Exhibit 10.1

EXECUTION COPY

AMENDED AND RESTATED

PURCHASE AGREEMENT

DATED AS OF MAY 26, 2006

AMONG

RED MOUNTAIN TIMBERLANDS LLC,

FOREST INVESTMENT ASSOCIATES L.P.,

RED MOUNTAIN INVESTMENTS LLC,

FIA INVESTMENTS LLC,

RMS TIMBERLANDS LLC,

RMS TEXAS TIMBERLANDS I LP,

RED MOUNTAIN OPERATIONS LLC,

INTERNATIONAL PAPER COMPANY

AND

THE OTHER SELLING PARTIES LISTED ON SCHEDULE A

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Table of Contents

 

         Page ARTICLE I SALE AND PURCHASE Section 1.1   Sale and Purchase of
Cash Entity Assets.    2 Section 1.2   Transfer of Timber Entity Assets.    5
Section 1.3   Transfer of Personalty to Buyer Affiliate    6 Section 1.4  
Timber LLC Interests and Timber LP Interests.    7 Section 1.5   Purchased Asset
Conveyance.    7 Section 1.6   Excluded Assets.    7 Section 1.7   Permitted
Exceptions.    8 Section 1.8   Assumed Liabilities; Excluded Liabilities.    11
ARTICLE II PURCHASE PRICE; PAYMENT Section 2.1   Purchase Price.    13
Section 2.2   Allocation of Purchase Price.    13 Section 2.3   Purchase Price
Adjustments.    15 Section 2.4   Apportionments.    24 Section 2.5   Payment of
Purchase Price.    25 ARTICLE III CLOSING Section 3.1   Closing.    26
Section 3.2   Closing Deliveries.    26 Section 3.3   Possession.    31
Section 3.4   Costs and Expenses.    31 ARTICLE IV BUYING PARTIES’
ACKNOWLEDGEMENTS Section 4.1   Buying Parties’ Acknowledgements.    32 ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER RELATED TO THE PURCHASED ASSETS
Section 5.1   Organization.    34 Section 5.2   Qualification.    35 Section 5.3
  Authority.    35

 

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Table of Contents

(continued)

 

         Page Section 5.4   No Conflict.    36 Section 5.5   Consents and
Approvals.    36 Section 5.6   Litigation.    36 Section 5.7   Taxes.    37
Section 5.8   Contracts.    37 Section 5.9   Continuing Agreements.    38
Section 5.10   Brokers and Advisors.    38 ARTICLE VI REPRESENTATIONS AND
WARRANTIES OF SELLER RELATED TO THE PURCHASED REAL PROPERTY ASSETS Section 6.1  
Title to the Timberlands.    38 Section 6.2   Timber Entity.    39 Section 6.3  
Compliance with Laws.    39 Section 6.4   Matters Relating to the Environmental
Condition of the Timberlands.    39 Section 6.5   No Casualty Loss.    40
Section 6.6   Condemnations.    40 Section 6.7   Timberland Leases and Real
Property Leases.    40 ARTICLE VII REPRESENTATIONS AND WARRANTIES OF SELLER
RELATED TO THE OTHER PURCHASED ASSETS Section 7.1   Collective Bargaining
Agreements.    41 Section 7.2   Labor Matters.    41 Section 7.3   Ownership of
Purchased Personal Assets.    41 Section 7.4   Employee Benefit Plans; ERISA.   
42 ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF BUYING PARTIES Section 8.1  
Organization.    43 Section 8.2   Qualification.    43 Section 8.3   Authority.
   43 Section 8.4   No Conflict.    44 Section 8.5   Consents and Approvals.   
44 Section 8.6   Litigation.    45 Section 8.7   Availability of Funds.    45
Section 8.8   Investment Purpose.    45 Section 8.9   Brokers and Advisors.   
46

 

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Table of Contents

(continued)

 

         Page Section 8.10   Tax Matters.    46 Section 8.11   Financing.    46
ARTICLE IX ADDITIONAL AGREEMENTS RELATING TO THE PURCHASED ASSETS Section 9.1  
Commercially Reasonable Efforts.    47 Section 9.2   Maintenance of Business.   
48 Section 9.3   Public Announcements.    49 Section 9.4   Books and Records.   
49 Section 9.5   Dispute Resolution.    50 Section 9.6   Consents.    51
Section 9.7   Continuing Agreements.    52 Section 9.8   Transition Services   
52 ARTICLE X ADDITIONAL AGREEMENTS RELATING TO THE TIMBERLANDS Section 10.1  
Right of Entry.    53 Section 10.2   Permits and Licenses.    55 Section 10.3  
Environmental Matters.    55 Section 10.4   Special Places.    55 Section 10.5  
Reserved Minerals and Gases.    55 Section 10.6   Easements.    56 Section 10.7
  Title Insurance; No Surveys.    57 Section 10.8   Transfer of Timber Entity
Assets.    58 Section 10.9   No Transfers, Etc.    58 Section 10.10   Tax
Matters.    59 Section 10.11   Title Matters.    60 Section 10.12   Pay-As-Cut
Timber Contract.    60 Section 10.13   Note Document Assistance.    60
Section 10.14   Financing.    61 ARTICLE XI HUMAN RESOURCES MATTERS Section 11.1
  Human Resources.    62 ARTICLE XII CONDITIONS PRECEDENT Section 12.1  
Conditions to Obligations of Each Party to Close.    63

 

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Table of Contents

(continued)

 

         Page Section 12.2   Conditions to Obligations of the Buying Parties to
Close.    64 Section 12.3   Conditions to Obligations of the Selling Parties.   
64 ARTICLE XIII SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION Section 13.1  
Survival of Representations.    66 Section 13.2   Seller’s Agreement to
Indemnify.    66 Section 13.3   Buyer Parents Agreement to Indemnify.    68
Section 13.4   Third Party Claims.    70 Section 13.5   Environmental Indemnity.
   71 Section 13.6   Prohibited Disclosure.    75 Section 13.7   Accepted Buyer
Parents’ Title Objection Indemnification.    76 Section 13.8   Adjustments to
Purchase Price.    76 ARTICLE XIV TERMINATION AND AMENDMENT Section 14.1  
Termination.    76 Section 14.2   Effect of Termination.    77 ARTICLE XV
GENERAL PROVISIONS Section 15.1   Notice.    78 Section 15.2   Legal Holidays.
   79 Section 15.3   Further Assurances.    79 Section 15.4   Assignment;
Binding Effect.    79 Section 15.5   Entire Agreement.    81 Section 15.6  
Amendments; Waivers.    81 Section 15.7   Confidentiality.    81 Section 15.8  
No Third Party Beneficiaries.    81 Section 15.9   Severability of Provisions.
   82 Section 15.10   Governing Law.    82 Section 15.11   Counterparts.    83
Section 15.12   Headings.    83 Section 15.13   Construction.    83
Section 15.14   Reimbursement of Legal Fees.    84 Section 15.15   Specific
Performance.    84 Section 15.16   Buyer Representative.    84

 

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Table of Contents

(continued)

 

         Page ARTICLE XVI DEFINITIONS Section 16.1   Definitions.    85

 

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SCHEDULES AND EXHIBITS

 

Schedule A    Other Selling Parties Schedule B    GIS Maps Exhibit A-1    Form
of Buyer Parent Instrument of Assumption Exhibit A-2    Form of Timber Entity
Instrument of Assumption Exhibit B    Adjustment Values Exhibit C    Form of
Timber Note Exhibit D-1    Form of General Assignment and Assumption Exhibit D-2
   Form of General Timber Entity Assignment and Assumption Exhibit D-3    Form
of General Buyer Affiliate Assignment and Assumption Exhibit D-4    Form of
Assignment and Assumption of Timberland Leases Exhibit D-5    Form of Assignment
and Assumption of Real Property Leases Exhibit E-1    Form of Pulpwood First
Right of Offer Agreement Exhibit E-2    Form of Pulpwood First Right of Offer
Agreement – Augusta Exhibit F    Form of Bill of Sale Exhibit G-1    Form of
Pulpwood Supply Agreement Exhibit G-2    Form of Log Supply Agreement Exhibit
G-3    Form of RMS Pulpwood Support Agreement Exhibit G-4    Form of FIA
Pulpwood Support Agreement Exhibit G-5    Form of RMS Log Support Agreement
Exhibit G-6    Form of FIA Log Support Agreement Exhibit H    Form of Title
Affidavit Exhibit I-1    Form of Assignment of Timber LLC Interests

 

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Exhibit I-2    Form of Assignment of Timber LP Interests Exhibit J    Form of
Surface Use Agreement Exhibit K    Form of Timber License Agreement Exhibit L   
Timber Note Indicative Terms Exhibit M    Form of Limited Liability Company
Agreement of Buyer Exhibit N    2006 Harvest Plan Exhibit O    Form of Master
Stumpage Agreement Exhibit P    Selling Parties’ Knowledge List

 

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AMENDED AND RESTATED PURCHASE AGREEMENT

This AMENDED AND RESTATED PURCHASE AGREEMENT, dated as of May 26, 2006 (this
“Agreement”), is among RED MOUNTAIN TIMBERLANDS LLC, a Delaware limited
liability company (“RMS Buyer Parent”), and FOREST INVESTMENTS ASSOCIATES L.P.,
a Delaware limited partnership (“FIA Buyer Parent”) (each of RMS Buyer Parent
and FIA Buyer Parent, a “Buyer Parent” and, collectively, “Buyer Parents”), RED
MOUNTAIN INVESTMENTS LLC, a Delaware limited liability company and a wholly
owned subsidiary of RMS Buyer Parent (“RMS Buyer”) and FIA INVESTMENTS LLC, a
Delaware limited liability company and a wholly owned subsidiary of FIA Buyer
Parent (“FIA Buyer”) (each of RMS Buyer and FIA Buyer, a “Buyer” and,
collectively, “Buyers”), RMS TIMBERLANDS LLC, a Delaware limited liability
company and a wholly owned subsidiary of RMS Buyer Parent (“Cash Timber
Entity”), RMS TEXAS TIMBERLANDS I LP, a Delaware limited partnership wholly
owned by RMS Buyer Parent and Cash Timber Entity (“Cash Timber LP”) (each of FIA
Buyer Parent, Cash Timber Entity and Cash Timber LP, a “Cash Entity” and,
collectively, “Cash Entities”), RED MOUNTAIN OPERATIONS LLC, a Delaware limited
liability company and a wholly owned subsidiary of RMS Buyer Parent (“Buyer
Affiliate”), INTERNATIONAL PAPER COMPANY, a New York corporation (“Seller”), and
the parties listed on Schedule A (the “Other Selling Parties” and, collectively
with Seller, the “Selling Parties” and, collectively with Buyer Parents, Buyers,
Cash Entities, Buyer Affiliate and Sellers, the “Parties”). Unless otherwise
defined herein, capitalized terms shall have the meanings set forth in Article
XVI.

RECITALS

WHEREAS, the Parties entered into a Purchase Agreement dated as of April 4, 2006
and now desire to amend and restate such agreement;

WHEREAS, the Selling Parties are the owners or lessees of certain real property
and mineral rights which they wish to sell, assign, transfer or convey, together
with certain other assets, inventory and rights under certain continuing leases,
contracts and other agreements, to each Buyer Parent, Buyer, Cash Entity, Timber
Entity and Buyer Affiliate in accordance with the terms and subject to the
conditions set forth in this Agreement;

WHEREAS, each Buyer Parent, Buyer, Cash Entity, Timber Entity and Buyer
Affiliate wishes to acquire and accept the Purchased Assets being transferred to
it in accordance with the terms and subject to the conditions set forth in this
Agreement;

WHEREAS, as a material inducement to the Selling Parties to sell the Purchased
Assets, each Buyer Parent, Buyer, Cash Entity and Buyer Affiliate has agreed to
pay its proportionate share of the Purchase Price to Seller on behalf of the
Selling Parties and

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each Buyer Parent has agreed to assume the Assumed Liabilities relating to the
Purchased Assets being transferred to it or to its direct or indirect wholly
owned subsidiaries and the Selling Parties have agreed to cause each Timber
Entity to assume the Timber Entity Assumed Liabilities in respect of the Timber
Entity Assets being transferred to it;

WHEREAS, Buyer Parent agreed to cause certain of its Affiliates to enter into
Fiber Supply Agreements immediately prior to the Closing and, as an inducement
to the Buying Parties to purchase the Purchased Assets, the Selling Parties have
agreed to enter into certain Ancillary Agreements as of the Closing Date; and

WHEREAS, it is the intention of the Parties that, except to the extent otherwise
expressly provided herein, the Buying Parties related to the RMS Buyer Parent
will acquire the Purchased Assets and the RMS Buyer Parent will assume the
Assumed Liabilities allocable to such Buying Parties, and the Buying Parties
related to the FIA Buyer Parent will acquire the Purchased Assets and the FIA
Buyer Parent will assume the Assumed Liabilities allocable to such Buying
Parties, in each case in accordance with the terms set forth herein;

NOW, THEREFORE, in consideration of the foregoing and their respective
representations, warranties, covenants and agreements set forth in this
Agreement, and intending to be legally bound hereby, the Parties agree as
follows:

ARTICLE I

SALE AND PURCHASE

Section 1.1 Sale and Purchase of Cash Entity Assets.

Upon the terms and subject to the conditions set forth in this Agreement, each
of the Selling Parties hereby agrees to sell, assign, transfer and convey to the
relevant Cash Entity, and the relevant Cash Entity hereby agrees to purchase,
acquire and accept from the Selling Parties, all the rights, title and interests
of the Selling Parties in and to the following assets (collectively, the “Cash
Entity Assets”):

(a) Owned Cash Timberlands. The land held by the Selling Parties in fee simple
described in Section 1.1(a)(1) of the Seller’s Disclosure Letter and identified
therein as Cash Entity Assets in accordance with Section 1.5 (it being agreed
that the land being transferred under this Agreement that is held by Blue Sky
Timber Properties LLC shall be identified as a Cash Entity Asset under
Section 1.5), together with (i) all buildings thereon, (ii) all timber growing
or standing thereon, (iii) all roads, bridges and other improvements and
fixtures thereon and (iv) all other privileges, appurtenances, easements
(including the Buyer Easements in respect thereof) and other rights appertaining
thereto (collectively, the “Owned Cash Timberlands”), subject to the

 

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Permitted Exceptions; provided that Seller reserves for itself and its
successors and assigns the easements with respect to the Owned Cash Timberlands
described in Section 1.1(a)(2) of the Seller’s Disclosure Letter;

(b) Cash Leasehold Interests. The rights of the Selling Parties as lessee,
sublessee or licensee with respect to the leases, subleases and licenses
described in Section 1.1(b) of the Seller’s Disclosure Letter and identified
therein as Cash Entity Assets in accordance with Section 1.5, which are in
effect on the Closing Date and which relate to the use and occupancy of certain
land (the “Cash Timberland Leases”), together with all purchase options, prepaid
rents and security deposits relating thereto, and together with certain
leasehold improvements with respect thereto, subject to the Permitted Exceptions
(collectively, the rights, interests and improvements described above, the “Cash
Leasehold Interests”);

(c) Conveyed Cash Minerals. All mineral substances in, on or under the Owned
Cash Timberlands, including any rights pertaining to biological sequestration on
or above the surface of the Owned Cash Timberlands, but excluding the Reserved
Minerals and Gases, Reserved Mineral and Gas Rights, Reserved Water Rights and
Subsurface Geosequestration Rights in respect of the Owned Cash Timberlands (the
“Conveyed Cash Minerals”);

(d) Cash Licenses. To the extent transferable under applicable Law, the rights
of the Selling Parties under the licenses, permits, authorizations, orders,
registrations, certificates, variances, approvals, franchises and consents of
Governmental Authorities or other Persons, which are in effect on the Closing
Date and (i) are held or were obtained by the Selling Parties primarily in
connection with the Cash Entity Assets or (ii) are described in Section 1.1(d)
of the Seller’s Disclosure Letter and identified therein as Cash Entity Assets
in accordance with Section 1.5 (collectively, the rights described above, the
“Cash Licenses”);

(e) Cash Purchased Contracts. The rights of the Selling Parties under the
Contracts in effect on the Closing Date that (i) primarily relate to all or any
portion of the Purchased Cash Real Property Assets or the forest operations
conducted on such Purchased Cash Real Property Assets, but excluding the rights
of the Selling Parties under (A) the Fiber Supply Agreements or any other
Ancillary Agreements and (B) any Cash Timberland Leases, Cash Real Property
Leases and Personal Property Leases, or (ii) are described in Section 1.1(e) of
the Seller’s Disclosure Letter and identified therein as Cash Entity Assets in
accordance with Section 1.5 (collectively, the rights described above, the “Cash
Purchased Contracts”);

(f) Cash Real Property Leases. The rights of the Selling Parties with respect to
any leases in effect on the Closing Date (i) that relate to all or any portion
of the Purchased Cash Real Property Assets to which any Selling Party is the
lessor and are

 

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described in Section 1.1(f)(1) of the Seller’s Disclosure Letter, including any
leases under which the Selling Parties have granted rights to a third party with
respect to the Conveyed Cash Minerals or hunting or other recreational rights
with respect to the Cash Timberlands (or, with respect to the hunting leases in
respect of the Cash Timberlands listed on Section 1.1(f)(2) of the Seller’s
Disclosure Letter that expire prior to the Closing Date, any new hunting leases
entered into with the same third party prior to the Closing Date on
substantially the same terms as the applicable prior lease and with a term not
to exceed 12 months) or (ii) under which a Selling Party is a lessee of
facilities related to the forest operations on the Cash Timberlands
(collectively, the leases described above, the “Cash Real Property Leases”); and

(g) Cash Purchased Condemnations. The interests of the Selling Parties in any
Condemnations that (i) exist on the date hereof or that arise between the date
of this Agreement and the Closing Date, including the Condemnations listed in
Section 1.1(g) of the Seller’s Disclosure Letter (or, if resolved prior to the
Closing, the proceeds actually received with respect thereto, net of all costs
incurred by the Selling Parties to recover such proceeds) and (ii) are
attributable exclusively to the Cash Timberlands (collectively, the
Condemnations described above, the “Cash Purchased Condemnations”).

(h) Personalty. Except to the extent transferred pursuant to Section 1.3, the
following assets (the “Personalty Assets”):

(i) Lying Timber. All timber lying on the Timberlands;

(ii) Purchased Personal Assets. The machinery, equipment, motor vehicles,
appliances, tools, supplies, furnishings, inventory and other tangible personal
property, owned by the Selling Parties on the Closing Date and primarily used by
the Selling Parties in connection with the forest operations conducted on the
Timberlands, including the property described in Section 1.1(h)(ii) of the
Seller’s Disclosure Letter and identified therein as Personalty Assets in
accordance with Section 1.5 (collectively, the property described above, the
“Purchased Personal Assets”); and

(iii) Personal Property Leases. The rights of the Selling Parties with respect
to the leases in effect on the Closing Date under which a Selling Party is a
lessee and that (x) relate to any machinery, equipment, motor vehicles,
appliances, tools, supplies, furnishings, inventory and other tangible personal
property, exclusively used by the Selling Parties in connection with the forest
operations conducted on the Timberlands or (y) are described in
Section 1.1(h)(iii) of the Seller’s Disclosure Letter and identified therein as
Personalty Assets in accordance with Section 1.5 (collectively, the leases
described above, the “Personal Property Leases”).

 

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Section 1.2 Transfer of Timber Entity Assets.

Upon the terms and subject to the conditions set forth in this Agreement,
immediately prior to the Closing each of the Selling Parties hereby agrees to
assign, transfer and convey to the relevant Timber Entity all the rights, title
and interests of the Selling Parties in and to the following assets
(collectively, the “Timber Entity Assets”):

(a) Owned Installment Note Timberlands. The land held by the Selling Parties in
fee simple described in Section 1.1(a)(1) of the Seller’s Disclosure Letter and
identified therein as Timber Entity Assets in accordance with Section 1.5,
together with (i) all buildings thereon, (ii) all timber growing or standing
thereon, (iii) all roads, bridges and other improvements and fixtures thereon
and (iv) all other privileges, appurtenances, easements (including the Buyer
Easements in respect thereof) and other rights appertaining thereto (the “Owned
Installment Note Timberlands”), subject to the Permitted Exceptions; provided
that Seller reserves for itself and its successors and assigns the easements
with respect to the Owned Installment Note Timberlands described in
Section 1.2(a) of the Seller’s Disclosure Letter;

(b) Timber Entity Leasehold Interests. The rights of the Selling Parties as
lessee with respect to the leases, subleases and licenses described in
Section 1.1(b) of the Seller’s Disclosure Letter, which are in effect on the
Closing Date and identified therein as Timber Entity Assets in accordance with
Section 1.5 (collectively, the “Installment Note Timberland Leases”), which
relate to the use and occupancy of certain land, including all purchase options,
prepaid rents and security deposits relating thereto, together with certain
leasehold improvements with respect thereto, subject to the Permitted Exceptions
(collectively, the rights, interests and improvements described above, the
“Timber Entity Leasehold Interests”);

(c) Conveyed Timber Entity Minerals. All mineral substances in, on or under the
Owned Installment Note Timberlands, including any rights pertaining to
biological sequestration on or above the surface of the Owned Installment Note
Timberlands, but excluding the Reserved Minerals and Gases, Reserved Mineral and
Gas Rights, Reserved Water Rights and Subsurface Geosequestration Rights in
respect of the Owned Installment Note Timberlands (the “Conveyed Timber Entity
Minerals”);

(d) Timber Entity Licenses. To the extent transferable under applicable Law, the
rights of the Selling Parties under the licenses, permits, authorizations,
orders, registrations, certificates, variances, approvals, franchises and
consents of Governmental Authorities or other Persons, which are in effect on
the Closing Date and (i) are held or were obtained by the Selling Parties
primarily in connection with the Timber Entity Assets or (ii) are described in
Section 1.1(d) of the Seller’s Disclosure Letter and identified therein as
Timber Entity Assets in accordance with Section 1.5 (collectively, the rights
described above, the “Timber Entity Licenses”);

 

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(e) Timber Entity Purchased Contracts. The rights of the Selling Parties under
the Contracts in effect on the Closing Date that (i) primarily relate to all or
any portion of the Purchased Timber Entity Real Property Assets or the forest
operations conducted on such Purchased Timber Entity Real Property Assets, but
excluding the rights of the Selling Parties under (A) the Fiber Supply
Agreements or any other Ancillary Agreements and (B) any Installment Note
Timberland Leases, Timber Entity Real Property Leases and Personal Property
Leases or (ii) are described in Section 1.1(e) of the Seller’s Disclosure Letter
and identified therein as Timber Entity Assets in accordance with Section 1.5
(collectively, the rights described above, the “Timber Entity Purchased
Contracts”);

(f) Timber Entity Real Property Leases. The rights of the Selling Parties with
respect to any leases in effect on the Closing Date (i) that relate to all or
any portion of the Purchased Timber Entity Real Property Assets to which any
Selling Party is a lessor and are described in Section 1.1(f)(1) of the Seller’s
Disclosure Letter, including any leases under which the Selling Parties have
granted rights to a third party with respect to the Conveyed Timber Entity
Minerals or hunting or other recreational rights with respect to the Installment
Note Timberlands (or, with respect to the hunting leases in respect of the
Installment Note Timberlands listed on Section 1.1(f)(2) of the Seller’s
Disclosure Letter that expire prior to the Closing Date, any new hunting leases
entered into with the same third party prior to the Closing Date on
substantially the same terms as the applicable prior lease and with a term not
to exceed 12 months) or (ii) under which a Selling Party is a lessee of
facilities related to the forest operations on the Installment Note Timberlands
(collectively, the leases described above, the “Timber Entity Real Property
Leases”); and

(g) Installment Note Purchased Condemnations. The interests of the Selling
Parties in any Condemnations that (i) exist on the date hereof or that arise
between the date of this Agreement and the Closing Date, including the
Condemnations listed in Section 1.1(g) of the Seller’s Disclosure Letter (or if
resolved prior to the Closing, the proceeds actually received therefrom, net of
all costs incurred by the Selling Parties to recover such proceeds) and (ii) are
attributable exclusively to the Installment Note Timberlands (collectively, the
Condemnations described above, the “Installment Note Purchased Condemnations”).

Section 1.3 Transfer of Personalty to Buyer Affiliate. Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, each of
the Selling Parties hereby agrees to assign, transfer and convey to Buyer
Affiliate, and Buyer Affiliate hereby agrees to purchase, acquire and accept
from the Selling Parties, all the rights, title and interests of the Selling
Parties in and to the Cash Assets (if any) which otherwise would be conveyed to
Cash Timber Entity pursuant to Section 1.1(h) hereof and which Cash Timber
Entity, after consultation with the Selling Parties, identifies in writing to
the Selling Parties no later than 15 days prior to the Closing (collectively,
the “Buyer Affiliate Assets”).

 

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Section 1.4 Timber LLC Interests and Timber LP Interests.

Upon the terms and subject to the conditions set forth in this Agreement,
immediately prior to the Closing, each of the Selling Parties hereby agrees to
assign, transfer and convey to (i) each Buyer all of the membership interests
outstanding as of the Closing Date in each Timber LLC listed opposite such
Buyer’s name in Section 1.4 of the Seller’s Disclosure Letter, which shall be
prepared by Seller, with the reasonable cooperation of Buyer Parent, and
delivered to Buyer Parent no later than 10 days prior to the Closing Date, and
(ii) RMS Buyer (A) all of the limited partnership interests outstanding as of
the Closing Date in Timber LP and (B) all of the membership interests
outstanding as of the Closing Date in Timber GP (collectively, (i) and (ii), the
“Timber Entity Interests”).

Section 1.5 Purchased Asset Conveyance.

No later than 15 days prior to the Closing, Seller shall deliver to Buyer Parent
a copy of the schedules contained in Section 1.1 of the Seller’s Disclosure
Letter marked to indicate which of the Purchased Assets will be conveyed as Cash
Entity Assets, which will be conveyed as Timber Entity Assets; provided,
however, that prior to delivering such schedules, Seller shall consult with
Buyer Parent regarding which Purchased Assets will be so conveyed, and shall
provide Buyer Parent the opportunity to review and comment upon such schedules.
Not later than 10 days prior to Closing, Buyer shall deliver to Seller
Section 1.5 of the Buyer Parents’ Disclosure Letter which shall indicate which
of the Purchased Assets, if any, will be conveyed as Buyer Affiliate Assets and
which of the Purchased Assets shall be conveyed to Cash Timber Entity, Cash
Timber LP, RMS Buyer, each RMS Timber Entity and Buyer Affiliate and which of
the Purchased Assets shall be conveyed to FIA Buyer Parent, FIA Buyer and each
FIA Timber Entity.

Section 1.6 Excluded Assets.

Notwithstanding anything in this Agreement to the contrary, the following assets
of the Selling Parties shall be excluded from and shall not constitute any part
of the Purchased Assets (collectively, the “Excluded Assets”):

 

  (a) all Selling Parties’ rights of first refusal under the Contracts described
in Section 1.6(a) of the Seller’s Disclosure Letter;

 

  (b) the Reserved Minerals and Gases, the Reserved Mineral and Gas Rights, the
Reserved Water Rights and the Subsurface Geosequestration Rights;

 

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  (c) the Continuing Agreements (other than rights thereunder to receive
payments related to the damage or use of the surface);

 

  (d) all accounts receivable in respect of the sales of timber removed from the
Timberlands prior to the Closing;

 

  (e) the assets described in Section 1.6(e) of the Seller’s Disclosure Letter;
and

 

  (f) vehicle leases with respect to vehicles leased for the personal use of
employees of the Selling Parties that are not Transferred Employees (as defined
in Section 11.1(b) of the Seller’s Disclosure Letter).

Section 1.7 Permitted Exceptions.

The Purchased Assets shall be sold, transferred, assigned and conveyed to each
Buying Party subject to the following matters (collectively, the “Permitted
Exceptions”):

(a) Restrictions on the ability of each Buying Party to build upon or use the
Purchased Assets imposed by any current or future development standards,
building or zoning ordinances or any other Law;

(b) To the extent a tract is bounded or traversed by a river, stream, branch or
lake:

(i) The rights of upper and lower riparian owners and the rights of others to
navigate such river or stream to the extent it is navigable;

(ii) The right, if any, of neighboring riparian owners and the public or others
to use any public waters or the rights, if any, of the public to use the beaches
or shores for recreational purposes;

(iii) Any claim of lack of title to the Timberlands formerly or presently
comprising the shores or bottom of navigable waters or as a result of the change
in the boundary due to accretion or avulsion; and

(iv) Any portion of the Timberlands which is sovereignty lands and other lands
which may lie beneath the ordinary high water mark of navigable rivers as
established as of the date the state in which such land is located was admitted
to the Union of the United States.

(c) To the extent any portion of the Timberlands is bounded or traversed by a
public road, the rights of others in and to any portion of the Timberlands that
lies within said road;

 

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(d) Railroad tracks and related facilities, if any, and related railroad
easements or rights of way, if any, traversing the Timberlands and the rights of
railroad companies to any tracks, siding, ties and rails associated therewith;

(e) All restrictions on the use of the Purchased Assets due to Environmental
Laws, conservation easements of record, or the habitat conservation plans or
similar agreements entered into by any of the Selling Parties as described in
Section 1.7(e) of the Seller’s Disclosure Letter (the “Habitat Conservation
Plans”), other than those which individually or in the aggregate would have a
material adverse effect on the use and enjoyment by any Buying Party of the
Timberlands or any portion thereof or would prevent or restrict in any material
manner the continued ability to commercially harvest timber thereon;

(f) As to the Timberlands, subject to the apportionment provisions of
Section 2.4, all ad valorem property Taxes for the Tax period during which the
Closing occurs and all subsequent Tax periods, including any additional or
supplemental Taxes that may result from a reassessment of the Timberlands, and
any potential roll-back or greenbelt type Taxes related to any agricultural,
forest or open space exemption which is subject to recapture pursuant to state
Laws;

(g) Liens for Taxes not yet due and payable;

(h) Easements, discrepancies or conflicts in boundary lines, shortages in area,
encroachments or any other facts which a current and accurate survey of the
Timberlands would disclose, other than those that, individually or in the
aggregate, would prevent or restrict in any material manner the continued
ability to commercially harvest timber on the affected parcel in substantially
the same manner as such harvesting is currently conducted;

(i) All oil, gas and other minerals as may have been previously reserved by or
conveyed to others and any mineral leases concerning the mineral estate of the
Timberlands;

(j) Rights, if any, relating to the construction and maintenance in connection
with any public utility of wires, poles, pipes, conduits and appurtenances
thereto, on, under, above or across the Timberlands;

(k) The Reserved Easements granted to or reserved by the Selling Parties
pursuant to any provision of this Agreement;

(l) Rights of others under any of the Purchased Contracts, the Timberland
Leases, the Real Property Leases or the Personal Property Leases;

(m) All matters disclosed in the Seller’s Disclosure Letter;

 

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(n) Any uncured Buyer Parent’s Title Objections pursuant to Section 2.3(b)
(other than those Seller has elected to cure pursuant to the provisions of
Section 2.3(b)(i));

(o) The terms and provisions of the Master Stumpage Agreements, the Fiber Supply
Agreements and the Support Agreements;

(p) Restrictions and obligations pursuant to the Continuing Agreements;

(q) Any claim of lack of access rights to any portion of the Owned Timberlands
where (i) permission to access has been granted verbally or (ii) the Selling
Parties have otherwise historically enjoyed access;

(r) Any other claim of lack of access rights to any portion of the Timberlands
identified in Section 1.5 of the Buyer Parents’ Disclosure Letter as Timberlands
to be conveyed to Cash Timber LLC, Cash Timber LP or any RMS Timber Entity,
provided that such claims do not relate to properties exceeding in the aggregate
1% of the total acreage of the Timberlands identified in Section 1.5 of the
Buyer Parents’ Disclosure Letter as Timberlands allocable to the Cash Timber
LLC, Cash Timber LP or any RMS Timber Entity (the “RMS Access Threshold”), and
provided, further that the acreage of any property deemed a Title Failure
Carveout, a Title Objection Carveout or an Environmental Carveout shall not be
applied to the RMS Access Threshold. If any such claims of lack of access rights
relate to properties exceeding, in the aggregate, the RMS Access Threshold, the
Parties shall use their reasonable best efforts to agree upon and specify, as
Permitted Exceptions, affected properties with a total acreage equal to the RMS
Access Threshold, the fair market value of which (determined in accordance with
the first sentence of Section 2.3(b)(iv)) is as near as possible to the RMS
Access FMV, and the lack of access with respect to the remainder of the
properties subject to such claims shall not be deemed to be Permitted Exceptions
hereunder;

(s) Any other claim of lack of access rights to any portion of the Timberlands
identified in Section 1.5 of the Buyer Parents’ Disclosure Letter as Timberlands
to be conveyed to FIA Buyer Parent or any FIA Timber Entity, provided that such
claims do not relate to properties exceeding in the aggregate 1% of the total
acreage of the Timberlands identified in Section 1.5 of the Buyer Parents’
Disclosure Letter as Timberlands allocable to any FIA Buyer Parent or any FIA
Timber Entity (the “FIA Access Threshold”), and provided, further that the
acreage of any property deemed a Title Failure Carveout, a Title Objection
Carveout or an Environmental Carveout shall not be applied to the FIA Access
Threshold. If any such claims of lack of access rights relate to properties
exceeding, in the aggregate, the FIA Access Threshold, the Parties shall use
their reasonable best efforts to agree upon and specify, as Permitted
Exceptions, affected properties with a total acreage equal to the FIA Access
Threshold, the fair

 

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market value of which (determined in accordance with the first sentence of
Section 2.3(b)(iv)) is as near as possible to the FIA Access FMV, and the lack
of access with respect to the remainder of the properties subject to such claims
shall not be deemed to be Permitted Exceptions hereunder;

(t) Any Condemnations in respect of the Timberlands;

(u) With respect to any Leasehold Interest, any covenants, obligations, use
restrictions and other terms set forth in the relevant Timberland Lease; and

(v) Any easements, covenants, use restrictions, zoning restrictions, boundary
line disputes, encroachments and other third-party rights affecting the
Timberlands or any material portion thereof not described in items (a) through
(t) above and which, individually or in the aggregate, would not prevent or
restrict in any material manner the continued ability to commercially harvest
timber thereon.

Section 1.8 Assumed Liabilities; Excluded Liabilities.

(a) At the Closing, each Buyer Parent and Cash Entity shall deliver to the
Selling Parties an instrument of assumption substantially in the form of
Exhibit A-1 (the “Buyer Parent Instrument of Assumption”) pursuant to which each
Buyer Parent and Cash Entity shall solely, exclusively and severally undertake,
assume and agree to perform, pay, become liable for and discharge when due, and
hold the Selling Parties and their respective directors, officers, employees,
Affiliates, controlling persons, agents and representatives, and their
respective successors and assigns, harmless from, any and all liabilities and
obligations arising in the ordinary course of business, whether accrued or
unaccrued, absolute or contingent, known or unknown, asserted or unasserted,
resulting from or related to the Purchased Assets conveyed to such Buyer Parent
or Cash Entity or to any direct or indirect wholly owned Subsidiary of such
Buyer Parent or Cash Entity or any contract, commitment or undertaking to the
extent related to the Purchased Assets conveyed to such Buyer Parent or Cash
Entity or to any direct or indirect wholly owned Subsidiary of such Buyer Parent
or Cash Entity (excluding any and all liabilities and obligations of Buyer),
other than the Excluded Liabilities (collectively, the “Assumed Liabilities”).

(b) Immediately prior to the Closing, Seller shall cause each Timber Entity to
deliver to the Selling Parties an instrument of assumption, substantially in the
form of Exhibit A-2 (the “Timber Entity Instrument of Assumption”), pursuant to
which each Timber Entity will solely, exclusively and severally undertake,
assume and agree to perform, pay, become liable for and discharge when due, and
hold the Selling Parties and their respective directors, officers, employees,
Affiliates, controlling persons, agents and representatives, and their
respective successors and assigns, harmless from, any and all liabilities and
obligations arising in the ordinary course of business, whether accrued or

 

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unaccrued, absolute or contingent, known or unknown, asserted or unasserted,
resulting from or related exclusively to the Timber Entity Assets conveyed to
such Timber Entity, other than the Excluded Liabilities (collectively, the
“Timber Entity Assumed Liabilities”).

(c) Notwithstanding anything in this Agreement to the contrary, no Buying Party
shall assume, and the Selling Parties shall be solely and exclusively liable
with respect to, and shall pay, perform or discharge when due, the liabilities
and obligations relating to (i) the Purchased Assets (including the Timber
Entity Assets), or any contract, commitment or undertaking related thereto to
the extent arising prior to the Closing Date and arising outside of the ordinary
course of business and arising or attributable to facts and circumstances that
occurred prior to Closing, (ii) Tax liabilities related to the Purchased Assets
(including the Timber Entity Assets) in respect of a Pre-Closing Tax Period
(other than (A) any property Taxes and other non-Income Taxes and assessments in
respect of the Purchased Assets (including the Timber Entity Assets) for the Tax
period in which the Closing occurs, which are governed under Section 2.4, and
(B) Transfer Taxes, which are governed under Section 3.4), (iii) the litigation
matters described on Section 1.8(c) of the Seller’s Disclosure Letter or any
litigation matters pending as of the Closing Date, except those pending
litigation matters the subject matter of which is the acquired Timberlands
(including boundary disputes and actions in respect of title, trespass and
easement matters), (iv) the Reserved Easements, the Reserved Minerals and Gases,
the Reserved Mineral and Gas Rights, the Reserved Water Rights and the
Subsurface Geosequestration Rights (v) the Selling Parties’ continuing
liabilities and obligations under this Agreement or the Ancillary Agreements,
(vi) any accounting, transactional, brokerage or other expenses relating to the
negotiation and consummation of the transactions contemplated in this Agreement
by or on behalf of the Selling Parties, (vii) any third-party claim (or series
of related claims based on the same or similar facts) with respect to events
occurring prior to the Closing Date for which the amount in controversy exceeds
$1,500,000, other than any pre-Closing third-party claim in respect of accounts
payable obligations incurred by a Selling Party in the ordinary course of
business and (viii) any Purchased Contract or Personal Property Lease required
to be disclosed in Section 5.8 of the Seller’s Disclosure Letter but not
disclosed therein, except to the extent that any Cash Entity after the Closing
accepts performance under any such Purchased Contract or uses the personal
property subject to any such Personal Property Lease, (ix) any governmental
enforcement action other than those arising under Environmental Laws with
respect to events occurring prior to the Closing Date, provided that no Buying
Party does, or causes any other Person to, provide or disclose any information
under any circumstances, except where required by Law, with the intent of or for
the purpose of inducing, encouraging or soliciting such governmental action,
(x) any governmental enforcement action arising under Environmental Laws brought
within 18 months of the Closing Date with respect to events occurring prior to
the Closing Date, and provided, further that (1) the provisions set forth in
Section 13.5(c)(i) and (ii) shall apply to any claims against or liabilities of
Seller in respect of Remediation pursuant to

 

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this subsection (x), and (2) no Buying Party does, or causes any other Person
to, provide or disclose any information under any circumstances, except where
required by Law, with the intent of or for the purpose of inducing, encouraging
or soliciting such governmental action, (xi) any non-governmental third-party
claim in respect of any injuries caused or suffered prior to the Closing Date in
respect of any pre-Closing Adverse Environmental Condition for which the amount
in controversy exceeds $500,000; provided that no Buying Party does, or causes
any other Person to, provide or disclose any information under any
circumstances, except where required by Law, with the intent of or for the
purpose of inducing, encouraging or soliciting any non-governmental action by a
third-party claimant; and provided further that such non-governmental
third-party claims pursuant to this Section 1.8(c)(xi) in respect of pre-Closing
Adverse Environmental Conditions caused by another party’s mining operations,
which mining operations are covered by a surface rights servitude or a mineral
servitude, shall be deemed Excluded Liabilities only (A) if any Cash Entity,
Timber Entity or Buyer Affiliate, as the case may be, shall have used their good
faith efforts to recover all losses, damages, costs and expenses from such party
and (B) to the extent that the losses, damages, costs or expenses arising out of
such non-governmental third-party claim exceed the damages or insurance proceeds
received from such party in respect of such loss, damage, cost or expense and
(xii) any liabilities of any Timber Entity or any Selling Party under ERISA
(collectively, the “Excluded Liabilities”).

ARTICLE II

PURCHASE PRICE; PAYMENT

Section 2.1 Purchase Price.

The aggregate purchase price payable by Buyer Parents, Buyers, Cash Entities and
Buyer Affiliate to Seller on behalf of the Selling Parties in consideration for
the Purchased Assets shall be $4,982,789,128 (the “Pre-Adjustment Purchase
Price”), subject to adjustment as provided in Sections 2.3 and 2.4 and Article
XIII (the “Purchase Price”). The Purchase Price shall be payable as provided in
Section 2.5.

Section 2.2 Allocation of Purchase Price.

(a) The Pre-Adjustment Purchase Price shall be tentatively allocated as follows:
(i) approximately 80% of the Pre-Adjustment Purchase Price shall be tentatively
allocated to the Installment Note Purchase Price, subject to adjustment as
provided in this Section 2.2(a); and (ii) the balance of the Pre-Adjustment
Purchase Price shall be allocated to the Cash Purchase Price. Not later than 10
days prior to the Closing Date, Seller shall determine and deliver to the Buyer
Representative, subject to the Buyer Representative’s consent (which consent
shall not be unreasonably withheld or delayed), the actual amounts of the
Installment Note Purchase Price to be paid by each Buyer to

 

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Seller at the Closing and the Cash Purchase Price to be paid by each Buyer
Parent, each Buyer, each Cash Entity and Buyer Affiliate to Seller at the
Closing, which amounts shall be consistent with the allocation of Purchased
Assets between Cash Assets and Installment Note Assets and among the various
Buying Parties pursuant to Section 1.5. The Installment Note Purchase Price
(prior to any adjustments made pursuant to Sections 2.3 or 2.4) shall not exceed
$4,000,000,000. The initial allocation described in this Section 2.2(a) shall be
further adjusted in accordance with the Purchase Price adjustment provisions set
forth in Sections 2.3 and 2.4.

(b) Not later than 90 days after the Closing, Buyer Parents shall determine,
prepare and submit to Seller proposed schedules of the following, subject to
Seller’s consent (which consent shall not be unreasonably withheld or delayed):
(i) the allocation of the Installment Note Purchase Price (together with any
Timber Entity Assumed Liabilities that are considered liabilities for Income Tax
purposes and that directly relate to the Installment Note Timberlands) among the
Installment Note Timberlands (the “Installment Note Purchase Price Allocation”)
and (ii) the allocation of the Cash Purchase Price (together with any Assumed
Liabilities that are considered liabilities for Income Tax purposes and that are
directly related to the Cash Assets) among the Cash Assets (the “Cash Purchase
Price Allocation” and, together with the Installment Note Purchase Price
Allocation, the “Purchase Price Allocation”). The Installment Note Purchase
Price (together with any Timber Entity Assumed Liabilities that are considered
liabilities for Income Tax purposes and that are directly related to the
Installment Note Timberlands) shall be allocated in its entirety to the
Installment Note Timberlands. Any Cash Assets used or held for use by the
Selling Parties in connection with the ownership and operation of the
Installment Note Timberlands (including any Timber Entity Assets that do not
constitute Installment Note Timberlands and any Buyer Affiliate Assets) or any
Assumed Liabilities (other than any Timber Entity Assumed Liabilities that are
directly related to the Installment Note Timberlands) shall be allocated as a
part of the Cash Purchase Price Allocation. It is the intention of the Parties
that the Installment Note Purchase Price (in the form of Timber Notes) will be
paid solely as consideration for the sale of the Installment Note Timberlands;
provided, however, that certain post-Closing adjustments to the Purchase Price
made in the form of cash may be allocated in part to the Installment Note
Timberlands. Buyer Parent shall adjust the Purchase Price Allocation from time
to time to reflect any adjustments to the Purchase Price made pursuant to
Sections 2.3 and 2.4 and Article XIII, subject to Seller’s consent (which
consent shall not be unreasonably withheld or delayed).

(c) The Purchase Price Allocation shall be made in accordance with Section 1060
of the Code and applicable Treasury Regulations. Except to the extent such
action or inaction would cause any Person to be in violation of the final
determination of any Tax Authority, each of the Parties shall: (i) be bound by
the Purchase Price Allocation for purposes of determining any Taxes;
(ii) prepare and file, and cause their Affiliates to prepare and file, their Tax
Returns on a basis consistent with the Purchase

 

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Price Allocation; and (iii) take no position, and cause their Affiliates to take
no position, inconsistent with the Purchase Price Allocation on any applicable
Tax Return or in any proceeding before any Tax Authority or otherwise. In the
event that the Purchase Price Allocation is disputed by any Tax Authority, the
Party receiving notice of the dispute shall promptly notify the other Parties
concerning the dispute and shall consult with the other Parties concerning the
resolution of the dispute and each Party shall cooperate in good faith in
responding to such challenge in order to preserve the effectiveness of the
allocations determined pursuant to this Section 2.2. Each Party shall cooperate
in the preparation and timely filing of Form 8594 and any comparable state or
local forms or reports and, to the extent permissible by or required by law, any
corrections, amendments or supplements (or additional forms or reports) thereto
(including any supplements, amendments, forms or reports arising as a result of
any adjustments to the Purchase Price pursuant to Sections 2.3 and 2.4 and
Article XIII).

Section 2.3 Purchase Price Adjustments.

The Purchase Price shall be subject to the following adjustments:

(a) Timber Adjustments.

(i) Within 30 days after the Closing Date, Seller shall provide to the Buyer
Representative a harvest report (the “Harvest Statement”) certifying the volume,
by Merchantable Timber Category, of merchantable timber that was actually
removed from the Timberlands during the Timber Adjustment Period (the “Harvest
Amount”), together with the Weighted Average Prices for Pulpwood and the
Transfer Prices for Saw Logs and such other supporting data as the Buyer
Representative may reasonably request. The Buyer Representative shall have 60
days from the receipt of the Harvest Statement to deliver to Seller written
notice (an “Objection Notice”) of (i) any objections to the calculation of any
portion of such Harvest Amount and/or (ii) any objections to the applicable
Weighted Average Prices and/or Transfer Prices, which Objection Notice shall
request commencement of the procedure set forth in Section 2.3(a)(ii). If Seller
does not receive an Objection Notice prior to the expiration of such 60-day
period, the Buyer Representative shall have been deemed to have waived its right
to object to Seller’s calculation of any portion of the Harvest Amount and any
applicable Weighted Average Price and/or Transfer Price.

(ii) Within 15 days of receipt of an Objection Notice, Seller shall appoint an
independent forestry consultant reasonably satisfactory to the Buyer
Representative to act as a consultant with respect to the calculation of the
Harvest Amount (the “Forestry Consultant”) and an independent appraiser,
appointed by Seller, and reasonably acceptable to the Buyer Representative, to
act as an arbitrator with respect to calculation of the Weighted Average Price
and/or

 

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Transfer Price. During the period following receipt of such Objection Notice,
Seller and the Buyer Representative shall negotiate in good faith to reach
agreement on the Harvest Amount, Weighted Average Price and/or Transfer Price.
If Seller and the Buyer Representative agree on the calculation of such amount
or such prices, then such amount and/or such prices, as applicable, shall become
final and binding on the Parties. If Seller and the Buyer Representative are
unable to agree on any of the disputed calculations within 30 days after receipt
of the Objection Notice, the parties shall refer outstanding matters relating to
the calculation of the Harvest Amount to the Forestry Consultant and outstanding
matters relating to the Weighted Average Prices and/or Transfer Prices to the
independent appraiser and each party will, at a mutually agreed time within
three days after referral of the matter to the Forestry Consultant and/or
independent appraiser, simultaneously submit to the (A) Forestry Consultant
their respective calculations of the disputed portions of the Harvest Amount and
any necessary supporting documentation and (B) independent appraiser their
respective calculations of the applicable Weighted Average Prices and/or
Transfer Prices. Within 30 days of such submissions, the Forestry Consultant
will select one of the two submissions (and shall not select any other amount)
as being most representative of the disputed portion of the Harvest Amount, and
the submission so selected shall be final and binding on the Parties. Within 30
days of such submissions, the independent appraiser will select one of the two
submissions (and shall not select any other price) as being most representative
of the disputed Weighted Average Price and/or Transfer Price, and the
submissions so selected shall be final and binding on the Parties. The costs and
expenses of the Forestry Consultant and the independent appraiser in connection
with the dispute resolution procedure set forth herein shall be paid by the
non-prevailing party.

(iii) Upon a final determination of the Harvest Amount, and the applicable
Weighted Average Prices and Transfer Prices, the Purchase Price shall be
adjusted pursuant to this Section 2.3(a)(iii). If the Timber Adjustment Value is
less than zero, the Purchase Price shall be reduced by such amount and Seller
shall pay such amount in cash by wire transfer of immediately available funds to
the bank account or accounts designated by the Buyer Representative. If the
Timber Adjustment Value is greater than zero, the Purchase Price shall be
increased by such amount and the Buyer Representative shall cause the
appropriate Buyer Parent to pay such amount in cash by wire transfer of
immediately available funds to the bank account or accounts designated by
Seller.

(b) Buyer Parents’ Title Objections.

(i) Each Buyer Parent shall have until the 60th day after the date a Title
Commitment and copies of all documentary exceptions referenced therein are made
available to it, in the case of any Title Commitment and copies of all

 

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documentary exceptions referenced therein made available to it on or after the
date of this Agreement (the “Title Objection Period”) to deliver to Seller
written notice of any objections to matters reflected in such Title Commitment,
which, in such Buyer Parent’s reasonable judgment, would adversely affect the
use or enjoyment by FIA Buyer Parent, any Cash Entity or Timber Entity of any
parcel or portion of the Owned Timberlands or recorded Leasehold Interests
(each, a “Buyer Parent Title Objection” and collectively, “Buyer Parents’ Title
Objections”); provided that no Buyer Parent shall have any right to object to
the following items pursuant to this Section 2.3(b) and, for the purposes of
this Agreement, such items will not be considered Buyer Parent Title Objections:
(A) any Permitted Exceptions and (B) any title matter that otherwise would have
constituted a Buyer Parent Title Objection unless and until, in the aggregate,
such title matters affect 1% or more of the total acreage of the FMA containing
the affected Owned Timberlands or recorded Leasehold Interests (the “Title
Basket Amount”) and, in such case, any such title matters affecting the
Timberlands exceeding 1% of such total acreage shall be eligible to be Buyer
Parent Title Objections; provided that (1) the Title Basket Amount shall not
apply to any Buyer Parent Title Objection in respect of (x) a Title Failure or
(y) a claim of lack of access with respect to properties exceeding the 1%
threshold in Sections 1.7(r) or (s), (2) each Buyer Parent shall be permitted to
object to all Title Failures affecting the Owned Timberlands and recorded
Leasehold Interests being conveyed to it and (3) Buyer Parent Title Objections
in respect of Title Failures shall not be considered in the determination of
whether the Buyer Parent Title Objections exceed the Title Basket Amount. In the
event any Title Commitment is made available to Buyer Parent by posting such
Title Commitment (together with any exceptions thereto) in the online data room
established by Seller, the Title Objection Period shall commence on the day
notice thereof has been given by Seller to Buyer Parent by email at the address
set forth in Section 2.3(b)(i) of the Buyer Parent’s Disclosure Letter. Upon
receipt of Buyer Parents’ Title Objections, Seller may elect (but shall not be
obligated) to remove or cause to be removed any such Buyer Parent Title
Objections, and Seller shall notify the relevant Buyer Parent in writing within
10 days after receipt of Buyer Parents’ Title Objections whether Seller elects
to remove the same. Failure of Seller to respond in writing within such time
period shall be deemed an election by Seller not to remove such Buyer Parent
Title Objections. Any Buyer Parent Title Objection shall be deemed to be cured
if Seller causes the Title Company to issue a Title Policy for such portion of
the Owned Timberlands affirmatively insuring over, or not raising as an
exception to the Title Policy, such Buyer Parent Title Objection.
Notwithstanding the foregoing, Seller shall be obligated to remove, on or before
the Closing Date, all Liens against the Owned Timberlands evidencing monetary
encumbrances (other than Liens for non-delinquent general real estate Taxes or
assessments) (“Monetary Liens”) created as a result of the acts or omissions of
the Seller Parties or their respective Affiliates, agents or employees.

 

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Seller may use any portion of the Timberlands Purchase Price to satisfy any
Monetary Liens that exist as of the Closing Date, provided that Seller shall
cause the Title Company to remove such Monetary Liens. If Seller does not
receive written notice of Buyer Parents’ Title Objections for any objection to
matters reflected in a particular Title Commitment on or before the expiration
of the relevant Title Objection Period, the relevant Buyer Parent shall be
deemed to have waived its right to object to any and all matters reflected in
such Title Commitment and the relevant Cash Entity, or Timber Entity as the case
may be, and, except in the case of a Title Failure, shall be deemed to accept
title subject to such matters. Except in the case of a Title Failure, any such
Buyer Parent Title Objection waived (or deemed waived) by the relevant Buyer
Parent shall be deemed to constitute a Permitted Exception, and the Closing
shall occur as herein provided without any reduction of or credit against the
Timberlands Purchase Price for such waived Buyer Parent Title Objection.

(ii) Remedy for Title Failure. In the event of any Title Failure, the relevant
Buyer Parent’s sole remedy with respect to any such Title Failure shall be to
receive a Purchase Price adjustment as described in Sections 2.3(b)(iv) and such
Buyer Parent shall, or shall cause the relevant Cash Entity or Timber Entity to,
proceed to the Closing with those portions of the Owned Timberlands or Leasehold
Interests that are subject to such Title Failure excluded from the Purchased
Real Property Assets to be conveyed to such Cash Entity at the Closing or to the
relevant Timber Entity immediately prior to the Closing, as the case may be, (a
“Title Failure Carveout”). Notwithstanding the foregoing, each Title Failure
Carveout in which Seller has an interest shall contain at least 20 acres and
provide the Selling Parties with reasonable access to such Title Failure
Carveout.

(iii) Remedy for Buyer Parent Title Objection. In the event Seller elects or is
deemed to have elected not to cure any Buyer Parent Title Objection (other than
Monetary Liens or Title Failures), then Seller, at its sole election, may either
require: (A) (1) the relevant Buyer Parent or Cash Entity, as the case may be,
to proceed to the Closing with the relevant Cash Entity accepting title to those
portions of the Owned Cash Timberlands that are subject to such uncured Buyer
Parents’ Title Objections and the relevant Timber Entity accepting title,
immediately prior to the Closing, to those portions of the Owned Installment
Note Timberlands being transferred to it that are subject to such uncured Buyer
Parents’ Title Objections (“Accepted Buyer Parents’ Title Objections”) and
indemnify the relevant Buyer Parent, Cash Entity or Timber Entity, as the case
may be, (or, if requested by the relevant Buyer Parent, Cash Entity, Timber
Entity or the Title Company), for any damages actually suffered by such party as
a result of the circumstances giving rise to such Accepted Buyer Parents’ Title
Objections pursuant to Section 13.7 or (2) in the case of any Buyer Parent Title
Objections relating to any Leasehold Interest, (x) require that the relevant
Cash Entity

 

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proceed to the Closing with such Cash Entity assuming the Cash Timberland Lease
that is subject to such uncured Buyer Parent’s Title Objections, and each Timber
Entity assuming, effective immediately prior to the Closing, the Installment
Note Timberland Lease that is subject to such uncured Buyer Parent’s Title
Objections and (y) indemnify such Cash Entity or such Timber Entity, as the case
may be, for any damages actually suffered by such party as a result of the
circumstances giving rise to such Accepted Buyer Parent Title Objections
pursuant to Section 13.7; provided, however, that in the event the
indemnification contemplated by this clause (A) is unacceptable to any Lender
providing Debt Financing to the Buying Parties, the Selling Parties will use
reasonable best efforts (including indemnifying the Title Company from and
against and against any liability in respect of any Accepted Buyer Parent Title
Objections subject to the limits set forth in Section 13.7) to provide to Buyer
Parent such Title Commitments issued by the Title Company as will be reasonably
acceptable to such Lender, or (B) require that the relevant Cash Entity accept
an adjustment to the Cash Purchase Price as described in Sections 2.3(b)(iv) and
require the relevant Buyer Parent, Buyer and Cash Entity to proceed to the
Closing with those portions of the Owned Timberlands or the Leasehold Interests
that are subject to such uncured Buyer Parents’ Title Objections excluded from
the Purchased Real Property Assets to be conveyed to the relevant Cash Entity at
the Closing or to the relevant Timber Entity immediately prior to the Closing,
as the case may be (a “Title Objection Carveout”); provided that (x) each Title
Objection Carveout with respect to a Buyer Parent’s Title Objection affecting a
portion or portions of the Timberlands shall contain at least 20 acres (other
than a Title Objection Carveout in respect of a recorded Leasehold Interest) and
provide the Selling Parties with reasonable access to such Title Failure
Carveout and (y) each Title Objection Carveout with respect to a Buyer Parent’s
Title Objection affecting a Leasehold Interest shall contain such Leasehold
Interest in its entirety.

(iv) FMV Calculation. The fair market value of any portion of the Owned
Timberlands and recorded Leasehold Interests subject to any Title Failure
Carveout or Title Objection Carveout, including lack of access claims exceeding
the RMS Access Threshold or FIA Access Threshold, as applicable, shall follow
the procedures set forth in Section 2.3(b)(i) above, and be calculated, in the
case of Owned Timberlands, in accordance with Exhibit B, and, in the case of
recorded Leasehold Interests, based on the discounted cash flows attributable to
such Leasehold Interests, as determined by mutual agreement, or, if Seller and
the relevant Buyer Parent are unable to agree on such fair market value, the
parties shall refer the matter to an independent consultant and each party will,
at a mutually agreed time within three days after referral of the matter to such
consultant, simultaneously submit to the consultant their respective
calculations of such fair market value and any necessary supporting
documentation. Within 30 days of such submissions, the consultant will select
one of the two submissions

 

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(and shall not select any other amount) as being most representative of the
disputed discounted rate of cash flows, and the submission so selected shall be
final and binding on the Parties. The costs and expenses of the consultant in
connection with the dispute resolution procedure set forth herein shall be paid
by the non-prevailing party. At the Closing, (A) the Cash Purchase Price shall
be reduced by an amount equal to the aggregate fair market value of the portions
of the Cash Timberlands subject to such Title Failure Carveouts or Title
Objection Carveouts (including those in respect of lack of access claims
exceeding the RMS Access Threshold or FIA Access Threshold), if any, as
calculated in accordance with Exhibit B and (B) the Installment Note Purchase
Price shall be reduced (in the form of a reduction to the aggregate principal
amount of the Timber Note) by an amount equal to the aggregate fair market value
of the Installment Note Timberlands subject to such Title Failure Carveouts or
Title Objection Carveouts (including those in respect of lack of access claims
exceeding the RMS Access Threshold of FIA Access Threshold), if any, as
calculated in accordance with Exhibit B.

(v) For a period of one year from the Closing Date, at its option, Seller may
require the relevant Cash Entity or Timber Entity to accept title to any Title
Failure Carveout or Title Objection Carveout (subject to the Permitted
Exceptions and Reserved Easements affecting such Title Failure Carveout or Title
Objection Carveout) for which any Selling Party has removed or caused to be
removed (A) all title defects affecting such Title Failure Carveout or (B) Buyer
Parent Title Objections affecting such Title Objection Carveout. If Seller
elects to transfer to the relevant Cash Entity or Timber Entity title to any
Title Failure Carveout or Title Objection Carveout pursuant to this
Section 2.3(b)(v), then (1) Seller shall convey or cause the Other Selling
Parties to convey such Title Failure Carveout or Title Objection Carveout to the
relevant Cash Entity or Timber Entity pursuant to an instrument of conveyance
described in Section 3.2(a)(iii) or (v), as applicable, subject to the Permitted
Exceptions and (2) the entity to which such Title Failure Carveout or Title
Objection Carveout is being conveyed, the relevant Cash Entity or Timber Entity,
shall pay Seller an amount in cash equal to the amount of the fair market value
of such Title Failure Carveout or Title Objection Carveout, provided that in no
event will such entity be obligated to pay under this Section 2.3(b)(v) an
amount in excess of the aggregate downward adjustment to the Purchase Price in
respect of the Title Failure Carveouts or Title Objection Carveouts pursuant to
Section 2.3(b)(iv). Any payments by the relevant Cash Entity or Timber Entity to
Seller for transfers of any Title Failure Carveouts or Title Objection Carveouts
shall be made, upon the transfer of such Title Failure Carveouts or Title
Objection Carveouts from Seller to the relevant Cash Entity or Timber Entity, as
the case may be, by wire transfer of immediately available funds to a bank
account designated by Seller. The relevant Cash Entity, Timber Entity and their
respective Affiliates shall cooperate in any effort that may be

 

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necessary for Seller to transfer title to any Title Failure Carveout or Title
Objection Carveout or to establish, vest or confirm title to any Title Failure
Carveout or Title Objection Carveout in the relevant Cash Entity or Timber
Entity, as the case may be, including executing all documents pertaining to the
Title Failure Carveouts or Title Objection Carveouts as are reasonably requested
by the Selling Parties. Any sales, use, excise, documentary, stamp duty,
registration, transfer, conveyance, economic interest transfer or other similar
Taxes related to the conveyance to the relevant Cash Entity or Timber Entity, as
the case may be, of any Title Failure Carveout or Title Objection Carveout
pursuant to this Section 2.3(b)(v) shall be payable as Transfer Taxes in
accordance with Section 3.4.

(c) Casualty Loss.

(i) Notification of Casualty Loss. From the date of this Agreement until the
Closing Date, Seller shall promptly give notice to the relevant Buyer Parent
upon obtaining any Selling Parties’ Knowledge of any Casualty Loss on any FMA
involving damaged or lost timber on such FMA occurring between November 15, 2005
and the Closing Date and affecting more than 100 acres as determined in good
faith by Seller, together with a written estimate of the fair market value of
the damaged or lost timber, as determined in good faith by Seller, resulting
from such Casualty Loss. The Buyer Representative shall have until the 90th day
after the Closing Date to deliver to Seller written notice of any Casualty Loss
that was not identified by Seller in accordance with the previous sentence of
this Section 2.3(c)(i) and that involved damaged or lost timber having a fair
market value in excess of $2,000,000, together with a written estimate of the
fair market value of the damaged or lost timber, as determined in good faith by
the Buyer Representative, resulting from such Casualty Loss. If Seller does not
receive notice of such Casualty Loss from the Buyer Representative prior to the
expiration of such 90-day period, the Buyer Representative shall be deemed to
have waived the rights of the relevant Buying Party to receive a Purchase Price
adjustment in respect of any such Casualty Loss in excess of $2,000,000, apart
from any Purchase Price adjustment for any portion of such Casualty Loss
exceeding $2,000,000 that was identified by Seller prior to the Closing pursuant
to the first sentence of this Section 2.3(c)(i), and the relevant Cash Entity or
Timber Entity, as the case may be, shall be deemed to accept the Timberlands
subject to such Casualty Loss.

(ii) Post-Closing Purchase Price Adjustment for Casualty Loss. If Buyer Parent
objects to any of Seller’s estimates of the fair market value of the damaged or
lost timber made prior to the Closing pursuant to Section 2.3(c)(i) or if Seller
objects to any of the Buyer Representative’s estimates of the fair market value
of the damaged or lost timber made post-Closing pursuant to

 

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Section 2.3(c)(i), and, in either case, Buyer Parent reasonably determines that
such damaged or lost timber had an FMV in excess of $2,000,000. Seller and the
Buyer Representative shall negotiate in good faith to determine by mutual
agreement the fair market value of the damaged or lost timber in accordance with
Section 2.3(c)(iv). If Seller and the Buyer Representative agree on the amount
of such value, then such value will become final and binding on the Parties. If
Seller and the Buyer Representative are unable to agree on the amount of such
value within 30 days of Buyer Parent’s or Buyer Representative’s delivery of a
notice of objection to Seller’s pre-Closing estimate or Seller’s delivery of a
notice of objection to the Buyer Representative’s post-Closing estimate, Seller
and the Buyer Representative will refer the matter to an independent appraiser,
appointed by Seller and reasonably acceptable to the Buyer Representative, and
each will, at a mutually agreed time within three days after such referral,
simultaneously submit to the independent appraiser their respective calculations
of the fair market value of such damaged or lost timber. Within 30 days of such
final submissions, the independent appraiser shall determine the fair market
value of the damaged or lost timber in accordance with this Section 2.3(c) and
shall select one of the two final submissions of the Parties (and shall not
select any other amount) as being most representative of the fair market value
of such damaged or lost timber, and the submission so selected shall be final
and binding on the Parties. Upon a final determination of the fair market value
of such damaged or lost timber, if the fair market value is finally determined
to exceed $2,000,000, the Purchase Price shall be reduced by such fair market
value and Seller shall pay such amount in cash by wire transfer of immediately
available funds to the bank account or accounts designated by the Buyer
Representative. The costs and expenses of the independent appraiser in
connection with the dispute resolution procedure set forth herein shall be paid
by the non-prevailing party.

(iii) Casualty Loss with FMV of less than $2,000,000. If Seller estimates in
good faith, or it is determined in accordance with this Section 2.3(c), that the
damaged or lost timber in connection with Casualty Losses on any FMA has an
aggregate fair market value of less than $2,000,000, the relevant Cash Entity or
Timber Entity, as the case may be, shall be deemed to accept such FMA (and the
timber thereon) in its condition as of the Closing Date, with no reduction in
the Purchase Price.

(iv) Determination of FMV of Timber Related to a Casualty Loss. For the purpose
of determining the fair market value of the damaged or lost timber resulting
from a Casualty Loss, (A) the fair market value for damaged or lost timber shall
be deemed to equal the value of the timber, determined in accordance with
Exhibit B, net of the actual salvage value of such timber received by the
relevant Cash Entity or Timber Entity, as the case may be, after deducting the
cost of harvesting and delivering such timber, and (B) a Casualty Loss shall
refer only to a single incident of casualty (e.g., a single fire or earthquake),
and separate incidents of casualty losses shall not be aggregated.

 

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(d) Acreage Adjustment.

(i) Not later than 20 days prior to the Closing Date, Seller shall furnish the
Buyer Parents with updated versions of the geographic information system maps
describing the Timberlands that are currently set forth in Section 1.1(a)(1) of
the Seller’s Disclosure Letter. Seller and the Buyer Representative shall
identify, by comparing such maps with the updated versions, the acreage added to
the Owned Cash Timberlands (the “Additional Owned Cash Timberlands Acreage”), to
the Owned Installment Note Timberlands (the “Additional Owned Installment Note
Timberlands Acreage”), to the Cash Leasehold Interests (the “Additional Cash
Leasehold Interests”) and to the Timber Entity Leasehold Interests (the
“Additional Timber Entity Leasehold Interests”), and the acreage subtracted from
the Owned Cash Timberlands (the “Subtracted Owned Cash Timberlands Acreage”),
from the Owned Installment Note Timberlands (the “Subtracted Owned Installment
Note Timberlands Acreage”), from the Cash Leasehold Interests (the “Subtracted
Cash Leasehold Interests”) and from the Timber Entity Leasehold Interests (the
“Subtracted Timber Entity Leasehold Interests”). If by the 15th day prior to the
Closing Date, Seller and the Buyer Representative are unable to agree on the
Additional Owned Cash Timberlands Acreage, the Additional Owned Installment Note
Timberlands Acreage, the Additional Cash Leasehold Interests, the Additional
Timber Entity Leasehold Interests, the Subtracted Owned Cash Timberlands
Acreage, the Subtracted Installment Note Timberlands Acreage, the Subtracted
Cash Leasehold Interests or the Subtracted Timber Entity Leasehold Interests,
Seller shall appoint a Forestry Consultant within three days and each party
will, at a mutually agreed time within three days after referral of the matter
to the Forestry Consultant, simultaneously submit to the Forestry Consultant
their respective identifications of the Additional Owned Cash Timberlands
Acreage, the Additional Owned Installment Note Timberlands Acreage, the
Additional Cash Leasehold Interests, the Additional Timber Entity Leasehold
Interests, the Subtracted Owned Cash Timberlands Acreage, the Subtracted
Installment Note Timberlands Acreage, the Subtracted Cash Leasehold Interests or
the Subtracted Timber Entity Leasehold Interests, as the case may be. Within
five days of such submissions, the Forestry Consultant will select one of the
two submissions as being most representative of the Additional Owned Cash
Timberlands Acreage, the Additional Owned Installment Note Timberlands Acreage,
the Additional Cash Leasehold Interests, the Additional Timber Entity Leasehold
Interests, the Subtracted Owned Cash Timberlands Acreage, the Subtracted
Installment Note Timberlands Acreage, the Subtracted Cash Leasehold Interests or
the Subtracted Timber Entity Leasehold Interests, as the case may be, and the
submission so selected shall be final and

 

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binding on the Parties. The costs and expenses of the Forestry Consultant in
connection with the dispute resolution procedure set forth herein shall be paid
by the non-prevailing Party.

(ii) The Cash Purchase Price to be paid at Closing shall be adjusted by
(A) adding the value of any Additional Owned Cash Timberlands Acreage and
Additional Cash Leasehold Interests and (B) subtracting the value of any
Subtracted Owned Cash Timberlands Acreage and Subtracted Cash Leasehold
Interests, such values in each case to be determined in accordance with Exhibit
B.

(iii) The Installment Note Purchase Price to be paid at Closing shall be
adjusted (A) adding the value of any Additional Owned Installment Note
Timberlands Acreage and Additional Timber Entity Leasehold Interests and
(B) subtracting the value of any Subtracted Owned Installment Note Timberlands
Acreage and Subtracted Timber Entity Leasehold Interests, such values in each
case to be determined in accordance with Exhibit B.

(iv) No adjustment to the Purchase Price shall be made under this Section 2.3(d)
to the extent any adjustment is made pursuant to Section 2.3(b)(iv).

(e) Adjustment of Harvest Plans. In the event of a material change in the total
acreage of the Timberlands transferred to the Buying Parties pursuant to this
Agreement resulting from changes described in Section 2.3(d), Title Failure
Carveouts, Title Objection Carveouts or Environmental Carveouts, the Parties
will negotiate in good faith to agree upon appropriate adjustments to the
harvest plans associated with the Fiber Supply Agreements in order to take
account of such change (including in respect of the approximately 29,000 acre
adjustment agreed to prior to the date hereof).

Section 2.4 Apportionments.

Except as provided in Section 3.4, the following shall be apportioned between
the Buying Parties, as the case may be, on the one hand, and the Selling
Parties, on the one hand, on and as of the Closing Date (on a per diem basis):
(i) rents due from Seller or any of the Selling Parties under the Timberland
Leases, Real Property Leases or Personal Property Leases; (ii) property and
other non-Income Taxes and assessments in respect of the Purchased Assets and
any Timberland Leases or Real Property Leases for which a Selling Party has the
obligation to pay property or other non-Income Taxes and assessments (including
property or other non-Income Taxes and assessments, if any, payable in respect
of the Timber Entity Assets), in each case, with respect to the Tax period in
which the Closing Date occurs; (iii) revenue from the Real Property Leases,
including hunting and other recreational lease revenue; and (iv) payments,
applying to the period beginning on the Closing Date, made by any Selling Party
in respect of any Timberland Leases, Real Property Leases, Personal Property
Leases or Purchased

 

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Contracts (collectively, “Apportionments”). Not later than five days prior to
the Closing Date, Seller and each Buyer Parent shall determine the
Apportionments, and the Installment Note Purchase Price shall be increased or
reduced, as applicable (in the form of an increase or reduction of the aggregate
principal amount of the Timber Notes), by the aggregate amount of such
Apportionments relating to the Installment Note Timberlands, and the Cash
Purchase Price shall be increased or reduced, as applicable, by the aggregate
amount of such Apportionments relating to the Cash Assets. If the Closing Date
occurs before the applicable Tax rate is fixed for the applicable Tax period,
then property Taxes and other non-Income Taxes and assessments shall be
apportioned on the basis of the Tax rate in effect for the immediately preceding
Tax period. Seller and each Buyer Parent agree to furnish each other with such
documents and other records as may be reasonably requested in order to confirm
all Apportionment calculations made pursuant to this Section 2.4. Except for the
estimated adjustment set forth hereinabove, there shall be no proration of
property Taxes or other non-Income Taxes and assessments and, as between each
Buyer Parent and Seller, each Buyer Parent agrees that, after the Closing, it
shall be solely responsible for all such property Taxes and other non-Income
Taxes and assessments due and payable in respect of any Purchased Assets
conveyed to it or conveyed to a direct or indirect wholly owned Subsidiary. If
Buyer Parents and Seller cannot agree as to Apportionments, the dispute will be
resolved pursuant to Section 9.5.

Section 2.5 Payment of Purchase Price.

At the Closing, Buyer Parents shall draw on the equity and debt commitments
evidenced by the commitment letters previously furnished to Seller, and the
Purchase Price shall be payable as follows:

(a) The Installment Note Purchase Price shall be payable by Buyers to Seller on
behalf of the Selling Parties, or to those parties designated in writing by
Seller on behalf of the Selling Parties, in the form of installment notes issued
by Buyers, substantially in the form of Exhibit C (each, a “Timber Note”), in an
aggregate principal amount equal to the Installment Note Purchase Price, as
adjusted pursuant to Section 2.3(d) and 2.4. Each Buyer shall pay the portion of
the Installment Note Purchase Price set forth opposite its name in
Section 2.5(a) of the Buyer Parents’ Disclosure Letter. Each Timber Note shall
be issued in the denomination requested by Seller on behalf of the Selling
Parties not later than five business days prior to the Closing Date. Each Timber
Note shall be fully secured by an irrevocable standby letter of credit in form
and substance reasonably satisfactory to Seller (each, a “Letter of Credit”) on
terms and conditions that are consistent with the Timber Note Indicative Terms.
Buyer Parents and Buyers will be solely responsible for all fees and expenses
associated with the Letters of Credit with respect to the initial ten years of
the term of the Timber Notes, and the Selling Parties will be solely responsible
for all fees and expenses associated with the Letters of Credit for all periods
thereafter.

 

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(b) The Cash Purchase Price, as adjusted pursuant to Sections 2.2(a),
2.3(b)(iv), 2.3(d) and 2.4, (i) in respect of the Cash Entity Assets shall be
payable by Cash Entities to Seller on behalf of the Selling Parties, (ii) in
respect of the Timber Entity Purchased Assets shall be payable by Buyers to
Seller on behalf of the Selling Parties and (iii) in respect of the Buyer
Affiliate Purchased Assets, if any, shall be payable by Buyer Affiliate to
Seller on behalf of the Selling Parties. Each Cash Entity, each Timber Entity
and Buyer Affiliate shall pay the portion of the Cash Purchase Price set forth
opposite its name in Section 2.5(b) of the Buyer Parents’ Disclosure Letter. The
amounts payable pursuant to (i), (ii) and (iii) hereof shall be payable by Cash
Entities, Buyers and Buyer Affiliate in cash by wire transfer of immediately
available funds to the bank account or accounts designated by Seller on behalf
of the Selling Parties.

ARTICLE III

CLOSING

Section 3.1 Closing.

The closing of the transactions contemplated by this Agreement (the “Closing”)
shall take place, subject to the satisfaction, or waiver by the Party or Parties
entitled to the benefit thereof, of the conditions set forth in Article XII, at
a place designated by Seller, at 9:00 a.m., New York City time, on or as of the
last day of the month in which all of the conditions set forth in Article XII
have been satisfied, or waived by the Party or Parties entitled to the benefit
thereof (other than those conditions that by their nature are to be satisfied at
the Closing), in accordance with this Agreement, provided that if such
conditions are satisfied or waived less than three days before the last day of
the month, the Closing will take place on or as of the last day of the
subsequent month or at such other time and date as the Parties shall agree in
writing (the date on which the Closing occurs, the “Closing Date”). Except as
specifically provided herein, time is of the essence for this Agreement for all
purposes.

Section 3.2 Closing Deliveries.

(a) Closing Deliveries by the Selling Parties. The Selling Parties shall deliver
the following items to the relevant Buyer Parent at the Closing:

(i) a certificate from a duly authorized officer of Seller attesting to the
matters set forth in Sections 12.2(b) and 12.2(c);

(ii) duly executed (A) counterparts of the assignment and assumption agreements
under which the Selling Parties assign and the relevant Buyer Parent and Cash
Entities assume all of the Selling Parties’ right, title and interest in and to
the Cash Purchased Contracts, Cash Licenses and Cash Purchased

 

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Condemnations being conveyed to it, substantially in the form of Exhibit D-1
(the “General Assignment and Assumption”), (B) counterparts of the assignment
and assumption agreements under which, immediately prior to the Closing, the
Selling Parties assigned and each Timber Entity assumed all of the Selling
Parties’ right, title and interest in and to the Timber Entity Purchased
Contracts, Timber Entity Licenses and the Installment Note Purchased
Condemnations being conveyed to it, substantially in the form of Exhibit D-2
(the “General Timber Entity Assignment and Assumption”), and (C) counterparts of
an assignment and assumption agreement under which, immediately prior to the
Closing, the Selling Parties assigned and Buyer Affiliate assumed all of the
Selling Parties’ right, title and interest in and to the Personal Property
Leases, substantially in the form of Exhibit D -3 (the “General Buyer Affiliate
Assignment and Assumption”);

(iii) duly executed counterparts of (A) assignment and assumption agreements, in
recordable form, for each Cash Timberland Lease, under which the applicable
Selling Party assigns and the relevant Cash Entity assumes all of such Selling
Party’s right, title and interest in and to any such Cash Timberland Lease being
conveyed to it and (B) assignment and assumption agreements, in recordable form,
for each Installment Note Timberland Lease, under which, immediately prior to
the Closing, the applicable Selling Party assigned and the relevant Timber
Entity assumed all of such Selling Party’s right, title and interest in and to
any such Installment Note Timberland Lease being conveyed to it, in each case
substantially in the form of Exhibit D-4 (each, an “Assignment and Assumption of
Timberland Lease”);

(iv) duly executed counterparts of (A) assignment and assumption agreements
under which the applicable Selling Party assigns and the relevant Cash Entity
assumes all of the Selling Parties’ right, title and interest in and to the Cash
Real Property Leases being conveyed to it and (B) assignment and assumption
agreements under which, immediately prior to the Closing, the applicable Selling
Party assigned and the relevant Timber Entity assumed all of the Selling
Parties’ right, title and interest in and to the Timber Entity Real Property
Leases being conveyed to it, in each case substantially in the form of Exhibit
D-5 (together, the “Assignment and Assumption of Real Property Leases”);

(v) limited or special warranty deeds (or their local equivalent), warranting
only against parties claiming by, through or under the Selling Parties and, in
the case of any Owned Cash Timberlands transferred to any Selling Party by an
Affiliate pursuant to Section 10.11, such Affiliate, in recordable form and
subject only to the Permitted Exceptions, and such other Conveyance Instruments
as are reasonably necessary to vest in the relevant Cash Entity title to the
Owned Cash Timberlands being conveyed to it and the Buyer Easements in respect

 

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thereof, excluding the Conveyed Minerals and the Reserved Minerals and Gases,
the Reserved Mineral and Gas Rights, the Reserved Water Rights and the
Subsurface Geosequestration Rights in respect thereof;

(vi) limited or special warranty deeds (or their local equivalent), warranting
only against parties claiming by, through or under the Selling Parties and, in
the case of any Owned Installment Note Timberland transferred to any Selling
Party by an Affiliate pursuant to Section 10.11, such Affiliate, in recordable
form and subject only to the Permitted Exceptions, and such other Conveyance
Instruments as were reasonably necessary immediately prior to Closing to vest in
the relevant Timber Entity title to the Owned Installment Note Timberlands being
conveyed to it and the Buyer Easements in respect thereof, excluding the
Conveyed Minerals the Reserved Minerals and Gases, the Reserved Mineral and Gas
Rights, the Reserved Water Rights and the Subsurface Geosequestration Rights in
respect thereof;

(vii) duly executed counterparts of (x) the Pulpwood First Right of Offer
Agreement, substantially in the form of Exhibit E-1 (the “Pulpwood First Right
of Offer Agreement”) and (y) the Pulpwood First Right of Offer Agreement–
Augusta, substantially in the form of Exhibit E-2 (the “Pulpwood First Right of
Offer Agreement – Augusta”);

(viii) quitclaim deeds, in recordable form, to the Conveyed Minerals in respect
of the Owned Cash Timberlands (excluding the Reserved Minerals and Gases, the
Reserved Mineral and Gas Rights, the Reserved Water Rights and the Subsurface
Geosequestration Rights in respect thereof) by the appropriate Selling Party to
the relevant Cash Entity to whom such Owned Cash Timberlands are being conveyed;

(ix) quitclaim deeds, in recordable form, to the Conveyed Minerals in respect of
the Owned Installment Note Timberlands (excluding the Reserved Minerals and
Gases, the Reserved Mineral and Gas Rights, the Reserved Water Rights and the
Subsurface Geosequestration Rights in respect thereof) by the appropriate
Selling Party to the relevant Timber Entity to whom such Owned Installment Note
Timberlands are being conveyed (the deeds contemplated by this subparagraph and
subparagraphs (v), (vi) and (viii) above are referred to in this Agreement as
the “Deeds”);

(x) a bill of sale with respect to the Purchased Personal Assets, substantially
in the form of Exhibit F;

(xi) duly executed counterparts of Master Stumpage Agreements and the pulpwood
supply agreements, each substantially in the form of Exhibit G-1

 

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(the “Pulpwood Supply Agreements”), and the log supply agreements, each
substantially in the form of Exhibit G-2 (the “Log Supply Agreements” and,
collectively with the Pulpwood Supply Agreements, the “Fiber Supply Agreements”)
and the support agreements in respect of the Pulpwood Supply Agreements,
substantially in the form of Exhibit G-3 or Exhibit G-4, as applicable (the
“Pulpwood Support Agreements”), and the support agreements in respect of the Log
Supply Agreements, substantially in the form of Exhibit G-5 or Exhibit G-6, as
applicable (the “Log Support Agreements” and, collectively with the Pulpwood
Support Agreements, the “Support Agreements”);

(xii) an affidavit stating the taxpayer identification number of Seller and that
Seller is not a “foreign person” for purposes of Section 1445 of the Code and
the regulations thereunder;

(xiii) affidavits stating the taxpayer identification number of each of the
Other Selling Parties and that none of the Other Selling Parties is a “foreign
person” for purposes of Section 1445 of the Code and the regulations thereunder;

(xiv) such title affidavits as are reasonably requested by the Title Company,
substantially in the form of Exhibit H;

(xv) a duly executed counterpart of an assignment agreement transferring to the
relevant Buying Party the Timber Entity Interests being conveyed to such Buying
Party, substantially in the form of Exhibit I-1 or Exhibit I-2, as applicable
(the “Assignment of Timber Entity Interests”);

(xvi) such assignments, bills of sale, certificates of title and other
instruments of assignment and conveyance, all in form reasonably satisfactory to
each Cash Entity, as are necessary to convey fully and effectively to each Cash
Entity, Timber Entity or Buyer Affiliate, as the case may be, the Purchased
Assets (other than the Purchased Real Property Assets and the Timber Entity
Interests) in accordance with the terms hereof; and

(xvii) a duly executed counterpart of the Surface Use Agreement.

(b) Closing Deliveries by Buyer Parent, Buyer, Cash Entity and Buyer Affiliate.
At the Closing, the relevant Buyer Parent, Buyer, Cash Entity or Buyer Affiliate
shall deliver or cause the following items to be delivered to Seller:

(i) the Purchase Price (subject to all pre-Closing adjustments as provided in
Article II), including the Timber Notes issued by Buyers in respect of the
Installment Note Purchase Price;

 

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(ii) the Letters of Credit securing the Timber Notes issued by Buyers in respect
of the Installment Note Purchase Price;

(iii) certificates of a duly authorized officer of each Buyer, Cash Entity and
Buyer Parent attesting to the matters set forth in Sections 12.3(b) and 12.3(c);

(iv) duly executed counterparts of each General Assignment and Assumption;

(v) duly executed counterparts of each Assignment and Assumption of Timberland
Lease with respect to each of the Cash Timberland Leases;

(vi) duly executed counterpart of each Assignment and Assumption of Cash Real
Property Leases;

(vii) duly executed Buyer Parent Instruments of Assumption in respect of the
Assumed Liabilities;

(viii) any Conveyance Instruments in respect of the Purchased Assets to which
Buyer Parent, Buyer, Cash Entity, Timber Entity or Buyer Affiliate is a Party;

(ix) one or more easements to the extent necessary to evidence the right of
Seller, the Selling Parties, or such other parties as shall be designated by
Seller to use the Reserved Easements;

(x) duly executed counterparts of the Master Stumpage Agreements, the Fiber
Supply Agreements duly executed by the Substitute Designee and the Support
Agreements;

(xi) a duly executed counterpart of each Assignment of Timber Entity Interests;

(xii) all such other instruments of assumption necessary, in the reasonable
opinion of Seller, for each Buyer Parent and Cash Entity to assume the Assumed
Liabilities;

(xiii) a duly executed counterpart of the Pulpwood First Right of Offer
Agreement; and

(xiv) a duly executed counterpart of the Surface Use Agreement;

(xv) a duly executed counterpart of the Pay-As-Cut Timber Contract.

 

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(c) Deliveries by Timber Entity. Immediately prior to the Closing, Seller shall
cause each Timber Entity to deliver to Seller:

(i) duly executed counterparts of each Timber Entity Instrument of Assumption in
respect of the Timber Entity Assumed Liabilities;

(ii) duly executed counterparts of each General Timber Entity Assignment and
Assumption; and

(iii) any other conveyance documents described in Section 3.2(a) to which any
Timber Entity will be a party.

(d) Other Closing Deliveries. The Parties shall each execute and deliver (and,
prior to the Closing, Seller shall cause the relevant Timber Entity to execute
and deliver, and, from and after Closing, the Buyer Representative shall cause
the relevant Timber Entity to execute and deliver) such other and further
certificates, assurances and documents as may reasonably be required by the
other Parties in connection with the consummation of the transaction
contemplated by this Agreement.

Section 3.3 Possession.

Possession of the Purchased Real Property Assets being transferred at the
Closing shall be delivered to the relevant Cash Entity at the Closing (or, in
the case of the Installment Note Timberlands, to the relevant Timber Entity
immediately prior to the Closing), subject to the Permitted Exceptions.

Section 3.4 Costs and Expenses.

Each Party shall be responsible for its own attorneys’ fees and expenses. The
Selling Parties shall prepare the Deeds at the Selling Parties’ expense. Buyer
Parents shall pay all other costs associated with filing any documents,
including the Deeds and each Assignment and Assumption of Timberland Lease, to
be recorded. Buyer Parents shall be responsible for any recapture, reassessment,
roll-back Taxes or changes in Tax assessments in respect of the Purchased Assets
that may become due and payable after the Closing caused by any action or
inaction of any Buying Party with respect to the removal of the Purchased Assets
after the Closing from their present classifications, or changes in use after
the Closing. The Buyer Parents collectively, on the one hand, and the Selling
Parties, on the other hand, shall bear one-half of (i) all sales, use, excise,
documentary, stamp duty, registration, transfer, conveyance, economic interest
transfer and other similar Taxes related to the conveyance of the Purchased
Assets (including the Timber Entity Assets) from the Selling Parties to the
Buying Parties arising in connection with the transactions contemplated by this
Agreement (collectively, “Transfer Taxes”), and the Party having primary
responsibility under applicable Law shall timely prepare and file Tax Returns in
respect of such Transfer Taxes with the applicable Tax Authority

 

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and (ii) the costs incurred by the Parties with respect to any dispute
resolution conducted pursuant to Section 9.5 hereof. Each of the Buyer Parents,
on the one hand, and the Selling Parties, on the other hand, shall pay one-half
of all filing fees incurred with respect to all filings made under the HSR Act
in connection with this Agreement. All other costs shall be paid by the Party
incurring such costs.

ARTICLE IV

BUYING PARTIES’ ACKNOWLEDGEMENTS

Section 4.1 Buying Parties’ Acknowledgements.

(a) Each Buyer Parent, Buyer, Cash Entity and Buyer Affiliate, on behalf of
itself, and each Buyer Parent, on behalf of the Timber Entities which are to be
its indirect wholly owned Subsidiaries, acknowledges that, except as is
specifically set forth herein or in the certificate, agreements and other
documents delivered at Closing pursuant to Sections 3.2(a)(i), (x), (xi),
(xii) and (xiii), no Selling Party has made, does make or has authorized anyone
else to make, any representations, warranties or promises of any kind, including
as to: (i) the existence or non-existence of access to or from the Purchased
Real Property Assets or any portion thereof; (ii) the location of the Purchased
Real Property Assets or any portion thereof within any flood plain, flood prone
area, watershed or the designation of any portion thereof as “wetlands”;
(iii) the availability of water, sewer, electrical, gas or other utility
services at or on the Purchased Real Property Assets; (iv) the number of acres
or square footage in the Purchased Real Property Assets; (v) the present or
future physical condition or suitability of the Purchased Assets for any
purpose; (vi) the actual amount and type of timber on the Purchased Real
Property Assets, if any; or (vii) any other matter or thing affecting or
relating to the Purchased Assets or this Agreement.

(b) Each Buyer Parent, Buyer, Cash Entity and Buyer Affiliate, on behalf of
itself, and each Buyer Parent, on behalf of those Timber Entities which are to
be its indirect wholly owned Subsidiaries, acknowledges that (i) the Selling
Parties have not obtained mineral title searches and will not provide a title
commitment for the Conveyed Minerals; and (ii) it will be the relevant Buyer
Parent’s responsibility, at the relevant Buyer Parent’s cost, if the relevant
Buyer Parent desires, to confirm the exact Conveyed Mineral interest and title
being conveyed.

(c) EACH BUYER PARENT, BUYER, CASH ENTITY AND BUYER AFFILIATE, ON BEHALF OF
ITSELF, AND BUYER PARENT, ON BEHALF OF THOSE TIMBER ENTITIES WHICH ARE TO BE ITS
INDIRECT WHOLLY OWNED SUBSIDIARIES, ACKNOWLEDGES THAT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLES V, VI AND VII, IN THE
CERTIFICATES DELIVERED BY SELLER AT THE CLOSING

 

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PURSUANT TO SECTIONS 3.2(A)(I) AND 3.2(A)(XII) AND IN THE DEEDS DELIVERED BY
SELLER PURSUANT TO SECTIONS 3.2(A)(V), 3.2(A)(VI), 3.2(A)(VIII) AND 3.2(A)(IX)
OR THE CERTIFICATES DELIVERED BY THE OTHER SELLING PARTIES PURSUANT TO
SECTION 3.2(A)(XIII): (I) NO REPRESENTATIONS, WARRANTIES OR PROMISES, EXPRESS OR
IMPLIED, HAVE BEEN OR ARE BEING MADE BY OR ON BEHALF OF ANY SELLING PARTY OR ANY
OTHER PERSON, INCLUDING WITH RESPECT TO THE CONDITION OR VALUE OF THE PURCHASED
ASSETS AND EACH OF THE SELLING PARTIES HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES
RELATING TO THE PURCHASED ASSETS, EITHER EXPRESS OR IMPLIED, INCLUDING
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND SUITABILITY FOR ITS
INTENDED USE, AND (II) IN ENTERING INTO THIS AGREEMENT, NO BUYER PARENT, BUYER,
CASH ENTITY OR BUYER AFFILIATE HAS RELIED ON OR DOES RELY ON ANY SUCH
REPRESENTATIONS, WARRANTIES OR PROMISES, EXPRESS OR IMPLIED, BY OR ON BEHALF OF
ANY SELLING PARTY OR ANY OTHER PERSON. EACH BUYER PARENT, BUYER, CASH ENTITY,
TIMBER ENTITY AND BUYER AFFILIATE SHALL TAKE THE PURCHASED ASSETS IN “AS IS,
WHERE IS, AND WITH ALL FAULTS” CONDITION ON THE CLOSING DATE, EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT.

UPON THE CLOSING, SUBJECT TO SECTION 1.7 AND ARTICLE XIII, EACH BUYER PARENT,
BUYER, CASH ENTITY, TIMBER ENTITY AND BUYER AFFILIATE SHALL ASSUME THE RISK THAT
ADVERSE MATTERS, INCLUDING ADVERSE ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN
REVEALED BY SELLER’S OR ANY BUYER PARENT’S INVESTIGATIONS, AND, UPON THE
CLOSING, EACH BUYER PARENT, BUYER, CASH ENTITY, TIMBER ENTITY AND BUYER
AFFILIATE SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER AND
THE SELLING PARTIES FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF
ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS
AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND
OR CHARACTER, KNOWN OR UNKNOWN, WHICH ANY BUYER PARENT, BUYER, CASH ENTITY,
TIMBER ENTITY OR BUYER AFFILIATE MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER
AND THE OTHER SELLING PARTIES AT ANY TIME BY REASON OF OR ARISING OUT OF
PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING ANY
ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES
OR MATTERS REGARDING THE PURCHASED REAL PROPERTY ASSETS. EACH BUYER PARENT,
BUYER, CASH ENTITY AND BUYER AFFILIATE, ON BEHALF OF ITSELF, AND BUYER PARENT,
ON BEHALF OF THOSE TIMBER ENTITIES WHICH ARE TO BE ITS INDIRECT

 

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WHOLLY OWNED SUBSIDIARIES, AGREES THAT, SUBJECT TO SECTION 1.7 AND ARTICLE XIII
BELOW, SHOULD ANY INVESTIGATION, CLEANUP, REMEDIATION, CORRECTIVE ACTION OR
REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ADVERSE ENVIRONMENTAL CONDITIONS ON THE
PURCHASED REAL PROPERTY ASSETS BE REQUIRED AFTER THE CLOSING, SUCH
INVESTIGATION, CLEAN-UP, REMOVAL, CORRECTIVE ACTION OR REMEDIATION SHALL BE THE
RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF THE
RELEVANT BUYER PARENT.

(d) Each Buyer Parent acknowledges that any materials provided to any Buying
Party, including any cost or other estimates, projections, acreage, and timber
information, the Confidential Information Memorandum dated November 2005, the
management presentations and the materials and information provided on data
disks or in the data room, are not and shall not be deemed representations or
warranties by or on behalf of any Selling Party or any other Person and are not
to be relied upon by any Buying Party, provided that the Seller’s Disclosure
Letter may be relied upon to the extent expressly provided in this Agreement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER RELATED TO THE PURCHASED ASSETS

Except as otherwise disclosed to Buyer Parents in the disclosure letter (the
“Seller’s Disclosure Letter”) delivered to each Buyer Parent by Seller on the
date hereof (except for those sections of the Seller’s Disclosure Letter that
contemplate delivery on a date other than the date hereof), Seller represents
and warrants to each Buyer Parent, as of the date hereof and as of the Closing
Date, as follows:

Section 5.1 Organization.

(a) Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of New York and has all requisite corporate
power and authority to: (i) own, lease and operate its properties and assets and
to carry on its business as now being conducted; (ii) execute this Agreement and
all other agreements, instruments and documents to be executed by it in
connection with the consummation of the transactions contemplated by this
Agreement and such other agreements (the “Ancillary Agreements”); and
(iii) perform its obligations and consummate the transactions contemplated
hereby and by the Ancillary Agreements.

(b) Each of the Other Selling Parties is duly organized or incorporated, validly
existing and in good standing under the laws of the state in which it is
organized

 

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or incorporated and has all requisite corporate power and authority or limited
liability company power and authority, as the case may be, to: (i) own, lease
and operate its properties and assets and to carry on its business as now being
conducted; (ii) execute this Agreement and all Ancillary Agreements to which it
is a party; and (iii) perform its obligations and consummate the transactions
contemplated hereby and by the Ancillary Agreements to which it is a party.

Section 5.2 Qualification.

(a) Seller is qualified or registered as a foreign corporation for the
transaction of business and is in good standing under the laws of each
jurisdiction in which the location of its properties makes such qualification
necessary, other than those jurisdictions as to which the failure to be so
qualified or registered would not, individually or in the aggregate, have a
Material Adverse Effect or a material adverse effect on Seller’s ability to
perform its obligations under this Agreement and the Ancillary Agreements.

(b) Each of the Other Selling Parties is qualified or registered as a foreign
corporation, limited liability company or other organization for the transaction
of business and is in good standing under the Laws of each jurisdiction in which
the location of its properties makes such qualification necessary, other than
those jurisdictions as to which the failure to be so qualified or registered
would not, individually or in the aggregate, have a Material Adverse Effect or a
material adverse effect on such Other Selling Party’s ability to perform its
obligations under this Agreement or any Ancillary Agreement to which it is a
party.

Section 5.3 Authority.

The execution, delivery and performance of this Agreement and the consummation
of transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Seller are necessary for it to authorize this Agreement or to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of transactions contemplated hereby have
been, or will be as of the Closing Date, duly and validly authorized by all
necessary corporate, limited liability company or partnership action, as the
case may be, and no other corporate, limited liability company or partnership
proceedings, as the case may be, on the part of any of the Other Selling Parties
are necessary for any of the Other Selling Parties to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Selling Parties and, assuming due
authorization, execution and delivery by each Buyer Parent, Buyer, Cash Entity
and Buyer Affiliate, is a legal, valid and binding obligation of each Selling
Party, enforceable against each Selling Party in accordance with its terms,
subject to

 

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bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar Laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.

Section 5.4 No Conflict.

None of the execution, delivery or performance of this Agreement by the Selling
Parties will result in a breach or violation of, or default under, (i) the
terms, conditions or provisions of Seller’s articles of incorporation, bylaws or
any standing resolution of its board of directors or any organizational document
of any Other Selling Party; (ii) any material Contract to which any Selling
Party is a party or by which any Selling Party or any of the assets of any
Selling Party may be bound; (iii) any Law applicable to any Selling Party or any
of its assets; or (iv) any permit, license, order, judgment or decree of any
Governmental Authority by which any Selling Party or the assets of any Selling
Party is or may be bound, excluding from the foregoing clauses (ii), (iii) and
(iv) such breaches, violations or defaults that would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect or a
material adverse effect on the Seller’s ability to perform its respective
obligations under this Agreement and the Ancillary Agreements.

Section 5.5 Consents and Approvals.

There are no approvals, consents or registration requirements with respect to
any Governmental Authority or any other Person that are or will be necessary for
the valid execution and delivery by any Selling Party of this Agreement and the
Ancillary Agreements, or the consummation of the transactions contemplated
hereby and thereby, other than (i) those described on Section 5.5 of the
Seller’s Disclosure Letter and (ii) those which (a) have been obtained, (b) are
of a routine nature and not customarily obtained or made prior to execution of
purchase and sale agreements in transactions similar in nature to those
contemplated hereby and where the failure to obtain the same would not,
individually or in the aggregate, have a Material Adverse Effect or a material
adverse effect on Seller’s ability to perform its obligations under this
Agreement and the Ancillary Agreements, or (c) are required under the HSR Act.

Section 5.6 Litigation.

(a) Except as set forth in Section 5.6(a) of the Seller’s Disclosure Letter, as
of the date hereof, there are no Claims or, to the Selling Parties’ Knowledge,
threatened Claims which (i) either (A) seek to restrain or enjoin the execution
and delivery of this Agreement or any Ancillary Agreement or the consummation of
any of the transactions contemplated hereby or thereby or (B) affect or relate
to any of the Purchased Assets and (ii) would be reasonably likely, individually
or in the aggregate, to

have a Material Adverse Effect or a material adverse effect on Seller’s ability
to perform its obligations under this Agreement and the Ancillary Agreements.

 

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(b) As of the date hereof, there are no judgments or outstanding orders,
injunctions, decrees, stipulations or awards (whether rendered by a Governmental
Authority or by an arbitrator) against any Selling Party (or affecting any of
their respective assets, including the Purchased Real Property Assets) which
prohibit or restrict or could reasonably be expected to result in any material
delay of the consummation of the transactions contemplated by this Agreement or
the Ancillary Agreements.

Section 5.7 Taxes.

Except for such Liens as are reflected in the Title Commitments or are not
reasonably likely, individually or in the aggregate, to have a material adverse
effect on the use and enjoyment by any Buying Party of the Timberlands or any
material portion thereof, there are no Liens or other encumbrances, other than
the Permitted Exceptions, on any of the Purchased Assets that arose in
connection with any failure or alleged failure by Seller or any Selling Party to
pay any Tax. All material Taxes related to the Purchased Assets required to be
withheld and paid have been withheld and have been paid, except for (i) such
Taxes the failure to pay which would not be reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect and (ii) any Taxes being
contested in good faith.

Section 5.8 Contracts.

Section 5.8 of the Seller’s Disclosure Letter contains a list, and the Selling
Parties have made available to Buyer Parent copies, of:

(a) each Purchased Contract and Personal Property Lease that is in effect on the
date of this Agreement and that (i) requires expenditures or receipts,
performance of services or delivery of goods or materials by or to any Selling
Party in an amount or of value in excess of $250,000 per year or $1,000,000 over
the term of such Purchased Contract or Personal Property Lease and (ii) is not
terminable by the Selling Party thereto upon notice of 180 days or less;

(b) each Purchased Contract for capital expenditures or the acquisition or
construction of fixed assets which (i) requires aggregate future payments in
excess of $250,000 and (ii) is not terminable by the Selling Party thereto upon
notice of 180 days or less; and

(c) each material amendment, supplement, and modification in respect of any of
the foregoing.

 

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Section 5.9 Continuing Agreements.

The Continuing Agreements (as defined below) in effect as of the date of this
Agreement, except for those Continuing Agreements that would not be reasonably
likely, individually or in the aggregate, to have a material adverse effect on
the use and enjoyment by each Buying Party of the Timberlands or any material
portion thereof, are listed in Section 5.9 of the Seller’s Disclosure Letter.
Each Buyer Parent has been provided with copies of or access to the Continuing
Agreements set forth in Section 5.9 of the Seller’s Disclosure Letter.

Section 5.10 Brokers and Advisors.

Except for fees payable to Goldman Sachs & Co. Inc., UBS Securities LLC and
Lazard Frères & Co., no broker, investment banker, financial advisor or other
Person is entitled to any broker’s, finder’s, financial advisor’s or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made on or behalf of any of the Selling
Parties.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF SELLER RELATED TO THE PURCHASED REAL PROPERTY
ASSETS

Except as otherwise disclosed to Buyer Parents in the Seller’s Disclosure Letter
delivered to each Buyer Parent by Seller on the date hereof (except for those
sections of the Seller’s Disclosure Letter that contemplate delivery on a date
other than the date hereof), Seller represents and warrants to each Buyer
Parent, as of the date hereof and as of the Closing Date, as follows:

Section 6.1 Title to the Timberlands.

Except as set forth in Section 6.1 of the Seller’s Disclosure Letter, to the
Selling Parties’ Knowledge, as of the time of the Closing (or, in the case of
Installment Note Timberlands, immediately prior to the Closing), the Selling
Parties own (i) fee simple title to the Owned Timberlands and (ii) leasehold
title to the Leasehold Interests, in each case free and clear of all Liens, but
subject to the Permitted Exceptions. At the Closing, each Cash Entity will
receive (i) fee simple title to the Owned Cash Timberlands being conveyed to it
and (ii) leasehold title to the Cash Leasehold Interests being conveyed to it,
in each case free and clear of all Liens, but subject to the Permitted
Exceptions. In the case of the Installment Note Timberlands, immediately prior
to the Closing, each Timber Entity will receive (i) fee simple title to the
Owned Installment Note Timberlands being conveyed to it and (ii) leasehold title
to the Timber Entity Leasehold Interests being conveyed to it, in each case free
and clear of all Liens, but subject to the Permitted Exceptions.

 

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Section 6.2 Timber Entity.

Immediately prior to the Closing, each Timber Entity will be a newly formed
limited liability company or limited partnership, validly existing and in good
standing under the Laws of the state of its formation. Immediately prior to the
Closing, each Timber Entity will not have conducted any operations other than
acquiring the Timber Entity Assets and assuming the Timber Entity Assumed
Liabilities immediately prior to the Closing and will have no liabilities prior
to acquiring the Timber Entity Assets. Immediately prior to the Closing Date,
the Selling Parties will own of record and beneficially all of the Timber Entity
Interests and, immediately after the Closing, the Buying Parties (other than the
Timber Entities) will own of record and beneficially all of the Timber Entity
Interests.

Section 6.3 Compliance with Laws.

(a) The Selling Parties hold all licenses, certificates, permits, franchises,
approvals, exemptions, registrations and rights of any Governmental Authority
which are necessary to conduct operations on the Timberlands as presently
conducted, except for those licenses, certificates, permits, franchises,
approvals, exemptions, registrations and rights the failure to hold which would
not be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect.

(b) The Selling Parties are presently operating the Timberlands in substantial
compliance with applicable Laws, other than Environmental Laws which are covered
by Section 6.4 and except for those violations, if any, that would not be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect.

Section 6.4 Matters Relating to the Environmental Condition of the Timberlands.

Except as described in Section 6.4 of the Seller’s Disclosure Letter, as set
forth in the Phase I Reports or as would not be reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect, (i) to the Selling
Parties’ Knowledge, there is no condition existing on the Timberlands that
constitutes a violation of any applicable Environmental Law, (ii) to the Selling
Parties’ Knowledge, there is no existing Adverse Environmental Condition on the
Timberlands, (iii) to the Selling Parties’ Knowledge, the Selling Parties are
operating the Timberlands in compliance with all applicable Environmental Laws
and the requirements of all applicable Environmental Permits, (iv) no Selling
Party has received any written notice of any violation of, or liability under,
any Environmental Law in connection with the Selling Parties’ operations on the
Purchased

 

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Assets during the past five years, and (v) there are no material writs,
injunctions, decrees, orders or judgments outstanding or any actions, suits,
proceedings or investigations pending or, to the Selling Parties’ Knowledge,
threatened relating to the Selling Parties’ compliance with or liability under
any Environmental Law affecting the Purchased Assets.

Section 6.5 No Casualty Loss.

Except as described in Section 6.5 of the Seller’s Disclosure Letter, from
November 15, 2005 to the date hereof, to the Selling Parties’ Knowledge, there
has been no Casualty Loss on any FMA that affects more than 100 acres.

Section 6.6 Condemnations.

Except as described in Section 1.1(g) of the Seller’s Disclosure Letter, there
are no Condemnations and no Condemnations have been concluded between January 1,
2006 and the date hereof.

Section 6.7 Timberland Leases and Real Property Leases.

Except as described in Section 6.7 of the Seller’s Disclosure Letter, with
respect to each Timberland Lease and Real Property Lease or except as would not
be reasonably likely, individually or in the aggregate, to have a material
adverse effect on the use and enjoyment any Buying Party of the Timberlands or
any portion thereof: (i) such Timberland Lease or Real Property Lease is legal,
valid, binding, enforceable and in full force and effect; (ii) the transactions
contemplated by this Agreement or the Ancillary Agreements will not result in a
breach or default under such Timberland Lease or Real Property Lease, or
otherwise cause such Timberland Lease or Real Property Lease to cease to be
legal, valid, binding, enforceable and in full force and effect on identical
terms following the Closing; (iii) no Selling Party, or to the Selling Parties’
Knowledge, any other Party to such Timberland Lease or Real Property Lease is in
breach or default under such Timberland Lease or Real Property Lease; and
(iv) no event has occurred or failed to occur or circumstances exist which, with
the delivery of notice, the passage of time or both, would constitute a breach
or default under such Timberland Lease or Real Property Lease or permit the
termination, modification or acceleration of rent under such Timberland Lease or
Real Property Lease.

 

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ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF SELLER RELATED TO THE OTHER PURCHASED ASSETS

Except as otherwise disclosed to Buyer Parents in the Seller’s Disclosure Letter
delivered to each Buyer Parent by Seller on the date hereof (except for those
sections of the Seller’s Disclosure Letter that contemplate delivery on a date
other than the date hereof), Seller represents and warrants to each Buyer
Parent, as of the date hereof and as of the Closing Date, as follows:

Section 7.1 Collective Bargaining Agreements.

Except as set forth in Section 7.1 of the Seller’s Disclosure Letter, no Selling
Party is a party to any collective bargaining agreement with respect to any of
its Eligible Employees.

Section 7.2 Labor Matters.

(a) Except as set forth in Section 7.2(a) of the Seller’s Disclosure Letter,
(i) there is no material labor strike, dispute, slowdown, stoppage or lockout
ongoing or, to the Selling Parties’ Knowledge, threatened against or affecting
the Purchased Assets; (ii) there is no unfair labor practice charge or complaint
against any Selling Party (relating to the Purchased Assets) pending (for which
written notice has been provided) or, to the Selling Parties’ Knowledge,
threatened before the National Labor Relations Board; and (iii) to the Selling
Parties’ Knowledge, no Selling Party has received written notice of the intent
of any Governmental Authority responsible for the enforcement of labor or
employment laws to conduct an investigation with respect to or relating to the
Purchased Assets and no such investigation is in progress, other than, with
respect to clauses (i), (ii) and (iii), such strikes, disputes, slowdowns,
stoppages, lockouts, charges, complaints or investigations as would not be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect.

(b) Section 7.2(b) of the Seller’s Disclosure Letter contains a schedule
listing, as of the date set forth therein, all names, employee positions,
annualized pay rates and target bonus opportunities, where applicable, for all
Selling Party employees whose duties are performed primarily for the benefit of
any of the Purchased Assets (the “Eligible Employees”).

Section 7.3 Ownership of Purchased Personal Assets.

The Selling Parties have title to all of the Purchased Personal Assets, free and
clear of any Liens, except for encumbrances that in the aggregate are not
substantial in amount, do not materially detract from the value of the assets
subject thereto, and do not materially interfere with the present use thereof.

 

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Section 7.4 Employee Benefit Plans; ERISA.

(a) Section 7.4(a) of the Seller’s Disclosure Letter lists all material benefit
and compensation plans and contracts, including “employee benefit plans” within
the meaning of Section 3(3) of ERISA, and all deferred compensation, stock
option, stock purchase, stock appreciation rights, stock-based incentive and
bonus plans maintained or contributed to by any Selling Party for the benefit of
any Eligible Employee (collectively, the “Plans”). True and complete copies of
all material Plans, including any trust instruments and insurance contracts
forming a part of any Plans, and all amendments thereto have been provided or
made available to each Buyer Parent.

(b) Each of the Plans has been administered in accordance with its terms and in
substantial compliance with applicable Law (including, where applicable, ERISA
and the Code), except where the failure to so administer such Plan is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect.

(c) Each of the Plans intended to be “qualified” within the meaning of
Section 401(a) of the Code has been determined by the Internal Revenue Service
to be so qualified, and Seller knows of no fact or set of circumstances that has
adversely affected, or is reasonably likely to affect adversely, the
qualification of such Plan prior to the Closing.

(d) Except as set forth in Section 7.4(d) of the Seller’s Disclosure Letter, no
Plan provides medical, surgical, hospitalization, death or similar benefits
(whether or not insured) for any Eligible Employee for periods extending beyond
their termination of service (by retirement or otherwise), other than
(i) coverage mandated by applicable Law, (ii) death benefits under any “pension
plan,” as that term is defined in Section 3(2) of ERISA, or (iii) benefits the
full cost of which is borne by the Eligible Employee (or his beneficiary).

(e) There are no pending or, to the Selling Parties’ Knowledge, threatened
claims (other than routine claims for benefits) by, on behalf of or against any
of the Plans or any trusts related thereto, except for those claims that are
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect.

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES OF BUYING PARTIES

Except as otherwise disclosed to Seller in a disclosure letter (the “Buyer
Parents’ Disclosure Letter”) delivered to Seller by each Buyer Parent on the
date hereof (except

 

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for those sections of the Buyer Parents’ Disclosure Letter that contemplate
delivery on a date other than the date hereof), each Buying Party severally
represents and warrants to Seller, as of the date hereof and as of the Closing
Date as follows:

Section 8.1 Organization.

Such Buyer Parent, Buyer, Cash Entity and Buyer Affiliate is a limited liability
company or limited partnership duly organized and such Buyer Parent, Buyer, Cash
Entity and Buyer Affiliate are validly existing and in good standing under the
laws of the State of Delaware. Such Buyer Parent, Buyer, Cash Entity and Buyer
Affiliate has all requisite limited liability company or limited partnership
power and authority to: (i) own, lease and operate its properties and assets and
to carry on its business as now being conducted; (ii) execute this Agreement and
the Ancillary Agreements to be executed by it in connection with the
consummation of the transactions contemplated hereby and thereby; and
(iii) perform its obligations and consummate the transactions contemplated
hereby and thereby. Immediately prior to the Closing, such Buyer will be a newly
formed limited liability company and will not have conducted any operations or
engaged in any activities other than those related to the acquisition of the
relevant Timber Entities, the issuance of the relevant Timber Notes and
obtaining the relevant Letters of Credit, as contemplated by the Transaction
Documents.

Section 8.2 Qualification.

Such Buyer Parent, Buyer, Cash Entity and Buyer Affiliate is qualified or
registered as a foreign limited liability company or limited partnership for the
transaction of business and such Buyer Parent, Buyer, Cash Entity and Buyer
Affiliate is in good standing under the laws of each jurisdiction in which the
location of its properties makes such qualification necessary, other than those
jurisdictions as to which the failure to be so qualified or registered would
not, individually or in the aggregate, have a material adverse effect on the
financial condition or results of the operations of such Buyer Parent, Buyer,
Cash Entity or Buyer Affiliate, as the case may be, or on the ability of such
Buyer Parent, Buyer, Cash Entity or Buyer Affiliate as the case may be, to
perform its obligations under this Agreement and the Ancillary Agreements to be
executed by it.

Section 8.3 Authority.

The execution, delivery and performance of this Agreement and the consummation
of transactions contemplated hereby have been, or will be as of the Closing
Date, duly and validly authorized by all necessary limited liability company
action or limited partnership action, as the case may be, and no other limited
liability company or limited partnership proceedings on the part of such Buyer
Parent, Buyer, Cash Entity or Buyer Affiliate is necessary for such Buyer
Parent, Buyer, Cash Entity or Buyer Affiliate, to authorize this Agreement or to
consummate the transactions

 

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contemplated hereby. This Agreement has been duly and validly executed and
delivered by such Buyer Parent, Buyer, Cash Entity and Buyer Affiliate and,
assuming due authorization, execution and delivery by the Selling Parties, is a
legal, valid and binding obligation of such Buyer Parent, Buyer, Cash Entity and
Buyer Affiliate, enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar Laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.

Section 8.4 No Conflict.

The execution, delivery, and performance by such Buyer Parent, Buyer, Cash
Entity and Buyer Affiliate of this Agreement or any of the Ancillary Agreements
to which it is a party will not result in a breach or violation of, or default
under, (i) the terms, conditions or provisions of the certificate of formation
or limited liability company agreement or limited partnership agreement of such
Buyer Parent, Buyer, Cash Entity or Buyer Affiliate, or any material Contract to
which such Buyer Parent, Buyer, Cash Entity or Buyer Affiliate is a party or by
which any Buyer Parent, Buyer, Cash Entity or Buyer Affiliate or any of their
respective assets may be bound; (ii) any Law applicable to it; or (iii) any
permit, license, order, judgment or decree of any Governmental Authority by
which such Buyer Parent, Buyer, Cash Entity or Buyer Affiliate or any of their
respective assets is or may be bound, excluding from the foregoing clauses (i),
(ii) or (iii) such breaches, violations or defaults that would not be reasonably
likely, individually or in the aggregate, to have a material adverse effect on
the financial condition or results of operations of such Buyer Parent, Buyer,
Cash Entity or Buyer Affiliate or on the ability of such Buyer Parent, Buyer,
Cash Entity or Buyer Affiliate to perform its obligations under this Agreement
and the Ancillary Agreements to be executed by it.

Section 8.5 Consents and Approvals.

There are no approvals, consents or registration requirements with respect to
any Governmental Authority that are or will be necessary for the valid execution
and delivery by such Buyer Parent, Buyer, Cash Entity or Buyer Affiliate of this
Agreement and the Ancillary Agreements, or the consummation of the transactions
contemplated hereby and thereby, other than those which (i) have been obtained,
(ii) are of a routine nature and not customarily obtained or made prior to
execution of purchase and sale agreements in transactions similar in nature to
those contemplated hereby and where the failure to obtain the same would not,
individually or in the aggregate, have a material adverse effect on the
financial condition or results of operations of any such Buyer Parent, Buyer,
Cash Entity or Buyer Affiliate or on the ability of such Buyer Parent, Buyer,
Cash Entity or Buyer Affiliate to perform its obligations under this Agreement
and the Ancillary Agreements to be executed by it, (iii) may be required to be
obtained by any Cash Entity or Timber Entity to conduct operations on the
Purchased Real Property Assets, or (iv) may be required under the HSR Act.

 

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Section 8.6 Litigation.

(a) As of the date hereof, there are no claims against such Buyer Parent, Buyer,
Cash Entity or Buyer Affiliate or, to the knowledge of such of the Buying
Parties, any threatened claims against any Buyer Parent, Buyer, Cash Entity or
Buyer Affiliate, which either alone or in the aggregate seek to restrain or
enjoin the execution and delivery of this Agreement or the Ancillary Agreements
or the consummation of any of the transactions contemplated hereby or thereby.

(b) As of the date hereof, there are no judgments or outstanding orders,
injunctions, decrees, stipulations or awards (whether rendered by a Governmental
Authority or by an arbitrator) against such Buyer Parent, Buyer, Cash Entity or
Buyer Affiliate (or affecting any of such parties’ respective assets) which
prohibit or restrict or could reasonably be expected to result in any delay of
the consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements.

Section 8.7 Availability of Funds.

Such Buyer Parent currently has enforceable commitments for, and will at the
Closing (or at such other time as any such amounts shall become due and payable)
have available, sufficient funds to pay the Purchase Price allocable to such
Buyer Parent and to pay any and all other amounts payable by the Buying Parties
related to such Buyer Parent pursuant to this Agreement and to effect the
transactions contemplated hereby.

Section 8.8 Investment Purpose.

Such Buyer Parent and Buyer represents and warrants that such Buyer is acquiring
the Timberlands and the Timber Entity Interests being transferred to it for its
own account and not as nominee, agent or intermediary for any other Person.
Except as may be permitted by Section 15.4, as of the date of this Agreement,
such Buying Parties have not entered into any plan, agreement or other
arrangement to transfer or otherwise dispose of any interest in the Installment
Note Timberlands (except as contemplated by the Master Stumpage Agreements), or
any plan, agreement or other arrangement to transfer or otherwise dispose of any
interest in any Timber Entity, to any other Person (including another Buying
Party), and such Buyer Parent has not entered into any plan, agreement or other
arrangement to transfer or otherwise dispose of any interest in such Buyer to
any other Person (including another Buying Party), and such Buying Parties will
not enter into any such plan, agreement or other arrangement prior to the
Closing; provided that such Buyer Parent may designate one or more Affiliates to
acquire all or a portion of the Cash Timberlands.

 

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Section 8.9 Brokers and Advisors.

No broker, investment banker, financial advisor or other Person is entitled to
any broker’s, finder’s, financial advisor’s or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made on or behalf of any of such Buying Parties.

Section 8.10 Tax Matters.

Each Buyer is treated as a “disregarded entity” of the relevant Buyer Parent for
U.S. federal Income Tax purposes and all applicable state and local Income Tax
purposes in state and local jurisdictions following the U.S. federal Income Tax
treatment of entities.

Section 8.11 Financing.

(a) Concurrently with the execution of this Agreement, RMS Buyer Parent and FIA
Buyer Parent have delivered complete copies of certain revised executed
commitment letters dated as of May 26, 2006 from the parties listed in
Section 8.11(a)(i) of the Buyer Parents’ Disclosure Letter and concurrently with
the execution of the original purchase agreement among the Parties, RMS Buyer
Parent and FIA Buyer Parent delivered copies of executed commitment letters from
the parties listed in Section 8.11(a)(ii) of the Buyer Parents’ Disclosure
Letter (the “Equity Commitment Letters”), to provide equity financing to the
Buyer Parent identified therein in the amount noted therein (the “Equity
Financing”).

(b) Concurrently with the execution of this Agreement, RMS Buyer Parent has
delivered complete copies of an executed commitment letter, dated May 26, 2006
(the “Debt Commitment Letter”), from Metropolitan Life Insurance Company (the
“Lender”) to provide RMS Buyer Parent $1,420,000,000 in senior secured term loan
financing (the “Debt Financing”).

(c) (i) As of May 26, 2006, the Debt Commitment Letter and each Equity
Commitment Letter delivered May 26, 2006 and (ii) as of April 4, 2006, each
Equity Commitment Letter delivered April 4, 2006, in the form so delivered is
valid and in full force and effect and no event has occurred which, with or
without notice, lapse of time or both, would constitute a default or breach on
the part of the relevant Buyer Parent under any term or condition of such
Commitment Letter.

(d) As of May 26, 2006, RMS Buyer Parent has no reason to believe that any of
the conditions to the Debt Financing will not be satisfied on a timely basis.
RMS Buyer Parent has fully paid any and all commitment fees or other fees
required by any of the Commitment Letters to be paid as of May 26, 2006.

 

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ARTICLE IX

ADDITIONAL AGREEMENTS RELATING TO THE PURCHASED ASSETS

Section 9.1 Commercially Reasonable Efforts.

(a) Subject to the terms and conditions herein provided, each of the Selling
Parties and each of the Buying Parties agrees to use all commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement and
to cooperate with each other in connection with the foregoing, including using
all commercially reasonable efforts:

(i) to obtain all necessary waivers, consents, releases and approvals, including
all consents, approvals and authorizations that are required to be obtained
under any applicable Law;

(ii) to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the Parties to consummate the transactions
contemplated hereby or by the Ancillary Agreements;

(iii) to effect all necessary registrations and filings and submissions of
information requested by Governmental Authorities; and

(iv) to fulfill all conditions to this Agreement.

(b) In furtherance and not in limitation of the foregoing, each of the Selling
Parties and each of the Buying Parties agrees to make, or cause to be made, all
necessary filings required pursuant to the HSR Act and any other Regulatory Law
with respect to the transactions contemplated hereby as promptly as practicable
after the date of this Agreement, but in no event later than 15 days after the
date hereof, and to supply as promptly as practicable any additional information
and documentary material that may be requested pursuant to the HSR Act and any
other Regulatory Law and to request early termination of the waiting period
under the HSR Act and to use all commercially reasonable efforts to cause the
expiration or early termination of the applicable waiting periods under the HSR
Act in the most expeditious manner practicable.

(c) If necessary to obtain any consents, approvals, permits or authorizations or
to remove any impediments to the transactions contemplated hereby or by any
Ancillary Agreement relating to any Regulatory Law or to avoid the entry of, or
to effect the dissolution of, any injunction, temporary restraining order or
other order in any suit or proceeding relating to Regulatory Law, each of the
Selling Parties and each Buyer Parent shall cooperate with each other and take
such lawful steps as shall be necessary or appropriate to secure such end,
including, an agreement by any Buying Party to hold separate or divest any of
the Purchased Assets.

 

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(d) If requested by any Buyer Parent in writing, the Selling Parties shall
cooperate with such Buyer Parent in a commercially reasonable manner to
(i) obtain an estoppel certificate from the lessor under any of the Timberland
Leases listed in Section 9.1(d) of the Seller’s Disclosure Letter or
(ii) formalize any access arrangements referred to under Section 1.7(q)(i),
provided, however, that the relevant Buyer Parent shall indemnify and hold
harmless the Seller Indemnitees against any Seller Damages in connection with
any such request.

Section 9.2 Maintenance of Business.

(a) Subject to the terms and conditions of this Agreement, and except as
otherwise contemplated hereby, the Selling Parties, from the date hereof through
the Closing Date, shall use commercially reasonable efforts to operate and
maintain the Purchased Assets in the ordinary course in all material respects,
shall not incur liabilities other than in the ordinary course, shall not incur
Liens on any of the Purchased Personal Assets other than in the ordinary course,
except for encumbrances that in the aggregate are not substantial in amount, do
not materially detract from the value of the assets subject thereto, and do not
materially interfere with the present use thereof, and shall pay when due all
accounts payable in respect of the Purchased Assets in a manner consistent with
past practice; provided, however, that it is understood and agreed that if the
Selling Parties harvest timber in accordance with the 2002-2004 Sustainable
Forestry Initiative Standard, as amended or updated from time to time, such
harvest activity will be deemed not to violate this Section 9.2(a).

(b) Subject to the terms and conditions of this Agreement, and except as Seller
may otherwise agree in writing, each Buyer Parent, Buyer, Cash Entity and Buyer
Affiliate shall use, and each Buyer Parent shall cause those Timber Entities
which are to be its indirect wholly owned subsidiaries to use, all commercially
reasonable efforts not to interfere with the Selling Parties’ conduct of
business with respect to the Purchased Assets pending the Closing and not to
take any action that might reasonably be expected to impair any Selling Party’s
relationships with customers, suppliers or employees of the businesses and
operations of any Selling Party, whether or not associated with the Purchased
Assets.

(c) From the date hereof through the Closing Date, Selling Parties shall not
sell any material portion of the Timberlands that are to be transferred pursuant
to this Agreement.

 

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Section 9.3 Public Announcements.

(a) This Agreement (or a memorandum thereof) may not be recorded by any Buying
Party. In the event that this Agreement (or a memorandum thereof) is recorded by
any Buying Party, Seller may, at its option, terminate this Agreement.

(b) Notwithstanding anything to the contrary set forth in Section 15.7 or the
Confidentiality Agreement, except as required by applicable Law, stock exchange
rules or rules and regulations promulgated by the SEC, the Selling Parties and
the Buying Parties shall consult with each other before issuing, and will
provide each other the opportunity to review, comment upon and concur with, and
use commercially reasonable efforts to agree on, any press releases and other
public announcements with respect to the transactions contemplated by this
Agreement, including the time, form and content of such press release or public
announcement, and shall not issue any such press release or make any such public
announcement prior to such consultation, provided that any disclosure required
to be made under applicable Law or stock exchange rule may be made without such
mutual agreement if a Party required to make such disclosure has determined in
good faith that it is necessary to do so and has used commercially reasonable
efforts, prior to the issuance of the disclosure, to provide the other Parties
with a copy of the proposed disclosure and to discuss the proposed disclosure
with the other Parties, and provided, further, that Seller may make any filings
required by any or rule or regulation promulgated by the SEC without
consultation with any Buying Party.

Section 9.4 Books and Records.

(a) At the Closing, Seller shall use commercially reasonable efforts to provide
to each Buyer Parent (except for those items which are stored at locations
included in the Purchased Assets) with copies of all maps (including backup
data), surveys, drawings, deeds, timber harvest records and other property
records, in each case, exclusively related to the Purchased Assets or the
Assumed Liabilities, that are in the Selling Parties’ possession or control and
are not subject to the attorney-client or other privilege (as reasonably and in
good faith determined by the Selling Parties) (the “Books and Records”);
provided, however, that Seller shall have no obligation to provide (i) any
information to any Buyer Parent regarding the pricing of timber, internal
appraisals of the Purchased Assets, other valuations or similar pricing or
financial records, or any other information that is confidential and proprietary
to any Selling Party, (ii) any files, records, data (including seismic data and
related information) or other documentary information maintained in the normal
course of business by any Selling Party pertaining exclusively to the Reserved
Minerals and Gases, the Reserved Mineral and Gas Rights, the Reserved Water
Rights or the Subsurface Geosequestration Rights, or (iii) any document or item
that any Selling Party is contractually or otherwise bound to keep confidential.
Notwithstanding the foregoing, the Selling Parties may retain a copy of the
Books and Records for legal compliance or regulatory purposes or in accordance
with their internal document retention policies.

 

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(b) For a period of seven years after the Closing, (i) Seller shall provide the
Buyer Representative with reasonable access, at the Buyer Representative’s cost,
to any books and records in Seller’s possession to the extent such books and
records relate to the Purchased Assets or the Assumed Liabilities (subject to
the provisos set forth in Section 9.4(a)), and (ii) Buyer Representative shall
cause the relevant Buying Party to provide Seller with reasonable access, at
Seller’s cost, to any books and records in the possession of any Buyer Parent,
Buyer, Timber Entity or Buyer Affiliate to the extent such books and records
relate to the Excluded Assets or the Excluded Liabilities.

Section 9.5 Dispute Resolution.

(a) In the event of any dispute, claim, question, disagreement or controversy
arising from or relating to this Agreement or the breach thereof, or the
Purchased Assets, other than those disputes, claims, questions, disagreements or
controversies for which dispute resolution procedures are set forth in Sections
2.3(a), 2.3(b) and 2.3(c), Seller, on behalf of the Selling Parties, and the
Buyer Representative, on behalf of the Buying Parties, shall use their
reasonable efforts to settle the dispute, claim, question or disagreement. To
this effect, they shall consult and negotiate with each other in good faith and,
recognizing their mutual interests, attempt to reach a just and equitable
solution satisfactory to the Parties.

(b) If Seller and the Buyer Representative do not reach such a solution within a
period of 30 days after written notice by either Seller or the Buyer
Representative requesting that such discussions be initiated, the Parties agree
that any and all disputes, claims, questions, disagreements or controversies
arising from or relating to this Agreement or the breach thereof, or the
Purchased Assets, shall be submitted to non-binding, voluntary mediation. Either
Seller or the Buyer Representative may commence mediation by providing the Buyer
Representative (in the case of Seller) or Seller (in the case of any Buying
Party) with a written request for mediation, setting forth the subject of the
dispute and the relief requested. The Parties will cooperate with one another in
selecting a single mediator, and in promptly scheduling the mediation
proceedings.

(c) If the Parties cannot agree upon a mediator, they shall appoint the American
Arbitration Association as a mediation body (which shall in turn select a single
mediator), and shall implement the Commercial Mediation Rules.

(d) All settlement offers, promises, conduct and statements, whether oral or
written, made in the course of the settlement and mediation process by either
Seller or the Buyer Representative, their agents, employees, experts and
attorneys, and by the mediator, are confidential, privileged and inadmissible
for any purpose, including

 

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impeachment, in any arbitration or other proceeding involving the Parties;
provided that evidence that is otherwise admissible or discoverable shall not be
rendered inadmissible or non-discoverable as a result of its disclosure during
settlement or mediation efforts.

(e) During the pendency of the settlement and mediation process, the Parties
agree to forebear from filing or otherwise proceeding with litigation; provided,
however, that either Seller or the Buyer Representative shall be entitled to
seek a temporary restraining order or preliminary injunction to prevent the
breach of the Selling Parties’ or Buying Parties’ obligations, as the case may
be, under this Agreement. If the agreement of the Parties to use mediation
breaks down and a later litigation is commenced or application for an injunction
is made, the Parties will not assert a defense of laches or statute of
limitations based upon the time spent in mediation.

(f) Either Seller or the Buyer Representative may initiate litigation with
respect to the matters submitted to mediation at any time following 60 days
after the initial mediation session or 90 days after the date of sending the
written request for mediation, whichever occurs first. The mediation may
continue after the commencement of litigation if Seller and the Buyer
Representative so mutually elect in writing.

(g) The provisions of this Section 9.5 may be enforced by any court of competent
jurisdiction, and the Party seeking enforcement shall be entitled to an award of
all costs, fees and expenses, including attorneys’ fees, to be paid by the Party
against whom enforcement is ordered.

Section 9.6 Consents.

(a) Each of the Selling Parties and each of the Buying Parties shall cooperate,
and use all commercially reasonable efforts, to make all filings and obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Authorities and other third parties necessary to
consummate the transactions contemplated by this Agreement. In addition to the
foregoing, each Buyer Parent agrees to provide such assurances as to financial
capability, resources and creditworthiness as may be reasonably requested by any
third party whose consent or approval is sought hereunder or in connection
herewith. Notwithstanding the foregoing, nothing herein shall obligate or be
construed to obligate any Party to make any payment to any third party in order
to obtain the consent or approval of such third party or to transfer any
Purchased Contract, Timberland Lease, Real Property Lease, Personal Property
Lease or License in violation of its terms.

(b) With respect to any agreements for which any required consent or approval is
not obtained prior to the Closing, each of the Selling Parties and each of the
Buying Parties shall use all commercially reasonable efforts to obtain any such
consent or approval after the Closing until either such consent or approval has
been obtained or the

 

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Selling Parties determine in good faith that such consent cannot reasonably be
obtained. In addition, to the extent that any Purchased Contract, Timberland
Lease, Real Property Lease, Personal Property Lease or License may not be
assigned without the consent or approval of any third party, and such consent is
not obtained prior to the Closing, the Selling Party that is party thereto shall
use all commercially reasonable efforts to provide the relevant Buying Party
with the same benefits (and the relevant Buying Party shall be responsible for
all corresponding obligations) arising under such Purchased Contract, Timberland
Lease, Real Property Lease, Personal Property Lease or License, including
performance by such Selling Party (or the relevant Buying Party) as agent, if
legally permissible and commercially feasible; provided that the relevant Buying
Party (or such Selling Party, if applicable) shall provide such Selling Party
(or the relevant Buying Party) with such access to the premises, books and
records and personnel as is reasonably necessary to enable such Selling Party
(or the relevant Buying Party) to perform its obligations under such Purchased
Contracts, Timberland Leases, Real Property Leases, Personal Property Leases or
Licenses and the relevant Buyer Parent shall pay or satisfy the corresponding
liabilities for the enjoyment of such benefits to the extent the relevant Buying
Party would have been responsible therefor if such consent or approval had been
obtained.

Section 9.7 Continuing Agreements.

Each Buying Party acknowledges that the Purchased Assets are and will continue
to be subject to certain Contracts that are Excluded Assets, including certain
oil, gas and mineral leases affecting the Timberlands and relating to the
Reserved Minerals and Gases (the “Continuing Agreements”). Each Buying Party
further acknowledges that from the date of this Agreement to the Closing Date,
the Selling Parties may enter into additional Continuing Agreements in respect
of the Purchased Assets subject to the prior approval of the relevant Buyer
Parent (such approval not to be unreasonably withheld or delayed), and that the
entry into such Continuing Agreements shall be deemed not to breach this
Agreement, provided that such Continuing Agreements shall not be reasonably
likely, individually or in the aggregate, to have a material adverse effect on
the use and enjoyment by any Buying Party of the Timberlands or any material
portion thereof, and provided, further, that such Continuing Agreements shall
provide for reasonable payments in respect of damages to the surface. For so
long as any of the Continuing Agreements remains in effect from and after the
Closing Date, the relevant Cash Entity shall comply (and shall assist the
Selling Parties in their compliance) with the obligations thereunder that apply
to the Selling Parties as surface owner as if such Cash Entity were a party
thereto and such relevant Cash Entity shall be entitled to the surface payments
related to such Continuing Agreements.

Section 9.8 Transition Services. During the period between the date of this
Agreement and the Closing Date, the Parties will negotiate in good faith to
execute (i) a transition services agreement in a form reasonably acceptable to
Seller and each Buyer Parent and, (ii) if necessary, a non-exclusive technology
license in a form reasonably acceptable to Seller and each Buyer Parent.

 

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ARTICLE X

ADDITIONAL AGREEMENTS RELATING TO THE TIMBERLANDS

Section 10.1 Right of Entry.

(a) Upon reasonable prior written notice to Seller, but in no event less than
five days prior notice, and receipt of written authorization from Seller, prior
to the Closing Date or termination of this Agreement in accordance with Article
XIV, any Buyer Parent, through its authorized agents or representatives, may
enter upon the Timberlands at all reasonable times for the purposes of making
inspections and other studies, provided that no Buyer Parent nor the agents or
representatives of such Buyer Parent shall (i) enter upon the Timberlands for
the purpose of preparing Phase II Reports or making any soil borings or other
invasive or other subsurface environmental investigations relating to all or any
portion of the Timberlands, (ii) prepare or instruct its agents or
representatives to prepare Phase II Reports or make any soil borings or other
invasive or other subsurface environmental investigations relating to all or any
portion of the Timberlands, or (iii) contact any official or representative of
any Governmental Authority regarding Hazardous Substances on or the
environmental condition of the Timberlands, in each case without Seller’s prior
written consent thereto. Upon the completion of such inspections and studies,
the relevant Buyer Parent, at its expense, shall repair any damage caused to the
Purchased Assets and remove all debris resulting from and all other material
placed on the Timberlands in connection with such Buyer Parent’s inspections and
studies.

(b) At any Selling Party’s request, the relevant Buyer Parent shall disclose the
results of such inspections and studies, and shall deliver copies of all such
reports and test results, to Seller. The results of such inspections and studies
(as well as any information and documents that any Selling Party delivered or
caused to be delivered to any Buyer Parent concerning the Timberlands) shall be
treated as strictly confidential by the Parties and the same shall not be
disclosed to any third party or Governmental Authority (provided that such
results, information and documents may be disclosed to consultants, attorneys,
investors and lenders of any Buyer Parent for use solely in connection with the
transactions contemplated by this Agreement, who shall be required by such Buyer
Parent to similarly treat such results, information and documents as strictly
confidential) except to the extent required by any Law or court order or in
connection with any legal proceeding filed to enforce a Party’s rights under
this Agreement. In the event that disclosure of the results of any such
inspections or studies or any such information or documents that any Selling
Party delivered or caused to be delivered to any Buyer Parent concerning the
Timberlands is required by applicable law, regulation or

 

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court order, such Buyer Parent shall notify Seller promptly in writing so that
Seller may seek a protective order (at its own cost and expense) or other
appropriate remedy or, in its sole discretion, waive compliance with the terms
of this Section 10.1(b). Such Buyer Parent shall cooperate with Seller to obtain
a protective order or other appropriate remedy. In the event that no such
protective order or other appropriate remedy is obtained, or Seller waives
compliance with the terms of this Section 10.1(b), such Buyer Parent shall give
Seller written notice of the information to be disclosed as far in advance of
its disclosure as practicable.

(c) Each Buyer Parent shall indemnify, defend and hold each Selling Party
harmless from and against any and all claims, demands, losses, expenses,
damages, costs and liabilities, suffered or incurred by any Selling Party as a
result of any physical damage to the Timberlands or any death or personal injury
to any person caused by or attributable to the acts or omissions of any Buying
Party, or the employees, contractors, representatives or agents of any Buying
Party arising in connection with inspections or studies performed by or on
behalf of any such Buying Party. In addition, each Buyer Parent agrees that any
Buying Party and the contractors, representatives and agents of any Buying Party
who enter upon the Timberlands shall maintain general liability insurance,
naming the Selling Parties as additional insureds, in an amount not less than
$1,000,000 and, prior to any such entry upon the Timberlands, shall provide the
Selling Parties with written evidence of such insurance.

(d) During the period between the date of this Agreement and the Closing, and
subject to the Confidentiality Agreement and Applicable Law, Seller shall
provide each Buyer Parent, and its respective officers, employees, accountants,
counsel, financial advisors and other representatives, with (i) access at all
reasonable times upon reasonable prior written notice to Seller, but in no event
less than five days prior written notice, to its Books and Records primarily
related to the Purchased Assets or the Assumed Liabilities, provided that such
access shall not unreasonably interfere with the business or operations of any
Selling Party and (ii) access to the online data room established by Seller
prior to the date hereof. Nothing in this Section 10.1(d) shall require Seller
to provide any access or to disclose any information: (i) relating to its
employees, except as required under Section 11.1 or Section 11.1(b) of the
Seller’s Disclosure Letter, (ii) that is not in the possession or control of a
Selling Party or (iii) if permitting such access or disclosing such information
would (A) violate Applicable Law, (B) violate any of its obligations with
respect to confidentiality, (C) result in the loss of attorney-client privilege
or (D) be adverse to the interests of any Selling Party or any of their
respective Affiliates in any pending or threatened litigation between the
Parties in respect of the terms of this Agreement.

 

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Section 10.2 Permits and Licenses.

Each Buyer Parent shall be solely responsible for obtaining all permits and
licenses, if any, required by any Buying Party to carry on their intended
operations at the Timberlands.

Section 10.3 Environmental Matters.

Seller has provided a copy of each of the Phase I Reports described on
Section 10.3 of the Seller’s Disclosure Letter to the Buyer Parent listed
opposite each Phase I Report in Section 10.3 of the Seller’s Disclosure Letter
upon the following terms and conditions: (i) the Phase I Reports are provided
for informational purposes only, without any representation or warranty by or on
behalf of any of the Selling Parties as to the accuracy or completeness of the
information contained therein; (ii) the Phase I Reports are subject to the terms
and conditions of the Confidentiality Agreement; and (iii) no information
contained in the Phase I Reports shall be deemed to obligate any Selling Party
to take any action, including action to investigate, correct, remediate or
address any condition described in the Phase I Reports, except as required by
Section 13.5. Each Buyer Parent acknowledges receipt of the Phase I Reports
listed opposite its name in Section 10.3 of the Seller’s Disclosure Letter and
accepts delivery of such Phase I Reports upon the terms and conditions set forth
herein.

Section 10.4 Special Places.

Each Buyer Parent acknowledges that the Timberlands include certain areas
referred to as “Special Places in the Forest,” which areas are described in
Section 10.4 of the Seller’s Disclosure Letter. Each Buyer Parent further
acknowledges that the Timberlands are subject to certain Habitat Conservation
Plans, including those set forth in Section 10.4 of the Seller’s Disclosure
Letter. At the Closing, each Cash Entity and Timber Entity shall assume those
obligations set forth in the Habitat Conservation Plans being conveyed to it.

Section 10.5 Reserved Minerals and Gases.

(a) At Closing, Seller and each Cash Entity and Timber Entity shall enter into a
surface use agreement with respect to the Reserved Minerals and Gases, Reserved
Mineral and Gas Rights, Reserved Water Rights and Subsurface Geosequestration
Rights substantially in the form set forth in Exhibit J (the “Surface Use
Agreement”).

(b) To the extent affirmative action is necessary for the Selling Parties to
reserve the ownership of the Reserved Minerals and Gases, Reserved Mineral and
Gas Rights, Reserved Water Rights or Subsurface Geosequestration Rights or to
establish or confirm title to the Reserved Minerals and Gases, Reserved Mineral
and Gas Rights,

 

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Reserved Water Rights or Subsurface Geosequestration Rights in the Selling
Parties, each Buying Party and its respective Affiliates shall cooperate with
the Selling Parties in such efforts, including executing all documents
pertaining to the Reserved Minerals and Gases, Reserved Mineral and Gas Rights,
Reserved Water Rights or Subsurface Geosequestration Rights as are reasonably
requested by the Selling Parties.

(c) In the event that any Cash Entity or Timber Entity intends to sell to any
third party (other than an Affiliate of such Cash Entity or Timber Entity) any
Owned Timberlands in compliance with the terms of this Agreement and free and
clear of all obligations under the applicable Support Agreement (a “Third Party
Sale”), such Cash Entity or Timber Entity may request in writing that Seller
sell to such Cash Entity or Timber Entity the non-producing Reserved Mineral and
Gas Rights, Reserved Water Rights and Subsurface Geosequestration Rights
exclusively pertaining to such Owned Timberlands (collectively, “Mineral
Rights”) and, in such case, (i) Seller and such Cash Entity or Timber Entity, as
the case may be, shall negotiate in good faith for a period of not less than 45
days the price and other terms upon which such Cash Entity or Timber Entity
would purchase such Mineral Rights, and (ii) such Cash Entity or Timber Entity
shall provide such information as may be reasonably requested by Seller
regarding the proposed Third Party Sale. If Seller and such Cash Entity or
Timber Entity, as the case may be, reach agreement upon the price and other
terms upon which a Mineral Sale would be effected (a “Mineral Sale Agreement”),
any purchase of Mineral Rights thereunder shall become effective upon
consummation of the Third Party Sale, provided that any Mineral Sale Agreement
shall expire 120 days after the date thereof if the Third Party Sale has not by
then been consummated, unless otherwise expressly agreed in the Mineral Sale
Agreement. Any Buyer Parent may record a notice of this Section 10.5(c). The
relevant Selling Party shall execute such record notice to the extent required
under applicable Law.

Section 10.6 Easements.

(a) To the extent affirmative action is necessary for the Selling Parties to
acquire or reserve the easement ownership of the Reserved Easements or to
establish or confirm easement title to the Reserved Easements in the Selling
Parties, each Buying Party and their respective Affiliates shall cooperate with
the Selling Parties in such efforts, including by executing all documents
pertaining to the Reserved Easements as are reasonably requested by the Selling
Parties. To the extent affirmative action is necessary for any Cash Entity or
Timber Entity to acquire the easement ownership of the Buyer Easements or to
establish or confirm easement title to the Buyer Easements in any Cash Entity or
Timber Entity, the Selling Parties shall cooperate with such Cash Entity or
Timber Entity in such efforts and shall use commercially reasonable efforts to
assist such Cash Entity or Timber Entity in acquiring such ownership, including
executing all documents pertaining to the Buyer Easements as are reasonably
requested by the relevant Cash Entity.

 

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(b) For a period of one year following the Closing, in the event that Seller
identifies any portion of the Timberlands which should have been identified as a
Reserved Easement, but was not disclosed to the relevant Buyer Parent prior to
the Closing (a “Post-Closing Reserved Easement”), so long as such Post-Closing
Reserved Easement relates to a use or access right that existed as of the
Closing (taking into account the change of ownership of Seller’s various
properties and assets) and does not have a material adverse effect on the use
and enjoyment by any Cash Entity or Timber Entity of the Timberlands, each
Buying Party and their respective Affiliates shall cooperate with the Selling
Parties, at Seller’s sole cost and expense, in any efforts that may be necessary
for the Selling Parties or any third parties who may acquire facilities not
included in the Purchased Assets from Seller to acquire easement ownership in
any Post-Closing Reserved Easements or to establish or confirm easement title to
the Post-Closing Reserved Easements in the Selling Parties or such third
parties, including executing all documents pertaining to the Post-Closing
Reserved Easements as are reasonably requested by the Selling Parties on behalf
of themselves or such third parties.

(c) For a period of one year following the Closing, in the event that any Buyer
Parent identifies property owned by any of the Selling Parties in the vicinity
of any of the Timberlands which should have been identified as a Buyer Easement,
but was not disclosed to the Selling Parties prior to the Closing (a
“Post-Closing Buyer Easement”), so long as such Post-Closing Buyer Easement
relates to a use or access right that existed as of the Closing and does not
have a material adverse effect on the use and enjoyment by the Selling Parties
of such property, the Selling Parties and their respective Affiliates shall
cooperate with such Buyer Parent, at such Buyer Parent’s sole cost and expense,
in any efforts that may be reasonably necessary for such Cash Entity, Timber
Entity or their respective Affiliates to acquire ownership in any Post-Closing
Buyer Easements or to establish or confirm title to the Post-Closing Buyer
Easements in such Cash Entity, Timber Entity or their respective Affiliates,
including executing such documents pertaining to the Post-Closing Buyer
Easements as are reasonably requested by any Buying Party or its respective
Affiliates.

(d) No Buying Party or any of their respective Affiliates shall interfere with
or oppose the Selling Parties Reserved Easements or any Post-Closing Reserved
Easements. None of the Selling Parties shall interfere with or oppose the Buyer
Easements or any Post-Closing Buyer Easements.

Section 10.7 Title Insurance; No Surveys.

(a) The Selling Parties shall provide each Buyer Parent title commitments from
the Title Company on the Owned Timberlands being conveyed to it and the
Leasehold Interests being conveyed to it for which leases have been recorded. At
the Closing, each Cash Entity and each Buyer shall purchase an aggregate amount
of title insurance on the Owned Timberlands being conveyed to it (or, in the
case of each Buyer,

 

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being conveyed to those Timber Entities which are to be conveyed to such Buyer)
in amounts not less than the amount of the Timberlands Purchase Price, allocated
by county and/or state, as applicable and allocated to the Purchased Assets
being conveyed to entity using the standard 1992 ALTA owner’s title insurance
policy (or such other comparable form of title insurance policy as is available
in the jurisdictions in which the Timberlands are located) (the “Title
Policies”).

(b) Other than in accordance with Section 9.4(a), Seller shall not provide any
surveys of the Timberlands to any Buyer Parent. No Buyer Parent nor any of its
Affiliates intends to obtain any new surveys of the Timberlands.

(c) If requested by the Buying Parties, the Selling Parties and their respective
Affiliates shall cooperate with the Buying Parties in their efforts to purchase
title insurance covering portions of the Owned Timberlands where the Selling
Parties have historically enjoyed access (other than solely through verbal
permission), including providing such affidavits as may be reasonably requested
by the applicable title company. Upon a Buyer Parent’s request, Seller shall use
commercially reasonable efforts to provide to such Buyer Parent the information
in the Selling Parties’ possession and control regarding the historical and
verbal access rights to the Owned Timberlands which the Selling Parties enjoy as
of the date of this Agreement and as of the Closing Date.

(d) The Selling Parties shall be responsible for the costs associated with the
title examinations and the issuance of the Title Commitments. The Buying Parties
shall be responsible for premiums payable in connection with the issuance of the
final Title Policies.

Section 10.8 Transfer of Timber Entity Assets.

(a) Immediately prior to the Closing, each Selling Party shall transfer to the
relevant Timber Entity all of its outstanding interests in the Timber Entity
Assets, subject to the Permitted Exceptions; provided that the Selling Parties
reserve for themselves and their successors and assigns the easements with
respect to the Timber Entity Assets described in Section 1.2(a) of the Seller’s
Disclosure Letter.

(b) Immediately prior to the Closing, Seller shall cause the relevant Timber
Entity to enter into the Support Agreements.

Section 10.9 No Transfers, Etc.

(a) No Buyer shall distribute, transfer or otherwise dispose of the Timber
Entity Interests conveyed to it and no Buyer Parent or Buyer shall cause or
permit any Timber Entity which is to be its direct or indirect wholly owned
subsidiary to distribute, transfer or otherwise dispose of any of the Timber
Entity Assets held by such Timber Entity (except as contemplated by the Master
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that any Timber Entity may distribute cash to Buyer), in each case to any Buyer
Parent (or any other Person related to any Buyer Parent or Buyer), or commit to
do any of the foregoing, in each case until a period of one year has elapsed
from the Closing Date.

(b) No Buyer Parent shall transfer or otherwise dispose of its interest in any
Buyer or commit to do so, (i) to a Credit Enhancement Bank or any Affiliate
thereof, at any time or (ii) to any other Person, until a period of one year has
elapsed from the Closing Date. Any transfer or other disposition by any Buyer
Parent (or any subsequent transferee) of its interest in any Buyer following
such one-year period shall be made only in compliance with the Support
Agreements and shall require the prior written consent of Seller (such consent
not to be unreasonably withheld) and the written agreement of any transferee in
favor of Seller to (i) comply with the obligations of such Buyer Parent under
the limited liability company agreement of the relevant Buyer and under Sections
10.9, 10.10 and 15.7 of this Agreement as if such transferee were such Buyer
Parent and (ii) cause such Buyer to comply with all of its obligations,
covenants and representations under the limited liability company agreement of
such Buyer and the Transaction Documents.

(c) (i) For so long as any Buyer Parent owns all of the outstanding interests in
any Buyer, such Buyer Parent shall comply, and shall cause such Buyer to comply
and (ii) each Buyer shall comply, in each case, with all of their respective
obligations, covenants and representations under the limited liability company
agreement of such Buyer or under the Transaction Documents. It is agreed that in
no event shall Buyer Parent have any obligation as a guarantor, surety or
otherwise, to pay or perform any of the obligations of Buyer under the Timber
Notes or any reimbursement agreement in respect of the Letters of Credit.

(d) Prior to payment in full of the Timber Notes at maturity, no amendment,
modification or waiver of any provision of the limited liability company
agreement of any Buyer may be made without the prior written consent of Seller.

(e) Notwithstanding anything herein to the contrary, Landowner may grant
mortgage liens on the Timberlands to banks, insurance companies, pension or
benefit plans, investment funds that are in the business of making mortgage
loans, or similar institutional lenders subject to the requirements and
restrictions set forth in the Support Agreements and the Fiber Supply
Agreements, including the requirement that such mortgage liens be subject to and
subordinate to the Support Agreements, the Master Stumpage Agreements and the
Fiber Supply Agreements.

Section 10.10 Tax Matters.

No Buyer Parent or Buyer shall (i) make any election under Treasury Regulations
Section 301.7701-3 (or any corresponding provision of state and local Tax law)
to treat

 

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any Buyer as an association taxable as a corporation or (ii) take any action
that would cause such Buyer to have more than one owner for U.S. federal (or any
applicable state and local) Income Tax purposes. For so long as any Buyer Parent
owns all of the outstanding interests in any Buyer, such Buyer Parent shall
treat each Timber Note issued by such Buyer as indebtedness of such Buyer Parent
for all applicable Income Tax purposes.

Section 10.11 Title Matters.

Each Buying Party acknowledges that, prior to signing, certain Affiliates of the
Selling Parties who are not Selling Parties may be identified as the record
owner or lessee of portions of the Timberlands pursuant to the Title Commitments
provided by the Selling Parties. Prior to the Closing, the Selling Parties shall
cause such Affiliates to convey such Timberlands to the appropriate Selling
Party, who at the Closing (or immediately prior to the Closing with respect to
the Installment Note Timberlands) shall convey such Timberlands to the relevant
Cash Entity or Timber Entity, as applicable, in accordance with the terms of
this Agreement.

Section 10.12 Pay-As-Cut Timber Contract.

At Closing, each Cash Entity and the applicable Selling Parties shall enter into
a pay-as-cut timber contract in substantially the form as Exhibit K (the
“Pay-As-Cut Timber Contract”), pursuant to which the Selling Parties shall have
the right to permit a third party contractor to harvest the timber on the tracts
set forth in Section 10.12 of the Seller’s Disclosure Letter from the Closing
Date until March 31, 2008.

Section 10.13 Note Document Assistance.

(a) Each Buyer shall do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register any and all such further acts, deeds,
certificates, assurances and other instruments as may be necessary or reasonably
desirable from time to time in order to (i) carry out more effectively the
purposes of the Timber Notes, the Letters of Credit and all documents related
thereto (collectively, the “Note Documents”) and (ii) assure, convey, grant,
assign, transfer, preserve, protect and confer more effectively unto Seller (or
any assignee of the Timber Notes) the rights granted or now or hereafter
intended to be granted to Seller (or such assignee) under any Note Document or
under any other instrument executed in connection with any Note Document to
which Buyer is or is to be a party.

(b) Each Buyer shall cooperate in connection with any transaction relating to
the Timber Notes as may be reasonably requested by Seller, its Affiliates and
any holder of the Timber Notes (the “Note Parties”), at the expense of the Note
Parties, including (i) furnishing the Note Parties with such financial and other
pertinent

 

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information regarding Buyer (but not Buyer Parent) as may reasonably be
requested by Seller and (ii) using reasonable best efforts to obtain a legal
opinion that if a Buyer Parent, a Cash Entity, a Buyer Affiliate, a Timber LLC
or any Affiliate of such Party were to become a debtor in a case under Title 11
of the United States Code, the bankruptcy court would not order the substantive
consolidation of the assets and liabilities of Buyer with those of such Person,
and such customary corporate law opinions concerning Buyer as may reasonably be
requested by Seller. Notwithstanding anything herein to the contrary, no Buyer
shall take any steps designed to create or encourage the making of a market in
the Timber Notes or the listing or trading of the Timber Notes on an
“established securities market” or otherwise take any actions designed to render
the Timber Notes “readily tradable in an established securities market” within
the meaning of Treasury Regulation § 15A.453-1(e)(4).

Section 10.14 Financing.

(a) RMS Buyer Parent shall use its best efforts to arrange the Debt Financing on
the terms and conditions described in the Debt Commitment Letter, including
using best efforts to (i) negotiate definitive agreements with respect thereto
on the terms and conditions contained therein or on other terms not materially
less beneficial to RMS Buyer Parent, (ii) satisfy on a timely basis all
conditions applicable to RMS Buyer Parent in such definitive agreements that are
within its control, and (iii) consummate the Debt Financing contemplated by the
Debt Commitment Letter at Closing. RMS Buyer Parent shall provide notice to
Seller promptly upon receiving the Debt Financing.

(b) Each Buyer Parent shall obtain the Equity Financing contemplated by the
Equity Commitment Letters. None of the Buyer Parents shall permit any amendment
or modification to be made to, or any waiver of any material provision or remedy
under, the Equity Commitment Letters without the prior written consent of
Seller.

(c) If any portion of the Debt Financing becomes unavailable on the terms and
conditions contemplated in the Debt Commitment Letter, RMS Buyer Parent shall
use its best efforts to arrange to obtain alternative financing, including from
alternative sources, on terms that are not materially less beneficial to RMS
Buyer Parent as promptly as practicable following the occurrence of such event.
RMS Buyer Parent shall give the Seller prompt notice upon becoming aware of any
material breach by any party to any Debt Commitment Letter or any termination of
any Debt Commitment Letter. RMS Buyer Parent shall keep the Seller informed on a
reasonably current basis in reasonable detail of the status of its efforts to
arrange the Debt Financing and shall not permit any material amendment or
modification to be made to, or any waiver of any material provision or remedy
under, the Debt Commitment Letter without the prior written consent of Seller
(such consent not to be unreasonably withheld or delayed).

 

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(d) Each Buyer shall use its reasonable best efforts to arrange for a Credit
Enhancement Bank to issue a Letter of Credit on terms and conditions that are
consistent with the Timber Note Indicative Terms in an aggregate amount of not
less than such Buyer’s portion of the Installment Note Purchase Price plus one
interest payment on the respective Timber Note (the “L/C Amount”), including
using reasonable best efforts (i) as soon as practicable to obtain a firm
commitment (each, an “L/C Commitment Letter”), in form and substance reasonably
satisfactory to Seller, to provide such Letter of Credit, (ii) to negotiate
definitive agreements with respect to such Letter of Credit on the terms and
conditions contained in the L/C Commitment Letter or on other terms not
materially less beneficial to Buyer Parent, Buyer or Seller, (iii) to satisfy on
a timely basis all conditions applicable to such Buyer in such definitive
agreements that are within its control, and (iv) to consummate the issuance of
the Letters of Credit at Closing.

(e) In the event any portion of the Letters of Credit becomes unavailable to any
Buyer on the terms and conditions contemplated in the L/C Commitment Letters,
such Buyer shall use its reasonable best efforts to arrange to obtain letters of
credit, including from alternative sources, on terms and conditions that are not
materially less beneficial to Buyer Parent, Buyer or Seller and that are
consistent with the Timber Note Indicative Terms, promptly following the
occurrence of such event. Each Buyer shall give Seller prompt notice upon
becoming aware of any material breach by any party to any L/C Commitment Letter
or any termination of any L/C Commitment Letter. Each Buyer shall keep Seller
informed on a reasonably current basis in reasonable detail of the status of its
efforts to arrange the Letters of Credit and shall not permit any material
amendment or modification to be made to, or any waiver of any material provision
or remedy under, the L/C Commitment Letters without the prior written consent of
Seller (such consent not to be unreasonably withheld or delayed). Buyers and
Seller shall consult in good faith and cooperate in determining the maximum
aggregate amounts of Letters of Credit per Credit Enhancement Bank and otherwise
with respect to the terms of the Letter of Credit documentation.

ARTICLE XI

HUMAN RESOURCES MATTERS

Section 11.1 Human Resources.

(a) Except as otherwise expressly set forth herein, the provisions of the
Confidentiality Agreement governing solicitation for employment, inducing or
attempting to induce to leave the employ of any Selling Party or any Affiliate
of a Selling Party, and employing or hiring any employees of any Selling Party
shall remain in effect after the date hereof until the termination of such
provisions in accordance with their terms under the Confidentiality Agreement.

 

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(b) The Parties shall comply with the provisions set forth in Section 11.1(b) of
the Seller’s Disclosure Letter with respect to Eligible Employees.

ARTICLE XII

CONDITIONS PRECEDENT

Section 12.1 Conditions to Obligations of Each Party to Close.

The obligations of the Parties to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction or waiver, on or before the
Closing Date, of the following conditions:

(a) Any waiting periods (and any extension thereof) applicable to the
transactions contemplated by this Agreement, under Regulatory Law, including
under the HSR Act, shall have expired or been earlier terminated and neither the
Department of Justice nor the Federal Trade Commission shall have taken any
action to enjoin or delay (for a period of longer than 120 days) the
consummation of the transactions contemplated by this Agreement.

(b) There shall be no injunction, restraining order or decree of any nature of
any court or Governmental Authority that is in effect that restrains or
prohibits the consummation of the transactions contemplated hereunder or imposes
conditions on such consummation not otherwise provided for herein.

(c) No Party shall have been advised by any United States federal government
agency (which advisory has not been officially withdrawn on or prior to the
Closing Date) that such government agency is investigating the transactions
contemplated by this Agreement to determine whether to file or commence any
litigation which seeks or would seek to enjoin, restrain or prohibit the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements.

(d) The Letters of Credit securing the Timber Notes issued by each Buyer in
respect of the Installment Note Purchase Price shall have been delivered to
Seller by the Credit Enhancement Banks in such maximum aggregate amounts per
Credit Enhancement Bank as are satisfactory to Seller and on terms and
conditions that are consistent with the Timber Note Indicative Terms, provided,
that the obligation of each Buying Party to consummate the transactions
contemplated by this Agreement shall not be subject to the satisfaction or
waiver of the condition set forth in this Section 12.1(d) if the Buying Parties
have failed to satisfy their obligations under Section 10.14.

 

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Section 12.2 Conditions to Obligations of the Buying Parties to Close.

The obligation of each of the Buying Parties to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction or waiver,
on or before the Closing Date of the following conditions:

(a) All material consents, authorizations, registrations or approvals of or with
any Governmental Authority or other Person required in connection with the
consummation of the transactions contemplated by this Agreement, each of which
is set forth in Section 12.2(a) of the Seller’s Disclosure Letter, to have been
filed, made, given or obtained by the Selling Parties shall have been filed,
made, given or obtained and copies thereof shall have been delivered to each
Buyer Parent; provided, however, that the obligation of any Buying Party to
consummate the transactions contemplated by this Agreement shall not be subject
to the satisfaction or waiver of the condition set forth in this Section 12.2(a)
if any Buying Party fails to satisfy its obligations under Section 9.1(c).

(b) Each of the representations and warranties of Seller contained in this
Agreement that is qualified as to materiality shall be true and correct, and
each of the representations and warranties of Seller that is not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and as of the Closing Date with the same effect as though made
as of the Closing Date (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of such
representations and warranties to be true and correct as so made does not have
and would not be reasonably likely to have, in each case individually or in the
aggregate, a Material Adverse Effect.

(c) The Selling Parties shall have performed or complied with, in all material
respects, all agreements and covenants required by this Agreement to be
performed or complied with by the Selling Parties on or prior to the Closing.

(d) The Selling Parties shall have delivered or caused to be delivered to the
relevant Buyer Parent the items set forth in Section 3.2(a).

(e) The Selling Parties shall have caused the relevant Timber Entity to deliver
to the Selling Parties the items set forth in Section 3.2(c).

Section 12.3 Conditions to Obligations of the Selling Parties.

The obligation of the Selling Parties to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction or waiver,
on or before the Closing Date, of the following conditions:

 

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(a) The consents, authorizations, registrations or approvals of or with
Governmental Authorities or any other Person required in connection with the
consummation of the transactions contemplated by this Agreement, each of which
is set forth in Section 12.3(a) of the Seller’s Disclosure Letter, to have been
filed, made, given or obtained by each Buying Party shall have been filed, made,
given or obtained and copies thereof shall have been delivered to Seller,
provided that the obligation of the Selling Parties to consummate the
transactions contemplated by this Agreement shall not be subject to the
satisfaction or waiver of the condition set forth in this Section 12.3(a) if any
of the Selling Parties fails to satisfy its obligations under Section 9.1(c).

(b) Each of the representations and warranties of any Buying Party contained in
this Agreement that is qualified as to materiality shall be true and correct,
and each of the representations and warranties of any Buying Party that is not
so qualified shall be true and correct in all material respects, in each case as
of the date of this Agreement and as of the Closing Date with the same effect as
though made as of the Closing Date (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the failure of such
representations and warranties to be true and correct as so made does not have
and would not be reasonably likely to have, in each case individually or in the
aggregate, a material adverse effect on any Buying Party or on their ability to
perform their obligations under this Agreement or the Ancillary Agreements to be
executed by them.

(c) Each Buying Party each shall have performed or complied with, in all
material respects, all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing.

(d) Each Buying Party shall have delivered or caused to be delivered to Seller
the items set forth in Section 3.2(b).

(e) Each Buyer Parent and Buyer shall have entered into an amended and restated
limited liability company operating agreement in respect of such Buyer
substantially in the form of Exhibit M.

(f) Each Buyer shall have entered into a services agreement (the “Services
Agreement”), in form and substance reasonably satisfactory to Buyer Parent and
Seller, with a third party Trustee reasonably satisfactory to Buyer Parent and
Seller pursuant to which the Trustee will make payments of amounts due and
payable under such Buyer’s Timber Notes, hold and invest Buyer’s excess cash and
provide other customary services.

(g) Each Cash Entity and each Timber Entity shall have purchased the Title
Policies from the Title Company in respect of the Owned Timberlands being
transferred to it at (or in the case of each Timber Entity, immediately prior
to) the Closing and shall have provided Seller with written evidence that each
Cash Entity and each Timber Entity has obtained such Title Policies.

 

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ARTICLE XIII

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

Section 13.1 Survival of Representations.

Except as otherwise set forth in this Article XIII, all (i) representations and
warranties made in this Agreement and (ii) all agreements or covenants made in
this Agreement and to be performed prior to or at Closing shall survive for a
period of eighteen months after the Closing Date; provided that Section 6.3
shall survive for a period of one year after the Closing Date, Sections 3.4, 5.7
and 8.10 shall survive for the applicable statute of limitations plus 60 days,
Sections 1.8, 10.9 and 10.10 shall survive indefinitely and Sections 6.1 and 6.4
shall not survive the Closing (the “Indemnity Period”). Notwithstanding the
foregoing, except as set forth in Section 14.2, no representation, warranty,
covenant or agreement shall survive any termination of this Agreement. After the
Indemnity Period or, except as provided in Section 14.2, the Parties agree that
no claims or causes of action may be brought against any Party or any of their
respective directors, officers, employees, Affiliates, controlling persons,
agents or representatives based upon, directly or indirectly, any of the
representations and warranties contained in this Agreement. This Section 13.1
shall not limit any covenant or agreement of the Parties that contemplates
performance after the Closing.

Section 13.2 Seller’s Agreement to Indemnify.

(a) Subject to the terms and conditions set forth herein, from and after the
Closing, Seller shall indemnify and hold harmless each Buying Party and its
directors, officers, employees, Affiliates, controlling persons, agents and
representatives and their successors and assigns (collectively, the “Buyer
Indemnitees”) from and against all liability, demands, claims, actions or causes
of action, assessments, damages, costs and expenses (including reasonable
attorneys’ fees and expenses, but excluding all punitive, incidental, indirect,
special or consequential damages (unless payable to a third party))
(collectively, the “Buyer Damages”) asserted against or incurred by any Buyer
Indemnitee as a result of or arising out of (i) the Excluded Liabilities,
provided, that any Third Party Claims related to the Excluded Liabilities shall
be subject to the terms and conditions of Section 13.4, (ii) a breach of any
representation or warranty contained in Articles V, VI (excluding, for the
avoidance of doubt, Sections 6.1 and 6.4, which do not survive the Closing, as
set forth above) or VII of this Agreement, (iii) a breach of any agreement or
covenant of any Selling Party or Timber Entity in this Agreement that
contemplates performance or compliance on or prior to the Closing Date, except
for a breach of Section 10.3 or Section 10.7(a), (iv) a breach of any other
agreement or

 

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covenant of any Selling Party or (v) any Accepted Buyer Parent Title Objection
determined in accordance with Section 2.3(b)(iii). Each Buyer Parent agrees
that, except as contemplated by Section 15.15, (A) the indemnification provided
in this Section 13.2 is the exclusive remedy for a breach by any Selling Party
of any representation, warranty, agreement or covenant contained in this
Agreement and is in lieu of any and all other rights and remedies that any
Buying Party may have under this Agreement or otherwise for monetary relief or
equitable relief with respect to the matters described in clauses (i), (ii),
(iii), (iv) and (v) above, (B) the indemnification contemplated by Section 13.5
shall be the exclusive remedy in respect of Adverse Environmental Conditions
(except to the extent such conditions are Excluded Liabilities) and shall be in
lieu of any and all other rights and remedies that any Buying Party may have
under this Agreement or otherwise for monetary or equitable relief with respect
to Adverse Environmental Conditions and (C) the indemnification contemplated by
Section 13.7 in respect of any Accepted Buyer Parent Title Objection shall be
the exclusive remedy in respect of Accepted Buyer Parents’ Title Objections and
shall be in lieu of any and all other rights and remedies that any Buying Party
may have under this Agreement or otherwise for monetary or equitable relief with
respect to Accepted Buyer Parents’ Title Objections; provided that, subject to
Section 15.10, in the event that the Selling Parties fail to consummate the
transactions contemplated herein, Buyer Parent may undertake an action, suit or
proceeding for the enforcement of the provisions of this Agreement or for
monetary damages, unless Buyer Parent’s failure to perform any of its
obligations under this Agreement primarily contributes to the failure of the
Selling Parties to consummate the transactions contemplated herein. There shall
be no indemnification for a breach of any representation, warranty, agreement or
covenant for which (x) a Purchase Price adjustment has been made pursuant to
Section 2.3, or (y) a decree of specific performance has been issued pursuant to
Section 15.15.

(b) Seller’s obligations to indemnify Buyer Indemnitees pursuant to
Section 13.2(a) are subject to the following limitations:

(i) No indemnification shall be made by Seller with respect to any claim made
pursuant to Section 13.2(a)(ii) or (iii) unless (A) the amount of such claim
exceeds $250,000 (the “Minimum Claim Amount”), and (B) the aggregate amount of
Buyer Damages under all claims in excess of the Minimum Claim Amount made
pursuant to Section 13.2(a)(ii) or (iii) exceeds an amount equal to 1.5% of the
Purchase Price allocable to the FMA to which the claim relates (the “Basket
Amount”) and, in such event, indemnification shall be made by Seller only to the
extent Buyer Damages exceed, in the aggregate, the Basket Amount.

(ii) In no event shall Seller’s aggregate obligation to indemnify Buyer
Indemnitees pursuant to Section 13.2(a)(ii) or (iii), together with any
indemnification paid pursuant to any other provisions of this Agreement, exceed
an amount equal to 30% of the Purchase Price (the “Cap”).

 

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(iii) The amount of any Buyer Damages shall be reduced by any amount actually
received by a Buyer Indemnitee with respect thereto under any third party
insurance coverage or from any other party alleged to be responsible therefor.
If a Buyer Indemnitee makes a claim for indemnification under this Section 13.2,
Buyer Indemnitees shall use commercially reasonable efforts to collect any
amounts available under such insurance coverage and from such other party
alleged to have responsibility. If a Buyer Indemnitee receives an amount under
insurance coverage or from such other party with respect to Buyer Damages at any
time subsequent to any indemnification provided by Seller pursuant to this
Section 13.2, then such Buyer Indemnitee shall promptly reimburse Seller for any
payment made or expense incurred by Seller in connection with providing such
indemnification up to such amount received by Buyer Indemnitee, but net of any
expenses incurred by such Buyer Indemnitee in collecting such amount.

(iv) Seller shall be obligated to indemnify Buyer Indemnitees only for those
claims giving rise to Buyer Damages as to which Buyer Indemnitees have given
Seller written notice prior to the end of the pertinent Indemnity Period, in the
event that the Indemnity Period applies to such Buyer Damages. Any written
notice delivered by a Buyer Indemnitee to Seller with respect to Buyer Damages
shall set forth, with as much specificity as is reasonably practicable, the
basis of the claim for Buyer Damages and, to the extent reasonably practicable,
a reasonable estimate of the amount thereof.

(v) If on the Closing Date, any Buying Party knows of any information that would
cause one or more of the representations and warranties made by Seller to be
inaccurate as of the date made or as of the Closing Date, no Buying Party shall
have any right or remedy after the Closing with respect to such inaccuracy and
shall be deemed to have waived its rights to indemnification in respect thereof.

Section 13.3 Buyer Parents Agreement to Indemnify.

(a) Subject to the terms and conditions set forth herein, from and after the
Closing Date, each Buyer Parent shall, severally and not jointly, indemnify and
hold harmless each of the Selling Parties and each of the Selling Parties’
directors, officers, employees, Affiliates, controlling persons, agents and
representatives and their successors and assigns (collectively, the “Seller
Indemnitees”) from and against all liability, demands, claims, actions or causes
of action, assessments, damages, costs and expenses (including reasonable
attorneys’ fees and expenses, but excluding all punitive, incidental, indirect,
special or consequential damages (unless payable to a third party))
(collectively, the “Seller Damages”) asserted against or incurred by any Seller
Indemnitee as a result of or arising out of (i) the Assumed Liabilities relating
to the Purchased Assets acquired by such Buyer Parent or its Affiliates, (ii) a
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Buyer Parent or its Subsidiaries contained in Article VIII of this Agreement,
(iii) a breach of any other agreement or covenant of such Buyer Parent or its
Subsidiaries (other than a Timber Entity), contained herein that contemplates
performance or compliance on or prior to the Closing Date, except for a breach
of Section 10.3 or 10.7(a), (iv) a breach of any other agreement or covenant of
such Buyer Parent or its Subsidiaries (in the case of any agreement or covenant
of any Timber Entity, to the extent such agreement or covenant is required by
this Agreement to be performed or complied with after the Closing), (v) the use,
operation or ownership of any of the Purchased Assets acquired by such Buyer
Parent or its Subsidiaries, after the Closing or (vi) any hiring activities of
such Buyer Parent in respect of the Eligible Employees as described in
Section 11.1(b) of the Seller’s Disclosure Letter. Seller agrees that, except as
provided in Section 15.15, the indemnification provided in this Section 13.3 is
(A) the exclusive remedy for a breach by such Buyer Parent or its Subsidiaries
of any representation or warranty or covenant contained in this Agreement,
(B) is in lieu of any and all other rights and remedies which Seller may have
under this Agreement or otherwise for monetary or equitable relief with respect
to (i), (ii), (iii), (iv), (v) and (vi) above; provided that, subject to
Section 15.10, in the event that the Buying Parties fail to consummate the
transactions contemplated herein, Seller may undertake an action, suit or
proceeding for the enforcement of the provisions of this Agreement or for
monetary damages, unless Seller’s failure to perform any of its obligations
under this Agreement primarily contributes to the failure of the Buying Parties
to consummate the transactions contemplated herein. There shall be no
indemnification for a breach of any representation, warranty, agreement or
covenant for which a decree of specific performance has been issued pursuant to
Section 15.15.

(b) Subject to the terms and conditions set forth herein, from and after the
Closing Date, each Buyer shall, severally and not jointly, indemnify and hold
harmless each of the Seller Indemnitees from and against all Seller Damages
asserted against or incurred by any Seller Indemnitee as a result of or arising
out of any breach of Section 10.9 or 10.10 by such Buyer.

(c) Each Buyer Parent’s obligations pursuant to Section 13.3(a), and each
Buyer’s obligations pursuant to Section 13.3(b), to indemnify Seller Indemnitees
are subject to the following limitations:

(i) No indemnification shall be made by any Buyer Parent with respect to any
claim made pursuant to Section 13.3(a)(ii) or (iii) or by Buyer with respect to
any claim made pursuant to Section 13.3(b) unless (A) the amount of such claim
exceeds the Minimum Claim Amount, and (B) the aggregate amount of Seller Damages
under all claims in excess of the Minimum Claim Amount made pursuant to
Section 13.3(a)(ii) or (iii) or Section 13.3(b) exceeds the Basket Amount and,
in such event, indemnification shall be made by any Buyer Parent only to the
extent Seller Damages exceed, in the aggregate, the Basket Amount.

 

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(ii) In no event shall the aggregate obligation of Buyer Parents to indemnify
the Seller Indemnitees pursuant to Section 13.3(a)(ii) or (iii) and of Buyer to
indemnify the Seller Indemnitees pursuant to Section 13.3(b), together with any
indemnification paid pursuant to any other provisions of this Agreement, exceed
the Cap.

(iii) The amount of any Seller Damages shall be reduced by any amount actually
received by a Seller Indemnitee with respect thereto under any third party
insurance coverage or from any other party alleged to be responsible therefor.
If a Seller Indemnitee makes a claim for indemnification under this
Section 13.3, Seller Indemnitees shall use commercially reasonable efforts to
collect any amounts available under such insurance coverage and from such other
party alleged to have responsibility. If a Seller Indemnitee receives an amount
under insurance coverage or from such other party with respect to Seller Damages
at any time subsequent to any indemnification provided by any Buyer Parent
pursuant to this Section 13.3, then such Seller Indemnitee shall promptly
reimburse such Buyer Parent for any payment made or expense incurred by such
Buyer Parent in connection with providing such indemnification up to such amount
received by the Seller Indemnitee, but net of any expenses incurred by such
Seller Indemnitee in collecting such amount.

(iv) Each Buyer Parent shall be obligated to indemnify the Seller Indemnitees
only for those claims giving rise to Seller Damages as to which the Seller
Indemnitees have given such Buyer Parent written notice prior to the end of the
Indemnity Period, in the event that the Indemnity Period applies to such Seller
Damages. Any written notice delivered by a Seller Indemnitee to each Buyer
Parent with respect to Seller Damages shall set forth, with as much specificity
as is reasonably practicable, the basis of the claim for Seller Damages and, to
the extent reasonably practicable, a reasonable estimate of the amount thereof.

Section 13.4 Third Party Claims.

The obligations of any indemnifying Party to indemnify any indemnified party
under this Article XIII with respect to Buyer Damages or Seller Damages, as the
case may be, resulting from the assertion of liability by third parties,
including liabilities related to Section 1.8(c)(xi) (a “Third Party Claim”),
will be subject to the following terms and conditions:

(a) Any Party against whom any Third Party Claim is asserted will give the Party
which may be required to provide indemnity hereunder written notice of any such
Third Party Claim promptly after learning of such Third Party Claim, and the
indemnifying Party may at its option undertake the defense thereof by
representatives of its own choosing. Failure to give prompt notice of a Third
Party Claim hereunder shall

 

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not affect the indemnifying party’s obligations under this Article XIII, except
to the extent that the indemnifying party is actually prejudiced by such failure
to give prompt notice. If the indemnifying party, within 30 days after notice of
any such Third Party Claim, fails to assume the defense of such Third Party
Claim, the indemnified party against whom such claim has been made will (upon
further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the account
and risk, and at the expense, of the indemnifying party, subject to the right of
the indemnifying party to assume the defense of such Third Party Claim at any
time prior to settlement, compromise or final determination thereof.

(b) Notwithstanding anything in this Section 13.4 to the contrary, (i) the
indemnified party shall not settle a claim for which it is indemnified without
the prior written consent of the indemnifying party, which consent shall not be
unreasonably withheld, conditioned or delayed, and (ii) the indemnifying party
shall not enter into any settlement or compromise of any action, suit or
proceeding or consent to the entry of any judgment for other than monetary
damages to be borne by the indemnifying party without the prior written consent
of the indemnified party, which consent shall not be unreasonably withheld,
conditioned or delayed.

Section 13.5 Environmental Indemnity.

(a) From and after the Closing, Seller shall indemnify, defend and hold harmless
Buyer Indemnitees from and against Buyer Damages (subject to the limitations set
forth in this Section 13.5), costs and expenses incurred by any Buying Party in
connection with any required Remediation under applicable Environmental Law as
such Law existed on the Closing Date in respect of Adverse Environmental
Conditions, on any portion of the Timberlands, that existed on the Closing Date
(the “Affected Land”), excluding, in each case, all those matters disclosed in
the Phase I Reports and, in each case in accordance with this Section 13.5. At
its option, Seller may require the relevant Cash Entity to transfer to Seller or
may require the relevant Buyer Parent to cause the relevant Timber Entity to
transfer to Seller (i) ownership of any portion of the Affected Land,
(ii) ownership of a reasonable amount of additional surrounding buffer land
identified by Seller for each portion of Affected Land transferred pursuant to
clause (i) above, provided that the aggregate amount of land transferred to
Seller shall be at least 20 acres, and (iii) reasonable access rights for each
portion of Affected Land transferred pursuant to clause (i) above (an
“Environmental Carveout”). If Seller elects to require the relevant Cash Entity
to, or to cause the relevant Timber Entity to, transfer ownership of an
Environmental Carveout pursuant to the previous sentence, Seller shall pay such
Cash Entity or such Timber Entity, as the case may be, an amount in cash equal
to the fair market value of the Environmental Carveout (which fair market value
shall be calculated in accordance with Exhibit B) and, notwithstanding any other
Buyer Indemnitee right to indemnification set forth in this Agreement, a Buyer
Indemnitee’s right to indemnification with respect to any Environmental Carveout
shall

 

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be limited to the actual out-of-pocket costs and expenses such Buyer Indemnitee
incurred in connection with the transfer of the Environmental Carveout.
Notwithstanding the foregoing sentence, if Seller elects to require the relevant
Cash Entity to, or cause the relevant Timber Entity to, transfer ownership of an
Environmental Carveout and Seller subsequently corrects, remediates or addresses
the Adverse Environmental Condition on such Affected Land, Seller shall have the
option to return and transfer such property (“Corrected Property”) to the
relevant Cash Entity or Timber Entity, and the relevant Cash Entity or Timber
Entity shall purchase the Corrected Property from Seller at the fair market
value of the Corrected Property (which fair market value shall be calculated in
accordance with Exhibit B), subject to evidence reasonably satisfactory to the
relevant Cash Entity or Timber Entity that Seller has corrected such Adverse
Environmental Condition in accordance with all applicable Environmental Laws.
Any payments by Seller to the relevant Cash Entity or Timber Entity, as the case
may be, for transfers of Environmental Carveouts shall be made by wire transfer
of immediately available funds to a bank account designated by the relevant Cash
Entity or Timber Entity, as the case may be, upon the transfer of such
Environmental Carveouts from the relevant Cash Entity or Timber Entity, as the
case may be, to Seller. Each Buying Party and their respective Affiliates shall
cooperate with the Selling Parties in any efforts that may be necessary for the
Selling Parties to acquire ownership in any Environmental Carveout or to
establish or confirm title to the Environmental Carveouts, including executing
all documents pertaining to the Environmental Carveouts as are reasonably
requested by the Selling Parties. Each Buyer Parent agrees that the remedies
provided in this Section 13.5 are the exclusive remedy for the matters addressed
in this Section 13.5 and these remedies are in lieu of any and all other rights
and remedies which any Buying Party may have under this Agreement or otherwise
for monetary or injunctive relief with respect to matters addressed in this
Section 13.5. There shall be no indemnification for matters addressed in this
Section 13.5 if, and to the extent, in respect of such matters, a Purchase Price
adjustment has been made pursuant to Section 2.3.

(b) Seller’s obligation to indemnify, defend and hold harmless Buyer Indemnitees
for the matters addressed in Section 13.5(a) shall be limited to those matters
as to which either Buyer Parent provides Seller with written notice (such notice
to be in conformance with other relevant provisions of this Agreement and to
contain, to the extent available, reasonable details of the claim for which
indemnity is sought) within 18 months after the Closing Date.

(c) With respect to claims to defend, indemnify and hold harmless Buyer
Indemnitees pursuant to Section 13.5(a):

(i) Seller shall be required to defend, indemnify and hold harmless Buyer
Indemnitees only to the extent that: (A) investigation, containment or
Remediation of the Hazardous Substances associated with the matters impacting
the Affected Land are required by any Governmental Authority having and

 

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asserting jurisdiction pursuant to an applicable Environmental Law that is in
effect as of and is enforceable as of the Closing Date; (B) the Remediation
Standards applicable to the matters impacting the Affected Land that must be met
in order to satisfy the requirements of the applicable Environmental Law (1) are
no more stringent than the Remediation Standards that were in effect as of and
were enforceable as of the Closing Date under the applicable Environmental Law
that is the source of the obligation to conduct a Remediation, or, where no such
Remediation Standards had been promulgated and were enforceable as of the
Closing Date, Remediation Standards (including institutional and engineering
controls) that were applied, within one year prior to the Closing Date, on a
case-by-case basis, to properties that are most similar to and in the same
jurisdiction as the portions of the affected Timberlands subject to a
Remediation, and (2) are those Remediation Standards applicable to such
Timberlands that would be the least stringent Remediation Standards (including
institutional and engineering controls), taking into account that the normal
operating condition at the affected Timberlands shall be maintained at all
times, that would be applicable given the use of the property as of the day
before the Closing Date; (C) such investigation, containment and/or Remediation
is conducted using reasonably cost effective methods, taking into account that
the normal operating condition at the affected Timberlands shall be maintained
at all times, for investigation, Remediation and/or containment consistent with
applicable Environmental Law; and (D) Seller has reasonable right and access to
the Affected Land to perform any such investigation, containment or Remediation.
At Seller’s option, Seller shall notify each Buyer Parent in writing that Seller
chooses not to perform any such investigation, containment and/or Remediation
and, in such event, the relevant Buyer Parent shall be responsible for such
investigation, containment and/or Remediation consistent with the provisions of
this Section 13.5 and, in such case, Seller shall indemnify such Buyer Parent to
the extent required by this Section 13.5. To the extent that the Buyer
Indemnitee incurs Buyer Damages in connection with an investigation, containment
or Remediation associated with matters impacting the Affected Land that are in
excess of the Buyer Damages that would be incurred for an investigation,
containment or Remediation meeting the conditions set forth in this subsection,
Seller shall have no obligation to indemnify any Buyer Indemnitees for such
excess Buyer Damages. Notwithstanding anything herein to the contrary, Seller
shall not be obligated to pay the relevant Buyer Parent or otherwise indemnify
any Buyer Indemnitee, from indirect or consequential damages, business
interruptions or lost profits of such Buying Party or any third party or
diminution in value of property whatsoever as a result of or arising out of any
investigation, containment, Remediation or other activities performed under this
Section 13.5(c).

(ii) If the costs of an investigation, containment or Remediation at any of the
Affected Land that is subject to an indemnity by Seller hereunder are

 

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increased due to an act of God or an act or omission (after the Closing) by a
Person other than any Selling Party or a Subsidiary, Affiliate, agent,
representative or contractor of any Selling Party, Seller shall not be
responsible for any such increase in costs incurred. Seller shall not be
responsible for any increased costs or increased Buyer Damages under this
subsection to the extent they arise by reason of (A) the voluntary closure or
reduction of logging operations at the affected Timberlands, or (B) a material
change in use of any of affected Timberlands from the use of such affected
Timberlands as of the Closing, including use for residential or recreational
homes, developments or enterprises or other higher or better use opportunities
pursued by the relevant Buying Party or any other Person on the Timberlands.

(iii) No indemnification shall be made by Seller with respect to any claim under
this Section 13.5 unless the amount of such claim (without taking into account
the proviso to the definition of Environmental Matters set forth in Article XVI)
exceeds $250,000 (the “Environmental Minimum Claim Amount”).

(iv) Seller’s obligation to indemnify Buyer Indemnitees pursuant to
Section 13.5(a) shall not be subject to the Cap.

(d) Notwithstanding anything to the contrary herein:

(i) the matters listed on Section 13.5(d) of the Seller’s Disclosure Letter and
identified with a “B,” “C” or “D” shall be subject to indemnification under this
Section 13.5 despite being disclosed in the Phase 1 Reports;

(ii) the “Environmental Minimum Claim Amount” for matters listed on Schedule
13.5(d) and identified with a “B,” “C” or “D” shall be $50,000;

(iii) the Buyer Representative may, by notice delivered to Seller not later than
June 30, 2006, require Seller to remove any land affected by the matters listed
on Schedule 13.5(d) and identified with a “C,” together with a reasonable amount
of additional surrounding buffer land as identified by Seller, from the
Timberlands being transferred pursuant to this Agreement, provided that the
relevant Buyer Parent shall cause the relevant Cash Entity or Timber Entity to
provide Seller with reasonable access rights for each portion of land so
removed, and provided, further that the aggregate amount of land removed from
the Timberlands shall be at least 20 acres;

(iv) the relevant Buyer Parent may, by notice to Seller delivered not later than
the second anniversary of the Closing Date, require Seller to treat any land
affected by the matters listed on Schedule 13.5(d) and identified with a “C,”
but not removed from the Timberlands prior to the Closing pursuant to clause
(iii) above, as an Environmental Carveout in accordance with Section 13.5(a),
without regard to any Environmental Minimum Claim Amount; and

 

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(v) prior to the Closing, Seller shall remove the land affected by the matters
listed on Schedule 13.5(d) and identified with a “D,” together with a reasonable
amount of additional surrounding buffer land as identified by Seller, from the
Timberlands being transferred pursuant to this Agreement, provided that the
relevant Buyer Parent shall cause the relevant Cash Entity or Timber Entity to
provide Seller with reasonable access rights for each portion of land so
removed, and provided, further that the aggregate amount of land removed from
the Timberlands shall be at least 20 acres.

(e) Notwithstanding anything to the contrary herein, with respect to claims
arising pursuant to this Section 13.5, Seller shall not be obligated to
indemnify Buyer Indemnitees for the costs and expenses associated with Buyer
Indemnitees’ overseeing of Seller’s performance of its defense, Remediation and
indemnity obligations, including the costs and expenses of overseeing of
Seller’s legal counsel, consultants or employees, and Seller shall not be
obligated to indemnify Buyer Indemnitees for any costs or expenses of Buyer
Indemnitees for management and employee time costs.

Section 13.6 Prohibited Disclosure.

No Buying Party shall, or shall cause any other Person to, and each Buyer Parent
shall cause any Timber Entity which is its indirect wholly owned Subsidiary not
to, provide or disclose to any Person or Governmental Authority, any information
in any form, including reports, analyses, sampling results or data, relating to
any Adverse Environmental Condition which Section 13.5 requires Seller to
investigate, remediate, or indemnify against, unless (i) requested or consented
to by Seller, (ii) Seller is in default (after notice and a reasonable
opportunity to cure) of obligations imposed by this Section 13.6, (iii) each
Buyer Parent has agreed in writing that Seller has completed the obligations
imposed by this Section 13.6 or (iv) such disclosure is required by
Environmental Laws. To the extent any Buyer Parent believes in good faith that
such Person is required by any Environmental Law to disclose such information,
such Person shall timely inform Seller of any such belief and, in the event
Seller declines to consent to the disclosure of such information, Seller shall
indemnify and hold harmless any Buying Party, pursuant to this Section 13.6,
from any claim of violation of Environmental Laws for failure to disclose such
information, provided that where such Environmental Law provides criminal
sanctions for failure to disclose such information, such Person may disclose
such information to the extent required by such Environmental Law, but only
after providing Seller prompt notice of such intent to disclose such
information. No Buyer Parent shall, or shall cause any other Person to, provide
or disclose any such information under any circumstances with the intent of or
for the purpose of inducing,

 

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encouraging or soliciting any (A) Governmental Authority to require
investigation, remediation or corrective action or (B) Third-Party Claim
indemnifiable under this Section 13.6.

Section 13.7 Accepted Buyer Parents’ Title Objection Indemnification.

Notwithstanding anything in this Agreement to the contrary, Seller shall
indemnify and hold harmless the Buyer Indemnitees from and against any liability
for Accepted Buyer Parents’ Title Objections pursuant to Section 2.3(b)(iii);
provided that Seller’s obligation to indemnify the Buyer Indemnitees in respect
of any Accepted Buyer Parents’ Title Objection shall not exceed the fair market
value of the portion of the Owned Timberlands subject to such Accepted Buyer
Parents’ Title Objections (which fair market value shall be calculated in
accordance with the first sentence of Section 2.3(b)(iv)). To the extent that an
indemnification obligation pursuant to this Section 13.7 may overlap with any
other indemnification obligation pursuant to this Article XIII, the provisions
of this Section 13.7 shall control.

Section 13.8 Adjustments to Purchase Price.

Any payments made pursuant to the indemnification provisions of this Article
XIII shall be deemed to be adjustments to the Purchase Price and the Parties
shall treat them as such for all purposes.

ARTICLE XIV

TERMINATION AND AMENDMENT

Section 14.1 Termination.

This Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time prior to the Closing:

(a) by mutual written consent of Seller and each Buyer Parent; or

(b) by either Seller or any Buyer Parent, if the Closing has not occurred by
November 30, 2006 (such date the “Termination Date”); and provided, further,
that the right to terminate the Agreement pursuant to this Section 14.1(b) shall
not be available to any Party whose failure to perform any of its obligations
under this Agreement primarily contributes to the failure of the Closing to have
occurred by such time;

(c) by Seller pursuant to Section 9.3;

 

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(d) by Seller upon a breach or violation of any representation, warranty,
covenant or agreement on the part of any Buying Party set forth in this
Agreement, which breach or violation would result in the failure to satisfy the
conditions set forth in Section 12.3(b) or Section 12.3(c) and, in any such
case, such breach or violation shall be incapable of being cured by the
Termination Date, or the relevant Buyer Parent shall not be using on a
continuous basis all commercially reasonable efforts to cure in all material
respects such breach or violation after the giving of written notice thereof by
any of the Selling Parties to the relevant Buyer Parent of such violation or
breach; and

(e) by any Buyer Parent upon a breach or violation of any representation,
warranty, covenant or agreement on the part of the Selling Parties set forth in
this Agreement, which breach or violation would result in the failure to satisfy
the conditions set forth in Section 12.2(b) or Section 12.2(c) and, in any such
case, such breach or violation shall be incapable of being cured by the
Termination Date, or Seller shall not be using on a continuous basis all
commercially reasonable efforts to cure in all material respects such breach or
violation after the giving of written notice thereof by Buyer Parent to Seller
of such violation or breach.

Section 14.2 Effect of Termination.

In the event of any termination of this Agreement as provided in Section 14.1,
the obligations of the Parties hereunder shall terminate and there shall be no
liability on the part of any Party hereto with respect thereto, except for the
provisions of Section 3.4, Section 10.1, this Section 14.2, Article XV and the
final sentence of Section 9.4(a); provided, however, that in no case shall any
Party be relieved or released from any liability or damages arising from a
willful breach of any provision of this Agreement (including any failure to
consummate the transactions contemplated by this Agreement unless an express
condition to such Party’s obligation to consummate such transactions has not
been satisfied).

ARTICLE XV

GENERAL PROVISIONS

Section 15.1 Notice.

Any notice given pursuant to this Agreement shall be given in writing and
delivered in person, by overnight courier, by facsimile (with a copy sent by
regular mail) or by registered or certified mail, postpaid, return receipt
requested, addressed as follows:

If to the Selling Parties, to:

International Paper Company

6400 Poplar Avenue, Tower III

Memphis, Tennessee 38197

Attention: General Counsel

Facsimile: (901) 419-3818

 

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with copies to:

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention: Jeffrey J. Rosen, Esq.

      William D. Regner, Esq.

Facsimile: (212) 909-6836

If to any Buying Party or the Buyer Representative to:

Resource Management Service

P.O. Box 380757

Birmingham, AL 35238

Attention: Bruno F. Fritschi

Facsimile: (205) 991-9516

with copies to:

Forest Investment Associates LP

15 Piedmont Center

Suite 1250

Atlanta, GA 30305

Attention: Charles L. VanOver

Facsimile: (404) 261-9574

Sutherland Asbill & Brennan LLP

999 Peachtree Street, NE

Atlanta, Georgia 30309-3996

Attention: Victor P. Haley, Esq.

Facsimile: (404) 853-8806

Such notices, if delivered personally or by overnight courier service, shall be
deemed given at the time of delivery; if sent by registered or certified mail,
shall be deemed given two days after the time of mailing; and if sent by
facsimile, shall be deemed given on the next day following the day on which such
facsimile was sent, provided that a copy is also sent by regular mail.

 

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Section 15.2 Legal Holidays.

If any date herein set forth for the performance of any obligation by any Party,
or for the delivery of any instrument or notice as herein provided, should be a
Saturday, Sunday or legal holiday, the compliance with such obligation or
delivery shall be deemed acceptable on the next day which is not a Saturday,
Sunday or legal holiday. As used herein, the term “legal holiday” means any
state or federal holiday for which financial institutions or post offices are
generally closed in the State of New York for observance thereof.

Section 15.3 Further Assurances.

Each of the Parties shall execute such further Conveyance Instruments and such
other documents, instruments of transfer or assignment (including a real estate
excise Tax affidavit) and do such other acts or things as may be reasonably
required or desirable to carry out the intent of the Parties hereunder and the
provisions of this Agreement and the transactions contemplated hereby.

Section 15.4 Assignment; Binding Effect.

Subject to the conditions set forth below, each Buyer Parent shall have the
right to assign: (a) to another Person its rights hereunder to acquire the
Purchased Assets comprising an entire FMA; (b) to newly formed Cash Entities and
Buyers its rights hereunder to acquire identified Purchased Assets comprising an
entire FMA; and (c) (i) to any timberland investment fund managed by such Buyer
Parent or an Affiliate, (ii) to any person for which such Buyer Parent or an
Affiliate will serve as the manager for the Purchased Assets and (iii) to any
other Person, which in each case described in clauses (i), (ii) or (iii) has
submitted (either directly or through a Buyer Parent in its capacity as an
investment manager) an equity commitment letter to such Buyer Parent and Seller
at or prior to the execution and delivery of this Agreement, its rights
hereunder to acquire identified Purchased Assets. In the case of an assignment
of rights under clause (c) to acquire Purchased Assets comprising less than an
entire FMA, all such assignments by a Buyer Parent shall not divide the
Purchased Assets into more than 16 parcels (no more than 12 of which shall be
created by assignments by FIA Buyer Parent and no more than four of which shall
be created by assignments by RMS Buyer Parent), each of which must be at least
10,000 acres and, in the case of any assignment by RMS Buyer Parent, must
consist solely of Purchased Assets relating to Timberlands held by Blue Sky
Timber Properties LLC. In the case of clause (a) or (c) above, the assigning
Buyer Parent shall provide the Selling Parties with such assurances that the
assignee has the financial capacity to pay the portion of the Purchase Price
allocable to the identified Purchased Assets the assignee will acquire, in form
consistent with the equity commitment letters provided by Buyer Parents to
Seller in connection with the execution and delivery of this Agreement, and such
other information and assurances as Seller may reasonably request.

 

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Any assignee hereunder shall expressly assume all of the rights, liabilities and
obligations under this Agreement relating to the Purchased Assets to be acquired
by it pursuant to an assignment and assumption agreement in form and substance
reasonably satisfactory to Seller. Upon any assignment provided in clause (a) or
(c) above, the assignee shall be substituted as the Buyer Parent with respect to
the Purchased Assets comprising the applicable FMA or the identified Purchased
Assets, as the case may be, and shall succeed to the assigning Buyer Parents’
rights and obligations under the Purchase Agreement with respect to such
Purchased Assets. If any assignment hereunder includes the right to acquire
Timber Entity Interests, the assigning Buyer Parent’s applicable Buyer shall
also assign its rights and delegate its obligations with respect to the Timber
Entity Assets to be assigned, transferred and conveyed to the applicable Timber
Entity pursuant to Section 1.2 to a wholly owned limited liability company of
the assignee Buyer Parent, in the case of clause (a) or (c) above, or the
assignor Buyer Parent, in the case of clause (b) above, which assignee shall
expressly assume all of the rights, liabilities and obligations under this
Agreement relating to such Timber Entity Assets pursuant to an assignment and
assumption agreement reasonably satisfactory to Seller. Prior to any such
assignment, the applicable Buyer Parent and the assignee Buyer shall enter into
an amended and restated limited liability company operating agreement in respect
of such Buyer substantially in the form of Exhibit M. Upon any such assignment,
the assignee shall be substituted as the Buyer with respect to the Timber Entity
Assets to be assigned, transferred and conveyed to the applicable Timber Entity
pursuant to Section 1.2 and shall succeed to the assigning Buyer’s rights and
obligations under the Purchase Agreement with respect to such Timber Entity
Assets. In the case of any assignment of the right to acquire Purchased Assets
comprising less than an entire FMA under clause (b) or (c) above, the assigning
Buyer Parent shall negotiate in good faith with Seller to agree upon an
appropriate division of the Minimum Harvest Plan for Pulpwood and Saw Logs among
the parcels created by such assignment, and the applicable Cash Entities and
Timber Entities shall enter each into irrevocable agreements with the Seller
under the Master Stumpage Agreement under which they agree to provide their
applicable portion of the Minimum Harvest Plan under the Pulpwood Supply
Agreements and to provide their applicable portion of the Target Volume under
the Log Supply Agreements. In addition to the foregoing rights of assignment in
favor of Buyer Parents, the Buyer Parties shall have the right to make a
collateral assignment of and grant a security interest in all of their rights
under this Agreement to any one or more parties providing financing to one or
more of the Buyer Parties in connection with the transactions contemplated by
this Agreement. Notwithstanding anything in the foregoing to the contrary,
(i) no assignment pursuant to clause (a) or (c) above shall be made without the
prior written consent of Seller, which consent shall not be unreasonably
withheld, conditioned or delayed, and (ii) no assignment hereunder shall relieve
any Buyer Parent of any obligation under this Agreement that is to be performed
at or prior to the Closing. Following the Closing, the assigning Buyer Parent
(and any related assigning Buyer) shall be released from all liabilities and
obligations with respect to the assigned Purchased Assets. Except as set forth
above, this Agreement shall not be assignable or

 

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otherwise transferable (x) by any Buying Party without the prior written consent
of Seller, and (y) by any of the Selling Parties without the prior written
consent of the Buyer Representative; provided, however, that any of the Selling
Parties may, by written notice to the Buyer Representative, assign all or any
portion of its rights and obligations under this Agreement to any Affiliate
thereof. Any attempt to assign this Agreement without any prior written consent
required by this Section 15.4 shall be void. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns.

Section 15.5 Entire Agreement.

This Agreement (including the Exhibits and schedules hereto), the Seller’s
Disclosure Letter and the Confidentiality Agreement (which is incorporated
herein by reference) and the other Transaction Documents constitute the entire
agreement and understanding of the Parties and supersede any prior agreements or
understandings, whether written or oral, among the Parties with respect to the
subject matter hereof.

Section 15.6 Amendments; Waivers.

This Agreement may not be amended or modified in any manner other than by an
agreement in writing signed by Seller and each Buyer Parent or their respective
successors or permitted assigns. No waiver under this Agreement shall be valid
or binding unless set forth in a writing duly executed and delivered by the
Party against whom enforcement of such waiver is sought. Neither the waiver by
any of the Parties of a breach of or a default under any of the provisions of
this Agreement, nor the failure by any of the Parties, on one or more occasions,
to enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder.

Section 15.7 Confidentiality.

Each Party will hold, and will cause its respective officers, employees,
accountants, counsel, financial advisors and other representatives and
Affiliates to hold, any nonpublic information confidential in accordance with
the terms of the Confidentiality Agreement. Except with the Seller’s prior
written approval but subject to the exceptions set forth in the Confidentiality
Agreement, no Buying Party shall disclose to any third party any non-public
information regarding the Timber Notes, the Buyers or the structure for the
issuance of the Timber Notes and the Letters of Credit.

Section 15.8 No Third Party Beneficiaries.

Nothing in this Agreement or any Ancillary Agreements, whether express or
implied, is intended or shall be construed to confer upon or give to any Person,
other than the Parties hereto, the Buyer Indemnitees and the Seller Indemnitees
(with respect to Article XIII), any rights, remedies or other benefits under or
by reason of this Agreement.

 

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Section 15.9 Severability of Provisions.

If any provision of this Agreement (including any phrase, sentence, clause,
Section or subsection) is inoperative, invalid, illegal or unenforceable for any
reason, all other provisions of this Agreement shall remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any Party. Upon any
such determination, the Parties shall negotiate in good faith to modify this
Agreement so as to give effect to the original intent of the Parties as closely
as possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.

Section 15.10 Governing Law.

(a) THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY,
CONSTRUCTION, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE
EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION. EACH OF THE PARTIES HEREBY (I) IRREVOCABLY SUBMITS
TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE FEDERAL
COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE, CITY AND COUNTY OF
NEW YORK FOR THE PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (II) AGREES
THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION
OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT, AND (III) AGREES THAT IT WILL
NOT BRING ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN A NEW YORK STATE COURT OR
FEDERAL COURT LOCATED IN THE STATE, CITY AND COUNTY OF NEW YORK. EACH OF THE
PARTIES HEREBY CONSENTS TO AND GRANTS ANY SUCH COURT JURISDICTION OVER THE
PERSON OF SUCH PARTY AND OVER THE SUBJECT MATTER OF ANY SUCH DISPUTE AND AGREES
THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR
PROCEEDING IN THE MANNER PROVIDED IN SECTION 15.1, OR IN SUCH OTHER MANNER AS
MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF ON SUCH
PARTY.

 

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(b) EACH PARTY HEREBY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF
THE ANCILLARY AGREEMENTS, OR THE BREACH, TERMINATION OR VALIDITY OF THIS
AGREEMENT OR ANY ANCILLARY AGREEMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY. EACH PARTY HEREBY CERTIFIES AND ACKNOWLEDGES THAT (I) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER, (III) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH OF
THE ANCILLARY AGREEMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS SET FORTH IN THIS SECTION.

Section 15.11 Counterparts.

This Agreement may be signed in any number of counterparts, each of which shall
be deemed an original and, when taken together, shall constitute one agreement.

Section 15.12 Headings.

Section headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.

Section 15.13 Construction.

This Agreement shall not be construed more strictly against one Party than
against any other merely by virtue of the fact that it may have been prepared by
counsel for one of the Parties, it being recognized that both the Selling
Parties and Buyer Parent have contributed substantially and materially to the
preparation of this Agreement. When appearing in this Agreement, the term
“including” shall be deemed to be immediately followed by the term “but not
limited to.” When appearing in this Agreement, the phrase “the date hereof”
shall be deemed to refer to, April 4, 2006, the execution date of the original
purchase agreement between the Parties.

 

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Section 15.14 Reimbursement of Legal Fees.

In the event any legal proceeding should be brought to enforce the terms of this
Agreement or for breach of any provision of this Agreement, the non-prevailing
Party shall reimburse the prevailing Party for all reasonable costs and expenses
of the prevailing Party (including its attorneys’ fees and disbursements).

Section 15.15 Specific Performance.

The Parties acknowledge that money damages would not be a sufficient remedy for
any breach of this Agreement and that irreparable harm would result if this
Agreement were not specifically enforced. Therefore, the rights and obligations
of the Parties under this Agreement shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection therewith.

Section 15.16 Buyer Representative.

All obligations of Buyer Parents under this Agreement shall be several (not
joint and several). Each Buying Party irrevocably appoints Resource Management
Service to act as its designated representative, agent and attorney-in-fact,
with full authority to make all decisions and determinations and to take all
actions required or permitted under or relating to this Agreement and each
Ancillary Agreement on behalf of itself (in such capacity, the “Buyer
Representative”), including (i) approving any document required to be delivered
by any Buying Party on or after the Closing Date, (ii) approving or contesting
the adjustment or allocation of the Purchase Price pursuant to Article II, and
any other matter provided for in Article II, (iii) administering any
indemnification matter on behalf of any Buying Party, agreeing to the settlement
of any indemnification matter and otherwise handling and negotiating
indemnification matters, (iv) agreeing to any waiver, consent or amendment under
or to this Agreement, (v) sending, receiving and reviewing notices under this
Agreement on behalf of any Buying Party and (vi) appointing a successor Buyer
Representative in the event of the resignation of the then current
Representative, any such successor to be subject to the prior written approval
of Seller. Each Buying Party acknowledges that this Section 15.16 is intended to
have the broadest possible scope for the purpose of promoting the efficient
negotiation and handling of all matters which arise under or in connection with
this Agreement. All actions taken by the Buyer Representative in connection
with, or relating to, the subject matter of this Agreement or any Ancillary
Agreement that are within the authority conferred upon the Representative
pursuant to this Section 15.16 shall be deemed authorized, approved, ratified
and confirmed by each Buying Party, having the same force and effect as if
performed pursuant to the direct authorization of each such Buying Party. Each
of the Selling Parties shall be entitled to rely upon, without independent
investigation, any act, notice, instruction or communication from the Buyer

 

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Representative on behalf of each Buying Party and shall not be liable in any
manner whatsoever for any action taken or not taken in reliance upon the actions
taken or not taken or communications or writings given or executed by the Buyer
Representative. Each of the Selling Parties shall be entitled to disregard any
notices or communications given or made by any Buying Party unless given or made
through the Buyer Representative.

ARTICLE XVI

DEFINITIONS

Section 16.1 Definitions.

The terms set forth below shall have the following meanings:

“2006 Harvest Plan” means the harvest plan for the Timberlands set forth in
Exhibit N.

“Accepted Buyer Parents’ Title Objections” has the meaning specified in
Section 2.3(b)(iii)(A).

“Additional Cash Leasehold Interests” has the meaning specified in
Section 2.3(d).

“Additional Owned Cash Timberlands Acreage” has the meaning specified in
Section 2.3(d).

“Additional Owned Installment Note Timberlands Acreage” has the meaning
specified in Section 2.3(d).

“Additional Timber Entity Leasehold Interests” has the meaning specified in
Section 2.3(d).

“Adverse Environmental Condition” means, with respect to any of the Timberlands,
the existence of an Environmental Matter.

“Affected Land” has the meaning specified in Section 13.5(a).

“Affiliate” of any Person means another Person which, directly or indirectly,
controls, is controlled by, or is under common control with, the first Person.

“Aggregate Excess Harvest Value” means the sum of the Excess Harvest Values, if
any, for each Merchantable Timber Category relating to the Timberlands.

 

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“Aggregate Reduced Harvest Value” means the sum of the Reduced Harvest Values,
if any, for each Merchantable Timber Category relating to the Timberlands.

“Agreement” has the meaning specified in the Preamble.

“Ancillary Agreements” has the meaning specified in Section 5.1(a)(ii).

“Apportionments” has the meaning specified in Section 2.4.

“Assignment and Assumption of Real Property Leases” has the meaning specified in
Section 3.2(a)(iv).

“Assignment and Assumption of Timberland Lease” has the meaning specified in
Section 3.2(a)(iii).

“Assignment of Timber Entity Interests” has the meaning specified in
Section 3.2(a)(xv).

“Assumed Liabilities” has the meaning specified in Section 1.8(a).

“Basket Amount” has the meaning specified in Section 13.2(b)(i)(B).

“Books and Records” has the meaning specified in Section 9.4(a).

“Buyer” has the meaning specified in the preamble.

“Buyer Affiliate” has the meaning specified in the preamble.

“Buyer Affiliate Assets” has the meaning specified in Section 1.3.

“Buyer Damages” has the meaning specified in Section 13.2(a).

“Buyer Easements” means such access easements across property owned by the
Selling Parties as may be reasonably necessary to allow any Buyer Parent or
Timber Entity and their respective Affiliates, successors and assigns to use any
portion of the Timberlands for its intended purposes.

“Buyer Indemnitees” has the meaning specified in Section 13.2(a).

“Buyer Parent” has the meaning specified in the Preamble.

“Buyer Parent Instrument of Assumption” has the meaning specified in
Section 1.8(a).

 

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“Buyer Parent Title Objection” or “Buyer Parents’ Title Objections” has the
meaning specified in Section 2.3(b)(i).

“Buyer Parents’ Disclosure Letter” has the meaning specified in the preamble to
Article VIII.

“Buyer Representative” has the meaning specified in Section 15.16.

“Buying Party” means, prior to the Closing, any Buyer Parent, Buyer, Cash Entity
or Buyer Affiliate and, immediately prior to the Closing, any Buyer Parent,
Buyer, Cash Entity, Buyer Affiliate or Timber Entity.

“Cap” has the meaning specified in Section 13.2(b)(ii).

“Cash Assets” means the Purchased Assets which are identified in Section 2.2(b)
of the Seller’s Disclosure Letter.

“Cash Entity” or “Cash Entities” has the meaning specified in the preamble.

“Cash Entity Assets” has the meaning specified in Section 1.1.

“Cash Leasehold Interests” has the meaning specified in Section 1.1(b).

“Cash Licenses” has the meaning specified in Section 1.1(d).

“Cash Purchase Price” means the portion of the Purchase Price payable by Buyer
Parents, Buyers, the Cash Entities and Buyer Affiliates to Seller on behalf of
the Selling Parties in consideration for the Cash Assets.

“Cash Purchase Price Allocation” has the meaning specified in
Section 2.2(b)(ii).

“Cash Purchased Condemnations” has the meaning specified in Section 1.1(g).

“Cash Purchased Contracts” has the meaning specified in Section 1.1(e).

“Cash Real Property Leases” has the meaning specified in Section 1.1(f).

“Cash Timber Entity” has the meaning specified in the preamble.

“Cash Timber LP” has the meaning specified in the preamble.

“Cash Timberland Leases” has the meaning specified in Section 1.1(b).

“Cash Timberlands” means, collectively, the Owned Cash Timberlands and the Cash
Leasehold Interests.

 

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“Casualty Loss” means any material physical damage to or loss of the timber on
any portion of the Timberlands by fire, earthquake, flood or other casualty
occurring prior to the Closing.

“Claims” means, with respect to the Purchased Assets, all claims, demands,
investigations, causes of action, suits, defaults, assessments, litigation or
other proceedings, including administrative proceedings, third party actions,
arbitral proceedings and proceedings by or before any Governmental Authority.

“Closing” has the meaning specified in Section 3.1.

“Closing Date” has the meaning specified in Section 3.1.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commercial Mediation Rules” means the commercial mediation rules of the
American Arbitration Association, as in effect from time to time.

“Commitment Letters” means, collectively, the Debt Commitment Letter and the
Equity Commitment Letters.

“Condemnation” means any condemnation proceeding filed or threatened in writing
by any Governmental Authority or any exercise, by a Governmental Authority, of
eminent domain powers (or notice of the exercise thereof) with respect to the
Timberlands.

“Confidentiality Agreement” means, collectively, the confidentiality agreement
dated November 1, 2005 between Seller and Resource Management Service, LLC and
the confidentiality agreement dated October 31, 2005 between Seller and Forest
Investment Associates.

“Continuing Agreements” has the meaning specified in Section 9.7.

“Contract” means any agreement, lease, license, evidence of debt, mortgage, deed
of trust, note, bond, indenture, security agreement, commitment, instrument,
understanding or other contract, obligation or arrangement of any kind.

“Conveyance Instruments” means such deeds, assignments of leases, and/or other
instruments necessary or appropriate under applicable Laws to convey (i) to each
Cash Entity fee simple title to the Owned Cash Timberlands and (ii) to each
Timber Entity fee simple title to the Owned Installment Note Timberlands, in
each case with covenants of limited or special warranty as to title, or (x) to
each Cash Entity leasehold title to the Cash Leasehold Interests and (y) to each
Timber Entity leasehold title to the Timber Entity Leasehold Interests, in each
case subject to the Permitted Exceptions.

 

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“Conveyed Cash Minerals” has the meaning specified in Section 1.1(c).

“Conveyed Minerals” means, collectively, the Conveyed Cash Minerals and the
Conveyed Timber Entity Minerals.

“Conveyed Timber Entity Minerals” has the meaning specified in Section 1.2(c).

“Corrected Property” has the meaning specified in Section 13.5(a).

“Credit Enhancement Banks” means one or more banks or other financial
institutions selected by Buyer Parents having credit ratings of not less than
AA-/Aa3 (and reasonably acceptable to Seller) to provide the standby Letters of
Credit required by Section 2.5(a) as credit enhancement for the Timber Notes.

“Debt Commitment Letter” has the meaning specified in Section 8.11(b).

“Debt Financing” has the meaning specified in Section 8.11(b).

“Deeds” has the meaning specified in Section 3.2(a)(ix).

“Eligible Employees” has the meaning specified in Section 7.2(b).

“Environmental Carveout” has the meaning specified in Section 13.5(a).

“Environmental Laws” means any United States federal, state or local Laws and
the regulations promulgated thereunder, in existence on the date hereof,
relating to pollution or protection of the environment or to threatened or
endangered species, including the federal Endangered Species Act, Laws relating
to wetlands protection, Laws relating to reclamation of land and waterways and
Laws relating to emissions, discharges, disseminations, releases or threatened
releases of Hazardous Substances into the environment (including ambient air,
surface water, ground water, soil, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.

“Environmental Matters” means any violation of any applicable Environmental Law
by any Selling Party at, on or attributable to the Timberlands existing as of
(x) the date hereof and as of the Closing Date, for purposes of Section 6.4 and
(y) the Closing Date, for purposes of Sections 13.5 and 13.6, relating to
(i) emissions, discharges, disseminations, releases or threatened releases of
Hazardous Substances into air, surface water, ground water, soil, land surface
or subsurface strata, buildings or facilities or (ii) otherwise arising out of,
relating to, or resulting from the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances by
any Selling Party at the Timberlands prior to the date hereof, provided that
only such violations that cannot be reasonably cured by the relevant Buyer
Parent, Timber Entity or Buyer Affiliate within one year after the Closing Date
for $500,000 or less will be deemed “Environmental Matters.”

 

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“Environmental Minimum Claim Amount” has the meaning specified in
Section 13.5(c)(iii).

“Environmental Permits” means all permits approvals, identification numbers,
licenses and other authorizations required under any applicable Environmental
Law.

“Equity Commitment Letters” has the meaning specified in Section 8.11(a).

“Equity Financing” has the meaning specified in Section 8.11(a).

“ERISA” means Employee Retirement Income Security Act of 1974, as amended.

“Excess Harvest” means a harvest of any merchantable timber described in a
Merchantable Timber Category during the Timber Adjustment Period exceeding the
Harvest Target (prorated for any portion of a calendar year) for such
Merchantable Timber Category set forth in the applicable annual harvest plan.

“Excess Harvest Value” means, for each Merchantable Timber Category for which
there was an Excess Harvest, the product of (i) the difference between the
Harvest Amount for such Merchantable Timber Category and the Harvest Target for
such Merchantable Timber Category and (ii) (a) in the case of Pulpwood and Saw
Logs in the State of Michigan, the Weighted Average Price for such Merchantable
Timber Category or (b) in the case of Saw Logs in any state except the State of
Michigan, the Transfer Price for such Merchantable Timber Category.

“Excluded Assets” has the meaning specified in Section 1.6.

“Excluded Liabilities” has the meaning specified in Section 1.8(c).

“FIA Access FMV” means an amount equal to the product of (x) the number of acres
constituting the FIA Access Threshold, and (y) the average fair market value per
acre of the total acreage of the properties subject to claims of lack of access
rights to any portion of the Owned Timberlands identified in Section 1.5 of the
Buyer Parents’ Disclosure Letter as Owned Timberlands to be conveyed to FIA
Buyer or each FIA Timber Entity, which fair market value shall be determined by
Seller in accordance with the first sentence of Section 2.3(b)(iv) and shall be
subject to the dispute resolution procedures set forth therein.

“FIA Access Threshold” has the meaning specified in Section 1.7(s).

“FIA Buyer” has the meaning specified in the Preamble.

 

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“FIA Buyer Parent” has the meaning specified in the Preamble.

“FIA Timber Entity” means each Timber Entity to be transferred to an FIA Buyer.

“Fiber Supply Agreements” has the meaning specified in Section 3.2(a)(xi).

“FMAs” means the following 14 distinct forest management areas of the
Timberlands: Augusta, Eastover (formerly part of Augusta), Central Alabama,
Central Arkansas, Chapman, Courtland, East Louisiana, Georgetown, Gulf Coast,
Livingston, Michigan (formerly part of Lake States), Mississippi, Riegelwood and
Roanoke Rapids.

“Forestry Consultant” has the meaning specified in Section 2.3(a)(ii).

“General Assignment and Assumption” has the meaning specified in
Section 3.2(a)(ii)(A).

“General Buyer Affiliate Assignment and Assumption” has the meaning specified in
Section 3.2(a)(ii)(C).

“General Timber Entity Assignment and Assumption” has the meaning specified in
Section 3.2(a)(ii)(B).

“Governmental Authority” means any federal, state, local or foreign government
or any court or any administrative, regulatory or other governmental agency,
commission or authority or any non-governmental self-regulatory agency,
commission or authority.

“Habitat Conservation Plans” has the meaning specified in Section 1.7(e).

“Harvest Amount” has the meaning specified in Section 2.3(a)(i).

“Harvest Target” means the volume of timber set forth on the 2006 Harvest Plan
attached as Exhibit N that the Selling Parties shall be permitted to remove from
the Timberlands during the Timber Adjustment Period by FMA and Merchantable
Timber Category.

“Harvest Statement” has the meaning specified in Section 2.3(a)(i).

“Hazardous Substances” means any chemical, compound, constituent, material,
waste, contaminant (including petroleum, crude oil or any fraction thereof) or
other substance, defined as hazardous or toxic, or otherwise regulated by any of
the following Laws and regulations promulgated thereunder as amended from time
to time prior to the FMA Closing Date: (i) the Comprehensive Environmental
Response, Compensation and Liability Act (as amended by the Superfund Amendments
and Reauthorization Act), 42 U.S.C. § 9601 et seq.; (ii) the Resource
Conservation and Recovery Act of 1976, 42

 

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U.S.C. § 6901 et seq.; (iii) the Hazardous Materials Transportation Act, 49
U.S.C. § 1801 et seq.; (iv) the Toxic Substances Control Act, 15 U.S.C. § 2601
et seq.; (v) the Clean Water Act, 33 U.S.C. § 1251 et seq.; (vi) the Clean Air
Act, 42 U.S.C. § 1857 et seq.; and (vii) with respect to the Timberlands located
in such States, all Laws of the States based on, or substantially similar to,
the federal statutes listed in parts (i) through (vi) of this subparagraph.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

“Income Tax” or “Income Taxes” means all Taxes based upon, measured by, or
calculated with respect to (i) gross or net income or gross or net receipts or
profits (including any capital gains, minimum taxes and any Taxes on items of
preference, but not including sales, use, goods and services, real or personal
property transfer or other similar Taxes), (ii) net worth, capital or capital
stock (including any corporate franchise, business activity, doing business or
occupation Taxes), (iii) multiple bases (including corporate franchise, doing
business or occupation Taxes) if one or more of the bases upon which such Tax
may be based upon, measured by, or calculated with respect to, is described in
(i) above, or (iv) withholding taxes measured by, or calculated with respect to,
any payments or distributions (other than wages).

“Indemnity Period” has the meaning specified in Section 13.1.

“Installment Note Purchase Price” means the portion of the Purchase Price
payable by Buyer to Seller in consideration for the Installment Note
Timberlands.

“Installment Note Purchase Price Allocation” has the meaning specified in
Section 2.2(b)(i).

“Installment Note Purchased Condemnations” has the meaning specified in
Section 1.2(g).

“Installment Note Timberland Leases” has the meaning specified in
Section 1.2(b).

“Installment Note Timberlands” means the Owned Installment Note Timberlands and
the Installment Note Timberland Leases, provided, that any buildings, roads,
bridges or other improvements and fixtures thereon and any other assets or
rights appurtenant thereto shall be treated as Cash Assets and shall not be
included within the definition of Installment Note Timberlands.

“L/C Amount” has the meaning specified in Section 10.14(d).

“L/C Commitment Letter” has the meaning specified in Section 10.14(d).

 

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“Landowner” means, collectively, Timber Entity and Buyer Parent.

“Law” means any rule, regulation, statute, order, ordinance, guideline, code or
other legally enforceable requirement, including state and federal laws or
securities laws and laws of foreign jurisdictions.

“Leasehold Interests” means, collectively, the Cash Leasehold Interests and the
Timber Entity Leasehold Interests.

“Lender” has the meaning specified in Section 8.11(b).

“Letter of Credit” has the meaning specified in Section 2.5(a).

“Licenses” means, collectively, the Cash Licenses and the Timber Entity
Licenses.

“Lien” means any mortgage, lien, charge, pledge, hypothecation, assignment,
deposit, arrangement, encumbrance, security interest, assessment, adverse claim,
levy, preference or priority or other security agreement of any kind or nature
whatsoever (whether voluntary or involuntary, affirmative or negative (but
excluding all negative pledges), and whether imposed or created by operation of
law or otherwise) in, on or with respect to, or pledge of, any Purchased Assets,
or any other interest in the Purchased Assets, designed to secure the repayment
of debt or any other obligation, whether arising by Contract, operation of law
or otherwise.

“Log Supply Agreements” has the meaning specified in Section 3.2(a)(xi).

“Log Support Agreements” has the meaning specified in Section 3.2(a)(xi).

“Master Stumpage Agreements” means the agreements to sell timber on the stump
between the relevant Buying Party, as seller, and Supply Designee, as purchaser,
which will provide for the sale of stumpage sufficient to permit Supply Designee
to meet the volume requirements set forth in the Supply Agreements. The form of
the Master Stumpage Agreement is attached as Exhibit O.

“Material Adverse Effect” means any event, occurrence, condition, fact or change
that has a material and adverse effect on the Purchased Assets taken as a whole;
provided that (i) any changes in economic conditions in the timber industry, the
forest products industry, the pulp and paper industry or the United States
generally, (ii) any continuation of an adverse trend or condition which does not
exclusively affect the Purchased Assets, (iii) any change in Law, rule or
regulation or interpretations thereof applicable to any Selling Party or Buyer
or (iv) any effect resulting from actions to be taken pursuant to this Agreement
or any Ancillary Agreement, or which are primarily attributable to the

 

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announcement of this Agreement and the transactions contemplated hereby, shall
not be considered when determining whether a “Material Adverse Effect” has
occurred.

“Merchantable Timber Category” means a category of merchantable timber
identified by type and FMA as described on Exhibit N.

“Mineral Rights” has the meaning specified in Section 10.5(c).

“Mineral Sale Agreement” has the meaning specified in Section 10.5(c).

“Minimum Claim Amount” has the meaning specified in Section 13.2(b)(i)(A).

“Monetary Liens” has the meaning specified in Section 2.3(b)(i).

“Note Documents” has the meaning specified in Section 10.13(a).

“Note Parties” has the meaning specified in Section 10.13(b).

“Objection Notice” has the meaning specified in Section 2.3(a)(i).

“Other Selling Parties” has the meaning specified in the Preamble.

“Owned Cash Timberlands” has the meaning specified in Section 1.1(a).

“Owned Installment Note Timberlands” has the meaning specified in
Section 1.2(a).

“Owned Timberlands” means, collectively, the Owned Cash Timberlands and the
Owned Installment Note Timberlands.

“Parties” has the meaning specified in the Preamble.

“Pay-As-Cut Timber Contract” has the meaning specified in Section 10.12.

“Permitted Exceptions” has the meaning specified in Section 1.7.

“Person” means an individual, partnership, limited partnership, corporation
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.

“Personal Property Leases” has the meaning specified in Section 1.1(h)(iii).

“Personalty” has the meaning specified in Section 1.1(h).

 

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“Phase I Report” means an environmental site assessment with respect to the
Timberlands prepared in general accordance with a modified version of ASTM
1527-00, 1527-05 or ASTM 1528-00 and environmental site assessments prepared in
general accordance with ASTM E 2247-02 Standard Practice for Environmental Site
Assessments: Phase I Environmental Site Assessment Process for Forestland or
Rural Property, and as limited by such conditions or other qualifying statements
as set forth in such assessment.

“Phase II Report” means an investigation and written report conducted by an
environmental professional that further evaluates an REC identified in a Phase I
Report or other transaction screen process for the purpose of proving additional
information regarding the nature and extent of environmental contamination
associated with an REC conducted in general accordance with ASTM Standard E1903
(2002) “Standard Guide for Environmental Site Assessments: Phase II
Environmental Site Assessment Process.”

“Plans” has the meaning specified in Section 7.4(a).

“Post-Closing Buyer Easement” has the meaning specified in Section 10.6(c).

“Post-Closing Reserved Easement” has the meaning specified in Section 10.6(b).

“Pre-Adjustment Purchase Price” has the meaning specified in Section 2.1.

“Pre-Closing Tax Period” means a Tax period (or any portion thereof) ending on
or prior to the Closing Date.

“Pulpwood” means roundwood intended to be chipped, shredded, flaked, ground, or
otherwise converted to make pulp, paper or composite panel products.

“Pulpwood First Right of Offer Agreement– Augusta” has the meaning specified in
Section 3.2(a)(vii).

“Pulpwood First Right of Offer Agreement” has the meaning specified in
Section 3.2(a)(vii).

“Pulpwood Supply Agreements” has the meaning specified in Section 3.2(a)(xi).

“Pulpwood Support Agreements” has the meaning specified in Section 3.2(a)(xi).

“Purchase Price” has the meaning specified in Section 2.1.

“Purchase Price Allocation” has the meaning specified in Section 2.2(b).

 

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“Purchased Assets” means, collectively, the Cash Entity Assets, the Timber
Entity Assets and the Buyer Affiliate Assets.

“Purchased Cash Real Property Assets” means, collectively, the Conveyed Cash
Minerals and the Cash Timberlands.

“Purchased Condemnations” means, collectively, the Cash Purchased Condemnations
and the Installment Note Purchased Condemnations.

“Purchased Contracts” means the Contracts in effect on the Closing Date that
(i) exclusively relate to all or any portion of the Purchased Real Property
Assets or the forest operations conducted on such Purchased Real Property
Assets, but excluding the rights of the Selling Parties under(A) the Fiber
Supply Agreements or any other Ancillary Agreements and (B) any Timberland
Leases, Real Property Leases and Personal Property Leases or (ii) are described
in Section 1.1(e) of the Seller’s Disclosure Letter.

“Purchased Personal Assets” has the meaning specified in Section 1.1(h)(ii).

“Purchased Real Property Assets” means, collectively, the Purchased Cash Real
Property Assets and Purchased Timber Entity Real Property Assets.

“Purchased Timber Entity Real Property Assets” means, collectively, the Conveyed
Timber Entity Minerals and the Installment Note Timberlands.

“Real Property Leases” means, collectively, the Cash Real Property Leases and
the Installment Note Real Property Leases.

“REC” means the presence or likely presence of any hazardous substance or
petroleum products on a property under conditions that indicated an existing
release, a past release, or a material threat of a release of any hazardous
substance or petroleum product into structures on the property or in the ground,
groundwater or surface water of the property.

“Reduced Harvest” means a harvest of any merchantable timber described in a
Merchantable Timber Category during the Timber Adjustment Period which is less
than the Harvest Target (pro-rated for any portion of a calendar year) for such
Merchantable Timber Category.

“Reduced Harvest Value” means, for each Merchantable Timber Category for which
there was a Reduced Harvest, the product of (i) the difference between the
Harvest Amount for such Merchantable Timber Category and the Harvest Target for
such Merchantable Timber Category and (ii) (a) in the case of all Pulpwood and
Saw Logs in the State of Michigan, the Weighted Average Price for such
Merchantable Timber Category or (b) in the case of Saw Logs in any State except
the State of Michigan, the Transfer Price for such Merchantable Timber Category.

 

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“Regulatory Law” means the Sherman Antitrust Act of 1890, as amended, the
Clayton Antitrust Act of 1914, as amended, the HSR Act, the Federal Trade
Commission Act of 1914, as amended, and all federal, state and foreign, if any,
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other Laws that are designed or intended to prohibit, restrict or
regulate (i) foreign investment, (ii) foreign exchange or currency control or
(iii) actions having the purpose or effect of monopolization or restraint of
trade or lessening of competition.

“Remediation” means any investigation, removal, cleanup or remediation that is
required by any Governmental Authority having and asserting jurisdiction
pursuant to any Environmental Law, with respect to any Environmental Matter.

“Remediation Standard” means a numerical standard (whether resulting from an
enacted statute, promulgated regulation, guidance or policy document issued by a
regulatory agency, or developed on a case-by-case basis through a risk
assessment or other methodology authorized pursuant to an applicable
Environmental Law and acceptable to the applicable Governmental Authority) that
defines the concentrations of Hazardous Substances that may be permitted to
remain in any environmental media after an investigation, Remediation or
containment of a release of Hazardous Substances.

“Reserved Easements” means, collectively, the easements in respect of the Owned
Cash Timberlands described in Section 1.1(a)(2) of the Seller’s Disclosure
Letter, together with the easements in respect of the Owned Installment Note
Timberlands described in Section 1.2(a) of the Seller’s Disclosure Letter.

“Reserved Mineral and Gas Rights” means:

(i) all executory rights, including the right to convey or execute leases, and
other rights presently owned or held by the Selling Parties or any of their
Affiliates with respect to the interests of any parties in and any and all
Reserved Minerals and Gases, together with full rights of ingress and egress and
use of the surface to the extent reasonably necessary for the purposes of
exploring, drilling, mining (including shaft, in situ, open pit, surface or
strip mining), developing, producing, storing, removing, treating, transporting
and owning all of the Reserved Minerals and Gases;

(ii) all rights in and to all personal property, fixtures and improvements
appurtenant to the Reserved Minerals and Gases and used or obtained in
connection with the operation of the wells, or leases, or with the production,
sale or disposal of hydrocarbons or water produced thereby or attributable
thereto, including pipelines, pipeline systems, gathering systems or compression
facilities;

 

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(iii) all property, rights, privileges, benefits in any way belonging,
incidental to, or pertaining to the Reserved Minerals and Gases, and to the
extent transferable, all exploration agreements, letter agreements, product
purchase and sale contracts, surface gathering contracts, processing agreements,
compression agreements, equipment leases, permits, gathering lines,
rights-of-way, licenses, farmouts and farmins, options, orders, pooling, spacing
agreements, operating agreements, and all other agreements related to oil and
gas exploration or production; and

(iv) the right to sequester carbon dioxide or other greenhouse gas emissions in
the subsurface of the Owned Timberlands, including oil and gas reservoirs, coal
seams, and other geological formations, together with the rights of ingress and
egress necessary to field test and employ carbon sequestration technology in the
subsurface of the Owned Timberlands, and to separate, transport and store carbon
dioxide and greenhouse gas emissions prior to sequestration in the subsurface of
the Owned Timberlands.

“Reserved Minerals and Gases” means:

(i) the oil and gas and associated hydrocarbons and any and all gaseous
hydrocarbons, as well as their constituent products (including condensate,
casinghead gas, distillate and natural gas liquids) on, in or under the Owned
Timberlands located in the States of Alabama, Arkansas, Florida, Louisiana,
Mississippi, Virginia and Texas;

(ii) coal and lignite on, in or under the Owned Timberlands located in the
States of Alabama, Arkansas, Florida, Louisiana, Mississippi, Virginia and
Texas;

(iii) coalbed methane and coalseam gas on, in or under the Owned Timberlands
located in the States of Alabama, Arkansas, Florida, Louisiana, Mississippi,
Virginia and Texas; and

(iv) geothermal energy resources (including hydropressured reservoirs,
geopressured reservoirs, steam and other gases, hot water, hot brine, heat,
natural gas dissolved in formation water and any associated energy found in such
formation water) and other fissionable materials on, in or under the Owned
Timberlands located in the States of Alabama, Arkansas, Florida, Louisiana,
Mississippi, Virginia and Texas.

“Reserved Water Rights” means all rights to withdraw groundwater from the Gulf
Coast Aquifer appurtenant to the Timberlands located in the State of Texas and
all rights to reasonable access to the Gulf Coast Aquifer appurtenant to the
Timberlands located in the State of Texas for the production, use, commercial
development and sale of such groundwater, including the use of existing roads
and the right to construct future roads and pipelines.

“RMS Access FMV” means an amount equal to the product of (x) the number of acres
constituting the RMS Access Threshold, and (y) the average fair market value per

 

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acre of the total acreage of the properties subject to claims of lack of access
rights to any portion of the Owned Timberlands identified in Section 1.5 of the
Buyer Parents’ Disclosure Letter as Owned Timberlands to be conveyed to RMS
Buyer, Cash Timber Entity, Cash Timber LP, each RMS Timber Entity or Buyer
Affiliate, which fair market value shall be determined by Seller in accordance
with the first sentence of Section 2.3(b)(iv) and shall be subject to the
dispute resolution procedures set forth therein.

“RMS Access Threshold” has the meaning specified in Section 1.7(r).

“RMS Buyer” has the meaning specified in the Preamble.

“RMS Buyer Parent” has the meaning specified in the Preamble.

“RMS Timber Entity” means each Timber Entity to be transferred to an RMS Buyer.

“Saw Logs” means all large sawtimber, medium sawtimber, small sawtimber,
plyblocks, chip-n-saw, canterwood, or other timber used to manufacture lumber or
other wood products.

“SEC” means the Securities and Exchange Commission.

“Seller” has the meaning specified in the Preamble.

“Seller Damages” has the meaning specified in Section 13.3(a).

“Seller Indemnitees” has the meaning specified in Section 13.3(a).

“Seller’s Disclosure Letter” has the meaning specified in the preamble to
Article V.

“Selling Parties” has the meaning specified in the Preamble.

“Selling Parties’ Knowledge” means actual knowledge possessed by the Persons set
forth on Exhibit P, without any duty on the part of such individuals to
investigate or inquire into any particular matter.

“Services Agreement” has the meaning specified in Section 12.3(g).

“Special Places in the Forest” has the meaning specified in Section 10.4.

“Subsidiary” means, with respect to any Person, any other Person of which (i) a
majority of the outstanding share capital, voting securities or other equity
interests are owned, directly or indirectly, by such Person or (ii) such Person
is entitled, directly or indirectly, to appoint a majority of the board of
directors or managers or comparable supervisory body of the other Person.

 

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“Substitute Designee” means the seller party in the Fiber Supply Agreements.

“Subsurface Geosequestration Rights” means the subsurface geosequestration
rights set forth in subsection (iv) of the definition of Reserved Mineral and
Gas Rights with respect to the Owned Timberlands in Alabama, Arkansas, Florida,
Louisiana, Mississippi, Virginia and Texas, but excluding any rights pertaining
to biological sequestration on or above the surface of the Owned Timberlands.

“Subtracted Cash Leasehold Interests” has the meaning specified in
Section 2.3(d).

“Subtracted Owned Cash Timberlands Acreage” has the meaning specified in
Section 2.3(d).

“Subtracted Owned Installment Note Timberlands Acreage” has the meaning
specified in Section 2.3(d).

“Subtracted Timber Entity Leasehold Interests” has the meaning specified in
Section 2.3(d).

“Supply Designee” means the purchaser party in the Master Stumpage Agreement.

“Support Agreements” has the meaning specified in Section 3.2(a)(xi).

“Surface Use Agreement” has the meaning specified in Section 10.5(a).

“Tax” or “Taxes” means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar, including FICA),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other Tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.

“Tax Authority” means the Internal Revenue Service and any other domestic or
foreign Governmental Authority responsible for the administration or collection
of any Taxes.

 

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“Tax Return” means any return, report or similar statement (including the
attached schedules) required to be filed with respect to Taxes, including any
information return, claim for refund, amended return, or declaration of
estimated Taxes.

“Termination Date” has the meaning specified in Section 14.1(b).

“Third Party Claim” has the meaning specified in Section 13.4.

“Third Party Sale” has the meaning specified in Section 10.5(c).

“Timber Adjustment Period” means the period from January 1, 2006 through the
Closing Date.

“Timber Adjustment Value” means the amount equal to the Aggregate Reduced
Harvest Value less the Aggregate Excess Harvest Value.

“Timber Entity” means, collectively, each Timber LLC and Timber LP.

“Timber Entity Assets” has the meaning specified in Section 1.2.

“Timber Entity Assumed Liabilities” has the meaning specified in Section 1.8(b).

“Timber Entity Instrument of Assumption” has the meaning specified in
Section 1.8(b).

“Timber Entity Interests” has the meaning specified in Section 1.4.

“Timber Entity Leasehold Interests” has the meaning specified in Section 1.2(b).

“Timber Entity Licenses” has the meaning specified in Section 1.2(d).

“Timber Entity Purchased Contracts” has the meaning specified in Section 1.2(e).

“Timber Entity Real Property Leases” has the meaning specified in
Section 1.2(f).

“Timber GP” means the Delaware limited liability company to be formed by the
Selling Parties prior to the Closing, pursuant to organizational documents
reasonably satisfactory to the Selling Parties and Buying Parties, to serve as
general partner of Timber LP, and any successor to each such entity.

“Timber LLC” means each Delaware limited liability company to be formed by the
Selling Parties prior to the Closing, pursuant to organizational documents
reasonably satisfactory to the Selling Parties and Buying Parties, for the
purposes described in Section 1.2, and any successor to each such entity. Each
Timber LLC will be wholly owned by one Selling Party.

 

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“Timber LP” means the Delaware limited partnership to be formed by the Selling
Parties prior to the Closing, pursuant to organizational documents reasonably
satisfactory to the Selling Parties and Buying Parties, for the purposes
described in Section 1.2, and any successor to each such entity.

“Timber Note” has the meaning specified in Section 2.5(a).

“Timber Note Indicative Terms” means the terms of the Timber Note set forth in
Exhibit L.

“Timberland Leases” means, collectively, the Cash Timberland Leases and the
Installment Note Timberland Leases.

“Timberlands” means the Owned Timberlands and the Leasehold Interests.
Geographic information system maps describing the Timberlands and included in
the Seller’s Disclosure Letter are listed on Schedule B.

“Timberlands Purchase Price” means the sum of (i) the Installment Note Purchase
Price and (ii) the portion of the Cash Purchase Price allocated to the Cash
Timberlands pursuant to Section 2.2(b).

“Title Basket Amount” has the meaning specified in Section 2.3(b)(i).

“Title Commitment” means a commitment for issuance of a Title Policy by the
Title Company.

“Title Company” means First American Title Insurance Company.

“Title Failure” means any portion of the Owned Timberlands which is not, or
immediately prior to the Closing will not be, (i) owned by a Selling Party or
(ii) insurable by the Title Company.

“Title Failure Carveout” has the meaning specified in Section 2.3(b)(ii).

“Title Objection Carveout” has the meaning specified in Section 2.3(b)(iii).

“Title Objection Period” has the meaning specified in Section 2.3(b)(i).

“Title Policies” has the meaning specified in Section 10.7(a).

“Transaction Documents” means this Agreement, the Timber Notes, the Letters of
Credit and any exhibits or schedules thereto or other documents referred to
therein, the Fiber Supply Agreements and the Ancillary Agreements.

 

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“Transfer Price” means, for a Saw Log (other than a Saw Log in the Michigan FMA)
of a given specification, the average price obtained by Seller’s forest resource
division for sales of Saw Logs with similar specifications to Seller’s wood
products divisions (i) for the period beginning on the date of this Agreement
and ending 10 days prior to each date on which any calculation that the
Agreement contemplates will be made prior to Closing is made or (ii) for the
period beginning on the date of this Agreement and ending on the Closing Date
for calculations that the Agreement contemplates will be made after the Closing
Date.

“Transfer Taxes” has the meaning specified in Section 3.4(i).

“Treasury Regulations” means the treasury regulations (including temporary
regulations) promulgated by the United States Department of Treasury with
respect to the Code.

“Trustee” means the trustee party to the Services Agreement.

“Weighted Average Price” has the meaning specified in the Pulpwood Supply
Agreements.

 

103

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IN WITNESS WHEREOF, the Selling Parties, each Buyer Parent, each Buyer , each
Cash Entity and Buyer Affiliate have caused this Agreement to be signed by their
respective officers thereunto duly authorized, all as of the date first written
above.

 

INTERNATIONAL PAPER COMPANY By:  

/s/ David A. Liebetreu

Name:   David A. Liebetreu Title:   Vice President SUSTAINABLE FORESTS L.L.C.
By:  

/s/ David A. Liebetreu

Name:   David A. Liebetreu Title:   President SP FORESTS L.L.C. By:  

/s/ David A. Liebetreu

Name:   David A. Liebetreu Title:   President LAKE SUPERIOR LAND COMPANY By:  

/s/ David A. Liebetreu

Name:   David A. Liebetreu Title:   President

 

104

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BLUE SKY TIMBER PROPERTIES LLC By:  

/s/ David A. Liebetreu

Name:   David A. Liebetreu Title:   President

 

105

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RED MOUNTAIN TIMBERLANDS LLC By:  

Resource Management Service, LLC,

Sole Member and Manager

  By:  

/s/ Bruno Fritschi

  Name:   Bruno Fritschi   Title:   President RED MOUNTAIN INVESTMENTS LLC By:  

Resource Management Service, LLC,

Sole Member and Manager

  By:  

/s/ Bruno Fritschi

  Name:   Bruno Fritschi   Title:   President RMS TIMBERLANDS LLC By:  

Resource Management Service, LLC,

Sole Member and Manager

By:  

Red Mountain Timberlands LLC,

Sole Member

  By:  

/s/ Bruno Fritschi

  Name:   Bruno Fritschi   Title:   President

 

106

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RMS TEXAS TIMBERLANDS I LP By:  

RMS Timberlands LLC,

General Partner

By:  

Red Mountain Timberlands LLC,

its Sole Member

By:  

Resource Management Service, LLC,

Sole Member and Manager

  By:  

/s/ Craig Blair

  Name:   Craig Blair   Title:   Senior Vice President RED MOUNTAIN OPERATIONS
LLC By:  

Red Mountain Timberlands LLC,

its Sole Member

By:  

Resource Management Service, LLC,

its Sole Member and Manager

  By:  

/s/ Craig Blair

  Name:   Craig Blair   Title:   Senior Vice President

 

107

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FIA INVESTMENTS LLC By:  

Forest Investment Associates L.P.,

Member

By:  

Forest Investment Associates, Inc.,

General Partner

  By:  

/s/ Charles L. VanOver

  Name:   Charles L. VanOver   Title:   Vice President FOREST INVESTMENT
ASSOCIATES L.P. By:  

Forest Investment Associates, Inc.,

General Partner

  By:  

/s/ Charles L. VanOver

  Name:   Charles L. VanOver   Title:   Vice President

 

108