of Deferred Asset Management Fees from the
Effective Date through the end of the immediately preceding Fiscal Quarter.

 

“Cumulative Deferred Asset Management Fees Recovered” means, with respect to any
Fiscal Quarter, the cumulative amount all Recovered Asset Management Fees from
the Effective Date through the end of the immediately preceding Fiscal Quarter.

 

“Cumulative Net Shortfall” means, with respect to any Fiscal Quarter, an amount
equal to: (a) Cumulative UCF Variance for such Fiscal Quarter, plus (b)
Cumulative Bank Utilized with respect to such Fiscal Quarter, plus (c)
Cumulative Deferred Asset Management Fees for such Fiscal Quarter, plus (d) the
aggregate amount of all Capital Contributions made by the Common Investors to
Member from the Effective Date through the end of the immediately preceding
Fiscal Quarter, minus (e) the Cumulative Deferred Asset Management Fees
Recovered for such Fiscal Quarter. For all purposes hereunder, if the
“Cumulative Net Shortfall” is equal to an amount greater than zero ($0), it will
be referred to as a “Cumulative Net Surplus.”

 

“Cumulative UCF Actual” means, with respect to any full Fiscal Quarter, the
cumulative amount of Unlevered Cash Flow actually generated by the Property and
other Real Property Assets from the Effective Date through the end of such
Fiscal Quarter.

 

“Cumulative UCF Budget” means, with respect to any full Fiscal Quarter, the
cumulative amount of “Unlevered Cash Flow (Definitional, Excludes HBU Sales)”
set forth on Exhibit C-1 for each Fiscal Quarter from the Effective Date through
the end of such Fiscal Quarter.

 

“Cumulative UCF Variance” means, with respect to any full Fiscal Quarter, an
amount equal to (x) Cumulative UCF Actual, minus (y) Cumulative UCF Budget.

 

“Deferred Asset Management Fees Balance” means, with respect to any Fiscal
Quarter, an amount equal to (i) the prior Fiscal Quarter’s Deferred Asset
Management Fees Balance, plus (ii) the aggregate amount of Deferred Asset
Management Fees with respect to such Fiscal Quarter, less (iii) the aggregate
amount of Recovered Asset Management Fees with respect to such Fiscal Quarter.
The initial Deferred Asset Management Fees Balance shall be zero.

 

“Dollars” and the sign “$” mean Dollars, lawful currency of the United States of
America.

 

“Ending Bank Balance” means, with respect to any Fiscal Quarter, (i) the Opening
Bank Balance with respect to the Fiscal Quarter, minus (ii) the amount deducted
from the Opening Bank Balance pursuant to Section 2.1(b)(i), minus (iii) the
optional amount deducted from the Opening Bank pursuant to Section 4.2(c).

 

Exhibit A- Page 43

 

 

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as
amended and the regulations thereunder and interpretations thereof promulgated
by the U.S. Department of Labor, as in effect from time to time.

 

“Excess Units Price” means the price purportedly paid by a Purported Record
Transferee for Excess Units.

 

“Excess Units Trust” means any separate trust created and administered for the
exclusive benefit of a Charitable Beneficiary.

 

“Excess Units Trustee” means the Person designated by the General Partner to act
as trustee of any Trust, or any successor trustee thereof. For the avoidance of
doubt, the Excess Units Trustee shall be a “United States Person” within the
meaning of Section 7701(a)(30) of the Code and unaffiliated with both the
Partnership and any Purported Record Transferee (and, if different than the
Purported Record Transferee, the Person who would have had Beneficial Ownership
of the interests that would have been owned of record by the Purported Record
Transferee).

 

“Excluded Loss” means (a) any Losses to the extent the same are reimbursed by
insurance proceeds or indemnities from third parties and (b) any consequential,
special, punitive or exemplary damages to the extent such damages are not owed
to a third party in connection with any third-party claim.

 

“Fair Value” means value of any Property or other Business Assets, valued at
their fair value as determined in accordance with the Valuation Policy.

 

“Fiscal Quarter” of Company means each three (3)-month period ending March 31,
June 30, September 30 or December 31 of each year; provided, that (a) the
initial Fiscal Quarter shall begin on the Effective Date and (b) the last Fiscal
Quarter shall end on the date that the final liquidation, dissolution and
termination of Company is completed; provided, further, that, if Company is
required under the Code to use a taxable year other than a calendar year, then
Fiscal Quarter shall mean each quarter of such taxable year (and the initial
Fiscal Quarter and the last Fiscal Quarter shall be adjusted accordingly). To
the extent any computation or other provision of this Agreement provides for an
action to be taken on a Fiscal Quarter basis, an appropriate proration or other
adjustment shall be made in respect of the initial and last Fiscal Quarters to
reflect that such periods are less than full calendar quarter periods.

 

“Fiscal Year” of Company means the twelve (12)-month period ending December 31
of each year; provided, that (a) the initial Fiscal Year shall be the period
beginning on the Effective Date and ending on December 31 of the same year and
(b) the last Fiscal Year shall be the period beginning on January 1 of the
calendar year in which the final liquidation, dissolution and termination of
Company is completed and ending on the date that such final liquidation,
dissolution and termination is completed; provided, further, that, if Company is
required under the Code to use a taxable year other than a calendar year, then
Fiscal Year shall mean such taxable year (and the initial Fiscal Year and the
last Fiscal Year shall be adjusted accordingly). To the extent any computation
or other provision of this Agreement provides for an action to be taken on a
Fiscal Year basis, an appropriate proration or other adjustment shall be made in
respect of the initial and last Fiscal Years to reflect that such periods are
less than full calendar year periods.

 

Exhibit A- Page 44

 

 

“General Partner” means Triple T GP, LLC, a Delaware limited liability company.

 

“Government Authority” means (i) a federal or national government, any state
government, any political subdivision thereof, or any local jurisdiction
therein; (ii) an instrumentality, board, commission, court or agency, whether
civilian or military, of any of the above, however constituted; (iii) a public
organization, being an organization whose members are (A) countries or
territories; (B) governments of countries or territories; and/or (C) other
public international organizations and includes the World Bank, the United
Nations, the International Monetary Fund and the OECD; or (iv) any company,
association, organization, business, enterprise or other entity which is owned,
whether in whole or in part, or controlled by any person listed in (i) to (iii)
above.

 

“HBU Sale” means any disposition through a cash sale of a portion of the
Property or any other Real Estate Asset.

 

“Highland Investors” means Highland Floating Rate Opportunities Fund, NexPoint
Strategic Opportunities Fund and NexPoint Real Estate Strategies Fund.

 

“IK” means a Person who is intended to qualify as an “independent contractor”
within the meaning of Section 856(d)(3) of the Code with respect to the Company.

 

“Indebtedness” means all obligations of Company or its Subsidiaries for borrowed
money, including all obligations evidenced by bonds, debentures, notes or other
similar instruments and all Senior Credit Debt.

 

“Initial Liquidation Value” means $725,866,142.

 

“Investor” or “Investors” means, collectively, Common Investors and Preferred
Investors.

 

“IRS” means the U.S. Internal Revenue Service or any successor agency or
department with primary responsibility for adopting, interpreting and enforcing
provisions of the Code.

 

“JAWS Investor” means JAWS Capital, LP, a Delaware limited partnership.

 

“Law” means any law, statute, act, legislation, bill, enactment, policy, treaty,
international agreement, ordinance, judgment, injunction, award, decree, rule,
regulation, interpretation, determination, requirement, writ or order of any
Government Authority.

 

“Loss” or “Losses” means the dollar amounts of all actual costs, claims, suits,
actions, damages, losses, liabilities, obligations, reasonable fees and expenses
of any kind or nature, including costs and expenses of accountants, attorneys
and other professionals, judgments, fines, penalties, settlements and all other
costs and expenses and disbursements of any nature or type actually paid or
incurred or imposed on or asserted against a specified Person, and all costs and
expenses paid or incurred by the prevailing party or any of its Affiliates in
litigating against any other party or any of its Affiliates, but specifically
excluding in all such cases any Excluded Loss.

 

“Medley Investor” means Caddo Investors Holdings 1 LLC, a Delaware limited
liability company.

 

Exhibit A- Page 45

 

 

“Member LP Agreement” means that certain Amended and Restated Limited
Partnership Agreement of Member, dated as of the Amendment Effective Date, by
and among Member and the other parties thereto.

 

“Membership Interests” means the interests of Member in Company, including such
Member’s right: (a) to distributions of the assets or property of Company
pursuant to Article 10 and in accordance with its ownership of Shortfall Return
Units, Preferred Return Units, Common Return Units, Residual Units, Class A
Preferred Units and Excess Units, as set forth in Article 3 and Section 5.2, as
applicable; and (b) to inspect the books and records of Company as provided in
Section 8.1 and such other rights to participate in the management and operation
of Company as are expressly set forth in this Agreement.

 

“Net Operating Income” means, with respect to Company and its Subsidiaries, an
amount equal to: (i) total revenue, consisting of the following line items:
Harvest Revenue, Hunting Revenue, Seedling Revenue, Surface Use Payments and
Other Revenues, less (ii) total operating expenses, consisting of the following
line items: Forestry Management, General and Administrative, Property Insurance,
Property Tax, Legal/Consultant/Audit/SFI Dues, Release, Second Fertilizer, Road
Maintenance, Disruption Fees, and Other Expenses, in each case as set forth in
Exhibit C-1. For the avoidance of doubt, the computation of Net Operating Income
excludes any proceeds from HBU Sales.

 

“Non-Transfer Event” means an event or other change in circumstances other than
a purported Transfer that would cause any Person to Beneficially Own or
Constructively Own a greater amount of interests in a direct or indirect tenant
or IK of the Company than such Person Beneficially Owned or Constructively Owned
immediately prior to such event. Non-Transfer Events include, but are not
limited to, (i) the granting of any option or entering into any agreement for
the sale, transfer or other disposition of Membership Interests or interests in
a tenant or IK (or of Beneficial Ownership or Constructive Ownership of
Membership Interests or interests in a tenant or IK) or (ii) the sale, transfer,
assignment or other disposition of interests in any Person or of any securities
or rights convertible into or exchangeable for Membership Interests or interests
in a tenant or IK or for interests in any Person that directly or indirectly
results in changes in Beneficial Ownership or Constructive Ownership of
Membership Interests or interests in a tenant or IK.

 

“Nursery Disposition Agreements” shall mean that certain (1) Nursery and Seed
Orchard Management Agreement, dated as of November 1, 2018, by and among Crown
Pine Timber 1, L.P., Crown Pine Realty 1, Inc., Crown Pine Leasing, LLC and
ArborGen Inc. (the “Nursery Management Agreement”), (2) Land and Equipment Lease
Agreement with Put Option and Call Option, dated as of November 1, 2018, by and
among Crown Pine Timber 1, L.P., Crown Pine Realty 1, Inc., Crown Pine Leasing,
LLC and ArborGen Inc.; (3) Seed Purchase Agreement, dated as of November 1,
2018, by and among

Crown Pine Timber 1, L.P., Crown Pine Realty 1, Inc., Crown Pine Leasing, LLC
and ArborGen Inc.; and (4) Seedling Production Contract, dated as of November 1,
2018, by and among Crown Pine Timber 1, L.P., Crown Pine Realty 1, Inc., Crown
Pine Leasing, LLC and ArborGen Inc.

 

Exhibit A- Page 46

 

 

“Opening Bank Balance” means, with respect to any full Fiscal Quarter, the
Ending Bank Balance as of the end of the previous Fiscal Quarter; provided, that
the initial Opening Bank Balance shall be $4,000,000.

 

“Parties” means the parties to this Agreement.

 

“Permitted Recapitalization Period” shall have the meaning set forth in the
Member LP Agreement.

 

“Permitted Recapitalization Transaction” shall have the meaning set forth in the
Member LP Agreement.

 

“Person” means an individual or a general partnership, limited partnership,
corporation, professional corporation, limited liability company, limited
liability partnership, joint venture, trust, business trust, unincorporated
organization, cooperative or association or a governmental, administrative or
regulatory agency or any other entity.

 

“Plan Assets” has the meaning set forth in the Plan Asset Regulations (as
modified by Section 3(42) of ERISA) or as set forth in the applicable provisions
of any Similar Law.

 

“Plan Asset Regulations” means the regulations issued by the U.S. Department of
Labor in Title 29, Code of Federal Regulations, Part 2510, Section 101-3, as
modified by Section 3(42) of ERISA.

 

“Preferred Investors” means, collectively, Medley Investor, BCI Investors, TIG
Investor, Highland Investors and JAWS Investor.

 

“Preferred Return” means an amount computed like interest at a rate of ten and
one-quarter percent (10.25%) per annum, compounded on the last day of each
calendar year, on the Preferred Return Base for the period from the Effective
Date through the date of the relevant calculation; provided, that solely with
respect to the Preferred Return Units the Preferred Return shall increase
beginning July 1, 2020 by one-half of one percentage point (0.5%) and shall
increase by one-half of one percentage point (0.5%) on the first day of each
subsequent Fiscal Quarter until the Preferred Return equals twelve and
one-quarter percent (12.25%) and the Preferred Return shall not exceed such
amount; provided, however, upon the date of the effectiveness of the Board
operating under the Alternative Voting System, the Preferred Return solely with
respect to the Preferred Return Units shall decrease by one-half of one
percentage point (0.5%) on such date and shall decrease by one-half of one
percentage point (0.5%) every ninety (90) days thereafter until the Preferred
Return equals ten and one-quarter percent (10.25%) per annum.

 

“Preferred Return Base” means as of the date of the relevant calculation, the
amount obtained by (i) (x) computing for each day in the period to which the
Preferred Return relates (A) if the Preferred Return is with respect to the
Common Return Units, the amount of Capital Contributions made (or deemed made)
by Member in respect of the Common Return Units, or (y) if the Preferred Return
is with respect to the Preferred Return Units, or the amount of the Initial
Liquidation Value, as applicable, on or before such date, minus (B) the amount
distributed with respect to the Common Return Units pursuant to Section
3.4(b)(ii) or distributed with respect to the Preferred Return Units pursuant to
Section 3.3(d) (and excluding, for the avoidance of doubt, the portion of
amounts distributed pursuant to such section corresponding to Preferred Return
or Early Satisfaction Premiums), as applicable, before such date, (ii) adding
together all amounts obtained in the foregoing clause (i), and (iii) dividing
the sum obtained in the foregoing clause (ii) by the number of days in the
relevant period.

 

Exhibit A- Page 47

 

 

“Prohibited Owner” means, with respect to any purported Transfer or Non-Transfer
Event, any Person who is prevented from becoming or remaining the owner of
Membership Interests by the provisions of Section 5.1 or Section 5.2.

 

“Qualified Appraiser” means an independent appraisal firm selected by the
applicable party from those listed on Schedule 8.3(b) attached hereto.

 

“Quarterly Current Bank Amount Utilized” means, with respect to any Fiscal
Quarter, an amount equal to: (x) the Opening Bank Balance for such Fiscal
Quarter, less (y) the Ending Bank Balance for such Fiscal Quarter.

 

“Quarterly Deferred Asset Management Fees” means, with respect to any Fiscal
Quarter, the amount of Deferred Asset Management Fees for such Fiscal Quarter.

 

“Quarterly Deferred Asset Management Fees Recovered” means, with respect to any
Fiscal Quarter, the amount of Recovered Asset Management Fees for such Fiscal
Quarter.

 

“Quarterly Net Shortfall” means, with respect to any Fiscal Quarter, an amount
equal to: (a) the amount equal to (x) the amount of Unlevered Cash Flow
generated by Company for such Fiscal Quarter, less (y) the amount equal to the
amount set forth in Exhibit C-1 in the line item denoted “Quarterly UCF Budget
(Definitional, Excludes HBU Sales)” for such Fiscal Quarter, plus (b) Quarterly
Current Bank Amount Utilized for such Fiscal Quarter, plus (c) Quarterly
Deferred Asset Management Fees for such Fiscal Quarter, plus (d) the aggregate
amount of all Capital Contributions made by the Common Partners to Member with
respect to such Fiscal Quarter (including, for the avoidance of doubt, any
Capital Contributions made after the end of such Fiscal Quarter if such Capital
Contributions are made in respect of such Fiscal Quarter), minus (e) the
Quarterly Deferred Asset Management Fees Recovered for such Fiscal Quarter. For
all purposes hereunder, if the “Quarterly Net Shortfall” is equal to an amount
greater than zero ($0), it will be referred to as a “Quarterly Net Surplus”.

 

“Real Estate Asset” means any real property asset of Company and its
Subsidiaries, including the Property.

 

“REIT” means a real estate investment trust under Section 856 of the Code.

 

“REIT Requirements” means the requirements, as set forth in Section 856 et seq.
of the Code and the related Regulations, for an entity to (a) qualify for REIT
status, (b) maintain REIT status and (c) avoid the imposition of any U.S.
federal income tax or penalty on such REIT.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Senior Credit Debt” means “Obligations” as defined in the Senior Credit
Documents (or similar definition in the case of a modification or refinancing of
the Senior Credit Documents).

 

Exhibit A- Page 48

 

 

“Senior Credit Documents” means that certain Credit Agreement, dated on or about
the Effective Date, among Company, as borrower, the Subsidiaries thereof, as
guarantors, the Senior Lender, and the financial instructions party thereto from
time to time as lenders, as amended, restated, supplemented and otherwise
modified from time to time, and any refinancings, refundings, renewals and
extensions thereof.

 

“Senior Lender” means CoBank, ACB, or its successors and assigns, as the
Administrative Agent under the Senior Credit Documents on behalf of itself and
the other secured parties.

 

“Senior Officer” means a senior officer or director of the Company or its
Affiliates.

 

“Shortfall Contribution Balance” means, with respect to Member, a balance
maintained for such Member (i) to which shall be credited the Shortfall
Contributions made to Company by Member and (ii) from which shall be debited the
amount of distributions to Member with respect to the Shortfall Contribution
Balance pursuant to Section 3.2(b).

 

“Shortfall Return” means, with respect to Member, an amount computed like
interest at a rate of seventeen and one-half percent (17.5%) per annum,
compounded on the last day of each calendar year, on Member’s Shortfall Return
Base for the period from the date of such Member’s initial Shortfall
Contribution through the date of the relevant calculation.

 

“Shortfall Return Balance” means, with respect to Member as of the date of the
relevant calculation, an amount equal to the excess, if any, of (i) the
Shortfall Return that has accrued with respect to Member through such date, over
(ii) the cumulative distributions actually made to Member by Company pursuant to
Section 3.2(a) prior to the date of such relevant calculation in accordance with
this Agreement.

 

“Shortfall Return Base” means with respect to the Shortfall Contributions of
Member as of the date of the relevant calculation, the amount obtained by
(i) computing for each day in the period to which the Shortfall Return relates,
(A) the amount of such Shortfall Contributions made (or deemed made) by Member
on or before such date, minus (B) the amount distributed to such Member pursuant
to Section 3.2(b) before such date, (ii) adding together all amounts obtained in
the foregoing clause (i), and (iii) dividing the sum obtained in the foregoing
clause (ii) by the number of days in the relevant period.

 

“Similar Law” means any federal, state, local, non-U.S. or other law or
regulation that contains one or more provisions that are (i) similar to any of
the fiduciary responsibility or prohibited transaction provisions contained in
Title I of ERISA or Section 4975 of the Code and/or (ii) similar to the
provisions of the Plan Asset Regulations or would otherwise provide that the
assets of Company could be deemed to include “plan assets” under such law or
regulation.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company, trust or other entity of which all or any part of the
outstanding equity interests are owned, directly or indirectly, by such Person.

 

“Surface Use Agreement” means easements, leases, rights of ways or any agreement
which provides for the usage of Company owned roads or other real property for
access through, to, or across the property for any reason, or for the sale,
exploitation or extraction of any minerals, water, carbon, or conservation
rights or cell tower usage as conducted in the ordinary course of business of
Company and its Subsidiaries.

 

Exhibit A- Page 49

 

 

“Surface Use Agreement Interval” means where, with respect to any Surface Use
Agreement, either (x) the aggregate acreage taken out of timber production with
respect to such Surface Use Agreement, together with the acreage taken out of
timber production by all other Surface Use Agreements entered into in accordance
with the then-applicable Approved Surface Use Agreement Interval, is equal to or
less than fifty (50) acres or (y) the aggregate amounts payable or receivable in
connection with such Surface Use Agreement and all other Surface Use Agreements
entered into in accordance with the then-applicable Approved Surface Use
Agreement Interval (excluding any renewal payments) are equal to or less than
one million dollars ($1,000,000).

 

“Tax” means all taxes, levies, duties, imposts, charges, contributions and
withholdings of any nature whatsoever, including taxes on actual or deemed
income profits on gains, stamp duty and taxes on receipts, sales, use,
value-added, transfer, capital and personal property, together with all
penalties, fines, surcharges, charges and interest relating to any of them.

 

“TIG Investor” means Caddo TIG Newco L.P., a Delaware limited partnership.

 

“Timber Current Value” with respect to the value of the timber to be sold
pursuant to an HBU Sale is the sum of (i) the product of (A) multiplied by (B),
and (ii) the product of (C) multiplied by (D) (i.e., ((A) x (B)) + ((C) x (D)))
where:

 

(A) is equal to the per-acre fair market value allocated to timber assets that
are “pre-merchantable” at the time of the applicable HBU Sale;

 

(B) is equal to the then current number of acres of with timber that are
“pre-merchantable” being sold pursuant to the applicable HBU Sale;

 

(C) is equal to the per ton fair market value by product class allocated to the
individual timber assets that are “merchantable” at the time of the applicable
HBU Sale; and

 

(D) is equal to the then-current tonnage of the timber that is “merchantable” by
product class being sold pursuant to the applicable HBU Sale.

 

“Transfer” means any, direct or indirect, sale, assignment, pledge,
hypothecation, transfer by gift, exchange or otherwise disposition of or
encumbrance of all or any portion of a Membership Interest by operation of law
or otherwise, other than Transfers of the holders of the partnership interests
of the Member LP in accordance with the terms of the Member LP Agreement.

 

“Treasury Regulations” means the Income Tax Regulations and Procedures and
Administration Regulations promulgated under the Code, as amended from time to
time.

 

Exhibit A- Page 50

 

 

“Unlevered Cash Flow” means, for any applicable Fiscal Quarter, an amount equal
to: (a) the Net Operating Income generated during such Fiscal Quarter (for the
avoidance of doubt, such Net Operating Income does not include proceeds
generated from any HBU Sales), minus (b) the amount of Capital Expenditures for
such Fiscal Quarter provided in the then-applicable approved Annual Budget;
provided, that if, during such Fiscal Quarter, there is not an approved Annual
Budget in effect or there is a Budget Impasse, then the amount of Capital
Expenditures for purposes of this clause (b) shall be deemed to be equal to the
amount designated as “Cap Ex” for such Fiscal Quarter in Exhibit C-1; provided,
further, that (w) no Expenses incurred or reimbursed to the Partners pursuant to
Section 2.2(c)(ii) of this Agreement shall be included when calculating the
amount of Unlevered Cash Flow for any period, (x) no Nursery Disposition
Agreement Payments received by or on behalf of the LLC or any of its Affiliates
shall be included when calculating the amount of Unlevered Cash Flow for any
period, (y) no other Expenses approved by the Board as a Major Decision to be
excluded from the calculation of Unlevered Cash Flow shall be included when
calculating the amount of Unlevered Cash Flow for any period specified by the
Board in such approval and (z) no costs or expenses under or in connection with
Section 5.9 of the Member LP Agreement or Section 4.15 of this Agreement shall
be included when calculating the amount of Unlevered Cash Flow for any period.
For purposes of this Agreement, “Nursery Disposition Agreement Payments” shall
include any and all payments received by or on behalf of the LLC pursuant to the
Nursery Disposition Agreements, including, but not limited to: (i) lease or
rental payments (including any late payment penalties and interest charges paid
in respect thereof); (ii) payments of the purchase price (or any installment
thereof) for any real property, inventory (including seeds, seedlings and other
growing stock) or equipment (including pursuant to the exercise of any call
option in respect of the foregoing); (iii) proceeds from the sale of any
harvested seeds, seedlings, cones or other growing stock; (iv) real estate tax
credits, rebates, refunds, reductions or other adjustments to taxes shared
pursuant to the Nursery Disposition Agreements; (v) any portion of any security
deposit or the delivery of the proceeds from any letter of credit provided as a
replacement therefor; (vi) the proceeds of any insurance policy maintained
pursuant to the Nursery Disposition Agreements; (vii) any indemnification
payments; or (viii) any reimbursements of costs or expenses, except for the
reimbursement (if and as the cash amount of such reimbursements are received by
the LLC or any of its Affiliates) of (A) costs and expenses provided for by
Sections 2.5 and 2.6 of the Nursery Management Agreement and (B) third-party
transportation costs paid by the LLC or any of its Affiliates in connection with
the sale of seedlings to outside customers during the term of the Nursery
Management Agreement.

 

“Wood Supply Agreements” means the following agreements: (i) Third Amended and
Restated Sawtimber Supply Agreement (Texas Timberlands) by and between
Georgia-Pacific WFS LLC and Crown Pine Realty 1, Inc. dated as of June 24, 2020;
(ii) Third Amended and Restated Sawtimber Support Agreement by and among
Georgia-Pacific WFS LLC, Creek Pine, LLC, Crown Pine Realty 1, Inc. and Crown
Pine Timber 1, L.P. dated as of June 24, 2020; (iii) Second Amended and Restated
Pulpwood Supply Agreement (Texas Timberlands) by and between International Paper
Company and CPT LogCo, LLC dated as of January 1, 2018, as assigned by CPT
LogCo, LLC to Crown Pine Realty 1, Inc. pursuant to that certain Bill of Sale,
Assignment and Assumption Agreement dated as of July 6, 2018; and (iv) Second
Amended and Restated Pulpwood Support Agreement by and among International Paper
Company, Crown Pine Parent, L.P., and Crown Pine Timber 1, L.P. dated as of
January 1, 2018, as assigned by Crown Pine Parent, L.P. to Creek Pine, LLC
pursuant to that certain Bill of Sale, Assignment and Assumption Agreement dated
as of July 6, 2018.

 

Exhibit A- Page 51

 

 

 

Section A-2. Table of Definitions. The following terms have the meanings set
forth in the Sections referenced below:

 

Defined Terms

  Acquisition Recitals Act Recitals Agreement Preamble Allowable Variances
Section 4.8(b) Amendment Effective Date Preamble Annual Budget Section 4.8(a)
Annual Harvest Schedule Exhibit C-2 Annual Plan Exhibit C-2 Asset Management
Agreement Section 4.9(a)(i) Asset Manager Section 4.9(a)(i) Beneficial Owner
Exhibit A Beneficially Owned Exhibit A Beneficially Owns Exhibit A Board Section
4.1(a) Board Member Section 4.2(a) Board Observer Section 4.2(c)(v) Budget
Impasse Section 4.8(c) Cash Operating Account Section 2.1(a)(ii) Certificate
Recitals Class Section 2.3(a) Class A Preferred Members Preamble Class A
Preferred Units Section 2.3(a) Closing Section 2.1(a)(i) Common Board Members
Section 4.2(a) Common Return Units Section 2.3(e) Company Preamble Controlled by
Exhibit A Controlling Exhibit A Covered Persons Section 7.1(a) CPR1 Recitals
Crown Pine Purchase Agreement Recitals Cumulative Net Shortfall, Post-Bank,
Pre-AM Fee Deferral Amount Section 2.1(b)(i) Cumulative Net Surplus Exhibit A
Deadlock Section 4.8(d) Deferred Asset Management Fees Section 2.1(b)(ii)
Distributable Cash Flow Section 3.4(a) Distribution Date Section 3.3(b)
Distribution Payment Date Annex A Distribution Period Annex A Distribution
Record Date Annex A Early Satisfaction Premium Section 3.3(c) Early Satisfaction
Premium Balance Section 3.3(c) Effective Date Recitals Excess Units Section
5.2(b)

 

Exhibit A—Page 52

 

 

Expenses Section 2.2(a) Forecast Plan Exhibit C-2 Formation Date Recitals GP
Recitals GP WSA Amendment Recitals Indebtedness Document Section 3.6 Initial
Annual Budget Section 4.8(a) Initial Member Recitals Initial Preferred
Distribution Balance Section 3.3(b) Junior Securities Annex A Liquidation Event
Annex A Liquidation Preference Annex A Liquidator Section 9.4(a) Major Decisions
Section 4.7 Maximum Rate Section 11.14 Member Preamble Net Available Cash
Section 3.3(a) Non-Controllable Expenses Section 4.8(c) Notice Section 10.1
Nursery Disposition Agreement Payments Exhibit A Nursery Management Agreement
Exhibit A Original Agreement Recitals Original Issue Date Annex A Other Units
Section 2.3(a) Paying Agent Annex A PDF Section 11.15 Permitted HBU Sale Section
4.10 persons acting in concert Exhibit A Preferred Board Members Section 4.2(a)
Preferred Return Units Section 2.3(c) Pre-Funded Expense Account Section
2.1(a)(ii) Preliminary Budget Exhibit C-2 Property Recitals Purchase Price
Section 2.1(a)(i) Quarterly Net Surplus Exhibit A Recovered Asset Management
Fees Section 2.1(b)(ii) Redemption Premium Annex A Redemption Price Annex A REIT
Qualification Date Section 4.11 Related Party Agreement Section 4.7(m) Remaining
Distributable Cash Flow Section 3.5 Residual Units Section 2.3(d) Restriction
Termination Date Section 4.11 Selected Acres Exhibit H Shortfall Contributions
Section 2.1(b)(iv) Shortfall Return Units Section 2.3(b)

 

Exhibit A—Page 53

 

 

Term Section 1.4 Thirty-Year Harvest Schedule Exhibit C-2 Three-Year Harvest
Plan Exhibit C-2 UCC Section 1.7(a) Units Section 2.3(a) Upper-Tier REIT Savings
Provision Section 5.2(b) Valuation Policy Section 8.3(a)

 

Exhibit A—Page 54

 

 

Rules of Interpretation

 

The following rules shall be applied by the Parties and all other Persons
(including judges) in the determination, evaluation, interpretation and
enforcement of the provisions of this Agreement, unless another provision of
this Agreement expressly applies another rule:

 

a)The provisions of all Exhibits to this Agreement are incorporated into and
made an integral part of this Agreement as though they had been fully set forth
in the actual text of this Agreement.

 

b)Any financial or accounting term used, but not otherwise defined, in this
Agreement shall have the meaning given to it under U.S. generally accepted
accounting principles.

 

c)Any reference to a right, benefit, action, decision or other item or matter in
this Agreement is intended to allow its making, taking or other exercise to the
fullest extent permitted by Company or other applicable law.

 

d)The word “including” is not limiting and shall be construed as meaning
“including, without limitation.”

 

e)Any provision of this Agreement that gives Member or another Person the right,
option or election to take or not take any action in any manner shall not, and
shall not be deemed or construed to, require or obligate that Member or Person
to take all or any part of such action.

 

f)The singular includes the plural, and the plural includes the singular.

 

g)The masculine gender includes the feminine and neuter and vice versa.

 

h)References to a law include any rule or regulation issued under the law, any
amendment to a law, rule or regulation, any successor law, rule or regulation
and all applicable judicial interpretations of any such law, rule or regulation.

 

i)Unless otherwise specified, references to an Article, Section or Exhibit mean
a reference to an Article, Section or Exhibit contained in or attached to the
Agreement.

 

j)Any reference to “days” means calendar days unless Business Days are expressly
specified. If the date on which any period ends is not a Business Day, such
period shall end on the Business Day immediately following such date.

 

k)The caption headings of Articles and Sections in this Agreement are for
convenience only and do not necessarily define, modify, extend, limit or
describe the scope or intent of any of the terms of this Agreement.

 

l)This Agreement shall be interpreted and enforced in accordance with its
provisions and without the aid of any custom or rule of law requiring or
suggesting construction against the party drafting, commenting on, or causing
the drafting or redrafting of, the provision in question.

 

Exhibit A—Page 55

 

 

Exhibit B

 

Members; Capital Contributions; Membership Interests

 

(As of June 24, 2020)

 

Capital Contributions:

 

Member Capital Contribution Member $930,866,142 TOTAL $930,866,142

 

Membership Interests:

 

Member Shortfall Return Units Preferred Return Units Common Return Units
Residual Units Member 0 725,866,142 205,000,000 930,866,142

 

Exhibit B—Page 1

 

 

Exhibit C-1

 

Initial Annual Budget

 

(Cash basis)

 

(See attached.)

 

Exhibit C-1—Page 1

 

 

Project Caddo

REVISED Exhibit C-1: Initial 5-Year Quarterly Cash Flow Projections

($'s, except per acre data)

 

NOTE: BASIS OF PRESENTATION IS ON A CASH BASIS

 

[***]

 

Exhibit C-1-2

 

 

Exhibit C-2

 

Budget Development Protocol

 

·The Asset Manager will produce an annual harvest schedule (“Annual Harvest
Schedule”), taking into consideration (i) Company’s obligations under the Wood
Supply Agreements, (ii) Unlevered Cash Flow requirements, (iii) the long-term
value of the Property, and (iv) Sustainable Forestry Initiative (SFI)
obligations.

 

·The Preferred Investors, by majority vote of the Board Members designated by
the Preferred Investors, may designate a Person to provide reasonable review and
input regarding the following items during the preparation of the Annual Harvest
Schedule: Linear Program (LP) constraints, financial assumptions, silvicultural
assumptions, and harvest volume in excess of or outside of Wood Supply Agreement
obligations. The initial designee shall be TTG Forestry Services, LLC.

 

·Each Annual Harvest Schedule will include a thirty (30)-year harvest schedule
(“Thirty-Year Harvest Schedule”) and a rolling three (3)-year harvest plan
(“Three-Year Harvest Plan”). A written summary of each Annual Harvest Schedule
will be made available to the Investors, including all assumptions, constraints
utilized, and supporting stand level information as may be necessary for a
reasonable evaluation of the Thirty-Year Harvest Schedule and the Three-Year
Harvest Plan. In addition, annual property profiles including merchantable
timber volumes, pre-merchantable acres by species and age class, and acres by
land class shall be provided.

 

·To the extent necessary to facilitate the Investors’ review of the proposed
Annual Budget, the Asset Manager will also (i) provide the Investors information
regarding tract and stand-level activity for the Property and applicable other
Real Estate Assets (including, for example, site preparation and treatment,
planting method, stock type, planting density, thinning plan, volume removals by
product class, and detailed inventory information), and (ii) furnish the
Investors a copy of the then-current Geographic Information Systems (GIS) data
for the Property and applicable other Real Estate Assets.

 

·The Asset Manager will seek, based on the Three-Year Harvest Plan, to develop a
preliminary version of the Annual Budget (“Preliminary Budget”) and present such
Preliminary Budget to the Board no later than September 10th of each calendar
year for review and consideration.

 

·The Board will provide any comments and feedback regarding the Preliminary
Budget no later than September 25th of each calendar year.

 

·Based on the Preliminary Budget timber volumes (as the same reflects the
comments and feedback of the Board) the Asset Manager will provide the “Annual
Plan” and “Forecast Plan” volumes to the respective counterparties to the Wood
Supply Agreements, as required, on or before September 30th of each calendar
year.

 

Exhibit C-2—Page 1

 

 

·The proposed Annual Budget submitted to the Board for final approval pursuant
to Section 4.8 of the Agreement will reflect any changes required by the
counterparties to the Wood Supply Agreements after review of the Annual Plan
volumes.

 

·The Annual Budget will include the terms pertaining to any Permitted HBU Sale
to be conducted during the applicable Fiscal Year, including (i) a general
description of the potential Property and other Real Estate Assets to be sold,
(ii) the minimum price and (iii) any permissible non-standard commercial terms.

 

Exhibit C-2—Page 2

 

 

Exhibit C-3

 

Shortfall Calculation Examples

 

(Cash basis)

 

(See attached.)

 

Exhibit C-3—Page 1

 

 

Project Caddo

Exhibit C-3: Asset Management Fee Deferral & Board Flip Exhibit

 

($‘s, unless otherwise noted)

 

          9/30/18     12/31/18     3/31/19     6/30/19     9/30/19     12/31/19
    3/31/20     6/30/20     9/30/20     12/31/20     3/31/21     6/30/21    
9/30/21     12/31/21     3/31/22     6/30/22     9/30/22     12/31/22    
3/31/23     6/30/23             Q3     Q4     Q1     Q2     Q3     Q4     Q1    
Q2     Q3     Q4     Q1     Q2     Q3     Q4     Q1     Q2     Q3     Q4     Q1
    Q2             Year 1     Year 1     Year 2     Year 2     Year 2     Year 2
    Year 3     Year 3     Year 3     Year 3     Year 4     Year 4     Year 4    
Year 4     Year 5     Year 5     Year 5     Year 5     Year 6     Year 6  

CUMULATIVE UCF VARIANCE

 

[***]

    [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]  

Quarterly UCF Variance

      —         —         —         —         —         —         —         —  
      —         —         —         —         —         —         —         —  
      —         —         —         —    

Cumulative UCF Actual

    Defined Term       [***]       [***]       [***]       [***]       [***]    
  [***]       [***]       [***]       [***]       [***]       [***]       [***]
      [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]  

Cumulative UCF Budget

    Defined Term       [***]       [***]       [***]       [***]       [***]    
  [***]       [***]       [***]       [***]       [***]       [***]       [***]
      [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]      

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative UCF Variance

    Defined Term       —         —         —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —         —         —         —         —    

QUARTERLY & CUMULATIVE NET SHORTFALL DEFINITIONS

 

Quarterly Net Shortfall

                                         

Quarterly Variance

    $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0
    $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0
 

Plus: Quarterly Current Bank Utilized

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Plus: Quarterly Deferred Asset Management Fees

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Plus: Quarterly Common Capital Contributions

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Less: Quarterly Deferred Asset Management Fees Recovered

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Quarterly Net Shortfall / Surplus

      —         —         —         —         —         —         —         —  
      —         —         —         —         —         —         —         —  
      —         —         —         —    

Cumulative Net Shortfall

                                         

Cumulative UCF Variance

            —         —         —         —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Plus: Cumulative Current Bank Utilized

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Plus: Cumulative Deferred Asset Management Fees

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Plus: Cumulative Common Capital Contributions

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Less: Cumulative Deferred Asset Management Fees Recovered

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —              

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative Net Shortfall / Surplus

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Cumulative Net Surplus

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Cumulative Net Shortfall

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

CUMULATIVE NET SHORTFALL FUNDING

 

         

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative Net Shortfall

          $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  
  $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0            

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Current Bank

                                         

Current Bank Balance Opening

    Defined Term     $ 4,000,000     $ 4,000,000     $ 4,000,000     $ 4,000,000
    $ 4,000,000     $ 4,000,000     $ 4,000,000     $ 4,000,000     $ 4,000,000
    $ 4,000,000     $ 4,000,000     $ 4,000,000     $ 4,000,000     $ 4,000,000
    $ 4,000,000     $ 4,000,000     $ 4,000,000     $ 4,000,000     $ 4,000,000
    $ 4,000,000  

Quarterly Current Bank Utilized

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Optional Quarterly Current Bank Utilized (1)

            —         —         —         —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —              

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Current Bank Balance Ending

    Defined Term       4,000,000       4,000,000       4,000,000       4,000,000
      4,000,000       4,000,000       4,000,000       4,000,000       4,000,000
      4,000,000       4,000,000       4,000,000       4,000,000       4,000,000
      4,000,000       4,000,000       4,000,000       4,000,000       4,000,000
      4,000,000  

Memo: Cumulative Current Bank Utilized

    Defined Term       —         —         —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —         —         —         —         —              

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative Net Shortfall, Post Bank, Pre-AM Fee Deferral

          $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  
  $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0            

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Asset Management Fee Due & Payable

                                         

Asset Management Fee Due

      [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]  

Less: Quarterly Deferred Asset Management Fees

    Defined Term         Test Holiday       —         —         —         —    
    —         —         —         —         —         —         —         —    
    —         —         —         —         —    

Less: Optional Quarterly Deferred Asset Management Fees (1)

            —         —         —         —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Plus: Quarterly Deferred Asset Management Fees Recovered

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —        

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Asset Management Fee Payable

      [***]       [***]       [***]       [***]       [***]       [***]      
[***]       [***]       [***]       [***]       [***]       [***]       [***]  
    [***]       [***]       [***]       [***]       [***]       [***]      
[***]  

Memo: Cumulative Deferred Asset Management Fees

    Defined Term       —         —         —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —         —         —         —         —    

Memo: Cumulative Deferred Asset Management Fees Recovered

    Defined Term       —         —         —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —         —         —         —         —              

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative Net Shortfall, Pre-Common Capital Contribution

          $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  
  $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0            

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Quarterly Common Capital Contributions

      —         —         —         —         —         —         —         —  
      —         —         —         —         —         —         —         —  
      —         —         —         —    

Memo: Cumulative Common Capital Contributions

      —         —         —         —         —         —         —         —  
      —         —         —         —         —         —         —         —  
      —         —         —         —              

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cumulative Net Shortfall, Post-Bank, Post-AM Fee Deferral, Post-Common Capital
Contribution

 

  $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  
  $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0            

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

DEFERRED ASSET MANAGEMENT FEES

 

Deferred Asset Management Fees

                                         

Beginning Balance

          $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  
  $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  

Plus: Asset Management Fees Deferred

            —         —         —         —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —    

Less: Deferred Asset Management Fees Recovered

            —         —         —         —         —         —         —      
  —         —         —         —         —         —         —         —      
  —         —              

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deferred Asset Management Fee Balance

    Defined Term             —         —         —         —         —        
—         —         —         —         —         —         —         —        
—         —         —         —    

Less: Return of Deferred Asset Management Fees Upon Termination

 

                 
Only Upon
Termination  
                    —    

ALTERNATIVE VOTING SYSTEM TRIGGER

 

Alternative Voting System Trigger

                                         

Trailing Four Quarters Net Shortfall / Surplus

          $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  
  $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0     $ 0  

Alternative Voting System Triggered?

                No       No       No       No       No       No       No      
No       No       No       No       No       No       No       No  

 

 

(1)

Optional at the Common Partner’s option, and only in cases where Net Shortfall
is negative and Cumulative Net Shortfall is positive.

 

 

Exhibit C-3 - 2

 

 

 

Exhibit C-4

 

Operating Metrics

 

1.Recordable incident rate

    2.Conformity with certification requirements provided by Sustainable
Forestry Initiative Inc.

    3.Development of managerial talent

    4.Litigation risk

    5.Compliance with applicable environmental statutes and regulations

    6.Technology and information systems infrastructure

 

Exhibit C-4—Page 3

 

 

Exhibit D

 

Notice Addresses

 

Party Address     Member

To:         TexMark Timber Treasury, L.P.
 702 North Temple Drive
 Diboll, Texas 75941
 Attention: Brian Davis
 Email: Brian.Davis@catchmark.com

 

with a copy to:

 

 Alston & Bird LLP
 1201 West Peachtree Street
 Atlanta, Georgia 30309
 Attention: Rosemarie A. Thurston
 Email: rosemarie.thurston@alston.com

 

Exhibit D—Page 1

 

 

Exhibit E

 

Illustrative Distribution Examples

 

(See attached.)

 

 

Exhibit E-Page 1

 

 

 

[tm2023298d1_ex10-1sp21img01.jpg]

 

 

[tm2023298d1_ex10-1sp21img02.jpg]

 

 

 

Exhibit F

 

Asset Management Agreement

 

(See attached.)

 

Exhibit F—Page 1

 

 

 

Execution Version

 

Pursuant to Item 601(b)(10)(iv) of Regulation S-K, certain identified
information marked with [***] has been excluded from the exhibit because it is
both (i) not material and (ii) would be competitively harmful if publicly
disclosed

 

AMENDED AND RESTATED ASSET Management Agreement

 

This AMENDED AND RESTATED ASSET MANAGEMENT AGREEMENT (as amended or restated
from time to time, including all appendixes and exhibits thereto, this
“Agreement”), dated as of June 24, 2020 (the “Amendment Effective Date”), by and
between Creek Pine REIT, LLC, a Delaware limited liability company (the
“Company”), Crown Pine Realty 1, Inc., a Delaware corporation (“CPR1”), and
CatchMark TRS Creek Management, LLC, a Delaware limited liability company (the
“Asset Manager”). The Company, CPR1 and the Asset Manager are each referred to
herein as a “Party” and collectively as the “Parties.”

RECITALS

 

WHEREAS, the Parties hereto are parties to that certain Asset Management
Agreement dated as of July 6, 2018, as amended by the First Amendment thereto,
effective as of February 25, 2019 (the “Original AMA”), and the parties to the
Original Agreement desire to amend and restate the Original AMA on the terms and
conditions herein in connection with the amendment of the Second Amended and
Restated Sawtimber Supply Agreement by and between Georgia-Pacific WFS, LLC and
CPR1;

 

WHEREAS, the Company intends to continue to be taxed as a REIT (as hereinafter
defined) for federal income tax purposes;

 

WHEREAS, the Company shall continue to cause CPR1 to undertake certain
activities the income from which would not (or the activities of which would
cause any rents not to) be treated with respect to the Company as “qualifying
income” (within the meaning of Section 856(c) of the Code); and

 

WHEREAS, CPR1 and the Company desire that the Asset Manager provide such
services to the Company and its Subsidiaries (including CPR1) as are set forth
herein, and the Asset Manager desires to render such services in consideration
of the compensation provided for herein.

 

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, and
other good and valuable consideration, the Parties agree to amend and restate
the Original AMA as of the Amendment Effective Date as follows:

 

1.             Defined Terms. Defined terms used in this Agreement shall, unless
the context otherwise requires, have the meanings specified in this Section 1
or, if not so specified, shall have the meanings given to such defined terms in
the Company LLC Agreement.

 

2

 

 

(a)          “Affiliate” means, in relation to a Person, any holding company,
subsidiary or any other subsidiaries of any such holding company, in each case
of such Person and any Person that Controls, is Controlled by or is under common
Control with such Person.

 

(b)            “Agreement” shall have the meaning set forth in the Preamble.

 

(c)            “Allowable Variance” shall have the meaning set forth in Section
3(b).

 

(d)            “Alternative Voting System” shall have the meaning ascribed to
such term in the Company LLC Agreement.

 

(e)            “Amendment Effective Date” shall have the meaning set forth in
the Preamble.

 

(f)             “Annual Budget” shall have the meaning set forth in Section
3(a).

 

(g)           “Annual Harvest Schedule” shall have the meaning set forth on
Schedule B-2.

 

(h)           “Applicable Rate” shall have the meaning set forth in Section
9(a).

 

(i)            “Asset Management Fee” shall have the meaning set forth in
Section 9(a).

 

(j)            “Asset Manager” shall have the meaning set forth in the Preamble.

 

(k)          “Bad Act” means, with respect to a Person, (i) gross negligence,
(ii) bad faith, (iii) fraud, or (iv) willful misconduct; provided, that, other
than with respect to fraud, if the applicable action or circumstance is curable,
then the breaching party will not be deemed to have caused the occurrence of a
Bad Act pursuant to this definition if such party cures the applicable action or
circumstance (including, for the avoidance of doubt, paying or otherwise
remedying any adverse effects resulting from the Bad Act and otherwise
offsetting any Losses suffered by other relevant Persons) within the thirty (30)
days following the receipt of written notice thereof. For the avoidance of
doubt, for purposes of Section 11(c), any Loss in respect of or arising from an
act by the Asset Manager as a fiduciary under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations thereunder shall not
constitute a “Bad Act.”

 

(l)            “Bankruptcy” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(m)          “Base Amount” means $1,524,000,000.

 

(n)           “Beginning Preferred Partner Ratio” shall mean the number equal to
(x) the aggregate amount of all Capital Contributions (as such term is defined
in the Parent LP Agreement) made by the Preferred Partners in accordance with
the Parent LP Agreement as of the Effective Date, divided by (y) the aggregate
amount of all Capital Contributions made by all Partners in accordance with the
Parent LP Agreement as of the Effective Date.

3

 

 

(o)           “Budget Development Protocols” shall have the meaning set forth in
Section 3(a).

 

(p)           “Budget Impasse” shall have the meaning set forth in Section 3(c).

 

(q)            “Business Assets” shall have the meaning ascribed to such term in
the Company LLC Agreement.

 

(r)            “Business Day” shall have the meaning ascribed to such term in
the Company LLC Agreement.

 

(s)           “Capital Contribution” shall have the meaning ascribed to such
term in the Parent LP Agreement.

 

(t)            “Cause” shall mean any of the following:

 

(i)             there has been a final determination by a court of competent
jurisdiction, or an admission by the Asset Manager or any of its Affiliates,
that the Asset Manager or any of its Affiliates has committed, in connection
with the performance of the Asset Manager’s duties under this Agreement, (1)
fraud or intentional misappropriation of funds, (2) willful misconduct, (3)
gross negligence, or (4) a breach of this Agreement resulting in material Losses
to the Parent, the Company or any of its Subsidiaries, taken as a whole;
provided, that, such an occurrence shall not constitute “Cause” to the extent
(1) the act or omission is the result of the conduct of an employee of the Asset
Manager or its Affiliates who is not otherwise a Senior Officer, (2) such
conduct occurs without the prior knowledge of a Senior Officer or (3) such
“Cause” event is cured within thirty (30) days, which cure may include: (x) the
removal of the subject employee from the Asset Manager or the applicable
Affiliate, as applicable; (y) a comprehensive review by the Asset Manager or the
applicable Affiliate of its internal policies and procedures to determine
whether additional procedures should be implemented in order to prevent such act
or event by the Asset Manager (or such Affiliate thereof); and (z) full
restitution and reimbursement is made to the Parent, the Company or the
applicable Subsidiary, or to the Preferred Partners, as applicable, by the Asset
Manager, for any Losses caused by such Cause event;

 

(ii)            a Transfer by the General Partner or any of its Affiliates in
contravention of the Parent LP Agreement that is not cured within thirty (30)
days after the earlier of (x) the General Partner (or CTT Partner (as such term
is defined in the Parent LP Agreement)) becoming aware of such Transfer or (y)
written notice from a Partner specifying the breach;

 

(iii)           the Asset Manager has failed to retain certification by or to
obtain recertification from Sustainable Forestry Initiative Inc. with respect to
all of the Property; or;

 

(iv)           the Bankruptcy of (i) the Asset Manager or (ii) CTT, CatchMark
Timber Operating Partnership, L.P., or any Affiliate thereof that directly holds
equity interests in Parent.

 

4

 

 

(u)          “Change of Control” shall mean any transaction or series of related
transactions which directly or indirectly results in:

 

(i)              the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”)) of direct or indirect beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more
of either the then-outstanding shares of common stock of CTT or the Asset
Manager or the combined voting power of any other then-outstanding securities of
CTT or the Asset Manager entitled to vote generally in the election of directors
(as applicable with respect to CTT or the Asset Manager, the “Outstanding Voting
Securities”); or

 

(ii)            any merger, consolidation, reorganization or other similar
transaction pursuant to which CTT or the Asset Manager is merged with and into
or otherwise acquired by another entity; excluding, however, any such
transaction pursuant to which the individuals and entities who are beneficial
owners of the applicable entity’s Outstanding Voting Securities immediately
prior to such transaction will in the aggregate beneficially own, directly or
indirectly, fifty percent (50%) or more of the outstanding shares of common
stock, and the combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from such transaction (including a corporation that as a
result of such transaction owns CTT or the Asset Manager, as applicable, or all
or substantially all of the assets of CTT or the Asset Manager, as applicable,
either directly or through one or more subsidiaries).

 

(v)            “Closing” shall have the meaning ascribed to such term in the
Parent LP Agreement.

 

(w)           “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(x)           “Company” shall have the meaning set forth in the Preamble.

 

(y)           “Company Account” shall have the meaning set forth in Section 7.

 

(z)           “Company Board” shall mean the board of managers of the Company,
as established and maintained pursuant to the Company LLC Agreement.

 

(aa)         “Company LLC Agreement” means the Amended and Restated Limited
Liability Company Agreement of the Company (as amended or restated from time to
time, including all appendixes and exhibits thereto).

 

(bb)         “Confidential Information” shall have the meaning set forth in
Section 8(b).

 

(cc)         “Constituent Members” means any Person that is an officer,
director, member, partner or shareholder in a Person, or any Person that,
indirectly through one or more limited liability companies, partnerships or
other entities, is an officer, director, member, partner or shareholder in a
Person.

 

5

 

 

(dd)        “Control” means, in relation to a Person, where a person (or persons
acting in concert) holds or has direct or indirect control of (i) the affairs of
that Person, (ii) more than fifty percent (50%) of the total voting rights
conferred by all the issued shares in the capital of that Person which are
ordinarily exercisable in a general meeting (or the equivalent) or (iii) a
majority of the board of directors/managers of that Person, and “Controlled by”
shall be construed accordingly. For these purposes, “persons acting in concert,”
in relation to a Person, are persons which actively cooperate pursuant to an
agreement or understanding (whether formal or informal), with a view to
exercising, obtaining or consolidating Control of that Person.

 

(ee)         “CPR1” shall have the meaning set forth in the Preamble.

 

(ff)           “CTT” shall mean CatchMark Timber Trust, Inc.

 

(gg)         “Deferred Asset Management Fees” shall have the meaning ascribed to
such term in the Company LLC Agreement.

 

(hh)         “Effective Date” means July 6, 2018.

 

(ii)           “Excluded Loss” means (a) any Losses to the extent the same are
reimbursed by insurance proceeds or indemnities from third parties and (b) any
consequential, special, punitive or exemplary damages to the extent such damages
are not owed to a third party in connection with any third-party claim.

 

(jj)           “Expenses” shall have the meaning set forth in Section 10(a)

 

(kk)        “Fiscal Quarter” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(ll)           “Fiscal Year” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(mm)       “General Partner” shall have the meaning ascribed to such term in the
Parent LP Agreement.

 

(nn)         “Government Authority” means (i) a federal or national government,
any state government, any political subdivision thereof, or any local
jurisdiction therein; (ii) an instrumentality, board, commission, court or
agency, whether civilian or military, of any of the above, however constituted;
(iii) a public organization, being an organization whose members are (A)
countries or territories; (B) governments of countries or territories; and/or
(C) other public international organizations and includes the World Bank, the
United Nations, the International Monetary Fund and the OECD; or (iv) any
company, association, organization, business, enterprise or other entity which
is owned, whether in whole or in part, or controlled by any person listed in (i)
to (iii) above.

 

(oo)         “Indemnified Party” shall have the meaning set forth in Section
11(c).

 

(pp)         “Indemnitor” shall have the meaning set forth in Section 11(d).

 

6

 

 

(qq)        “Initial Annual Budget” shall have the meaning set forth in Section
3(a).

 

(rr)         “Key Man” shall mean any person set forth on Schedule A attached
hereto.

 

(ss)         “Key Man Employment Agreement” shall mean the Employment Agreements
listed on Schedule A attached hereto, as such may be amended, restated,
supplemented, modified or otherwise renegotiated.

 

(tt)           “Key Man Event” shall have the meaning set forth in Section 12.

 

(uu)        “Law” means any law, statute, act, legislation, bill, enactment,
policy, treaty, international agreement, ordinance, judgment, injunction, award,
decree, rule, regulation, interpretation, determination, requirement, writ or
order of any Government Authority.

 

(vv)         “Loss” or “Losses” means the dollar amounts of all actual costs,
claims, suits, actions, damages, losses, liabilities, obligations, reasonable
fees and expenses of any kind or nature, including costs and expenses of
accountants, attorneys and other professionals, judgments, fines, penalties,
settlements and all other costs and expenses and disbursements of any nature or
type actually paid or incurred or imposed on or asserted against a specified
Person, and all costs and expenses paid or incurred by the prevailing party or
any of its Affiliates in litigating against any other party or any of its
Affiliates, but specifically excluding in all such cases any Excluded Loss.

 

(ww)        “Major Decision” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(xx)         “Manager Indemnified Parties” shall have the meaning set forth in
Section 11(a).

 

(yy)         “Non-Controllable Expenses” shall have the meaning set forth in
Section 3(c).

 

(zz)         “Original AMA” shall have the meaning set forth in the Recitals.

 

(aaa)       “Parent” shall mean TexMark Timber Treasury, L.P., a Delaware
limited partnership.

 

(bbb)       “Parent Board” shall mean the partnership board of the Parent, as
established and maintained pursuant to the Parent LP Agreement.

 

(ccc)       “Parent Indemnified Parties” shall have the meaning set forth in
Section 11(c).

 

(ddd)       “Parent LP Agreement” means the Amended and Restated Limited
Partnership Agreement of TexMark Timber Treasury, L.P., a Delaware limited
partnership (as amended or restated from time to time, including all appendixes
and exhibits thereto).

 

7

 

 

(eee)      “Parent Partners” shall mean the Partners of the Parent, as defined
in the Parent LP Agreement.

 

(fff)         “Partner” shall have the meaning set forth in the Parent LP
Agreement.

 

(ggg)      “Party” shall have the meaning set forth in the Preamble.

 

(hhh)      “Person” means an individual or a general partnership, limited
partnership, corporation, professional corporation, limited liability company,
limited liability partnership, joint venture, trust, business trust,
unincorporated organization, cooperative or association or a governmental,
administrative or regulatory agency or any other entity.

 

(iii)         “Preferred Board Members” shall have the meaning set forth in
Section 3(a).

 

(jjj)         “Preferred Partners” shall have the meaning ascribed to such term
in the Parent LP Agreement.

 

(kkk)     “Preliminary Budget” shall have the meaning set forth on Schedule B-2.

 

(lll)         “Property” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(mmm)   “Qualified REIT Consultant” means a nationally recognized accounting
firm, which may be the Company’s audit or tax firm, or a nationally recognized
law firm selected by the Asset Manager.

 

(nnn)      “REIT” means a “real estate investment trust” under Section 856 of
the Code

 

(ooo)       “Senior Credit Documents” shall have the meaning ascribed to such
term in the Parent LP Agreement.

 

(ppp)       “Senior Lender” shall have the meaning ascribed to such term in the
Parent LP Agreement.

 

(qqq)       “Senior Officer” means a senior officer or director of the Asset
Manager or its Affiliates.

 

(rrr)        “Services” shall have the meaning set forth in the Section 2(b).

 

(sss)       “Subsidiaries” means, with respect to any Person, any corporation,
partnership, limited liability company, trust or other entity of which all or
any part of the outstanding equity interests are owned, directly or indirectly,
by such Person. For the avoidance of doubt, the Company and its Subsidiaries and
CPR1 shall each be considered a Subsidiary of Parent, and CPR1 shall be
considered a Subsidiary of the Company, for purposes of this Agreement.

 

8

 

 

(ttt)        “Termination Date” shall mean the effective date of any termination
of this Agreement in accordance with the terms hereof.

 

(uuu)      “Thirty-Year Harvest Schedule” shall have the meaning set forth on
Schedule B-2.

 

(vvv)        “Three-Year Harvest Plan” shall have the meaning set forth on
Schedule B-2.

 

(www)     “Timber Manager” shall mean any entity that has been retained by the
Company or a Subsidiary thereof to perform and carry out property management
services at the Property or any other Real Estate Assets.

 

(xxx)        “Transfer” shall have the meaning ascribed to such term in the
Company LLC Agreement.

 

(yyy)        “Wood Supply Agreements” shall have the meaning ascribed to such
term in the Company LLC Agreement.

 

2.             Appointment and Duties of the Asset Manager.

 

(a)           On the terms and subject to the conditions set forth in this
Agreement, the Company, on its own behalf and on behalf of each of its
Subsidiaries, hereby appoints the Asset Manager to serve as asset manager and to
provide the Services, and the Asset Manager hereby accepts such appointment.
Except as otherwise provided herein or in connection with the termination of
this Agreement, neither the Company nor any of its Subsidiaries shall appoint
any other Person to serve as Asset Manager or to provide the services of the
Asset Manager as set forth in this Agreement, except to the extent that the
Asset Manager otherwise agrees, in its sole and absolute discretion. Whenever in
this Agreement the approval or consent of the Company is required, such approval
shall be obtained through the affirmative action of the Company Board, in
accordance with the terms of the Company LLC Agreement.

 

(b)           The Asset Manager undertakes and agrees to use all commercially
reasonable efforts to provide the Services and to otherwise fulfill its
obligations hereunder. In rendering the Services and otherwise fulfilling its
obligations hereunder, the Asset Manager will at all times (i) be subject to the
supervision, management and direction of the Company Board and any applicable
approvals required by or restrictions imposed by this Agreement, the Company LLC
Agreement or the Parent LP Agreement, (ii) have only such functions and
authority as the Company Board may delegate to it, including the functions and
authority identified herein and delegated to the Asset Manager hereby, (iii) not
take, or cause to be taken, any action that constitutes a Major Decision without
such action having received the required prior approval of the Parent Board or
the Company Board, as applicable, in accordance with the Parent LP Agreement or
the Company LLC Agreement, as applicable, (iv) act in a manner consistent with,
and subject to, the applicable Annual Budget (subject to Section 3 hereof) and
applicable Law and (v) act in good faith as a reasonable expert in managing
forestry investments. Subject to the foregoing, during the term of this
Agreement, the Asset Manager will be responsible for the following
(collectively, the “Services”):

 

9

 

 

(i)            preparing the Annual Budget and presenting the Annual Budget for
approval in accordance with Section 3 hereof and the Company LLC Agreement;

 

(ii)            implementing each Annual Budget following the approval thereof
in accordance with the terms of such approved Annual Budget and Section 3
hereof;

 

(iii)           administering the day-to-day business and operations of the
Company and its Subsidiaries and performing and supervising the performance of
such administrative functions necessary to the management of the Company and its
Subsidiaries as may be agreed upon by the Asset Manager and the Company Board;

 

(iv)           assisting the Company in retaining at all times a Qualified REIT
Consultant and other advisors to advise the Company regarding the maintenance of
the Company’s qualification as a REIT and monitoring compliance with the various
REIT qualification tests and other rules set out in the Code and Treasury
Regulations thereunder;

 

(v)            investigating, selecting, engaging and supervising, on behalf of
the Company and its Subsidiaries, third-party service providers as contemplated
by Section 2(c) hereof;

 

(vi)           overseeing the performance by each Timber Manager of its duties
and making periodic recommendations to the Company Board regarding the
engagement, or termination of, such Timber Managers;

 

(vii)         identifying, investigating, analyzing and originating potential
investment opportunities for the Company and its Subsidiaries, to the extent
directed to do so by the Company Board;

 

(viii)        consulting with the Company Board regarding acquiring, financing,
retaining, selling, restructuring or disposing of Business Assets and
recommending strategies for the same;

 

(ix)           supervising and structuring prospective sales or exchanges of
Business Assets, and conducting negotiations with purchasers, brokers, lenders
and, if applicable, their respective agents and representatives, in each case,
as requested by the Company Board;

 

(x)             identifying, evaluating and recommending sources of financing
for the Company and its Subsidiaries, as requested by the Company Board;

 

(xi)            providing the Company Board with periodic review and evaluation
of the performance of the Business Assets and other customary functions related
to asset management;

 

(xii)          taking required actions on behalf of the Company and its
Subsidiaries to qualify to do business in all applicable jurisdictions and to
obtain and maintain all appropriate licenses;

 

10

 

 

(xiii)        taking required actions on behalf of the Company and its
Subsidiaries in complying with all applicable regulatory requirements with
respect to their business activities;

 

(xiv)         preparing and filing all tax returns and tax elections which are
required by applicable law to be filed or are otherwise advisable and taking all
other action reasonably necessary in connection with such required tax filings
and reports with respect to the Company and its Subsidiaries (subject to the
written approval of the Company and/or its Subsidiaries, as applicable);

 

(xv)           preparing, or causing to be prepared, and delivering (i) the
financial reports and other information set forth in Section 4 hereof (pursuant
to the terms thereof), and, (ii) the information related to tax matters set
forth in Section 5 hereof (pursuant to the terms thereof);

 

(xvi)         preparing and providing for submission to and approval by the
Company Board, prior to approval of the first Annual Budget, health and safety
policies and procedures for employees and contractors (including all reasonably
requested amendments thereto from the Company Board), as well as for tracking,
reporting and managing workplace health and safety;

 

(xvii)         ensuring that the Business Assets are managed in accordance with
Sustainable Forestry Initiative requirements, including all required reporting
and auditing obligations, and forecasting a timeline for audits and
recertification, as applicable, and reporting to the Company Board on the same;

 

(xviii)        complying with the requirements of the Wood Supply Agreements,
including preparing, delivering and obtaining approval of the Annual Plan,
Forecast Plan and Delivery Plan (as each such term is defined in the Wood Supply
Agreements) each year when and as required in the Wood Supply Agreements;

 

(xix)          reporting quarterly to the Company Board any variances in harvest
from the harvest plans for the previous calendar quarter exceeding Allowable
Variance as identified on Exhibit A appended hereto, and shall not exceed any
such Allowable Variance without having first obtained the approval of the
Company Board;

 

(xx)           submitting to the Company Board monthly reports detailing any
recordable incidents for employees and contractors that occurred in the previous
month and any material environmental compliance matters, including violations or
potential violations of Laws and best management practices applicable to the
Business Assets, the Company and its Subsidiaries, and the operation of the
same;

 

(xxi)          preparing, or causing to be prepared, and delivering, or causing
to be delivered, to the lenders or other creditors of the Company or any of its
Subsidiaries, such financial information, reports and other information as is
required pursuant to the terms of any loan or credit agreement between the
Company or any of its Subsidiaries and such lenders or creditors;

 

11

 

 

 

(xxii)      providing such other services (i) related to the foregoing as the
Asset Manager and the Company Board may reasonably agree upon or (ii) set forth
elsewhere herein; and

 

(xxiii)    doing all things reasonably necessary to assure its ability to render
the Services as described in this Agreement.

 

Notwithstanding anything else to the contrary in this Agreement, the Asset
Manager shall, at all times in its provision of the above Services, (A) hold
itself out to the public as a legal entity separate and distinct from the
Parent, the Company and its Subsidiaries, (B) correct any known misunderstanding
regarding its status as a separate entity from the Parent, the Company and its
Subsidiaries, (C) conduct and operate its business in its own name and (D) not
identify itself or any of its Affiliates as a division or part of the Parent,
the Company or its Subsidiaries. Further, the Asset Manager shall not assume any
liability for any obligations of the Parent, the Company and their Subsidiaries
(and shall clearly identify in any action taken on behalf of the Company or
their Subsidiaries that the Asset Manager is acting in the capacity as agent and
not in its individual capacity), and neither the Asset Manager nor the Company
nor any of their Subsidiaries shall hold the Asset Manager out to any third
parties as liable for any of the obligations of the Parent, the Company or any
of their Subsidiaries. For the avoidance of doubt, the immediately preceding
sentence is not intended to modify the liability of any Affiliate of the Asset
Manager that owns equity interests of the Parent, subject to the applicable
provisions of the Parent LP Agreement.

 

(c)               The Asset Manager may investigate, select, recommend, engage
and supervise, for and on behalf of, and at the sole cost and expense of, the
Company or its Subsidiaries, accountants, legal counsel, appraisers, insurers,
brokers, transfer agents, registrars, developers, investment banks, valuation
firms, financial advisors, due diligence firms and such other third party
professionals as the Asset Manager reasonably deems necessary or advisable in
connection with the performance of the Services and its other obligations
hereunder, and the Company or its Subsidiaries shall pay for the reasonable cost
and expenses thereof, including pursuant to Section 7 of this Agreement. Any
such engagement of third-party professionals shall not relieve the Asset Manager
from its obligations hereunder.

 

(d)              Anything in this Agreement to the contrary notwithstanding, but
subject to Section 2(g), the Asset Manager shall refrain from taking any action
which, in its sole judgment made in good faith, would (i) reasonably be expected
to adversely affect the status of the Company as a REIT, (ii) subject Parent,
the Company or any of its Subsidiaries to regulation under the Investment
Company Act of 1940, as amended, or (iii) violate any applicable Law or
otherwise not be permitted by the Company LLC Agreement or the Parent LP
Agreement. If such action shall be ordered by the General Partner, the Parent
Board or Company Board, the Asset Manager shall notify promptly the General
Partner, the Parent Board or Company Board, as applicable, of the Asset
Manager’s judgment of the potential impact of such action and shall refrain from
taking such action. In such event, the Asset Manager shall have no liability for
acting in accordance with the specific instructions of the General Partner, the
Parent Board or Company Board so given. Notwithstanding the foregoing, the
Manager Indemnified Parties shall not be liable to Parent, the Company or any of
their respective Subsidiaries, the General Partner, the Parent Board or the
Company Board, or the members, managers or partners of the General Partner,
Parent, the Company or any of their respective Subsidiaries, for any act or
omission by any Manager Indemnified Parties except as provided in Section 11 of
this Agreement.

 

11

 

(e)               In the performance of its obligations and responsibilities
hereunder, the Asset Manager shall not (i) use any corporate funds for any
illegal contributions, gifts, entertainment or other unlawful expenses relating
to political activity, (ii) use any corporate funds for any direct or indirect
unlawful payments to any foreign or domestic governmental officials or employees
or any employees of a foreign or domestic government-owned entity, (iii) violate
any provision of the Foreign Corrupt Practices Act of 1977 or any other
anticorruption Law applicable to the Company or any of its Subsidiaries, (iv)
make, offer, authorize or promise any payment, rebate, payoff, influence
payment, contribution, gift, bribe, rebate, kickback, or any other thing of
value to any government official or employee, political party or official, or
candidate, regardless of form, to obtain favorable treatment in obtaining or
retaining business or to pay for favorable treatment already secured, (v)
establish or maintain any fund of corporate monies or other properties for the
purpose of supplying funds for any of the purposes described in the foregoing
clause (iv) or (vi) make any bribe, unlawful rebate, payoff, influence payment,
facilitation payment, kickback or other similar payment of any nature. The Asset
Manager shall develop and implement an anti-corruption compliance program that
includes internal controls, policies and procedures designed to ensure
compliance with any applicable national, regional or local anti-corruption Law.
The Asset Manager shall report violations or suspected violations of applicable
anti-corruption Law or this Section 2(e) to the Company Board as soon as
practicable after the Asset Manager becomes aware of or suspects a violation.

 

(f)                Without limiting any provision herein, all actions of the
Parent and the Company under this Agreement requiring the consent or approval of
the Company Board shall be subject to the direction of the members of the
Company Board. Asset Manager expressly acknowledges Section 4.12(b) of the
Parent LP Agreement and the Company LLC Agreement.

 

(g)               Asset Manager shall, and shall use reasonable best efforts to
take all actions required to cause the Company to, comply with Sections 4.11 and
5.2 of the Company LLC Agreement.

 

(h)              Asset Manager expressly acknowledges the restrictions on
Parent’s activities pursuant to Sections 4.17 and 4.19 of the Parent LP
Agreement, and understands that the restrictions in Section 4.17 include the
actions of an agent acting on its behalf. Asset Manager acknowledges and agrees
that for U.S. federal income tax purposes it is providing Services to and on
behalf of distinct principals pursuant to this Agreement and agrees that it
shall use reasonable best efforts to take all actions (including avoiding taking
actions) required to cause Parent to comply with such provisions of the Parent
LP Agreement, without prejudice to actions required to be undertaken on behalf
of the Company or its Subsidiaries.

 

12

 

3.             Annual Budget.

 

(a)               The Company and its Subsidiaries shall be operated in
accordance with an annual budget, as it may be annually updated from time to
time pursuant to this Section 3 (the “Annual Budget”). The initial Annual Budget
for the period beginning on the Effective Date and ending on December 31, 2018,
including the related variances, is attached hereto as Schedule B-1 (the
“Initial Annual Budget”). For each Fiscal Year thereafter, the Asset Manager
shall be responsible for preparing and submitting to the Company Board for
approval as a Major Decision in accordance with the terms of the Company LLC
Agreement a proposed updated Annual Budget, including the related variances. The
Annual Budget shall be prepared by the Asset Manager in accordance with the
protocols (including the preparation of the back-up materials on the timetable
set forth therein) set forth on Schedule B-2 hereto (the “Budget Development
Protocols”). The Annual Budget for each Fiscal Year shall be prepared with the
same detail and line items as set forth in the Initial Annual Budget and such
other detail as the members of the Company Board appointed by the Preferred
Partners in accordance with Section 4.3(c) of the Parent LP Agreement (the
“Preferred Board Members”) may reasonably request. In connection with the review
of a proposed Annual Budget, the Preferred Board Members may reasonably request
additional information regarding the materials supporting the proposed Annual
Budget or such other information as is necessary or desirable to enable review
of such proposed Annual Budget, and the Asset Manager shall provide such
requested information. The Preferred Board Members shall consent to or reject
the proposed Annual Budget, or request additional information (as provided for
above), within ten (10) Business Days following (i) receipt of such proposed
Annual Budget or (ii) receipt of all additional information that is, in the
determination of the Preferred Board Members, necessary or desirable to enable
review of such proposed Annual Budget. The Asset Manager shall comply with the
Budget Development Protocols regarding the Preliminary Budget for each Fiscal
Year. The Annual Budget shall be prepared and submitted annually by the Asset
Manager no later than December 10 of each year with respect to the following
Fiscal Year. The Annual Budget for each Fiscal Year shall include use of the
pre-funded reserve amounts as shown on Schedule B-3 hereto for the four Fiscal
Quarters comprising such Fiscal Year. In connection with the submission of the
Annual Budget, the Asset Manager shall also prepare and submit to the Company
Board an annual business plan for Parent and its Subsidiaries, including a
responsible five-year operations forecast, including the operating metrics set
forth on Schedule B-4 hereto (the “Annual Plan”). The Preferred Board Members,
or their designated representatives, shall be provided reasonable access to all
information, data, reports, models and analyses relied on in developing the
Annual Plan (including, for the avoidance of doubt, all financial and
silvicultural assumptions, constraints, supporting stand level data,
merchantable timber volumes, pre-merchantable acres by species and age class and
acres by land classification).

 

(b)              Pursuant to this Agreement, the Asset Manager is charged with
implementing each Annual Budget following the approval thereof, in accordance
with the terms of such approved Annual Budget and the terms of this Agreement.
In doing so, the Asset Manager shall at all times act in a manner consistent
with the Annual Budget; provided, however, that the Asset Manager may in its
discretion expend funds for Non-Controllable Expenses (as defined below) not
otherwise reflected in the Annual Budget. In implementing the Annual Budget, the
Asset Manager may in its discretion vary material line items in the applicable
Annual Budget within the variances set forth in Exhibit A appended hereto (such
variances being referred to herein as “Allowable Variances”). Asset Manager
shall not exceed any Allowable Variance without having first obtained the
approval of the Company Board.

 

13

 

(c)               In the event the Asset Manager is unable to obtain the
approval of the Company Board of any Annual Budget prior to the intended period
for such Annual Budget, then a “Budget Impasse” shall be deemed to exist, until
such time as such Annual Budget is approved in accordance with this Agreement,
the Parent LP Agreement and Company LLC Agreement. During any Budget Impasse,
the Asset Manager shall perform the Services and otherwise fulfill its
obligations under this Agreement in accordance with the most recently approved
Annual Budget, except that (i) the Asset Manager may make or cause to be made
any expenditure not contemplated by such Annual Budget which is (1) an emergency
expenditure to protect the health, safety and welfare of people or property (in
which event the Asset Manager shall notify the Company Board immediately) or (2)
an expenditure to satisfy (A) any outstanding taxes and related fees, costs and
expenses, (B) any obligations for interest, principal (except at maturity),
escrows, fees and expenses due under the Senior Credit Documents and any other
indebtedness approved as a Major Decision or (C) premiums for insurance required
under this Agreement, the Parent LP Agreement or the Company LLC Agreement, and
Senior Credit Documents, any loan document relating to indebtedness approved as
a Major Decision or any other contract to which the Parent or any of its
Subsidiaries is a party that are entered into in accordance with the Parent LP
Agreement (such expenses, “Non-Controllable Expenses”) and (ii) the Asset
Manager acting alone shall otherwise have no authority to make any other
expenditure without the approval of the Company Board as a Major Decision.

 

4.             Reporting.

 

(a)               The Asset Manager shall prepare, or cause to be prepared, at
the expense of the Company and its Subsidiaries, all reports, financial or
otherwise, with respect to the Company and its Subsidiaries reasonably requested
in order to comply with their respective organizational documents or any other
materials required to be filed with any governmental body or agency, and shall
prepare, or cause to be prepared, all materials and data necessary to complete
such reports and other materials.

 

(b)              Without limiting the generality of Section 4(a), the Asset
Manager shall prepare, or cause to be prepared, and shall deliver to the Company
and the Company Board, at the expense of Company, the following:

 

(i)                 within forty-five (45) days after the end of each Fiscal
Year, a report as of the end of such Fiscal Year prepared in conformity with
accounting principles generally accepted in the United States and consistently
applied, setting forth (A) a balance sheet of Company (that will include
appropriate footnote disclosure) as of the end of such Fiscal Year, and (B) an
income statement of Company for such Fiscal Year; provided, that the annual
financial statements referred to in this Section 4(b)(i) shall be audited by a
nationally recognized accounting firm in accordance with generally accepted
auditing standards in the United States and consistently applied, and such
accounting firm’s report thereon shall accompany the annual financial
statements; provided, further, that while the Asset Manager shall endeavor to
provide such audited financial statements within the forty-five (45)-day period
stated above, it will not be considered to have breached this Section 4(b)(i) if
it fails to do so if the Asset Manager (x) is using commercially reasonable
efforts to produce audited financial statements within such timeframe, (y)
provides unaudited financial statements within such forty-five (45)-day period
and (z) provides such audited financial statements as soon as practicable
following such date but in any event no later than ninety (90) days after the
end of such Fiscal Year;

 

14

 

(ii)              not later than forty-five (45) days after the end of each of
the first three Fiscal Quarters of each Fiscal Year, final versions of each of
the following:

 

(A)             An unaudited report setting forth as of the end of such fiscal
quarter (x) a balance sheet of Company as of the end of such Fiscal Quarter and
(y) an income statement of Company for such Fiscal Quarter

 

(B)              A calculation of the reserves of the Company and the amount of
“Base Available Cash,” “Net Available Cash,” “Distributable Cash Flow” and
“Remaining Distributable Cash Flow” as of the end of the relevant Fiscal
Quarter, in each case, as defined in the Company LLC Agreement;

 

(C)              A narrative describing the condition of the Property and other
Business Assets and operations of Company and its Subsidiaries during such
Fiscal Quarter;

 

(D)             A report of any changes in the status of any major service
contracts, any material line item variances of more than ten percent (10%) from
the Annual Budget and any litigation or other legal issues involving the Parent,
the Company or its Subsidiaries during such Fiscal Quarter; and

 

(E)              A report providing a detailed description of each Permitted HBU
Sale (as defined in the Company LLC Agreement) consummated during such Fiscal
Quarter.

 

(c)               In addition to the reporting requirements set forth above, the
Asset Manager shall give notice to the Company Board of:

 

(i)               Any items that will otherwise be reportable under
Section 4(b)(ii)(D) above promptly after the Asset Manager becomes aware of such
item;

 

(ii)              Any known or reported non-conformance with applicable state
and local regulations and Sustainable Forestry Initiative standards or
principles as in effect on the date hereof and as modified from time to time by
Sustainable Forestry Initiative Inc.; and

 

(iii)             Any proposed transaction between the Company or any of its
Subsidiaries, on the one hand, and any other Person, on the other hand, if such
transaction would create a potential conflict of interest on the part of the
Asset Manager in causing the Company or its Subsidiaries to enter into such
transaction, or any other occurrence of a potential conflict of interest on the
part of the Asset Manager or its Affiliates in connection with causing Company
(or its Subsidiaries) to enter into such transaction.

 

(d)               The Asset Manager shall meet with the Partners on a quarterly
basis to discuss the quarterly reporting and such other topics relating to the
business of the Company and its Subsidiaries as the other Partners may
reasonably request.

 

15

 

5.                  Certain Tax Matters. The Asset Manager shall, at Company’s
expense, use reasonable best efforts to (i) not later than twenty-five (25) days
from the end of each Fiscal Quarter (including the end of each Fiscal Year),
provide to the Company a report regarding the Company’s compliance with the REIT
asset tests in Section 856(c)(4) of the Code for such Fiscal Quarter reviewed by
the Qualified REIT Consultant, (ii) not later than forty-five (45) days from the
end of each Fiscal Quarter, provide to the Company the quarterly REIT testing
reports regarding the Company reviewed by the Qualified REIT Consultant and
(iii) not later than forty-five (45) days after the end of each Fiscal Year,
provide to the Company the final REIT testing report regarding the Company
reviewed by the Qualified REIT Consultant. The Asset Manager shall provide to
the Company Board and Partners, as soon as is reasonably practicable following
request thereof, any other information reasonably required to determine
compliance by the Company with the requirements under Section 856 et seq. of the
Code and the related Treasury Regulations for the Company to (x) qualify for,
and maintain, status as a REIT and (y) avoid the imposition of any U.S. federal
income tax or penalty on the Company.

 

6.                  Additional Activities. Nothing in this Agreement is intended
to prevent the Asset Manager or any of its Affiliates, officers, directors,
employees or personnel from engaging in other activities, investments or
businesses, including from rendering advice or services of any kind to any other
Person so long as Asset Manager complies at all times with Section 8 and
promptly notifies the Company Board of any such activities that conflict with
its obligations hereunder.

 

7.                  Bank Accounts. At the direction of the Company Board, the
Asset Manager may establish and maintain one or more bank accounts in the name
of the Company or any of its Subsidiaries (any such account, a “Company
Account”), and may collect and deposit funds into any such Company Account or
Company Accounts, and disburse funds from any such Company Account or Company
Accounts for the payment of Expenses, under such terms and conditions as the
Company Board may approve. The Asset Manager shall from time to time render
appropriate accountings of such collections and disbursements to the Company
and, upon the request of the Company Board, to the Company’s auditors. The Asset
Manager shall disburse funds to pay Expenses from the Company Account in the
name of the entity with respect to which such Expenses relate. For the avoidance
of doubt, the Asset Manager’s disbursement of funds from the Company Accounts
for the payment of Expenses or any other amounts shall be subject to the terms
of the applicable Annual Budget and any limitations on specific Expenses set
forth in Section 10(a).

 

8.                  Records; Confidentiality.

 

(a)               The Asset Manager shall maintain and preserve the books and
records of the Company and its Subsidiaries (including accounting and reporting
systems), and such records shall be accessible for inspection by the General
Partner or representatives of Parent, the Company or any of its Subsidiaries at
any time during normal business hours upon reasonable advance written notice.

 

16

 

(b)              The Asset Manager shall keep confidential any and all
information regarding Parent, the Company or its Subsidiaries obtained in
connection with the Services rendered under this Agreement (“Confidential
Information”) and shall not disclose any such Confidential Information (or use
the same except in furtherance of its duties under this Agreement) to
unaffiliated third parties except (i) with the prior written consent of Company
Board; (ii) to legal counsel, accountants and other professional advisors; (iii)
to appraisers, financing sources and others in the ordinary course of business
of Parent, the Company and its Subsidiaries; (iv) to governmental officials
having jurisdiction over Parent, the Company or any of its Subsidiaries; (v) in
connection with any governmental or regulatory filings of Parent, the Company or
any of its Subsidiaries or disclosure or presentations to Parent’s equity
holders or prospective equity holders; (vi) as required by applicable Law; or
(vii) to the extent such information is otherwise publicly available.
Notwithstanding anything herein to the contrary, each of the following shall be
deemed to be excluded from the provisions hereof any Confidential Information
that (A) has become publicly available through the actions of a Person other
than the Asset Manager, (B) is released in writing by CTT, Parent, the Company
or any of its Subsidiaries to the public or (C) is obtained by the Asset Manager
from a third party without breach by such third party of an obligation of
confidence with respect to the Confidential Information disclosed.

 

9.                  Asset Management Fee.

 

(a)               For the period prior to the Amendment Effective Date, the
Asset Manager is entitled to receive the Asset Management Fee earned under the
Original AMA, subject to its terms. Subject to Section 9(b), for the period of
time on and after the Amendment Effective Date, the Asset Manager shall receive
from the Company an asset management fee (the “Asset Management Fee”),
calculated and payable quarterly in arrears, in an annual amount equal to (x)
the Applicable Rate (as defined below) for the applicable period of time,
multiplied by (y) the Base Amount, multiplied by (z) the Beginning Preferred
Partner Ratio. The “Applicable Rate” shall mean 1.00%; provided, however, that
if the entire Initial Preferred Distribution Balance has not been reduced to
zero ($0) in accordance with Section 3.3(d) of the Company LLC Agreement, the
Applicable Rate shall (i) be reduced to 0.75% for the three (3) consecutive
Fiscal Quarters beginning with the first full Fiscal Quarter following the third
(3rd) anniversary of the Effective Date, and (ii) be further reduced to 0.25%
for all Fiscal Quarters thereafter; provided, further, that to the extent that
the Applicable Rate has been so reduced, and subsequent to such reduction the
entire Initial Preferred Distribution Balance is reduced to zero ($0) in
accordance with Section 3.3(d) of the Company LLC Agreement, then the Applicable
Rate shall automatically increase back to 1.0% commencing with the day upon
which such return threshold is achieved. The Asset Management Fee, to the extent
due and owing in accordance with this Agreement, the Parent LP Agreement and the
Company LLC Agreement, shall be paid quarterly within forty-five (45) days
following the end of the preceding Fiscal Quarter.

 

(b)              The payment of the Asset Management Fee shall be subject to
deferral as set forth in the Parent LP Agreement and the Company LLC Agreement.
In addition, the Asset Management Fee shall be subject to reduction pursuant to
the terms of Schedule 5.7 of the Parent LP Agreement.

 

(c)               Asset Manager acknowledges and agrees that the Company and its
Subsidiaries will agree upon an allocation between each of them of the Asset
Management Fee based on the relative Services provided to each of them.

 

17

 

10.              Expenses

.

(a)               The Company or its Subsidiaries shall bear and pay (including
pursuant to the terms of Section 7), the following third-party fees, costs and
expenses, whether incurred prior to or following the Effective Date
(collectively, “Expenses”):

 

(i)                 all costs and expenses incurred in connection with the
formation of the Company and its Subsidiaries, and all expenses associated with
the issuance of the Subsidiary REIT Preferred Units, including any placement
agent fees associated with such issuance;

 

(ii)              all fees, costs and expenses incurred in evaluating,
negotiating, structuring, acquiring, holding, managing, leasing, financing,
refinancing, disposing of or otherwise dealing with the Property and other
Business Assets, including any reasonable legal and accounting expenses and
other fees and out-of-pocket costs related thereto, and the costs of rendering
financial assistance to or arranging for financing for any assets or businesses
constituting the Business Assets (including the Property);

 

(iii)            fees, costs and expenses of auditors, appraisers, legal counsel
and other advisors of the Company and its Subsidiaries, insurance costs of the
Company and its Subsidiaries and litigation costs and indemnity expenses of the
Company and its Subsidiaries;

 

(iv)             administrative expenses related to the operation of the Company
and its Subsidiaries, including fees, costs and expenses of accountants, lawyers
and other professionals incurred in connection with the Company’s and its
Subsidiaries’ annual audit, financial reporting, legal opinions and tax return
preparation (including, without limitation, any costs and expenses incurred in
connection with the satisfaction of the requirements of Section 5 hereof), as
well as expenses associated with valuations of the Property and other Business
Assets, including the fees, costs and expenses of any independent appraiser;

 

(v)               interest expenses, brokerage commissions and other investment
costs incurred by or on behalf of the Company and its Subsidiaries;

 

(vi)             the Asset Management Fee, subject to the restrictions and
limitations provided in the Parent LP Agreement and the Company LLC Agreement;

 

(vii)          costs of travel and travel-related expenses with respect to the
business of the Company and its Subsidiaries; provided, that the cost of airfare
shall not exceed commercial fares and, for the avoidance of doubt, shall not
include costs associated with first-class, private or chartered air travel;

 

(viii)        subject to Section 10(c), all taxes and license fees levied
against the Company and its Subsidiaries or their assets or operations;

 

(ix)             the costs of annual REIT compliance testing for the Company,
including fees and expenses of the Qualified REIT Consultant;

 

18

 

(x)               insurance costs incurred in connection with the operation of
the business of the Company and its Subsidiaries;

 

(xi)             the compensation of the employee identified on, and subject to
the limitations set forth on, Schedule C; and

 

(xii)          amounts to be contributed or advanced to any Subsidiary for the
purpose of such entity paying any cost of the type described in the foregoing
clauses (i) through (xi).

 

(b)              Notwithstanding anything herein to the contrary, the Asset
Manager and its Affiliates shall bear the costs and expenses incurred by such
Persons in providing for their normal operating overhead, salaries (except as
specifically provided in Section 10(a)(xi)), wages or benefits of their
employees, rent, utilities, expenses of office furniture, computers and other
office equipment, taxes (including taxes imposed on the income or gross receipts
of the Asset Manager on account of fees received pursuant to the terms of this
Agreement), other expenses incurred in maintaining their place of business, and
other similar administrative expenses (including all premiums and expense
required in connection with “errors and omissions” insurance policies covering
the officers and employees of the Asset Manager or its Affiliates). Neither
Parent nor the Company nor any of its Subsidiaries shall pay such expenses, and
Asset Manager shall not be entitled to reimbursement from Parent, the Company or
its Subsidiaries for any such expenses.

 

(c)               For the avoidance of doubt, Asset Manager shall not be
reimbursed for any expenses under this Agreement.

 

11.              Exculpation and Indemnification.

 

(a)               The Asset Manager, its Affiliates and their respective
Constituent Members, employees, managers, consultants and agents (collectively,
the “Manager Indemnified Parties”) will not be liable to Parent, the Company or
any of their respective Subsidiaries, the Parent Board, the General Partner, the
Company Board or the members, managers or partners of Parent, the Company or any
of their respective Subsidiaries for any acts or omissions by any Manager
Indemnified Party, pursuant to or in accordance with this Agreement, except for
any acts or omissions by any Manager Indemnified Party constituting a Bad Act.

 

(b)              To the fullest extent permitted by applicable Law, Company
shall and does hereby agree to indemnify and hold harmless and pay all judgments
and claims against any Manager Indemnified Party, each of which shall be a
third-party beneficiary of this Agreement solely for purposes of this Section
11, from and against any Loss incurred by them for any act or omission taken or
suffered by each Manager Indemnified Party (including any act or omission
performed or omitted by any of them in good faith reliance upon and in
accordance with the opinion or advice of experts, including of legal counsel as
to matters of law, of accountants as to matters of accounting, or of investment
bankers or appraisers as to matters of valuation; provided, that such Persons
were selected and monitored with reasonable care) in connection with, in respect
of or arising from any acts or omissions of such Manager Indemnified Party made
in the performance of this Agreement, except that there shall be no
indemnification for (i) any act or omission of a Manager Indemnified Party that
constitutes a Bad Act or (ii) any indemnification obligation of the Manager
Indemnified Parties pursuant to Section 5.3(b)(iv) of the Parent LP Agreement or
the Losses related thereto.

 

19

 

(c)               To the fullest extent permitted by applicable Law, Asset
Manager shall and does hereby agree to indemnify and hold harmless and pay all
judgments and claims against Parent, the Company and its Subsidiaries and each
of their respective Constituent Members, employees, managers, consultants and
agents (collectively, the “Parent Indemnified Parties” and together with the
Manager Indemnified Parties, the “Indemnified Parties”), from and against any
Loss incurred by them in respect of or arising from any acts or omissions by any
Manager Indemnified Party pursuant to or in accordance with this Agreement
constituting a Bad Act. Each of the Parent Indemnified Parties (excluding the
Company) shall be a third-party beneficiary of this Agreement solely for
purposes of this Section 11. For the avoidance of doubt, for purposes of this
Section 11(c), any Loss in respect of or arising from an act by the Asset
Manager in its capacity as a fiduciary under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations thereunder shall not
constitute a Bad Act.

 

(d)              The Indemnified Party will promptly notify the party against
whom indemnity is claimed (the “Indemnitor”) of any claim for which it seeks
indemnification; provided, however, that the failure to so notify the Indemnitor
will not relieve the Indemnitor from any liability which it may have hereunder,
except to the extent such failure actually prejudices the Indemnitor. The
Indemnitor shall have the right to assume the defense and settlement of such
claim; provided, that the Indemnitor notifies the Indemnified Party of its
election to assume such defense and settlement within thirty (30) days after the
Indemnified Party gives the Indemnitor notice of the claim. In such case, the
Indemnified Party will not settle or compromise such claim, and the Indemnitor
will not be liable for any such settlement made, without its prior written
consent. If the Indemnitor is entitled to, and does, assume such defense by
delivering the aforementioned notice to the Indemnified Party, the Indemnified
Party will (i) have the right to approve the Indemnitor’s counsel (which
approval will not be unreasonably withheld, delayed or conditioned), (ii) be
obligated to cooperate in furnishing evidence and testimony and in any other
manner in which the Indemnitor may reasonably request, and (iii) be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense. In addition, if the Indemnitor assumes such
defense, the Indemnitor may settle any such claim without the prior consent of
the Indemnified Party if such settlement involves the full release of the
Indemnified Party and does not impose any non-monetary remedies and conditions
on the Indemnified Party without the Indemnified Party’s prior written consent,
which shall not be unreasonably withheld, delayed or conditioned.

 

(e)               Expenses reasonably incurred by an Indemnified Party in
defense or settlement of any claim that may be subject to a right of
indemnification pursuant to Section 11(b) or Section 11(c) shall be advanced by
the Indemnitor prior to the final disposition thereof upon receipt of an
undertaking by or on behalf of such Indemnified Party to repay such amount to
the extent that it shall be determined upon final decision, judgment or order
(whether or not subject to appeal) that such Indemnified Party is not entitled
to be indemnified hereunder.

 

(f)                If a claim for indemnification or payment of reasonable
expenses hereunder is not paid in full within twenty (20) days after a written
notice of claim therefor has been received by the Indemnitor, the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expenses of prosecuting such claim.

 

20

 

 

(g)           The indemnification provided by this Section 11 shall be in
addition to any other rights to which an Indemnified Party may be entitled under
any agreement, pursuant to any action of the Company, as a matter of Law or
otherwise, and shall continue as to an Indemnified Party who has ceased to serve
in such capacity.

 

12.          KEY MAN EVENT.

 

(a)            If the employment of any Key Man terminates other than due to
death, Disability (as defined in the Key Man Employment Agreement) or Cause (as
defined in the Key Man Employment Agreement), a “Key Man Event” shall have
occurred. For a period of one (1) year after the occurrence of any Key Man
Event, Company Board and Asset Manager shall discuss, and Company shall
reasonably consider, potential replacements for the relevant Key Man. If, after
such one (1)-year period, no suitable replacement for such Key Man, as
determined by the Company in its reasonable discretion (acting at the direction
of a majority of the Preferred Board Members), is agreed upon by the Asset
Manager and Company (acting at the direction of a majority of the Preferred
Board Members), then the Company (acting at the direction of a majority of the
Preferred Board Members) may, upon written notice to the Asset Manager,
immediately terminate this Agreement.

 

(b)            If the employment of any Key Man terminates due to death,
Disability (as defined in the Key Man Employment Agreement) or Cause (as defined
in the Key Man Employment Agreement), then Asset Manager shall use commercially
reasonable efforts to identify a suitable replacement for such Key Man within a
reasonable period of time thereafter.

 

13.          Term; Termination.

 

(a)           The term of this Agreement shall commence on the Amendment
Effective Date and shall continue until terminated pursuant to Section 12 or
this Section 13.

 

(b)           Notwithstanding anything herein to the contrary, this Agreement
shall automatically and immediately terminate, without the requirement for any
further action by any Party, upon the earliest to occur of (i) the initiation of
the dissolution and liquidation of the Parent pursuant to Article 10 of the
Parent LP Agreement or the Company pursuant to the Company LLC Agreement, (ii)
the removal of the General Partner as the general partner of the Parent pursuant
to Section 4.13 of the Parent LP Agreement or the voluntary resignation of the
General Partner (when such General Partner is an Affiliate of CTT Partner) in
such capacity, (iii) the initiation of any sale process or the initiation of any
other disposition of all or substantially all of the Property and the other Real
Estate Assets pursuant to Section 4.16 of the Parent LP Agreement solely if both
(a) the Alternative Voting System is then in effect pursuant to Section
4.3(b)(ii), (iii) or (iv) of the Parent LP Agreement and (b) a Person other than
the General Partner was appointed to sell the Property and manage all aspects of
the sale process, or (iv) the date that is seven (7) years after the Effective
Date.

 

(c)           The Company, acting at the direction of the Preferred Board
Members and acting without consent or approval of any other members of the
Company Board or any other Person, may terminate this Agreement immediately upon
delivery of written notice of such termination to the Asset Manager (i) in the
event that any Change of Control occurs without the prior written consent of the
Company Board and (ii) for Cause.

 

21

 

 

(d)            Subject to the terms of the “Budget Variance Cure Protocols” set
forth on Exhibit B hereto, the Company, acting at the direction of the Preferred
Board Members, may terminate this Agreement immediately upon delivery of written
notice to the Asset Manager in the event that a Fiscal Year’s actual results (as
determined following the applicable year-end) with respect to a particular Line
Item (as defined in Exhibit B) are outside the applicable Allowable Variance
Limits (as defined in Exhibit B).

 

14.          Payments Due Upon and Following Termination.

 

(a)            Upon the termination of this Agreement pursuant to Section 13(b)
or Section 13(c), the Asset Manager shall not be entitled to any further
compensation hereunder following the Termination Date; provided, however, that
the Asset Manager shall be entitled to receive all accrued but unpaid Asset
Management Fees as of the Termination Date (including Deferred Asset Management
Fees) to the extent that the Company has funds available for such repayment,
unless such termination was consummated pursuant to clause (ii) of Section
13(b).

 

(b)            In the event the Termination Date falls on a day other than the
last calendar day of a Fiscal Quarter, the Asset Management Fee payable with
respect to the Fiscal Quarter in which the Termination Date occurs shall be an
amount equal to the product of (x) the total Asset Management Fee otherwise
payable for such Fiscal Quarter, multiplied by (y) a fraction, the numerator of
which is the number of calendar days between the start of such Fiscal Quarter
and the Termination Date and the denominator of which is the total number of
calendar days in such Fiscal Quarter.

 

15.         SURVIVAL. Notwithstanding anything herein to the contrary, the terms
of Section 8, Section 10, Section 11, Section 14 and Section 16 shall survive
the termination of this Agreement.

 

16.          Miscellaneous.

 

(a)            Nothing in this Agreement shall be construed to make the Company
or any of its Subsidiaries or any other Person, on the one hand, and the Asset
Manager, on the other hand, partners or joint venturers or impose any liability
as such on either of them.

 

(b)           This Agreement, including all schedules and exhibits attached
hereto, constitutes the entire agreement among the Parties pertaining to the
subject matter hereof. This Agreement supersedes any prior agreement or
understanding among the Parties with respect to the subject matter hereof
(including the Original AMA), but shall not amend, modify, supersede or in any
way affect any other agreement or understanding among the Parties or their
Affiliates that does not relate to the subject matter hereof.

 

(c)            This Agreement may be amended, supplemented or waived at any time
and from time to time only by an instrument in writing signed by each Party.

 

22

 

 

(d)           This Agreement and all disputes or controversies arising out of or
relating to this Agreement or the transactions contemplated hereby shall be
governed by, and construed in accordance with, the internal laws of the State of
Delaware, without regard to the laws of any other jurisdiction that might be
applied because of the conflicts of laws principles of the State of Delaware.
Each Party hereby irrevocably consents and agrees that any action, suit or
proceeding with respect to this Agreement shall be brought and determined only
in the exclusive jurisdiction of the Court of Chancery of the State of Delaware,
the courts of the United States of America for the District of Delaware, and
appellate courts thereof, and each Party hereby consents to the jurisdiction of
the aforesaid courts for itself and with respect to its property, generally and
unconditionally, with regard to any such action or proceeding arising out of or
relating to this Agreement and the transactions contemplated hereby. Each Party
further agrees that notice as provided herein shall constitute sufficient
service of process and the Parties further waive any argument that such service
is insufficient. Each Party hereby irrevocably and unconditionally waives, and
agrees not to assert, by way of motion or as a defense, counterclaim or
otherwise, in any action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby, (a) any claim that it is not
personally subject to the jurisdiction of the courts in Delaware as described
herein for any reason, (b) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (c) that (i) the suit, action or proceeding in any such court is brought in
an inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper or (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts. EACH PARTY, FOR ITSELF AND ON BEHALF OF ITS
AFFILIATES, HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION, LAWSUIT OR
PROCEEDING, WHETHER IN CONTRACT OR IN TORT, RELATING TO ANY DISPUTE ARISING
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DESCRIBED IN THIS
AGREEMENT OR TO ANY DISPUTE BETWEEN THE PARTIES (INCLUDING DISPUTES WHICH ALSO
INVOLVE OTHER PERSONS).

 

(e)           This Agreement shall be binding upon and inure to the benefit of
the Parties and their permitted successors and assigns.

 

(f)            The rights and obligations under this Agreement may not be
assigned or delegated (whether by operation of law, merger, consolidation or
otherwise) by any Party without the prior written consent of the other Parties,
and any attempted assignment without such prior written consent shall be null
and void and of no force or effect; provided, however, that the Asset Manager
shall be entitled, without the consent of the other Parties hereto, to assign
its right, title and interest in and to this Agreement to any lender or other
creditor as collateral security for indebtedness of the Asset Manager or its
Affiliates to such lender or other creditor. The Parties hereto hereby consent
and agree that such lender or other creditor has the right to assert and enforce
any or all of the rights of the Asset Manager collaterally assigned to such
lender or creditor in accordance with the terms and provisions of the related
indebtedness. The Parties hereto agree and acknowledge that none of such lender
or other creditor shall be deemed to have assumed any of the obligations or
liabilities of the Asset Manager under this Agreement by reason of such
collateral assignment.

 

23

 

 

(g)           Subject to Section 11, the provisions of this Agreement are for
the sole and exclusive benefit of the Parties and their permitted successors and
assigns and shall not be deemed to create any rights for the benefit of any
other Person except as specifically provided herein.

 

(h)           If any provision of this Agreement or the application of such
provision to any Party or circumstance shall be held invalid or unenforceable,
the remainder of this Agreement or the application of that provision to another
Party or circumstance shall not be affected thereby.

 

(i)             No waiver by a Party of any default, breach or violation of this
Agreement shall be deemed to be a waiver of any other default, breach or
violation of any kind or nature, whether or not similar to the default, breach
or violation that has been waived, and no failure to enforce a particular
provision in one instance shall be deemed a waiver or modification of rights or
preclude the enforcement thereafter. No acceptance of payment or performance by
a Party after any such default, breach or violation shall be deemed to be a
waiver of any default, breach or violation of this Agreement, whether or not
such Party knows of such default, breach or violation at the time it accepts
such payment or performance. Subject to any applicable statutes of limitation,
no failure or delay on the part of a Party to exercise any right it may have
under this Agreement shall prevent its exercise by such Party, and no such
failure or delay shall operate as a waiver of any default, breach or violation
of this Agreement.

 

(j)             The captions and headings used in this Agreement are for
convenience only and do not in any way affect, limit, amplify or modify the
terms and provisions hereof.

 

(k)          This Agreement may be executed in several counterparts. If so
executed, each of such counterparts shall be deemed an original for all purposes
and all counterparts shall, collectively, constitute one agreement. In making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart and photocopies may be used.

 

(l)            Notwithstanding anything herein to the contrary, this may not be
amended or modified in a manner that is material and adverse to the interests of
the Senior Lender (or the other secured parties under the Senior Credit
Documents) without the prior written approval of the Senior Lender.

 

Remainder of page left intentionally blank; signature pages follow.

 

24

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their representatives thereunto duly authorized effective as of the day and year
first above written.

 

  CREEK PINE REIT, LLC       By: TEXMARK TIMBER TREASURY, L.P., its sole member
      By: /s/ John Rasor   Name:   John Rasor   Title:   President

 

[Signature Page to A&R Asset Management Agreement]

 

 

 

 

  CROWN PINE REALTY 1, INC.,   a Delaware corporation       By: /s/ John F.
Rasor     Name: John F. Rasor     Title: President

 

[Signature Page to A&R Asset Management Agreement]

 

 

 

 

  CATCHMARK TRS CREEK MANAGEMENT, LLC       By: CatchMark Timber TRS, Inc., its
sole member       By: /s/ Brian M. Davis   Name:   Brian M. Davis   Title:  
Chief Executive Officer and President

 

[Signature Page to A&R Asset Management Agreement]

 

 

 

 

Schedule A

 

Key Man

 

1.Key Man: Brian M. Davis

 

2.Key Man Employment Agreement: Employment Agreement, dated as of October 30,
2013, by and between CatchMark Timber Trust, Inc. and Brian M. Davis, as amended
by the First Amendment to Employment Agreement, dated December 31, 2018, as
amended by the Second Amendment to Employment Agreement, dated December 19,
2019.

 

 

 

 

Schedule B-1

 

Initial Annual Budget

 

(See attached.)

 

 

 

 

Project Caddo

 

REVISED Schedule B-1 & B-3: Initial 5-Year Quarterly Cash Flow Projections

($'s, except per acre data)

 

NOTE: BASIS OF PRESENTATION IS ON A CASH BASIS

 

[***]

 

 

 

 

 

Schedule B-2

 

Budget Development Protocol

 

·              The Asset Manager will produce an annual harvest schedule
(“Annual Harvest Schedule”), taking into consideration (i) the Company’s
obligations under the Wood Supply Agreements, (ii) Unlevered Cash Flow
requirements, (iii) the long-term value of the Property and (iv) Sustainable
Forestry Initiative (SFI) obligations.

 

·              The Preferred Partners, by a majority vote of the Board Members
designated by the Preferred Partners, may designate a Person to provide
reasonable review and input regarding the following items during the preparation
of the Annual Harvest Schedule: Linear Program (LP) constraints, financial
assumptions, silvicultural assumptions and harvest volume in excess of or
outside of Wood Supply Agreement obligations. The initial such designee shall be
TTG Forestry Services, LLC.

 

·              Each Annual Harvest Schedule will include a thirty (30)-year
harvest schedule (“Thirty-Year Harvest Schedule”) and a rolling three (3)-year
harvest plan (“Three-Year Harvest Plan”). A written summary of each Annual
Harvest Schedule will be made available to the Company Board, including all
assumptions, constraints utilized and supporting stand level information as may
be necessary for a reasonable evaluation of the Thirty-Year Harvest Schedule and
the Three-Year Harvest Plan. In addition, annual property profiles including
merchantable timber volumes, pre-merchantable acres by species and age class and
acres by land class shall be provided.

 

·             To the extent necessary to facilitate the Company Board’s review
of the proposed Annual Budget, the Asset Manager will also (i) provide the
Company Board information regarding tract and stand-level activity for the
Property and applicable other Real Estate Assets (including, for example, site
preparation and treatment, planting method, stock type, planting density,
thinning plan, volume removals by product class and detailed inventory
information) and (ii) furnish the Company Board a copy of the then-current
Geographic Information Systems (GIS) data for the Property and applicable other
Real Estate Assets.

 

·              The Asset Manager will seek, based on the Three-Year Harvest
Plan, to develop a preliminary version of the Annual Budget (“Preliminary
Budget”) and present such Preliminary Budget to the Company Board no later than
September 10th of each calendar year for review and consideration.

 

·              The Company Board will provide any comments and feedback
regarding the Preliminary Budget no later than September 25th of each calendar
year.

 

·              Based on the Preliminary Budget timber volumes (as the same
reflects the comments and feedback of the Board) the Asset Manager will provide
the “Annual Plan” and “Forecast Plan” volumes to the respective counterparties
to the Wood Supply Agreements, as required, on or before September 30th of each
calendar year.

 

·              The proposed Annual Budget submitted to the Company Board for
final approval pursuant to Section 3 of this Agreement will reflect any changes
required by the counterparties to the Wood Supply Agreements after review of the
Annual Plan volumes.

 

·              The Annual Budget will include the terms pertaining to any
Permitted HBU Sale to be conducted during the applicable Fiscal Year, including
(i) a general description of the Property and other Real Estate Assets to be
sold, (ii) the minimum price and (iii) any permissible non-standard commercial
terms.

 

Schedule B-2—Page 1

 

  

Schedule B-3

 

Pre-Funded Reserves

 

(See attached.)

 

 

 

Project Caddo

REVISED Schedule B-1 & B-3: Initial 5-Year Quarterly Cash Flow Projections

($'s, except per acre data)

 

NOTE: BASIS OF PRESENTATION IS ON A CASH BASIS

 

[***]

 

 

 

Schedule B-4

 

Operating Metrics

 

1.Recordable incident rate

 

2.Conformity with certification requirements provided by Sustainable Forestry
Initiative Inc.

 

3.Development of managerial talent

 

4.Litigation risk

 

5.Compliance with applicable environmental statutes and regulations

 

6.Technology and information systems infrastructure

 

 

 

Schedule C

 

Employees

 

1.John Rasor, in the amount of up to $500,000 annually, but only to the extent
he is performing the Services. The Parties acknowledge and agree that this
amount shall be considered by the Company as an expense within the “Forestry
Management” line item of the applicable Annual Budget.

 

 

 

Exhibit A

 

Allowable Variances

 

Item Minimum Maximum Plantation Clearcut Acres [***] [***] Total GP/IP WSA
Volume [***] [***] Weighted Age of Plantation Clearcuts [***] [***] Hardwood
Release [***] [***] Mid Rotation Fertilization [***] [***] Road Maintenance
[***] [***] Site Prep + Plant + Seedlings + Herbaceous Weed Control [***] [***]
Fertilization at Establishment [***] [***] Capital Infrastructure Expenses,
including bridges, culverts and road construction [***] [***]

 

 

 

Exhibit B

 

Budget Variance Cure Protocols

 

1.If the actual results for a Fiscal Year (as determined following the
applicable year-end) reflect a variance (measured against the applicable Annual
Budget) (a “Budget Variance”) above or below the “Minimum” or “Maximum” values
set forth on Exhibit C hereto (the “Allowable Variance Limits”) with respect to
any of the line items set forth on Exhibit C (each, a “Line Item”), then the
Asset Manager will, simultaneously with the delivery of the results of such
Fiscal Year, provide the Company Board with a written notice (a “Budget Variance
Notice”) setting forth in reasonable detail:

 

(i)a description of such Line Item and the amount of the Budget Variance;

 

(ii)the underlying causes of the Budget Variance, including (A) a Force Majeure
Event (as defined below), (B) market issues, (C) regulatory or environmental
compliance, (D) SFI compliance, or (E) such other causes as the Asset Manager
identifies (each, a “Notice Event”); and

 

(iii)if the Budget Variance is due to a Force Majeure Event, recommendations for
reducing or eliminating the amount of the anticipated Budget Variance and the
appropriate cure period (not to exceed the applicable cure period set forth
opposite such Line Item on Exhibit C hereto) (each, a “Proposed Variance Cure”),
including (A) a description of the actions required to implement each Proposed
Variance Cure, (B) the financial implications of each Proposed Variance Cure,
(C) an estimated timeline to implement each Proposed Variance Cure, and (D) the
Asset Manager’s preferred Proposed Variance Cure.

 

As used above, “Force Majeure Event” means any (i) any Change Event (as defined
in the applicable Wood Supply Agreement) under a Wood Supply Agreement or (ii)
the occurrence of a Force Majeure (as defined in the applicable Wood Supply
Agreement) under a Wood Supply Agreement.

 

2.If the Notice Event identified in the Budget Variance Notice is a Force
Majeure Event (in which case such Budget Variance Notice is referred to herein
as a “Force Majeure Budget Variance Notice”), then, subject to the remaining
provisions of this Exhibit B, the Company Board may not immediately terminate
this Agreement pursuant to Section 13(d) with respect to the Line Item
identified in such Force Majeure Budget Variance Notice. If, however, the Notice
Event identified in the Budget Variance Notice is not a Force Majeure Event,
then the Company Board shall have the right to immediately terminate this
Agreement pursuant to Section 13(d).

 

3.Upon delivery of a Force Majeure Budget Variance Notice, the Company Board and
the Asset Manager will work together in good faith for a period of 45 days to
approve a Proposed Variance Cure, either as originally presented in the Force
Majeure Budget Variance Notice or subject to such modifications as the Company
Board and the Asset Manager mutually agree upon.

 

Exhibit B—Page 1

 

 

4.If a Proposed Variance Cure is agreed within the 45-day period set forth in
paragraph 3 above (an “Agreed Variance Cure”), then the Asset Manager shall
implement such Agreed Variance Cure within the applicable cure period. If the
Asset Manager fails to implement the Agreed Variance Cure within the applicable
cure period, then the Company Board shall have the right to immediately
terminate this Agreement in accordance with Section 13(d).

 

5.If a Proposed Variance Cure is not agreed within the 45-day period set forth
in paragraph 3 above, then the Asset Manager will in good faith implement the
Proposed Variance Cure that the Company Board determines is in the best
interests of the Company, taking into account long-term asset value (the
“Company-Determined Variance Cure”). The Company Board shall have the right to
immediately terminate this Agreement if the Asset Manager fails to implement a
Company-Determined Variance Cure within the applicable cure period.

 

6.Notwithstanding anything to the contrary contained herein, (i) all actions of
the Company Board hereunder shall be taken as a Major Decision, and (ii) with
respect to any of the Line Items under the heading “Seasonal Events” on Exhibit
C hereto, if the Asset Manager fails to implement the Annual Budget within the
parameters set forth in the applicable Annual Variance Limits for a period of
two (2) consecutive Fiscal Years (a “Two Year Seasonal Line Item Implementation
Failure”), then the Company Board shall have the right to immediately terminate
this Agreement pursuant to Section 13(d) (notwithstanding any Budget Variance
Notices); provided, however, that if in each of such two (2) consecutive Fiscal
Years, (x) a named hurricane or tropical storm (in each case, affecting at least
10% of the total acres of the Parent and its Subsidiaries by acreage) or (y)
disease, insect infestation, wind, ice or fire (in each case, affecting at least
5,000 acres of harvest units in the current 3-year harvest plan of the Company)
has occurred, and the Asset Manager has delivered Budget Variance Notices that
identify such events as the Notice Events, then the Company Board shall not have
the right to terminate this Agreement with respect to such Two Year Seasonal
Line Item Implementation Failure.

 

7.Notwithstanding anything to the contrary contained herein, if, during a Fiscal
Year, the Asset Manager in good faith determines that it is reasonably likely
that a Budget Variance will exist with respect to a Line Item, then the Asset
Manager may provide the Company Board with a written notice setting forth, in
reasonable detail (1) a description of such Line Item, (2) an estimate of the
amount of the anticipated Budget Variance, and (3) a description of the
underlying Notice Event (an “Expected Variance”), and the Company Board may, as
a Major Decision, approve or disapprove such Expected Variance. If the Company
Board approves an Expected Variance, then, notwithstanding anything to the
contrary contained herein, the Company Board’s right to terminate this Agreement
pursuant to Section 13(d) shall be waived to the extent of such Expected
Variance with respect to such Fiscal Year.

 

All capitalized terms used and not otherwise defined herein shall have the
meanings given to them in the Agreement.

 

Exhibit B—Page 2

 

 

Exhibit C

 

Variance Termination Triggers

 

Non-Seasonal Events Minimum Maximum Cure Period for Force Majeure Event Hardwood
Release + mid rotation fertilization [***] [***] 365 days from end of Fiscal
Year Road Maintenance [***] [***] 180 days from end of Fiscal Year Capital
Infrastructure (incl. bridges, culverts, road construction) [***] [***] 180 days
from end of Fiscal Year   [***] [***]   Seasonal events [***] [***]   Total
GP/IP WSA [***] [***] No cure if outside variance for 2 successive years
Plantation Clearcut Acres [***] [***] No cure if outside variance for 2
successive years Weighted Age of plantation Clearcuts [***] [***] No cure if
outside variance for 2 successive years Site Prep + Plant + Seedlings +
Herbaceous Weed Control [***] [***] No cure if outside variance for 2 successive
years  Fertilization at Establishment [***] [***] No cure if outside variance
for 2 successive years

 

(1)Notwithstanding anything herein to the contrary, variances attributable to
Non-Controllable Expenses (as defined in the Parent LP Agreement) shall not be
counted towards determining whether there is a variance above or below the
Annual Budget.

 

(2)Measured on an annual basis based upon the applicable annual financial and
operational information presented by the Asset Manager to the Company Board
within forty-five (45) days of the end of each Fiscal Year.

 

(3)Cure period for the Line Items under the heading “Seasonal Events” to be
agreed upon by the Company Board and the Asset Manager in accordance with clause
(c) of Exhibit B; provided, that if the cure period cannot be timely agreed
upon, then the cure period shall be as set forth above.

 

 

 

 

Exhibit G 

 

Form of Certificate of Membership Interest

 

(See attached.)

 

Exhibit G—Page 1

 

 

NUMBER   INTEREST     1   *100.00* 

 

CREEK PINE REIT, LLC

 

Formed under the Delaware Limited Liability Company Act

 

Membership Interest

 

This Certifies that TexMark Timber Treasury is the owner of a 100.00% fully paid
Membership interest in Creek Pine REIT, LLC (the “Company”), transferable only
on the records of the Company by the holder hereof, in person or by a duly
authorized

attorney-in-fact, upon surrender of this Certificate properly endorsed or
assigned.

 

This Certificate and the membership interest represented hereby are issued and
shall be held subject to all of the provisions of the Company’s Limited
Liability Company Agreement (the “Agreement”), and the Delaware Limited
Liability Company Act as set forth in the Agreement and such Act, to all of
which the holder of this Certificate, by acceptance hereof, assents.

 

In Witness Whereof, the undersigned has executed this Certificate on behalf of
the Company as of the         day of July, 2018.

 

  SOLE MEMBER:       TEXMARK TIMBER TREASURY, L.P., as Sole Member     By: /s/
John F. Rasor   Name: John F. Rasor   Title: President

 

 

 

 

Exhibit H

 

Selected acres Sale process

[***]

 

Exhibit H—Page 1

 

 

Schedule 1

 

CLASS A PREFERRED MEMBERS

 

(See attached.)

 

 

 

 

Schedule 2.5(a)(ii)

 

Fees and Expenses

 

PROJECT CADDO      

FEES & EXPENSES DETAIL

       ($s and acres in 000’s)               FEES & EXPENSES              
BANKER’S FEES Assumption:    RJ PEC [***]  [***] RJ Advisory Fee  [***]  [***]
Greenhill     [***]         CATCHMARK FEES       Attorneys’ Fees       A&B Legal
Fees     [***] Eversheds - CoBank     [***] Southerland Loan Review     [***]
SGR - Title Review     [***] Title Search Fees (buyer pays 50%)  [***]  [***]
FSA Renegotiation Legal Fee     [***]         Title Insurance Premium      
Title Insurance Premium  [***]  [***]         Environmental—SLR Review Fees    
  50% of Cost of New Report     [***] SLR Review Fee     [***]        
Consulting Fees       FRC     [***] Orbis     [***] Sizemore     [***] UTS    
[***]         Preferred Fees       Legal     [***] Technical DD     [***] Other
Consulting     [***]         Total Estimated Closing Costs     [***]

 

Schedule 2.5(a)(ii)—Page 1

 

 

Schedule 4.7

 

Surface Use Agreements

 

[***]

Schedule 4.7—Page 1

 

 

Schedule 8.3(b)

 

Approved Appraisal Firms

[***]

 

Schedule 8.3(b)—Page 1

 

 

 

Annex A

Class a Preferred Units

 

1.1       Designation and Number. In addition to the Other Units, the Company is
authorized to issue one hundred twenty-five (125) Units of preferred membership
interests, having the rights, preferences, powers and limitations described in
this Agreement including without limitation those rights described in this Annex
A. The Class A Preferred Units shall be uncertificated.

 

1.2       Rank. The Class A Preferred Units shall, with respect to distribution
and redemption rights and rights upon liquidation, dissolution or winding-up of
the Company, rank senior to the Other Units and Excess Units (other than Excess
Units in respect of Class A Preferred Units) of the Company and to all other
membership interests and equity securities issued by the Company (together with
the Other Units and the Excess Units (other than Excess Units in respect of
Class A Preferred Units), the “Junior Securities”). The terms “membership
interests” and “equity securities” shall not include convertible debt
securities.

 

1.3       Distributions.

 

1.3.1       Each holder of the then-outstanding Class A Preferred Units shall be
entitled to receive, when and as authorized by the Board, out of funds legally
available for the payment of distributions, cumulative preferential cash
distributions at the rate of 12% per annum of the total of $1,000.00 per unit
plus all accumulated and unpaid distributions thereon. Such distributions shall
accrue on a daily basis and be cumulative from the first date on which any Class
A Preferred Unit is issued, such issue date to be contemporaneous with the
receipt by the Company of subscription funds for the Class A Preferred Units
(the “Original Issue Date”), and shall be payable semiannually in arrears on
June 30 and December 31 of each year or, if not a Business Day, the next
succeeding (or if determined by the Board, the preceding) Business Day (each, a
“Distribution Payment Date”). Any distribution payable on the Class A Preferred
Units for any full or partial Distribution Period will be computed on the basis
of a three hundred sixty (360)-day year consisting of twelve (12) thirty
(30)-day months. A “Distribution Period” shall mean, with respect to the first
“Distribution Period,” the period from and including the Original Issue Date to
and including the first Distribution Payment Date, and with respect to each
subsequent “Distribution Period,” the period from but excluding a Distribution
Payment Date to and including the next succeeding Distribution Payment Date.
Distributions will be payable to holders of record as they appear in the records
of the Company at the close of business on the applicable record date, which
shall be June 15 and December 15, respectively, or on such other date designated
by the Board for the payment of distributions that is not more than thirty (30)
nor less than ten (10) days prior to such Distribution Payment Date (each, a
“Distribution Record Date”); provided, however, that notwithstanding anything in
the Agreement or this Annex A to the contrary, all or part of any payment or
distribution by the Company to holders of Class A Preferred Units may, at the
option of the Company, be paid to the Paying Agent (as defined in Section 1.10
below) for the benefit of such holder instead of being paid directly to such
holder.

 

1.3.2       No distributions on Class A Preferred Units shall be declared by the
Company or paid or set apart for payment by the Company at such time as the
terms and provisions of any written agreement between the Company and any party
that is not an Affiliate of the Company, including any agreement relating to its
indebtedness, prohibit such declaration, payment or setting apart for payment or
provide that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such declaration,
payment or setting apart for payment is restricted or prohibited by law.

 

2

 

 

1.3.3       Notwithstanding the foregoing, distributions on the Class A
Preferred Units shall accrue whether or not the terms and provisions set forth
in Section 1.3.2 of this Annex A at any time prohibit the current payment of
distributions, whether or not the Company has earnings, whether or not there are
funds legally available for the payment of such distributions and whether or not
such distributions are authorized or declared. Furthermore, distributions will
be declared and paid when due in all events to the fullest extent permitted by
law. Accrued but unpaid distributions on the Class A Preferred Units will
accumulate as of the Distribution Payment Date on which they first become
payable.

 

1.3.4       Unless full cumulative distributions on all outstanding Class A
Preferred Units have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof is set apart for payment for all
prior Distribution Periods (and, if such date of declaration is a Distribution
Payment Date, the current Distribution Period), no distributions (other than in
units of Junior Securities) shall be declared or paid or set aside for payment,
nor shall any other distribution be declared or made upon any Junior Securities,
nor shall any Junior Securities be redeemed, purchased or otherwise acquired for
any consideration (or any moneys be paid to, or made available for, a sinking
fund for the redemption of any such units) by the Company (except by conversion
into or exchange for other units of Junior Securities and except for transfers
made pursuant to the provisions of Article 7 of the Agreement). For the sake of
clarity, distributions do not need to be declared and paid, or set apart for
payment, on Class A Preferred Units for the current Distribution Period unless
the date of declaration is a Distribution Payment Date (e.g., if cumulative
distributions on all outstanding shares of Class A Preferred Units have been
declared and paid, or declared and set apart for payment, for all prior
Distribution Payment Dates through June 30, 2017, distributions may be declared
and paid upon any Other Units until December 31, 2017 without the need to
declare and pay, or set apart for payment, distributions on Class A Preferred
Units prior to, or contemporaneously with, such declaration and payment of
distributions on Other Units).

 

1.3.5       When distributions are not paid in full (or a sum sufficient for
such full payment is not set apart) on the Class A Preferred Units, all
distributions declared upon the Class A Preferred Units shall be declared and
paid pro rata based on the number of Class A Preferred Units then outstanding.

 

1.3.6       Any distribution payment made on the Class A Preferred Units shall
first be credited against the earliest accrued but unpaid distribution due with
respect to such Units which remains payable. Holders of the Class A Preferred
Units shall not be entitled to any distribution, whether payable in cash,
property or units, in excess of full cumulative distributions on the Class A
Preferred Units as described above.

 

Annex A—Page 2

 

 

1.4       Liquidation Preference.

 

1.4.1       Subject to Section 1.4.6 below, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the affairs of the Company (each, a
“Liquidation Event”), the holders of Class A Preferred Units then outstanding
are entitled to be paid, out of the assets of the Company legally available for
distribution to its members, a liquidation preference equal to the sum of the
following (collectively, the “Liquidation Preference”): (i) $1,000.00 per unit,
(ii) all accrued and unpaid distributions thereon through and including the date
of payment, and (iii) if the Liquidation Event occurs before the Redemption
Premium (as defined below) right expires, the per unit Redemption Premium in
effect on the date of payment of the Liquidation Preference, before any
distribution of assets is made to holders of any Junior Securities.

 

1.4.2       If upon any Liquidation Event the available assets of the Company
are insufficient to pay the full amount of the Liquidation Preference on all
outstanding Class A Preferred Units, the holders of Other Units shall contribute
back to the Company any distributions or other payments received from the
Company in connection with a Liquidation Event to the extent necessary to enable
the Company to pay all sums payable to the holders of the Class A Preferred
Units pursuant to the Agreement. If, notwithstanding the funds received from the
holders of Other Units pursuant to the previous sentence, the available assets
of the Company are still insufficient to pay the full amount payable hereunder
with respect to all outstanding Class A Preferred Units, then the holders of the
Class A Preferred Units shall share ratably in any distribution of assets in
proportion to the full Liquidation Preference to which they would otherwise be
respectively entitled.

 

1.4.3       After payment of the full amount of the Liquidation Preference to
which they are entitled, the holders of Class A Preferred Units will have no
right or claim to any of the remaining assets of the Company.

 

1.4.4       Upon the Company’s provision of written notice as to the effective
date of any Liquidation Event, accompanied by a check (whether to each record
holder or the Paying Agent) in the amount of the full Liquidation Preference to
which each record holder of the Class A Preferred Units is entitled, the Class A
Preferred Units shall no longer be deemed outstanding membership interests of
the Company and all rights of the holders of such units will terminate. Such
notice shall be given by first class mail, postage prepaid, to the Paying Agent
or to each record holder of the Class A Preferred Units at the respective
mailing addresses of such holders as the same shall appear in the records of the
Company.

 

1.4.5       The consolidation or merger of the Company with or into any other
business enterprise or of any other business enterprise with or into the
Company, or the sale, lease or conveyance of all or substantially all of the
assets or business of the Company, shall not be deemed to constitute a
Liquidation Event; provided, however, that any such transaction which results in
an amendment, restatement or replacement of the Agreement that has a material
adverse effect on the rights and preferences of the Class A Preferred Units, or
that increases the number of authorized or issued Class A Preferred Units, shall
be deemed a Liquidation Event for purposes of determining whether the
Liquidation Preference is payable unless the right to receive payment is waived
by holders of a majority of the outstanding Class A Preferred Units voting as a
separate class (excluding any interests that were not issued in a private
placement of the Class A Preferred Units conducted by H&L Equities, LLC).

 

Annex A—Page 3

 

 

1.4.6       The Board, in its sole discretion, may elect not to pay the holders
of Class A Preferred Units the sums due pursuant to Section 1.4.1 above
immediately upon a Liquidation Event but instead choose to first distribute such
amounts as may be due to the holders of the Other Units hereunder. If the Board
elects to exercise this option pursuant to this section, the Board shall first
establish a reserve in an amount equal to 200% of all amounts owed to the
holders of the Class A Preferred Units pursuant to the Agreement. In the event
that the Company elects to establish a reserve for payment of the Liquidation
Preference, the Class A Preferred Units shall remain outstanding until the
holders thereof are paid the full Liquidation Preference, which payment shall be
made no later than immediately prior to the Company making its final liquidating
distribution on the Other Units. In the event that the Redemption Premium in
effect on the payment date is less than the Redemption Premium on the date that
the Liquidation Preference was set apart for payment, the Company may make a
corresponding reduction to the funds set apart for payment of the Liquidation
Preference.

 

1.5       Redemption.

 

1.5.1       Right of Optional Redemption. The Company, at its option, may redeem
some or all of the Class A Preferred Units at any time or from time to time, for
cash at a redemption price (the “Redemption Price”) equal to $1,000.00 per unit
plus all accrued and unpaid distributions thereon through and including the date
fixed for redemption (except as provided in Section 1.5.3 below), plus a
redemption premium per unit (each, a “Redemption Premium”) calculated as follows
based on the date fixed for redemption: (1) until December 31, 2020, $100, and
(2) thereafter, no Redemption Premium. If less than all of the outstanding Class
A Preferred Units are to be redeemed, the Class A Preferred Units to be redeemed
may be selected by any equitable method determined by the Company; provided,
that such method does not result in the creation of fractional interests.

 

1.5.2       Limitations on Redemption. Unless full cumulative distributions on
all Class A Preferred Units have been, or contemporaneously are, declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for all prior Distribution Periods, no Class A Preferred Units shall be
redeemed or otherwise acquired, directly or indirectly, by the Company unless
all outstanding Class A Preferred Units are simultaneously redeemed or acquired;
provided, however, that the foregoing shall not prevent the purchase by the
Company of interests transferred to a Beneficiary (as defined in the Agreement)
in accordance with the Agreement or the purchase or acquisition of Class A
Preferred Units pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding Class A Preferred Units.

 

1.5.3       Rights to Distributions on Units Called for Redemption. Immediately
prior to or upon any redemption of Class A Preferred Units, the Company shall
pay, in cash, any accumulated and unpaid distributions to and including the
redemption date, unless a redemption date falls after a Distribution Record Date
and prior to the corresponding Distribution Payment Date, in which case each
holder of Class A Preferred Units at the close of business on such Distribution
Record Date shall be entitled to the distribution payable on such units on the
corresponding Distribution Payment Date notwithstanding the redemption of such
units before such Distribution Payment Date.

 

Annex A—Page 4

 

 

1.5.4       Procedures for Redemption.

 

(a)       Upon the Company’s provision of written notice as to the effective
date of the redemption, accompanied by a check (whether to each record holder or
the Paying Agent) in the amount of the full Redemption Price through such
effective date to which each record holder of Class A Preferred Units is
entitled, the Class A Preferred Units shall be redeemed and shall no longer be
deemed outstanding by the Company and all rights of the holders of such Class A
Preferred Units will terminate. Such notice shall be given by first class mail,
postage prepaid, to the Paying Agent or to each record holder of the Class A
Preferred Units at the respective mailing addresses of such holders as the same
shall appear in the records of the Company or to such designee of such record
holder at such address as such record holder shall have designated in writing to
the Company. No failure to give such notice or any defect therein or in the
mailing thereof shall affect the validity of the proceedings for the redemption
of any Class A Preferred Units except as to the holder (or such holder’s
designee) to whom notice was defective or not given.

 

(b)       In addition to any information required by law, such notice shall
state: (A) the redemption date; (B) the Redemption Price; (C) the number of
Class A Preferred Units to be redeemed; and (D) that distributions on the units
to be redeemed will cease to accrue on such redemption date. If less than all of
the Class A Preferred Units held by any holder are to be redeemed, the notice
mailed to such holder shall also specify the number of Class A Preferred Units
held by such holder to be redeemed.

 

(c)       If notice of redemption of any Class A Preferred Units has been given
and if the funds necessary for such redemption have been deposited by the
Company in accordance with clause (d) for the benefit of the holders of any
Class A Preferred Units so called for redemption and with irrevocable
instructions and authority to pay such amounts to the holders of Class A
Preferred Units upon surrender of the Class A Preferred Units at the place
designated in the notice of redemption, then, from and after the redemption
date, distributions will cease to accrue on such Class A Preferred Units, such
Class A Preferred Units shall no longer be deemed outstanding and all rights of
the holders of such units will terminate, except the right to receive the
Redemption Price. Since the Class A Preferred Units are uncertificated, such
units shall be redeemed in accordance with the notice and no further action on
the part of the holders of such units shall be required.

 

(d)       The deposit of funds with a bank or trust corporation for the purpose
of redeeming the Class A Preferred Units shall be irrevocable except that:

 

(i)       the Company shall be entitled to receive from such bank or trust
corporation the interest or other earnings, if any, earned on any money so
deposited in trust, and the holders of any units redeemed shall have no claim to
such interest or other earnings; and

 

(ii)       any balance of monies so deposited by the Company and unclaimed by
the holders of the Class A Preferred Units entitled thereto at the expiration of
two years from the applicable redemption dates shall be repaid, together with
any interest or other earnings thereon, to the Company, and after any such
repayment, the holders of the units entitled to the funds so repaid to the
Company shall look only to the Company for payment of the Redemption Price
without interest or other earnings.

 

Annex A—Page 5

 

 

1.5.5       Status of Redeemed Units. Any Class A Preferred Units that shall at
any time have been redeemed or otherwise acquired by the Company shall, after
such redemption or acquisition, have the status of authorized but unissued units
of membership interest of the Company which may be issued by the Board from time
to time at its discretion.

 

1.6       Voting Rights. Except as provided in this Section 1.6, the holders of
the Class A Preferred Units shall not be entitled to vote on any matter
submitted to the Members of the Company for a vote. Notwithstanding the
foregoing, the consent of the holders of a majority of the outstanding Class A
Preferred Units (excluding any Units that were not issued in a private placement
of the Class A Preferred Units conducted by H&L Equities, LLC), voting as a
separate class, shall be required for (a) authorization or issuance of any
membership interest or equity security in the Company with any rights that are
senior to or have parity with the Class A Preferred Units, (b) any amendment to
the Agreement or the Company’s certificate of formation which has a material
adverse effect on the rights and preferences of the Class A Preferred Units or
which increases the number of authorized or issued Class A Preferred Units, or
(c) any reclassification of the Class A Preferred Units.

 

1.7       Conversion. Other than conversion into Excess Units pursuant to the
Agreement, the Class A Preferred Units are not convertible into or exchangeable
for any other property or securities of the Company.

 

1.8       Limitation of Liability. Except to the extent required by applicable
law, no holder of Class A Preferred Units shall be bound by, or be personally
liable for, the expenses, liabilities or obligations of the Company in excess of
his or her initial Capital Contribution made in exchange for the Class A
Preferred Units.

1.9       Defined Terms. Unless the context otherwise requires, the defined
terms used in this Annex A shall have the meanings specified in this Annex A,
or, if not so specified, the meanings specified in the Agreement.

 

1.10       Appointment of the Paying Agent. The holders of Class A Preferred
Units hereby authorize REIT Funding, LLC, with an address at 1175 Peachtree
Street, N.E., 100 Colony Square, Suite 2200, Atlanta, Georgia 30361 (or if
changed, such address as shall be set forth in a written notice provided to the
holders of the Class A Preferred Units as promptly as practicable following the
Company’s receipt of notice of such change of address), and any
successor-in-interest thereto or any substitute selected in good faith by the
Board, written notice of which shall be provided to the holders of the Class A
Preferred Units, to act as paying agent on behalf of the holders of Class A
Preferred Units (the “Paying Agent”). Any distribution payments received by the
Paying Agent for the benefit of the holders of Class A Preferred Units shall be
deemed paid to the Members holding Class A Preferred Units on the later of the
date received by the Paying Agent or the date declared as the payment date
therefor.

 

Annex A—Page 6

 

 

Exhibit L

 

REIT Opinion

 

(See attached.)

 

Exhibit L—Page 1

 

 

 

[tm2023298d1_ex10-1img01a.jpg] 

 

 

The Atlantic Building 950 F Street, NW

Washington, DC 20004-1404

202-239-3300 | Fax: 202-239-3333

 

July 6, 2018

 

Texmark Timber Treasury, L.P.

702 N. Temple Dr.,

Diboll, Texas 75941

 

Creek Pine REIT, LLC

702 N. Temple Dr.,

Diboll, Texas 75941

 

Re: REIT Qualification of Creek Pine REIT, LLC

 

Ladies and Gentlemen:

 

We have acted as tax counsel to Texmark Timber Treasury, L.P., a Delaware
limited partnership (the “Partnership”) governed by that Amended and Restated
Limited Partnership Agreement dated as of the date hereof (the “Partnership
Agreement”) in connection with the formation of the Partnership, the
organization of the Subsidiary REIT, and the negotiation of various agreements
relating to such entities and the Purchase Agreement (the “Caddo Transactions”).
Capitalized terms used in this letter and not otherwise defined herein shall
have the meanings ascribed to such terms in the Partnership Agreement. This
opinion regarding qualification of the Subsidiary REIT as a real estate
investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue
Code of 1986, as amended (the “Code”) is delivered pursuant to Section 4.9(a) of
the Partnership Agreement.

 

In preparing this opinion letter, we have reviewed forms of the Partnership
Agreement, the Subsidiary REIT Agreement, the Crown Pine Purchase Agreement, the
Asset Management Agreement and such other forms of agreement and documents as we
have deemed relevant and necessary in connection with the opinion hereinafter
set forth. We assume that all such forms of agreements are identical in all
material respect to the agreements that will be executed on the date hereof,
will be executed by persons with authority to execute them and that they will be
applied and enforced in accordance with their terms.

 

We have also received and reviewed, and assumed the accuracy of, the
representations relating to the organization and proposed operation of the
Subsidiary REIT contained in a certificate, dated as of the date hereof,
provided to us by [the General Partner and the Asset Manager] (the
“Certificate”). For purposes of rendering this opinion, we have also assumed
that the Subsidiary REIT has been organized, and will continue to be organized
and operated, in the manner described in the Certificate and the applicable
organizational documents of the Subsidiary REIT, that all terms and provisions
of such documents have been and will continue to be complied with, that the
Subsidiary REIT will timely file IRS Form 8832, electing to be classified as an
association taxable as a corporation, effective as of the date hereof, and that
the Subsidiary REIT will timely file IRS Form 1120-REIT, electing pursuant to
section 856(c)(1) to be taxed as a REIT commencing with its taxable year ending
December 31, 2018.

 

Alston & Bird LLP www.alston.com

 

 

 

Atlanta | Beijing | Brussels | Charlotte | Dallas | Los Angeles | New York |
Research Triangle | San Francisco | Silicon Valley | Washington, D.C.

 

 

 

 

July 6, 2018

Page 2

 

We have not made an independent investigation of the facts set forth in the
Certificate and assume that all representations and covenants therein are, and
will continue to be, accurate, without regard to any qualifications as to
knowledge or belief.

 

Based upon the foregoing, and subject to the qualifications, assumptions and
limitations stated herein, we are of the opinion that commencing with its short
taxable year ending December 31, 2018, the Subsidiary REIT will be organized in
conformity with the requirements for qualification as a REIT under the Code, and
its proposed method of operations will enable it to meet the requirements for
qualification and taxation as a REIT under the Code.

 

Our opinion is not binding upon either the Internal Revenue Service (the “IRS”)
or any court. In this regard, an opinion of counsel with respect to an issue
represents counsel’s best professional judgment with respect to the outcome on
the merits with respect to such issue, if such issue were to be litigated, but
an opinion is not binding on the IRS or the courts, and is not a guarantee that
the IRS will not assert a contrary position with respect to such issue or that a
court will not sustain such a position asserted by the IRS.

 

No opinions other than those expressly contained herein may be inferred or
implied. We undertake no obligation to update this opinion letter or to
ascertain after the date hereof whether circumstances occurring after the date
hereof may affect the conclusions set forth herein.

 

The opinion set forth above is based upon the Code, the Treasury Regulations
promulgated thereunder and other relevant authorities and law, all as in effect
on the date hereof, and all of which are subject to change, possibly on a
retroactive basis. Any such change may affect the conclusions stated herein. In
addition, any variation or difference in the facts from those set forth in the
Certificate may affect the conclusions stated herein. The Subsidiary REIT’s
qualification and taxation as a REIT depend upon the Company’s ability to meet
the various requirements imposed under the Code, including through actual annual
operating results, asset composition, distribution levels and diversity of
ownership, the results of which have not been, and will not be, reviewed by
Alston & Bird LLP. Accordingly, no assurance can be given that the actual
results of the Company’s operation for any particular taxable year will satisfy
such requirements. In addition, the opinion set forth above does not foreclose
the possibility that the Subsidiary REIT may have to pay a deficiency dividend,
or an excise or penalty tax, which could be significant in amount, in order to
maintain its REIT qualification.

 

This letter is furnished only to you and is solely for your benefit in
connection with the Caddo Transactions. This letter may not be relied upon you
for any other purposes or by any other person for any purpose without our prior
written consent, which may be granted or withheld in our sole discretion.

 

Very truly yours,

 

ALSTON & BIRD LLP

 

 

 

 

Schedule 2.5(a)(ii)

 

FEES AND EXPENSES

 

PROJECT CADDO          

FEES & EXPENSES DETAIL

           ($s and acres in 000’s)                       FEES & EXPENSES      
                BANKER’S FEES   Assumption:       RJ PEC   [***]    [***]  RJ
Advisory Fee   [***]    [***]  Greenhill        [***]              CATCHMARK
FEES           Attorneys’ Fees           A&B Legal Fees        [***]  Eversheds
- CoBank        [***]  Southerland Loan Review        [***]  SGR - Title Review 
      [***]  Title Search Fees (buyer pays 50%)   [***]    [***]  FSA
Renegotiation Legal Fee        [***]              Title Insurance Premium      
    Title Insurance Premium   [***]    [***]              Environmental—SLR
Review Fees           50% of Cost of New Report        [***]  SLR Review Fee 
      [***]              Consulting Fees           FRC        [***]  Orbis      
 [***]  Sizemore        [***]  UTS        [***]              Preferred Fees 
         Legal        [***]  Technical DD        [***]  Other Consulting      
 [***]              Total Estimated Closing Costs        [***] 

 

Schedule 2.5(a)(ii)—Page 53

 

 

 

Schedule 5.6(b)

 

CALL RIGHT PURCHASE PRICE MULTIPLES

 

Closing Date of Call Sale  Applicable Multiple  On or prior to the first (1st)
anniversary of the Effective Date   1.5  After the first (1st) anniversary of
the Effective Date, but on or prior to the second (2nd) anniversary of the
Effective Date   1.5  After the second (2nd) anniversary of the Effective Date,
but on or prior to the third (3rd) anniversary of the Effective Date   1.675 
After the third (3rd) anniversary of the Effective Date, but on or prior to the
fourth (4th) anniversary of the Effective Date   1.85  After the fourth (4th)
anniversary of the Effective Date, but on or prior to the fifth (5th)
anniversary of the Effective Date   2.0  After the fifth (5th) anniversary of
the Effective Date   2.5 

 

Schedule 5.6(b)—Page 54

 

 

 

 

Schedule 5.7

 

PERMITTED FINANCING TRANSACTIONS

 

Issuer:   “Issuer” means a corporation, limited liability company, limited
partnership or other entity initially formed by CTT or its Affiliates that is
separate from (and not a Subsidiary of) the Partnership. The Issuer may issue
equity, debt or convertible securities as determined by the Issuer to investors
(the “New Investors”); provided, that (x) the ratio of debt to total
capitalization of Issuer shall not be greater than fifty percent (50%) and (y)
the holders of any equity, debt or convertible securities issued by Issuer shall
not be any of the Partners or their respective Affiliates except for (i)
securities issued in respect of Rollover Proceeds and (ii) nominal equity
interests held by CTT or its Affiliates for purposes of formation and management
of the Issuer.       Sidecar Transactions:  

CTT Partner is hereby granted, and shall be entitled to assign to Issuer upon
its formation, an option (the “Sidecar Transaction Call Option”) to purchase
from the Sidecar Entity (as hereinafter defined) a new class of equity interests
in such Sidecar Entity (the “Sidecar Equity Interests”) equal to, for each such
transaction, the applicable Sidecar Transaction Percentage of the right to
receive distributions of cash from the Sidecar Entity upon any distribution of
cash, in exchange for payment to such applicable Sidecar Entity by the Issuer of
the applicable Sidecar Transaction Purchase Price. At the option of the Issuer,
a Permitted Financing Transaction may instead be structured as (a) a purchase
from the Partnership of the Preferred Return Units equivalent to the proceeds
the Partnership would have received in respect of such Preferred Return Units in
such a Permitted Financing Transaction and (b) the subsequent recapitalization
of such purchased Preferred Return Units into a new class of equity interests
equal to the applicable Sidecar Transaction Percentage of the right to receive
distributions of cash from the Sidecar Entity upon any distribution of cash.

 

“Sidecar Entity” means the Subsidiary REIT; provided, however, that the CTT
Partner and the Partnership (acting at the direction of the Board Members
appointed by the Preferred Partners) may engage in a good faith discussion to
determine an alternate entity with respect to a particular Sidecar Transaction
after considering relevant financial, tax and regulatory considerations.

 

Schedule 5.7—Page 1

 

Exercise of Right:   Issuer may exercise the Sidecar Transaction Call Option
with respect to a Permitted Financing Transaction by delivering written notice
thereof to the Preferred Partners at least sixty (60) days prior to the date of
the proposed completion of the applicable Permitted Financing Transaction (the
“Sidecar Notice”) indicating the aggregate purchase price (the cash amount of
such purchase price, the “Sidecar Cash Amount”) to be paid by the Issuer to the
applicable Sidecar Entity for the Sidecar Equity Interests in the applicable
Permitted Financing Transaction. The “Sidecar Transaction Purchase Price” means,
with respect to a Permitted Financing Transaction, (x) the Sidecar Cash Amount,
plus (y) any Rollover Proceeds, if applicable.       Preferred Right to Appoint
Investment Banker:   At least thirty (30) days prior to Issuer exercising its
Sidecar Transaction Call Option, Issuer shall notify the Board Members appointed
by the Preferred Interests. Upon receipt of such notice, a majority of the Board
Members appointed by the Preferred Interests may select, at their expense and
not the expense of the Partnership, an investment banker to assist in CTT
marketing any proposed Permitted Financing Transaction. CTT will reasonably
cooperate with such investment banker.       Number and Amount of Sidecar
Transactions:   Issuer shall be entitled to consummate up to [***] Permitted
Financing Transactions; provided, that the first Permitted Financing Transaction
must involve a Sidecar Transaction Purchase Price (inclusive of any Rollover
Proceeds) of at least [***]and each of the [***]subsequent Permitted Financing
Transactions must involve a Sidecar Transaction Purchase Price (inclusive of any
Rollover Proceeds) of at least [***], except that any Permitted Financing
Transactions consummated during the Permitted Recapitalization Period must (x)
involve a Sidecar Transaction Purchase Price (inclusive of any Rollover
Proceeds) of at least [***] and (y) if the Permitted Financing Transaction has a
Sidecar Transaction Purchase Price (inclusive of any Rollover Proceeds) of less
than [***], be expressly conditioned upon the substantially concurrent
consummation of at least one additional similar Permitted Financing Transaction
such that the aggregate amount of all Sidecar Transaction Purchase Prices
(inclusive of the aggregate of any Rollover Proceeds) is at least [***].      
Sidecar Transaction Percentage:   “Sidecar Transaction Percentage” for a
particular Permitted Financing Transaction means a percentage of the total
rights to receive distributions of cash from the Sidecar Entity equal to a
fraction: (x) the numerator of which shall be the Sidecar Transaction Purchase
Price; and (y) the denominator of which shall be the equal to (i) the applicable
Sidecar Transaction Value, plus (ii) any cash and cash equivalents held by the
applicable Sidecar Entity and its Subsidiaries, minus (iii) the amount of all
Indebtedness of the applicable Sidecar Entity and its Subsidiaries, in the case
of clause (ii) and clause (iii) as of the date of the applicable Permitted
Financing Transaction.

 

Schedule 5.7—Page 2

 

Sidecar Transaction Value:   The “Sidecar Transaction Value” for a particular
Permitted Financing Transaction means the greater of: (a) (x) for any Permitted
Financing Transaction occurring on or prior to two (2) years from the Effective
Date, a dollar amount equal to the product of (i) the number of REIT-Owned
Acres, multiplied by (ii) [***]; or (y) for any Permitted Financing Transaction
occurring after two (2) years from the Effective Date and on or prior to three
(3) years from the Effective Date, a dollar amount equal to the product of (i)
the number of REIT-Owned Acres, multiplied by (ii) [***]; and (b) the Sidecar
Transaction Appraised Value. “REIT-Owned Acres” means the aggregate number of
acres of the Property owned by the applicable Sidecar Entity and its
Subsidiaries.       Roll-over Election:   Subject to the “Common Participation”
section, each Partner shall have the right to elect to contribute all or a
portion of the cash proceeds such Partner (the “Rolling Partner”) receives in
respect of the Sidecar Cash Amount in a particular Permitted Financing
Transaction to Issuer (such contributed proceeds, “Rollover Proceeds”) for the
same class(es) of securities (and at the same equivalent price(s)) in the Issuer
as purchased by the New Investors in connection with such Permitted Financing
Transaction. Any contribution to the Issuer of the Rollover Proceeds shall be
calculated as if it was a separate Permitted Financing Transaction for purposes
of determining the Sidecar Transaction Percentage with respect to such Rollover
Proceeds. Partners may provide such notice by delivering written notice to the
Issuer within thirty (30) days of receiving the Rollover Notice.       Sidecar
Transaction Appraised Value:   If, after delivery of the Sidecar Notice, the
Preferred Investors reasonably believe that the Sidecar Transaction Appraised
Value would be higher than the amount determined under part (a) of the
definition of Sidecar Transaction Value, the Preferred Investors may deliver
written notice to CTT (the “Appraisal Notice”) requesting an appraisal be
initiated. The General Partner and the Preferred Investors shall each retain a
Qualified Appraiser and determine the Appraised Value of the Property and other
Real Property Assets held by the applicable Sidecar Entity and its Subsidiaries
in accordance with the procedures set forth in Section 5.6(b) of the Agreement.
The Issuer and, with respect to the Preferred Investors, the Partnership, shall
bear their respective fees and out-of-pocket expenses incurred in connection
with such determination of Appraised Value. The Appraised Value to be used with
respect to the Property and other Business Assets held by the applicable Sidecar
Entity and its Subsidiaries for a particular Permitted Financing Transaction
shall be the “Sidecar Transaction Appraised Value” for the particular Permitted
Financing Transaction.

 

Schedule 5.7—Page 3

 

Asset Management Fee; Other Fees:   Following the consummation of a Permitted
Financing Transaction, the Asset Management Agreement shall be reduced dollar
for dollar to the extent the Issuer pays CTT or any of its Affiliates a similar
asset management fee. There shall be no carried interest or similar fee charged
by CTT or any of its Affiliates to the Issuer without the prior approval of a
majority of the Board Members appointed by the Preferred Interests.       Common
Participation:   Notwithstanding the foregoing, the Common Partners shall not be
entitled to invest Rollover Proceeds in connection with a Permitted Financing
Transaction until the Preferred Partners have each received as distributions
pursuant to Article 3 aggregate amounts equal to the greater of (x) (1) the
applicable multiple set forth on Schedule 5.6(B) of this Agreement determined as
of the closing of the Permitted Financing Transaction, multiplied by (2) the
Initial Liquidation Value of the applicable Preferred Partner’s Preferred
Interests as of the Effective Date and (y) the Appraised Residual Value.      
Partition:  

Upon (and subject to the occurrence of) the earlier of (x) the termination of
this Agreement in accordance with its terms and (y) the liquidation of the
Partnership, Issuer shall have the right to require the applicable Sidecar
Entity to cause the partition of the Property and other Real Estate Assets such
that the applicable Sidecar Entity, on the one hand, and Issuer, on the other
hand, shall own, directly or indirectly, fee simple title to tracts of the
Property and other Real Estate Assets on a proportionate basis according to the
fair market value of such tracts (determined in accordance with the following
sentence) in accordance with their respective percentage interests in the
applicable Sidecar Entity (the “Partition Right”). Such partition shall take
into account the fair market value of the applicable tracts of the Property and
other Real Estate Assets, after taking into consideration the number of acres,
type of wood and wood stocking (i.e., timber value). The costs of such partition
shall be borne by the Partnership, on the one hand, and the Issuer, on the other
hand, pro rata in accordance with their respective percentage interests in the
applicable Sidecar Entity and its Subsidiaries.

 

The Partition Right shall be triggered by written notice from Issuer to the
applicable Sidecar Entity, which written notice shall include Issuer’s
identification of the tracts of the Property and other Real Estate Assets of the
applicable Sidecar Entity and its Subsidiaries to be owned, directly or
indirectly, by the Partnership, on the one hand, and the Issuer, on the other
hand, following the completion of the partition, as well as reasonable backup
information (the “Issuer Partition Notice”). Within thirty (30) days of the
delivery of the Issuer Partition Notice, the Partnership and Issuer shall work
in good faith to agree on a final plan for the partition (the “Final Partition
Plan”). If the applicable Sidecar Entity and the Issuer are unable to agree on
the Final Partition Plan in such time period, then following the expiration of
such time period, either party may submit such matter to a party mutually agreed
by the Partnership and Issuer as the arbitrator to determine the Final Partition
Plan, or if such party shall not accept such appointment, such expert in timber
management as designated by the American Arbitration Association (the
“Arbitrator”).

 

Following the agreement or final determination of the Final Partition Plan,
notwithstanding anything in the Agreement (including Article 10), the
Partnership shall cause the partition to be consummated in accordance with the
Final Partition Plan.

 

The costs of such partition shall be borne by the applicable Sidecar Entity, on
the one hand, and the Issuer, on the other hand, pro rata in accordance with
their respective percentage interests in the applicable Sidecar Entity and its
Subsidiaries.

 

Schedule 5.7—Page 4

 

Audit and Reporting:   The Issuer shall be entitled to information rights with
respect to the applicable Sidecar Entity substantially consistent with those set
forth in Section 8.2 of the Agreement.       Confidentiality:   Any potential
New Investor shall sign a confidentiality agreement with the Issuer and the
applicable Sidecar Entity.       Tax Considerations:   The parties will
cooperate in good faith in structuring the transactions contemplated herein to
reflect their respective tax, accounting, Senior Debt-related and other related
considerations.       Governance Rights:   The Issuer shall have no governance
rights with respect to the Partnership or Subsidiary REIT or each of their
respective Subsidiaries, regardless of the Issuer’s ownership interest in any of
such entities.

 

Schedule 5.7—Page 5

 

Schedule 8.3(b)

 

APPROVED APPRAISAL FIRMS

 

[***]

 

Schedule 8.3(b)—Page 1