EX-10.9 CREDIT AGREEMENT



 





Exhibit 10.9




[EXECUTION COPY]




$212,000,000




CREDIT AGREEMENT,




dated as of October 9, 2007,




among




TIMBERLANDS II, LLC




and




WELLS TIMBERLAND ACQUISITION, LLC,




as the Borrowers,




COBANK, ACB,




as the Administrative Agent,




and




CERTAIN FINANCIAL INSTITUTIONS,




as the Lenders.




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I Definitions and Accounting Terms
	 	 	1	 
	 
	SECTION 1.1 Defined Terms
	 	 	1	 
	SECTION 1.2 Use of Defined Terms
	 	 	24	 
	SECTION 1.3 Certain Rules of Construction
	 	 	24	 
	SECTION 1.4 Accounting Determinations
	 	 	24	 
	 
	 	 	 	 
	ARTICLE II FUNDING OF LOANS
	 	 	25	 
	 
	SECTION 2.1 Amount and Terms of Loans
	 	 	25	 
	SECTION 2.1.1 The Loans
	 	 	25	 
	SECTION 2.1.2 Notice of Borrowing
	 	 	25	 
	SECTION 2.1.3 Disbursement of Funds
	 	 	25	 
	SECTION 2.2 Notes
	 	 	25	 
	SECTION 2.3 Termination of Commitments
	 	 	25	 
	SECTION 2.4 Continuation Elections
	 	 	26	 
	 
	 	 	 	 
	ARTICLE III Payments, Interest and Fees
	 	 	26	 
	 
	SECTION 3.1 Repayments and Prepayments
	 	 	26	 
	SECTION 3.1.1 Voluntary Prepayments
	 	 	26	 
	SECTION 3.1.2 Mandatory Repayments and Prepayments
	 	 	26	 
	SECTION 3.2 Interest Provisions
	 	 	27	 
	SECTION 3.2.1 Interest Rates
	 	 	27	 
	SECTION 3.2.2 Post-Default Rates
	 	 	27	 
	SECTION 3.2.3 Payment Dates
	 	 	27	 
	 
	 	 	 	 
	ARTICLE IV Yield Protection, Taxes and Related Provisions
	 	 	28	 
	 
	SECTION 4.1 Eurodollar Rate Lending Unlawful
	 	 	28	 
	SECTION 4.2 Inability to Determine Rates
	 	 	28	 
	SECTION 4.3
Increased Costs, etc.
	 	 	28	 
	SECTION 4.4 Funding Losses
	 	 	29	 
	SECTION 4.5 Increased Capital Requirements
	 	 	29	 
	SECTION 4.6 Taxes
	 	 	29	 
	SECTION 4.7
Payments, Interest Calculations, etc.
	 	 	31	 
	SECTION 4.8 Sharing of Payments
	 	 	32	 
	SECTION 4.9 Setoff
	 	 	32	 
	SECTION 4.10 Use of Proceeds
	 	 	32	 
	SECTION 4.11 Payment Reliance
	 	 	33	 
	SECTION 4.12 Alternative Interest Rate
	 	 	33	 
	SECTION 4.13 Replacement of Lenders
	 	 	33	 
	 
	 	 	 	 
	ARTICLE V CONDITIONS PRECEDENT TO FUNDING DATE
	 	 	34	 
	 
	SECTION 5.1 Conditions
	 	 	34	 
	SECTION 5.1.1 Agreement
	 	 	34	 
	SECTION
5.1.2 Resolutions, Good Standing, etc.
	 	 	34	 
	SECTION 5.1.3 Delivery of Notes
	 	 	34	 
	SECTION 5.1.4 Required Consents and Approvals
	 	 	34	 






 









 






	 	 	 	 	 
	 	 	Page	 
	SECTION 5.1.5 Consummation of the Transaction
	 	 	34	 
	SECTION 5.1.6 Opinion of Counsel
	 	 	35	 
	SECTION 5.1.7 Evidence of Insurance
	 	 	35	 
	SECTION 5.1.8 Guaranty
	 	 	35	 
	SECTION 5.1.9 Pledged Property
	 	 	35	 
	SECTION
5.1.10 U.C.C. Search Results, etc.
	 	 	35	 
	SECTION
5.1.11 Security Agreements, Filings, etc.
	 	 	36	 
	SECTION 5.1.12 Solvency Certificate
	 	 	36	 
	SECTION 5.1.13 Closing Date Certificate
	 	 	36	 
	SECTION 5.1.14 Interest Reserve
	 	 	37	 
	SECTION 5.1.15 Cash Equity; MWV SPE Capital Note
	 	 	37	 
	SECTION 5.1.16 Transaction Documents; Material Government Approvals
	 	 	37	 
	SECTION 5.1.17 Assignment of Material Agreements; Recognition Agreements
	 	 	37	 
	SECTION
5.1.18 Mortgages, etc.
	 	 	37	 
	SECTION 5.1.19 Subordinated Debt Documents
	 	 	39	 
	SECTION 5.1.20 Representations and Warranties True and Correct
	 	 	39	 
	SECTION 5.1.21 Environmental Matters
	 	 	40	 
	SECTION
5.1.22 Financial Information, etc.
	 	 	40	 
	SECTION
5.1.23 Deposit Account Control Agreements, etc.
	 	 	40	 
	SECTION
5.1.24 Borrowing Request, etc.
	 	 	40	 
	SECTION 5.1.25 Patriot Act
	 	 	40	 
	SECTION 5.1.26 Satisfactory Due Diligence
	 	 	41	 
	SECTION 5.1.27 Initial Compliance Certificate
	 	 	41	 
	SECTION 5.1.28 Satisfactory Legal Form
	 	 	41	 
	SECTION 5.1.29 Fees and Expenses; Interest Reserve
	 	 	41	 
	SECTION 5.2 Perfection of Security Interest
	 	 	41	 
	 
	 	 	 	 
	ARTICLE VI Representations and Warranties
	 	 	41	 
	 
	SECTION 6.1
Organization, etc.
	 	 	42	 
	SECTION 6.2
Due Authorization, Non-Contravention, etc.
	 	 	42	 
	SECTION 6.3 Required Approvals
	 	 	42	 
	SECTION 6.4
Validity, etc.
	 	 	43	 
	SECTION 6.5 No Material Liabilities
	 	 	43	 
	SECTION 6.6
No Material Adverse Change, etc.
	 	 	43	 
	SECTION 6.7
Litigation, Labor Matters, etc.
	 	 	44	 
	SECTION 6.8 Capitalization
	 	 	44	 
	SECTION 6.9
Compliance with Laws, etc.
	 	 	44	 
	SECTION 6.10
Properties, Permits, etc.
	 	 	44	 
	SECTION 6.11
Taxes, etc.
	 	 	45	 
	SECTION 6.12 ERISA
	 	 	46	 
	SECTION 6.13 Environmental Warranties
	 	 	46	 
	SECTION 6.14 Accuracy of Information
	 	 	47	 
	SECTION 6.15
Transaction Agreement, etc.
	 	 	48	 
	SECTION 6.16 Absence of Default and Restrictions
	 	 	48	 
	SECTION 6.17
Margin Regulations; Bank Secrecy Act, etc.
	 	 	49	 
	SECTION 6.18 Investment Company Status
	 	 	49	 
	SECTION 6.19 Material Agreements; Governmental Approvals
	 	 	49	 
	SECTION 6.20 Solvency
	 	 	49	 
	SECTION 6.21 Insurance
	 	 	49	 
	SECTION 6.22 Affiliate Transactions
	 	 	50	 






-ii-









 






	 	 	 	 	 
	 	 	Page	 
	SECTION 6.23 Patriot Act, etc.
	 	 	50	 
	SECTION 6.24 Subordinated Debt, etc.
	 	 	50	 
	SECTION 6.25 Separateness; Special Representations and Covenants Relating to Loan Parties
	 	 	51	 
	SECTION 6.25.1 Purpose
	 	 	51	 
	SECTION 6.25.2 Financial Statements
	 	 	52	 
	SECTION 6.25.3 Tax Return
	 	 	52	 
	SECTION 6.25.4 Separateness
	 	 	52	 
	SECTION 6.25.5 Overhead
	 	 	52	 
	SECTION 6.25.6 Liabilities and Expenses
	 	 	52	 
	SECTION 6.25.7 Adequate Capital
	 	 	52	 
	SECTION 6.25.8 Separateness of Assets
	 	 	52	 
	SECTION 6.25.9 Guarantees
	 	 	53	 
	SECTION 6.25.10 Corporate Formalities
	 	 	53	 
	SECTION 6.25.11 Bankruptcy
	 	 	53	 
	 
	 	 	 	 
	ARTICLE VII Covenants
	 	 	53	 
	 
	SECTION 7.1 Affirmative Covenants
	 	 	53	 
	SECTION 7.1.1 Financial Information, Reports, Notices, etc.
	 	 	53	 
	SECTION 7.1.2 Compliance with Laws; Payment of Obligations
	 	 	56	 
	SECTION 7.1.3 Maintenance of Properties and Franchises
	 	 	57	 
	SECTION 7.1.4 Insurance
	 	 	57	 
	SECTION 7.1.5 Books and Records; Inspections; Annual Meeting
	 	 	59	 
	SECTION 7.1.6 Environmental Covenants
	 	 	59	 
	SECTION 7.1.7 As to Intellectual Property Collateral
	 	 	61	 
	SECTION 7.1.8 Payment of Taxes and Claims; Deposits for Taxes and Insurance Premiums
	 	 	62	 
	SECTION 7.1.9 Further Assurances; Additional Collateral
	 	 	63	 
	SECTION 7.1.10 Exercise of Rights under Transaction Documents
	 	 	64	 
	SECTION 7.1.11 Timber Affirmative Covenants
	 	 	64	 
	SECTION 7.1.12 Interest Reserve Account
	 	 	72	 
	SECTION 7.1.13 Wells TRS Subsidiary Account
	 	 	74	 
	SECTION 7.1.14 Post-Closing Items
	 	 	76	 
	SECTION 7.2 Negative Covenants
	 	 	76	 
	SECTION 7.2.1 Business Activities
	 	 	77	 
	SECTION 7.2.2 Indebtedness
	 	 	77	 
	SECTION 7.2.3 Liens
	 	 	77	 
	SECTION 7.2.4 Financial Condition
	 	 	78	 
	SECTION 7.2.5 Investments; Change in Capital Structure
	 	 	78	 
	SECTION 7.2.6 Restricted Payments; Payments on Permitted Subordinated Debt
	 	 	78	 
	SECTION 7.2.7 Take or Pay Contracts
	 	 	79	 
	SECTION 7.2.8 Mergers, Asset Acquisitions, etc.
	 	 	79	 
	SECTION 7.2.9 Asset Dispositions, etc.
	 	 	79	 
	SECTION 7.2.10 Modification of Certain Agreements
	 	 	80	 
	SECTION 7.2.11 Transactions with Related Parties
	 	 	80	 
	SECTION 7.2.12 Negative Pledges, Restrictive Agreements, etc.
	 	 	81	 
	SECTION 7.2.13 Management Fees, Expenses, etc.
	 	 	81	 
	SECTION 7.2.14 Limitation on Sale and Leaseback Transactions
	 	 	82	 
	SECTION 7.2.15 Fiscal Year End, etc.
	 	 	82	 
	SECTION 7.2.16 ERISA
	 	 	82	 






-iii-









 






	 	 	 	 	 
	 	 	Page	 
	SECTION 7.2.17 Deposit Account Control Agreements
	 	 	82	 
	SECTION 7.2.18 Timber Negative Covenants
	 	 	82	 
	SECTION 7.2.19 Fundamental Change as to Wells Installment Note Issuer
	 	 	84	 
	SECTION 7.2.20 Unrestricted Timber Transactions
	 	 	85	 
	SECTION 7.2.21 Transfer of Funds
	 	 	85	 
	 
	 	 	 	 
	ARTICLE VIII Events of Default and Remedies
	 	 	85	 
	 
	SECTION 8.1 Listing of Events of Default
	 	 	85	 
	SECTION 8.1.1 Non-Payment of Obligations
	 	 	86	 
	SECTION 8.1.2 Breach of Representations and Warranties
	 	 	86	 
	SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations
	 	 	86	 
	SECTION 8.1.4 Non-Performance of Other Covenants and Obligations
	 	 	86	 
	SECTION 8.1.5 Default on Other Obligations
	 	 	86	 
	SECTION 8.1.6 Judgments
	 	 	86	 
	SECTION 8.1.7 Installment Note Default
	 	 	87	 
	SECTION 8.1.8 Bankruptcy, Insolvency, etc.
	 	 	87	 
	SECTION 8.1.9 Impairment of Loan Documents, Security, etc.
	 	 	87	 
	SECTION 8.1.10 Non-Payment of Taxes
	 	 	88	 
	SECTION 8.1.11 Impairment of Material Agreements
	 	 	88	 
	SECTION 8.1.12 Impairment of Business
	 	 	88	 
	SECTION 8.1.13 Subordinated Debt Documents
	 	 	88	 
	SECTION 8.1.14 Bankruptcy Claims
	 	 	88	 
	SECTION 8.1.15 MWV SPE Capital Note
	 	 	89	 
	SECTION 8.1.16 Material Adverse Effect
	 	 	89	 
	SECTION 8.2 Action if Bankruptcy
	 	 	89	 
	SECTION 8.3 Action if Other Event of Default
	 	 	89	 
	SECTION 8.4 Remedies
	 	 	89	 
	SECTION 8.5 Foreclosure on Collateral
	 	 	90	 
	SECTION 8.6 Appointment of Administrative Agent as Attorney-in-Fact
	 	 	90	 
	SECTION 8.7 Payments Upon Acceleration
	 	 	91	 
	 
	 	 		 
	ARTICLE IX REVENUE ACCOUNT
	 	 	91	 
	 
	SECTION 9.1 Establishment of Revenue Account
	 	 	91	 
	SECTION 9.1.1 Revenue Account
	 	 	91	 
	SECTION 9.1.2 Account Name
	 	 	92	 
	SECTION 9.1.3 Characterization of Account
	 	 	92	 
	SECTION 9.1.4 Investments
	 	 	92	 
	SECTION 9.2 Deposit of Revenues into the Revenue Account
	 	 	93	 
	SECTION 9.3 Payment of Funds From Accounts
	 	 	93	 
	SECTION 9.4 Sole Dominion and Control
	 	 	95	 
	SECTION 9.5 Pledge of Revenue Account
	 	 	95	 
	SECTION 9.5.1 Security for Obligations
	 	 	95	 
	SECTION 9.5.2 Rights on Default
	 	 	96	 
	SECTION 9.5.3 Financing Statement; Further Assurances
	 	 	96	 
	SECTION 9.6 Administrative Agent Appointed Attorney-In-Fact
	 	 	96	 
	 
	 	 		 
	ARTICLE X The Administrative Agent
	 	 	97	 
	 
	SECTION 10.1 Appointment; Lender Indemnification
	 	 	97	 
	SECTION 10.2 Exculpation
	 	 	97	 
	SECTION 10.3 Reliance by Administrative Agent
	 	 	98	 






-iv-









 






	 	 	 	 	 
	 	 	Page	 
	SECTION 10.4 Delegation of Duties
	 	 	99	 
	SECTION 10.5 Resignation of Administrative Agent
	 	 	99	 
	SECTION 10.6 Rights as a Lender
	 	 	100	 
	SECTION 10.7 Non-Reliance on Administrative Agent and Other Lenders
	 	 	100	 
	SECTION 10.8 Copies, etc.
	 	 	100	 
	SECTION 10.9 Certain Collateral Matters
	 	 	100	 
	 
	 	 	 	 
	ARTICLE XI Miscellaneous Provisions
	 	 	101	 
	 
	SECTION 11.1 Waivers, Amendments, etc.
	 	 	101	 
	SECTION 11.2 Notices
	 	 	102	 
	SECTION 11.3 Payment of Costs and Expenses
	 	 	103	 
	SECTION 11.4 Indemnification by the Borrowers
	 	 	104	 
	SECTION 11.5 Survival
	 	 	106	 
	SECTION 11.6 Severability
	 	 	106	 
	SECTION 11.7 Headings
	 	 	106	 
	SECTION 11.8 Execution in Counterparts, Effectiveness, etc.
	 	 	106	 
	SECTION 11.9 Governing Law; Entire Agreement
	 	 	107	 
	SECTION 11.10 Assignments and Participations
	 	 	107	 
	SECTION 11.11 Press Releases and Related Matters
	 	 	110	 
	SECTION 11.12 Forum Selection and Consent to Jurisdiction
	 	 	110	 
	SECTION 11.13 Waiver of Jury Trial, etc.
	 	 	111	 
	SECTION 11.14 Waiver of Consequential Damages, etc.
	 	 	111	 
	SECTION 11.15 No Strict Construction
	 	 	112	 
	SECTION 11.16 Protection of Interests
	 	 	112	 
	SECTION 11.17 Confidentiality
	 	 	112	 
	SECTION 11.18 Patriot Act Information
	 	 	113	 
	SECTION 11.19 Joint and Several Liability
	 	 	113	 
	SECTION 11.20 Intercreditor Lien Releases
	 	 	113	 
	SECTION 11.21 Waiver of Farm Credit Rights
	 	 	113	 
	SECTION 11.22 No Voluntary Bankruptcy Filing
	 	 	113	 
	SECTION 11.23 Purchase of AgSouth Equity Interests
	 	 	114	 
	SECTION 11.24 Funding Date Assignments
	 	 	114	 






-v-









 






SCHEDULES




	 	 	 	 	 
	SCHEDULE I

	 	-
	 	Disclosure Schedule
	SCHEDULE II

	 	-
	 	Commitment Amount
	SCHEDULE III

	 	-
	 	Administrative Information
	 
	 	 	 	 
	EXHIBITS

	 
	 	 	 	 
	EXHIBIT A

	 	-
	 	Form of Note
	EXHIBIT B-1

	 	-
	 	Form of Borrowing Request
	EXHIBIT B-2

	 	-
	 	Form of Continuation Notice
	EXHIBIT C

	 	-
	 	Form of Assignment and Assumption
	EXHIBIT D

	 	-
	 	Form of Closing Date Certificate
	EXHIBIT E-1

	 	-
	 	Form of Wells Timberland Solvency Certificate
	EXHIBIT E-2

	 	-
	 	Form of Wells Acquisition Solvency Certificate
	EXHIBIT E-3

	 	-
	 	Form of Wells TRS Subsidiary Solvency Certificate
	EXHIBIT E-4

	 	-
	 	Form of Wells REIT Solvency Certificate
	EXHIBIT E-5

	 	-
	 	Form of Wells TRS Solvency Certificate
	EXHIBIT F

	 	-
	 	Form of Compliance Certificate
	EXHIBIT G

	 	-
	 	Form of Pledge Agreement
	EXHIBIT H

	 	-
	 	Form of Security Agreement
	EXHIBIT I

	 	-
	 	Form of Landlord Estoppel Certificate
	EXHIBIT J-1

	 	-
	 	Form of Wells REIT Limited Guaranty
	EXHIBIT J-2

	 	-
	 	Form of Wells TRS Guaranty
	EXHIBIT J-3

	 	-
	 	Form of Wells TRS Subsidiary Guaranty
	EXHIBIT K-1

	 	-
	 	Form of Georgia Mortgage
	EXHIBIT K-2

	 	-
	 	Form of Alabama Mortgage
	EXHIBIT L

	 	-
	 	Form of Opinion of New York Counsel to the Borrowers
	EXHIBIT M

	 	-
	 	Form of Opinion of Georgia Counsel to the Borrowers
	EXHIBIT N

	 	-
	 	Form of Opinion of Alabama Counsel to the Borrowers
	EXHIBIT O

	 	-
	 	Form of Deposit Account Control Agreement
	EXHIBIT P

	 	-
	 	Form of Subordinated Intercreditor Agreement
	EXHIBIT Q-1

	 	-
	 	Form of Recognition Agreement (Fiber Supply Agreement)
	EXHIBIT Q-2

	 	-
	 	Form of Recognition Agreement (Master Stumpage Agreement)
	EXHIBIT R

	 	-
	 	Form of Collateral Assignment of Material Agreement
	EXHIBIT S

	 	-
	 	Form of Wells REIT Security Agreement
	EXHIBIT T

	 	-
	 	Form of Timber Manager Subordination Agreement






-vi-









 





CREDIT AGREEMENT




     CREDIT AGREEMENT, dated as of October 9, 2007, among TIMBERLANDS II, LLC, a Delaware limited
liability company (“Wells Timberland”), and WELLS TIMBERLAND ACQUISITION, LLC, a Delaware
limited liability company (“Wells Acquisition”; Wells Timberland and Wells Acquisition each
a “Borrower” and collectively, the “Borrowers”), the various financial institutions
as are, or may from time to time become, parties hereto (collectively, the “Lenders”), and
COBANK, ACB (“CoBank”), as administrative agent (in such capacity, the “Administrative
Agent”) for the Lenders.



W I T N E S S E T H:




     WHEREAS, the Borrowers’ only business is the direct or indirect ownership and operation of the
Real Property (such capitalized term and all other capitalized terms used in these recitals without
definition shall have the meanings provided for in Article I hereto); and



     WHEREAS, in order to fund a portion of the purchase price of the Transaction the Borrowers
desire that the Lenders make Loans in an aggregate principal amount of $212,000,000; and



     WHEREAS, the Lenders are willing, on the terms and subject to the conditions hereinafter set
forth (including Article V), to make such Loans to the Borrowers;



     NOW, THEREFORE, the parties hereto hereby agree as follows:



ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS




     SECTION 1.1 Defined Terms. The following terms when used in this Agreement, including
its preamble and recitals, shall, except where the context otherwise requires, have the following
meaning:



     “Account Bank” is defined in Section 9.1.1.



     “Account Collateral” is defined in Section 9.5.1.



     “Adjusted Eurodollar Rate” means, for any Interest Period with respect to the Loans,
the rate per annum obtained by dividing (rounded upwards to the next nearest 1/100 of 1%) (a) (i)
the rate per annum equal to the rate determined by Administrative Agent to be the offered rate as
calculated by the British Bankers’ Association and obtained though a nationally recognized service
such as Dow Jones Market Service (Telerate), Bloomberg Professional Service Page or Reuters, and
any successor or substitute page of each such service, providing rate quotations comparable to
those currently provided on each such page of each such service for deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such period in Dollars, determined as
of approximately 11:00 a.m. (London, England time) two Business Days prior to the first
day of such Interest Period, or (ii) in the event the rates referenced in the preceding clause
(i) are not available, the rate per annum (rounded upwards to the nearest 1/100 of 1%) equal to
the offered quotation rate to major banks in the London interbank market by the



 









 







Administrative Agent for deposits (for delivery on the first day of the relevant Interest
Period) in Dollars of amounts in same day funds comparable to the principal amount of the
applicable Loans of the Administrative Agent, in its capacity as a Lender, for which the Adjusted
Eurodollar Rate is then being determined with maturities comparable to such period as of
approximately 11:00 a.m. (London, England time) two Business Days prior to the first day
of such Interest Period, by (b) an amount equal to (i) one minus (ii) the Eurodollar
Reserve Requirement.



     “Administrative Agent” is defined in the preamble and includes each successor
Administrative Agent pursuant to Section 10.5.



     “Affiliate” of any Person means:




     (a) each of such Person’s officers, directors, joint venturers and partners; and




     (b) any other Person which, directly or indirectly, controls, is controlled by or is under
common control with such Person (excluding any trustee under, or any committee with responsibility
for administering, any Pension Plan). A Person shall be deemed to be “controlled by” any other
Person if such other Person possesses, directly or indirectly, power:




     (i) to vote 5% or more of the Equity Interests (on a fully diluted basis) having
ordinary voting power for the election of directors or managing general partners; or




     (ii) to direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise.



     “Agreement” means this Credit Agreement.



     “AgSouth” means AgSouth Farm Credit, ACA.



     “AgSouth Equity Interests” is defined in Section 11.23.



     “Alternate Base Rate” means, for any day, a rate per annum equal to the highest of (a)
the Prime Rate and (b) 0.50% per annum plus the Federal Funds Effective Rate for such day. For
purposes hereof:




     (i) “Federal Funds Effective Rate” means, for any day, the weighted average of
the rates (rounded upwards, if necessary, to the nearest whole multiple of 1/16 of 1%) on
overnight Federal funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average (rounded upwards, if necessary, to the nearest whole multiple of
1/16 of 1%) of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing selected by it;
and



-2-









 






     (ii) “Prime Rate” means, a variable rate of interest per annum equal, on any
day, to the rate of interest published on such day in the Eastern Edition of The Wall Street
Journal as the average prime lending rate for 75% of the United States’ 30 largest
commercial banks, or if the Eastern Edition of The Wall Street Journal or such rate is not
published on such day, such rate as last published in the Eastern Edition of The Wall Street
Journal. In the event the Eastern Edition of The Wall Street Journal ceases to publish such
rate or an equivalent, the term “Prime Rate” shall be determined by reference to such other
regularly published prime rate based upon any averaging of such 30 banks, as Administrative
Agent shall determine, or if no such published average prime rate is available, then the
term “Prime Rate” shall mean a variable rate of interest per annum as determined by
Administrative Agent equal to the highest of the “prime rate,” “reference rate,” “base rate”
or other similar rate announced from time to time by any of JPMorgan Chase Bank, N.A. and
Citibank, N.A. as selected by Administrative Agent (with the understanding that any such
rate may merely be a reference rate and may not necessarily represent the lowest or best
rate actually charged to any customer by such bank). Any change in the “Prime Rate” shall be
automatic, without the necessity of notice being provided to the Borrower or any other
Person.


If for any reason the Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability or failure of the Administrative Agent to obtain sufficient
quotations in accordance with the terms hereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a
change in the calculation thereof by the Administrative Agent shall be effective on the effective
date of such change.




     “Applicable Margin” means, until delivery of the Compliance Certificate for the period
ending December 31, 2007, 1.50% per annum, and thereafter (a) 1.75% per annum, if the Senior Loan
to Value Ratio is equal to or greater than 55%, (b) 1.50% per annum, if the Senior Loan to Value
Ratio is equal to or greater than 50% and less than 55%, (c) 1.35% per annum, if the Senior Loan to
Value Ratio is equal to or greater than 40% and less than 50% and (d) 1.25% per annum, if the
Senior Loan to Value Ratio is less than 40%. The Senior Loan to Value Ratio used to compute the
Applicable Margin shall be the Senior Loan to Value Ratio set forth in the Compliance Certificate
most recently delivered by Wells Acquisition to the Administrative Agent pursuant to clause
(e) of Section 7.1.1; changes in the Applicable Margin resulting from a change in the
Senior Loan to Value Ratio shall become effective upon delivery by Wells Acquisition to the
Administrative Agent of a new Compliance Certificate pursuant to clause (e) of Section
7.1.1. If Wells Acquisition shall fail to deliver a Compliance Certificate with respect to a
Fiscal Quarter as and when required pursuant to clause (e) of Section 7.1.1, the
Applicable Margin, from and including the date it was required to deliver such Compliance
Certificate to but not including the date Wells Acquisition delivers to the Administrative Agent a
Compliance Certificate with respect to such Fiscal Quarter, shall conclusively be presumed to equal
the highest relevant Applicable Margin set forth above. The Applicable Margin shall be
automatically increased to the highest Applicable Margin set forth above during all periods of time
in which any Event of Default has occurred and is continuing.



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     “Approved Fund” means any Person (other than a natural Person) that is engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business that is administered or managed by (a) a Lender, (b)
an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages
a Lender.



     “Assignment and Assumption” means the Assignment and Assumption substantially in the
form of Exhibit C attached hereto.



     “Authorized Officer” means, relative to any Loan Party, each Financial Officer and
other officers of such Loan Party whose signatures and incumbency shall have been certified to the
Administrative Agent and the Lenders pursuant to Section 5.1.2.



     “Best Management Practices” means forest management, silvicultural, planting, thinning
and timber harvesting practices that are in accordance with (a) SFI-certification requirements of
Sustainable Forestry Initiative, Inc. and (b) “Best Management Practices” (or similarly titled
regulations or non-binding guidance) issued with respect to the management and harvesting of
timberlands by Governmental Authorities in the States where the Real Property is located.



     “Borrower” and “Borrowers” is defined in the preamble.



     “Borrowing” means a borrowing of the Loans from the Lenders on the Funding Date in
accordance with their Commitments.



     “Borrowing Request” means a Borrowing Request, duly executed by a Financial Officer of
each Borrower, in substantially the form of Exhibit B-1 attached hereto.



     “Business Day” means (a) any day on which the Administrative Agent is open for
business and is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or
required to be closed in New York, New York or Denver, Colorado; and (b) relative to the making,
continuing, prepaying or repaying of the Loans, any day which is a Business Day described in
clause (a) above and which is also a day on which dealings in Dollars are carried on in the
interbank eurodollar market.



     “Cash Equivalent Investment” means, at any time:



          (a) any evidence of Indebtedness, with overnight maturities issued or guaranteed by the United
States;




          (b) commercial paper, maturing not more than one day from the date of issuance and rated at
least A-1 by S&P or P-1 by Moody’s, which is issued by a corporation (other than an Affiliate of
any Loan Party) organized under the Laws of any state of the United States or of the District of
Columbia;




          (c) any certificate of deposit or bankers acceptance or time deposit, maturing daily, which is
issued by a commercial banking institution that (i) is a member of the Federal Reserve System, (ii)
has a combined capital and surplus and undivided profits of not less than


-4-









 







$1,000,000,000 and (iii) has a credit rating of A2 or higher from Moody’s or A or higher from
S&P; or




          (d) any investment in money market mutual funds having portfolio assets in excess of
$5,000,000,000 that comply with the criteria set forth in Securities and Exchange Commission Rule
2a-7 under the Investment Company Act of 1940 and are rated AAA by S&P and Aaa by Moody’s.




     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended.



     “Change in Law” means the occurrence, after the Funding Date, of (a) the adoption or
taking effect of any Law, (b) any change in any Law or in the administration, interpretation or
application thereof by any Governmental Authority or (c) the making or issuance of any guideline or
directive (whether or not having the force of Law) by any Governmental Authority.



     “CoBank” is defined in the preamble.



     “Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise
modified from time to time.



     “Collateral” means (a) the Equity Interests of Wells TRS Subsidiary and (b) all the
other assets of the Borrowers and each other Loan Party that are subject to a Lien pursuant to any
Loan Document. Without limiting the foregoing, the Collateral shall include the Senior Priority
Collateral, the Senior Exclusive Collateral and the Subordinated Priority Collateral, but shall not
include the Subordinated Exclusive Collateral.



     “Collateral Assignment of Material Agreement” means each Collateral Assignment of
Material Agreement in substantially the form of Exhibit R attached hereto, executed by each
relevant Loan Party and other Persons that are parties to the Material Agreement the subject
thereof. In the discretion of the Administrative Agent, the form of the relevant Collateral
Assignment of Material Agreement with respect to any particular Material Agreement may vary.



     “Collateral Disposition Proceeds” means, with respect to any of the Collateral (other
than the sale of Timber in accordance with clause (m) of Section 7.1.11) sold,
leased, transferred or otherwise disposed of (whether voluntarily or involuntarily, or under power
of eminent domain, condemnation or otherwise), the greater of (a) the allocated cost basis of such
Collateral as set forth in Item 1.1(a) (“Cost Basis of Collateral”) of the Disclosure
Schedule (it being understood that, if less than the relevant tract of the Collateral as set forth
in the Disclosure Schedule is so disposed of, the cost basis of such tract so disposed of shall be
determined by the Administrative Agent) or (b) the result of (i) the gross cash proceeds received
by any of the Borrowers or any other Loan Party with respect to such Collateral (including any cash
payments received by way of a deferred payment of principal pursuant to a permitted note or
installment receivable or otherwise, but only when and as received) minus (ii) (A) all
reasonable and customary fees and expenses actually paid in cash by the Borrowers or any other Loan
Parties in connection with such disposition which have not been paid to any Loan Party or their
Affiliates and (B) all taxes actually paid or reasonably estimated by a Borrower (determined in
good faith by a Financial Officer) to be payable in cash with respect to the same year with respect
to any



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such disposition; provided, however, that if, after the payment of all taxes
with respect to such disposition, the amount of estimated taxes, if any, pursuant to clause
(ii) exceeded the amount actually paid in cash in respect of such disposition, the aggregate
amount of such excess shall be promptly payable, pursuant to clause (b) of Section
3.1.2, as Collateral Disposition Proceeds.



     “Collateral Insurance Proceeds” means all insurance proceeds that have been paid on
account of any of the Collateral.



     “Commitment” means, for each Lender, the commitment to make Loans in an aggregate
principal amount not exceeding its Commitment Amount.



     “Commitment Amount” means, for each Lender, the amount set forth opposite such
Lender’s name on Schedule II attached hereto.



     “Compliance Certificate” means a Compliance Certificate duly executed by a Financial
Officer of Wells Acquisition, substantially in the form of Exhibit F attached hereto,
together with such changes thereto as the Administrative Agent may from time to time reasonably
request.



     “Contingent Liability” means any agreement, undertaking or arrangement by which any
Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or
indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or
otherwise to invest in, a debtor, or otherwise to assure a creditor against loss (including by
providing a Lien on its property or assets, maintaining any financial statement condition or
liquidity level, or purchasing or leasing any property or services)) the indebtedness, obligation
or any other liability of any other Person (other than by endorsements of instruments in the course
of collection), or guarantees the payment of dividends or other distributions upon the shares of
any other Person. The principal amount of any Person’s obligation under any Contingent Liability
shall (subject to any limitation set forth therein) be deemed to be the outstanding principal
amount (or maximum principal amount, if larger) of the debt, obligation or other liability
guaranteed thereby.



     “Continuation Notice” means a Continuation Notice duly executed by a Financial Officer
of each Borrower, substantially in the form of Exhibit B-2 attached hereto.



     “Conveyed Minerals” means all mineral substances in, on or under the Land.



     “Debt Service Coverage Ratio” means, as of the close of any Fiscal Quarter, the ratio,
computed for the Rolling Period ending as of the close of such Fiscal Quarter, of:



     (a) (i) Net Income during the Rolling Period ending as of such Fiscal Quarter end;



plus




          (ii) Interest Expense during the Rolling Period ending as of such Fiscal Quarter end;




plus




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          (iii) the aggregate amount of the Interest Reserve as of such Fiscal Quarter end;




plus




          (iv) the amount properly deducted, in determining Net Income, of all income taxes (whether
paid or deferred) of Wells Timberland during the Rolling Period ending as of such Fiscal Quarter
end;




plus




          (v) the amount properly deducted, in determining Net Income, representing the depletion of
assets of Wells Timberland during the Rolling Period ending as of such Fiscal Quarter end;




to




     (b) Interest Expense during such Rolling Period ending as of such Fiscal Quarter end.



     “Default” means any Event of Default or any condition, occurrence or event which,
after notice or lapse of time or both, would constitute an Event of Default.



     “Deposit Account Bank” means each bank or other financial institution that has entered
into a Deposit Account Control Agreement.



     “Deposit Account Control Agreement” means each Deposit Account Control Agreement,
substantially in the form of Exhibit O attached hereto or such other form as may be
reasonably acceptable to the Administrative Agent, executed by a Deposit Account Bank, each
applicable Loan Party and the Administrative Agent.



     “Discharge of the Senior Obligations” is defined in the Subordinated Intercreditor
Agreement.



     “Discharge of the Subordinated Obligations” is defined in the Subordinated
Intercreditor Agreement.



     “Disclosure Schedule” means the Disclosure Schedule attached as Schedule I
hereto, as amended, supplemented or otherwise modified from time to time by the Borrowers with the
consent of the Administrative Agent and the Required Lenders.



     “Division” means those portions of the Timberlands, whether owned or leased, which are
grouped together for management purposes as tracts as described in Exhibits A and B of the
Transaction Agreement.



     “Dollar” and the symbol “$” mean lawful money of the United States.



     “Eligible Assignee” means (a) a Lender, (b) an Affiliate of any Lender, (c) an
Approved Fund and (d) any other Person (other than a natural Person) approved (i) by the
Administrative



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Agent and (ii) after the Administrative Agent has notified Wells Acquisition of the successful
initial syndication of this Agreement and provided that no Event of Default has occurred and is
continuing, by Wells Acquisition (such approval of Wells Acquisition not to be unreasonably
withheld or delayed and shall, in any event, be deemed to have been given by Wells Acquisition if
no objection is received by the Administrative Agent from Wells Acquisition within five Business
Days after notice of such proposed assignment has been provided to Wells Acquisition); provided,
that notwithstanding the foregoing, “Eligible Assignee” shall not include the Loan Parties or any
of their Affiliates or Subsidiaries.



     “Enforcement Action” is defined in the Subordinated Intercreditor Agreement.



     “Environmental Laws” means all Laws relating to public health and safety and
protection of the environment, threatened or endangered species, preservation or reclamation of
natural resources, Release of any Hazardous Material or to health and safety matters, including
CERCLA, the Surface Mining Control and Reclamation Act of 1977, the Resource Conservation and
Recovery Act, the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977,
33 U.S.C. §§ 1251 et seq., the Clean Air Act of 1970, 42 U.S.C. §§ 7401 et seq., the Toxic
Substances Control Act of 1976, 15 U.S.C. §§ 2601 et seq., the Occupational Safety and Health Act
of 1970, as amended, 29 U.S.C., §§ 651 et seq., the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. §§ 11001 et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C.
§§ 300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C. §§ 5101 et seq., the Solid
Waste Disposal Act, 42 U.S.C. §§ 6901 et seq., the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. §§ 136 et seq., the Endangered Species Act of 1973, 16 U.S.C. §§ 1531 et seq., and
any similar or implementing state or local Law.



     “Environmental Tests” is defined in clause (d) of Section 7.1.6.



     “Equity Interests” means, with respect to any Person, all shares of capital stock,
partnership interests, membership interests in a limited liability company or other ownership in
participation or equivalent interests (however designated, whether voting or non-voting) of such
Person’s equity capital (including any warrants, options or other purchase rights with respect to
the foregoing), whether now outstanding or issued after the Funding Date.



     “Equity Raise Account” is defined in Section 9.1.1 of the Subordinated Credit
Agreement as of the date hereof.



     “Equity Raise Waterfall” is defined in Section 9.3.2 of the Subordinated Credit
Agreement as of the date hereof.



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



     “ERISA Affiliate” means any trade or business (whether or not incorporated) that,
together with any Loan Party, is treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code or Section 4001(b) of ERISA or, solely for purposes of Section 302 of ERISA and Section
412 of the Code, is treated as a single employer under Section 414 of the Code.



-8-









 





     “Eurodollar Reserve Requirement” means, with respect to the Loans, the maximum rate,
expressed as a decimal, at which reserves (including, without limitation, any basic marginal,
special, supplemental, emergency or other reserves) are required to be maintained with respect
thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D of the F.R.S.
Board) under regulations issued from time to time by the F.R.S. Board or other applicable banking
regulator. Without limiting the effect of the foregoing, the Eurodollar Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks with respect to (a) any
category of liabilities which includes deposits by reference to which the applicable Adjusted
Eurodollar Rate or any other interest rate of a Loan is to be determined or (b) any category of
extensions of credit or other assets which include the Loans. For the purposes of this Agreement,
the Loans shall constitute Eurocurrency liabilities and shall be subject to applicable reserve
requirements without the benefit of or credit for proration, exceptions or offsets that may be
available from time to time to the applicable Lender. The rate of interest on the Loans shall be
adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve
Requirement.



     “Event of Default” is defined in Section 8.1.



     “Excluded Taxes” means, with respect to the Administrative Agent or any Lender, or any
other recipient of any payment to be made by or on account of any obligation of the Borrowers
hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the Laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable lending office is located,
(b) any branch profits taxes imposed by the United States or any similar tax imposed by any other
jurisdiction in which any Borrower is located and (c) in the case of a Foreign Lender, any
withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new lending office) or is attributable to such
Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with
Section 4.6, except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to receive additional
amounts from the Borrowers with respect to such withholding tax pursuant to Section 4.6.



     “Expiration Time” means 2:00 p.m. (New York City time) on October 9, 2007.



     “Fee Letter” means the Fee Letter, dated the date hereof, among CoBank, Wachovia and
the Borrowers.



     “Fiber Supply Agreement” means the Fiber Supply Agreement, dated as of the date
hereof, among MW, MeadWestvaco Corporation and Wells TRS Subsidiary, as amended, restated or
otherwise modified from time to time in accordance with clause (l) of Section
7.1.11.



     “Financial Officer” means, with respect to each Borrower, its president, chief
financial officer, principal accounting officer or controller (or the president, chief financial
officer, principal accounting officer or controller of the manager thereof) whose signatures and



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incumbency have been certified to the Administrative Agent and the Lenders pursuant to
Section 5.1.2.



     “Fiscal Quarter” means any quarter of a Fiscal Year.



     “Fiscal Year” means any period of twelve consecutive calendar months ending on
December 31.



     “Foreign Lender” means any Lender that is organized under the Laws of a jurisdiction
other than that in which either Borrower is resident for tax purposes. For purposes of this
definition, the United States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.



     “F.R.S. Board” means the Board of Governors of the Federal Reserve System or any
successor thereto.



     “Fund” means any Person (other than a natural Person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of business.



     “Funding Date” means the closing date of the Transaction, which date shall be a
Business Day and at a time on or prior to the Expiration Time.



     “GAAP” is defined in Section 1.4.



     “Governmental Authority” means the government of the United States or any other nation
or government, any state or other political subdivision thereof, any agency, authority,
instrumentality, regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.



     “Guaranty” means, collectively, the Limited Guaranty substantially in the form of
Exhibit J-1 attached hereto, the Guaranty substantially in the form of Exhibit J-2
attached hereto and the Guaranty substantially in the form of Exhibit J-3 attached hereto.



     “Harvest Plan” is defined in clause (c) of Section 7.1.11.



     “Hazardous Material” means (a) any “hazardous substance” as defined by CERCLA, (b) any
“hazardous waste” as defined by the Resource Conservation and Recovery Act, (c) any petroleum
product or byproduct or (d) any pollutant or contaminant or hazardous, dangerous or toxic chemical,
material or substance within the meaning of any Law relating to or imposing liability or standards
of conduct concerning any hazardous, toxic or dangerous waste, substance or material.



     “Hedging Obligations” means, with respect to any Person, all liabilities of such
Person under any Rate Protection Agreement.



     “Indebtedness” of any Person means, without duplication:



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          (a) all obligations of such Person for borrowed money, including all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments (including, without
limitation, the Loans and the Permitted Subordinated Debt);




          (b) all obligations, contingent or otherwise, relative to the face amount of all letters of
credit, whether or not drawn, and banker’s acceptances issued for the account of such Person;




          (c) all obligations of such Person as lessee under leases which have been or should be, in
accordance with GAAP, recorded as capitalized lease liabilities;




          (d) whether or not so included as liabilities in accordance with GAAP, all obligations of such
Person to pay the deferred purchase price of property or services (excluding trade accounts payable
arising in the ordinary course of business), and indebtedness (excluding prepaid interest thereon)
secured by a Lien on property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse;




          (e) all obligations of such Person to purchase, redeem, retire or otherwise acquire for value
(including by means of converting into, or exchanging for, Indebtedness) any Equity Interest of
such Person;




          (f) the liquidation value of any preferred capital stock or similar Equity Interest of such
Person or its Subsidiaries held by any Person;




          (g) all obligations and liabilities secured by any Lien on such Person’s property or assets,
even though such Person shall not have assumed or become liable for the payment thereof;




          (h) all Off-Balance Sheet Obligations; and




          (i) all Contingent Liabilities of such Person in respect of any of the foregoing.




     “Indemnified Liabilities” is defined in clause (a) of Section 11.4.



     “Indemnified Parties” is defined in clause (a) of Section 11.4.



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Installment Note” means the Purchase Note, dated the date hereof, executed by the
Wells Installment Note Issuer and payable to the order of MW in the original principal amount of
$397,979,000, evidencing the deferred portion of the purchase price to be paid to MW pursuant to
the Transaction Agreement.



     “Installment Note Documents” means, collectively, the Installment Note, the Continuing
Letter of Credit Reimbursement Agreement, dated as of the date hereof, between



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Wachovia and the Wells Installment Note Issuer and the Pledge Agreement, dated as of the date
hereof, between Wachovia and the Wells Installment Note Issuer.



     “Intellectual Property Collateral” is defined in the Security Agreement.



     “Interest Expense” means, for any period, the aggregate interest expense of Wells
Timberland for such period, as determined in accordance with GAAP, including, without duplication,
the portion of any capitalized lease liabilities of such Persons allocable to interest expense, all
commissions, discounts and other fees charged with respect to the amortization of debt discounts
and the net costs under Rate Protection Agreements, in each case paid or payable during such
period.



     “Interest Period” means, relative to the Loans, the period beginning on (and
including) the Funding Date and shall end on (but exclude) the day which numerically corresponds to
such date one, two or three months thereafter, provided, however, that:



          (a) the Borrowers shall not be permitted to select Interest Periods to be in effect at any one
time which have expiration dates occurring on more than five different dates;




          (b) if such Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next following Business Day (unless such next following Business
Day is the first Business Day of a month, in which case such Interest Period shall end on the
Business Day next preceding such numerically corresponding day); and




          (c) if there is no numerically corresponding day in such month, such Interest Period shall end
on the last Business Day of such month.



The Loans shall bear interest from and including the first day of the applicable Interest Period to
(but not including) the last day of such Interest Period at the interest rate determined as
applicable to the Loans.




     “Interest Reserve” is defined in clause (a) of Section 7.1.12.



     “Interest Reserve Account” is defined in clause (a) of Section 7.1.12.



     “Interest Reserve Collateral” is defined in clause (b) of Section
7.1.12.



     “Investment” means, with respect to any Person, (a) any loan, advance, other extension
of credit or capital made by such Person to any other Person (excluding account receivables
generated in the ordinary course of business of such Person and payable or dischargeable in
accordance with customary trade terms), (b) any Contingent Liability of such Person incurred in
connection with any item described in clause (a) and (c) any Equity Interest held by such
Person in any other Person.



     “Land” means all the land owned and held by the Borrowers in fee simple, including the
land described in Exhibit A of the Transaction Agreement and identified therein as Purchased Assets
as defined in the Transaction Agreement, together with (a) all buildings, structures or other
improvements thereon, (b) all Timber located thereon, (c) roads, bridges and other



-12-









 







improvements and fixtures thereon and (d) all other privileges and heriditaments, tenements,
appurtenances, easements, rights-of-way (including the Purchaser Easements (as defined in the
Transaction Agreement) in respect thereof) and other rights relating, including all development,
air and water rights and water stock relating to such land and any strips and gores.



     “Landlord Estoppel Certificate” means a Landlord Estoppel Certificate in substantially
the form of Exhibit I attached hereto, to be executed by each landlord of each Leasehold
Interest.



     “Laws” means, collectively, all statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities of any Governmental
Authority (including any of the foregoing that relates to zoning and planning, building,
subdivision, Environmental Laws, wildlife protection, forest practices, mining, drilling,
extraction and reclamation), including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or administration thereof, and
all applicable administrative orders, consent decrees, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority.



     “Leasehold Interests” means the rights of the Borrowers as lessee with respect to the
Timber Leases including all purchase options, prepaid rents and security deposits relating thereto,
together with leasehold improvements with respect thereto.



     “Leaseholds” means, collectively, all real estate leased, subleased or licensed by any
Borrower under the Timber Leases.



     “Lender Party” means, as the context may require, any Lender or the Administrative
Agent, together with each of the respective successors, transferees and assigns.



     “Lenders” is defined in the preamble.



     “Lien” means any security interest, mortgage, pledge, hypothecation, collateral,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or
interest in property to secure payment of a debt or performance of an obligation, or other priority
or preferential arrangement of any kind or nature whatsoever.



     “Loan” and “Loans” is defined in of Section 2.1.1.



     “Loan Documents” means, collectively, this Agreement, the Notes, the Security
Agreement, the Pledge Agreement, the Guaranty, the Subordinated Intercreditor Agreement, any Rate
Protection Agreement with a Lender, each Assignment and Assumption, each Deposit Account Control
Agreement, each Landlord Estoppel Certificate, each Recognition Agreement, each Collateral
Assignment of a Material Agreement, each Mortgage, the Wells REIT Security Agreement, the Timber
Manager Subordination Agreement, the LTC Lease Support Agreement and each other agreement,
instrument or document executed and delivered pursuant to or in connection with this Agreement and
the other Loan Documents.



     “Loan Party” means each Borrower, Wells TRS Subsidiary, Wells REIT, Wells TRS, Wells
Partnership and any other Person (other than any Lender Party) obligated under any Loan Document.
Without limiting the foregoing, Wells Installment Note Issuer is not a Loan Party.



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     “LTC Lease” means the Lease Agreement, dated June 25, 1956, between Gerald B.
Saunders, Charlotte A. Saunders, C.V. Saunders, Ruth M. Saunders, J. Frank Alexander, Helen C.
Alexander and Alexander Brothers Lumber Company, Inc. as lessors and MW (by assignment from Georgia
Kraft Company), as lessee.



     “LTC Lease Disposition Proceeds” means amounts payable to the Administrative Agent
pursuant to Section 2.4 of the LTC Lease Support Agreement.



     “LTC Lease Support Agreement” means the LTC Lease Support Agreement, dated as of the
date hereof, among the Borrowers, MW, MeadWestvaco Corporation, the Administrative Agent and the
Subordinated Administrative Agent, as amended, restated or otherwise modified from time to time.



     “Master Stumpage Agreement” means the Master Stumpage Agreement, dated as of the date
hereof, among MW, MeadWestvaco Corporation, Wells Timberland and Wells TRS Subsidiary, as amended,
restated or otherwise modified from time to time in accordance with clause (l) of
Section 7.1.11.



     “Material Adverse Effect” means any event or series of events (whether or not related)
that could reasonably be expected to have a material adverse effect on:



          (a) the business, assets, operations, properties, condition (financial or otherwise) or
prospects of the Borrowers and the other Loan Parties, taken as a whole;




          (b) the ability of either Borrower or any other Loan Party to perform or pay its Obligations
in accordance with the terms hereof or of any other Loan Document;




          (c) the Administrative Agent’s (i) first priority security interest in the Senior Priority
Collateral or Senior Exclusive Collateral or (ii) second priority security interest in the
Subordinated Priority Collateral;




          (d) the value of the Collateral or the amount the Administrative Agent and the Lenders would
be likely to receive (after giving consideration to delays in payment and costs of enforcement) in
the liquidation of the Collateral; or




          (e) the validity or enforceability of any Loan Document or the rights and remedies available
to the Administrative Agent or the Lenders under any Loan Document.




     “Material Agreements” means those agreements that are material to the business or
operations of either Borrower or Wells TRS Subsidiary (other than the Subordinated Debt Documents),
including those agreements identified on Item 1.1(b) (“Material Agreements) of the
Disclosure Schedule, as each such agreement may be amended, restated or otherwise modified from
time to time in accordance with Section 7.2.10.



     “Material Governmental Approvals” is defined in clause (c) of Section
6.19.



     “Material Environmental Amount” means an amount payable by either Borrower or any
other Loan Party in excess of $1,000,000 for remedial costs, compliance costs,



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compensatory damages, punitive damages, fines, penalties or any combination thereof, in each
case with respect to Environmental Laws.



     “Mineral Activity” is defined in clause (c) of Section 7.2.18.



     “Mineral Leases” is defined in clause (c)(ii) of Section 7.2.18.



     “Moody’s” means Moody’s Investors Service, Inc.



     “Mortgage” means collectively, (a) with respect to the Real Property located in
Georgia and owned in fee simple or leased by Wells Timberland, a deed to secure debt substantially
in the form of Exhibit K-1 attached hereto, and (b) with respect to the Real Property
located in Alabama and owned in fee simple or leased by Wells Timberland, a mortgage in
substantially in the form of Exhibit K-2 attached hereto.



     “Multiemployer Plan” means a Pension Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.



     “MW” means MeadWestvaco Coated Board, Inc., a Delaware corporation.



     “MW Contribution Agreement” means the Contribution Agreement, dated as of the date
hereof, between MW and Wells Timberland, as amended, restated or otherwise modified from time to
time in accordance with Section 7.2.10.



     “MW Supply Agreements” means, collectively, the Master Stumpage Agreement and the
Fiber Supply Agreement.



     “MWV SPE Capital Note” means that certain unsecured promissory note issued by Wells
Acquisition to Wells Installment Note Issuer in the original principal amount of $7,959,580.



     “Net Income” means, for any period, all amounts (exclusive of all amounts in respect
of any extraordinary gains or losses) which, in accordance with GAAP, would be included as net
income or net loss on the consolidated statements of income of Wells Timberland.



     “Non-Recourse” means, with respect to any Unrestricted Timber Transaction, that none
of the Borrowers or Wells TRS Subsidiary (a) has made or will make any Investment with respect to
such Unrestricted Timber Transaction or any Unrestricted Timber Subsidiary; (b) has any liability
(including any Contingent Liability) with respect to the Indebtedness or other obligations with
respect to such Unrestricted Timber Transaction or any Unrestricted Timber Subsidiary; or (c) is a
party or otherwise subject to any agreement or arrangement with respect to such Unrestricted Timber
Transaction or any Unrestricted Timber Subsidiary.



     “Note” and “Notes” is defined in clause (a) of Section 2.2 and
also means all other promissory notes accepted from time to time in substitution therefor or
renewal thereof.



     “Obligations” means all obligations (monetary or otherwise) of either Borrower and
each other Loan Party arising under or in connection with this Agreement and each other Loan



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Document, including principal, interest (including post-default interest and interest accruing
after the commencement of any bankruptcy, insolvency or similar proceeding referred to in
Section 8.1.8, whether or not a claim for post-filing or post-petition interest is allowed
in any such proceeding), reimbursement obligations, fees, indemnities, costs and expenses
(including the reasonable fees and disbursements of counsel to the Administrative Agent and each
Lender required to be paid by the Borrowers) that are owing under this Agreement and the other Loan
Documents, in each case whether now existing or hereafter incurred, direct or indirect, absolute or
contingent, and due or to become due.



     “Off-Balance Sheet Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use of
property or sale of assets that create obligations that do not appear on the balance sheet of such
Person but which, upon the insolvency or bankruptcy of such Person, could be characterized as
Indebtedness of such Person (without regard to accounting treatment).



     “Organizational Document” means, with respect to any Loan Party, its articles or
certificate of incorporation or formation, partnership agreement, operating agreement, by-laws and
all shareholder agreements, voting trusts and similar arrangements applicable to any of its
authorized Equity Interests.



     “Other Taxes” means all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or
under any other Loan Document, or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.



     “Participant” is defined in clause (d) of Section 11.10.



     “Patriot Act” is defined in clause (a) of Section 6.23.



     “PBGC” means the Pension Benefit Guaranty Corporation.



     “Pension Plan” means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA, and in respect of which any Loan Party or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section
3(5) of ERISA.



     “Permitted Subordinated Debt” means, subject to all the restrictions contained in the
Subordinated Intercreditor Agreement, all principal, interest and other amounts owing by the
Borrowers pursuant to the Subordinated Notes and the Subordinated Credit Agreement.



     “Person” means any natural person, corporation, partnership, limited liability
company, firm, association, trust, Governmental Authority or other entity, whether acting in an
individual, fiduciary or other capacity.



     “Pledge Agreement” means the Pledge Agreement substantially in the form of Exhibit
G attached hereto.



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     “Quarterly Payment Date” means the last Business Day of each March, June, September
and December, or, if any such day is not a Business Day, the next succeeding Business Day.



     “Rate Protection Agreement” means any interest rate cap agreement, interest rate
collar agreement, floating to fixed rate swap agreement, interest rate swap agreement or similar
arrangement designed to protect a Person against fluctuations in interest rates.



     “Real Property” means, collectively, (a) the Land, (b) the Leasehold Interests and (c)
the Conveyed Minerals.



     “Recognition Agreement” means, collectively, the Recognition Agreement (Fiber Supply
Agreement) substantially in the form of Exhibit Q-1 attached hereto and the Recognition
Agreement (Master Stumpage Agreement) substantially in the form of Exhibit Q-2 attached
hereto.



     “Register” is defined in clause (c) of Section 10.10.



     “Related Parties” means, with respect to any Person, such Person’s Affiliates and the
partners, directors, officers, employees, agents and advisors of such Person and of such Person’s
Affiliates.



     “Release” means a “release” or “threatened release” as such terms are defined in
CERCLA, including any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, seeping, migrating, dumping or disposing of any Hazardous Material
into the indoor or outdoor environment, including the abandonment or discarding of barrels,
containers and other closed receptacles containing any Hazardous Materials or pollutants or
contaminants.



     “Release Parcel” is defined in clause (o) of Section 7.1.11.



     “Required Lenders” means, at the time any determination thereof is to be made, Lenders
and Voting Participants holding more than 51% of the then aggregate unpaid principal amount of the
Notes; provided, however, that with respect to any vote by the Lenders and Voting
Participants: (a) to increase the total Commitment Amount, (b) to direct the Administrative Agent
to take any actions in connection with the Subordinated Intercreditor Agreement, (c) with respect
to authorizing the sale or disposition of any Collateral, (d) to direct the Administrative Agent to
accelerate the Loans pursuant to Section 8.3, (e) upon the occurrence and during the
continuance of any Event of Default (other than those matters requiring the consent of each
affected Lender as provided in clause (b)(i) through (b)(ix) of Section
11.1 and voting on a plan of reorganization with respect to any Loan Party), the determination
of Required Lenders shall be made without giving effect to the unpaid principal amount of Notes of
those Lenders and Voting Participants that are also Subordinated Lenders (which Lenders and Voting
Participants, who are also Subordinated Lenders, having no vote with respect to such matters).



     “Resource Conservation and Recovery Act” means collectively the Resource Conservation
and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, as amended, 42
U.S.C. §§6901, et seq., as in effect from time to time.



-17-









 





     “Revenue Account” is defined in Section 9.1.1.



     “Revenue Waterfall” is defined in clause (a) of Section 9.3.1.



     “Rolling Period” means, as of any date of calculation, the immediately preceding four
Fiscal Quarters; provided, however, that prior to the completion of the first four
Fiscal Quarters following the Funding Date, the Rolling Period as of the end of any Fiscal Quarter
shall be based on the actual number of full Fiscal Quarters since the Funding Date, with such
results to be annualized.



     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc.



     “Security Agreement” means the Security Agreement substantially in the form of
Exhibit H attached hereto.



     “Senior Exclusive Collateral” is defined in the Subordinated Intercreditor Agreement.



     “Senior Loan to Value Ratio” means, as of the Funding Date or the close of any Fiscal
Quarter thereafter, as applicable, the ratio of (a) the outstanding principal amount of the Loans
to (b) the Value of the Timberlands.



     “Senior Priority Collateral” is defined in the Subordinated Intercreditor Agreement.



     “Solvent” means, when used with respect to any Person, that, as of any date of
determination:



          (a) the amount of the “present fair saleable value” of the assets of such Person will, as of
such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of
such date, as such value is established and such liabilities are evaluated in accordance with
Section 101(32) of the Federal Bankruptcy Code and the state Laws governing determinations of the
insolvency of debtors of New York and each state where such Person is doing business or has its
principal place of business;




          (b) such Person will not have, as of such date, an unreasonably small amount of capital with
which to conduct its business; and




          (c) such Person will be able to pay its debts as they mature.



For purposes of this definition, (i) “debt” means liability on a “claim” and (ii) “claim” means any
(x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured
or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or unsecured.




     “Stated Maturity Date” means September 9, 2010.



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     “Subordinated Administrative Agent” means Wachovia, in its capacity as administrative
agent under the Subordinated Debt Documents, together with its successors and assigns in such
capacity.



     “Subordinated Credit Agreement” means the Subordinated Credit Agreement, dated as of
the date hereof, among the Borrowers, the Subordinated Administrative Agent and the Subordinated
Lenders, as amended, restated or otherwise modified from time to time in accordance with
Section 7.2.10.



     “Subordinated Debt Documents” means, collectively, the Subordinated Credit Agreement,
each Subordinated Note and each other agreement, instrument or document entered into in connection
therewith, as amended, restated or otherwise modified from time to time in accordance with
Section 7.2.10.



     “Subordinated Exclusive Collateral” is defined in the Subordinated Intercreditor
Agreement.



     “Subordinated Exclusive Collateral Transfer Date” is defined in the Subordinated
Intercreditor Agreement.



     “Subordinated Intercreditor Agreement” means the Intercreditor Agreement substantially
in the form of Exhibit P attached hereto.



     “Subordinated Lender Parties” means, collectively, the Subordinated Administrative
Agent and the Subordinated Lenders.



     “Subordinated Lenders” means those lenders that are from time to time parties to the
Subordinated Credit Agreement.



     “Subordinated Notes” means the promissory notes issued pursuant to the Subordinated
Credit Agreement, as amended, restated or otherwise modified from time to time in accordance with
Section 7.2.10.



     “Subordinated Priority Collateral” is defined in the Subordinated Intercreditor
Agreement.



     “Subordination Provisions” is defined in Section 6.24.



     “Subsidiary” means, with respect to any Person:



          (a) any corporation of which more than 50% of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors or other governing body of such
corporation (irrespective of whether at the time capital stock of any other class or classes of
such corporation shall or might have voting power upon the occurrence of any contingency) is at the
time directly or indirectly owned by such Person, or by one or more Subsidiaries of such Person, or
with respect to which any such Person has the right to vote or designate the vote of more than 50%
of such Equity Interests (whether by proxy, agreement, operation of law or otherwise); or




-19-









 








          (b) any partnership, joint venture, limited liability company or other entity as to which such
Person, or one or more Subsidiaries of such Person, owns (whether in the form of voting or
participation in profits or capital contribution) more than a 50% Equity Interest, acts as the
general partner or has power to direct or cause the direction of management and policies, or the
power to elect the managing partner (or the equivalent), of such partnership, joint venture or
other entity, as the case may be.




     “Taxes” means all present or future taxes, levies, imposts, dues, duties, deductions,
withholdings, assessments, fees, fines or other charges imposed by any Governmental Authority,
including any interest, additions to tax or penalties applicable thereto, and any tax or excise on
rents or other tax, however described, assessed or levied by any Governmental Authority as a
substitute, in whole or in part, for taxes assessed or imposed, including annual real estate and
personal property taxes, tree growth taxes, timber, coal or mineral severance taxes, taxes on the
value of unmined or unextracted coal, oil, gas or other minerals, or any other taxes related to
mining, drilling, extracting, producing, transporting, storing or processing coal, oil, gas or
other minerals, or any royalty interest therein, and all excise, privilege or license taxes that
may be levied against or upon coal, oil, gas or other minerals, or the privilege of producing coal,
oil, gas or other minerals, and including any ad valorem taxes assessed on coal, oil, gas and other
minerals, and business and occupation taxes charged against the value of any royalty interest in
coal, oil, gas or other minerals produced and any taxes in lieu thereof.



     “Timber” means any trees of any age, species or condition, whether standing, lying,
growing or to be grown, alive or dead and now or hereafter at any time located on the Real
Property.



     “Timber Leases” means, collectively, the leases, subleases and licenses described on
Exhibit B of the Transaction Agreement, together with any replacement thereof.



     “Timber Manager” means Forest Resource Consultants, Inc., a Georgia corporation, and
any other manager of the Timberland that is acceptable to the Administrative Agent.



     “Timber Manager Subordination Agreement” means the Timber Manager Subordination
Agreement substantially in the form of Exhibit T attached hereto.



     “Timberlands” means, collectively, the Land and the Leasehold Interests.



     “Title Insurance Company” is defined in clause (c) of Section 5.1.18.



     “Transaction” means the acquisition by Wells Timberland of the Real Property pursuant
to the Transaction Documents.



     “Transaction Agreement” means the Purchase and Sale Agreement, dated as of August 3,
2007, between Wells Acquisition and MW, as amended, restated or otherwise modified from time to
time in accordance with Section 7.2.10.



     “Transaction Documents” means the Transaction Agreement, together with all schedules
and exhibits thereto, and each other instrument or document executed and delivered pursuant to or
in connection with the Transaction Agreement, including the following



-20-









 







agreements: the MW Contribution Agreement, the MW Supply Agreements and the various
assignment and assumption agreements and deed contemplated under the Transaction Agreement.



     “U.C.C.” means the Uniform Commercial Code as from time to time in effect in the State
of New York.



     “United States” or “U.S.” means the United States of America, its fifty States
and the District of Columbia.



     “Unperfected Collateral” is defined in Section 5.2.



     “Unrestricted Timber Subsidiary” means any Wholly-Owned Subsidiary acquired or
organized by Wells REIT, Wells Partnership or Wells TRS for the purpose of consummating an
Unrestricted Timber Transaction, provided that, (a) (i) each such direct Subsidiary of
Wells REIT shall act as an intermediate holding company performing substantially the same functions
as Wells Partnership, (ii) each such direct Subsidiary of Wells Partnership (other than Wells TRS)
shall act as a borrower pursuant to any financing provided in connection with such Unrestricted
Timber Transaction and (iii) each such direct Subsidiary of Wells TRS shall perform substantially
the same functions as Wells TRS Subsidiary in connection with such Unrestricted Timber Transaction
and (b) each such Subsidiary satisfies the requirements set forth in the definition of
“Unrestricted Timber Transaction”.



     “Unrestricted Timber Transaction” means the purchase or acquisition of real property
or leases of real property (either through the purchase of assets or the purchase of Equity
Interests of any Person that owns such assets) for the purpose of harvesting Timber thereon,
provided that (a) each such transaction is consummated and conducted exclusively by (i)
Unrestricted Timber Subsidiaries or (ii) Wells Partnership; (b) in the case of each such
transaction consummated pursuant to clause (a)(i), (i) Wells REIT, Wells Partnership and
Wells TRS perform in all material respects the same functions in each such transaction as they
perform with respect to the Transaction; (ii) each such Unrestricted Timber Subsidiary performs the
functions specified in clause (a) of the proviso that is contained in the definition of
“Unrestricted Timber Subsidiary”; (iii) each such Unrestricted Timber Subsidiary has been
capitalized solely through amounts contributed by Wells REIT or funded by Persons other than a Loan
Party; and (iv) neither Wells REIT, Wells Partnership nor Wells TRS shall in any respect be subject
to any material restriction or obligation imposed by, or provide any additional material benefits
to, the lenders providing any financing with respect to each such transaction, in each case without
complying with Section 7.2.20; (c) in the case of each such transaction consummated
pursuant to clause (a)(ii), 100% of the purchase price with respect to each such
transaction is paid for by the issuance of Equity Interests in Wells Partnership to the seller or
lessor of the relevant real property; (d) in the case of each such transaction consummated pursuant
to either clause (a)(i) or (a)(ii), (i) all the representations and warranties
contained in this Agreement and in the other Loan Documents shall be true and correct,
provided that if any such representations or warranties relate to an earlier date it shall
be true and correct as of such date; (ii) all obligations in connection with each such transaction
are Non-Recourse; (iii) no Default or an Event of Default has occurred or is continuing or would
result from the consummation of each such transaction; (iv) each such transaction shall be
consummated in accordance with applicable Laws; and (v) no



-21-









 







Material Adverse Effect could reasonably be expected to result from the consummation of each
such transaction.



     “Value of the Timberlands” means, with respect to the Real Property, the appraised
value thereof as determined prior to the Funding Date and agreed to by the Administrative Agent and
annual updates thereof as provided in clause (h) of Section 7.1.11.



     “Voting Participant” is defined in clause (d) of Section 11.10.



     “Wells Acquisition” is defined in the preamble.



     “Wells Asset Management Fees” means an amount payable to Wells Manager on a monthly
basis in an amount equal to 1/12 of 1.25% of the greater of (a) the cost or (b) value of Wells
REIT’s assets; provided that the Wells Asset Management Fees shall be (i) set forth in the
operating expense budget delivered pursuant to Section 5.1.22 and clause (q) of
Section 7.1.1, (ii) approved by the Administrative Agent (or, if the Borrowers have
delivered such operating expense budget as provided in clause (q) of Section 7.1.1
and the Administrative Agent has not approved the same, the amount of Wells Asset Management Fees
set forth in the most recent operating budget approved by the Administrative Agent to the extent
such amount does not exceed the amount set forth in the proposed operating budget) and (iii)
reasonably allocated (as determined by the Administrative Agent) among the operations of the
Borrowers and Wells TRS Subsidiary, on the one hand, and the other operations (including pursuant
to Unrestricted Timber Transactions) of Wells REIT and its Subsidiaries (other than the Borrowers
and Wells TRS Subsidiary), on the other hand.



     “Wells Capital” means Wells Capital, Inc., a Georgia corporation, the sole stockholder
of Wells Manager.



     “Wells Installment Note Issuer” means MWV SPE, LLC, a Delaware limited liability
company.



     “Wells Investment” means Wells Investment Securities, Inc., a Georgia corporation that
is a registered broker-dealer and a direct Subsidiary of Wells Real Estate Funds, Inc., a Delaware
corporation.



     “Wells Manager” means Wells Timberland Management Organization, LLC, a Georgia limited
liability company.



     “Wells Operating Expenses” means all costs and expenses paid or incurred, from time to
time, by Wells Manager that are related to the operations of the Borrowers or Wells TRS Subsidiary
(but expressly excluding the Wells Other Operating Expenses and the Wells Asset Management Fees);
provided that the Wells Operating Expenses shall be (i) set forth in the operating expense
budget delivered pursuant to Section 5.1.22 and clause (q) of Section
7.1.1, (ii) approved by the Administrative Agent (or, if the Borrowers have delivered such
operating expense budget as provided in clause (q) of Section 7.1.1 and the
Administrative Agent has not approved the same, the amount of Wells Operating Expenses set forth in
the most recent operating budget approved by the Administrative Agent to the extent such amount
does not exceed the amount set forth in the proposed operating budget) and (iii) reasonably
allocated (as



-22-









 







determined by the Administrative Agent) among the operations of the Borrowers and Wells TRS
Subsidiary, on the one hand, and the other operations (including pursuant to Unrestricted Timber
Transactions) of Wells REIT and its Subsidiaries (other than the Borrowers and Wells TRS
Subsidiary), on the other hand.



     “Wells Other Operating Expenses” means reimbursement of Wells Manager’s expenses in
connection with its provision of services to Wells REIT (including related personnel, rent,
utilities and information technology costs (but excluding personnel costs relating to services for
which Wells Manager earns real estate disposition fees)) in an amount not to exceed the greater of
(a) 2% of Wells REIT’s average invested assets or (b) 25% of Wells REIT’s net income;
provided that the Wells Other Operating Expenses shall be (i) set forth in the operating
expense budget delivered pursuant to Section 5.1.22 and clause (q) of Section
7.1.1, (ii) approved by the Administrative Agent (or, if the Borrowers have delivered such
operating expense budget as provided in clause (q) of Section 7.1.1 and the
Administrative Agent has not approved the same, the amount of Wells Other Operating Expenses set
forth in the most recent operating budget approved by the Administrative Agent to the extent such
amount does not exceed the amount set forth in the proposed operating budget) and (iii) reasonably
allocated (as determined by the Administrative Agent) among the operations of the Borrowers and
Wells TRS Subsidiary, on the one hand, and the other operations (including pursuant to Unrestricted
Timber Transactions) of Wells REIT and its Subsidiaries (other than the Borrowers and Wells TRS
Subsidiary), on the other hand.



     “Wells Partnership” means Wells Timberland Operating Partnership, L.P., a Delaware
limited partnership.



     “Wells REIT” means Wells Timberland REIT, Inc., a Maryland corporation.



     “Wells REIT Security Agreement” means the Security Agreement substantially in the form
of Exhibit S attached hereto.



     “Wells Timberland” is defined in the preamble.



     “Wells Timberland Operating Agreement” means the Timberland Operating Agreement, dated
as of the date hereof, between Wells TRS Subsidiary, Wells Timberland and the Timber Manager, as
amended, restated or otherwise modified from time to time in accordance with Section
7.2.10.



     “Wells TRS” means Wells Timberland TRS, Inc., a Delaware corporation.



     “Wells TRS Subsidiary” means Wells TRS Harvesting Operations, LLC, a Delaware limited
liability company.



     “Wells TRS Subsidiary Account” is defined in clause (a) of Section
7.1.13.



     “Wells TRS Subsidiary Account Collateral” is defined in clause (b) of
Section 7.1.13.



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     SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the context otherwise
requires, terms for which meanings are provided in this Agreement shall have such meanings when
used in each disclosure schedule and each other Loan Document.



     SECTION 1.3 Certain Rules of Construction. Unless otherwise specified, references in this
Agreement and in each other Loan Document to any Article or Section are references to such Article
or Section of this Agreement or such other Loan Document, as the case may be. The words “herein,”
“hereof” and “hereunder” and other words of similar import refer, as the context may require, to
the relevant agreement as a whole, including all annexes, exhibits and schedules, and not to any
particular section, subsection or clause contained in such agreement, annex, exhibit or schedule.
Wherever from the context it appears appropriate, each term stated in either the singular or plural
shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter genders. The words “including”, “includes”
and “include” shall be deemed to be followed by the words “without limitation”, and where general
words are followed by a specific listing of items, the general words shall be given their widest
meaning and shall not be limited by an enumeration of specific matters; the word “or” is not
exclusive; references to Persons include their respective successors and assigns (to the extent and
only to the extent permitted by the Loan Documents) or, in the case of any Governmental Authority,
Persons succeeding to the relevant functions of such Governmental Authority; all references to any
Law shall include any amendments and successors of the same; all references to any agreement,
instrument or document shall refer to each such agreement, instrument or document as amended,
restated or otherwise modified from time to time (subject to any restrictions regarding the
foregoing as may be set forth in this Agreement); and the words “asset” and “property” shall have
the same meaning and refer to tangible and intangible assets and properties, including cash,
securities, accounts and contract rights. A Default or Event of Default shall be deemed to exist at
all times during the period commencing on the date that such Default or Event of Default occurs to
the date on which such Default or Event of Default is waived by the Required Lenders pursuant to
this Agreement or, in the case of a Default, is cured within any period of cure expressly provided
for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event
of Default has been waived by the Required Lenders. Whenever any provision in any Loan Document
refers to the knowledge (or an analogous phrase) of any Loan Party, such words are intended to
signify that a member of management or officer or member of the board of directors of such Loan
Party has actual knowledge or awareness of a particular fact or circumstance or a member of
management or officer or director of such Loan Party, if it had exercised reasonable diligence,
would have known or been aware of such fact or circumstance. For purposes of computing a period of
time from a specified date, the word “from” means “from and including” and the word “to” and
“until” each mean “to, but excluding”. Any reference to a Loan Party that is an individual as “it”
shall refer to such Loan Party in his or her individual capacity.



     SECTION 1.4 Accounting Determinations. Unless otherwise specified, all accounting terms
used herein or in any other Loan Document shall be interpreted, all accounting determinations and
computations hereunder or thereunder shall be made, and all financial statements required to be
delivered hereunder or thereunder shall be prepared in accordance with, those generally accepted
accounting principles (“GAAP”) as in effect from time to time.



-24-









 





ARTICLE II




FUNDING OF LOANS




     SECTION 2.1 Amount and Terms of Loans.



          SECTION 2.1.1 The Loans. Subject to and upon the terms and conditions set forth herein, each
Lender severally agrees to make, on the Funding Date, one loan (each, a “Loan” and,
collectively for all the Lenders, the “Loans”) to the Borrowers in a principal amount equal
to such Lender’s Commitment Amount.




          SECTION 2.1.2 Notice of Borrowing. The Borrowers shall deliver to the Administrative
Agent, on or prior to 11:00 a.m. (New York City time) on the Business Day preceding the Funding
Date, a Borrowing Request, which Borrowing Request shall request that each Lender fund its pro rata
share of such Borrowing (in an aggregate principal amount not exceeding each Lender’s Commitment
Amount).




          SECTION 2.1.3 Disbursement of Funds. Subject to the terms and conditions hereof, no later
than 1:00 p.m. (New York City time) on the Funding Date, each Lender will wire transfer its
pro rata share of the requested Borrowing in immediately available funds of Dollars
to the account specified by the Borrowers pursuant to Section 2.1.2




     SECTION
2.2  Notes.(a) (a) The Borrowers’ obligation to pay the principal of, and
interest on, the Loan made to it by each Lender shall be evidenced by a promissory note
substantially in the form of Exhibit A attached hereto, with blanks appropriately completed
in conformity herewith (each, a “Note” and, collectively, the “Notes”).



          (b) The Note issued to each Lender pursuant to clause (a) shall (i) be executed by the
Borrowers, (ii) be payable to the order of such Lender or such Lender’s assigns and be dated the
Funding Date, (iii) be in the stated principal amount equal to the Loan made by such Lender on the
Funding Date, (iv) be payable as provided in Section 3.1, (v) accrue interest as provided
in Section 3.2 and (vi) be entitled to the benefits of this Agreement and the other Loan
Documents.




          (c) Each Lender shall record in its records the amount and date of the Loan made by such
Lender to the Borrowers on the Funding Date and each repayment thereof. The aggregate unpaid
principal amount so recorded shall, absent manifest error, be conclusive evidence of the principal
amount of the Loan owing and unpaid. The failure to so record any such amount or any error in so
recording any such amount shall not, however, limit or otherwise affect the Obligations of the
Borrowers hereunder or under the Note to repay the principal amount of the Loan hereunder, together
with interest accruing thereon.




     SECTION 2.3 Termination of Commitments. The Commitment of each Lender to make its Loan to the Borrowers shall terminate on the earlier
to occur of (a) immediately following the making of such Lender’s Loan on the Funding Date pursuant
to Section 2.1.1 and (b) the Expiration Time.



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     SECTION 2.4 Continuation Elections. By delivering a Continuation Notice to the
Administrative Agent on or before 11:00 a.m. (New York City time) on a Business Day, the
Borrowers may from time to time irrevocably elect on not less than three nor more than five
Business Days’ notice, that all, or any portion in an aggregate minimum amount of $1,000,000 and an
integral multiple of $1,000,000 be continued as Loans accruing interest at the Adjusted Eurodollar
Rate (in the absence of delivery of a Continuation Notice with respect to any Loan at least three
Business Days (but not more than five Business Days) before the last day of the then current
Interest Period with respect thereto, such Loan shall, on such last day, automatically continue for
an Interest Period of one month); provided, however, that (a) each such
continuation shall be prorated among the applicable outstanding Loans of all Lenders and (b) with
respect to the Loans accruing interest at the Adjusted Eurodollar Rate that have an Interest Period
ending on one particular date such Loans shall not be subject to the integral multiple requirement
set forth above (it being understood that, if there are Loans with Interest Periods ending on more
than one date, this clause shall only apply to those Loans with an Interest Period ending on one
particular date and no other date).



ARTICLE III

PAYMENTS, INTEREST AND FEES




     SECTION 3.1 Repayments and Prepayments. The Loans shall be repaid as set forth in this
Section.



          SECTION 3.1.1 Voluntary Prepayments. Prior to the Stated Maturity Date, the Borrowers may,
from time to time on any Business Day, make a voluntary prepayment, in whole or in part, of the
outstanding principal amount of the Loans; provided, however, that:




          (a) all such voluntary prepayments shall require notice on or before 11:00 a.m. (New
York City time) not less than one nor more than five Business Days’ in advance of any prepayment of
any Loan;




          (b) all such voluntary partial prepayments shall be in an aggregate minimum amount of
$1,000,000 and an integral multiple of $500,000 or, if less, the aggregate principal amount of the
relevant Loans outstanding hereunder; and




          (c) all such prepayments shall be made pro rata among Loans having the same
Interest Period.




          SECTION 3.1.2 Mandatory Repayments and Prepayments.




          (a) Stated Maturity Date. On the Stated Maturity Date, the Borrowers shall repay in
full the then aggregate outstanding principal amount of each Loan.




          (b) Mandatory Prepayments from Certain Sources. (i) The Borrowers shall apply 100% of
any Collateral Disposition Proceeds, Collateral Insurance Proceeds and LTC Lease Disposition
Proceeds to prepay the outstanding principal amount of the Loans. In addition, the outstanding
principal amount of the Loans shall be prepaid as and when required pursuant to the terms of the
Revenue Waterfall and Equity Raise Waterfall.




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    (ii) If the Subordinated Administrative Agent is exercising Enforcement Action against the
Subordinated Priority Collateral at a time when an Event of Default has not occurred and is
continuing, the Borrowers shall, following the Discharge of the Subordinated Obligations, prepay
the Loans from the proceeds of any Subordinated Priority Collateral remaining thereafter.



          (c) Acceleration. The Borrowers shall, immediately upon any acceleration of the Stated
Maturity Date of any Loans pursuant to Section 8.2 or Section 8.3, repay all (or if
only a portion is accelerated thereunder, such portion of) the Loans then outstanding.




     SECTION 3.2 Interest Provisions. Interest on the outstanding principal amount of Loans
shall, pursuant to an appropriately delivered Borrowing Request or Continuation Notice, accrue and
be payable in accordance with this Section.



          SECTION 3.2.1 Interest Rates. Subject to Sections 3.2.2 and 4.12, the
Loans shall accrue interest during each Interest Period applicable thereto, from the Funding Date
until paid in full, at the Adjusted Eurodollar Rate plus the Applicable Margin;
provided that, the initial Borrowing may accrue interest at the Alternate Base Rate if the
Borrowing Request also requests that the Loans accrue interest at the Adjusted Eurodollar Rate
three Business Days thereafter.




          SECTION 3.2.2 Post-Default Rates. Subject to 4.12, upon the occurrence and during
the continuation of any Event of Default, the Borrowers shall pay, but only to the extent permitted
by applicable Law, interest (after as well as before judgment) on (a) the Loans at the rate
otherwise in effect plus 2% per annum and (b) on all other Obligations at a rate per annum
equal to the highest interest rate with respect to the Loans as in effect from time to time
plus 2% per annum; provided, however, that if no Loans are outstanding such
interest rate shall be based upon the Adjusted Eurodollar Rate with an Interest Period of one
month.




          SECTION 3.2.3 Payment Dates. Interest accrued on each Loan shall be paid as follows:




          (a) on the Stated Maturity Date therefor;




          (b) on the date of any payment or prepayment, in whole or in part, of principal outstanding on
such Loan on the principal amount so paid or prepaid;




          (c) on the last day of each applicable Interest Period and, if interest on the Loans is
accruing at the Alternate Base Rate, on each Quarterly Payment Date; and




          (d) on that portion of any Loans the Stated Maturity Date of which is accelerated pursuant to
Section 8.2 or Section 8.3, immediately upon such acceleration.



Interest accrued on Loans or other monetary Obligations arising under this Agreement or any other
Loan Document after the date such amount is due and payable (whether on the Stated Maturity Date,
upon acceleration or otherwise) shall be payable upon demand.




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ARTICLE IV

YIELD PROTECTION, TAXES AND RELATED PROVISIONS




     SECTION 4.1 Eurodollar Rate Lending Unlawful. If any Lender shall determine (which
determination shall, upon notice thereof to Wells Acquisition and the Administrative Agent, be
conclusive and binding on the Borrowers) that the introduction of or any change in or in the
interpretation of any Law makes it unlawful, or any central bank or other Governmental Authority
asserts that it is unlawful, for such Lender to accrue interest on the Loans at the Adjusted
Eurodollar Rate, the obligations of the Lenders to continue to accrue interest on the Loans at the
Adjusted Eurodollar Rate shall, upon such determination, forthwith be suspended until such Lender
shall notify the Administrative Agent that the circumstances causing such suspension no longer
exist, and all Loans shall automatically, at the end of the then current Interest Period, continue
to accrue interest as provided in Section 4.12.



     SECTION 4.2 Inability to Determine Rates. If the Administrative Agent shall have
determined or been instructed by the Required Lenders that adequate means do not exist for
adequately and fairly determining the cost to the Lenders of making or maintaining Loans that
accrue interest at the Adjusted Eurodollar Rate or calculating the same then, upon notice from the
Administrative Agent to Wells Acquisition and the Lenders, the obligations of all the Lenders to
make or continue any Loans that accrue interest at the Adjusted Eurodollar Rate shall forthwith be
suspended until the Administrative Agent shall notify Wells Acquisition and the Lenders that the
circumstances causing such suspension no longer exist. Until such time as the Administrative Agent
rescinds such notice the Loans shall accrue interest as provided in Section 4.12.



     SECTION 4.3 Increased Costs, etc. If any Change in Law shall:



          (a) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance
charge or similar requirement against assets of, deposits with or for the account of, or credit
extended or participated in by, any Lender (except any reserve requirement reflected in the
Eurodollar Reserve Requirement);




          (b) subject any Lender to any tax whatsoever with respect to this Agreement, any Loan, or
change the basis of taxation of payments to such Lender in respect thereof (except for Indemnified
Taxes or Other Taxes covered by Section 4.6 and the imposition of, or any change in the
rate of, any Excluded Tax payable by such Lender); or




          (c) impose on any Lender or the London interbank market any other condition, cost or expense
affecting this Agreement or any Loan;




and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Loan (or of maintaining its obligation to make any such Loan), or to reduce the
amount of any sum received or receivable by such Lender hereunder (whether of principal, interest
or any other amount) then, upon request of such Lender, the Borrowers will pay to such Lender such
additional amounts as will compensate such Lender for such additional costs incurred or reduction
suffered. A certificate of such Lender delivered to Wells Acquisition (with a copy to the
Administrative Agent) as to such additional amounts that are necessary to



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compensate such Lender as
aforesaid shall, absent manifest error, be conclusive and binding on the Borrowers and shall be
payable within 10 days after receipt thereof.



     SECTION 4.4 Funding Losses. In the event any Lender shall incur any loss or expense
(including any loss or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender) as a result of any Loan not being made in accordance with a
Borrowing Request, the Interest Period of any Loan not being continued in accordance with the
Continuation Notice therefor or any repayment or prepayment of the principal amount of any Loans on
a date other than the scheduled last day of the Interest Period applicable thereto, whether
pursuant to Section 3.1, Section 4.1, Section 4.2, Article VIII or
otherwise then, upon the notice of such Lender to Wells Acquisition (with a copy to the
Administrative Agent), the Borrowers shall promptly (and, in any event, within three Business Days
of receipt of such notice) pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense. Such notice (which
shall include calculations in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrowers. For the purpose of calculating amounts payable to a Lender
under this Section, each Lender shall be deemed to have actually funded its relevant Loan through
the purchase of a deposit bearing interest at the Adjusted Eurodollar Rate in an amount equal to
the amount of that Loan and having a maturity comparable to the relevant Interest Period;
provided, that each Lender may fund each of its Loans in any manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation of amounts payable under this
Section.



     SECTION 4.5 Increased Capital Requirements. If any Lender Party determines that any Change in Law affecting such Lender Party or any
lending office of such Lender Party or such Lender Party’s holding company, if any, regarding
capital requirements has or would have the effect of reducing the rate of return on such Lender
Party’s capital or on the capital of such Lender Party’s holding company, if any, as a consequence
of this Agreement, the Commitment of such Lender Party or the Loans made by, such Lender Party to a
level below that which such Lender Party or such Lender Party’s holding company could have achieved
but for such Change in Law (taking into consideration such Lender Party’s policies and the policies
of such Lender Party’s holding company with respect to capital adequacy), then from time to time
the Borrowers will pay to such Lender Party such additional amounts as will compensate such Lender
Party or such Lender Party’s holding company for any such reduction suffered. A certificate of a
Lender Party delivered to Wells Acquisition (with a copy to the Administrative Agent) as to any
such additional amounts or reduced returns shall, absent manifest error, be conclusive and binding
on the Borrowers, and shall be payable within 10 days after the receipt thereof. In determining
such amount, the Administrative Agent, each Lender Party may use any method of averaging and
attribution that it (in its sole and absolute discretion) shall deem applicable.



     SECTION 4.6 Taxes.



          (a) Payments Free of Taxes. Any and all payments by or on account of the Obligations
shall be made free and clear of and without reduction or withholding for any Indemnified Taxes
(including any Other Taxes), provided that if the Borrowers shall be required by applicable
Law to deduct any Indemnified Taxes or Other Taxes from such payments, then




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(i) the sum payable
shall be increased as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) each Lender Party receives an amount
equal to the sum it would have received had no such deductions been made, (ii) the Borrowers shall
make such deductions and (iii) the Borrowers shall timely pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable Law.




          (b) Payment of Other Taxes by the Borrowers. Without limiting the provisions of
clause (a), the Borrowers shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable Law.




          (c) Indemnification by the Borrowers. The Borrowers shall indemnify the Lender Party
within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts
payable under this Section) paid by such Lender Party and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other
Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to Wells Acquisition by any
Lender Party (with a copy to the Administrative Agent), or by the Administrative Agent on its own
behalf or on behalf of another Lender Party, shall be conclusive absent manifest error.




          (d) Evidence of Payments. As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrowers to a Governmental Authority, the Borrowers
shall deliver to the Administrative Agent the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative Agent.




          (e) Status of Lenders. Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the Law of the jurisdiction in which either Borrower is resident
for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall deliver to Wells Acquisition (with a copy to the
Administrative Agent), at the time or times prescribed by applicable Law or reasonably requested by
Wells Acquisition or the Administrative Agent, such properly completed and executed documentation
prescribed by applicable Law as will permit such payments to be made without withholding or at a
reduced rate of withholding. In addition, any Lender, if requested by either Borrower or the
Administrative Agent, shall deliver such other documentation prescribed by applicable Law or
reasonably requested by either Borrower or the Administrative Agent as will enable the Borrowers or
the Administrative Agent to determine whether or not such Lender is subject to backup withholding
or information reporting requirements.



Without limiting the generality of the foregoing, in the event that either Borrower is resident for
tax purposes in the United States, any Foreign Lender shall deliver to Wells Acquisition and the
Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior
to the date on which such Foreign Lender becomes a Lender under this Agreement (and


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from time to
time thereafter upon the request of either Borrower or the Administrative Agent, but only if such
Foreign Lender is legally entitled to do so), whichever of the following is applicable:




    (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for
benefits of an income tax treaty to which the United States is a party;



    (ii) duly completed copies of Internal Revenue Service Form W-8ECI;



    (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio
interest under Section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender
is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent
shareholder” of either Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) duly
completed copies of Internal Revenue Service Form W-8BEN; or



    (iv) any other form prescribed by applicable Law as a basis for claiming exemption from or a
reduction in United States Federal withholding tax duly completed, together with such supplementary
documentation as may be prescribed by applicable Law to permit the Borrowers to determine the
withholding or deduction required to be made.



     SECTION
4.7 Payments, Interest Calculations, etc. (a) (a) Unless otherwise expressly
provided, all payments by the Borrowers pursuant to or in respect of this Agreement, the Notes or
any other Loan Document shall be made by the Borrowers to the Administrative Agent for the
pro rata account of the Lenders entitled to
receive such payment. All such payments required to be made to the Administrative Agent shall
be made without setoff, deduction or counterclaim, not later than 11:00 a.m. (New York
City time), on the date due, in same day or immediately available funds, to such account as the
Administrative Agent shall specify from time to time by notice to Wells Acquisition. Funds received
after that time shall be deemed to have been received by the Administrative Agent on the next
succeeding Business Day and any applicable interest shall continue to accrue thereon. The
Administrative Agent shall promptly remit (and, in any event, on the same Business Day as received
by the Administrative Agent is so received on or prior to 11:00 a.m. (New York City time))
in same day funds to each Lender its share, if any, of such payments received by the Administrative
Agent for the account of such Lender.



          (b) All interest and fees shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) occurring during the period for which such
interest or fee is payable over a year comprised of 360 days. If a Loan is repaid on the same day
it is made one day’s interest shall be charged. Whenever any payment to be made shall otherwise be
due on a day which is not a Business Day, such payment shall (except as otherwise required by
clause (b) of the definition of the term “Interest Period”) be made on the next
succeeding Business Day and such extension of time shall be included in computing interest and
fees, if any, in connection with such payment.





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          (c) The Administrative Agent is authorized to charge any account maintained by either Borrower
or any other Loan Party with it for any Obligations owing to it or any of the Lender Parties.




     SECTION 4.8 Sharing of Payments. If any Lender shall obtain any payment or other recovery
(whether voluntary, involuntary, by application of setoff, counterclaim or otherwise) on account of
any Loan (other than (a) pursuant to the terms of Sections 4.3, 4.4, 4.5,
4.6 (b) pursuant to the other express terms of this Agreement or (c) any payment obtained
by a Lender as consideration for the assignment of or sale of a participation in any of its Loans)
in excess of its pro rata share of payments pursuant to Section 4.9 by all
the Lenders, such Lender shall notify the Administrative Agent of the same and purchase for cash at
face value from the other Lenders such participations in Loans made by them (without recourse,
representation or warranty) as shall be necessary to cause such purchasing Lender to share the
excess payment or other recovery ratably with each of them; provided, however, that
if all or any portion of the excess payment or other recovery is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase price to the ratable
extent of such recovery, without interest. The Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this Section may, to the fullest extent permitted by
Law, exercise all its rights of payment (including pursuant to Section 4.9) with respect to
such participation as fully as if such Lender were the direct creditor of each Borrower in the
amount of such participation. If under any applicable bankruptcy, insolvency or other similar
applicable Law, any Lender receives a secured claim in lieu of a setoff to which this Section
applies, such Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.



     SECTION 4.9 Setoff. Each Lender and its Affiliates shall, upon the occurrence and during
the continuance of any Event of Default, have the right to appropriate and apply to the payment of
the Obligations owing to it (whether or not then due), and (as security for the Obligations) the
Borrowers hereby grant to each Lender and its Affiliates a continuing security interest in, any and
all balances, credits, deposits, (general or special, time or demand, provisional or final,
whatever currency), accounts or moneys of the Borrowers now or thereafter maintained with such
Lender or Affiliate thereof, in each case irrespective of whether or not such Lender shall have
made any demand under this Agreement or any other Loan Document and although such Obligations may
be contingent or unmatured or are owed to a branch or office of such Lender different from the
branch or office holding such deposit or obligated on such indebtedness; provided,
however, that any such appropriation and application shall be subject to the provisions of
Section 4.5 (each Lender agreeing promptly to notify Wells REIT and the Administrative
Agent after any such setoff and application made by such Lender, but the failure to give such
notice shall not affect the validity of such setoff and application). The rights of each Lender
under this Section are in addition to other rights and remedies (including other rights of setoff
under applicable Law or otherwise) which such Lender may have.



     SECTION 4.10 Use of Proceeds. The Borrowers shall apply all the proceeds of the Loans to
pay their purchase price obligations in connection with the Transaction. All



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transaction costs and
expenses incurred in connection with the Transaction shall be paid by the Borrowers or MW.



     SECTION 4.11 Payment Reliance. Unless the Administrative Agent shall have received notice
from either Borrower prior to the date on which any payment is due to the Administrative Agent for
the account of the Lenders hereunder that the Borrowers will not make such payment, the
Administrative Agent may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount
due. In such event, if the Borrowers have not in fact made such payment, then each of the Lenders
severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender, with interest thereon at the Applicable Margin, for each day from and including the
date such amount is distributed to it to but excluding the date of payment to the Administrative
Agent.



     SECTION 4.12 Alternative Interest Rate. If, as provided in Section 4.1 or
4.2, the Loans are not accruing interest at the Adjusted Eurodollar Rate, the Loans shall
accrue interest at a rate equal to Alternate Base Rate plus 0.50% per annum.



     SECTION 4.13 Replacement of Lenders. If (a) any Lender requests compensation under
Section 4.3 or 4.5 or (b) any Lender (other than CoBank) fails to approve any
amendment, consent or waiver under a Loan Document that requires the unanimous consent of all the
Lenders and such amendment, consent or waiver is
consented to by the Lenders holding not less than two-thirds of the outstanding principal amount of
the Loans, then for a period of 45 days following any of the foregoing the Borrowers may, at their
sole expense and effort, upon notice to such Lender and the Administrative Agent, require such
Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions
contained in, consents required by, and fees to be paid pursuant to Section 11.10), all of
its interests, rights and obligations under this Agreement and the related Loan Documents to an
assignee that shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment), provided that:



    (i) the Borrower shall have paid to the Administrative Agent the processing and recordation
fee specified in Section 11.10;



    (ii) such Lender shall have received payment of an amount equal to the outstanding principal
of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder
and under the other Loan Documents from the assignee;



    (iii) in the case of any such assignment resulting from a claim for compensation under
Section 4.3 or 4.5 such assignment will result in a material reduction in such
compensation or payments thereafter; and



    (iv) such assignment does not conflict with applicable Law.


A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.




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ARTICLE V

CONDITIONS PRECEDENT TO FUNDING DATE




     SECTION 5.1 Conditions. The obligations of each Lender to enter into this Agreement and
make a Loan on the Funding Date shall be subject to the prior or concurrent fulfillment of each of
the conditions precedent set forth in this Section to the satisfaction of each Lender.



          SECTION 5.1.1 Agreement. The Administrative Agent shall have received this Agreement duly
executed by each Lender, the Administrative Agent and an Authorized Officer of each Borrower.




          SECTION 5.1.2 Resolutions, Good Standing, etc. Each Lender shall have received from each
Loan Party a certificate, dated the Funding Date, of its Secretary or Assistant Secretary as to:




          (a) resolutions of its Board of Directors (or equivalent body) then in full force and effect
authorizing the execution, delivery and performance of each Loan Document to be executed by it;




          (b) each Organizational Document of each such Loan Party; and




          (c) the incumbency and signatures of each officer (including each Authorized Officer and
Financial Officer) of each such Loan Party that is authorized to act with respect to each Loan
Document executed by it, upon which certificate each Lender Party may conclusively rely until it shall have received a
further certificate of the Secretary or Assistant Secretary of the relevant Loan Party canceling or
amending such prior certificate. In addition, the Administrative Agent shall have received
satisfactory good standing certificates for each jurisdiction where the Collateral is located and
each other jurisdiction where the Borrowers and each other Loan Party are organized and are
authorized (or should be authorized under applicable Law) to conduct business.




          SECTION 5.1.3 Delivery of Notes. Each Lender shall have received its Note in an amount
equal to such Lender’s Commitment Amount, dated the Funding Date, duly completed as herein provided
and duly executed and delivered by an Authorized Officer of each Borrower.




          SECTION 5.1.4 Required Consents and Approvals. All required consents and approvals shall
have been obtained and be in full force and effect with respect to the transactions contemplated
hereby and the Transaction from (a) all relevant Governmental Authorities and (b) any other Person
whose consent or approval any Lender deems necessary or appropriate to effect the transactions
contemplated hereby and by the Transaction.




          SECTION 5.1.5 Consummation of the Transaction. Each Lender shall have received evidence
satisfactory to it that (a) all the conditions precedent to the consummation of the Transaction
have been fully satisfied, (b) there has been no amendment, waiver or the exercise of an option
(with respect to title defects, casualty loss, condemnation



-34-









 






proceedings or similar issues) by any
Borrower under the Transaction Documents from the forms thereof approved by the Administrative
Agent without the prior consent of the Administrative Agent and (c) the Transaction will,
contemporaneously with the funding of the Loans, be consummated in accordance with all the terms of
the Transaction Documents and applicable Laws.




          SECTION 5.1.6 Opinion of Counsel. The Administrative Agent shall have received legal
opinions, dated the Funding Date and addressed to the Administrative Agent and all the Lenders,
from New York, Georgia and Alabama legal counsel to the Borrowers, substantially in the form of
Exhibits L, M and N, respectively, attached hereto. In addition, the
Administrative Agent shall have received reliance letters with respect to any opinions issued
pursuant to the Transaction (other than with respect to the Subordinated Debt Documents).




          SECTION 5.1.7 Evidence of Insurance. The Administrative Agent shall have received evidence of the insurance coverage required to be
maintained pursuant to Section 7.1.4, which insurance shall have been reviewed by one or
more of the Administrative Agent’s risk managers and be satisfactory to the same. All such
insurance shall be subject to satisfactory endorsements in favor of the Administrative Agent.




          SECTION 5.1.8 Guaranty. The Administrative Agent shall have received (a) the Limited
Guaranty in substantially the form of Exhibit J-1 attached hereto, dated as of the date
hereof and duly executed by an Authorized Officer of Wells REIT, (b) the Guaranty in substantially
the form of Exhibit J-2 attached hereto, dated as of the date hereof and duly executed by
an Authorized Officer of Wells TRS and (c) the Guaranty in substantially the form of Exhibit
J-3 attached hereto, dated as of the date hereof and duly executed by an Authorized Officer of
Wells TRS Subsidiary.




          SECTION 5.1.9 Pledged Property. The Administrative Agent shall have received:




          (a) the Pledge Agreement, dated as of the date hereof, duly executed by an Authorized Officer
of Wells TRS; and




          (b) original certificates evidencing all of the issued and outstanding shares of capital stock
and other Equity Interests required to be pledged pursuant to the terms of the Pledge Agreement,
which certificates shall be accompanied by undated stock and other powers duly executed in blank by
each relevant pledgor.




          SECTION 5.1.10 U.C.C. Search Results, etc. The Administrative Agent shall have received:




          (a) U.C.C. search reports certified by a party acceptable to the Administrative Agent, dated a
date reasonably near (but prior to) the Funding Date, listing all effective U.C.C. financing
statements, federal and state tax Liens, and judgment Liens which name the Borrowers, any other
Loan Party or MW, as the debtor, and which are filed in each jurisdiction in which U.C.C. filings
are to be made pursuant to this Agreement or the other Loan Documents, in each jurisdiction where
any Loan Party has its principal place of business, maintains its books and




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records or owns any
Real Property, and in such other jurisdictions as the Administrative Agent may reasonably request,
together with copies of such financing statements; and




          (b) with respect to all the Intellectual Property Collateral, search results from the United
States Patent and Trademark Office and United States Copyright Office to the extent of any patents,
trademarks or copyrights form a part of the Collateral.




          SECTION
5.1.11 Security Agreements, Filings, etc. (a) (a) The Administrative Agent
shall have received the Security Agreement, dated as of the date hereof, duly executed by an
Authorized Officer of each Borrower and Wells TRS Subsidiary, together with:




    (i) U.C.C. financing statements naming each such Person as the debtor and the Administrative
Agent as the secured party, such U.C.C. financing statements to be filed under the U.C.C. of all
jurisdictions as may be necessary or, in the opinion of the Administrative Agent, desirable to
perfect (x) the first priority security interest of the Administrative Agent in the Senior Priority
Collateral and Senior Exclusive Collateral and (y) the second priority security interest of the
Administrative Agent in the Subordinated Priority Collateral; and



    (ii) evidence satisfactory to the Administrative Agent of the filing (or delivery for filing)
of appropriate trademark, copyright and patent security supplements with the United States Patent
and Trademark Office and United States Copyright Office to the extent relevant in order to perfect
the first priority security interest of the Administrative Agent therein.



          (b) The Administrative Agent shall have received the Wells REIT Security Agreement, dated as
of the date hereof, duly executed by an Authorized Officer of Wells REIT, together with:




    (i) U.C.C. financing statements naming Wells REIT as the debtor and the Administrative Agent
as the secured party, such U.C.C. financing statements to be filed under the U.C.C. of all
jurisdictions as may be necessary or, in the opinion of the Administrative Agent, desirable to
perfect the second priority security interest of the Administrative Agent in the Collateral the
subject thereof; and



    (ii) evidence of completion of all other actions, reasonably requested by the Administrative
Agent, in order to perfect its second priority security interest in the Collateral the subject
thereof.



          SECTION 5.1.12 Solvency Certificate. The Administrative Agent shall have received solvency
certificates in substantially the form of Exhibits E-1, E-2, E-3,
E-4 and E-5 attached hereto, duly executed by a Financial Officer of Wells
Timberland, Wells Acquisition, Wells TRS Subsidiary, Wells REIT and Wells TRS, respectively, and
dated the Funding Date.




          SECTION 5.1.13 Closing Date Certificate. The Administrative Agent shall have received a
Closing Date Certificate in substantially the form of Exhibit D attached hereto, duly
executed by a Financial Officer of each Borrower and dated Funding Date. All documents



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and
agreements appended to such Closing Date Certificate shall be in
form  and substance satisfactory to
the Administrative Agent and the Lenders.




          SECTION 5.1.14 Interest Reserve. The Administrative Agent shall have received evidence
that the Interest Reserve has been funded as required by Section 7.1.12.




          SECTION
5.1.15 Cash Equity; MWV SPE Capital Note. (a) (a) The Administrative Agent shall have received satisfactory evidence that, after giving
effect to the consummation of the Transaction and the payment of all purchase price obligations and
related fees and expenses, Wells Installment Note Issuer has cash equity of not less that
$3,979,790.




          (b) The MWV SPE Capital Note shall have been duly entered into, which Note shall be
satisfactory to the Lenders.




          SECTION
5.1.16 Transaction Documents; Material Government Approvals. (a) (a) The
Borrowers shall have delivered to each Lender a certificate, signed by a Financial Officer of each
Borrower and dated the Funding Date, to the effect that attached thereto are true and correct
copies of the Transaction Documents (including all schedules and annexes thereto) and each of the
agreements, documents, instruments, opinions, filings, consents and approvals that have been
executed, delivered, furnished or filed pursuant to the Transaction Documents (all of which shall,
to the extent not provided to the Administrative Agent on or prior to August 3, 2007 in connection
with the execution of the Transaction Agreement, be satisfactory to each Lender).




          (b) There shall have been delivered to the Lenders a breakdown, in reasonable detail, of all
fees and expenses payable in connection with the Transaction and the transactions contemplated
hereby.




          (c) The Borrowers shall have delivered to each Lender a certificate signed by a Financial
Officer of each Borrower and dated the Funding Date, certifying true and copies of all the
approvals of Governmental Authorities set forth on Item 6.20(c) (“Material Governmental
Approvals”) of the Disclosure Schedule.




          SECTION 5.1.17 Assignment of Material Agreements; Recognition Agreements. The Administrative Agent
shall have received:




          (a) with respect to each MW Supply Agreement, a duly executed Recognition Agreement that is
applicable thereto; and




          (b) with respect to the Transaction Agreement, the MW Contribution Agreement, the Wells
Timberland Operating Agreement, each MW Supply Agreement and each other Material Agreement, a duly
executed Collateral Assignment of Material Agreement.




          SECTION 5.1.18 Mortgages, etc.



With respect to the Real Property, the Administrative Agent shall have received all of the
following:




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          (a) counterparts of the Mortgages, each dated as of the date hereof and duly executed by Wells
Timberland;




          (b) maps or surveys of the sites of the Real Property that are the same as those described in
Schedule A of the Transaction Agreement;




          (c) a mortgagee’s title insurance policy (or policies) or marked up unconditional commitment
for such insurance. Each such policy shall (i) be in an amount satisfactory to the Administrative
Agent; (ii) be issued at ordinary rates; (iii) insure that each Mortgage insured thereby creates a
valid first priority security interest in the Real Property free and clear of all Liens, except for
such Liens as are acceptable to the Administrative Agent; (iv) name the Administrative Agent for
the benefit of itself and the Lenders, as the insured thereunder; (v) be in the form of ALTA Loan
Policy — 1970 Form B (Amended 10/17/70 and 10/17/84) (or equivalent policies), if available; (vi)
contain such endorsements and affirmative coverages as the Administrative Agent may require,
including without limitation (to the extent applicable with respect to the relevant Real Property
and available in the jurisdiction in which such Real Property is located), the following: variable
rate endorsement; survey same as map endorsement; comprehensive endorsement; first loss, last
dollar and tie-in endorsement; access coverage; separate tax parcel coverage; usury; doing
business; subdivision; environmental protection lien; CLTA 119.2; and such other endorsements as
the Administrative Agent shall require, including endorsements in order to provide insurance
against specific risks identified by the Administrative Agent in connection with the Real Property
and (vii) be issued directly by First American Title Insurance Company (the “Title Insurance
Company”) and with such co-insurance and reinsurance as may be required by the Administrative
Agent. The Administrative Agent shall have received evidence satisfactory to it that all premiums
in respect of each such policy, all charges for mortgage recording and similar taxes, and all
related expenses, if any, have been paid;




          (d) (i) a copy of each Timber Lease, certified as true and correct by a Financial Officer of
each Borrower; (ii) with respect to each such Timber Lease (other than with respect to the LTC
Lease and such other Timber Leases that require the consent of the relevant landlord for each such
Timber Lease to be subject to a mortgage), subject to the requirements of the Transaction Agreement
a copy of each landlord estoppel in the form of Exhibit I to the Transaction Agreement duly
executed by each applicable landlord; and (iii) with respect to (x) the LTC Lease, a copy of the
LTC Lease Support Agreement duly executed by the relevant Persons, and (y) such other Timber Leases
referred to in clause (ii), a copy of a Landlord Estoppel Certificate duly executed by the
relevant landlords;




          (e) a copy of (i) all documents referred to, or listed as exceptions to title in, the title
policy or policies referred to in clause (c) above and (ii) all other material documents
affecting the Real Property, including all building, construction, environmental and other permits,
licenses, franchises, approvals, consents, authorizations and other approvals required in
connection with the construction, ownership, use, occupation or operation of the Real Property;




          (f) satisfactory appraisals from American Forest Management or other nationally recognized
forestry appraisal firm that is satisfactory to the Administrative Agent; and





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          (g) U.C.C.-1 financing statements relating to the Real Property naming Wells Timberland as the
debtor and the Administrative Agent as the secured party, such U.C.C. financing statements to be
filed in the same offices where the applicable Mortgage is filed; and




          (h) satisfactory summary Harvest Plan for calendar year 2007-2008.




          SECTION 5.1.19 Subordinated Debt Documents. Each Lender shall have received:




          (a) the Subordinated Intercreditor Agreement, dated as of the date hereof, duly executed by
the Administrative Agent, the Subordinated Administrative Agent and each Loan Party;




          (b) copies of the Subordinated Credit Agreement and each other Subordinated Debt Document duly
executed by the parties thereto;




          (c) satisfactory evidence that the Borrowers (i) have received commitments from the
Subordinated Lenders to make available not less than $160,000,000 from the Subordinated Credit
Agreement and (ii) applied or will substantially contemporaneously apply all of the same to pay the
purchase price obligations in connection with the Transaction; and




          (d) the Timber Manager Subordination Agreement, dated as of the date hereof, duly executed by
the Timber Manager, Wells Timberland, the Administrative Agent, the Subordinated Administrative
Agent and Wells TRS Subsidiary, together with copies of the Wells Timberland Operating Agreement.




          SECTION 5.1.20 Representations and Warranties True and Correct. Both before and after
giving effect to the making of the Loans:




          (a) all the representations and warranties set forth in Article VI (other than those
representations and warranties set forth in Sections 6.7, 6.10, 6.13 and
6.16) shall be true and correct in all respects with the same effect as if then made,
provided that (i) such representations and warranties that relate solely to an earlier date
shall be true and correct as of such earlier date and (ii) the inaccuracy of any of the
representations and warranties set forth in Article VI (including those representations and
warranties set forth in Sections 6.7, 6.10, 6.13 and 6.16) shall,
subject to the terms of Section 8.1.2, result in an Event of Default;




          (b) all the representations and warranties set forth in Articles V, VI and VII of the
Transaction Agreement, in the MW Contribution Agreement and the MW Supply Agreements shall be true
and correct in all respects with the same effect as if then made, provided that the failure
of such representations and warranties to be true and correct shall only cause this condition not
to be satisfied if, as a result thereof, under the terms of the Transaction Agreement Wells
Acquisition is not required to consummate the Transaction; and




          (c) no Default or Event of Default (other than under Section 8.1.2 as it relates to
Sections 6.7, 6.10, 6.13, and 6.16) has occurred and is continuing
or would result therefrom.





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          SECTION
5.1.21 Environmental Matters. (a) Each Lender shall have received a
certificate signed by a Financial Officer of each Borrower and dated the Funding Date, certifying
true and correct copies of all (i) environmental reports, including Phase I or Phase II
environmental assessment reports and wetlands assessments and delineations, (ii) endangered species
reports, including the “Survey for Imperiled Plants and Animals on MeadWestvaco’s Mahrt Forest,”
dated July 2007, and (iii) surveys of historical, cultural and ecological resources prepared in
connection with the Transaction Agreement, all of the foregoing to be in form and substance
satisfactory to the Lenders and their environmental consultants, if any.




          (b) Each Lender shall have received a reliance letter with respect to the Phase I
environmental assessment report referred to in clause (a).




          (c) Each Lender shall have received satisfactory evidence that all environmental matters that
were to be remediated prior to the Funding Date have been so remediated.




          SECTION 5.1.22 Financial Information, etc. (a) The Administrative Agent shall have
received a certificate of a Financial Officer of Wells REIT attaching true and correct copies of
(i) a pro forma balance sheet for Wells Timberland as of the Funding Date, (ii)
pro forma financial statements for Wells Timberland, prepared on a monthly basis,
for the period from the Funding Date through December 31, 2008 and (iii) a projected operating
expense budget for Wells Timberland, prepared on a monthly basis, for the period from the Funding
Date through December 31, 2008.




          (b) The Administrative Agent shall have received satisfactory evidence that the Borrowers have
funded the operating expense account in an amount equal to 30 days of operating expenses as set
forth in the operating expense budget delivered pursuant to clause (a)(iii).




          SECTION 5.1.23 Deposit Account Control Agreements, etc. The Administrative Agent shall
have received a duly executed Deposit Account Control Agreement from each Deposit Account Bank with
respect to the Revenue Account, the Equity Raise Account, the Interest Reserve Account, the Wells
TRS Subsidiary Account and each other bank account maintained by the Borrowers and Wells TRS
Subsidiary. In addition, the Administrative Agent shall have received satisfactory evidence that
Wells Timberland and Wells TRS Subsidiary have directed that all amounts payable to them from their
account debtors and other Persons shall be deposited either (a) (i) in the case of Wells
Timberland, in the Revenue Account, or (ii) in the case of Wells TRS Subsidiary, in the Wells TRS
Subsidiary Account or (b) in lock-box accounts pursuant to arrangements satisfactory to the
Administrative Agent.




          SECTION 5.1.24 Borrowing Request, etc. The Administrative Agent shall have received, as
herein provided, a duly completed and executed Borrowing Request.




          SECTION 5.1.25 Patriot Act. The Lenders shall have received all documentation and other
information required by bank regulatory authorities under applicable



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“know your customer” and
anti-money laundering rules and regulations, including without limitation, the Patriot Act.




          SECTION 5.1.26 Satisfactory Due Diligence. Each Lender Party shall have completed, to its
satisfaction, a due diligence analysis with respect to the business, assets, operations, condition
(financial and otherwise) and prospects of the Borrowers and their Subsidiaries, including with
respect to their ability to comply with the representations and warranties and covenants contained
in the Loan Documents; provided, that with respect to any due diligence with regards to
title work to be conducted with respect to the Real Property the Lenders shall only be entitled to
conduct the same to the extent as Wells Acquisition is permitted to conduct the same pursuant to
the Transaction Agreement.




          SECTION 5.1.27 Initial Compliance Certificate. The Borrower shall have received an initial
Compliance Certificate, duly executed by a Financial Officer of Wells Acquisition and dated as of
the date hereof, showing a calculation of the Senior Loan to Value Ratio.




          SECTION 5.1.28 AgSouth Equity Interests. Wells Timberland shall have purchased Equity
Interests in AgSouth as provided in Section 11.23.




          SECTION 5.1.29 Satisfactory Legal Form. All documents executed or submitted pursuant
hereto by or on behalf of any Loan Party shall be reasonably satisfactory in form and substance to
each Lender Party and its legal counsel. In addition, the Administrative Agent shall have received
all information, approvals, opinions, documents or instruments as its counsel may reasonably
request.




          SECTION 5.1.30 Fees and Expenses; Interest Reserve. The Administrative Agent shall have
received for its own account, and for the account of each Lender, all fees, costs and expenses due
and payable pursuant to the Fee Letter and Section 10.3.




     SECTION 5.2 Perfection of Security Interest. Notwithstanding the terms of Sections
5.1.11 and 5.1.18, if the perfection of the Administrative Agent’s security interest in
certain of the Real Property and other assets forming a part of the Collateral cannot be completed
by the Funding Date without undue burden and expense to the Borrowers after the exercise of
reasonable commercial efforts by the Borrowers to complete the same (collectively, the
“Unperfected Collateral”), then the Lender Parties agree, notwithstanding the existence of
the Unperfected Collateral, to fund the Loans on the Funding Date if (a) the Administrative Agent
is fully perfected in the Unperfected Collateral, in accordance with the
requirements of such Sections, not later than 50 days after the Funding Date and (b) without the
inclusion of the Unperfected Collateral the Senior Loan to Value Ratio is not greater than 65%.



ARTICLE VI

REPRESENTATIONS AND WARRANTIES




     In order to induce the Lenders to enter into this Agreement and make the Loans, the Borrowers
represent and warrant as of the Funding Date, and after giving effect to the making of the Loans
and the consummation of the Transaction, to each Lender as set forth in this Article.



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     SECTION 6.1 Organization, etc. Each Borrower and each other Loan Party (a) (i) is a
corporation or limited liability company validly organized and existing and in good standing under
the Laws of the jurisdiction of its organization and (ii) is duly qualified to do business and is
in good standing as a foreign corporation or limited liability company in each jurisdiction where
the nature of its business requires such qualification; and (b) has full power and authority and
holds all requisite permits, licenses, authorizations, approvals, entitlements, accreditations and
privileges, from Governmental Authorities or otherwise, to (i) enter into and perform its
Obligations under this Agreement and each other Loan Document to which it is a party and (ii) own
and hold under lease its property and to conduct its business in the ordinary course. Neither the
Borrowers nor any other Loan Party are in violation of its Organizational Documents.



     SECTION 6.2 Due Authorization, Non-Contravention, etc. The execution, delivery and
performance by the Borrowers and each other Loan Party of this Agreement, each other Loan Document
and each Transaction Document executed or to be executed by it, are within the Borrowers’ and each
such other Loan Party’s corporate or limited liability company powers, have been duly authorized by
all necessary corporate or limited liability company action, and do not:



          (a) contravene or result in a default under the Borrowers’ or any such other Loan Party’s
Organizational Documents;




          (b) contravene any Law binding on the Borrowers or any such other Loan Party;




          (c) violate, conflict with, result in a breach of, or constitute (along or with notice or
lapse of time or both) a default of event of default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under, any agreement,
document or other instrument to which it is a party;




          (d) violate, conflict with, result in a breach of, or result in the impairment, forfeiture or
non-renewal of, any material permit, license, authorization, approval, entitlement, accreditation
or privilege of any Governmental Authority; or




          (e) result in, or require the creation or imposition of, any Lien on the Borrowers’ or any
such other Loan Party’s properties (other than the Liens in favor of the Subordinated
Administrative Agent pursuant to the Subordinated Debt Documents).




     SECTION 6.3 Required Approvals. Except as duly obtained and in full force and effect prior
to the Funding Date and the filing of U.C.C. financing statements and the Mortgages in the
appropriate filing offices, no authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority or other Person is required for:



          (a) the due execution, delivery or performance by the Borrowers or any other Loan Party of
this Agreement, each other Loan Document or any Transaction Document to which it is a party;



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          (b) the grant by the Borrowers or any other Loan Party of the security interests, pledges and
Liens granted by the Loan Documents; or




          (c) the perfection of or the exercise by the Administrative Agent of its rights and remedies
under this Agreement or any other Loan Document.




     SECTION 6.4 Validity, etc. This Agreement constitutes, and each other Loan Document and
Transaction Document executed by the Borrowers and each other Loan Party will, on the due execution
and delivery thereof, constitute, the legal, valid and binding obligations of the Borrowers and
each other relevant Loan Party enforceable in accordance with their respective terms, subject in
each case to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar Law affecting creditors’ rights generally, and subject to the effect of general principles
of equity (regardless of whether considered in a proceeding in equity or at Law). Each of the Loan
Documents which purports to create a security interest in favor of the Administrative Agent (on
behalf of the Lender Parties) creates a valid first priority security interest in the Senior
Priority Collateral and Senior Exclusive Collateral (subject, in the case of non-possessory
security interests only, to Liens permitted by Section 7.2.3) and a valid second priority
security interest in the Subordinated Priority Collateral, in each case securing the payment of the
Obligations, and all filings and other actions necessary or desirable to perfect and protect such
security interest have been duly taken. Upon the filing of U.C.C. financing statements and the
Mortgages in the proper filing offices, the Liens granted to the Administrative Agent pursuant to
the Security Agreement, the Wells REIT Security Agreement and the Mortgages shall constitute a
valid first priority perfected security interest in the Senior Priority Collateral and Senior
Exclusive Collateral covered thereby and a valid second priority security interest in the
Subordinated Priority Collateral covered thereby, in each case in compliance with all applicable
Laws.



     SECTION
6.5 No Material Liabilities. (a) Prior to the making of the Loans (i)
neither the Borrowers nor any other Loan Party (other than Wells REIT) have engaged in any
activities other than those activities directly related to their organization and the transactions
contemplated by the Transaction Agreement, the Loan Documents and the Subordinated Debt Documents and (ii) Wells
REIT has not engaged in any activities other than those activities referred to in clause
(i) and accruing the Wells Asset Management Fees, Wells Operating Expenses and Wells Other
Operating Expenses (as previously disclosed to the Lenders).



          (b) The Borrowers and each other Loan Party do not have any Indebtedness other than the
Indebtedness permitted by Section 7.2.2.




     SECTION
6.6 No Material Adverse Change, etc. (a) Since the date of organization of
each Borrower and each other Loan Party, there has been no material adverse change in its condition
(financial or otherwise), operations, assets, business, properties or prospects, taken as a whole.



          (b) No Borrower or any other Loan Party has been involved in any bankruptcy or similar
proceeding, and has never entered into an agreement or received the benefit of any settlement or
compromise of Indebtedness.




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     SECTION 6.7 Litigation, Labor Matters, etc. (a) There are (i) no outstanding
judgments against the Borrowers or any other Loan Party and (ii) no pending or, to the knowledge of
the Borrowers and each other Loan Party, threatened, litigation, action, proceeding or labor
controversy affecting any Loan Party or any of its respective properties, businesses, assets or
revenues.



          (b) To the extent any of the Loan Parties have employees, the hours worked by and payments
made to employees of the Borrowers and each other Loan Party has not been in violation of the Fair
Labor Standards Act or any other applicable Law dealing with such matters. Item 6.7(b)
(“Labor Matters”) of the Disclosure Schedule sets forth, as of the Funding Date, all collective
bargaining agreements, management agreements, consulting agreements and employment agreements to
which the Borrowers or any other Loan Party is a party. There are no strikes, slowdowns, labor
disputes, work stoppages or controversies pending, or to the knowledge of the Borrowers threatened,
between the Borrowers or any other Loan Party, on the one hand, and its employees, on the other
hand, other than employee grievances arising in the ordinary course of business.




     SECTION 6.8 Capitalization. As of the Funding Date, the authorized Equity Interests in the
Borrowers, each other Loan Party and all other Persons in which they own any Equity Interests is
set forth in Item 6.8 (“Initial Capitalization”) of the Disclosure Schedule. Except as set
forth in such Disclosure Schedule, as of the Funding Date there are no (a) outstanding rights to
purchase, options, warrants or similar rights pursuant to which the Borrowers, any other Loan Party
or any other Persons in which they own any Equity Interests may be required to issue, sell,
repurchase or redeem any of its Equity Interests or (b) voting rights agreements. The Equity
Interests so specified on the Disclosure Schedule are fully paid and non-assessable and are owned
by the applicable Person, directly or indirectly, free and clear of all Liens (other than Liens in
favor of the Administrative Agent pursuant to the Loan Documents and the Subordinated Agent
pursuant to the Subordinated Loan
Documents). From and after the Funding Date neither the Borrowers nor any other Loan Party will
establish or acquire any additional Equity Interests in any Person except as permitted by
Section 7.2.5.



     SECTION 6.9 Compliance with Laws, etc. The Borrowers and each other Loan Party are in
compliance in all material respects with all Laws applicable to each of them or their properties.



     SECTION 6.10 Properties, Permits, etc. (a) The Borrowers and each other Loan Party
have, and are in material compliance with, all material permits, licenses, authorizations,
approvals, entitlements, accreditations and privileges of Governmental Authorities or otherwise
that are required for such Person to lawfully own, lease, manage or operate the Real Property and
other property being acquired pursuant to the Transaction Agreement. Except as disclosed in
Item 6.10(a) (“Property Matters”) of the Disclosure Schedule, no condition exists or event
has occurred which, in itself or with the giving of notice or lapse of time or both, would result
in the suspension, revocation, impairment, forfeiture or non-renewal of any such permit, license,
authorization, approval, entitlement, accreditation or privilege, and there is no claim that any of
the foregoing is not in full force and effect.



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          (b) Each of the Borrower and its Subsidiaries has (i) good, valid and marketable fee title to
all of the Land and (ii) good, valid, and marketable title to the Leasehold Interests, in each case
free and clear of all Liens, easements, covenants, rights-of-way and other similar restrictions of
any nature whatsoever, except Liens permitted by Section 7.2.3.




          (c) All permits, licenses, authorizations, approvals, entitlements, accreditations and
privileges required to have been issued to the Borrowers or any other Loan Party with respect to
the Real Property in order to enable such property to be lawfully occupied and used for all of the
purposes for which it is currently occupied and used or is installed intended to be occupied and
used have been lawfully issued and are in full force and effect, other than such permits which, if
not obtained, would not have a material adverse effect on the intended use or operation of the Real
Property. Except as disclosed in Item 6.10(c) (“Consents and Approvals”) of the Disclosure
Schedule, all the Real Property complies in all material respects with all applicable Laws. No
consent or approval of any landlord or other third party in connection with any Leasehold Interest
or other leased property is necessary for the Borrowers or any other Loan Party to enter into and
execute the Loan Documents or grant any Liens thereunder.




          (d) Except as disclosed in Item 6.10(d) (“Timber Operations”) of the Disclosure
Schedule, no Person other than the Borrowers, Wells TRS Subsidiary and their agents and
representatives has any right to conduct timbering operations on the Real Property or any right,
title or interest in and to any Timber located thereon, except for Liens permitted by Section
7.2.3.




          (e) Except as disclosed in Item 6.10(e) (“Condemnation Proceedings”) of the Disclosure
Schedule, there is no pending or, to the knowledge of the Borrowers, contemplated condemnation or
eminent domain proceeding affecting any of the Real Property.




          (f) Except as may be disclosed in the title insurance policies delivered pursuant to
Section 5.1.18, there are no unresolved claims or disputes relating to access to any
portion of the Real Property that could reasonably be expected to have a material adverse effect on
the intended use of such Real Property by the Borrowers.




          (g) The representations and warranties contained in the Security Agreement, the Wells REIT
Security Agreement, the Pledge Agreement, each Mortgage and each other Loan Document with respect
to the Collateral are true and correct.




     SECTION
6.11 Taxes, etc. (a) The Borrowers and each other Loan Party have (i)
timely filed all tax returns and reports required by Law to have been filed by it, which tax
returns and reports are correct and complete in all material respects, and (ii) paid all income
Taxes and other Taxes of Governmental Authorities thereby shown to be owing, except any such Taxes
which are being diligently contested in good faith by appropriate proceedings which stay the
enforcement of any Lien resulting from the non-payment thereof and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.



          (b) No Loan Party is a party to any tax sharing agreement.




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          (c) The Borrowers and each other Loan Party have made adequate provision to establish reserves
for liabilities for all Taxes as are or may become payable for the period prior to or after the
Funding Date. Neither the Borrowers nor any other Loan Party has knowledge of any proposed
additional material tax assessment against it or its properties.




     SECTION 6.12 ERISA. Neither the Borrowers, any other Loan Party, any of their Subsidiaries
or any ERISA Affiliate thereof sponsors, maintains or contributes or is required to sponsor,
maintain or contribute to, any Pension Plan or Multiemployer Plan.



     SECTION
6.13 Environmental Warranties. (a) The Real Property has been and is
owned, operated or leased by the Borrower and each other Loan Party in compliance with all
Environmental Laws, except for such violations that, either individually or in the aggregate, could
not reasonably be expected to result in a liability exceeding a Material Environmental Amount.



          (b) There have been no past (to the knowledge of the Borrowers and the other Loan Parties),
and there are no pending or threatened claims, complaints, written notices or requests for
information received by the Borrower or any other Loan Party with respect to any alleged violation
of any Environmental Law that, either individually or in the aggregate, could
reasonably be expected to result in a liability exceeding a Material Environmental Amount, or
alleges criminal misconduct or injunctive relief.




          (c) There have been no Releases of Hazardous Materials at, on or under the Real Property that,
either individually or in the aggregate, has, or could reasonably be expected to result in having,
a liability exceeding a Material Environmental Amount.




          (d) The Borrower and each other Loan Party has been issued, and is in compliance with, all
permits, licenses, authorizations, approvals, entitlements and accreditations relating to
environmental matters that are necessary or desirable for their businesses and required by
Environmental Laws, except where the failure to have or do any of the foregoing, either
individually or in the aggregate, could not reasonably be expected to result in a liability
exceeding a Material Environmental Amount.




          (e) No property now or previously owned, operated or leased by the Borrower or any other Loan
Party is listed or (to the best of their knowledge) proposed for listing on the National Priorities
List pursuant to CERCLA or on any similar state list of sites requiring investigation or clean-up.




          (f) Except as set forth in Item 6.13(f) (“Environmental Matters/Storage Tanks”) of the
Disclosure Schedule, there are no above ground or underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under the Real Property.




          (g) None of the Borrower, any other Loan Party or any other Person (to the best of their
knowledge (after due inquiry)) has transported or arranged for the transportation of any Hazardous
Material to any location which is listed or (to the best of their knowledge) proposed for listing
on the National Priorities List pursuant to CERCLA or on any similar state list or which is the
subject of federal, state or local enforcement actions or other investigations, which may lead to
claims against the Borrowers or any other Loan Party for any remedial work,



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damage to natural
resources or personal injury (including claims under CERCLA) which, either individually or in the
aggregate, could reasonably be expected to result in a liability exceeding a Material Environmental
Amount.




          (h) There are no polychlorinated biphenyls, friable asbestos or other Hazardous Materials
present on the Real Property that, either individually or in the aggregate, could reasonably be
expected to result in a liability exceeding a Material Environmental Amount.




          (i) No conditions exist at, on or under any property now or previously owned, operated or
leased by the Borrower or any other Loan Party which, with the passage of time, or the giving of
notice or both, either individually or in the aggregate, could reasonably be expected to result in
a liability exceeding a Material Environmental Amount.




          (j) There are no areas of the Real Property with respect to which the Borrowers or any other
Loan Party has a legal obligation under the Endangered Species Act of 1973, 16 U.S.C. §§ 1531 et
seq., on the Real Property, and no portion of the Real Property has been designated as a “critical
habitat”, as defined in such Act.




     SECTION
6.14 Accuracy of Information. (a) All information furnished from time to time (whether prior to or after the Funding
Date) by or on behalf of the Borrowers, any other Loan Party or any of their Related Parties in
writing to the Administrative Agent or any Lender in connection with this Agreement, any other Loan
Document or any transaction contemplated hereby or thereby or by the Transaction, is and will be,
as the case may be, true and accurate in every material respect on the date as of which such
information is dated or certified, and such information is not, or shall not be, as the case may
be, incomplete by omitting to state any material fact necessary to make such information not
misleading.



          (b) All information prepared by any consultant or professional advisor on behalf of the
Borrowers, any other Loan Party or any of their Related Parties which was furnished to the
Administrative Agent or any Lender in connection with this Agreement or any other Loan Document has
been reviewed by the Borrowers, and nothing has come to the attention of the Borrowers in the
context of such review which would lead it to believe that such information (or the assumptions on
which such information is based) is not true and correct in all material respects or that such
information omits to state any material fact necessary to make such information not misleading in
any material respect.




          (c) Insofar as any of the information described above includes assumptions, estimates,
projections or opinions, the Borrowers have reviewed such matters and nothing has come to the
attention of the Borrowers which would lead them to believe that such matters were not when made
true and correct in all material respects or that such assumptions, estimates, projections or
opinions omitted to state any material fact necessary to make such assumptions, estimates,
projections or opinions not reasonable or not misleading in any material respect. All projections
and estimates have been prepared in good faith on the basis of reasonable assumptions and represent
the best estimate of future performance by the party supplying the same, it being agreed that
projections are subject to uncertainties and contingencies and that no assurance can be given that
any projection will be realized.





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          (d) (i) The balance sheets and financial statements delivered to the Lenders pursuant to
Section 5.1.22 and Section 7.1.1 have each been or will be, as the case may be,
prepared in accordance with GAAP consistently applied and do or will, as the case may be, present
fairly in all material respects the financial condition of the Persons covered thereby as at the
dates thereof and the results of their operations for the periods then ended; provided that
unaudited interim financial statements are subject to normal year-end adjustments. The pro
forma balance sheet and financial statements delivered pursuant to Section 5.1.22
(A) have been prepared in good faith based on reasonable assumptions, (B) are based on the best
information available to Wells Timberland after due inquiry, (C) accurately reflect all adjustments
necessary to give effect to the Transaction and the Loan Documents and (D) present fairly, in all
material respects, the pro forma financial position of Wells Timberland as of each
relevant date.




               (ii) Except as disclosed in the financial statements referred to above or the notes thereto
and for the items disclosed in the Disclosure Schedule, after giving effect to the Transaction none
of the Loan Parties have, as of the Funding Date, any material contingent liabilities, unusual
long-term commitments or unrealized losses.



     SECTION 6.15 Transaction Agreement, etc. (a) All representations and warranties by the Borrowers and each other Loan Party under
the Transaction Documents and the Subordinated Debt Documents are true and correct as of the
Funding Date; provided, that such representations and warranties that relate solely to an
earlier date shall be true and correct as of such earlier date. The Borrowers agree that, by this
reference, such representations and warranties contained in the Transaction Documents and the
Subordinated Debt Documents are incorporated herein, mutatis, mutandis, for the
benefit of the Lenders.



          (b) No default exists and no events have occurred or conditions exist that, with notice or
lapse of time or both, would constitute a default under the Transaction Agreement by any party
thereto, and the Transaction Agreement is in full force and effect, and the rights, benefits and
indemnities in favor of the Borrowers thereunder are not subject to any defenses, offsets or claims
of any kind.




     SECTION 6.16 Absence of Default and Restrictions. (a) Neither any Borrower nor
any other Loan Party is (i) in default in the payment of (or in the performance of any obligation
applicable to) any Indebtedness or (ii) in violation in any material respect of any (A) applicable
Law, (B) contract, agreement, lease or other instrument to which it is a party or (C) permit,
license, authorization, entitlement, accreditation or privilege of any Governmental Authority
binding upon it or its property or assets. No event has occurred and no condition exists that,
upon consummation of the Transaction and the making of the Loans hereunder, would constitute a
Default or an Event of Default.



          (b) Neither any Borrower nor any other Loan Party (i) is a party to any contract, agreement,
lease or other instrument, or subject to any other restriction, that restricts its ability to incur
Indebtedness (other than this Agreement and the Subordinated Debt Documents) or (ii) has agreed or
consented to exist on any of the Real Property or other Collateral, whether now or in the future,
any Lien other than those Liens permitted by Section 7.2.3.




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     SECTION 6.17 Margin Regulations; Bank Secrecy Act, etc. (a) Neither any Borrower
nor any other Loan Party is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying “margin stock” (as defined
in F.R.S. Board Regulation U). None of the proceeds of any Loan will be used for the purpose of, or
be made available by any Borrower or any other Loan Party in any manner to any other Person to
enable or assist such Person in, directly or indirectly purchasing or carrying “margin stock” (as
so defined) or otherwise in violation of Regulations T, U or X of the F.R.S. Board.



          (b) None of the proceeds of any Loan shall be used, directly or indirectly, in a manner that
would cause the Administrative Agent or any Lender to violate the Foreign Corrupt Practices Act of
1977, the Bank Secrecy Act or any of the sanctions programs administered by the Office of the
Foreign Assets Control of the United States Department of Treasury.




     SECTION 6.18 Investment Company Status. Neither any Borrower nor any other Loan Party is an “investment company” nor a “company controlled
by an investment company” within the meaning of the Investment Company Act of 1940, as amended.



     SECTION 6.19 Material Agreements; Governmental Approvals. (a) The Borrowers, each
other Loan Party and (to the best of their knowledge) each other party to a Material Agreement is
in compliance in all material respects with all the terms contained in each Material Agreement,
each Material Agreement is in full force and effect and all consents to duly assign each relevant
Material Agreement (as required by Section 5.1.17) from the Borrowers and each other Loan
Party to the Administrative Agent have been obtained and are in full force and effect.



          (b) Set forth on Item 6.19(b) (“Material Governmental Approvals”) of the Disclosure
Schedule is a listing, as of the Funding Date, of all material licenses, permits and other
approvals of Governmental Authorities (collectively, the “Material Governmental Approvals”)
that is required to (i) own, operate or lease the Real Property and (ii) operate the business of
the Borrowers and each other Loan Party in the ordinary course (including with respect to
activities related to Timber harvesting, building, zoning, sub-division, wildlife protection,
mining, drilling, extraction or reclamation). Neither the Borrowers nor any other Loan Party have
failed to obtain any Material Governmental Approval and is not in violation of any Material
Governmental Approval. Neither the Borrowers nor any other Loan Party have received written notice
of any violation with respect to the matters the subject of this clause.




     SECTION 6.20 Solvency. The Borrowers and each other Loan Party are, and after giving
effect to the Transaction and the incurrence of all Indebtedness and obligations being incurred in
connection herewith and therewith pursuant to the Loan Documents or otherwise will be and will
continue to be, Solvent.



     SECTION 6.21 Insurance. Item 6.21 (“Insurance”) of the Disclosure Schedule sets
forth a true, complete and correct description of all insurance maintained by the Borrowers and
each other Loan Party as of the Funding Date. As of such date, such insurance is in full force and
effect and all premiums have been duly paid.



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     SECTION 6.22 Affiliate Transactions. Except as described on Item 6.22 (“Affiliate
Transactions”) of the Disclosure Schedule, as of the Funding Date no Affiliate of the Borrowers or
any other Loan Party (or any of their respective family members) is a party to any transaction with
any Loan Party, including any contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such Person or any Person in which any officer, director, or any
such employee or family member has a substantial interest or is an officer, director, partner,
member or trustee.



     SECTION 6.23 Patriot Act, etc. (a) Each Borrower and each other Loan Party is in compliance, in all material respects,
with the (i) Trading with the Enemy Act, as amended, and each of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
and any other enabling legislation or executive order relating thereto, and (ii) Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
Act of 2001 (the “Patriot Act”). No part of the proceeds of the Loans will be used,
directly or indirectly, for any payments to any official or employee of any Governmental Authority,
political party, official of a political party, candidate for political office, or anyone else
acting in an official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as
amended. No Borrower or any other Loan Party is engaged in or has engaged in any course of conduct
that could reasonably be expected to subject any of their respective properties to any Lien,
seizure or other forfeiture under any criminal Law, racketeer influenced and corrupt organizations
Law, civil or criminal, or other similar Laws.



          (b) Neither the Borrowers nor any other Loan Party (i) is a Person whose property or interest
in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or
transactions prohibited by Section 2 of such Executive Order, or is otherwise associated with any
such Person in any manner that violates such Section 2, or (iii) is a Person on the list of
Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions
under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or
executive order.




     SECTION 6.24 Subordinated Debt, etc. Each Borrower and each other relevant Loan Party has
duly executed and delivered all of the Subordinated Debt Documents to which it is a party and each
such document constitutes the legal, valid and binding obligation of each such Person, enforceable
against each such Person in accordance with its terms subject, as to enforcement, only to
bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the enforceability of
creditors’ rights generally, and subject to the effect of general principles of equity (regardless
of whether considered in a proceeding in equity or at Law). The Borrowers have delivered true and
complete copies of the Subordinated Debt Documents to the Administrative Agent and the Lenders,
together with all amendments, waivers and other changes thereto. Notwithstanding any bankruptcy,
insolvency, reorganization, moratorium or similar proceeding in respect of the Borrowers or any
other Loan Party, at all times (i) the provisions contained in the Subordinated Intercreditor
Agreement (collectively, the “Subordination Provisions”) are enforceable against each
Borrower and each other Loan Party by the



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Administrative Agent and the Lenders and (ii) all
Obligations, including the Obligations to pay principal of and interest on the Obligations,
constitute “Senior Obligations” (as defined in the Subordinated Intercreditor Agreement), and all
such Obligations will be entitled to the benefits of the Subordinated Intercreditor Agreement. Each
Borrower acknowledges that the Administrative Agent and the Lenders are entering into this
Agreement, and have made the Loans in reliance upon the Subordination Provisions and the
representations and warranties made pursuant to this Section.



     SECTION 6.25 Separateness; Special Representations and Covenants Relating to Loan
Parties.



          SECTION 6.25.1 Purpose. (a) The only business that Wells REIT conducts or will
conduct will be (i) owning and holding the Equity Interests of Wells Partnership, (ii) entering
into the Loan Documents and the Subordinated Debt Documents, (iii) pledging all of the Collateral
that it owns as collateral for the Loans and the Subordinated Notes, (iv) entering into
Unrestricted Timber Transactions and (v) transacting any and all lawful business under the laws of
the state of its organization that is incident, necessary and appropriate to accomplish the
foregoing and appropriate or necessary to its status as a public company.




          (b) The only business that Wells Partnership conducts or will conduct will be (i) owning and
holding the Equity Interests of Wells Acquisition, (ii) entering into the Loan Documents and the
Subordinated Debt Documents, (iii) pledging all of the Collateral that it owns as collateral for
the Loans and the Subordinated Notes, (iv) entering into Unrestricted Timber Transactions and (v)
transacting any and all lawful business under the laws of the state of its organization that is
incident, necessary and appropriate to accomplish the foregoing.




          (c) The only business that Wells Acquisition conducts or will conduct will be (i) owning and
holding the Equity Interests of Wells Installment Note Issuer, incidental personal property related
thereto and proceeds thereof, (ii) entering into the Loan Documents and the Subordinated Debt
Documents, (iii) pledging all of the Collateral that it owns as collateral for the Loans and the
Subordinated Notes and (iv) transacting any and all lawful business under the laws of the state of
its organization that is incident, necessary and appropriate to accomplish the foregoing.




          (d) The only business that Wells Timberland conducts or will conduct will be (i) acquiring,
owning and holding the Real Property, incidental personal property related thereto and proceeds
thereof, and operating and managing the Real Property including the selling and harvesting of
Timber by itself any by others pursuant to Timber rights granted by Wells Timberland, (ii) entering
into the Loan Documents and the Subordinated Debt Documents, (iii) pledging all of the Collateral
that it owns as collateral for the Loans and the Subordinated Notes and (iv) transacting any and
all lawful business under the laws of the state of its organization that is incident, necessary and
appropriate to accomplish the foregoing.




          (e) The only business that Wells TRS conducts or will conduct will be (i) entering into the
Loan Documents and the Subordinated Debt Documents, (ii) pledging all of the Collateral that it
owns as collateral for the Loans and the Subordinated Notes, (iii) entering into Unrestricted
Timber Transactions and (iv) transacting any and all lawful business under the laws



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of the state of
its organization that is incident, necessary and appropriate to accomplish the foregoing.




          (f) The only business that Wells TRS Subsidiary conducts or will conduct will be (i) entering
into the MW Supply Agreements, (ii) entering into the Loan Documents and the Subordinated Debt
Documents, (iii) pledging all of the Collateral that it owns as collateral for
the Loans and the Subordinated Notes and (iv) transacting any and all lawful business under
the laws of the state of its organization that is incident, necessary and appropriate to accomplish
the foregoing.




          SECTION 6.25.2 Financial Statements. Each Loan Party has and will have its own separate
financial statement, provided, however, that each Loan Party’s assets may be
included in a consolidated financial statement of its parent companies if inclusion on such a
consolidated statement is required to comply with the requirements of GAAP, provided,
further, that (a) such consolidated financial statement shall contain a footnote to the
effect that each Loan Party’s assets are owned by such Loan Party and that the assets are being
included on the financial statement of its parent solely to comply with the requirements of GAAP
and (b) such assets shall be listed on such Loan Party’s own separate balance sheet.




          SECTION 6.25.3 Tax Return. Each of Wells Timberland, Wells Acquisition and Wells
Partnership is and will be treated as a disregarded entity or pass-through entity for Federal
income tax purposes, with all items of income, gain, loss and expense of each such Person being
treated as though earned or incurred by Wells REIT (except for the 1% interest in Wells Partnership
that is not owned by Wells REIT).




          SECTION 6.25.4 Separateness. Each Loan Party has, and at all times will hold itself out to
the public as, a legal entity separate and distinct from any other Person, shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct and operate its business
in its own name and shall not identify itself or any of its Affiliates as a division or part of the
other.




          SECTION 6.25.5 Overhead. Each Loan Party has and will allocate fairly and reasonably any
overhead expenses that are shared with any other Loan Party or any Affiliate thereof, including
paying for office space and services performed by any employee of an affiliate.




          SECTION 6.25.6 Liabilities and Expenses. Each Loan Party has and will pay its own
liabilities and expenses out of its own funds drawn on its own bank account.




          SECTION 6.25.7 Adequate Capital. Each Loan Party has and will maintain adequate capital
for the normal obligations reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations.




          SECTION 6.25.8 Separateness of Assets. Each Loan Party (a) has and will (i) maintain all of its bank accounts separate from any other
Person, (ii) hold all of its assets in its own name and (iii) maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or identify its individual assets
from those of any other entity; and (b) has



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not and will not (i) commingle its funds or other
assets with those of any other Person or (ii) participate in a cash management system with any
other Person.




          SECTION 6.25.9 Guarantees. Other than as provided in the Loan Documents, the Subordinated
Debt Documents and the Unrestricted Timber Transactions, no Loan Party has or will hold itself out
as being responsible for the debts or obligations of any other Person, or hold out its credit as
available to satisfy the obligations of any other Person.




          SECTION 6.25.10 Corporate Formalities. Each Loan Party has and will hold regular meetings,
as appropriate, to conduct its business in the ordinary course, and each Loan Party has done and
will do all things necessary to observe all customary organizational and operational formalities
and record keeping and to preserve its existence. Each Loan Party has and will maintain all of its
books and records separate from those of any other Person and will maintain separate telephone
numbers, stationery, invoices and checks.




          SECTION 6.25.11 Bankruptcy.Neither the Borrowers nor any other Loan Party will file a
bankruptcy or insolvency petition or otherwise institute insolvency proceedings with respect to
itself or to any other entity in which it has a direct or indirect legal or beneficial ownership
interest.




          ARTICLE VII
COVENANTS




     SECTION 7.1 Affirmative Covenants. The Borrowers agree with each Lender Party that, until
all the Obligations have been paid in full in cash and performed in full, the Borrowers will
perform the obligations set forth in this Section.



          SECTION 7.1.1 Financial Information, Reports, Notices, etc. Each Borrower will furnish, or
will cause to be furnished, to the Administrative Agent copies of the following financial
statements, reports, notices and information (all of which shall be in form and scope reasonably
satisfactory to the Administrative Agent):




          (a) (i) as soon as available and in any event within 45 days after the end of each Fiscal
Quarter, consolidated and consolidating balance sheets of Wells REIT and its Subsidiaries as of the
end of such Fiscal Quarter and consolidated and consolidating statements of earnings and cash flow
of Wells REIT and its Subsidiaries for such Fiscal Quarter and (when available) for the period
commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter
(when available), together with comparable information adjusted to
reflect any changes at the close of and for the corresponding Fiscal Quarter for the prior
Fiscal Year and for the corresponding portion of the previous Fiscal Year, certified as complete
and correct by a Financial Officer of Wells REIT as fairly presenting the financial position of
Wells REIT and its consolidated Subsidiaries as of the date thereof and for the period then ended;
and (ii) as soon as available and in any event within 45 days after the end of each Fiscal Quarter,
consolidated and consolidating balance sheets of Wells Timberland as of the end of such Fiscal
Quarter and consolidated and consolidating statements of earnings and cash flow of Wells Timberland
for such Fiscal Quarter and (when available) for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal Quarter (when available),



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together with
comparable information adjusted to reflect any changes at the close of and for the corresponding
Fiscal Quarter for the prior Fiscal Year and for the corresponding portion of the previous Fiscal
Year, certified as complete and correct by a Financial Officer of Wells Timberland as fairly
presenting the financial position of Wells Timberland as of the date thereof and for the period
then ended;




          (b) (i) as soon as available and in any event within 90 days after the end of each Fiscal
Year, a copy of the annual audit report for such Fiscal Year for Wells REIT and its Subsidiaries,
including therein consolidated and consolidating balance sheets of Wells REIT and its Subsidiaries
as of the end of such Fiscal Year and consolidated and consolidating statements of earnings and
consolidated statements of cash flow of Wells REIT and its Subsidiaries for such Fiscal Year, in
each case certified without any “going concern” or other material qualification in a manner
reasonably acceptable to the Administrative Agent by Deloitte & Touche LLP or other independent
public accountants acceptable to the Administrative Agent, together (A) with the annual letters to
such accountants in connection with their audit examination detailing contingent liabilities and
material litigation matters and (B) comparable information adjusted to reflect any changes at the
close of the prior Fiscal Year (when available); and (ii) as soon as available and in any event
within 90 days after the end of each Fiscal Year, a copy of the annual audit report for such Fiscal
Year for Wells Timberland, including therein consolidated and consolidating balance sheets of Wells
Timberland as of the end of such Fiscal Year and consolidated and consolidating statements of
earnings and consolidated statements of cash flow of Wells Timberland for such Fiscal Year, in each
case certified without any “going concern” or other material qualification in a manner reasonably
acceptable to the Administrative Agent by Deloitte & Touche LLP or other independent public
accountants acceptable to the Administrative Agent, together (A) with the annual letters to such
accountants in connection with their audit examination detailing contingent liabilities and
material litigation matters and (B) comparable information adjusted to reflect any changes at the
close of the prior Fiscal Year (when available);




          (c) concurrently with the delivery of the financial statements pursuant to clauses (a)
and (b), a certificate from a Financial Officer of Wells REIT that, to the best of his
knowledge, each Loan Party during the period covered by such financial statements has observed or
performed all of its covenants and other agreements contained in this Agreement and the other Loan
Documents required to be observed, performed or satisfied by it, and that such Financial Officer
has obtained no knowledge of any Default or Event of Default except as specified in such
certificate;




          (d) concurrently with the delivery of the financial statements pursuant to clause (b):




               (i) the final management letter, if any, prepared by the independent public accountants who
prepared such financial statements with respect to internal audit and financial controls of the
Borrowers and their Subsidiaries; and



               (ii) a certificate of a Financial Officer of Wells Acquisition (A) setting forth the
information required pursuant to the disclosure schedules of the Security Agreement, the Wells REIT
Security Agreement and Pledge Agreement or confirming that there has been no change in such
information since the Funding Date or the date of the most recent certificate



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delivered pursuant to
this clause and (B) certifying that all U.C.C. financing statements (including fixture filings, as
applicable), mortgages or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the Collateral have been
filed of record in each Governmental Authority and other appropriate office in each jurisdiction
that is necessary to protect and perfect the security interests under the Loan Documents;




          (e) as soon as available and in no event later than the date the financial statements are
delivered (or are required to be delivered) pursuant to clause (a), a Compliance
Certificate, executed by a Financial Officer of Wells Acquisition, showing (in reasonable detail
and with appropriate calculations and computations in all respects satisfactory to the
Administrative Agent) the calculation of the Senior Loan to Value Ratio and Debt Service Coverage
Ratio;




          (f) as soon as possible and in any event within three Business Days after (i) the occurrence
of any material adverse development with respect to any litigation, action, proceeding or labor
controversy described in Section 6.7, (ii) the commencement of any litigation, action,
proceeding or labor controversy of the type described in Section 6.7, (iii) the
commencement of any legal proceeding seeking injunctive relief or which may materially impair the
ability of the Borrowers or any Loan Party to perform their Obligations or (iv) any change in the
certified public accountants of the Borrowers, notice thereof by an Authorized Officer of any
Borrower and copies of all documentation relating thereto;




          (g) as soon as possible and in any event within three Business Days after the occurrence of
each Default, Event of Default or event that could reasonably be expected to result in a Material
Adverse Effect, a statement of an Authorized Officer of a Borrower setting forth reasonably
detailed information regarding such Default, Event of Default or event, and the action which the
Borrowers have taken and proposes to take with respect thereto;




          (h) concurrently with the sending or filing thereof, copies of all (i) reports and documents
which the Borrowers or any other Loan Party sends to any of its holders of Equity Interests, (ii)
press releases and other statements made available by the Borrowers or any other Loan Party to the
public concerning material changes or developments in it business and (iii) reports, financial
statements and registration statements which the Borrowers or any other Loan Party files with the
Securities and Exchange Commission or any securities exchange, except that the Borrowers shall not
be required to deliver any of the foregoing which has previously been delivered hereunder;




          (i) promptly after becoming aware of any events which would give rise to a mandatory
prepayment under clause (b) of Section 3.1.2, a statement of the Financial Officer
of Wells Acquisition setting forth reasonably detailed information regarding the same;




          (j) all such notices and documents required to be delivered pursuant to the other Loan
Documents;




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          (k) promptly after the receipt thereof by the Borrowers or any other Loan Party, copies of any
notice of non-payment or underpayment of Taxes or other charges by the Borrowers or any other Loan
Party that is received from any relevant Governmental Authority;




          (l) concurrently with the receipt or delivery thereof, all notices or documents received or
delivered by any Loan Party pursuant to the Subordinated Debt Documents (including the Equity Raise
Monthly Account Statement (as defined therein) but excluding notices or documents that have been
delivered pursuant to the Loan Documents);




          (m) promptly after any Borrower or any other Loan Party obtains knowledge that any statement
contained in any representation or warranty in any Loan Document was not when made true and
correct, a statement of an Authorized Officer of either Borrower setting forth reasonably detailed
information regarding the same;




          (n) concurrently with the receipt or delivery thereof by any Borrower or any other Loan Party,
all material notices, including notices of default or termination, received or delivered by any
such Borrower or other Loan Party pursuant to any Material Agreement;




          (o) promptly after the assertion or occurrence thereof, notice of any proceeding, demand,
investigation or claim of any Governmental Authority regarding the noncompliance by the Borrowers
or any other Loan Party with any Environmental Law that could (i) reasonably be expected to result
in a liability exceeding a Material Environmental Amount or (ii) cause any Real Property to be
subject to any restrictions on ownership, transferability or occupancy;




          (p) as soon as available and in no event later than 10 Business Days prior to the consummation
of any Unrestricted Timber Transaction (or such shorter period of time as may be acceptable to the
Administrative Agent), Wells REIT shall (i) certify to the Lenders that all the terms and
conditions contained in the definition of “Unrestricted Timber Transaction” have been satisfied
with respect thereto, (ii) deliver to the Lenders substantially final copies of the operative
documents evidencing such Unrestricted Timber Transaction and (iii) provide such other evidence, as
may be reasonably requested by the Administrative Agent or any Lender, in connection therewith;




          (q) as soon as available and in no event later than 10 Business Days prior to the beginning of
each calendar year, an update of the pro forma financial statements and operating
expense budget delivered pursuant to Section 5.1.22 for the next following 18-month period;
and




          (r) such other information respecting the condition or operations, financial or otherwise, of
any Loan Party as any Lender through the Administrative Agent may from time to time reasonably
request.




          SECTION 7.1.2 Compliance with Laws; Payment of Obligations.(a) Each Borrower
will, and will cause each other Loan Party to, comply in all material respects with all material
permits, licenses, authorizations, approvals, entitlements, accreditations and privileges of each
Governmental Authority and all applicable Laws.




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          (b) Each Borrower will, and will cause each other Loan Party to, pay before the same become
delinquent, all (i) its Indebtedness and other obligations, including all income and other Taxes,
assessments and charges imposed by Governmental Authorities upon it or upon its property, and (ii)
lawful claims for labor, materials and supplies or otherwise, except for the non-payment of such
other obligations, Taxes and claims that (A) are being diligently contested in good faith by
appropriate proceedings which (i) suspend collection of the contested other obligation or Tax or
charge and any Lien arising therefrom and (ii) for which adequate reserves in accordance with GAAP
shall have been set aside on its books and (B) could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. If such contest is terminated,
adversely resolved or the conditions set forth in this Section are no longer met, the Borrowers and
each other Loan Party shall promptly pay or discharge the contested other obligations, Taxes and
claims.




          SECTION 7.1.3 Maintenance of Properties and Franchises. (a) Each Borrower will,
and will cause each other Loan Party to, in the exercise of its reasonable business judgment,
maintain, preserve, protect and keep its properties in good repair, working order and condition
(reasonable wear and tear excepted), and make necessary and proper repairs, renewals and
replacements so that its business carried on in connection therewith may be properly conducted at
all times.




          (b) Each Borrower will, and will cause each other Loan Party to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect (i) its legal existence and
qualification as a foreign corporation, limited liability company or partnership in each
jurisdiction where it has assets or conducts business and (ii) the permits, licenses,
authorizations, approvals, entitlements, accreditations, privileges and franchises of all
Governmental Authorities or otherwise necessary for the proper conduct of its business (including
the ownership and the leasing of the Real Property).




          SECTION 7.1.4 Insurance. (a) Each Borrower and Wells TRS Subsidiary will, and will
cause each other Loan Party to (to the extent relating to the Collateral), maintain, insurance
policies and coverage with respect to its property and assets at least as expansive as set forth on
Item 6.21 (“Insurance”) of the Disclosure Schedule and, in any event, to such extent and
covering such risks as is customary for companies in sound financial condition in the same or
similar businesses and operations and in the same or similar locations. In addition, each Borrower
and Wells TRS Subsidiary will maintain, and will cause each other Loan Party to maintain (to the
extent relating to the Collateral), such other additional insurance coverage in such amounts
and with respect to such risks as the Administrative Agent or the Required Lenders may reasonably
request from time to time. All such insurance will be provided (i) by insurers authorized by Lloyds
of London to underwrite such risks, (ii) by insurers having an A.M. Best policyholders rating of
not less than “A” or (iii) by such other insurers as the Administrative Agent may approve.




          (b) All premiums on insurance policies required under this Section will be paid by the
Borrowers. All insurance policies relating to any loss or damage sustained in respect of any item
constituting a part of the Collateral will contain a loss payable endorsement, in form and
substance reasonably satisfactory to the Administrative Agent, in favor of the Administrative
Agent. All insurance policies relating to general liability, umbrella and excess insurance



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coverages will contain an additional insured endorsement, in form and substance satisfactory to the
Administrative Agent, in favor of the Administrative Agent. All such insurance policies will
provide that:




               (i) neither the Borrowers, any other Loan Party, nor any Lender will be a coinsurer
thereunder; and



               (ii) such insurance will not be affected by any unintentional act or negligence or
representation or warranty on the part of the Borrowers, any other Loan Party or other owner of the
policy or the property described in such policy.


All such insurance policies will provide that the insurer will, simultaneously with the delivery to
either Borrower or any other Loan Party of any notice of a material event under such policy,
deliver to the Administrative Agent a copy of such notice. All such insurance policies and loss
payable clauses will provide that they may not be canceled, amended or terminated unless the
Administrative Agent is given at least the same number of days’ notice that the insurance company
which issued such policies is required to give the Borrowers or any other Loan Party, but in no
event less than 30 days’ prior written notice.




          (c) The Borrowers will provide to the Administrative Agent and to its insurance consultant (or
any agent, officer or employee of the Administrative Agent) such other information relating to its
insurance coverage as may be reasonably requested by the Administrative Agent. The insurance
consultant (through its officers or employees) shall have the right to visit the Borrowers’ and the
other Loan Parties’ offices, upon reasonable prior notice during usual business hours, to inspect
the insurance policies provided for herein. The reasonable fees, costs and expenses of the
insurance consultant shall be paid for by the Borrowers.




          (d) If any Borrower or other Loan Party fails to maintain any of the policies of insurance
required by this Section the Administrative Agent may (but shall not be required), at the sole cost
and expense of the Borrowers, obtain and maintain such policies of insurance, pay the related
premiums and take such other action as it deems reasonably advisable. All costs related to the
foregoing shall be charged to the Borrowers’ loan account. Notwithstanding the foregoing, the
Administrative Agent shall have no liability with respect to the cost, scope, amount or other terms
with respect to the insurance purchased by it pursuant to this provision.




          (e) Upon the occurrence and during the continuance of an Event of Default, the Administrative
Agent shall have the sole right, in the name of the Lenders and each other Loan Party, to file
claims under any insurance policies with respect to which the Administrative Agent is the loss
payee, to receive receipt and give acquittance for any payments that may be payable thereunder, and
to execute any and all endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or settlement of any claims
under any such insurance policies.




          (f) The Borrowers will furnish to the Administrative Agent at least annually and at such other
times as the Administrative Agent shall request, a certificate of insurance and other evidence as
to the insurance required to be maintained pursuant to this Section.




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          SECTION 7.1.5 Books and Records; Inspections; Annual Meeting. (a) (a) Each Borrower
will, and will cause each other Loan Party to, keep books and records which accurately reflect in
all material respects all of its business affairs and transactions. The Borrowers will maintain,
and will cause each other Loan Party to maintain, at all times books and records pertaining to the
Collateral in such detail, form, and scope as the Administrative Agent shall reasonably require.




          (b) Each Borrower and Wells TRS Subsidiary will, and will cause each other Loan Party to (to
the extent relating to the transactions contemplated by the Loan Documents), permit the
Administrative Agent and each Lender or any of their respective representatives (including outside
auditors), at reasonable times and intervals and with reasonable prior notice unless a Default or
Event of Default has occurred and is continuing, to visit all of its offices, to discuss its
financial matters with its officers and independent public accountant (and the Borrowers hereby
authorize such independent public accountant to discuss the Borrowers’ financial matters with each
Lender or its representatives whether or not any representative of the Borrowers are present) and
to examine (and, at the expense of the Borrowers, copy extracts from) and conduct audits of any of
its account receivables, other assets and books or other corporate records (including computer
records).




          (c) At least once each Fiscal Year at a time reasonably requested by the Administrative Agent
and, if any Default or Event of Default has occurred and is continuing, more frequently as may be
requested by the Administrative Agent or the Required Lenders, the Borrowers shall host a meeting
of the Lenders to discuss their financial condition and results of operations (including its
financial reports and related material delivered with respect to such Fiscal Year). Such meeting
shall be held at a mutually convenient location as agreed to by the Administrative Agent and the
Lenders.




          (d) The Borrowers will pay all the reasonable fees and expenses of the Administrative Agent
and each Lender in the exercise of their rights pursuant to this Section, including the reasonable
fees and expenses of independent public accountants and other professionals retained by the
Administrative Agent and the Lenders; provided that, notwithstanding the foregoing, (i) if
no Default or Event of Default has occurred and is continuing, the Borrower shall not be required
to reimburse the Administrative Agent for such fees and expenses in connection with more than one
audit and one visit per calendar year, (ii) the
Borrowers shall promptly provide to the Administrative Agent after the completion thereof
certified copies of all separate audits conducted by the Subordinated Administrative Agent and
(iii) unless a Default or an Event of Default has occurred and is continuing, the Borrower shall
not be required to reimburse the Lenders for any such fees and expenses.




          SECTION 7.1.6 Environmental Covenants.(a) (a) Each Borrower will, and will cause each
other Loan Party, lessees and other Persons occupying any of the Real Property or their other
properties to:




               (i) use and operate all of its facilities and properties in compliance with all Environmental
Laws, keep all permits, approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in compliance therewith, and handle all Hazardous
Materials in compliance with all applicable Environmental Laws,



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except where the failure to do any
of the foregoing, either individually or in the aggregate, could not reasonably be expected to
result in a liability exceeding a Material Environmental Amount;




               (ii) take all such actions as are necessary and appropriate so that no liability with respect
to the Environmental Laws may arise which, either individually or in the aggregate, could
reasonably be expected to result in a liability exceeding a Material Environmental Amount;



               (iii) promptly notify the Administrative Agent and provide copies upon receipt of all material
written claims, complaints, notices or inquiries relating to the condition of the Real Property or
compliance with Environmental Laws, and shall cure and have dismissed with prejudice to the
reasonable satisfaction of the Administrative Agent any actions and proceedings relating to
compliance with or liability pursuant to Environmental Laws which, either individually or in the
aggregate, could reasonably be expected to result in a liability exceeding a Material Environmental
Amount; and



               (iv) provide such information and certifications which the Administrative Agent may reasonably
request from time to time to evidence compliance with this Section.



          (b) Prior to acquiring any ownership or leasehold interest in any real property after the
Funding Date that could give rise to the Borrowers or Wells TRS Subsidiary being found subject to
potential liability under any Environmental Law, the Borrowers will (i) obtain a written report by
a reputable independent environmental consultant reasonably acceptable to the Administrative Agent
(an “Environmental Consultant”) as to its assessment of the presence or potential presence
of significant levels of any Hazardous Material on, in, under or about such property, or of other
conditions that could give rise to a potentially significant liability to the Borrowers or Wells
TRS Subsidiary under violations of any Environmental Law relating to such transaction, and notify
the Administrative Agent of such potential transaction, and (ii) afford the Administrative Agent a
reasonable opportunity to review, to discuss such report with the Environmental Consultant who
prepared it and a knowledgeable representative of the Borrowers. The Administrative Agent shall
have the right, but shall not have any duty, to obtain, review, or discuss any such report.




          (c) If any Default or Event of Default has occurred and is continuing or if the Administrative
Agent or any Lender has formed a reasonable belief that material violations of Environmental Laws
may exist or Hazardous Materials may be present on the Real Property in amounts or under
circumstances which could reasonably be expected to result in a liability exceeding a Material
Environmental Amount, then, at the Administrative Agent’s request, the Borrowers shall perform, or
use commercially reasonable efforts to cause to be performed by any other responsible party, tests,
including subsurface testing, soil and groundwater testing, and other tests which may physically
invade the Real Property pursuant to a scope of work proposed by the Borrowers and approved by the
Administrative Agent (the “Environmental Tests”), as the Administrative Agent, in its
reasonable discretion, determines is necessary to (i) investigate the condition of the Real
Property, (ii) protect the security interest created under the Mortgages and the other Loan
Documents and (iii) determine compliance in all material respects with all Environmental Laws, the
provisions of the Loan Documents and other matters relating thereto.



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The Borrowers shall provide
true and accurate copies of the results of the Environmental Tests to the Administrative Agent and
the Lenders upon receipt of the results. In the event that (i) the Borrowers fail to promptly
initiate the Environmental Tests requested by the Administrative Agent, (ii) the Borrowers fail to
provide to the Administrative Agent and the Lenders with the results of such Environmental Tests
within 60 days of the request therefor or such additional time as the Administrative Agent shall
agree in its sole discretion or (iii) the Administrative Agent or the Required Lenders are not
reasonably satisfied with the results of such Environmental Tests, then the Administrative Agent
may undertake to perform or cause to be performed, at the Borrower’s expense, such Environmental
Tests for the account of the Borrowers.




          (d) The Borrowers and Wells TRS Subsidiary shall, in accordance with prudent industry
practice, from time to time perform any remediation, reclamation or similar action required under
any applicable Environmental Law, any such actions with respect to the Real Property to include,
but not be limited to, the investigation of the condition of the Real Property, the preparation of
any feasibility studies, reports or remedial plans, and the performance of any cleanup,
remediation, containment, operation, maintenance, monitoring or restoration work, whether on or off
of the Real Property. Each plan of remediation shall be subject to the prior review of the
Administrative Agent. All such work shall be performed by one or more Environmental Consultants.
The Borrowers shall proceed continuously and diligently with such investigatory and remedial
actions, provided that in all cases such actions shall (i) be in accordance with the
remediation plan approved by an appropriate Governmental Authority and all applicable Environmental
Laws and (ii) be performed in a good, safe and workmanlike manner so as to minimize, to the extent
practicable, any impact on the business conducted at or the value of the Real Property. The
Borrowers shall pay all costs actually incurred in connection with such investigatory and remedial
activities, including all power and utility costs, and any and all Taxes or fees that may be
applicable to such activities. The Borrowers shall promptly provide to the Administrative Agent
and the Lenders copies of testing reports and results generated in connection with such activities.
Promptly upon completion of such investigation and remediation, the Borrowers shall permanently
close all monitoring wells and test holes in compliance with applicable Laws, remove all associated
equipment and restore the Real Property to the maximum extent practicable, which shall include,
without limitation, the repair of any surface damage. Within 30 days of demand therefor, the
Borrowers shall provide the Administrative Agent with a bond, letter of credit or similar financial
assurance reasonably
satisfactory to the Administrative Agent evidencing that the necessary funds are available to
perform the obligations established by this clause, unless a bond or similar financial assurance at
least in the amount required by the Administrative Agent is in full force and effect and is
available and is in fact used by the relevant Governmental Authority to pay such obligations.




          (e) The Administrative Agent, whether or not the Administrative Agent has acquired possession
or title to the Real Property, shall have the right to undertake any and all actions to remediate
the Real Property which the Borrowers shall fail to perform or cause to be performed in accordance
with the requirements of this clause.




          SECTION 7.1.7 As to Intellectual Property Collateral. (a) Each Borrower will, and
will cause Wells TRS Subsidiary to, take all actions necessary to ensure that no Intellectual
Property Collateral lapses, becomes abandoned, dedicated to the public, invalid,



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unenforceable or
subject to any adverse determination or development (including the institution of, or any adverse
determination or development in, any proceeding in the United States Patent and Trademark Office,
the United States Copyright Office or any foreign counterpart thereof or any court), unless the
Borrowers shall either (i) reasonably and in good faith determine (and notice of such determination
shall have been delivered to the Administrative Agent) that any of such Intellectual Property
Collateral is of negligible economic value to the Borrowers or Wells TRS Subsidiary or (ii) have a
valid business purpose (exercised in the ordinary course of business that is consistent with past
practice).




          (b) In no event shall any Borrower, Wells TRS Subsidiary or any of their agents, employees,
designees or licensees file an application for the registration of any Intellectual Property
Collateral with the United States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political subdivision thereof, unless
it promptly informs the Administrative Agent, and upon request of the Administrative Agent,
executes and delivers any and all agreements, instruments, documents and papers as the
Administrative Agent may reasonably request to evidence the Administrative Agent’s first priority
security interest in such Intellectual Property Collateral and the goodwill and general intangibles
of the Borrowers and each of their Loan Parties relating thereto or represented thereby.




          (c) Each Borrower and Wells TRS Subsidiary will take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political subdivision thereof, to
maintain and pursue any application (and to obtain the relevant registration) filed with respect
to, and to maintain any registration of, the Intellectual Property Collateral, including the filing
of applications for renewal, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and taxes (except to the extent
that dedication, abandonment or invalidation is permitted under clause (a)).




          SECTION 7.1.8 Payment of Taxes and Claims; Deposits for Taxes and Insurance
Premiums. (a) Each Borrower will, and will cause each other Loan Party to, comply in all
material respects with all material permits, licenses, authorizations, approvals, entitlements,
accreditations and privileges of each Governmental Authority and all applicable Laws that are, in
each case, binding on any of them, the Real Property or their other property or assets.




          (b) Each Borrower will, and will cause each other Loan Party to, pay before the same become
delinquent, all (i) its Indebtedness and other obligations and (ii) lawful claims for labor,
materials and supplies or otherwise, except for the non-payment of such claims that (A) are being
diligently contested in good faith by appropriate proceedings which (i) suspend collection of the
contested Indebtedness or claim and any Lien arising therefrom and (ii) for which adequate reserves
in accordance with GAAP shall have been set aside on its books and (B) could not reasonably be
expected to result in, either individually or in the aggregate, a material liability to any of
them. If such contest is terminated, adversely resolved or the conditions set forth in this
Section are no longer met, the Borrowers and each other Loan Party shall promptly pay or discharge
the contested Indebtedness and claims.




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          (c) Each Borrower will, and will cause each other Loan Party to, file all Federal and other
material tax returns required to be filed in any jurisdiction and pay all Taxes imposed or levied
upon the Collateral or on the interests created by any Mortgage or with respect to the filing of
any Mortgage, or on the Lien and other interests created by any Mortgage, to the extent such Taxes
have become due and payable and before they have become delinquent, and upon request of the
Administrative Agent the Borrowers will, and will cause each other Loan Party to, deliver receipts
therefor or other evidence of payment satisfactory to the Administrative Agent. The Borrowers and
the other Loan Parties may, at the their own expense, in good faith and by appropriate proceedings
diligently contest any such Taxes and, in the event of any such contest, may permit the Taxes so
contested to remain unpaid during the period of such contest and any appeal therefrom,
provided that during such period the Borrowers shall be in compliance with this Agreement
and that adequate reserves for such Taxes shall have been set aside on their books in accordance
with GAAP.




          (d) Each Borrower shall deliver to Lender not less than once per year, and more often at the
request of the Administrative Agent, a certification by the Borrowers that all Taxes which are due
and payable for such year have been paid in full.




          (e) In the event of the passage, after the Funding Date, of any Law that deducts from the
value of the Collateral any Tax or changes the taxation of mortgages, deeds of trust and/or
security agreements, or the manner of the collection of any such Taxes, in each case which has the
effect of imposing any additional payment or expense against any of the Collateral or upon the
Administrative Agent or any Lender, the Borrowers shall pay such Tax or promptly reimburse the
Administrative Agent or such Lender for its or their payment.




          SECTION 7.1.9 Further Assurances; Additional Collateral. (a) Each Borrower will,
and will cause each other Loan Party to, execute any and all further documents, financing
statements, agreements and instruments, and take all such further actions (including the filing and
recording of financing statements, fixture filings, mortgages, deeds to secure debt and other
documents), which may be required under any applicable Law, or which the Administrative Agent or
the Required Lenders may reasonably request, to comply with the terms of this Agreement and the
other Loan Documents, including causing the Senior Priority Collateral and the Senior Exclusive
Collateral to be subject to a first priority security interest in favor of the Administrative Agent
(subject, in the case of non-possessory security interests, to the Liens permitted by Section
7.2.3) and causing the Subordinated Priority Collateral to be subject to a second priority
security interest in favor of the Administrative Agent, in each case securing all the Obligations,
all at the expense of the Borrowers. The Borrowers also agree to provide to the Administrative
Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent
as to the perfection and priority of the Liens created or intended to be created by the Loan
Documents.




          (b) If any property or asset is acquired or leased by any Borrower or Wells TRS Subsidiary
after the Funding Date, the Borrowers will notify the Administrative Agent promptly thereof (except
such notice shall not be required if the Administrative Agent has a valid first priority perfected
security interest in such property or asset comprising the Senior Priority Collateral or the Senior
Exclusive Collateral and a valid second priority security interest in such property or asset
comprising the Subordinated Priority Collateral, in each case by virtue of any



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actions previously
taken by or on behalf of the Administrative Agent), and will cause such property or asset to be
subjected to a first priority security interest in favor of the Administrative Agent (subject, in
the case of non-possessory security interests, to the Liens permitted by Section 7.2.3), in
the case of such property or asset comprising the Senior Priority Collateral or the Senior
Exclusive Collateral, and a valid second priority security interest in such property or asset
comprising the Subordinated Priority Collateral, and will take, and cause Wells TRS Subsidiary to
take, such actions as shall be necessary or reasonably requested by the Administrative Agent to
grant and perfect such Liens (including the actions described in Section 7.1.9 and
clause (a) and obtaining Landlord Estoppel Certificates with respect to assets located on
leased Real Property).




          SECTION 7.1.10 Exercise of Rights under Transaction Documents. Each Borrower will, and
will cause each other Loan Party to, enforce in their reasonable business judgment all of their
material rights under each Transaction Document, including, without limitation, all material
indemnification rights thereunder, and pursue all material remedies that are available to the Loan
Parties with diligence and in good faith in connection with the enforcement of any such rights.




          SECTION 7.1.11 Timber Affirmative Covenants.




          (a) Management. The Timberland shall be operated in accordance with (i) industry
standards for their highest and best use as timberlands, having due regard to soil
conditions, stand arrangements and other factors relevant to the conduct of sound
silvicultural and harvesting practices and (ii) Best Management Practices.




          (b) The Wells Timberland Operating Agreement shall remain in full force and effect and there
shall be no default, breach or violation existing thereunder by any party thereto and no event
shall occur (other than payments due but not yet delinquent) that would entitle either party
thereto to terminate such Agreement. The Wells Timberland Operating Agreement shall not be
modified in any respect except as provided in clause (b) of Section 7.2.10, and the
Loan Parties shall not enter into any agreement relating to the management or operation of the
Timberland with any Person (other than Wells Manager), without the express consent of the
Administrative Agent. If at any time the Administrative Agent consents to the appointment of a new
manager, such new manager and the Loan Parties shall, as a condition of the Administrative Agent’s
consent, execute an agreement in substantially the form of the Timber Manager Subordination
Agreement.




          (c) Annual Operating Plan. On or before each anniversary of the Funding Date (or such
later date as the Administrative Agent may approve in its sole discretion), Wells Timberland will
submit to the Lenders an annual plan of operations for forest management, silviculture, planting,
thinning and Timber harvesting (the “Harvest Plan”) for the Timberland (which shall be
prepared on a per Division basis), for the following year, which shall be prepared or reviewed by
the Timber Manager, the Administrative Agent and the Administrative Agent’s consultant (if any).
The Harvest Plan shall identify by a GIS based system of identification that corresponds to the
legal descriptions of the Timberland attached to the Mortgage, the land area of each Division to be
harvested, so that the Administrative Agent can verify that the Timberland is being harvested in an
orderly and efficient manner. Also, each Harvest Plan shall be



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accompanied by a certification by a
Financial Officer of Wells Timberland that Wells Timberland can meet the performance requirements
of the MW Supply Agreements on a current and prospective basis during the period covered by such
Harvest Plan. Wells Timberland shall promptly notify the Administrative Agent of any material
changes in the Harvest Plan, which changes shall be subject to approval by the Administrative
Agent.




          (d) Timber Harvesting and Forest Management Operations. If no Default or Event of
Default has occurred and is continuing, Wells Timberland may cut and remove Timber from the
Timberland subject to satisfaction of the following conditions:




               (i) All cutting, logging and removal of Timber shall be in accordance with Best Management
Practices.



               (ii) All cutting operations of Timber shall be conducted in such a manner as to realize in
accordance with industry standards the greatest return from the Timber, to effect suitable
utilization of the Timberland, to assure the early and complete regeneration of stands of desirable
Timber and to maximize development of Timber, both as to growth and quality. All standing Timber
shall be cut as close to the ground as practicable in order to leave the lowest stump, with
jump-butting to be used when necessary. All desirable Timber that is not at the time being
harvested, including young trees, shall be protected against unnecessary injury from felling,
skidding and hauling. All measures reasonably practicable shall be used in cutting operations to
prevent soil erosion including the proper location of skidways and roads.



               (iii) Any intermediate harvesting of Timber shall be carried out in accordance with industry
standards to produce the maximum growth on the maximum number of stems, consistent with the
production in accordance with industry standards in order to maximize the greatest quantity and
quality of merchantable Timber, and all harvesting shall be carried on in a manner calculated to
realize in accordance with industry standards the maximum investment value in the Timberland.



               (iv) Wells Timberland shall keep and maintain at its offices adequate and accurate books and
records of all Timber cut and removed from the Timberland and the payments received therefrom.
Wells Timberland shall furnish a record of cuttings and payments to the Administrative Agent in a
form and at such times as the Administrative Agent may specify from time to time, but not less
frequently than 45 days after each calendar quarter (with a comprehensive year-end summary with the
fourth calendar quarter report). All such reports shall include (A) independent information for
each Division; (B) the total net volume of logs scaled by species for each product type; (C) the
number of acres of the Timberland and in each Division on which cutting in the form of clear
cutting, seed tree, shelterwood, cover story removal and commercial thinning was conducted (with
the number of acres for each such form of cutting being separately stated and the location of the
acreage for each such form of cutting being identified according to the descriptions of Divisions
used in the Harvest Plan); (D) the number of acres of the Timberland in which Timber was lost or
destroyed (with the number of acres lost or destroyed by each cause being separately stated and the
location of the acreage lost or destroyed by each cause being identified); (E) a description of all
improvements made on the Timberland (including, but not limited to, all buildings and capitalized
forest roads and all pre-commercial thinning) and the acres affected by each such improvement (with
the location of such



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improvements and acres being identified according to said descriptions); (F) a
description of silviculture operations, site preparation and replanting (with the number of acres
affected, the location and the type of product replanted); and (G) such other information as the
Administrative Agent may reasonably specify from time to time with respect to the management of and
activities on the Timberland. No later than 45 days after the end of each calendar year (or such
later date as the Administrative Agent may approve in its sole discretion), Wells Timberland shall
provide a summary report of cuttings and payments for the preceding calendar year, including all
information on each quarterly report that was delivered for the preceding calendar year and a
comparison of the respective period’s cutting compared with the Harvest Plan for such period and
the requirements of the MW Supply Agreements. Wells Timberland shall also furnish with each such
periodic report, unless previously provided, maps satisfactory to the Administrative Agent, showing
the location of the Divisions on which the cutting, loss or destruction, site preparing and
replanting and improvements reported on by Wells Timberland occurred or were made. Each such
quarterly report shall be certified true and correct by a Financial Officer of Wells Timberland and
the Timber Manager, including a certification that Wells Timberland and the Timberland are in
compliance with the Harvest Plan and the requirements of this Section.




               (v) The Administrative Agent will have the right to inspect the Timberland, scaling practices,
scaling slips and summaries, at any reasonable time and upon prior notice. Additionally, the
Administrative Agent may, at its option, appoint a third party consulting forester of its choice to
perform loan monitoring services, including conducting property inspections, monitoring of Timber
harvesting, audit of Wells Timberland’s current
cruise and inventory data, Timber volumes, Timber management plans and other services deemed
reasonably necessary by the Administrative Agent so as to monitor compliance by the Loan Parties
with the requirements of this Agreement or any of the other Loan Documents. Each Borrower agrees
to pay all reasonable fees and expenses charged by such consulting foresters for such inspections
and services.



               (vi) Wells Timberland shall comply in all material respects with all Laws concerning the
harvesting of Timber and operation of a tree farm with respect to the Timberland.



               (vii) The remainder of any Timber cut for pine sawtimber or hardwood sawtimber not utilized
through generally accepted sawmilling processes and normally referred to as topwood may be utilized
as pulpwood at Wells Timberland’s discretion.



               (viii) The cutting restrictions contained in this Section shall not apply to Timber cut for
the purpose of salvaging Timber from loss due to oil, gas or mineral operations, insect
infestation, fire or, with the prior approval of the Administrative Agent, for the purpose of
carrying out sound forestry practices.



               (ix) The words “year(s)” and “cutting period(s)” as used in this Agreement shall mean the
period from January 1 to December 31.



               (x) If during any cutting period there is damage to the Timber on the Timberland by trespass,
unauthorized cutting, mining, drilling, right-of-way clearing,



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condemnation, fire, disease,
insects, storm or other hazards, Wells Timberland shall promptly cut Timber or take such other
reasonable and prompt measures as may be necessary to protect Timber from further damage in
accordance with good forestry practices.




               (xi) Wells Timberland will promptly notify the Administrative Agent of any damage to the
Timberland affecting more than 500 acres.



               (xii) All reasonable measures shall be taken by Wells Timberland to insure proper regeneration
of the Timber on the Timberland in order to maximize the development of the Timber, both as to
growth and quality. Any clear-cut area and each area without adequate seed source shall be
site-prepared and replanted within 12 months of such cutting (or such later date as the
Administrative Agent may approve in its sole discretion) with desirable species using the most
superior-type seedlings available and in any event, using then-current sound forestry practices.
In other areas when regeneration is not accomplished by natural means within a reasonable time,
Wells Timberland shall institute and maintain a planting program designed adequately to reforest
such land. Notwithstanding the foregoing, Wells Timberland shall not be required to take any
actions pursuant to this subclause which is not required by the terms of any Timber Lease in which
it is the lessee.



               (xiii) Prior to the commencement by Wells Timberland of any harvesting, mining or similar
activities near any boundary line of the Timberland, Wells Timberland shall have said boundaries
marked in order to prevent unauthorized harvesting from occurring. In the event adjoining
landowners are conducting timber harvesting, mining or similar activities on their property near
any boundary line of the Timberland, Wells Timberland will
cause the boundary lines to be clearly marked to prevent unauthorized cutting. Wells
Timberland shall cause the Timberland to be inspected periodically for the purpose of preventing
the unauthorized cutting of Timber.



               (xiv) Wells Timberland shall maintain at all times in accordance with sound silvicultural
practices all reasonable and effective measures to prevent the development of and to control the
spread of disease and insect infestation on the Timberland, including, the shifting of logging
operations, to the extent economically feasible, to remove diseased or insect-infested Timber and
other Timber threatened with disease or insect infestation and all such other accepted forest
sanitation and control measures as are necessary to prevent the development and spread of disease
and insect infestation.



          (e) Salvage. To the extent economically feasible, all Timber that is dead, diseased,
fallen or otherwise damaged by casualty or as a result of insect infestation, shall be salvaged and
harvested in accordance with sound silvicultural practices.




          (f) Fire Protection. All measures shall be taken which are reasonably necessary to
protect the Timberland from loss by fire, which measures shall be at least equal to fire-control
practices generally followed on timber producing property in the same general area, including the
adoption of suitable prevention and control measures, the maintenance of adequate firefighting
equipment, the maintenance of fire lanes where needed, the use of fire patrols, proper disposal of
slash and full cooperation with Governmental Authorities on matters of fire prevention and control.
Wells Timberland shall maintain membership in forest protective



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associations where any of the
Timberland fall within a forest protective district under the jurisdiction of any such association,
and shall pay as due any forest patrol assessments of any state forester or of such forest
protective association.




          (g) Maintenance of Roads. The existing system of roads and roadways shall be
maintained in such manner as to permit access of mobile firefighting equipment to substantially all
parts of the Timberland.




          (h) Annual Appraisals. If requested by the Administrative Agent in the exercise of
its reasonable commercial judgment (which request, unless an Event of Default has occurred and is
continuing, shall not be made more than once in any period of 12 consecutive months), within 60
days thereafter (or such later date as the Administrative Agent may approve in its sole discretion)
Wells Timberland shall deliver to the Lenders an appraisal of the entire Timberland, which
appraisal shall assign independent values to each Division and any Timber Lease. Each such
appraisal shall be done by American Forest Management or other nationally recognized forestry
appraisal firm that is acceptable to the Administrative Agent, and the appraisal, as well as the
scope thereof and the methods and assumptions included therein (including any “extraordinary
assumptions” or “hypothetical conditions” (each as defined by the Uniform Standards of Professional
Appraisal Practice), must be acceptable in form and substance to the Administrative Agent.




          (i) Inventory Updates. In connection with any appraisals conducted pursuant to
clause (h), Wells Timberland shall, if requested by the Administrative Agent, deliver to
the Lenders an updated Timberland inventory report that is reasonably acceptable to the
Administrative Agent. Such updated Timberland inventory report shall, among other things,
reflect volumes removed, destroyed or miscalculated pursuant to the records and/or knowledge of
Wells Timberland and/or the Timber Manager, plus the then applicable added growth of the
Timber volumes since the latest of either (i) the date of the last inventory report or (ii) Wells
Timberland’s last proprietary internal inventory system volume estimate.




          (j) Cruise or Appraisal with Event of Default. If any Default or Event of Default has
occurred and is continuing, the Administrative Agent may require that Wells Timberland furnish to
the Administrative Agent, at the expense of the Borrowers, a Timber cruise and/or appraisal of all
or any portion of the Timberland. Any such cruise or appraisal shall be in form and substance,
prepared by a third party professional, and with methods and assumptions, acceptable to the
Administrative Agent.




          (k) Notice of Appraisal or Cruise. Wells Timberland shall promptly provide to the
Lenders a copy of any appraisal or cruise related to the Timberland.




          (l) MW Supply Contracts. Wells Timberland shall not consent to any amendment,
supplement, waiver or other modification, termination or assignment of the MW Supply Agreements
without the prior consent of the Administrative Agent, and shall furnish the Administrative Agent
all information available to Wells Timberland, as well as any additional information reasonably
requested by the Administrative Agent, with respect thereto.





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          (m) Timber Sale and Release. If no Event of Default has occurred and is continuing or
would result from the taking of any actions pursuant to this clause, permission is hereby granted
by the Lenders to Wells Timberland to cut, or allow others to cut, Timber from the Timberland in
accordance with the current Harvest Plan previously approved by the Administrative Agent and on the
terms and conditions set forth in this Agreement, including, without limitation, clause
(d), and so as not to result in a violation of Section 7.2.4. If no Event of Default
has occurred and is continuing, the Lien of the Mortgage (and the related security interests under
the U.C.C.) against any cut or severed Timber (but not the proceeds thereof, it being the intent
hereof that the Administrative Agent’s Lien, on behalf of the Lenders, and security interest
continue in the proceeds) shall be released, without any action by any of Wells Timberland, the
Administrative Agent or the Lenders, upon the sooner of: (i) receipt by Wells Timberland of full
payment therefor and deposit of such amounts in the Revenue Account, or (ii) its removal from the
Timberland and after weight or volume is established and payment therefore assured in a manner
reasonably acceptable to the Administrative Agent. The Borrowers shall pay to the Administrative
Agent all reasonable fees, costs and expenses incurred by the Administrative Agent in connection
with any such partial releases including, without limitation, legal, appraisal and accounting fees
incurred by the Administrative Agent and all other expense, and recording and title insurance and
title expenses.




          (n) Partial Release Provisions. If no Default or Event of Default has occurred and is
continuing or would result from the taking of any actions pursuant to this clause, the
Administrative Agent agrees to provide Wells Timberland with partial releases of the Mortgage with
respect to the Timberland sold or otherwise disposed of (the portions of the Timberland subject to
such partial release being, the “Release Parcel”), subject to the following terms and
conditions:




               (i) All proceeds of the Release Parcel have been applied as provided in clause (b) of
Section 9.3.



               (ii) The proposed release of the Release Parcel does not adversely affect the Administrative
Agent’s security interest on any of the other Collateral.



               (iii) The proposed release of the Release Parcel does not, in the Administrative Agent’s
judgment, impair in any material respect (in the determination of the Administrative Agent) the
access to, or value, income producing ability, marketability or operational efficiency of, the
remaining Timberland.



               (iv) At the Administrative Agent’s request, the Borrowers shall cause the applicable Title
Insurance Company which issued the Administrative Agent’s title insurance policy in connection with
the Mortgage relating to the Release Parcel to issue an endorsement to such title insurance policy
which is in form and substance satisfactory to the Administrative Agent with respect to the Release
Parcel.



               (v) All reasonable out of pocket fees, costs and expenses actually incurred by the
Administrative Agent in connection with the consideration of any request for a partial release of
the Release Parcel (including, without limitation, legal, appraisal and accounting fees and
expenses, and all recording, title insurance premiums and title expenses)



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shall be borne solely by
the Borrowers. In addition, in connection with each request for a partial release of a Release
Parcel under this clause, the Administrative Agent shall be entitled to receive payment of a
reasonable administration fee for each Release Parcel so released.




          (o) Leases. With respect to all Timberland that Wells Timberland is the lessor
(including the Mineral Leases), Wells Timberland shall (i) enforce such leases in a diligent,
commercially reasonable and professional manner and (ii) furnish to the Administrative Agent
annually (together with the year-end summary report delivered pursuant to clause (d)(iv)),
and upon request of the Administrative Agent any other time, a rent roll certified by a Financial
Officer of Wells Timberland, which lists the expiration date, the rental and when paid through,
whether any default exists thereto and any other information reasonably requested by the
Administrative Agent. Wells Timberland shall not enter into any lease, as lessor, affecting any
portion of the Timberlands without the prior consent of the Administrative Agent, provided
that the Administrative Agent and Wells Timberland shall work together to establish forms and
parameters for routine leases so as to avoid the necessity of review of individual routine leases
by the Administrative Agent (it being agreed that lease transactions documented utilizing such
forms that are approved by the Administrative Agent shall not require the consent of the
Administrative Agent to enter into the same).




          (p) Estoppel Certificates as to Loans. Each Borrower, within five Business Days after
request by the Administrative Agent, shall furnish the Lenders from time to time with a statement,
duly acknowledged and certified, setting forth (i) the amount of the original principal amount of
the Loans, (ii) the unpaid principal amount of the Loans, (iii) the rate of interest on the Loans,
(iv) the date through which all installments of interest, commitment fees and/or principal have
been paid, (v) any offsets or defenses to the payment of the Obligations, if
any and (vi) such other information as shall be reasonably requested by the Administrative
Agent.




          (q) Estoppel Certificates as to Third-Parties. Wells Timberland, upon request by the
Administrative Agent, will use commercially reasonable efforts to obtain and furnish (within 30
days after request therefor and, if no Default or Event of Default has occurred and is continuing,
not more frequently than once in any period of 12 consecutive months with respect to each relevant
Person) statements from purchasers of Timber or lessees under coal leases and oil and gas leases,
as to the amount of timber purchased or coal, oil or gas extracted, as the case may be, and the
amounts paid therefrom to Wells Timberland during the preceding 12 months.




          (r) Timber Leases, Generally. In addition to making payment of all rent, Tax and
other payments and charges required to be made by Wells Timberland as tenant under and pursuant to
the provisions of each Timber Lease, Wells Timberland covenants that it will:




               (i) diligently and timely perform and observe all of the terms, conditions and covenants of
each such Timber Lease that are required to be performed and observed by Wells Timberland, to the
end that all things shall be done which are necessary to keep unimpaired Wells Timberland rights
under each such Timber Lease, and Wells Timberland agrees that no release or forbearance of any of
its obligations under any Timber Lease shall release Wells Timberland from any of its obligations
under this Agreement or any other Loan Agreement with regard to the same;



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               (ii) promptly notify the Administrative Agent of any default by any Person in the performance
and observance of any of the terms, conditions or covenants to be performed or observed under each
such Timber Lease;



               (iii) promptly notify the Administrative Agent of the giving of any notice under each such
Timber Lease of any default of Wells Timberland in the observance of any terms, covenants or
conditions of each such Timber Lease, and promptly deliver to the Administrative Agent a true copy
of each such notice; and



               (iv) not surrender the leasehold estate that is the subject of each such Timber Lease nor
cause or permit the termination or cancellation of any such Timber Lease except at the stated end
of the lease term or enter into any agreement (whether oral or written) modifying, supplementing or
amending any such Timber Lease, in each case without the prior consent of the Administrative Agent.



          (s) Timber Leases, Corrective Action. The Administrative Agent shall have the right
(but shall not be obligated) to take any action that the Administrative Agent deems necessary or
desirable to prevent or to cure any default by Wells Timberland in the performance of or compliance
with any of Wells Timberland’s obligations under any Timber Lease. Upon receipt by the
Administrative Agent of any notice of a default by Wells Timberland under a Timber Lease, the
Administrative Agent may take any action it deems reasonably appropriate in order to cure such
default even though the existence of such default or the nature thereof may be questioned or denied
by Wells Timberland. Wells Timberland hereby expressly grants to the Administrative Agent, and
agrees that the Administrative Agent shall have, the absolute and
immediate right to enter in and upon the Timberland or any part thereof to such extent and as
often as the Administrative Agent, in its sole discretion, deems necessary or desirable in order to
prevent or to cure any such default by Wells Timberland under any Timber Lease. The Administrative
Agent may pay and expend such sums of money as the Administrative Agent deems reasonably necessary
for any such purpose, and each Borrower hereby agrees to pay to the Administrative Agent, promptly
upon demand, all such sums so paid and expended by the Administrative Agent.




          (t) Timber Leases, Further Security. As further security for the repayment of the
Indebtedness secured hereby and for the performance of the covenants contained herein and in each
Timber Lease, Wells Timberland hereby assigns to the Administrative Agent, for the benefit of the
Lender Parties, all of its rights, privileges and prerogatives as lessee under each Timber Lease to
terminate, cancel, modify, change, supplement, alter or amend each such Timber Lease, and any such
termination, cancellation, modification, change, supplement, alteration or amendment of any Timber
Lease without the prior consent by the Administrative Agent shall be void and of no force and
effect; provided, however, that so long as no Event of Default has occurred and is
continuing, the Administrative Agent shall have no right to terminate, cancel, modify, change,
supplement, alter or amend any such Timber Lease. Wells Timberland represents and warrants that it
has delivered to the Administrative Agent a true and accurate copy of each Timber Lease, together
with all amendments thereto if any.




          (u) Timber Lease, No Merger. Unless the Administrative Agent shall otherwise
expressly consent, the fee title to the land leased under any Timber Lease and the



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leasehold estate
therein held by Wells Timberland shall not merge but shall always remain separate and distinct,
notwithstanding the union of said estates either in the lessor or in the lessee under the Timber
Lease, or in a third party by purchase or otherwise.




          (v) Timber Lease, Certificates of Estoppel. Wells Timberland shall, from time to
time, use its best efforts to obtain from the lessor under any Timber Leases such certificates of
estoppel with respect to compliance by the Wells Timberland with the terms of the Timber Lease as
may be requested by the Administrative Agent.




          SECTION 7.1.12 Interest Reserve Account.(a) (a) On the Funding Date the Borrowers
shall deposit in an account (the “Interest Reserve Account”) in the name of Wells
Timberland and for the benefit of the Administrative Agent, as secured party for the benefit of the
Lender Parties, the sum representing approximately two months interest on the Loans, as specified
by the Administrative Agent (said funds, together with any interest thereon, the “Interest
Reserve”). The Interest Reserve Account shall be under the sole dominion, control and
direction of the Administrative Agent, and neither Wells Timberland nor any other Loan Party shall
have any rights to control over the use of, or any right to withdraw any amount from, the Interest
Reserve Account, and Wells Timberland and each other Loan Party acknowledge that the bank where the
Interest Reserve Account is maintained shall comply only with instructions originated by the
Administrative Agent without further consent by any of Wells Timberland or other Loan Parties.
Notwithstanding the foregoing, funds of Wells Timberland which are deposited in the Interest
Reserve Account may at the direction of Wells Timberland, if no Default or Event of Default has
occurred and is
continuing, be invested by the Administrative Agent in one or more Cash Equivalent
Investments; provided, that under no circumstances shall the Lender Parties be liable for
any losses that may be incurred by the Borrowers in the making of any such Cash Equivalent
Investments. The Borrowers shall be required to maintain an Interest Reserve representing
approximately six months interest on the Loans (as determined by the Administrative Agent), which
shall be funded from the Revenue Waterfall and the Equity Raise Waterfall; provided,
however, that a Default shall not result hereunder if such six months’ Interest Reserve is
not maintained as a result of insufficient funds being available from the Revenue Waterfall or
Equity Raise Waterfall, as the case may be (it being understood that, notwithstanding the
foregoing, compliance with the Debt Service Coverage Ratio is a separate and independent covenant
that the Borrowers are required to comply with as herein provided). If at any time the Borrowers
fail to pay accrued interest on the Loans when due, the Administrative Agent may in its sole
discretion, without notice to or any consent by the Borrowers, apply amounts on deposit in the
Interest Reserve Account to pay such interest, and the Borrowers, subject to the terms of the
Revenue Waterfall and the Equity Raise Waterfall, shall be required to deposit into the Interest
Reserve Account an amount so that, in the determination of the Administrative Agent, approximately
six months of accrued interest on the Loans is on deposit therein. All interest which accrues on
the Interest Reserve shall be taxable to the Borrowers, and shall be retained in the Interest
Reserve Account until the Interest Reserve is fully funded, at which time amounts in the Interest
Reserve exceeding six months of interest on the Loans (as determined by the Administrative Agent)
shall be transferred to the Revenue Account and applied as provided in Section 9.3.




          (b) To secure the full and punctual payment and performance of all the Obligations, Wells
Timberland hereby grants to the Administrative Agent, for its benefit and the



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benefit of the
Lenders, a first priority continuing security interest in and to all of Wells Timberland’s right,
title and interest in, to and under the following property, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all of the same, collectively, the
“Interest Reserve Collateral”):




               (i) the Interest Reserve Account and all cash, checks, drafts, certificates and instruments,
if any, from time to time deposited or held in the Interest Reserve Account, including, without
limitation, all deposits or wire transfers made to the Interest Reserve Account, and any and all
Interest Reserve Collateral;



               (ii) any and all amounts on deposit in the Interest Reserve Account that are invested in Cash
Equivalent Investments;



               (iii) all interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise payable in respect of, or in exchange for, any or all of the
foregoing; and



               (iv) to the extent not covered by clauses (a), (b) or (c), all
“proceeds” (as defined under the U.C.C.) of any or all of the foregoing.


The Administrative Agent and the bank where the Interest Reserve Account is maintained, as agent
for the Administrative Agent, shall have with respect to the foregoing collateral, in
addition to the rights and remedies herein set forth, all of the rights and remedies available to a
secured party under the U.C.C., as if such rights and remedies were fully set forth herein.




          (c) In addition to the rights and remedies provided in Article VIII and elsewhere
herein, if any Event of Default has occurred and is continuing, the Administrative Agent shall have
all rights and remedies pertaining to the Interest Reserve Collateral as are provided for in any of
the Loan Documents, the U.C.C. and other applicable Law. Without limiting the foregoing, upon and
at all times after the occurrence and during the continuance of any Event of Default, the
Administrative Agent in its sole and absolute discretion, may use the Interest Reserve Collateral
(or any portion thereof) for any purpose, including but not limited to any combination of the
following: (i) payment of any of the Obligations, in such order as the Administrative Agent may
determine in its sole discretion; provided, that such application of funds shall not cure
or be deemed to cure any Default but shall reduce the Obligations to the extent of any such
repayment; and (ii) reimbursement of the Administrative Agent or any Lender for any losses or
expenses (including, without limitation, reasonable legal fees) suffered or incurred as a result of
such Event of Default.




          (d) Wells Timberland and each other Loan Party hereby irrevocably constitute and appoint the
Administrative Agent (and its agents and designees) as such Person’s true and lawful
attorney-in-fact, coupled with an interest and with full power of substitution, to execute,
acknowledge and deliver at any time any instruments and to exercise and enforce every right, power,
remedy, option and privilege of Wells Timberland with respect to the Interest Reserve Collateral,
and do in the name, place and stead of Wells Timberland, all such acts, things and deeds for and on
behalf of and in the name of Wells Timberland, which Wells Timberland is required to do hereunder
or under the other Loan Documents, or which the Account Bank or the



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Administrative Agent (or its
agents or designees) may deem necessary or desirable, to more fully vest the in the Administrative
Agent (or its agents or designees) the rights and remedies provided for in this Section. The
foregoing powers of attorney are irrevocable and coupled with an interest. Such authority in favor
of the Administrative Agent (and its agents and designees) pursuant to this Section shall include
the right to (i) take control in any manner of any item of payment in respect of the Interest
Reserve Collateral or otherwise received in or for deposit in the Interest Reserve Account, (ii)
endorse Wells Timberland’s name upon any item of payment constituting Interest Reserve Collateral
or otherwise received by the Administrative Agent (or its agents or designees) or any Lender and
deposit the same in Interest Reserve Account, and (iii) sign Wells Timberland’s name on any
verification of account receivables and notices thereof to account debtors or any secondary
obligors or other obligors in respect thereof. Wells Timberland hereby releases the Administrative
Agent (or its agents or designees) and the Lenders and their respective officers, employees and
designees from any liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of any such Person’s or
any Lender’s own gross negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.




          SECTION 7.1.13 Wells TRS Subsidiary Account.(a) (a) The Borrowers, Wells TRS
Subsidiary and each other Loan Party acknowledge and confirm that, on or before the date hereof and
pursuant to the terms of this
Agreement, Wells TRS Subsidiary has established and will maintain an account for the benefit
of the Administrative Agent, as first priority secured party for the benefit of the Lender Parties,
and the Subordinated Administrative Agent, as second priority secured party for the benefit of the
Subordinated Lender Parties, to serve as the “Wells TRS Subsidiary Account” (said account, and any
account replacing the same in accordance with this Agreement, the “Wells TRS Subsidiary
Account”). The Wells TRS Subsidiary Account shall be under the sole dominion, control and
direction of the Administrative Agent, and neither Wells TRS Subsidiary nor any other Loan Party
shall have any rights to control over the use of, or any right to withdraw any amount from, the
Wells TRS Subsidiary Account, and Wells TRS Subsidiary and each other Loan Party acknowledge that
the bank where the Wells TRS Subsidiary Account is maintained shall comply only with instructions
originated by the Administrative Agent without further consent by any of Wells TRS Subsidiary or
other Loan Parties. Notwithstanding the foregoing, funds of Wells TRS Subsidiary which are
deposited in the Wells TRS Subsidiary Account may at the direction of Wells TRS Subsidiary, if no
Default or Event of Default has occurred and is continuing, be invested by the Administrative Agent
in one or more Cash Equivalent Investments; provided, that under no circumstances shall the
Lender Parties or the Subordinated Lender Parties be liable for any losses that may be incurred by
Wells TRS Subsidiary in the making of any such Cash Equivalent Investments.




          (b) To secure the full and punctual payment and performance of all the Obligations, Wells TRS
Subsidiary hereby grants to the Administrative Agent, for its benefit and the benefit of the
Lenders, a first priority continuing security interest in and to all of Wells TRS Subsidiary’s
right, title and interest in, to and under the following property, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all of the same, collectively, the
“Wells TRS Subsidiary Account Collateral”):




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               (i) The Wells TRS Subsidiary Account and all cash, checks, drafts, certificates and
instruments, if any, from time to time deposited or held in the Wells TRS Subsidiary Account,
including, without limitation, all deposits or wire transfers made to the Wells TRS Subsidiary
Account, and any and all Wells TRS Subsidiary Account Collateral;



               (ii) any and all amounts on deposit in the Wells TRS Subsidiary Account that are invested in
Cash Equivalent Investments;



               (iii) all interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise payable in respect of, or in exchange for, any or all of the
foregoing; and



               (iv) to the extent not covered by clauses (a), (b) or (c), all
“proceeds” (as defined under the U.C.C.) of any or all of the foregoing.


The Administrative Agent and the bank where the Wells TRS Subsidiary Account is maintained, as
agent for the Administrative Agent, shall have with respect to the foregoing collateral, in
addition to the rights and remedies herein set forth, all of the rights and remedies available to a
secured party under the U.C.C., as if such rights and remedies were fully set forth herein.




          (c) In addition to the rights and remedies provided in Article VIII and elsewhere
herein, if any Event of Default has occurred and is continuing, the Administrative Agent shall have
all rights and remedies pertaining to the Wells TRS Subsidiary Account Collateral as are provided
for in any of the Loan Documents, the U.C.C. and other applicable Law. Without limiting the
foregoing, upon and at all times after the occurrence and during the continuance of any Event of
Default, the Administrative Agent in its sole and absolute discretion, may use the Wells TRS
Subsidiary Account Collateral (or any portion thereof) for any purpose, including but not limited
to any combination of the following: (i) payment of any of the Obligations, in such order as the
Administrative Agent may determine in its sole discretion; provided, that such application
of funds shall not cure or be deemed to cure any Default but shall reduce the Obligations to the
extent of any such repayment; and (ii) reimbursement of the Administrative Agent or any Lender for
any losses or expenses (including, without limitation, reasonable legal fees) suffered or incurred
as a result of such Event of Default.




          (d) Wells TRS Subsidiary and each other Loan Party hereby irrevocably constitute and appoint
the Administrative Agent (and its agents and designees) as such Person’s true and lawful
attorney-in-fact, coupled with an interest and with full power of substitution, to execute,
acknowledge and deliver at any time any instruments and to exercise and enforce every right, power,
remedy, option and privilege of Wells TRS Subsidiary with respect to the Wells TRS Subsidiary
Account Collateral, and do in the name, place and stead of Wells TRS Subsidiary, all such acts,
things and deeds for and on behalf of and in the name of Wells TRS Subsidiary, which Wells TRS
Subsidiary is required to do hereunder or under the other Loan Documents, or which the Account Bank
or the Administrative Agent (or its agents or designees) may deem necessary or desirable, to more
fully vest the in the Administrative Agent (or its agents or designees) the rights and remedies
provided for in this Section. The foregoing powers of attorney are irrevocable and coupled with an
interest. Such authority in favor of the Administrative Agent (and its agents and designees)
pursuant to this Section shall include the



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right to (i) take control in any manner of any item of
payment in respect of the Wells TRS Subsidiary Account Collateral or otherwise received in or for
deposit in the Wells TRS Subsidiary Account, (ii) have access to any lockbox or postal box into
which remittances from account debtors or other obligors in respect of account receivables or other
proceeds of Wells TRS Subsidiary Collateral are sent or received, (iii) endorse Wells TRS
Subsidiary’s name upon any items of payment in respect of account receivables or constituting Wells
TRS Subsidiary Collateral or otherwise received by the Administrative Agent (or its agents or
designees) or any Lender and deposit the same in Wells TRS Subsidiary Account, (iv) endorse Wells
TRS Subsidiary’s name upon any chattel paper, document, instrument, invoice or similar document or
agreement relating to any account receivable or any goods pertaining thereto or any other Wells TRS
Subsidiary Collateral, including any warehouse or other receipts, or bills of lading and other
negotiable or non-negotiable documents, and (e) sign Wells TRS Subsidiary’s name on any
verification of account receivables and notices thereof to account debtors or any secondary
obligors or other obligors in respect thereof. Wells TRS Subsidiary hereby releases the
Administrative Agent (or its agents or designees) and the Lenders and their respective officers,
employees and designees from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except as a result of any
such Person’s or any Lender’s own gross negligence or willful misconduct as determined pursuant to
a final non-appealable order of a court of competent jurisdiction.




          SECTION 7.1.14 Post-Closing Items. (a) To the extent not delivered on or prior to
the Funding Date, the Borrowers shall exercise their commercially reasonable best efforts to
deliver, not later than 90 days after the Funding Date, Landlord Estoppel Certificates duly
executed by each applicable landlord with respect to each Timber Lease.




          (b) Not later than 90 days after the Funding Date, the Borrowers shall deliver a Harvest Plan
for calendar year 2007-2008 that is reasonably satisfactory to the Administrative Agent and the
Required Lenders.




          (c) Not later than 10 days after the Funding Date, the Borrowers shall have entered into, with
a Lender or other Person reasonably satisfactory to the Administrative Agent, a satisfactory Rate
Protection Agreement providing for an interest rate cap with an aggregate notional principal amount
equal to (i) 100% of the aggregate principal amount of the Loans for the period ending on the one
year anniversary of the Funding Date and (ii) 50% of the aggregate principal amount of the Loans
for the period from the first anniversary of the Funding Date until the third anniversary of the
Funding Date. All Rate Protection Agreements shall be unsecured unless the counterparty is a
Lender, in which case the obligations under each such Rate Protection Agreement shall be secured
pro rata with all the other Obligations hereunder.




          (d) The Borrowers shall exercise their commercially reasonable best efforts to obtain as soon
as possible after the Funding Date a sustainable forestry initiative certification.




     SECTION 7.2 Negative Covenants. The Borrowers agree with each Lender Party that, until all
the Obligations have been paid in full in cash and performed in full, the Borrowers will perform
the obligations set forth in this Section.



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          SECTION 7.2.1 Business Activities. The Borrowers will not, and will not permit any of its
Subsidiaries to, engage in any business activity, except those business activities described in
Section 6.25.1 and in the first recital.




          SECTION 7.2.2 Indebtedness. No Borrower will, or will permit any other Loan Party to,
create, incur, assume or suffer to exist or otherwise become or be liable in respect of any
Indebtedness, other than, without duplication, the following:




          (a) Indebtedness in respect of the Loans;




          (b) Indebtedness incurred under the Subordinated Credit Agreement;




          (c) Indebtedness incurred under the MWV SPE Capital Note; and




          (d) Contingent Liabilities of Wells REIT, Wells Partnership and Wells TRS, in the form of
limited recourse guarantees that are substantially the same as the Guarantees to which they are a
party pursuant to this Agreement, in each case with respect to Indebtedness incurred pursuant to
any Unrestricted Timber Transaction pursuant to clause (a)(i) of the definition thereof.




          SECTION 7.2.3 Liens. No Borrower will, or will permit any other Loan Party to, create,
incur, assume or suffer to exist any Lien upon any of the Collateral, whether now owned or
hereafter acquired, except:




          (a) Liens securing payment of the Obligations and granted pursuant to any Loan Document in
favor of the Administrative Agent;




          (b) subject to the terms of the Subordinated Intercreditor Agreement, Liens securing the
Subordinated Permitted Debt pursuant to the Subordinated Debt Documents;




          (c) with respect to the Real Property, Liens listed as exceptions on Schedule B of the title
insurance with respect thereto that have been approved by the Administrative Agent;




          (d) Liens for taxes, assessments or other charges or levies of any Governmental Authority not
at the time delinquent or being diligently contested in good faith by appropriate proceedings which
suspends enforcement of such Liens and for which adequate reserves in accordance with GAAP shall
have been set aside on its books;




          (e) easements, rights of way and similar restrictions that (i) arise in the ordinary course of
business of Wells Timberland, (ii) are not in a substantial amount and (iii) do not in any respect
materially impair the value or usefulness of the Real Property; and




          (f) judgment Liens which do not result in an Event of Default under Section 8.1.6;



In addition, the Borrowers shall not permit there to be a Lien on any of their Equity Interests
(other than, subject to the terms of the Subordinated Intercreditor Agreement, Liens securing the
Subordinated Permitted Debt pursuant to the Subordinated Debt Documents).





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          SECTION 7.2.4 Financial Condition. The Borrowers will not permit the Debt Service Coverage
Ratio (beginning with the Fiscal Quarter ending March 31, 2008), for the Rolling Period ending on
each date set forth below, to be less than the ratio set forth opposite each such date:




	 	 	 
	 	 	Minimum Debt Service
	Date	 	Coverage Ratio
	March 31, 2008

	 	1.50:1.00
	June 30, 2008

	 	1.50:1.00
	September 30, 2008

	 	1.50:1.00
	December 31, 2008

	 	1.50:1.00
	March 31, 2009

	 	1.60:1.00
	June 30, 2009

	 	1.60:1.00
	September 30, 2009

	 	1.60:1.00
	December 31, 2009

	 	1.60:1.00
	March 31, 2010
and each Fiscal Quarter end thereafter

	 	1.70:1.00






          SECTION 7.2.5 Investments; Change in Capital Structure. (a) No Borrower will, or will
permit any other Loan Party to, make, incur, assume or suffer to exist (or agree to do any of the
foregoing) any Investment in any other Person, except (i) Investments by the Borrowers and the
other Loan Parties permitted by Section 6.8 comprising the Equity Interests of the Persons
identified therein, (ii) Investments by Wells REIT, Wells Partnership and Wells TRS in Unrestricted
Timber Subsidiaries in connection with Unrestricted Timber Transactions, (iii) Investments
evidenced by the MWE SPE Capital Note, (iv) Investments in the AgSouth Equity Interests as provided
in Section 11.23 and (v) that Wells Timberland may become a Wholly-Owned Subsidiary of
Wells Acquisition.




          (b) No Borrower will, or will permit any other Loan Party to, make any change in its capital
structure or ownership, including entering into any partnership, joint venture or similar
relationship, except as provided in the preceding clause (a).




          SECTION 7.2.6 Restricted Payments; Payments on Permitted Subordinated Debt. (a) No
Borrower will, or will permit any other Loan Party to (notwithstanding the terms of any
Organizational Document or any other agreement or instrument), (i) declare, pay or make on any of
its Equity Interests (or any warrants, options or other rights with respect thereto) any dividend,
distribution or other payment, whether on account of the purchase, redemption, sinking or analogous
fund, retirement, defeasance of any Equity Interests and whether in cash, property or obligations
(other than dividends or distributions payable solely in its Equity Interests, warrants to purchase
its Equity Interests or split-ups or reclassifications of its Equity Interests into additional or
other shares of its Equity Interests), or apply, or permit any other Loan Party to apply, any of
its funds, property or assets to the purchase, redemption, sinking or analogous fund or other
retirement of, any such Equity Interests (or any options, warrants or other rights with respect thereto); or (ii) make any payment, loan, advance, contribution or
other transfer of funds or property to any holder of its Equity Interests; provided,
however, that (x) any Subsidiary of Wells TRS Subsidiary or Wells Timberland may make
dividends, distributions and other payments to each of them and (y) if no




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Default or Event of
Default has occurred and is continuing or would result from the taking of any actions pursuant to
this clause, (A) Wells TRS Subsidiary may make dividends and distributions and other payments to
Wells TRS, (B) Wells Timberland may make intercompany loans, dividends and distributions and other
payments to Wells Acquisition, (C) Wells TRS may make dividends, distributions and other payments
to Wells Partnership, (D) Wells Acquisition may make dividends, distributions and other payments to
Wells Partnership and (E) Wells Partnership may make dividends, distributions and other payments to
Wells REIT, in each case from the amounts available therefore pursuant to clauses (a)(ii),
(a)(vii) and (a)(viii) of Section 9.3 and clauses (a)(ii), (a)(vii), and
(a)(viii) of Section 9.3 of the Subordinated Credit Agreement if such amounts are promptly applied
to the payment of the relevant obligations specified in such sections.




          (b) No Borrower will, or will permit any other Loan Party to, directly or indirectly,
voluntarily purchase, redeem, retire, defease or prepay (whether by a sinking fund or otherwise)
any principal of, premium, if any, interest, fees or other amount payable in respect of the
Permitted Subordinated Debt, except, if no Default or Event of Default has occurred and is
continuing and subject to the terms of the Subordinated Intercreditor Agreement, payments from the
amounts available therefore pursuant to clause (a)(viii) of Section 9.3 or clause
(a)(viii) of Section 9.3 of the Subordinated Credit Agreement.




          SECTION 7.2.7 Take or Pay Contracts. No Borrower will, or will permit any other Loan Party
to, enter into or be a party to any arrangement for the purchase of materials, supplies, other
property or services if such arrangement by its express terms requires that payment be made by the
Borrowers or any other Loan Party regardless of whether such materials, supplies, other property or
services are delivered or furnished to it.




          SECTION 7.2.8 Mergers, Asset Acquisitions, etc. No Borrower will, or will permit any
other Loan Party to (or agree to do), liquidate or dissolve, consolidate or amalgamate with, or
merge into or with, any other Person, or establish, purchase, lease or otherwise acquire (in each
case in one transaction or series of transactions) all or any part of the assets or Equity
Interests of any Person (or of any division thereof), other than (a) the consummation of the
Transaction, (b) Investments by the Borrowers and the other Loan Parties permitted by Section
6.8 comprising the Equity Interests of Persons referred to therein, (c) transactions permitted
by Section 7.2.5, (d) and the acquisition of assets that (i) are to be utilized in the
ordinary course of the business of the Borrowers accordance with Section 7.2.1 and (ii) are
from the amounts paid to the Borrowers pursuant to clause (a)(viii) of Section 9.3
and (e) subject to the other terms of this Agreement the purchase or lease of real property
pursuant to an Unrestricted Timber Transaction




          SECTION 7.2.9 Asset Dispositions, etc. No Borrower will, or will permit any other Loan Party to, sell, transfer, lease, contribute or
otherwise convey or dispose of (in each case in one transaction or series of transactions), or
grant options, warrants or other rights with respect to (in each case in one transaction or series
of related transactions, whether voluntary or involuntary), all or any part of its assets or
property, except:




          (a) for the sale of Timber in accordance with the conditions of clause (m) of
Section 7.1.11;





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          (b) the sale of Land, provided, that (i) such sales are conducted pursuant to and in
accordance with the applicable restrictions contained in the Master Stumpage Agreement without
giving effect to any waivers with respect to such restrictions that have not been approved by the
Required Lenders and (ii) all the related Collateral Disposition Proceeds are deposited in the
Revenue Account and are applied to prepay the Loans as provided in clause (b) of
Section 3.1.2 and clause (b) of Section 9.3;




          (c) in the ordinary course of business the sale or disposition of worn-out or obsolete
equipment; and




          (d) pursuant to any Unrestricted Timber Transaction, each relevant Unrestricted Timber
Subsidiary may do any of the foregoing in accordance with the terms of the relevant Unrestricted
Timber Transaction.




          SECTION 7.2.10 Modification of Certain Agreements. (a) Subject to clause (b)
and other applicable terms, no Borrower will, or will permit any other Loan Party to, consent to
any amendment, supplement, waiver or other modification of any of the terms or provisions contained
in, or applicable to, any of their Organizational Documents or any Transaction Document which in
any case:




               (i) is contrary to the terms of this Agreement or any other Loan Document;



               (ii) could reasonably be expected to be adverse to the rights, interests or privileges of the
Administrative Agent or the Lenders or their ability to enforce the same;



               (iii) results in the imposition or expansion in any material respect of any restriction or
burden on the Borrowers or any other Loan Party;



               (iv) reduces in any material respect any rights or benefits of the Borrowers or any other Loan
Party; or



               (v) could reasonably be expected to result in a Material Adverse Effect.



          (b) No Borrower will, or will permit any other Loan Party to, consent to any amendment,
supplement, waiver or other modification of any of the terms or provisions contained in, or
applicable to, (i) the MW Contribution Agreement or the Wells Timberland
Operating Agreement or (ii) the MW Supply Agreements in a manner contrary to clause
(l) of Section 7.1.11.




          (c) No Borrower will, or will permit any other Loan Party to, consent to any amendment,
supplement, waiver or other modification of any of the terms or provisions contained in, or
applicable to, the Subordinated Debt Documents that is contrary to the terms of the Subordinated
Intercreditor Agreement.




          SECTION 7.2.11 Transactions with Related Parties. Except for the Transactions Documents,
the MWV SPE Capital Note and the other Material Agreements listed



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on Item 1.1(b) (“Material
Agreements”) of the Disclosure Schedule, no Borrower will, or will permit any other Loan Party to,
enter into, or cause, suffer or permit to exist any arrangement or contract with, any of its
Related Parties unless such arrangement or contract:




          (a) is not otherwise prohibited by this Agreement or the other Loan Documents;




          (b) (i) is in the ordinary course of business of the Borrowers, (ii) is on fair and reasonable
terms and (iii) is an arrangement or contract of the kind which would be entered into by a prudent
Person in the position of a Borrower or any other Loan Party with a Person which is not one of its
Related Parties;




          (c) is for the payment of fees and compensation paid to, and customary indemnities and
reimbursements provided on behalf of, officers, directors, employees and agents of the Borrowers or
any other Loan Party.




          SECTION 7.2.12 Negative Pledges, Restrictive Agreements, etc. No Borrower will, or will
permit any other Loan Party to, enter into any agreement (excluding this Agreement, any other Loan
Document and the Subordinated Debt Documents) prohibiting or restricting:




          (a) their ability to comply with and perform their Obligations;




          (b) the creation or assumption of any Lien upon its properties, revenues or assets, whether
now owned or hereafter acquired, provided that, with respect to each Unrestricted Timber
Transaction, Wells REIT, Wells Partnership and Wells TRS may be subject to any of such restrictions
solely as it relates to each such Unrestricted Timber Transaction;




          (c) the ability of the Borrowers or any other Loan Party to amend or otherwise modify this
Agreement or any other Loan Document; or




          (d) the ability of any Subsidiary of a Borrower (other than Wells Installment Note Issuer) or
Wells TRS Subsidiary to make any payments, directly or indirectly, to the Borrowers or Wells TRS
Subsidiary by way of dividends, distributions, return on equity, advances, repayments of loans or
advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on investments, or any other
agreement or arrangement which restricts the ability of any such Subsidiary to make any payment or
transfer any property or asset, directly or indirectly, to the Borrowers or Wells TRS Subsidiary.




          SECTION 7.2.13 Management Fees, Expenses, etc. No Borrower will, or will permit any other
Loan Party to:




          (a) pay management, advisory, consulting, director or other similar fees, other than:





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               (i) fees payable (A) to the Administrative Agent, the Lenders or any of their Affiliates and
(B) pursuant to the Subordinated Debt Documents (as disclosed to the Lenders prior to the Funding
Date) as in effect on the date hereof;



               (ii) fees payable to non-Affiliate consultants engaged on arm’s-length basis as approved by
the Board of Directors of the applicable Borrower or any other Loan Party;



               (iii) director fees and reimbursement of out-of-pocket expenses incurred in connection with
attending Board of Director meetings, in an aggregate amount not to exceed $150,000 in any Fiscal
Year; or



               (iv) the Wells Asset Management Fees.



          (b) reimburse employees or any Affiliates for any expenses unless the same is incurred in the
ordinary course of business of the Borrowers and each other Loan Party and is reasonable.




          SECTION 7.2.14 Limitation on Sale and Leaseback Transactions. No Borrower will, or will
permit any other Loan Party to, enter into any arrangement with any Person whereby in a
substantially contemporaneous transaction the Borrowers or any of their Loan Parties sells or
transfers all or substantially all of its right, title and interest in an asset and, in connection
therewith, acquires or leases back the right to use such asset.




          SECTION 7.2.15 Fiscal Year End, etc. No Borrower will, or will permit any other Loan Party
to, change their Fiscal Year. In addition, except as required by GAAP neither the Borrowers nor any
other Loan Party shall make any significant change in its accounting treatment or reporting
practices.




          SECTION 7.2.16 ERISA. Neither the Borrowers, any of the other Loan Parties nor any
Affiliate thereof shall establish any Pension Plan or Multiemployer Plan, or shall enter into any
arrangements that could be expected to require the Borrowers, any other Loan Party or any Affiliate
thereof to contribute to
any Pension Plan or Multiemployer Plan. Neither the Borrowers nor any other Loan Party shall have
any ERISA Affiliates and shall not be an ERISA Affiliate of any other Person.




          SECTION 7.2.17 Deposit Account Control Agreements. The Borrowers will not, and will not
permit Wells TRS Subsidiary to, have any bank account unless the same is subject to a Deposit
Account Control Agreement with a Deposit Account Bank.




          SECTION 7.2.18 Timber Negative Covenants. 




          (a) Timber Sale, Harvesting and Stumpage Agreements. Other than the MW Supply
Agreements, without the prior approval of the Administrative Agent, the Borrowers shall not enter
into, and the Timberland shall not be subject to, any contracts or agreements (whether written or
oral) for the cutting, sale, removal or disposition of Timber which have: (i) a term (including
renewal options but excluding extensions for weather) of more than one year, (ii) a sale price of
less than then current fair market value or (iii) terms and conditions inconsistent with the then
current approved Harvest Plan or the requirements of this Agreement.





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          (b) Restrictions on Grazing and Use of Fire. Wells Timberland shall not permit the
grazing of livestock on the Timberland except with the consent of the Administrative Agent,
provided, that, in no event shall the grazing of the livestock be injurious to
forest regeneration, soils or forest growth. The application of fire in a controlled manner for
the benefit of Timber production (“prescribed burning”) shall not be utilized in the
management of the Timberland unless (i) local fire protection agencies are notified and all fire
protection and other applicable Laws are followed, (ii) appropriate equipment and trained personnel
are available and utilized, (iii) fire is applied only when weather conditions are favorable and
(iv) the prescribed burning area is isolated from other areas by appropriate natural or manmade
fire breaks.




          (c) Coal, Oil, Gas and Other Minerals. Wells Timberland shall not hold and shall not
permit any other Person to hold for Wells Timberland’s benefit or as Wells Timberland’s agent,
whether directly or indirectly, any permit or license which permits the exploration, extraction,
mining, processing, production, storage, transportation or handling of any coal, oil, gas or any
other mineral (collectively, “Mineral Activity”) with respect to the Timberlands.




               (i) Except as permitted hereby, Wells Timberland shall not undertake or operate or cause or
permit to be undertaken or operated for its benefit or by its agent, or under any lease of the Real
Property, whether directly or indirectly, any Mineral Activity.



               (ii) Any Mineral Activity on the Timberland, with respect to minerals owned by Wells
Timberland, if any, shall be carried out by third party (not Affiliates of any Borrower or any
other Loan Party) tenants under bona fide leases (collectively, “Mineral Leases”) which, to
the extent not in existence on the date of this Agreement, shall be in form and substance
reasonably acceptable to the Administrative Agent and shall contain covenants by the tenant to
comply with all applicable Laws, including without limitation, Environmental Laws, and an agreement
by the tenant to indemnify, defend and hold harmless the Borrowers, the Administrative Agent and
the Lenders and their respective successors and assigns against any
loss, claims or damage, including legal fees, arising from any breach of its Mineral Lease or
liability arising from such tenant’s activity or presence on the Timberland (including as a result
of a violation of any Environmental Laws).



               (iii) Wells Timberland shall (A) reasonably inspect and monitor the activities of all tenants
under the Mineral Leases, if any, to assure compliance in all material respects with the terms and
conditions of the Mineral Leases, (B) enforce the material terms and conditions of the Mineral
Leases and cause the tenants thereunder to comply with all material terms and conditions of the
Mineral Leases and (C) assure that all Mineral Activity complies in all material respects with all
Environmental Laws in the manner set forth in Section 7.1.6. Wells Timberland shall
furnish to the Administrative Agent, promptly following a request therefor, copies of its records
with regard to the compliance by tenants with all material terms and conditions of the Mineral
Leases.



               (iv) Any Mineral Activity on the Timberlands permitted hereunder shall not be undertaken or
permitted by Wells Timberland, except in such manner that none of the Administrative Agent or the
Lenders shall be liable in any event for any of such activities under applicable Environmental
Laws, including claims based upon the existence of any



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Hazardous Material, non-hazardous wastes,
discoloration or degradation of any water or streams, interference with the bed of any stream or
the natural flow thereof, reclamation or revegetation. Wells Timberland shall assure that all
reclamation and revegetation of the Timberland that is conducted as a result of any Mineral Lease
be timely completed in accordance with applicable Environmental Laws, other Laws and applicable
Best Management Practices.




               (v) Without limiting Section 7.1.6, in connection with the Mineral Activity, the
Borrowers shall, to the extent required by applicable Environmental Laws, clean up, or cause to be
cleaned up, any Hazardous Material or nonhazardous waste materials held, released, spilled,
abandoned or placed upon the Timberland or released into the environment by Wells Timberland, any
lessees, contractors, subcontractors, suppliers, employees, agents, or by anyone for whom Wells
Timberland or any lessees are responsible, at its own expense.



               (vi) Wells Timberland shall use commercially reasonable efforts (A) to cause all Mineral
Activity to be conducted with due regard for the present and future value of both the Timberland as
Timber producing coal mining and oil and gas properties, particularly with respect to the support
of overlying coal seams and prevention of slips, slides, squeezes and other distortions of said
seams; (B) all Mineral Activity be conducted in material compliance with all Environmental Laws and
other Laws; (C) to require that any Mineral Activity complies with all material conditions,
covenants and limitations contained in any of the instruments under which Wells Timberland holds
title to the Timberland or where Wells Timberland owns minerals without ownership of the surface
overlying said minerals; and (D) to cause its tenants to obtain rights from the then surface owners
with respect to such Mineral Activities.



               (vii) The Administrative Agent shall have the right (subject to the proviso of the last
sentence of clause (d) of Section 7.1.5), but not the duty, at any and all
reasonable times to enter upon the Timberland for the purposes of inspecting the Mineral Activities
being conducted thereon, including the financial records, royalty summaries, mining reports,
weighing devices and maps related thereto. Wells Timberland shall keep, or use
commercially reasonable efforts to cause its tenants to keep, adequate and accurate records of
all depths of mining and drilling, maps of the locations of all Mineral Activities, both above and
below ground, quantities of minerals extracted and amounts shipped, and all payments payable and
received with respect to all minerals and Mineral Leases. Wells Timberland agrees that it will
promptly furnish the Administrative Agent, without cost to the Administrative Agent, the results of
all core drilling and other exploratory openings and tests made for coal, oil, gas or other
minerals upon the Timberland, including the results of any analytical test made to determine the
quality, type or characteristics thereof, upon request.



               (viii) Without limiting Section 11.4, the Borrowers shall indemnify and hold harmless
the Administrative Agent and the Lenders and their respective officers, directors and employees and
their respective successors, from and against all fines, penalties, actions, suits, legal
proceedings and all costs and expenses associated therewith (including legal fees) arising out of
or in any way connected with any failure of any Borrower to perform its obligations under this
Section.



          SECTION 7.2.19 Fundamental Change as to Wells Installment Note Issuer. No Loan Party will
seek, vote in favor of any act, or give a consent required or requested



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to (a) liquidate, wind up
or dissolve, in whole or in part Wells Installment Note Issuer; (b) consolidate or merge Wells
Installment Note Issuer with or into any other Person, nor sell, convey, transfer or lease Wells
Installment Note Issuer’s assets substantially as an entirety to any Person nor permit any Person
to consolidate or merge with or into Wells Installment Note Issuer, nor permit any Person to sell,
convey, transfer or lease its assets substantially as an entirety to Wells Installment Note Issuer;
or (c) amend any provisions of Wells Installment Note Issuer’s organizational documents, whether
directly or indirectly, through one or more agreements or intermediaries. Each Loan Party will
cause Wells Installment Note Issuer to comply with the terms of its organizational documents as in
effect on the date hereof. Notwithstanding the foregoing, Wells Installment Note Issuer shall be
permitted to transfer the Equity Interests in Wells Timberland to Wells Acquisition after the one
year anniversary of the Funding Date.




          SECTION 7.2.20 Unrestricted Timber Transactions. The Loan Parties shall not consummate any
Unrestricted Timber Transaction unless (a) the certification required to be delivered pursuant to
clause (p) of Section 7.1.1 has been timely delivered as therein provided and (b)
no Lender Party has objected to the accuracy of any statement contained in such certification (it
being agreed that if any Lender Party fails to object to such certification, on or prior to 10
Business Days after the delivery thereof, such Lender Party shall be deemed to have accepted such
certification). If any Lender Party reasonably objects to such certification, the relevant
Unrestricted Timber Transaction shall not be consummated until the Loan Parties provide reasonably
satisfactory evidence as to the accuracy of the statements contained in such certification.
Without limiting the foregoing, if, in connection with any Unrestricted Timber Transaction that is
consummated pursuant to clause (a)(i) of the definition thereof, Wells REIT, Wells
Partnership or Wells TRS are subject in any respect to any material restriction or obligation
imposed by, or provide any material benefit to, any of the lenders providing financing in
connection with such Unrestricted Timber Transaction,
then such Persons shall be subject to similar restrictions or obligations, or provide similar
benefits, to the Lender Parties pursuant to the Loan Documents (which additional restrictions,
obligations and benefits shall be evidenced by amendments to the relevant Loan Documents within
five Business Days after the Administrative Agent makes a request therefore).




          SECTION 7.2.21 Transfer of Funds. Wells Timberland and Wells TRS Subsidiary shall not fail
to cause their account debtors and other Persons owing money to them to deposit the same into
either (a) (i) in the case of Wells Timberland, in the Revenue Account, or (ii) in the case of
Wells TRS Subsidiary, in the Wells TRS Subsidiary Account, or (b) in lock-box accounts pursuant to
arrangements satisfactory to the Administrative Agent. In addition Wells TRS Subsidiary shall not
fail to pay into the Revenue Account, as and when due, all amounts owing by it to Wells Timberland
pursuant to the Master Stumpage Agreement or otherwise.




ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES




     SECTION 8.1 Listing of Events of Default. Each of the following events or occurrences
described in this Section shall constitute an “Event of Default”.



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          SECTION 8.1.1 Non-Payment of Obligations. Either Borrower or any other Loan Party shall
default in the payment or prepayment when due of any (a) principal or (b) interest on a Loan or (c)
any fee, indemnity or other monetary Obligation hereunder or under any other Loan Document,
provided that the failure to make any such payments pursuant to clause (b) or
(c) shall not result in an Event of Default unless such failure is not cured within two
Business Days after the occurrence thereof.




          SECTION 8.1.2 Breach of Representations and Warranties. Any representation or warranty of
either Borrower or any other Loan Party made or deemed to be made hereunder, in any other Loan
Document or any other writing or certificate furnished by or on behalf of either Borrower or any
other Loan Party to any Lender Party in connection with this Agreement or any such other Loan
Document (including any certificates delivered pursuant to Article V), is or shall be
incorrect in any respect when made (or in any material respect if such representation or warranty
is not by its terms already qualified as to materiality).




          SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations. Either Borrower or any
other Loan Party shall default in the due performance and observance of any of its obligations
under Sections 4.10, 5.2, 6.25 and 7.1.1 (subject to a three
Business Day grace period, except with respect to clause (g) of Section 7.1.1, for
which there shall be no grace period), clause (a) of Section 7.1.2 (with respect to
the Borrowers’ existence), 7.1.4, 7.1.5, 7.1.8, 7.1.9 (with respect
to maintaining the Administrative Agent’s first priority security interest in the
Senior Priority Collateral and Senior Exclusive Collateral and second priority security interest in
the Subordinated Priority Collateral), 7.1.12, 7.1.13, 7.1.14 or
7.2.




          SECTION 8.1.4 Non-Performance of Other Covenants and Obligations. Either Borrower or any
other Loan Party shall default in the due performance and observance of any other agreement
contained herein or in any other Loan Document (other than items covered by Sections 8.1.1
or 8.1.3), and such default shall continue unremedied for a period of 30 days after the
earlier of (a) any officer of the Borrowers or any other Loan Party having knowledge thereof or (b)
notice thereof having been given to any Borrower or other Loan Party.




          SECTION 8.1.5 Default on Other Obligations. (a) Any “Event of Default” shall occur,
whether on account of the non-payment of any amount, the failure to comply with any covenant or
representation or warranty or otherwise on account of any Permitted Subordinated Debt or pursuant
to any Subordinated Debt Document and the Subordinated Administrative Agent shall notify the
Administrative Agent pursuant to clause (a)(i)(A) of Section 6 of the Subordinated Intercreditor
Agreement of its intention to commence Enforcement Action against all or any part of the Senior
Priority Collateral.




          (b) Any event of default shall occur under any agreement, document or instrument in which any
Borrower or any other Loan Party is a party (other than the Subordinated Debt Documents), or their
property or assets are bound, which involves a claim or liability of $500,000 or more.




          SECTION 8.1.6 Judgments. Any money judgment, writs or warrants of attachment, executions
or similar processes involving any aggregate amount (to the extent not paid or fully covered by
insurance maintained in accordance with the requirements of this



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Agreement and as to which the
relevant insurance company has acknowledged coverage) in excess of $250,000 shall be rendered
against either Borrower, any other Loan Party or any of the respective properties and either (a)
enforcement proceeding shall have been commenced by any creditor upon such judgment or order or (b)
there shall be any period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal, bond or otherwise, shall not be in effect.




          SECTION 8.1.7 Installment Note Default. Any default or event of default under any
Installment Note Document shall have occurred.




          SECTION 8.1.8 Bankruptcy, Insolvency, etc. Either Borrower or any other Loan Party shall:




          (a) generally fail to pay debts as they become due, or admit in writing its inability to pay
debts as they become due;




          (b) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver,
sequestrator, or other custodian for either Borrower or any other Loan Party or any property of any
thereof, or make a general assignment for the benefit of creditors;




          (c) in the absence of such application, consent or acquiescence, permit or suffer to exist the
involuntary appointment of a trustee, receiver, sequestrator or other custodian for either Borrower
or any other Loan Party or for any part of the property of any thereof, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within 30 days;




          (d) permit or suffer to exist the involuntary commencement of, or voluntarily commence, any
bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or
insolvency Laws, or permit or suffer to exist the involuntary commencement of, or voluntarily
commence, any dissolution, winding up or liquidation proceeding, in each case, by or against either
Borrower or any other Loan Party; provided, however, that if not commenced by
either Borrower or any such other Loan Party such proceeding shall be consented to or acquiesced in
by either Borrower or any such other Loan Party, or shall result in the entry of an order for
relief or shall remain for 30 days undismissed; or




          (e) take any corporate action authorizing, or in furtherance of, any of the foregoing.




          SECTION 8.1.9 Impairment of Loan Documents, Security, etc. Any Loan Document, or any Lien
granted thereunder, shall (except in accordance with its terms), in whole or in part, terminate,
cease to be effective or cease to be the legally valid, binding and enforceable obligation of the
Borrowers or any other Loan Party that is a party thereto; either Borrower, any other Loan Party,
any Governmental Authority or any other Person shall, directly or indirectly, contest in any manner
such effectiveness, validity, binding nature or enforceability; or any security interest in favor
of the Administrative Agent for the benefit of the Lender Parties securing (or required to secure)
any Obligation shall, in whole or in part, cease to be (a) a perfected first priority security
interest in the Senior Priority Collateral or Senior Exclusive Collateral or (b) a perfected second
priority security interest in the Subordinated Priority Collateral, subject to the Liens permitted
by Section 7.2.3.





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          SECTION 8.1.10 Non-Payment of Taxes. Either Borrower or any other Loan Party shall have
failed to pay when due any Taxes or other charges of any Governmental Authority in excess of
$250,000, except any such Taxes or other charges which are being diligently contested by it in good
faith by appropriate proceedings which stay the enforcement of any Lien resulting from the
non-payment thereof and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.




          SECTION 8.1.11 Impairment of Material Agreements. Any Material Agreement shall (except in
accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be
the legally valid, binding and enforceable obligation of either Borrower or any other Loan Party
that is a party thereto; or there shall be any event of default under any Material Agreement.




          SECTION 8.1.12 Impairment of Business. (a) Either Borrower or any other Loan Party
shall be prohibited or otherwise materially restrained, for a period of 10 or more consecutive
days, from conducting all or any material part of its business in the ordinary course in accordance
with past practice, as a result of (i) any casualty, strike, lockout, labor dispute, embargo,
condemnation, order of any Governmental Authority or act of God, (ii) one or more licenses,
permits, accreditations or authorizations of either Borrower or any other Loan Party being
suspended, limited or terminated or (iii) any other reason.




          (b) The indictment or threatened indictment of either Borrower or any other Loan Party under
any criminal statute, or the commencement or threatened commencement of a criminal or civil
proceedings against either Borrower or any other Loan Party, pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture to any Governmental
Authority of any portion of the property of such Person.




          SECTION 8.1.13 Subordinated Debt Documents. (a) The Subordination Provisions shall fail
to be enforceable by the Administrative Agent or any Lender which has not effectively waived the
benefits thereof; (b) any Borrower, any other Loan Party, any of their Related Parties or any
holder of Permitted Subordinated Debt shall, directly or indirectly, disavow or contest in any
manner (i) the effectiveness, validity or enforceability of any of the Subordination Provisions or
the other terms contained in the Subordinated Intercreditor Agreement; (ii) that any of the
Subordination Provisions or the other terms contained in the Subordinated Intercreditor Agreement
exist for the benefit of the Administrative Agent and the Lenders; or (iii) that all payments
realized from the liquidation of the Real Property or any other Collateral shall be subject to the
Subordination Provisions or the other terms contained in the Subordinated Intercreditor Agreement;
or (c) any of the Subordination Provisions or the other terms contained in the Subordinated
Intercreditor Agreement shall (except in accordance with their terms), in whole or in part,
terminate, cease to be effective or cease to be the legally valid, binding and enforceable
obligations of any holder of Permitted Subordinated Debt.




          SECTION 8.1.14 Bankruptcy Claims. Either Borrower or any other Loan Party shall be subject
to a claim arising out of any proceeding of the type referred to in Section 8.1.8 to which
MW or any of its Affiliates shall be subject.





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          SECTION 8.1.15 MWV SPE Capital Note. Any demand shall be made for payment by the Wells
Installment Note Issuer under the MWV SPE Capital Note.




          SECTION 8.1.16 Material Adverse Effect. There shall have occurred any event described in
clause (a), (c), (d) or (e) of the definition “Material Adverse
Effect”.




     SECTION 8.2 Action if Bankruptcy. If any Event of Default described in clauses (a)
through (d) of Section 8.1.8 shall occur, the Commitments (if not theretofore
terminated) shall automatically terminate and the outstanding principal amount of all outstanding
Loans and all other Obligations shall automatically become immediately due and payable, without
notice or demand.



     SECTION 8.3 Action if Other Event of Default. If any Event of Default (other than any
Event of Default described in clauses (a) through (d) of Section 8.1.8)
shall occur and be continuing for any reason, whether voluntary or involuntary, the Administrative
Agent, may, and upon the direction of the Required Lenders, shall, by notice to Wells Acquisition
declare all or any portion of the outstanding principal amount of the Loans and other Obligations
to be due and payable and the Commitments (if not theretofore terminated) to be terminated,
whereupon (without further notice, demand or presentment) the full unpaid amount of such Loans and
other Obligations which shall be so declared due and payable shall become immediately due and
payable and the Commitments shall terminate.



     SECTION 8.4 Remedies. If an Event of Default shall occur and be continuing, the
Administrative Agent may exercise, in addition to all other rights and remedies granted to it in
this Agreement, the other Loan Documents and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured party under the
U.C.C. Without limiting the generality of the foregoing, the Administrative Agent without demand
of performance or other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by Law or referred to below) to or upon any Borrower, any other Loan Party or
any other Person (each and all of which demands, presentments, protests, advertisements and notices
are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or
contract to do any of the foregoing), in one or more parcels or as an entirety at public or private
sale or sales, at any exchange, broker’s board or office of the Administrative Agent or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk. The Administrative
Agent shall have the right upon any such public sale or sales, and, to the extent permitted by Law,
upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold,
free of any right or equity of redemption in the Borrowers, which right or equity is hereby waived
or released. The Borrowers and each other Loan Party further agree, at the Administrative Agent’s
request, to assemble the Collateral and make it available to the Administrative Agent at places
which the Administrative Agent shall reasonably select, whether at the Borrowers’ premises or
elsewhere. The Administrative Agent shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all costs and expenses of every kind
incurred therein or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights



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of the Lender Parties hereunder, including without
limitation attorneys’ fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as the Administrative Agent may elect, and only after such application
and after the payment by the Administrative Agent of any other amount required or permitted by any
provision of Law, including without limitation Section 9-615(a)(3) of the UCC, need the
Administrative Agent account for the surplus, if any, to the Borrowers. If any notice of a
proposed sale or other disposition of Collateral shall be required by Law, such notice shall be
deemed reasonable and proper if given at least ten (10) days before such sale or other disposition.
The Borrowers shall remain liable for any deficiency (plus accrued interest thereon as
contemplated pursuant to Article III) if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorneys
employed by the Administrative Agent to collect such deficiency. The rights, powers and remedies
of the Administrative Agent and the Lenders under this Agreement shall be cumulative and not
exclusive of any other right, power or remedy which the Administrative Agent or the Lenders may
have against the Borrowers pursuant to this Agreement or the other Loan Documents, or existing at
Law or in equity or otherwise.



     SECTION 8.5 Foreclosure on Collateral. If any Event of Default shall occur and be
continuing, the Administrative Agent shall have, in addition to all rights and remedies provided
for in the U.C.C. and applicable Law, all such rights (including the right of foreclosure) with
respect to the Collateral as provided in the Pledge Agreement, the Security Agreement, the Wells
REIT Security Agreement, the Mortgages and each other Loan Document.



     SECTION 8.6 Appointment of Administrative Agent as Attorney-in-Fact. The Borrowers hereby
constitute and appoint the Administrative Agent as the Borrowers’ attorney-in-fact with full
authority in the place and stead of the Borrowers and in the name of the Borrowers, from time to
time in the Administrative Agent’s discretion while any Event of Default is continuing, to take any
action and to execute any instrument that the Administrative Agent may deem necessary or advisable
to accomplish the purposes of this Agreement and any other Loan Document, including to: (a) ask,
demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Collateral; (b) enforce the obligations of
obligors of account receivables or other Person obligated on the Collateral and enforce the rights
of the Borrowers with respect to such obligations and to any property that secures such
obligations; (c) file any claims or take any action or institute any proceedings that the
Administrative Agent may deem necessary or desirable for the collection of or to preserve the value
of any of the Collateral or otherwise to enforce the rights of the Administrative Agent and the
Lenders with respect to any of the Collateral; (d) pay or discharge Taxes or Liens levied or placed
upon or threatened against the Collateral in amounts necessary to discharge the same as determined
by the Administrative Agent in its sole discretion (all of such payments made by the Administrative
Agent shall become Obligations, due and payable immediately without demand); (e) sign and endorse
any invoices, freight or express bills, bills of lading, storage or warehouse receipts,
assignments, verifications and notices in connection with the account receivables, chattel paper or
general intangibles and other documents relating to the Collateral; (f) take any act required of
the Borrowers under this Agreement or any other Loan Document; and (g) sell, transfer, pledge, make
any agreement with respect to or otherwise deal with any of the Collateral as fully and completely
as though the Administrative Agent were the absolute owner thereof for all purposes,
and to do, at the Administrative Agent’s option and the Borrowers’ expense, at any time, all acts



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and things that the Administrative Agent deems necessary to protect, preserve or realize upon the
Collateral. The Borrowers hereby ratify and approve all acts of the Administrative Agent made or
taken pursuant to this Section, agrees to cooperate with the exercise by the Administrative Agent
in the exercise of its rights pursuant to this Section and shall not, either directly or
indirectly, take or fail to take any action which could impair, in any respect, any action taken by
the Administrative Agent pursuant to this Section. The appointment pursuant to this Section of the
Administrative Agent as the Borrowers’ attorney and the Administrative Agent’s rights and powers
are coupled with an interest and are irrevocable, so long as any of the Commitments hereunder shall
be in effect and until payment in full in cash of all Obligations.



     SECTION 8.7 Payments Upon Acceleration. After the occurrence of an Event of Default and
the acceleration of the Obligations pursuant to Section 8.2 or 8.3, the
Administrative Agent shall apply all payments in respect of the Obligations and all proceeds of
Collateral to the Obligations in the following order:



          (a) first, to pay Obligations in respect of any fees, expenses or indemnities then due
to the Administrative Agent (including, without limitation, fees and expenses referred to in
Sections 11.3 or 11.4), whether or not the same is allowed in any bankruptcy or
insolvency proceeding of any Loan Party;




          (b) second, to pay Obligations in respect of any fees, expenses or indemnities then
due to the Lenders, whether or not the same is allowed in any bankruptcy or insolvency proceeding
of any Loan Party;




          (c) third, to pay interest due in respect of the Loans, whether or not the same is
allowed in any bankruptcy or insolvency proceeding of any Loan Party;




          (d) fourth, to pay the principal outstanding with respect to the Loans;




          (e) fifth, to pay all other Obligations; and




          (f) sixth, to pay who may be lawfully entitled thereto.



In carrying out the foregoing, (i) amounts received shall be applied in the numerical order of each
category and shall only be applied to the next succeeding category after all amounts in the
preceding category have been paid in full in cash and (ii) amounts owing to each relevant Lender
Party in clauses (b) through (e) shall be allocated to the payment of the relevant
Obligations ratably, based on the proportion of each Lender Party’s interest in the aggregate
outstanding Obligations described in each such relevant clause.




ARTICLE IX




REVENUE ACCOUNT




     SECTION 9.1 Establishment of Revenue Account.



          SECTION 9.1.1 Revenue Account. The Borrowers and each other Loan Party acknowledge and
confirm that, on or before the date hereof and pursuant to the terms of



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this Agreement, Wells
Timberland has established and will maintain an account for the benefit of the Administrative
Agent, as first priority secured party for the benefit of the Lender Parties, and the Subordinated
Administrative Agent, as second priority secured party for the benefit of the Subordinated Lender
Parties, to serve as the “Revenue Account” (said account, and any account replacing the same in
accordance with this Agreement, the “Revenue Account”; the depositary institution in which
the Revenue Account is maintained, the “Account Bank”). The Revenue Account shall be under
the sole dominion and control of the Administrative Agent, and neither Wells Timberland nor any
other Loan Party shall have any rights to control or direct the investment or payment of funds
therein other than the right of Wells Timberland to direct the investments in Cash Equivalent
Investments so long as no Default or Event of Default has occurred and is continuing. The
Administrative Agent reserves the right, from time to time in its sole discretion, to change the
Account Bank.




          SECTION 9.1.2 Account Name. The Revenue Account shall be in the name of Wells Timberland,
in favor of the Administrative Agent, as first priority secured party, and the Subordinated
Administrative Agent, as second priority secured party; provided, that if the
Administrative Agent is replaced, the Account Bank, at the departing Administrative Agent’s
request, shall change the name of the secured party with respect to the Revenue Account to the name
of the replacement Administrative Agent.




          SECTION 9.1.3 Characterization of Account. The Revenue Account is and shall be a “deposit
account” as such term is defined in Section 9—102(a)(29) of the U.C.C.. Neither Wells Timberland
nor any other Loan Party shall be entitled to exercise any rights, other than the right of Wells
Timberland to direct the making of Cash Equivalent Investments from amounts on deposit in the
Revenue Account so long as no Default or Event of Default has occurred and is continuing, and that
the Account Bank shall treat only the Administrative Agent as entitled to exercise any and all
other rights with respect to the Revenue Account. All securities or other property underlying any
financial assets credited to the Revenue Account (other than cash) shall be registered in the name
of the Account Bank, indorsed to the Account Bank or in blank or credited to another securities
account maintained in the name of the Account Bank and in no case will any financial asset credited
to the Revenue Account be registered in the name of Wells Timberland or any other Loan Party,
payable to the order of Wells Timberland or any other Loan Party or specially indorsed to Wells
Timberland or any other Loan Party.




          SECTION 9.1.4 Investments. Sums on deposit in the Revenue Account shall not be invested except in Cash Equivalent
Investments. Unless a Default or Event of Default has occurred and is continuing, Wells Timberland
shall have the right to direct the Administrative Agent to invest sums on deposit in the Revenue
Account in Cash Equivalent Investments; provided, that under no circumstances shall the
Lender Parties or the Subordinated Lender Parties be liable for any losses that may be incurred by
Wells Timberland in the making of any such Cash Equivalent Investments. Wells Timberland hereby
irrevocably authorizes and directs the Account Bank to apply any income earned from Cash Equivalent
Investments to the Revenue Account. Wells Timberland shall be responsible for payment of any
federal, state or local income or other tax applicable to income earned from Cash Equivalent
Investments. The Revenue Account shall be assigned the federal tax identification number of Wells
Timberland. Any interest, dividends or other earnings from amounts on deposit in the Revenue
Account shall



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be added to the balance in the Revenue Account and allocated and/or disbursed in
accordance with the terms hereof.




     SECTION 9.2 Deposit of Revenues into the Revenue Account. Wells Timberland shall cause and
direct all amounts that are payable to it, including under the Master Stumpage Agreement from the
harvesting of Timber, constituting lease revenues, constituting Collateral Disposition Proceeds,
constituting Collateral Insurance Proceeds, constituting payments under the LTC Lease Support
Agreement (including the LTC Lease Disposition Proceeds) and all other revenues from the ownership
and operation of the Collateral to be deposited directly in the form received into the Revenue
Account. Wells Timberland represents, warrants and covenants that except for Interest Reserve
Account and the Wells TRS Subsidiary Account, there are no other accounts into which revenues from
the ownership and operation of the Collateral are deposited. So long as any Obligations shall be
outstanding, neither Wells Timberland nor any other Loan Party shall open any other accounts for
the deposit of revenues from the ownership and operation of the Collateral.



     SECTION 9.3 Payment of Funds From Accounts.(a) To the extent funds, other than
Collateral Disposition Proceeds, Collateral Insurance Proceeds or LTC Lease Disposition Proceeds,
are deposited in the Revenue Account, except as otherwise provided pursuant to Section 8.6
and subject to the Subordinated Intercreditor Agreement (which Section and agreement shall govern
how the Loans are repaid if the Lenders are exercising their remedies during the continuance of any
Event of Default), the Administrative Agent shall, at least once each calendar month and more
frequently as it may determine in its sole discretion, authorize the withdrawal of amounts on
deposit in the Revenue Account to make payments in the following order of priority,
provided that no payment shall be made under any clause below until all payments then
required to be made under all prior clauses shall have been fully paid (the “Revenue
Waterfall”):



               (i) to the payment of Obligations in respect of fees, expenses and indemnities then due and
owing to the Administrative Agent and the Lenders, including, without limitation, the fees and
expenses referred to in Sections 11.3 and 11.4 (it being agreed that no amounts
shall be paid to the Lenders pursuant to this clause until all amounts then due and owing to the
Administrative Agent pursuant to this clause have been paid);



               (ii) to the payment of Wells Operating Expenses then due and owing;



               (iii) to the payment of (x) accrued and unpaid interest on the Loans and (y) amounts due to a
Lender under any Rate Protection Agreement with a Borrower, in each case then due and owing;



               (iv) to the deposit in the Interest Reserve in an amount necessary to satisfy the requirements
of Section 7.1.12;



               (v) to make mandatory prepayments on the outstanding principal amount of the Loans, in an
amount sufficient to reduce the Senior Loan to Value Ratio to 40%, together with interest on the
principal amount so prepaid as provided in clause (b) of Section 3.2.3;



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               (vi) to make prepayments on the outstanding principal amount of the Subordinated Notes and
other amounts owing under the Subordinated Debt Documents (including payment of the “Exit Fee” (as
defined in the Subordinated Credit Agreement on the date hereof)), until the Subordinated Notes and
other amounts owing under the Subordinated Debt Documents are paid in full;



               (vii) to the payment of (A) Wells Asset Management Fees or (B) Wells Other Operating Expenses
then due and owing; and



               (viii) to fund (A) the acquisition of assets by the Borrowers pursuant to clause (d)
of Section 7.2.8 or (B) dividends, distributions, other payments and loans pursuant to
clause (a)(y)(A)-(E) of Section 7.2.6.


Notwithstanding anything to the contrary herein, no payments shall be made under clauses
(ii), (vi), (vii) and (viii) above (A) unless (I) Wells Acquisition has
delivered to the Administrative Agent a duly completed and executed Compliance Certificate for the
most recent Fiscal Quarter for which the same is required to be delivered pursuant to clause
(e) of Section 7.1.1 and (II) the Administrative Agent has confirmed to Wells
Acquisition that, in its reasonable and good faith determination, the calculations contained
therein are satisfactory (which confirmation the Administrative Agent agrees to provide not later
than five Business Days after the delivery of each such Compliance Certificate (it being agreed
that the failure of the Administrative Agent to fail to provide such confirmation shall constitute
its acceptance of each Compliance Certificate)) and (B) no Default or Event of Default has occurred
and, is continuing. In addition and without restricting the foregoing, any payments from the
Revenue Waterfall to the payment of the Subordinated Notes shall be subject to the terms of the
Subordinated Intercreditor Agreement. Notwithstanding the preceding sentence or any of the terms
of this Section, if any Event of Default has occurred and is continuing under Section
8.1.1, or 8.1.8, or the Administrative Agent or the Lenders are exercising any of their
remedies under Article VIII all amounts from the Revenue Waterfall from and thereafter
shall be applied, first, to the payment of the Obligations, and, second, after the
Discharge of the Senior Obligations but provided that the Subordinated Exclusive Collateral
Transfer Date has not occurred, to the payment of the Subordinated Obligations (it being agreed
that if, the Subordinated Exclusive Collateral Transfer Date has occurred, the security interest of
the Subordinated Administrative Agent and the Subordinated
Lenders in the Account Collateral and other Senior Priority Collateral shall terminate (as provided
in the Subordinated Intercreditor Agreement) and such Persons).




          (b) To the extent funds constituting Collateral Disposition Proceeds, Collateral Insurance
Proceeds or LTC Lease Disposition Proceeds are on deposit in the Revenue Account, the
Administrative Agent shall apply 100% of the same to make mandatory prepayments on the outstanding
principal amount of the Loans pursuant to clause (b) of Section 3.1.2.




          (c) The Administrative Agent agrees that it shall make all payments pursuant to clauses
(a)(iii) and (a)(v) so as to avoid the incurrence of liabilities by the Borrowers under
Section 4.4; provided that (i) in connection with the foregoing the Administrative
Agent is authorized to delay making such payments until such time as it determines in its sole
discretion that no such liabilities would result (it being agreed that no amounts retained by the



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Administrative Agent for such purpose shall be available or applied to the payment of any other
amounts to be paid pursuant to the Revenue Waterfall under any circumstances) and (ii) if any Event
of Default has occurred and is continuing the Administrative Agent may apply amounts available
pursuant to clauses (a)(iii) and (a)(v) at its sole discretion without regard to
the incurrence by the Borrowers of liabilities under Section 4.4.




     SECTION 9.4 Sole Dominion and Control. Wells Timberland and the other Loan Parties
acknowledge and agree that the Revenue Account is subject to the sole dominion, control and
direction of the Administrative Agent (and its authorized agents or designees), subject to the
terms hereof and the Deposit Account Control Agreement. Notwithstanding anything set forth herein
to the contrary, none of Wells Timberland, any other Loan Party nor any other Person, through or
under any of Wells Timberland or any other Loan Party, shall have any control over the use of, or
any right to withdraw any amount from, the Revenue Account, and Wells Timberland and each other
Loan Party acknowledge that the Account Bank shall comply with all instructions originated by the
Administrative Agent without further consent by any of Wells Timberland or other Loan Parties.
Wells Timberland and each other Loan Party acknowledge and agree that the Account Bank shall comply
with the instructions of the Administrative Agent with respect to the Revenue Account without the
further consent of Wells Timberland or any other Loan Party.



     SECTION 9.5 Pledge of Revenue Account.



          SECTION 9.5.1 Security for Obligations. To secure the full and punctual payment and
performance of all the Obligations, Wells Timberland hereby grants to the Administrative Agent, for
its benefit and the benefit of the Lenders, a first priority continuing security interest in and to
all of Wells Timberland’s right, title and interest in, to and under the following property,
whether now owned or existing or hereafter acquired or arising and regardless of where located (all
of the same, collectively, the “Account Collateral”):




          (a) the Revenue Account and all cash, checks, drafts, certificates and instruments, if any,
from time to time deposited or held in the Revenue Account, including,
without limitation, all deposits or wire transfers made to the Revenue Account, and any and
all Account Collateral;




          (b) any and all amounts on deposit in the Revenue Account that are invested in Cash Equivalent
Investments;




          (c) all interest, dividends, cash, instruments and other property from time to time received,
receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing; and




          (d) to the extent not covered by clauses (a), (b) or (c), all
“proceeds” (as defined under the U.C.C.) of any or all of the foregoing.



The Administrative Agent and the Account Bank, as agent for the Administrative Agent, shall have
with respect to the foregoing collateral, in addition to the rights and remedies herein set forth,
all of the rights and remedies available to a secured party under the U.C.C., as if such rights and
remedies were fully set forth herein.





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          SECTION 9.5.2 Rights on Default. Upon the occurrence and during the continuance of any
Event of Default the Administrative Agent may exercise any and all rights and remedies with respect
to the Account Collateral under the Loan Documents, the U.C.C. and other applicable Laws, including
liquidating the same and applying all proceeds therefrom to the payment of the Obligations as set
forth in Section 8.6.




          SECTION 9.5.3 Financing Statement; Further Assurances. Wells Timberland and each other
Loan Party agree that at any time and from time to time, at the expense of the Borrowers, Wells
Timberland and each other Loan Party will promptly execute and deliver all further instruments and
documents, and take all further action, that may be reasonably necessary or desirable, or that the
Administrative Agent or any Lender may reasonably request, in order to perfect and protect any
security interest granted in the Account Collateral or purported to be granted or to enable the
Administrative Agent or any Lender to exercise and enforce its rights and remedies hereunder with
respect to any Account Collateral. In the event of any change in name, identity or structure of
any of Wells Timberland or as otherwise reasonable requested by the Administrative Agent from time
to time, each such Person, at its sole cost and expense, shall promptly notify the Administrative
Agent and take all actions reasonably requested by the Administrative Agent in order to maintain
its first priority perfected security interest in the Account Collateral.




     SECTION 9.6 Administrative Agent Appointed Attorney-In-Fact. Wells Timberland and each
other Loan Party hereby irrevocably constitute and appoint the Administrative Agent (and its agents
and designees) as such Person’s true and lawful attorney-in-fact, coupled with an interest and with
full power of substitution, to execute, acknowledge and deliver at any time any instruments and to
exercise and enforce every right, power, remedy, option and privilege of Wells Timberland with
respect to the Account Collateral, and do in the name, place and stead of Wells Timberland, all
such acts, things and deeds for and on behalf of
and in the name of Wells Timberland, which Wells Timberland is required to do hereunder or under
the other Loan Documents, or which the Account Bank or the Administrative Agent (or its agents or
designees) may deem necessary or desirable, to more fully vest the in the Administrative Agent (or
its agents or designees) the rights and remedies provided for in this Section. The foregoing
powers of attorney are irrevocable and coupled with an interest. Such authority in favor of the
Administrative Agent (and its agents and designees) pursuant to this Section shall include the
right to (a) take control in any manner of any item of payment in respect of the Account Collateral
or otherwise received in or for deposit in the Revenue Account, (b) have access to any lockbox or
postal box into which remittances from account debtors or other obligors in respect of account
receivables or other proceeds of Collateral are sent or received, (c) endorse Wells Timberland’s
name upon any items of payment in respect of account receivables or constituting Collateral or
otherwise received by the Administrative Agent (or its agents or designees) or any Lender and
deposit the same in Revenue Account, (d) endorse Wells Timberland’s name upon any chattel paper,
document, instrument, invoice or similar document or agreement relating to any account receivable
or any goods pertaining thereto or any other Collateral, including any warehouse or other receipts,
or bills of lading and other negotiable or non-negotiable documents, and (e) sign Wells
Timberland’s name on any verification of account receivables and notices thereof to account debtors
or any secondary obligors or other obligors in respect thereof. Wells Timberland hereby releases
the Administrative Agent (or its agents or designees) and the Lenders and their respective
officers, employees and designees from any



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liabilities arising from any act or acts under this
power of attorney and in furtherance thereof, whether of omission or commission, except as a result
of any such Person’s or any Lender’s own gross negligence or willful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.



ARTICLE X

THE ADMINISTRATIVE AGENT




     SECTION 10.1 Appointment; Lender Indemnification. (a) Each Lender hereby irrevocably
appoints CoBank to act on its behalf as Administrative Agent under and for purposes of this
Agreement and each other Loan Document. Each Lender authorizes the Administrative Agent to act on
behalf of such Lender under this Agreement and each other Loan Document and, in the absence of
other written instructions from the Required Lenders received from time to time by the
Administrative Agent (with respect to which the Administrative Agent agrees that it will comply,
except as otherwise provided in this Section or as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically delegated to the Administrative Agent by the
terms hereof and thereof, together with such powers as may be reasonably incidental thereto. In
performing its duties hereunder the Administrative Agent is acting solely on behalf of itself and
the Lenders, and shall not have any fiduciary, trust or similar relationship with the Borrowers or
any other Loan Party. Without limiting the foregoing, the parties agree that the duties of the
Administrative Agent shall be mechanical and administrative in nature. The provisions of this
Article are solely for the benefit of the Administrative Agent and the Lenders, and neither the
Borrowers nor any other Loan Party shall have rights as a third party beneficiary of any of such
provisions



          (b) (i) Without limiting clause (b) of Section 10.4, each Lender hereby
indemnifies (which indemnity shall survive any termination of this Agreement) the Administrative
Agent, pro rata, from and against any and all liabilities, obligations, losses,
damages, claims, costs or expenses of any kind or nature whatsoever which may at any time be
imposed on, incurred by, or asserted against, the Administrative Agent in any way relating to or
arising out of this Agreement or any other Loan Document, including reasonable attorneys’ fees, and
as to which the Administrative Agent is not reimbursed by the Borrowers; provided,
however, that no Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, claims, costs or expenses which are determined by a court of
competent jurisdiction in a final non-appealable judgment to have resulted solely from the gross
negligence or willful misconduct of the Administrative Agent.




          (ii) The Administrative Agent shall not be required to take any action hereunder or under any
other Loan Document, or to prosecute or defend any suit in respect of this Agreement, the Notes or
any other Loan Document, unless it is indemnified hereunder to its satisfaction. If any indemnity
in favor of the Administrative Agent shall be or become, in the determination of the Administrative
Agent, inadequate, the Administrative Agent may call for additional indemnification from the
Lenders and cease to do the acts indemnified against hereunder until such additional indemnity is
given.




     SECTION 10.2 Exculpation. (a) Neither the Administrative Agent, nor any of its
directors, officers, employees, agents, Affiliates or Related Parties thereof, shall be liable to
any



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Lender for any action taken or omitted to be taken by it under this Agreement or any other Loan
Document, or in connection herewith or therewith, except as determined by a final non-appealable
judgment of a court of competent jurisdiction to have resulted from its or his own willful
misconduct or gross negligence. Under no circumstances shall the Administrative Agent, or any of
its directors, officers, employees, agents, Affiliates or Related Parties thereof, be responsible
for, or incur any liability with respect to: (i) any representations or warranties or statements
made by the Borrowers or any other Loan Party in connection with any Loan Document; (ii) the
effectiveness, enforceability, validity or due execution of any Loan Document; (iii) the creation,
perfection or priority of any Liens purported to be created by any of the Loan Documents; (iv) the
validity, genuineness, enforceability, existence, value or sufficiency of, or taking any action
with respect to the care, protection or preservation of, any Collateral; (v) the performance or
observance by the Borrowers or any other Loan Party of any covenants or agreements contained in the
Loan Documents; (vi) the contents of any certificate, report or document delivered pursuant to any
Loan Document; (vii) the satisfaction of any conditions (including any conditions set forth in
Article V) set forth in the Loan Documents; (viii) the existence of any Default or Event of
Default; or (ix) the financial condition of the Borrowers or any other Loan Party;



          (b) The Administrative Agent (i) is not required to make any inquiry respecting the
performance by the Borrowers or any other Loan Party of its obligations hereunder or under any
other Loan Document (other than to confirm receipt of items expressly required to be delivered to
the Administrative Agent), and any such inquiry which may be made by the Administrative Agent shall
not obligate it to make any further inquiry or to take any
action; (ii) shall not, except as expressly set forth herein and in the other Loan Documents,
have any duty to disclose, or be liable for the failure to disclose, any information relating to
the Borrowers or any of their Affiliates that is communicated to or obtained by the Administrative
Agent or any of its Affiliates; (iii) shall not be deemed to have knowledge of the existence of any
Default or Event of Default unless it has received written notice from an Authorized Officer that
specifically refers to and describes the same; (iv) shall not be subject to any fiduciary or other
implied duties, regardless of whether any Default or Event of Default has occurred and is
continuing; and (v) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby or by
the other Loan Documents that the Administrative Agent is required to exercise as directed in
writing by the Required Lenders (or such other percentage of the Lenders as shall be expressly
provided for herein), provided that the Administrative Agent shall not, in any event, be
required to take any action that, in its opinion or the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or applicable Law.




          (c) The Administrative Agent shall not in any event be liable for any action taken or not
taken by it with the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in
good faith shall be necessary, under the circumstances as provided in Section 10.1).




     SECTION 10.3 Reliance by Administrative Agent. The Administrative Agent shall be entitled
to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing (including any electronic message,
Internet or intranet website posting or other distribution) believed by it to be



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genuine and to
have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan the Administrative Agent may
presume that such condition is satisfactory to such Lender unless the Administrative Agent shall
have received notice to the contrary from such Lender prior to the making of such Loan. The
Administrative Agent may consult with legal counsel (who may be counsel for the Borrowers),
independent accountants and other experts selected by it, and shall not be liable for any action
taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.



     SECTION 10.4 Delegation of Duties. The Administrative Agent may perform any and all of its
duties and exercise any and all of its rights under the Loan Documents by or through any of its
directors, officers, employees, agents, Affiliates or Related Parties thereof, and the exculpatory
provisions of this Article shall apply to each such Person or when acting on behalf of the
Administrative Agent.



     SECTION 10.5 Resignation of Administrative Agent. The Administrative Agent may at any time
give notice of its resignation to the Lenders and the Borrowers. Upon receipt of any such notice
of resignation, the Required Lenders shall have the
right, in consultation with the Borrowers, to appoint a successor, which shall be an insurance
company or a bank with an office in the United States, or an Affiliate of any such insurance
company or bank with an office in the United States. If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation, then the retiring Administrative
Agent may on behalf of the Lenders, appoint a successor Administrative Agent meeting the
qualifications set forth above, provided that if the Administrative Agent shall notify the
Borrowers and the Lenders that no qualifying Person has accepted such appointment, then such
resignation shall nonetheless become effective in accordance with such notice and (a) the retiring
Administrative Agent shall be discharged from its duties and obligations hereunder and under the
other Loan Documents and (b) the Required Lenders shall thereafter perform all the duties of the
retiring Administrative Agent under the Loan Documents, until such time as the Required Lenders
appoint a successor Administrative Agent as provided for above in this Section. Upon the acceptance
of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent, and the retiring (or retired) Administrative Agent shall be discharged from
all of its duties and obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section). The fees payable by the Borrowers to a
successor Administrative Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Borrowers and such successor. After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article
and Section 10.3 and Section 10.4 shall continue in effect, for the benefit of such
retiring Administrative Agent and its directors, officers, employees, agents, Affiliates or Related
Parties thereof, in respect of any actions taken or omitted to be taken by any of them while the
retiring Administrative Agent was acting as Administrative Agent.



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     SECTION 10.6 Rights as a Lender. CoBank shall have the same rights and powers with respect
to the Loans made by it or any of its Affiliates as any other Lender, and may exercise such rights
and powers to the same extent as if it were not the Administrative Agent. CoBank and each of its
Affiliates may accept deposits from, lend money to, act as a financial advisor or in any other
advisory capacity for and generally engage in any kind of business with the Borrowers or any
Subsidiary or Affiliate of the Borrowers as if it were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders. CoBank shall have no duty to disclose any
information obtained or received by it or any of its Affiliates relating to any Loan Party or any
of its Subsidiaries to the extent such information was obtained or received in any capacity other
than as Administrative Agent.



     SECTION 10.7 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon any other Lender Party or any of
their Related Parties, and based on such Lender’s review of the financial information of the
Borrowers and each of their Subsidiaries and such other documents, information and investigations
as such Lender has deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and the other Loan Documents, and to extend
its Commitments. Each Lender also acknowledges that it will, independently and without reliance
upon the any other Lender Party or any of their Related Parties, and based on other documents,
information and investigations as it from time to time shall deem appropriate, continue to make its
own decisions as to exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan Document.



     SECTION 10.8 Copies, etc. The Administrative Agent shall give prompt notice to each
Lender of each notice or request given to the Administrative Agent by the Borrowers and required to
be delivered to the Lenders pursuant to the terms of this Agreement (unless concurrently delivered
to the Lenders by the Borrowers). The Administrative Agent will distribute to each Lender each
document or instrument received for its account and copies of all other communications received by
the Administrative Agent from the Borrowers for distribution to the Lenders by the Administrative
Agent in accordance with the terms of this Agreement.



     SECTION 10.9 Certain Collateral Matters. (a) The Administrative Agent is authorized on
behalf of all the Lenders, without the necessity of any notice to or further consent from the
Lenders, from time to time to take any action with respect to any Collateral or the Loan Documents
which may be necessary to perfect and maintain perfected the security interest in and Liens upon
the Collateral granted pursuant to the Loan Documents.



          (b) Each Lender agrees that none of them shall have any right individually to seek to realize
upon the Collateral, it being agreed that such rights and remedies may be exercised solely by the
Administrative Agent for the benefit of the Lender Parties and the Administrative Agent pursuant to
the terms of the Loan Documents.




          (c) Each Lender irrevocably authorize the Administrative Agent, at its option and in its
discretion, to release any security interest or Lien granted to or held by the Administrative Agent
upon any Collateral (i) upon termination of the Commitments and payment in full in cash of all
Loans and all other Obligations (other than unasserted contingent indemnification Obligations)
payable under this Agreement and the other Loan Documents, (ii)



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constituting property sold or to be
sold or disposed of as part of or in connection with any disposition permitted hereunder, (iii)
constituting property in which the Borrowers or any other Loan Party owned no interest at the time
the security interest and/or Lien was granted, (iv) constituting property leased to the Borrowers
or any other Loan Party under a lease which has expired or been terminated in a transaction
permitted under this Agreement or is about to expire and which has not been, and is not intended by
the Borrowers or any other Loan Party to be, renewed or extended, or (v) if approved by the
Required Lenders or, if required by Section 10.1, each Lender, if applicable. Upon request
by the Administrative Agent at any time, the Lenders will confirm in writing the Administrative
Agent’s authority to release particular types or items of collateral pursuant to this Section.




          (d) The Administrative Agent may from time to time make disbursements and advances that, in
its sole discretion, it deems necessary or desirable to preserve, protect, prepare
for sale or lease or dispose of the Collateral, to enhance the likelihood or maximize the
amount of the Obligations that are repaid by the Loan Party or pay any other amount chargeable to
the Loan Party hereunder. All such amounts disbursed or advanced by the Administrative Agent shall
be Obligations that are secured by the Collateral and be repayable by the Borrowers on demand.




ARTICLE XI

MISCELLANEOUS PROVISIONS




     SECTION 11.1 Waivers, Amendments, etc.(a) Except for actions expressly permitted to
be taken by the Administrative Agent pursuant to the terms of the Loan Documents, no amendment,
modification, termination or waiver of any provision of this Agreement or any other Loan Document,
or any consent to any departure by the Borrowers or any other Loan Party therefrom, shall in any
event be effective unless the same shall be in writing and signed by the Administrative Agent, the
Borrowers and the Required Lenders. Except as set forth in clause (b) below, all such
amendments, modifications, terminations or waivers requiring the consent of the Lenders shall only
require the written consent of the Required Lenders.



          (b) Notwithstanding clause (a), no amendment, modification, termination or waiver of
this Agreement or any other Loan Document shall, unless in writing and signed by the Administrative
Agent, each Lender and each Voting Participant directly affected thereby: (i) increase the
Commitment Amount of any affected Lender or Voting Participant; (ii) reduce the principal of, or
rate of interest on, any Loan of any affected Lender or Voting Participant; (iii) extend the due
date for, or reduce the amount of, any scheduled payment or prepayment under clause (a) or
(b) of Section 3.1.2 of principal on any Loan of any affected Lender or Voting
Participant; (iv) extend the due date for, or reduce the amount of, any payment of interest (other
than any waiver of any increase in the interest rate pursuant to Section 3.2.2) as to any
affected Lender or Voting Participant; (v) alter Section 2.1 or 2.3 or 8.3;
(vi) release any material part of the Collateral unless Section 9.3 has been complied with
(which action shall be deemed to affect all the Lenders); (vii) release any Loan Party from its
guarantee obligations under any Loan Document except as specifically provided for in the Loan
Documents (which action shall be deemed to affect all the Lenders); (viii) alter in any manner the
pro rata sharing of payments required hereunder (which action shall be deemed to
affect all the Lenders and Voting Participants); (ix) amend or waive this Section or the definition
of the “Required Lenders”



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insofar as such definition affects the substance of this Section, or any
other provision specifying the number or percentage of Lenders and Voting Participants required to
take any action under any Loan Document (which action shall be deemed to affect all the Lenders and
Voting Participants); or (x) increase the Commitment Amount (which action shall be deemed to affect
all the Lenders and Voting Participants). Furthermore, no amendment, modification, termination or
waiver affecting the rights or duties of the Administrative Agent under this Agreement or any other
Loan Document shall be effective unless in writing and signed by the Administrative Agent, in
addition to Lenders required hereinabove to take such action.




          (c) No failure or delay on the part of any Lender Party in exercising any power or right under
this Agreement or any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right. No notice to or
demand on the Borrowers in any case shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by any Lender Party shall, except as may be otherwise stated
in such waiver or approval, be applicable to subsequent transactions. The remedies provided in this
Agreement are cumulative, and not exclusive of remedies provided by Law.




     SECTION 11.2 Notices. (a) Except in the case of notices and communications expressly
permitted to be given by telephone and as provided in clause (b), all notices and other
communications provided to any party hereto under this Agreement or any other Loan Document shall
be in writing, shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopier, and addressed to such party at its address or telecopy
number set forth on Schedule III hereto, in an Assignment and Assumption or at such other
address or telecopy number as may be designated by such party in a notice to the other parties
given in accordance with this Section. Notices sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when received; notices sent by
telecopier shall be deemed to have been given when sent (except that, if not given during normal
business hours for the recipient, shall be deemed to have been given at the opening of business on
the next business day for the recipient). Notices delivered through electronic communications to
the extent provided in clause (b), shall be effective as provided therein.



          (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent, provided that the foregoing shall not
apply to notices to any Lender pursuant to Article II if such Lender has notified the
Administrative Agent that it is incapable of receiving notices under such Article by electronic
communication. The Administrative Agent or the Borrowers may, in their discretion, agree to accept
notices and other communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be limited to
particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i)
notices and other communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written acknowledgement),
provided that if such notice or other communication is not sent during the normal business
hours of the recipient, such notice or communication shall be deemed to have been sent at the
opening of business on the next Business Day for the recipient, and (ii) notices or communications
posted



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to an Internet or intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause (i) of
notification that such notice or communication is available and identifying the website address
therefor.




     SECTION 11.3 Payment of Costs and Expenses. (a) Subject to the proviso of the last
sentence of clause (d) of Section 7.1.5, the Borrowers agree to pay all reasonable
fees and out-of-pocket expenses of the Administrative Agent, its directors, officers, employees,
agents, Affiliates and their Related Parties (including,
without limitation, the reasonable fees and out-of-pocket expenses of legal counsel to the
Administrative Agent and accountants, appraisers, investment bankers, environmental advisors,
management consultants and other consultants, if any, who may be retained by the Administrative
Agent) that are actually incurred in connection with:



               (i) the syndication of the credit facilities provided for herein;



               (ii) the negotiation, preparation, execution, delivery and administration of this Agreement
and each other Loan Document (including with respect to due diligence matters, the preparation of
additional Loan Documents, the review and preparation of agreements, instruments or documents
pursuant to Section 7.1.9), and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from time to time hereafter be
required, and the Administrative Agent’s consideration of their rights and remedies hereunder or in
connection herewith from time to time whether or not the transactions contemplated hereby or
thereby are consummated;



               (iii) the filing, recording, refiling or rerecording of the Loan Documents and any other
security instruments executed in connection with the transactions contemplated hereby;



               (iv) the preparation and review of the form of any document or instrument relevant to this
Agreement or any other Loan Document;



               (v) sums paid or incurred to pay any amount or take any action required by the Borrowers or
any other Loan Party under the Loan Documents that the Borrowers or any such Loan Party fail to pay
or take; and



               (vi) costs of appraisals, field exams, inspections and verification of the Collateral,
including, without limitation, travel, lodging, meals and other charges, including the costs, fees
and expenses of independent auditors and appraisers.



          (b) The Borrowers further agree to reimburse each Lender Party upon demand for all
out-of-pocket expenses (including, without limitation, the fees and out-of-pocket expenses of legal
counsel and consultants to each Lender Party who may be retained by each such Lender Party)
actually incurred by each Lender Party in connection with (i) the consideration of their rights and
remedies hereunder in connection with any current or prospective Default or Event of Default; (ii)
the negotiation of any restructuring or “work-out”, whether or not consummated, of any Obligations;
(iii) the enforcement or protection of its rights in connection with this Agreement or any other
Loan Document; and (iv) any litigation, dispute, suit or proceeding relating to this Agreement or
any Loan Document.




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          (c) To the extent that the Borrowers for any reason fail to pay any amount required under
clause (a) or (b) to be paid by it to the Administrative Agent (or any director,
officer, employee, agent, Affiliate or Related Party thereof), each Lender severally agrees to pay
to the Administrative Agent (or any such director, officer, employee, agent, Affiliate or Related
Party thereof), such Lender’s pro rata share (determined as of the time that the
applicable unreimbursed expense or payment is sought) of such unpaid amount. The obligations of the
Lenders under this clause are several and not joint.




          (d) All amounts due under this Section shall be payable promptly and, in any event, not later
than 10 days after demand therefor.




     SECTION 11.4 Indemnification by the Borrowers.(a) The Borrowers agree, at their sole
cost and expense, to indemnify, exonerate and hold each Lender Party and each of their respective
directors, officers, employees, agents, Affiliates and Related Parties (collectively, the
“Indemnified Parties”) free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities, damages and out-of-pocket expenses (in each case whether
asserted by any third party or the Borrowers or any of its Affiliates and irrespective of whether
any such Indemnified Party is a party to the action for which indemnification hereunder is sought),
including, without limitation, the fees and out-of-pocket expenses of the Indemnified Parties
(including the fees and out-of-pocket expenses of legal counsel and consultants to the Indemnified
Parties who may be retained by the Indemnified Parties) (collectively, the “Indemnified
Liabilities”), that arise out of or relate to:



               (i) the negotiation, preparation, execution, delivery or performance of the terms of, or
consummation of the transactions contemplated by, this Agreement, any other Loan Document or any
other agreement or instrument contemplated thereby (including any action brought by or on behalf of
the Borrowers or any other Loan Party as the result of any determination by the Required Lenders
pursuant to Article V not to fund any Borrowing);



               (ii) any Loan and any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loan;



               (iii) any Environmental Laws;



               (iv) any presence, release, or threat of Release of Hazardous Materials, at, upon, under or
within the Real Property;



               (v) the falsity in any material respect of any of the representations made in Section
6.13, whether or not caused by the Borrowers;



               (vi) the failure of the Borrowers to duly perform the covenants, obligations or actions set
forth in Section 7.1.6, including with respect to: (A) the imposition by any Governmental
Authority of any lien upon the Real Property, (B) remediation of the Real Property or any other
land or water contaminated by Hazardous Materials which were generated on or migrated from the Real
Property, (C) liability for personal injury or property damage or damage to the environment, (D)
any diminution in the value of the Real Property and (E) claims, costs, liabilities and damages
arising under any Environmental Law, or any other claims, liabilities or costs which may be
incurred by or asserted against Indemnified Parties directly or



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indirectly resulting from the
presence of any Hazardous Material in, on, under or affecting the Real Property;




               (vii) any actual or prospective claim, litigation, investigation or proceeding relating to any
of the foregoing, whether based on contract, tort or any other theory;


except for any such Indemnified Liabilities arising from the relevant Indemnified Party’s gross
negligence or willful misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. If and to the extent that the foregoing undertaking may be unenforceable
for any reason, the Borrowers agree to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under applicable Law. Such
indemnification shall be available regardless whether the relevant Indemnified Party is found to
have acted with comparative, contributory or sole negligence. Under no circumstances shall any
Indemnified Party be liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications, electronic or other
information transmission systems in connection with this Agreement or the other Loan Documents or
the transactions contemplated hereby or thereby.




          (b) The Borrowers further agree that Lender Parties and their respective directors, officers,
employees, agents, Affiliates and Related Parties shall not assume any liability or obligation for
loss, damage, fines, penalties, claims or duty to remediate or dispose of wastes or Hazardous
Substances on or relating to Real Property as a result of any conveyance of title to the Real
Property to any of the Lender Parties or otherwise or as a result of any inspections or any other
actions made or taken by and Lender Party on the Real Property, except to the extent that any of
the foregoing matters are attributable to actions or omissions by such Lender Party or its agents
constituting fraud, gross negligence or willful misconduct. The Borrowers agree to remain fully
liable under the indemnification contained in this Section.




          (c) Promptly following completion of any actions imposed upon the Borrowers by any order,
judgment or other final resolution of a matter indemnified under this Agreement, or completion of
any other remediation requirement under any applicable Environmental Laws, the Borrowers shall
certify to the Administrative Agent and the Lenders that all such required actions have been
completed. The Administrative Agent or any Lender, at its option, may require the Borrowers, at
the Borrowers’ expense, to obtain and deliver to the Administrative Agent and the Lenders an
environmental report in form and substance reasonably acceptable to Administrative Agent from a
consultant reasonably acceptable to the Administrative Agent confirming that all such actions have
been completed in accordance with any such order, judgment or resolution or other legal or
remediation requirements, and that the Real Property is in compliance in all material respects with
applicable Environmental Laws. To the extent that the Borrowers for any reason fail to indefeasibly
pay any amount required under clause (a) to be paid by it to the Administrative Agent (or
any director, officer, employee, agent, Affiliate or Related Party thereof), each Lender severally
agrees to pay to the Administrative Agent (or any director, officer, employee, agent, Affiliate or
Related Party thereof), such Lender’s pro rata share (determined as of the time
that the applicable unreimbursed indemnity payment is sought) of such unpaid amount. The
obligations of the Lenders under this clause are several and not joint and shall survive the
termination of this Agreement.





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          (d) Each Loan Party also agrees that, without the prior consent of the Administrative Agent
(not to be unreasonably withheld), neither it nor any of its Affiliates will settle, compromise or
consent to the entry of any judgment in any pending or threatened claim, action or proceeding in
respect of which indemnification has been or could be sought under the indemnification provisions
hereof (whether or not any Indemnified Party is an actual or potential party to such claim, action
or proceeding), unless such settlement, compromise or consent (i)
includes a full and unconditional written release of each Indemnified Party from all liability
arising out of such claim, action or proceeding and (ii) does not include any statement as to or an
admission of fault, culpability or failure to act by or on behalf of any Indemnified Party.




     SECTION 11.5 Survival. The obligations of the Borrowers under Sections 4.3,
4.4, 4.5, 4.6, 11.3 and 11.4 and under any other provision
specifically providing for indemnification or reimbursement of fees, costs and expenses incurred by
any of the Lender Parties in connection with this Agreement and the other Loan Documents, and the
obligations of the Lenders under Section 10.1, shall in each case survive any termination
of this Agreement, the payment in full of all the Obligations and the termination of all the
Commitments. All covenants, agreements, representations and warranties made by each Loan Party in
the Loan Documents and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon
by the Lender Parties and shall survive the execution and delivery of the Loan Documents and the
making of any Loan, regardless of any investigation made by any Lender Party or on its behalf and
notwithstanding that any Lender Party may have had notice or knowledge of any Default or Event of
Default or incorrect representation or warranty at the time any credit is extended hereunder.



     SECTION 11.6 Severability. Any provision of this Agreement or any other Loan Document
which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or such Loan Document or affecting the
validity or enforceability of such provision in any other jurisdiction.



     SECTION 11.7 Headings. The various headings of this Agreement and of each other Loan
Document are inserted for convenience only and shall not affect the meaning or interpretation of
this Agreement or such other Loan Document or any provisions hereof or thereof.



     SECTION 11.8 Execution in Counterparts, Effectiveness, etc. This Agreement may be executed
by the parties hereto in several counterparts, each of which shall be deemed to be an original and
all of which shall constitute together but one and the same agreement. This Agreement shall become
effective when counterparts hereof have been executed on behalf of the Borrowers, the
Administrative Agent and each initial Lender and the same shall have been received by, and released
to, the Administrative Agent and notice thereof shall have been given by the Administrative Agent
to the Borrowers and each Lender. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this
Agreement.



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     SECTION 11.9 Governing Law; Entire Agreement. THIS AGREEMENT SHALL EACH BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. This Agreement and
each other Loan Document constitute the entire understanding among the parties hereto with respect
to the subject matter hereof and supersede any prior agreements, written or oral, with respect
thereto.



     SECTION 11.10 Assignments and Participations.



          (a) Successors and Assigns Generally. The provisions of this Agreement and each other
Loan Document shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrowers may not assign or
otherwise transfer any of its rights or obligations hereunder or any other Loan Document without
the prior written consent of the Administrative Agent and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in
accordance with the provisions of clause (b), (ii) by way of participation in accordance
with the provisions of clause (d) or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of clause (f) (and any other attempted assignment or
transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent provided in
clause (d) and, to the extent expressly contemplated hereby, the Related Parties of each of
the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.




          (b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that:




               (i) Minimum Amounts. (A) Except in the case of an assignment of the entire remaining
amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of
an assignment to a Lender or an Affiliate of a Lender or an Approved Fund, no minimum amount need
be assigned; and



                    (B) In any case not described in clause (b)(i)(A), the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable
Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date) shall not be less than
$5,000,000, unless each of Administrative Agent and, so long as no Event of Default has occurred
and is continuing, Wells REIT otherwise consents (such consent of Wells REIT not to be unreasonably
withheld or delayed); provided, however, that if a Lender is assigning less than
all of its Loans and Commitments it must, after giving effect to each such assignment, maintain not
less than $5,000,000 in principal amount of Loans and Commitments unless otherwise agreed to by the
Administrative Agent and Wells REIT (such consent of Wells REIT not to be required if any Event of
Default has occurred and is continuing at the time of such proposed assignment);



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               (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of
a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with
respect to the Loans or the Commitment assigned;



               (iii) Required Consents. No consent shall be required for any assignment except to
the extent required by clause (b)(i)(B) and, in addition, (A) the consent of the
Administrative Agent shall be required unless such assignment is to a Lender, an Affiliate of a
Lender or an Approved Fund and (B) the consent of Wells Acquisition (such consent not to be
unreasonably withheld or delayed and shall, in any event, be deemed to have been given by Wells
Acquisition if no objection is received by the Administrative Agent from Wells Acquisition within
five Business Days after notice of such proposed assignment has been provided to Wells Acquisition)
shall be required unless (x) any Event of Default has occurred and is continuing at the time of
such assignment, (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund
or (z) such assignment is necessary, in the judgment of the Administrative Agent, to ensure the
successful syndication of this Agreement.



               (iv) Assignment and Assumption. The parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with a processing and
recordation fee in the amount of $3,500 and the assignee, if it is not a Lender, shall deliver to
the Administrative Agent an administrative questionnaire.



               (v) No Assignment to Borrowers. No such assignment shall be made to the Borrowers or
any of the Borrowers’ Affiliates or Subsidiaries.



               (vi) No Assignment to Natural Persons. No such assignment shall be made to a natural
Person.


Subject to acceptance and recording thereof by the Administrative Agent pursuant to clause
(c), from and after the effective date specified in each Assignment and Assumption, the
Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations
under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be
entitled to the benefits of Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 with respect to
facts and circumstances occurring prior to the effective date of such assignment. Upon request, the
Borrowers (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does not comply with
this Section shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with clause (d).




          (c) Register. The Administrative Agent, acting solely for this purpose as an agent of
the Borrowers, shall maintain at an office specified from time to time a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names and addresses of the
Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the “Register”). The entries in the



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Register shall be conclusive, and the Borrowers, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Borrowers and any Lender at any reasonable time and from
time to time upon reasonable prior notice.




          (d) Participations. Any Lender may at any time, without the consent of, or notice to,
the Borrowers or the Administrative Agent, sell participations to any Person (other than a natural
person or the Borrowers or any of the Borrowers’ Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Administrative Agent and the Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.




               Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification which decreases the amount of
principal of, or the rate at which interest is payable on such Loans (except in connection with a
waiver of applicability of any post-default increase in interest rates), extends any scheduled
principal payment date or date fixed for the payment of interest on such Loans, or extends the
Commitment of such Lender in a manner that affects such Participant.



               Notwithstanding the preceding paragraph, any Participant that is a federally-chartered Farm
Credit System lending institution organized under the Farm Credit Act of 1971, as amended, that (i)
has purchased a participation in a minimum amount of $10,000,000, (ii) has been designated as a
voting participant (each a “Voting Participant”) in a notice (which notice shall include,
with respect to such voting participant, the information that would be included by a prospective
Lender in an Assignment and Assumption Agreement) sent by the relevant Lender to the Administrative
Agent and (iii) receives, prior to becoming a Voting Participant, the consent of the Administrative
Agent and Wells Acquisition (each such consent to be required only to the extent and under the
circumstances it would be required if such Voting Participant was to become a Lender pursuant to an
assignment in accordance with clause (b)), shall be entitled to vote, and the voting rights
of the selling Lender shall be correspondingly reduced, on a Dollar-for-Dollar basis, as if such
Voting Participant was a Lender, on all matters subject to a vote by the Lenders.



     Subject to clause (e), the Borrowers agree that each Participant shall be entitled to
the benefits of Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to clause (b). To the extent
permitted by Law, each Participant also shall be entitled to the benefits of Section 4.9 as
though it were a Lender, provided such Participant agrees to be subject to Section
4.5 as though it were a Lender.



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          (e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 than the applicable
Lender would have been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made with the Borrowers’
prior consent. A Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 4.6 unless the Borrowers are notified of the
participation sold to such Participant and such Participant agrees, for the benefit of the
Borrowers, to comply with Section 4.6 as though it were a Lender.




          (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve Bank;
provided that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.




          (g) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,”
and words of like import in any Assignment and Acceptance Agreement shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the
same legal effect, validity or enforceability as a manually executed signature or the use of a
paper-based record keeping system, as the case may be, to the extent and as provided for in any
applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act,
the New York State Electronic Signatures and Records Act, or any other similar state Laws based on
the Uniform Electronic Transactions Act.




     SECTION 11.11 Press Releases and Related Matters. The Borrowers agree that neither it nor
any other Loan Party will issue any press release or other public disclosure using the name of
CoBank or its Affiliates (other than the filing of the Loan Documents with the Securities and
Exchange Commission) without the prior consent of CoBank. The Borrowers consent to the publication
by the Administrative Agent or any Lender of a tombstone or similar advertising material relating
to the financing transactions contemplated by this Agreement. The Administrative Agent and each
such Lender shall provide a draft of any such tombstone or similar advertising material to the
Borrowers for review and reasonable comment prior to the publication thereof. In addition, the
Administrative Agent reserves the right to provide to industry trade organizations customary
information for inclusion in league table measurements.



     SECTION 11.12 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER
PARTIES OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE FEDERAL OR STATE COURTS
OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY



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SUBMITS TO
THE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT
MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION
OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.



     SECTION 11.13 Waiver of Jury Trial, etc. THE LENDER PARTIES AND THE BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR THE BORROWER. THE BORROWER
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER PARTIES ENTERING INTO THIS
AGREEMENT.



     SECTION 11.14 Waiver of Consequential Damages, etc. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE BORROWER AND EACH OTHER LOAN PARTY SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST
EACH LENDER PARTY ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT
OF, ANY LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, ANY CREDIT EXTENSION OR
THE USE OF THE PROCEEDS THEREOF. NO LENDER PARTY SHALL BE LIABLE FOR
ANY DAMAGES ARISING FROM THE USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS
DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS
IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.



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     SECTION 11.15 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.



     SECTION 11.16 Protection of Interests. Without limiting any of the other provisions hereof
and whether or not the Administrative Agent or any Lender acquires legal possession and title to
the Real Property, if the Administrative Agent becomes aware of any matter for which the Borrowers
may have liability in accordance with the other provisions of this Agreement, whether or not a
claim is asserted against any Lender Party, the Administrative Agent shall have the right to take
any action available to the Administrative Agent under applicable Law, and the Borrowers hereby
grant to the Administrative Agent and its respective agents, attorneys, employees, consultants,
contractors and assigns, an irrevocable license and authorization for access to the Real Property
and to conduct any such actions that the Administrative Agent deems reasonably appropriate in
connection therewith. The Borrowers shall pay promptly following demand by the Administrative
Agent all costs and expenses in connection with such investigatory and remedial activities. The
foregoing license and authorization is intended to be a means of protection of the Administrative
Agent’s or the Lenders’ security interest in the Real Property and not as participation in the
management of the Borrowers or the Real Property.



     SECTION 11.17 Confidentiality. Each Lender Party agrees to keep confidential the
Information (as defined below), except that each Lender Party shall be permitted to disclose
Information (a) to its Affiliates and to its and its Affiliates’ Related Parties, (b) to the extent
requested by any Governmental Authority, (c) to the extent otherwise required by applicable Laws or
by any subpoena or similar legal process, (d) in connection with the exercise of any remedies
hereunder or in any suit, action or proceeding relating to the enforcement of its rights hereunder
or under any other Loan Document, (e) to any other party hereto, (f) subject to any agreement
containing provisions substantially the same as set forth in this Section, to (i) any prospective
or actual Assignee Lender or Participant or (ii) any prospective or actual counterparty (or its
advisors) to any Rate Protection Agreement relating to the Borrowers, (g) with the consent of the
Borrowers or (h) to the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to any Lender Party on a
nonconfidential basis from a source other than the Borrowers, any other Loan Party or any other
Subsidiaries.


For purposes of this Section, “Information” means all information that is received from any
Loan Party relating to any Loan Party or any of their respective businesses other than any such
information that is available to any Lender Party on a nonconfidential basis prior to its
disclosure by a Loan Party and which is, in the case of Information provided after the date hereof,
clearly identified at the time of delivery as confidential. Each Lender Party shall be considered
to have complied with its obligations under this Section if it exercises the same degree of care to
maintain the confidentiality of the Information as such Person would accord its own confidential
information.




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Notwithstanding anything herein to the contrary, “Information” shall not include, and each
Lender Party and its Affiliates and Related Parties may disclose to any and all Persons, without
limitation of any kind, (a) any information with respect to the U.S. federal and state income tax
treatment of the transactions contemplated hereby and any facts that may be relevant to
understanding such tax treatment, which facts shall not include for this purpose the names of the
parties or any other Person named herein, or information that would permit identification of the
parties or such other Persons, or any pricing terms or other nonpublic business or financial
information that is unrelated to such tax treatment or facts, and (b) all materials of any kind
(including opinions or other tax analyses) that are provided to any of the Persons referred to
above relating to such tax treatment or facts.




     SECTION 11.18 Patriot Act Information. Each Lender Party hereby notifies the Borrowers and
each other Loan Party that pursuant to the requirements of the Patriot Act, it is required to
obtain, verify and record information that identifies the Borrowers or any other Loan Party, which
information includes the name and address of the Borrowers and each such other Loan Party and other
information that will allow each Lender Party to identify the Borrowers and each other Loan Party
in accordance with the Patriot Act. The Borrowers and each other Loan Party shall, and shall cause
each other Loan Party to, provide such information and take such actions as are reasonably
requested by any Lender Party in order to assist such Lender Party in maintaining compliance with
the Patriot Act.



     SECTION 11.19 Joint and Several Liability. In consideration of the financial
accommodations being provided by the Lender Parties, each of the Borrowers agree to be jointly and
severally liable, not merely as a surety but also as a co-debtor, with respect to the payment and
performance of all the Loans and other Obligations under this Agreement and the other Loan
Documents. Without limiting the foregoing, if any Borrower fails to make any payment of, or
perform with respect to, any of the Obligations, the other Borrower agrees to make such payment and
complete such performance requirement in accordance with the terms hereof and the other Loan
Documents.



     SECTION 11.20 Intercreditor Lien Releases. Upon the Subordinated Exclusive Collateral
Transfer Date all terms in this Agreement contemplating a Lien by the Subordinated Agent on the
Collateral shall be read as if such terms did not exist.



     SECTION 11.21 Waiver of Farm Credit Rights. THE BORROWERS ACKNOWLEDGE AND AGREE THAT, TOGETHER WITH LEGAL COUNSEL, THEY HAVE REVIEWED ALL
RIGHTS THAT THEY MAY OTHERWISE BE ENTITLED TO WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS UNDER THE STATUTES AND REGULATIONS OF THE FARM CREDIT ADMINISTRATION AS SPECIFIED AT 12
CFR § 617.7000 ET. SEQ., AND THAT THEY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY WAIVE ANY AND ALL SUCH RIGHTS.



     SECTION 11.22 No Voluntary Bankruptcy Filing. The Lender Parties agree, with respect to
the Wells Note Installment Issuer, not to take any action of a nature referred to in clause
(c) or (d) of Section 8.1.8.



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     SECTION 11.23 Purchase of AgSouth Equity Interests. Wells Timberland agrees to purchase
Equity Interests in AgSouth (the “AgSouth Equity Interests”) as AgSouth may require in
accordance with its bylaws and capital plan and that are applicable to borrowers generally. In
connection with the foregoing, Wells Timberland hereby acknowledges receipt, prior to the execution
of this Agreement, of: (a) AgSouth’s bylaws; (b) a written description of the terms and conditions
under which the AgSouth Equity Interests are issued; and (c) the most recent annual financial
report, and if more current, the latest quarterly financial report of AgSouth. Wells Timberland
acknowledges and agrees that it shall not receive any patronage with respect to the AgSouth Equity
Interests purchased by it.



     SECTION 11.24 Funding Date Assignments. On the Funding Date, AgSouth will assign all of
its Loans to AgFirst Farm Credit, ACA and CoBank. Accordingly, Schedule II contains the
Commitment Amount both before and after giving effect to such assignments and Schedule III
contains the administrative information of such assignees and not AgSouth.



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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized as of the day and year first above written.



	 	 	 	 	 	 	 
	 	 	TIMBERLANDS II, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	WELLS TIMBERLAND MANAGEMENT ORGANIZATION, LLC, as Manager	 	 
	 
	 	 	 	 	 	 
	 
	 	By:	 	/s/ Jess E. Jarratt	 	 
	 

	 	 	 	 

Name: Jess E. Jarratt
	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS TIMBERLAND ACQUISITION, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	WELLS TIMBERLAND MANAGEMENT ORGANIZATION, LLC, as Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jess E. Jarratt	 	 
	 

	 	 	 	 

Name: Jess E. Jarratt
	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	COBANK, ACB,

as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Michael Tousignant	 	 
	 

	 	 	 	 

Name: Michael Tousignant

Title: VP
	 	 
	 
	 	 	 	 	 	 
	 	 	LENDERS:	 	 
	 
	 	 	 	 	 	 
	 	 	AGSOUTH FARM CREDIT, ACA	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Pat Calhoun	 	 
	 

	 	 	 	 

Name: Pat Calhoun
	 	 
	 

	 	 	 	Title: Sr. Vice President	 	 





Credit
Agreement
 Signature Page


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	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Steve W. Whitcomb	 	 
	 

	 	 	 	 

Name: Steve W. Whitcomb

Title: Director
	 	 
	 
	 	 	 	 	 	 
	 	 	COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK, B.A.
“RABOBANK NEDERLAND”, NEW YORK BRANCH	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Theodore W. Cox	 	 
	 

	 	 	 	 

Name: Theodore W. Cox

Title: Executive Director
	 	 
	 
	 	 	 	 	 	 
	 
	 	By:	 	/s/ Rebecca O. Morrow	 	 
	 

	 	 	 	 

Name: Rebecca O. Morrow

Title: Executive Director
	 	 




Credit
Agreement
 Signature Page



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SCHEDULE I




DISCLOSURE SCHEDULE




	 	 	 
	ITEM 1.1(a)

	 	Cost Basis of Collateral
	ITEM 1.1(b)

	 	Material Agreements
	ITEM 6.7(b)

	 	Labor Matters
	ITEM 6.8

	 	Initial Capitalization
	ITEM 6.10(a)

	 	Property Matters
	ITEM 6.10(c)

	 	Consents and Approvals
	ITEM 6.10(d)

	 	Timber Operations
	ITEM 6.10(e)

	 	Condemnation Proceedings
	ITEM 6.13(f)

	 	Environmental Matters/Storage Tanks
	ITEM 6.19(b)

	 	Material Governmental Approvals
	ITEM 6.21

	 	Insurance
	ITEM 6.22

	 	Affiliate Transactions







 









 








SCHEDULE II




COMMITMENT AMOUNT




	 	 	 	 	 
	Lender	 	Commitment Amount	 
	AgSouth Farm Credit, ACA
	 	$	162,000,000	 
	Wachovia Bank, National Association
	 	$	30,000,000	 
	Coöperatieve Centrale Raiffeisen-Boerenleenbank, B.A.
“Rabobank Nederland”, New York Branch
	 	$	20,000,000	 






COMMITMENT AMOUNT AFTER GIVING

EFFECT TO THE FUNDING DATE ASSIGNMENTS




	 	 	 	 	 
	Lender	 	Commitment Amount	 
	CoBank, ACB
	 	$	104,400,000	 
	AgFirst Farm Credit, ACA
	 	$	57,600,000	 
	Wachovia Bank, National Association
	 	$	30,000,000	 
	Coöperatieve Centrale Raiffeisen-Boerenleenbank, B.A.
“Rabobank Nederland”, New York Branch
	 	$	20,000,000	 







 









 








SCHEDULE III




ADMINISTRATIVE INFORMATION




Borrowers




Timberlands II, LLC and Wells Timberland Acquisition, LLC

c/o Wells REIT, Inc.

6200 The Corners Parkway

Norcross, GA 30092-3365

Attention: Don Warden

Facsimile No.: (770) 243-8367




Administrative Agent




CoBank, ACB

5550 South Quebec Street

Greenwood Village, Colorado 80111

Attention: Syndications Coordinator, Corporate Finance Division

Facsimile No.: (303) 694-5830




With a copy to (in the case of any notice

pursuant to clause (g) of Section 7.1.1):




Sutherland Asbill & Brennan LLP

1114 Avenue of the Americas

40th Floor

New York, New York 10036

Attention: Jeffrey L. Dunetz, Esq.

Facsimile No.: (212) 389-5099




Lenders




CoBank, ACB

5550 South Quebec Street

Greenwood Village, Colorado 80111

Attention: Syndications Coordinator, Corporate Finance Division

Facsimile No.: (303) 694-5830




AgFirst Farm Credit, ACA

1401 Hampton Street

Columbia, South Carolina 29201

Attention: Tom Stallworth

Facsimile No.: (803) 254-4219




Wachovia Bank, National Association

301 South College Street, NC0174

Charlotte, North Carolina 28288-01741

Attention: Roger Shreero, Structured Asset Finance

Facsimile No.: (704) 715-0065




 









 





Coöperatieve Centrale Raiffeisen-Boerenleenbank,
  B.A.
“Rabobank Nederland”, New York Branch

10 Exchange Place

16th Floor

Jersey City, New Jersey 07302-3913

Attention: Corporate Services Dept.

Facsimile No.: 201-499-5326




Credit
Agreement
 Signature Page


- 2 -












 





EXHIBIT A




NOTE




			
	$                    
	 	[Date]






     FOR VALUE RECEIVED, the undersigned, Timberlands II, LLC, a Delaware limited liability
company, and Wells Timberland Acquisition, LLC, a Delaware limited liability company (each a
“Borrower” and collectively, the “Borrowers”), unconditionally jointly and
severally promise to pay to the order of                     (the “Lender”) the principal sum of
                    ($                    ) or, if less, the aggregate unpaid principal amount of all the Loans
made by the Lender pursuant to that certain Credit Agreement, dated as of October 9, 2007 (as
amended, supplemented, restated or otherwise modified from time to time, the “Credit
Agreement”), among the Borrowers, the various financial institutions (including the Lender) as
are, or may from time to time become, parties thereto, and CoBank, ACB, as administrative agent (in
such capacity, the “Administrative Agent”) for the Lenders, payable as set forth in the
Credit Agreement, with a final payment (in the amount necessary to pay in full this Note) due and
payable on the Stated Maturity Date. Unless otherwise defined, terms used herein have the meanings
provided in the Credit Agreement.



     The Borrower also promises to pay interest on the unpaid principal amount of this Note from
time to time outstanding from the date hereof until paid in full, at the rates per annum and on the
dates specified in the Credit Agreement.



     Payments of both principal and interest are to be made without set-off or counterclaim in
Dollars in same day or immediately available funds to the account designated by the Administrative
Agent pursuant to the Credit Agreement.



     This Note is one of the Notes referred to in, and evidences Indebtedness incurred under, the
Credit Agreement, to which reference is made for a description of the security for this Note and
for a statement of the terms and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which
such Indebtedness may be declared to be or shall automatically become immediately due and payable.



     All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment
for payment, demand, protest and notice of dishonor.



 









 





     THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE GOVERNED BY THE INTERNAL LAWS
OF THE STATE OF NEW YORK.



	 	 	 	 	 
	 	 	TIMBERLANDS II, LLC
	 
	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT

ORGANIZATION, LLC, as Manager
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt

Title: President
	 
	 	 	 	 
	 	 	WELLS TIMBERLAND ACQUISITION, LLC
	 
	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT

ORGANIZATION, LLC, as Manager
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt

Title: President






 









 





EXHIBIT B-1




BORROWING REQUEST




CoBank, ACB

      as Administrative Agent

5550 South Quebec Street

Greenwood Village, Colorado 80111




Attention: Syndications Coordinator, Corporate Finance Division




TIMBERLANDS II, LLC and

WELLS TIMBERLAND ACQUISITION, LLC




Ladies and Gentlemen:



     This Borrowing Request is delivered to you pursuant to Section 5.1.24 of the Credit Agreement,
dated as of October 9, 2007 (as amended, supplemented, restated or otherwise modified from time to
time, the “Credit Agreement”), among Timberlands II, LLC, a Delaware limited liability
company, Wells Timberland Acquisition, LLC, a Delaware limited liability company (each a
“Borrower” and collectively, the “Borrowers”), the various lending institutions as
are, or may from time to time become, parties thereto (collectively, the “Lenders”) and,
CoBank, ACB as administrative agent (in such capacity, the “Administrative Agent”) for the
Lenders. Unless otherwise defined herein or the context otherwise requires, terms used herein have
the meanings provided in the Credit Agreement.



     The Borrowers hereby request that Loans be made in the aggregate principal amount of
$                     on October 9, 2007, which Loans will accrue interest at the Alternate Base Rate. The
Borrowers hereby request, effective three Business Days after the Funding Date, the Loans accrue
interest at the Adjusted Eurodollar Rate and have an Interest Period of [one] [two] [three]
month(s).



     The Borrowers hereby acknowledge that each of the delivery of this Borrowing Request and the
acceptance by the Borrowers of the proceeds of the Loans requested hereby constitute a
representation and warranty by the Borrowers that, on the date of such Loans, and before and after
giving effect thereto and to the application of the proceeds therefrom, all statements set forth in
Section 5.1.20 of the Credit Agreement are true and correct.



     The Borrowers agree that if prior to the time of the Borrowing requested hereby any matter
certified to herein by them will not be true and correct at such time as if then made, they will
immediately so notify the Administrative Agent. Except to the extent, if any, that prior to the
time of the Borrowing requested hereby the Lender shall have received written notice to the
contrary from the Borrowers, each matter certified to herein shall be deemed once again to be
certified as true and correct as of the Funding Date as if then made.



     Please wire transfer the proceeds of the Loans as we have specified to you in writing.



 









 





     The Borrowers have caused this Borrowing Request to be executed and delivered, and the
certification and warranties contained herein to be made, by their duly Authorized Officers this
9th day of October, 2007.



	 	 	 	 	 
	 	 	TIMBERLANDS II, LLC
	 
	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT

ORGANIZATION, LLC, as Manager
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt

Title: President
	 
	 	 	 	 
	 	 	WELLS TIMBERLAND ACQUISITION, LLC
	 
	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT

ORGANIZATION, LLC, as Manager
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt

Title: President






Borrowing Request

Signature Page




-2-









 





EXHIBIT B-2




CONTINUATION NOTICE




CoBank, ACB

     as Administrative Agent

5550 South Quebec Street

Greenwood Village, Colorado 80111




Attention: Syndications Coordinator, Corporate Finance Division




TIMBERLANDS II, LLC and

WELLS TIMBERLAND ACQUISITION, LLC




Ladies and Gentlemen:




     This Continuation Notice is delivered to you pursuant to Section 2.4 of the Credit Agreement,
dated as of October 9, 2007 (as amended, supplemented, restated or otherwise modified from time to
time, the “Credit Agreement”), among Timberlands II, LLC, a Delaware limited liability
company, Wells Timberland Acquisition, LLC, a Delaware limited liability company (each a
“Borrower” and collectively, the “Borrowers”), the various lending institutions as
are, or may from time to time become, parties thereto (collectively, the “Lenders”) and,
CoBank, ACB as administrative agent (in such capacity, the “Administrative Agent”) for the
Lenders. Unless otherwise defined herein or the context otherwise requires, terms used herein have
the meanings provided in the Credit Agreement.



     The Borrowers hereby request that on                     ,                     , (a) $                    
of the presently
outstanding principal amount of the Loans, (b) with Interest Periods ending on                     , ___, be
continued as (c) Loans having an Interest Period of [one] [two] [three] month(s).


The Borrowers hereby:





     (a) certify and warrant that no Default or Event of Default has occurred and is
continuing; and




     (b) agree that if prior to the time of such continuation any matter certified to herein
by them will not be true and correct at such time as if then made, they will immediately so
notify the Administrative Agent.



     Except to the extent, if any, that prior to the time of the continuation requested hereby the
Administrative Agent shall receive written notice to the contrary from the Borrowers, each matter
certified to herein shall be deemed to be certified at the date of such continuation as if then
made.



 









 





     The Borrowers have caused this Continuation Notice to be executed and delivered, and the
certification and warranties contained herein to be made, by their Authorized Officers this
9th day of October, 2007.



	 	 	 	 	 
	 	 	TIMBERLANDS II, LLC
	 
	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT

ORGANIZATION, LLC, as Manager
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt

Title: President
	 
	 	 	 	 
	 	 	WELLS TIMBERLAND ACQUISITION, LLC
	 
	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT

ORGANIZATION, LLC, as Manager
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt

Title: President






Continuation Notice

Signature Page




-2-









 





EXHIBIT C




ASSIGNMENT AND ASSUMPTION




     This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Name of Assignor] (the
“Assignor”) and [Name of Assignee] (the “Assignee”). Capitalized terms used but not
defined herein shall have the meanings given to them in the Credit Agreement identified below (as
amended, supplemented, restated or otherwise modified from time to time, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard
Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and Assumption as if set forth
herein in full.



     For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (a) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below and (b) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under
or in connection with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as, the “Assigned Interest”). Such sale and assignment is without recourse to
the Assignor and, except as expressly provided in this Assignment and Assumption, without
representation or warranty by the Assignor.




	1.	 	Assignor:                                         
	 
	2.	 	Assignee:                                         

[and is an Affiliate/Approved Fund of [identify Lender]]
	 
	3.	 	Borrowers: Timberlands II, LLC, a
Delaware limited liability
company (“Wells Timberland”),
and Wells Timberland Acquisition, LLC (“Wells Acquisition”), a Delaware
limited liability company.
	 
	4.	 	Administrative Agent: CoBank, ACB.




 









 






	5.	 	Credit Agreement: The $212,000,000 Credit Agreement, dated as of October 9, 2007, among the
Borrowers, the lenders party thereto (collectively, the “Lenders”) and the
Administrative Agent.
	 
	6.	 	Assigned Interest:





	 	 	 	 	 	 	 
	Aggregate Amount of	 	Amount of Loans	 	Percentage Assigned of	 
	Loans for all Lenders	 	Assigned*	 	Loans1	 
	$
	 	$	 	 	%	 
	$
	 	$	 	 	%	 







	[7.	 	Trade Date:
___]2





     Effective Date:                      ___, 20___[TO BE INSERTED BY THE ADMINISTRATIVE AGENT AND
WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]





 




			
	*	 	Amount to be adjusted by the counterparties to take into account
any payments or prepayments made between the Trade Date and the Effective Date.
	 
	1	 	Set forth, to at least 9 decimals, as a percentage of
the Loans of all Lenders thereunder.
	 
	2	 	To be completed if the Assignor and the Assignee intend
that the minimum assignment amount is to be determined as of the Trade Date.





-2-









 





     The terms set forth in this Assignment and Assumption are hereby agreed to:



	 	 	 	 	 
	 	ASSIGNOR





[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	ASSIGNEE





[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



[Consented
to and]3 Accepted:




	 	 	 	 	 
	COBANK, ACB, as

  Administrative Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	WELLS TIMBERLAND ACQUISITION, LLC	 	 
	 
	 	 	 	 
	By:

	 	WELLS TIMBERLAND MANAGEMENT

ORGANIZATION, LLC, as Manager	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 








 




			
	3	 	To be added only if the consent of the Administrative
Agent or Wells Acquisition is required by the terms of the Credit Agreement.



Assignment
and Assumption 

Signature Page



-3-









 










ANNEX 1




STANDARD TERMS AND CONDITIONS

FOR ASSIGNMENT AND ASSUMPTION




Section 1. Representations and Warranties.




     1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any Lien
or other adverse claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with the Credit Agreement or any other Loan
Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower,
any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document
or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any
other Person of any of their respective obligations under any Loan Document.



     1.2 Assignee. The Assignee (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it meets all the requirements of an Eligible Assignee under the Credit
Agreement (subject to receipt of such consents as may be required under the Credit Agreement),
(iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire
assets of the type represented by the Assigned Interest and either it, or the person exercising
discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring
assets of such type, (v) it has received a copy of the Credit Agreement and has received or has
been accorded the opportunity to receive copies of the most recent financial statements delivered
pursuant to Section 7.1.1 thereof, as applicable, and such other documents and information as it
deems appropriate to make its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest, and (vi) if it is a Foreign Lender, attached to
the Assignment and Assumption is any documentation required to be delivered by it pursuant to the
terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i)
it will, independently and without reliance on the Administrative Agent, the Assignor or any other
Lender, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under the Loan Documents,
and (ii) it will perform in accordance with their terms all of the obligations which by the terms
of the Loan Documents are required to be performed by it as a Lender.



 









 





Section 2. Payments.




     [From and after the Effective Date, the Administrative Agent shall make all payments in
respect of the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to
the Assignee for amounts which have accrued from and after the Effective Date.] [From and after the
Effective Date, the Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to the Assignee
whether such amounts have accrued prior to, on or after the Effective Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments by the Administrative Agent for periods
prior to the Effective Date or with respect to the making of this assignment directly between
themselves.]



Section 3. General Provisions.




     This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns. This Assignment and Assumption may be executed
in any number of counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be
effective as delivery of a manually executed counterpart of this Assignment and Assumption. This
Assignment and Assumption shall be governed by, and shall be construed and enforced in accordance
with, the Laws of the State of New York.



-2-









 





EXHIBIT D




CLOSING DATE CERTIFICATE




TIMBERLANDS II, LLC and

WELLS TIMBERLAND ACQUISITION, LLC




     This Closing Date Certificate (this “Certificate”) is delivered pursuant to Section
5.1.13 of the Credit Agreement, dated as of October 9, 2007 (as amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”), among Timberlands II, LLC, a
Delaware limited liability company, Wells Timberland Acquisition, LLC, a Delaware limited liability
company (each a “Borrower” and collectively, the “Borrowers”), the various
financial institutions as are, or may from time to time become, parties hereto (collectively, the
“Lenders”), and CoBank, ACB, as administrative agent (in such capacity, the
“Administrative Agent”) for the Lenders. Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings ascribed thereto in the Credit Agreement.



     The undersigned, each a duly elected and acting Financial Officer of a Borrower, hereby
certifies, represents and warrants for and on behalf of the Borrower in which it is a Financial
Officer, as of the date of the Funding Date, as follows:



     1. Authority. Such Financial Officer is authorized and empowered to execute and
deliver this Certificate for and on behalf of the Borrower in which it is acting as a Financial
Officer.



     2. Funds Flow Memorandum. A funds flow memorandum with respect to all payments to be
made on the Funding Date is attached at Annex I hereto.



     3. Transaction Documents. Attached at Annex II hereto are true and correct
copies of the Transaction Documents that are required to be delivered pursuant to clause (a) of
Section 5.1.16 of the Credit Agreement.



     4. Material Governmental Approvals. Attached at Annex III hereto are true and
correct copies of the Material Governmental Approvals that are required to be delivered pursuant to
clause (c) of Section 5.1.16 of the Credit Agreement.



     5. Material Agreements. Attached at Annex IV hereto are true and correct
copies of the Material Agreements (other than the Transaction Documents) that are required to be
delivered pursuant to Section 1.1 and clause (b) of Section 5.1.17 of the Credit Agreement.



     6. Timber Leases. Attached at Annex V hereto are true and correct copies of
the Timber Leases that are required to be delivered pursuant to clause (d) of Section 5.1.18 of the
Credit Agreement.



     7. Appraisal. Attached at Annex VI hereto is a true and correct copy of the
initial appraisal of the Real Property conducted by American Forestry Management that is required
to be delivered pursuant to clause (f) of Section 5.1.18 of the Credit Agreement.



 









 





     8. Harvest Plan. Attached at Annex VII hereto is a true and correct copy of
the summary Harvest Plan for calendar year 2007 that is required to be delivered pursuant to clause
(h) of Section 5.1.18 of the Credit Agreement.



     9. Subordinated Debt Documents. Attached at Annex VIII hereto are true and
correct copies of the Subordinated Debt Documents that are required to be delivered pursuant to
clause (b) of Section 5.1.19 of the Credit Agreement.



     10. Wells Installment Note Issuer. The Wells Installment Note Issuer has cash equity
of $3,979,790. Attached at Annex IX hereto are true and correct copies of the MWV SPE
Capital Note that is required to be delivered pursuant to of clause (b) of Section 5.1.15 of the
Credit Agreement.



     11. Wells Timberland Operating Agreement. Attached at Annex X hereto is a
true and correct copy of the Wells Timberland Operating Agreement that is being assigned to the
Administrative Agent pursuant to clause (b) of Section 5.1.17 of the Credit Agreement.



     12. Environmental Reports. Attached at Annex XI hereto are true and correct
copies of the Phase I and Phase II Environmental Reports and other environmental studies that are
required to be delivered pursuant to clause (a) of Section 5.1.21 of the Credit Agreement.



     13. Pro Forma Balance Sheet. Attached at Annex XII hereto are true and
correct copies of the pro forma balance sheet for Wells Timberland that is required to be delivered
pursuant to of clause (a) of Section 5.1.22 of the Credit Agreement.



     14. Pro Forma Financial Statements. Attached at Annex XIII hereto are true
and correct copies of the pro forma financial statements for Wells Timberland that is required to
be delivered pursuant to of clause (b) of Section 5.1.22 of the Credit Agreement.



     15. Projected Operating Expense Budget. Attached at Annex XIV hereto are true
and correct copies of the projected operating expense budget for Wells Timberland that is required
to be delivered pursuant to of clause (c) of Section 5.1.22 of the Credit Agreement.



     16. Operating Expense Account. The Operating Expense Account had been funded in an
amount equal to $375,000, which equals 30 days of operating expenses as set forth in the Operating
Expense Budget delivered pursuant to Item 15.



     17. Interest Reserve. The amount on deposit in the Interest Reserve is $2,381,467.



     18. Representations and Warranties; No Default. All the statements set forth in
Section 5.1.20 are true and correct.



     19. Satisfaction of Conditions Precedent. All of the conditions precedent set forth
in Article V of the Credit Agreement that are required to be performed or satisfied by any Loan
Party as a condition to the Funding Date have been satisfied in full in accordance with the terms
thereof.



-2-









 





     This Certificate is delivered by the undersigned in his or her capacity as a Financial Officer
of a Borrower and not in his or her personal capacity.



-3-









 





     IN WITNESS WHEREOF, the undersigned has executed this certificate in his aforesaid capacity
this 9th day of October, 2007.



	 	 	 	 	 
	 	 	TIMBERLANDS II, LLC
	 
	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT

ORGANIZATION, LLC, as Manager
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt

Title: President
	 
	 	 	 	 
	 	 	WELLS TIMBERLAND ACQUISITION, LLC
	 
	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT

ORGANIZATION, LLC, as Manager
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt

Title: President






Closing Date Certificate

Signature Page




-4-









 





Annex I




Funds Flow Memorandum




 









 





Annex II




Transaction Documents




 









 





Annex III




Material Governmental Approvals




None.




 









 





Annex IV




Material Agreements




 









 





Annex V




Timber Leases




 









 





Annex VI




Appraisal




 









 





Annex VII




Summary Harvest Plan




 









 





Annex VIII




Subordinated Debt Documents




 









 





Annex IX




MWV SPE Capital Note




 









 





Annex X




Wells Timberland Operating Agreement




 









 





Annex XI




Environmental Reports




 









 





Annex XII




Pro Forma Balance Sheet




 









 





Annex XIII




Pro Forma Financial Statements




 









 





Annex XIV




Projected Operating Expense Budget





 












 





EXHIBIT E-1




SOLVENCY CERTIFICATE




TIMBERLANDS II, LLC




     This Solvency Certificate (this “Certificate”) is delivered to CoBank, ACB, as
administrative agent (in such capacity, the “Administrative Agent”), pursuant to Section
5.1.12 of the Credit Agreement, dated as of October 9, 2007 (as amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”), among Timberlands II, LLC, a
Delaware limited liability company (“Wells Timberland”), Wells Timberland Acquisition, LLC,
a Delaware limited liability company (each a “Borrower” and collectively, the
“Borrowers”), the various financial institutions as are, or may from time to time become,
parties hereto (collectively, the “Lenders”), and the Administrative Agent. Unless
otherwise defined herein or the context otherwise requires, terms used herein have the meanings
ascribed thereto in the Credit Agreement.



     The undersigned hereby certifies to the Administrative Agent and each Lender, in good faith
and to the best of his knowledge and belief, as follows:



     1. The undersigned is the duly qualified and acting Financial Officer of Wells Timberland.
The undersigned, together with other officers of Wells Timberland, acted on behalf of Wells
Timberland in connection with the transactions contemplated by the Credit Agreement and the other
Loan Documents.



     2. I have carefully reviewed the contents of this Certificate and have conferred with legal
counsel of Wells Timberland for the purpose of discussing the meaning of its contents.



     Based upon the foregoing, I have concluded, in good faith and to the best of my knowledge and
belief, that as of the date hereof and after giving effect to all the transactions contemplated by
the Credit Agreement and the other Loan Documents, as follows:




     (a) Wells Timberland is Solvent; and




     (b) Neither Wells Timberland nor any other Loan Party has incurred any obligation under
the Credit Agreement or any other Loan Document or made any conveyance pursuant to or in
connection therewith, with actual intent to hinder, delay or defraud either present or
future creditors of Wells Timberland or any other Loan Party.



     I understand that the Administrative Agent and the Lenders are relying on the truth and
accuracy of this Certificate and that the delivery of this Certificate is a material inducement for
the Administrative Agent and the Lenders to enter into the Credit Agreement and consummate the
transactions contemplated thereby, and the undersigned hereby consents to such reliance.



     I am delivering this Certificate in my capacity as an officer of Wells Timberland and not in
my personal capacity.



 









 





     I represent the foregoing information to be, in good faith and to the best of my knowledge and
belief, true and correct and have executed this Certificate this 9th day of October, 2007.



	 	 	 	 	 	 	 
	 	 	TIMBERLANDS II, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT ORGANIZATION, LLC, as Manager
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt	 	 
	 

	 	 	 	Title: President	 	 






Solvency Certificate – Wells Timberland

Signature Page




-2-









 








EXHIBIT E-2




SOLVENCY CERTIFICATE




WELLS TIMBERLAND ACQUISITION, LLC




     This Solvency Certificate (this “Certificate”) is delivered to CoBank, ACB, as
administrative agent (in such capacity, the “Administrative Agent”), pursuant to Section
5.1.12 of the Credit Agreement, dated as of October 9, 2007 (as amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”), among Wells Timberland
Acquisition, LLC, a Delaware limited liability company (“Timberland Acquisition”),
Timberlands II, LLC, a Delaware limited liability company (each a “Borrower” and
collectively, the “Borrowers”), the various financial institutions as are, or may from time
to time become, parties hereto (collectively, the “Lenders”), and the Administrative Agent.
Unless otherwise defined herein or the context otherwise requires, terms used herein have the
meanings ascribed thereto in the Credit Agreement.



     The undersigned hereby certifies to the Administrative Agent and each Lender, in good faith
and to the best of his knowledge and belief, as follows:



     1. The undersigned is the duly qualified and acting Financial Officer of Timberland
Acquisition. The undersigned, together with other officers of Timberland Acquisition, acted on
behalf of Timberland Acquisition in connection with the transactions contemplated by the Credit
Agreement and the other Loan Documents.



     2. I have carefully reviewed the contents of this Certificate and have conferred with legal
counsel of Timberland Acquisition for the purpose of discussing the meaning of its contents.



     Based upon the foregoing, I have concluded, in good faith and to the best of my knowledge and
belief, that as of the date hereof and after giving effect to all the transactions contemplated by
the Credit Agreement and the other Loan Documents, as follows:




     (a) Timberland Acquisition is Solvent; and




     (b) Neither Timberland Acquisition nor any other Loan Party has incurred any obligation
under the Credit Agreement or any other Loan Document or made any conveyance pursuant to or
in connection therewith, with actual intent to hinder, delay or defraud either present or
future creditors of Timberland Acquisition or any other Loan Party.



     I understand that the Administrative Agent and the Lenders are relying on the truth and
accuracy of this Certificate and that the delivery of this Certificate is a material inducement for
the Administrative Agent and the Lenders to enter into the Credit Agreement and consummate the
transactions contemplated thereby, and the undersigned hereby consents to such reliance.



     I am delivering this Certificate in my capacity as an officer of Timberland Acquisition and
not in my personal capacity.



 









 





     I represent the foregoing information to be, in good faith and to the best of my knowledge and
belief, true and correct and have executed this Certificate this 9th day of October, 2007.



	 	 	 	 	 	 	 
	 	 	WELLS TIMBERLAND ACQUISITION, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT ORGANIZATION, LLC, as Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt	 	 
	 

	 	 	 	Title: President	 	 






Solvency Certificate — Wells acquisition

Signature Page




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EXHIBIT E-3




SOLVENCY CERTIFICATE




WELLS TRS HARVESTING OPERATIONS, LLC




     This Solvency Certificate (this “Certificate”) is delivered to CoBank, ACB, as
administrative agent (in such capacity, the “Administrative Agent”), pursuant to Section
5.1.12 of the Credit Agreement, dated as of October 9, 2007 (as amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”), among Wells Timberland
Acquisition, LLC, a Delaware limited liability company, Timberlands II, LLC, a Delaware limited
liability company (each a “Borrower” and collectively, the “Borrowers”), the
various financial institutions as are, or may from time to time become, parties hereto
(collectively, the “Lenders”), and the Administrative Agent. Unless otherwise defined
herein or the context otherwise requires, terms used herein have the meanings ascribed thereto in
the Credit Agreement.



     The undersigned hereby certifies to the Administrative Agent and each Lender, in good faith
and to the best of his knowledge and belief, as follows:



     1. The undersigned is the duly qualified and acting Financial Officer Wells TRS Harvesting
Operations, LLC, a Delaware limited liability company (“Wells TRS Subsidiary”). The
undersigned, together with other officers of Wells TRS Subsidiary, acted on behalf of Wells TRS
Subsidiary in connection with the transactions contemplated by the Credit Agreement and the other
Loan Documents.



     2. I have carefully reviewed the contents of this Certificate and have conferred with legal
counsel of Wells TRS Subsidiary for the purpose of discussing the meaning of its contents.



     Based upon the foregoing, I have concluded, in good faith and to the best of my knowledge and
belief, that as of the date hereof and after giving effect to all the transactions contemplated by
the Credit Agreement and the other Loan Documents, as follows:




     (a) Wells TRS Subsidiary is Solvent; and




     (b) Neither Wells TRS Subsidiary nor any other Loan Party has incurred any obligation
under the Credit Agreement or any other Loan Document or made any conveyance pursuant to or
in connection therewith, with actual intent to hinder, delay or defraud either present or
future creditors of Wells TRS Subsidiary or any other Loan Party.



     I understand that the Administrative Agent and the Lenders are relying on the truth and
accuracy of this Certificate and that the delivery of this Certificate is a material inducement for
the Administrative Agent and the Lenders to enter into the Credit Agreement and consummate the
transactions contemplated thereby, and the undersigned hereby consents to such reliance.



     I am delivering this Certificate in my capacity as an officer of Wells TRS Subsidiary and not
in my personal capacity.



 









 






     I represent the foregoing information to be, in good faith and to the best of my knowledge and
belief, true and correct and have executed this Certificate this 9th day of October, 2007.



	 	 	 	 	 	 	 	 	 
	 	 	WELLS TRS HARVESTING OPERATIONS, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	FOREST RESOURCE CONSULTANTS, INC., as Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: David Foil	 	 
	 

	 	 	 	 	 	Title: President	 	 






Solvency Certificate — Wells Trs subsidiary

Signature Page




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EXHIBIT E-4




SOLVENCY CERTIFICATE




WELLS TIMBERLAND REIT, INC.




     This Solvency Certificate (this “Certificate”) is delivered to CoBank, ACB, as
administrative agent (in such capacity, the “Administrative Agent”), pursuant to Section
5.1.12 of the Credit Agreement, dated as of October 9, 2007 (as amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”), among Wells Timberland
Acquisition, LLC, a Delaware limited liability company, Timberlands II, LLC, a Delaware limited
liability company (each a “Borrower” and collectively, the “Borrowers”), the
various financial institutions as are, or may from time to time become, parties hereto
(collectively, the “Lenders”), and the Administrative Agent. Unless otherwise defined
herein or the context otherwise requires, terms used herein have the meanings ascribed thereto in
the Credit Agreement.



     The undersigned hereby certifies to the Administrative Agent and each Lender, in good faith
and to the best of his knowledge and belief, as follows:



     1. The undersigned is the duly qualified and acting Financial Officer of Wells Timberland
REIT, Inc., a Maryland corporation (“Wells REIT”). The undersigned, together with other
officers of Wells REIT, acted on behalf of Wells REIT in connection with the transactions
contemplated by the Credit Agreement and the other Loan Documents.



     2. I have carefully reviewed the contents of this Certificate and have conferred with legal
counsel of Wells REIT for the purpose of discussing the meaning of its contents.



     Based upon the foregoing, I have concluded, in good faith and to the best of my knowledge and
belief, that as of the date hereof and after giving effect to all the transactions contemplated by
the Credit Agreement and the other Loan Documents, as follows:




     (a) Wells REIT is Solvent; and




     (b) Neither Wells REIT nor any other Loan Party has incurred any obligation under the
Credit Agreement or any other Loan Document or made any conveyance pursuant to or in
connection therewith, with actual intent to hinder, delay or defraud either present or
future creditors of Wells REIT or any other Loan Party.



     I understand that the Administrative Agent and the Lenders are relying on the truth and
accuracy of this Certificate and that the delivery of this Certificate is a material inducement for
the Administrative Agent and the Lenders to enter into the Credit Agreement and consummate the
transactions contemplated thereby, and the undersigned hereby consents to such reliance.



     I am delivering this Certificate in my capacity as an officer of Wells REIT and not in my
personal capacity.



 









 





     I represent the foregoing information to be, in good faith and to the best of my knowledge and
belief, true and correct and have executed this Certificate this 9th day of October, 2007.



	 	 	 	 	 
	 	WELLS TIMBERLAND REIT, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Randall D. Fretz 	 
	 	 	Title:  	Senior Vice President 	 
	 



Solvency Certificate — Wells REIT

Signature Page




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EXHIBIT E-5




SOLVENCY CERTIFICATE




WELLS TIMBERLAND TRS, INC.





     This Solvency Certificate (this “Certificate”) is delivered to CoBank, ACB, as
administrative agent (in such capacity, the “Administrative Agent”), pursuant to Section
5.1.12 of the Credit Agreement, dated as of October 9, 2007 (as amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”), among Wells Timberland
Acquisition, LLC, a Delaware limited liability company, Timberlands II, LLC, a Delaware limited
liability company (each a “Borrower” and collectively, the “Borrowers”), the
various financial institutions as are, or may from time to time become, parties hereto
(collectively, the “Lenders”), and the Administrative Agent. Unless otherwise defined
herein or the context otherwise requires, terms used herein have the meanings ascribed thereto in
the Credit Agreement.



     The undersigned hereby certifies to the Administrative Agent and each Lender, in good faith
and to the best of his knowledge and belief, as follows:



     1. The undersigned is the duly qualified and acting Financial Officer Wells Timberland TRS,
Inc, a Delaware corporation (“Wells TRS”). The undersigned, together with other officers
of Wells TRS, acted on behalf of Wells TRS in connection with the transactions contemplated by the
Credit Agreement and the other Loan Documents.



     2. I have carefully reviewed the contents of this Certificate and have conferred with legal
counsel of Wells TRS for the purpose of discussing the meaning of its contents.



     Based upon the foregoing, I have concluded, in good faith and to the best of my knowledge and
belief, that as of the date hereof and after giving effect to all the transactions contemplated by
the Credit Agreement and the other Loan Documents, as follows:



          (a) Wells TRS is Solvent; and



          (b) Neither Wells TRS nor any other Loan Party has incurred any obligation under the
Credit Agreement or any other Loan Document or made any conveyance pursuant to or in
connection therewith, with actual intent to hinder, delay or defraud either present or
future creditors of Wells TRS or any other Loan Party.



     I understand that the Administrative Agent and the Lenders are relying on the truth and
accuracy of this Certificate and that the delivery of this Certificate is a material inducement for
the Administrative Agent and the Lenders to enter into the Credit Agreement and consummate the
transactions contemplated thereby, and the undersigned hereby consents to such reliance.



     I am delivering this Certificate in my capacity as an officer of Wells TRS and not in my
personal capacity.



 









 





     I represent the foregoing information to be, in good faith and to the best of my knowledge and
belief, true and correct and have executed this Certificate this 9th day of October, 2007.



	 	 	 	 	 	 	 
	 	 	WELLS TIMBERLAND TRS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Randall D. Fretz	 	 
	 

	 	 	 	Title: Senior Vice President	 	 






Solvency Certificate — Wells TRS

Signature Page





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EXHIBIT F




COMPLIANCE CERTIFICATE




TIMBERLANDS II, LLC and

WELLS TIMBERLAND ACQUISITION, LLC




     This Compliance Certificate is delivered pursuant to Section [5.1.27] [clause (e) of Section
7.1.1] of the Credit Agreement, dated as of October 9, 2007 (as amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”), among Wells Timberland
Acquisition, LLC, a Delaware limited liability company (“Well Acquisition”), Timberlands
II, LLC, a Delaware limited liability company (each a “Borrower” and collectively, the
“Borrowers”), the various financial institutions as are, or may from time to time become,
parties hereto (collectively, the “Lenders”), and CoBank, ACB, as administrative agent (in
such capacity, the “Administrative Agent”) for the Lenders. Unless otherwise defined herein
or the context otherwise requires, terms used herein have the meanings ascribed thereto in the
Credit Agreement.



     Well Acquisition hereby certifies and warrants that as of October 9, 20071 (the
“Computation Date”) (a) no Default or Event of Default had occurred and was continuing and
(b) that:



     (1) Senior Loan to Value Ratio. The Senior Loan to Value Ratio was 55%, as computed
on Attachment 1 hereto.



     (2) Debt Service Coverage Ratio. The Debt Service Coverage Ratio was N/A%, as
computed on Attachment 2 hereto. The minimum Debt Service Coverage Ratio required pursuant
to Section 7.2.4 of the Credit Agreement on the Computation Date is N/A% and, accordingly, the
aforementioned requirements of such Section have [not] been satisfied.





 




			
	1	 	The last day of the most recently completed Fiscal Quarter.





 









 





     IN WITNESS WHEREOF, Well Acquisition has caused this Certificate to be executed and delivered
by its Financial Officer on this 9th day of October.



	 	 	 	 	 
	 	WELLS TIMBERLAND ACQUISITION, LLC

 	 
	 	By:  	WELLS TIMBERLAND MANAGEMENT ORGANIZATION, LLC, as Manager
 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Jess E. Jarratt 	 
	 	 	Title:  	President 	 
	 



Compliance Certificate

Signature Page





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ATTACHMENT 1




SENIOR LOAN TO VALUE RATIO




	 	 	 	 	 	 	 
	A.	 	Outstanding Principal Amount of the Loans.
	 	$	                    	 
	 	 	 
	 	 	 	 
	B.	 	Value of the Timberlands.
	 	$	                    	 
	 	 	 
	 	 	 	 
	C.	 	Senior Loan to Value Ratio:
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	The ratio of Item A to Item B.
	 	             %	 






 









 





ATTACHMENT 2




DEBT SERVICE COVERAGE RATIO




	 	 	 	 	 	 	 	 	 
	A.
	 	(1)	 	Net Income.	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(2)	 	Interest Expense.	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(3)	 	Interest Reserve.	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(4)	 	Taxes.	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(5)	 	Depletion.	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(6)	 	The sum of Items A(1) through A(5)	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	B.
	 	 	 	Interest Expense.	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	C.
	 	 	 	Debt Service Coverage Ratio:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	The ratio of Item A(6) to Item B.	 	            %	 







 











 





EXHIBIT G




PLEDGE AGREEMENT




     PLEDGE AGREEMENT, dated as of October 9, 2007 (as amended, supplemented, restated or otherwise
modified from time to time, this “Agreement”), made by WELLS TIMBERLAND TRS, INC., a
Delaware corporation (“Wells TRS”), WELLS TRS HARVESTING OPERATIONS, LLC, a Delaware
limited liability company (“Wells TRS Subsidiary”), and each Additional Grantor (such
capitalized term and all other capitalized terms not otherwise defined herein to have the meanings
provided for in Article I) that may from time to time become a party hereto (Wells TRS,
Wells TRS Subsidiary and such Additional Grantors are collectively referred to as the
“Grantors” and individually as a “Grantor”), in favor of COBANK, ACB, as
administrative agent (in such capacity, the “Administrative Agent”) for each of the
Lenders.



W I T N E S S E T H:




     WHEREAS, pursuant to the Credit Agreement, dated as of the date hereof (as amended,
supplemented, restated or otherwise modified from time to time, the “Credit Agreement”),
among Timberlands II, LLC, a Delaware limited liability company, and Wells Timberland Acquisition,
LLC, a Delaware limited liability company (each a “Borrower” and collectively, the
“Borrowers”), the various lending institutions as are, or may from time to time become,
parties thereto (collectively, the “Lenders”), and the Administrative Agent, the Lenders
have extended Commitments to make Loans to the Borrowers;



     WHEREAS, as a condition precedent to the occurrence of the Funding Date, each Grantor is
required to execute and deliver this Agreement; and



     WHEREAS, each Grantor has duly authorized the execution, delivery and performance of this
Agreement;



     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Lenders to make the Loans to the Borrowers pursuant
to the Credit Agreement, each Grantor agrees, with the Administrative Agent for its benefit and the
benefit of each other Lender Party, as follows:



ARTICLE I

DEFINITIONS




     SECTION 1.1 Certain Terms. The following terms (whether or not underscored) when used
in this Agreement, including its preamble and recitals, shall have the following meanings (such
definitions to be equally applicable to the singular and plural forms thereof):



     “Additional Grantors” is defined in clause (b) of Section 7.2.



     “Administrative Agent” is defined in the preamble.



 









 





     “Agreement” is defined in the preamble.



     “Borrower” and “Borrowers” is defined in the preamble.



     “Collateral” is defined in Section 2.1.



     “Credit Agreement” is defined in the first recital.



     “Grantor” and “Grantors” are defined in the preamble.



     “Lenders” are defined in the first recital.



     “LLC Agreement” is defined in clause (c)(A) of Section 2.1.



     “Partnership Agreement” is defined in clause (c)(A) of Section 2.1.



     “Pledge Agreement Supplement” is defined in clause (b) of Section 7.2.



     “Pledged Equity Interests” means all Pledged Shares, Pledged Partnership Interests and
Pledged Membership Interests.



     “Pledged Membership Interests” is defined in clause (c) of Section
2.1.



     “Pledged Partnership Interests” is defined in clause (c) of Section
2.1.



     “Pledged Shares” means the shares of capital stock of any Securities Issuer in the
amounts and percentages listed on Item A of Schedule I hereto, as such Schedule may
be amended or supplemented from time to time.



     “Proceeds” has the meaning provided for in the U.C.C. and includes, without
limitation, (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to
any Grantor from time to time with respect to any of the Collateral, (b) any and all payments (in
any form whatsoever) made or due and payable to any Grantor from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority, (c) any recoveries by any Grantor against third parties
with respect to any litigation or dispute concerning any of the Collateral including claims arising
out of the loss or nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, the Collateral, and (d) any and all other amounts, rights to payment or
other property acquired upon the sale, lease, license, exchange or other disposition of the
Collateral and all rights arising out of Collateral.



     “Secured Obligations” is defined in Section 2.2.



     “Securities Act” is defined in Section 6.2.



     “Securities Issuer” means any Person listed on Schedule I attached hereto (as
such Schedule may be amended or supplemented from time to time) that has issued or may issue a
Pledged Equity Interest.



-2-









 





     “U.C.C.” means the Uniform Commercial Code as in effect from time to time in the State
of New York; provided that if, by reason of applicable Law, the validity or perfection or
the effect of perfection or non-perfection or the priority of any security interest in any
Collateral granted under this Agreement is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than New York, then as to such matters “U.C.C.” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction.



     SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Agreement, including its preamble and recitals, have
the meanings provided in the Credit Agreement.



     SECTION 1.3 U.C.C. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms for which meanings are provided in the U.C.C. are used in this Agreement,
including its preamble and recitals, with such meanings.



ARTICLE II

PLEDGE




     SECTION 2.1 Grant of Security Interest. Each Grantor hereby pledges, hypothecates,
collaterally assigns, charges, mortgages and pledges to the Administrative Agent, for its benefit
and the ratable benefit of each of the Lenders, and hereby grants to the Administrative Agent, for
its benefit and the ratable benefit of each of the Lenders, a security interest in, all of such
Grantor’s right, title and interest in and to the following, whether now or hereafter existing or
acquired (collectively, the “Collateral”):



          (a) all issued and outstanding shares of capital stock of each Securities Issuer identified in
Item B of Schedule I attached hereto (as such Schedule may be amended or
supplemented from time to time) and all additional shares of capital stock of Subsidiaries of the
Borrowers from time to time acquired by such Grantor in any manner, the certificates representing
such shares of capital stock and all options, warrants and other rights to acquire additional
shares of capital stock of each Securities Issuer and Subsidiary of the Loan Parties;




          (b) (i) All Equity Interests in each Securities Issuer which is a limited liability company
identified in Item C of Schedule I attached hereto (as such Schedule may be
amended or supplemented from time to time) and all additional Equity Interests in the same acquired
from time to time by such Grantor, and (ii) all Equity Interests in each Securities Issuer which is
a partnership identified in Item D of Schedule I attached hereto (as such Schedule
may be amended or supplemented from time to time) and all additional interests in the same acquired
from time to time by such Grantor, including, in each case, (A) all rights (but not obligations) of
each applicable Grantor as a member or partner thereof, as the case may be, pursuant to the
applicable limited liability company agreement or other related Organizational Document
(collectively, the “LLC Agreement”), partnership agreement or other related Organizational
Document (collectively, the “Partnership Agreement”) or otherwise, and all rights to
receive distributions, cash, instruments and other property and assets from time to time received,
receivable, or otherwise distributed thereunder, (B) all claims of each Grantor for damages arising
out of or for breach of or default under the applicable LLC Agreement or Partnership Agreement, as
the case may be, (C) the right of each applicable Grantor to terminate the




-3-









 




applicable LLC Agreement or Partnership Agreement, as the case may be, to perform and exercise
consensual or voting rights thereunder, and to compel performance and otherwise exercise all
remedies thereunder, (D) all rights of each applicable Grantor, whether as a member or partner
thereof, as the case may be, or otherwise, to all property and assets of the Securities Issuer
(whether real property, inventory, equipment, contract rights, accounts, receivables, general
intangibles, securities, instruments, chattel paper, documents, choses in action, or otherwise) and
(E) certificates or instruments evidencing an ownership, partnership or membership interest in the
applicable Securities Issuer or its assets (such certificates or instruments being referred to
herein, in the case of membership interests, as the “Pledged Membership Interests” and, in
the case of partnership interests, as the “Pledged Partnership Interests”), together with
all options, warrants and other rights to acquire additional Pledged Membership Interests and
Pledged Partnership Interests;




          (c) all dividends, distributions, interest and other payments and rights with respect to any
of the items listed in clauses (a), (b) and (c) above; and




          (d) all Proceeds of any and all of the foregoing Collateral.




     Notwithstanding the foregoing, under no circumstances shall the Collateral include the Equity
Interests or LLC Agreement of Timberlands II.



     SECTION 2.2 Security for Obligations. This Agreement secures the payment in full in
cash of all the Obligations, including all amounts payable by each Borrower and each other Loan
Party under or in connection with the Credit Agreement, the Notes and each other Loan Document,
whether for principal, interest, costs, fees, expenses, indemnities or otherwise and whether now or
hereafter existing (all of such obligations being the “Secured Obligations”).



     SECTION 2.3 Delivery of Collateral. All Pledged Equity Interests shall be evidenced
by a physical certificate. All such certificates and all other certificates or instruments
representing or evidencing any Collateral shall be delivered to and held by or on behalf of the
Administrative Agent pursuant hereto, shall be in suitable form for transfer by delivery and shall
be accompanied by all necessary instruments of transfer or assignment, duly executed in blank.



     SECTION 2.4 Voting Rights; Dividends, Distributions and Payments. (a) In the event
that any dividend or distribution is to be paid on any Pledged Equity Interest at a time when an
Event of Default has not occurred and is continuing, such dividend, distribution or payment may,
subject to the terms of the Credit Agreement, be paid directly to each Grantor. In addition, prior
to the occurrence of any Event of Default and receipt by any relevant Grantor of a notice described
in clause (b)(ii), such Grantor may exercise its voting and other consensual rights with
respect to the Pledged Equity Interests, provided that the same is exercised in a manner
not inconsistent with the terms of this Agreement or any other Loan Document. Notwithstanding the
foregoing, all distributions in the form of additional Equity Interests shall be paid and delivered
to the Administrative Agent and held as additional Collateral hereunder.



          (b) Each Grantor agrees that if any Event of Default shall have occurred and be continuing:




-4-









 





               (i) such Grantor shall, promptly upon receipt thereof and without any request therefor by the
Administrative Agent, deliver (properly endorsed where required hereby or requested by the
Administrative Agent) to the Administrative Agent all dividends, distributions, interest,
principal, other cash payments and Proceeds of the Collateral, all of which shall be held by the
Administrative Agent as additional Collateral for use in accordance with Section 6.4; and



               (ii) after the Administrative Agent has notified such Grantor of the Administrative Agent’s
intention to exercise its voting power under this clause:



                    (A) the Administrative Agent may exercise (to the exclusion of such Grantor) the voting power
and all other incidental rights of ownership with respect to any Pledged Equity Interests or other
Equity Interests constituting Collateral, and such Grantor hereby grants the Administrative Agent
an irrevocable proxy, exercisable under such circumstances, to vote the Pledged Equity Interests
and such other Collateral; and



                    (B) such Grantor shall promptly deliver to the Administrative Agent such additional proxies
and other documents as may be necessary to allow the Administrative Agent to exercise such voting
power.



          (c) All dividends, distributions, interest, principal, cash payments, and proceeds which may
at any time and from time to time be held by any Grantor but which such Grantor is then obligated
to deliver to the Administrative Agent shall, until delivery to the Administrative Agent, be held
by each Grantor separate and apart from such Grantor’s other property in trust for the
Administrative Agent.




     SECTION 2.5 Continuing Security Interest; Transfer of Notes. This Agreement shall
create a continuing security interest in the Collateral and shall remain in full force and effect
until payment in full in cash of all Secured Obligations (on terms and pursuant to documentation in
form and substance reasonably satisfactory to the Administrative Agent) and the irrevocable
termination of all the Commitments, at which time the security interest granted herein shall
terminate and all rights to the Collateral shall revert to the Grantors. In the event that any part
of the Collateral is sold in connection with a sale permitted under the Credit Agreement (other
than a sale to a Grantor) the security interest granted herein shall terminate with respect to such
Collateral and all rights therein shall revert to the applicable Grantor or Grantors. Upon any such
termination, the Administrative Agent will, at each Grantor’s sole expense, deliver to such
Grantor, without any representations, warranties or recourse of any kind whatsoever, all
certificates and instruments representing or evidencing all Pledged Equity Interests, together with
all other Collateral held by the Administrative Agent hereunder, and execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such termination or
release.



     SECTION 2.6 Security Interest Absolute. All rights of the Administrative Agent and
the security interests granted to the Administrative Agent hereunder, and all obligations of each
Grantor hereunder, shall be absolute and unconditional, irrespective of:



          (a) any lack of validity, legality or enforceability of any Loan Document;




-5-









 





          (b) the failure of any Lender Party:




               (i) to assert any claim or demand or to enforce any right or remedy against any Grantor, any
other Loan Party or any other Person under the provisions of any Loan Document or otherwise; or



               (ii) to exercise any right or remedy against any other guarantor of, or collateral securing,
any Secured Obligation of any Grantor or any other Loan Party;



          (c) any change in the time, manner or place of payment of, or in any other term of, all or any
of the Secured Obligations or any other extension, compromise or renewal of any Obligation of any
Grantor or any other Loan Party, including any increase in the Secured Obligations resulting from
the extension of additional credit to any Grantor or any other Loan Party or otherwise;




          (d) any reduction, limitation, impairment or termination of any Secured Obligation of any
Grantor or any other Loan Party for any reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and each Grantor hereby waives any right to
or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of
the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any
other event or occurrence affecting, any Secured Obligation of any Grantor, any other Loan Party or
otherwise;




          (e) any amendment to, rescission, waiver, or other modification of, or any consent to
departure from, any of the terms of any Loan Document;




          (f) any addition, exchange, release, surrender or non-perfection of any collateral (including
the Collateral), or any amendment to or waiver or release of or addition to or consent to departure
from any guaranty, for any of the Secured Obligations; or




          (g) any other circumstances which might otherwise constitute a defense available to, or a
legal or equitable discharge of, any Grantor, any other Loan Party, any surety or any guarantor,
including as a result of any proceeding of the nature referred to in Section 8.1.8 of the Credit
Agreement.




     SECTION 2.7 Grantors Remain Liable. Anything herein to the contrary notwithstanding:



          (a) each Grantor shall remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein, and shall perform all of such Grantor’s duties and
obligations under such contracts and agreements to the same extent as if this Agreement had not
been executed;




          (b) each Grantor will comply in all material respects with all Laws relating to the ownership
and operation of the Collateral, including, without limitation, all registration requirements under
applicable Laws, and shall pay when due all taxes, fees and assessments imposed on or with respect
to the Collateral, except to the extent the validity thereof is (A) being diligently contested in
good faith by appropriate proceedings which (i) suspend the collection




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thereof and any Lien therefrom and (ii) for which adequate reserves in accordance with GAAP
have been set aside by the Grantors, and (B) could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect;




          (c) the exercise by the Administrative Agent of any of its rights hereunder shall not release
any Grantor from any of such Grantor’s duties or obligations under such Grantor’s Organizational
Documents or any contract or agreement included in the Collateral; and




          (d) neither the Administrative Agent nor any other Lender Party shall have any obligation or
liability under any Organizational Document or any contracts or agreements included in the
Collateral by reason of this Agreement, nor shall the Administrative Agent or any other Lender
Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.




     SECTION 2.8 Waiver of Subrogation. Each Grantor hereby irrevocably waives to the
extent permitted by applicable Law and until such time as the Secured Obligations shall have been
paid in full in cash (on terms and pursuant to documentation in form and substance reasonably
satisfactory to the Administrative Agent) and all the Commitments have irrevocably terminated, any
claim or other rights which such Grantor may now or hereafter acquire against each Borrower or any
other Loan Party that arises from the existence, payment, performance or enforcement of such
Grantor’s obligations under this Agreement or any other Loan Document, including any right of
subrogation, reimbursement, exoneration or indemnification, and any right to participate in any
claim or remedy of any Lender Party against each Borrower or any other Loan Party or any collateral
which any Lender Party now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity or under contract or Law. If any amount shall be paid to any Grantor in violation
of the preceding sentence, such amount shall be deemed to have been paid to such Grantor for the
benefit of, and held in trust for, the Lender Parties, and shall forthwith be paid to the
Administrative Agent to be credited and applied against the Secured Obligations, whether matured or
unmatured. Each Grantor acknowledges that such Grantor will receive direct and indirect benefits
for the financing arrangements contemplated by the Credit Agreement and that the waiver set forth
in this Section is knowingly made in contemplation of such benefits.



ARTICLE III

REPRESENTATIONS AND WARRANTIES




     Each Grantor represents and warrants unto each Lender Party, as of the date such Grantor
becomes a party to this Agreement, the making of the Loans and each pledge and delivery by such
Grantor to the Administrative Agent of any Collateral, as set forth in this Article.



     SECTION 3.1 Ownership, No Liens, etc. Such Grantor has pledged to the Administrative
Agent, for its benefit and the benefit of each other Lender Party, all the Pledged Equity Interests
that is required to pledge pursuant to the Credit Agreement. Such Grantor is the legal and
beneficial owner of, and has good and marketable title to (and has full corporate, partnership or
limited liability company right and authority to pledge and assign) the Collateral, free and clear
of all Liens, except for this security interest granted pursuant hereto in favor of the
Administrative Agent for the benefit of the Lender Parties. All of the Pledge Equity Interests



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have been duly authorized, validly issued and are fully paid and non-assessable, and have not
been issued or transferred in violation of any securities or other applicable Law. Except as
permitted by the Credit Agreement, there are no existing options, warrants, calls, purchase rights,
commitments or obligations with respect to the Pledged Equity Interests.



     SECTION 3.2 Valid Security Interest. The delivery of any Pledged Equity Interests
forming a part of the Collateral to the Administrative Agent is effective to create a valid,
perfected, first priority security interest therein and all Proceeds thereof, securing the Secured
Obligations, in favor of the Administrative Agent for the ratable benefit of the Lender Parties. No
filing or other action will be necessary to perfect or protect such security interest.



     SECTION 3.3 As to Pledged Shares. In the case of any Pledged Shares constituting
Collateral, all of such Pledged Shares are duly authorized and validly issued, fully paid, and
non-assessable, and constitute all of the issued and outstanding capital stock of each Securities
Issuer thereof. The Grantors have no Subsidiaries other than the Securities Issuers and Timberlands
II.



     SECTION 3.4 As to Pledged Membership Interests and Pledged Partnership Interests, etc.



          (a) In the case of any Pledged Membership Interests and Pledged Partnership Interests
constituting a part of the Collateral, all of such Pledged Equity Interests are certificated, duly
authorized and validly issued, fully paid and non-assessable, and constitute all of the issued and
outstanding partnership interests and membership interests held by such Grantor in the applicable
Securities Issuer.




          (b) Each LLC Agreement and Partnership Agreement to which the Grantor is a party, true and
complete copies of which have been furnished to the Administrative Agent, has been duly authorized,
executed, and delivered by such Grantor, has not been amended or otherwise modified except as
permitted by the Credit Agreement, is in full force and effect, and is binding upon and enforceable
against such Grantor in accordance with its terms. There exists no material default (or other
default that could reasonably be expected to impair the interests or rights of the Administrative
Agent) under any such LLC Agreement or Partnership Agreement by such Grantor.




          (c) Each such LLC Agreement and Partnership Agreement, as the case may be, expressly provides
that the Pledged Membership Interests or Pledged Partnership Interests, as the case may be, are
“securities” governed by Article 8 of the U.C.C. and are required to be in certificated form.




          (d) Such Grantor’s Equity Interests in each Securities Issuer is set forth in Schedule
I attached hereto (as such Schedule may be amended or supplemented from time to time).




          (e) Such Grantor had and continues to have the power and legal capacity to execute and carry
out the provisions of all such LLC Agreements and Partnership Agreements, as the case may be, to
which such Grantor is a party.




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          (f) The state of organization of each Securities Issuer of any Pledged Membership Interests
and Pledged Partnership Interests constituting a part of the Collateral is as set forth in Item
C or Item D of Schedule I attached hereto (as such Schedule may be amended or
supplemented from time to time).




     SECTION 3.5 Authorization, Approval, etc. No authorization, approval or other action
by, and no notice to or filing with, any Governmental Authority or any other Person is required
either for (a) the pledge by such Grantor of any Collateral pursuant to this Agreement or for the
execution, delivery and performance of this Agreement by such Grantor or (b) the exercise by the
Administrative Agent of the voting or other rights provided for in this Agreement or the remedies
in respect of the Collateral pursuant to this Agreement, except, with respect to the Pledged Equity
Interests, as may be required in connection with a disposition of such Pledged Equity Interests by
Laws affecting the offering and sale of securities generally.



     SECTION 3.6 Due Execution, Validity, etc. Such Grantor has full corporate,
partnership or limited liability company power and authority, and holds all requisite licenses,
permits and other approvals of Governmental Authorities, to enter into and perform such Grantor’s
obligations under this Agreement. The execution, delivery and performance by such Grantor of this
Agreement does not contravene or result in a default under such Grantor’s Organizational Documents
or contravene or result in a default under any contractual restriction, Lien or Law binding on
such Grantor. This Agreement has been duly authorized by such Grantor, has been duly executed and
delivered by or on behalf of such Grantor and constitutes the legal, valid and binding obligation
of such Grantor enforceable in accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the rights of
creditors generally, and subject to the effect of general principles of equity (regardless of
whether considered in a proceeding in equity or at law).



ARTICLE IV

COVENANTS




     SECTION 4.1 Protect Collateral; Further Assurances, etc. No Grantor will create or
suffer to exist any Lien on the Collateral (except a Lien in favor of the Administrative Agent).
Each Grantor will warrant and defend the right and title herein granted unto the Administrative
Agent in and to the Collateral (and all right, title, and interest represented by the Collateral)
against the claims and demands of all Persons (other than the Administrative Agent). Each Grantor
agrees that at any time, and from time to time, at the expense of such Grantor, such Grantor will
promptly execute and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Administrative Agent may reasonably request, in
order to perfect, preserve and protect any security interest granted or purported to be granted
hereby or to enable the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Except as permitted by the Credit Agreement, no Grantor
will permit any Securities Issuer to own any Equity Interest unless the same is immediately
delivered in pledge to the Administrative Agent hereunder.



     SECTION 4.2 Powers, etc. Each Grantor agrees that all Pledged Equity Interests
delivered by such Grantor pursuant to this Agreement will be accompanied by duly executed undated
blank powers, or other equivalent instruments of transfer reasonably acceptable to the



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Administrative Agent. Each Grantor will, from time to time upon the reasonable request of the
Administrative Agent, promptly deliver to the Administrative Agent such powers, instruments, and
similar documents, reasonably satisfactory in form and substance to the Administrative Agent, with
respect to the Collateral and will, from time to time upon the request of the Administrative Agent
during the continuance of any Event of Default, promptly transfer any Pledged Equity Interests or
other Equity Interests constituting Collateral into the name of any nominee designated by the
Administrative Agent.



     SECTION 4.3 Continuous Pledge. Subject to Section 2.4, each Grantor will, at
all times, keep pledged to the Administrative Agent pursuant hereto all Pledged Equity Interests
constituting Collateral, all dividends and distributions with respect thereto and all other
Collateral and other securities, instruments, proceeds, and rights from time to time received by or
distributable to such Grantor in respect of any Collateral.



     SECTION 4.4 LLC Agreements, Partnership Agreements and Organizational Documents. (a)
Each Grantor shall at such Grantor’s own expense:



               (i) perform and observe in all material respects all the terms and provisions of each LLC
Agreement, Partnership Agreement or other Organizational Document relating to the Collateral, as
the case may be, to which such Grantor is a party and each other contract and agreement included in
all the Collateral to be performed or observed by such Grantor, maintain such LLC Agreement,
Partnership Agreement or other Organizational Document relating to the Collateral, as the case may
be, and each such other contract and agreement in full force and effect, in such Grantor’s
reasonable business judgment, enforce such LLC Agreement, Partnership Agreement or other
Organizational Document relating to the Collateral, as the case may be, and each such other
contract and agreement in accordance with its terms, and, upon the occurrence and during the
continuance of any Event of Default, take all such action to such end as may from time to time be
requested by the Administrative Agent; and



               (ii) from time to time (A) furnish to the Administrative Agent such information regarding the
Collateral as the Administrative Agent may reasonably request, and (B) upon the occurrence and
during the continuance of any Event of Default, upon the request of the Administrative Agent, make
to any other party to such LLC Agreement, Partnership Agreement or other Organizational Document
relating to the Collateral, as the case may be, such requests for information and for action as
such Grantor is entitled to make thereunder.



          (b) No Grantor shall consent to any amendment, supplement, waiver or other modification of any
of the terms or provisions contained in, or applicable to, any LLC Agreement, Partnership Agreement
or other Organizational Document except as permitted under Section 7.2.10 of the Credit Agreement.




     SECTION 4.5 Additional Covenants. Each Grantor agrees that, until all the Secured
Obligations have been paid in full in cash on terms and pursuant to documentation in form and
substance reasonably satisfactory to the Administrative Agent and all Commitments shall have
irrevocably terminated, it will comply with all the terms and provisions of the Credit Agreement
and the other Loan Documents that are applicable to it.



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ARTICLE V

THE ADMINISTRATIVE AGENT




     SECTION 5.1 Administrative Agent Appointed Attorney-in-Fact. Each Grantor hereby
irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof,
with full power of substitution, as such Grantor’s true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and in the name of such
Grantor or in such Grantor’s own name, for the purpose of carrying out the terms of this Agreement,
to take, upon the occurrence and during the continuance of any Event of Default, any and all
actions and execute any and all documents and instruments that may, in the judgment of the
Administrative Agent, be necessary or desirable to accomplish the purposes of this Agreement.
Without limiting the generality of the foregoing, after the occurrence and during the continuance
of any Event of Default, each Grantor hereby gives the Administrative Agent the power and right, on
behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the
following:



          (a) take possession of and indorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under or in respect of any Collateral and file any claim
or take any other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due
under or in respect of any Collateral whenever payable;




          (b) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral;




          (c) execute, in connection with any sale or other disposition provided for in Section
6.1, any endorsements, assignments or other instruments of conveyance or transfer with respect
to the Collateral; and




          (d) (i) direct any Person liable for any payment under any of the Collateral to make payment
of any and all moneys due or to become due thereunder directly to the Administrative Agent or as
the Administrative Agent shall direct; (ii) ask or demand for, collect, and receive payment of and
give receipt for, any and all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (iii) receive, collect, sign and indorse any drafts or
other instruments, documents and chattel paper in connection in connection with any of the
Collateral; (iv) commence and prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce
any other right in respect of any Collateral; (v) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (vi) settle, compromise or adjust any such
suit, action or proceeding and, in connection therewith, give such discharges or releases as the
Administrative Agent may deem appropriate; and (vii) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as fully and completely as
though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the
Administrative Agent’s option and such Grantor’s expense, at any time, or from time to time, all
acts and things that the Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Lender Parties’




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security interests therein and to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.



Each Grantor hereby acknowledges, consents and agrees that the power of attorney granted pursuant
to this Section is irrevocable and coupled with an interest.




     SECTION 5.2 Administrative Agent May Perform. If any Grantor fails to perform any
agreement contained herein, the Administrative Agent may itself perform, or cause performance of,
such agreement and the reasonable expenses of the Administrative Agent incurred in connection
therewith shall be payable by such Grantor.



     SECTION 5.3 Access and Examination. In order to give effect to the intent of this
Agreement, the Administrative Agent may at all reasonable times have access to, examine, audit,
make extracts from and inspect each Grantor’s records, files and books of account and the
Collateral, and may discuss each Grantor’s affairs with such Grantor’s officers and management.
Each Grantor will deliver to the Administrative Agent promptly following its request therefor any
instrument necessary for the Administrative Agent to obtain records from any service bureau
maintaining records for such Grantor. The Administrative Agent may, at expense of the Grantors, use
each Grantor’s personnel, supplies and premises as may be reasonably necessary for maintaining or
enforcing the security interest granted hereunder.



     SECTION 5.4 Administrative Agent Has No Duty. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest (on behalf of the Lender Parties)
in the Collateral and shall not impose any duty on it to exercise any such powers. The
Administrative Agent’s sole duty with respect to the custody, safekeeping and physical preservation
of the Collateral in its possession, under Section 9-207 of the U.C.C. or otherwise, shall be to
deal with it in the same manner as the Administrative Agent deals with similar property for its own
account. Neither the Administrative Agent nor any of its officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so, nor shall any such Person be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof (including (a) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Equity Interests, whether or not the Administrative Agent has or is deemed to have
knowledge of such matters, and (b) the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral). Neither the Administrative Agent
nor any of its officers, directors, employees or agents shall be responsible to any Grantor for any
loss, damage, depreciation or other diminution in the value of any of the Collateral, except in
respect of any damages attributable solely to any such Person’s gross negligence or willful
misconduct as determined in a final non-appealable judgment of a court of competent jurisdiction.



ARTICLE VI

REMEDIES




     SECTION 6.1 Remedies. If any Event of Default shall have occurred and be continuing
the Administrative Agent may:



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          (a) exercise in respect of the Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it (including, without limitation, as provided in
Section 5.1 and clause (b) of Section 2.4), all the rights and remedies of
a secured party on default under the U.C.C. and also may, without demand of performance or other
demand, presentment, obtaining a final judgment, protest, advertisement or notice of any kind
(except any notice required by Law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby waived), sell,
assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or
any part thereof (or contract to do any of the foregoing) in one or more parcels at public or
private sale, at any of the Administrative Agent’s offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Administrative Agent may deem commercially
reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by Law, at
least 10 days’ prior notice to such Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable notification. The
Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Administrative Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral so sold may be
retained by the Administrative Agent until the sale price is paid by the purchase or purchasers
thereof, but the Administrative Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such
failure, such Collateral may be sold again upon like notice. At any public (or, to the extent
permitted by Law, private) sale made pursuant to this Section, any Lender Party may bid for or
purchase, free (to the extent permitted by Law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also hereby waived and released to the
extent permitted by Law), the Collateral or any part thereof offered for sale and may make payment
on account thereof by using any claim then due and payable to such Lender Party from any Grantor as
a credit against the purchase price, and such Lender Party may upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability to any Grantor
therefor;




          (b) exercise any and all rights and remedies of each Grantor under or in connection with the
Collateral, including the right to sue upon or otherwise collect, extend the time for payment of,
modify or amend the terms of, compromise or settle for cash, credit, or otherwise upon any terms,
grant other indulgences, extensions, renewals, compositions, or releases, and take or omit to take
any other action with respect to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable directly or indirectly in
connection with any of the foregoing, without discharging or otherwise affecting the liability of
any Grantor for the Obligations or under this Agreement or any other Loan Document and the Assigned
Agreements or otherwise in respect of the Collateral, including any and all rights of such Grantor
to demand or otherwise require payment of any amount under, or performance of any provision of, any
Collateral; and




          (c) enforce compliance with, and take any and all actions with respect to, each LLC
Agreement, Partnership Agreement or other Organizational Document, as the case may be, to the
fullest extent as though the Administrative Agent were the absolute owner of the Pledged




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Membership Interests, Pledged Partnership Interests, Pledged Shares and other Collateral,
including the right to receive all distributions and other payments that are made pursuant to such
LLC Agreement , Partnership Agreement or other Organizational Document, as the case may be.




     SECTION 6.2 Securities Laws. If the Administrative Agent shall determine to exercise
its right to sell all or any of the Collateral pursuant to Section 6.1, each Grantor agrees
that, upon request of the Administrative Agent, such Grantor will, at its own expense:



          (a) execute and deliver, and cause each issuer of the Collateral contemplated to be sold and
the directors and officers thereof to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts and things, as may be necessary or, in the opinion of
the Administrative Agent, advisable to register such Collateral under the provisions of the
Securities Act of 1933, as from time to time amended (the “Securities Act”), and to cause
the registration statement relating thereto to become effective and to remain effective for such
period as prospectuses are required by Law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the opinion of the Administrative
Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and Exchange Commission applicable thereto;




          (b) use its best efforts to qualify the Collateral under the state securities or “Blue Sky”
Laws and to obtain all necessary governmental approvals for the sale of the Collateral, as
requested by the Administrative Agent;




          (c) cause each such issuer to make available to its security holders, as soon as practicable,
an earnings statement that will satisfy the provisions of Section 11(a) of the Securities Act; and




          (d) do or cause to be done all such other acts and things as may be necessary to make such
sale of the Collateral or any part thereof valid and binding and in compliance with applicable Law.



Each Grantor further acknowledges the impossibility of ascertaining the amount of damages that
would be suffered by the Administrative Agent or the Lenders by reason of the failure by such
Grantor to perform any of the covenants contained in this Section and, consequently, to the extent
permitted under applicable Law, agrees that, if such Grantor shall fail to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount equal to the value
(as determined by the Administrative Agent) of the Collateral on the date the Administrative Agent
shall demand compliance with this Section.




     SECTION 6.3 Compliance with Restrictions. Each Grantor agrees that in any sale of any
of the Collateral whenever an Event of Default shall have occurred and be continuing, the
Administrative Agent is hereby authorized to comply with any limitation or restriction in
connection with such sale as it may be advised by counsel is necessary in order to avoid any
violation of applicable Law (including compliance with such procedures as may restrict the number
of prospective bidders and purchasers, require that such prospective bidders and purchasers have
certain qualifications, and restrict such prospective bidders and purchasers



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to persons who will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such Collateral), or in order to
obtain any required approval of the sale or of the purchaser by any Governmental Authority or
official, and each Grantor further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner, nor shall the
Administrative Agent be liable nor accountable to any Grantor for any discount allowed by reason of
the fact that such Collateral is sold in compliance with any such limitation or restriction.



     SECTION 6.4 Application of Proceeds. All cash proceeds received by the Administrative
Agent in respect of any sale of, collection from, or other realization upon, all or any part of the
Collateral shall be applied (after payment of any amounts payable to the Administrative Agent
pursuant to Section 11.3 of the Credit Agreement and Section 6.5) in whole or in part by
the Administrative Agent for the ratable benefit of the Lender Parties against all or any part of
the Secured Obligations in accordance with Section 8.6 of the Credit Agreement. Any surplus of such
cash or cash proceeds held by the Administrative Agent and remaining after payment in full in cash
of all the Secured Obligations (on terms and pursuant to documentation in form and substance
reasonably satisfactory to the Administrative Agent), and the irrevocable termination of all the
Commitments, shall be paid over to the applicable Grantor or to whomsoever may be lawfully entitled
to receive such surplus.



     SECTION 6.5 Indemnity and Expenses. Each Grantor agrees to jointly and severally
indemnify and hold harmless the Administrative Agent and its directors, officers, employees,
agents, Affiliates and their Related Parties from and against any and all claims, losses and
liabilities arising out of or resulting from this Agreement (including enforcement of this
Agreement), except claims, losses or liabilities resulting from any such Person’s gross negligence
or willful misconduct as determined by a final non-appealable judgment of a court of competent
jurisdiction. Each Grantor will upon demand pay to the Administrative Agent the amount of any and
all reasonable out-of-pocket expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which the Administrative Agent may incur in connection with
(a) the administration of this Agreement, (b) the custody, preservation, use or operation of, or
the sale of, collection from, or other realization upon, any of the Collateral, (c) the exercise or
enforcement of any of the rights of the Administrative Agent or the Lenders hereunder or (d) the
failure by any Grantor to perform or observe any of the provisions hereof.



ARTICLE VII

MISCELLANEOUS PROVISIONS




     SECTION 7.1 Loan Document. This Agreement is a Loan Document executed pursuant to the
Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered
and applied in accordance with the terms and provisions thereof, including Section 1.3 and Article
X thereof.



     SECTION 7.2 Amendments, etc.; Additional Grantors; Successors and Assigns.



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          (a) No amendment to or waiver of any provision of this Agreement nor consent to any departure
by any Grantor herefrom, shall be effective unless the same shall be in writing and signed by the
Administrative Agent and the percentage of the Lenders as required by Section 11.1 of the Credit
Agreement, and then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given.




          (b) Upon the execution and delivery by any Person of a pledge agreement supplement in
substantially the form of Exhibit A hereto (each a “Pledge Agreement Supplement”),
(i) such Person shall be referred to as an “Additional Grantor” and shall be and become a
Grantor, and each reference in this Agreement to “Grantor” shall also mean and refer to such
Additional Collateral Grantor and (ii) the disclosure schedule attached to each Security Agreement
Supplement shall be incorporated into and become a part of and supplement Schedules I
through VI attached hereto, as appropriate, and the Administrative Agent may attach such
supplemental disclosure schedules to such Schedules, and each reference to such Schedules shall
refer to such Schedules as amended or supplemented by such supplemental disclosure schedules.




          (c) This Agreement shall be binding upon each Grantor and its successors, transferees and
assignees, and shall inure to the benefit of and be enforceable by the Administrative Agent and
each other Lender Party and their respective successors and assigns; provided,
however, that no Grantor may assign such Grantor’s obligations hereunder without the prior
written consent of the Administrative Agent. Without limiting the generality of the foregoing, any
Lender may assign or otherwise transfer (in whole or in part) any Loans held by it to any other
Person, and such other Person shall thereupon become vested with all the rights and benefits in
respect thereof granted to such Lender under any Loan Document (including this Agreement) or
otherwise, subject, however, to the provisions of Section 11.10 of the Credit Agreement.




     SECTION 7.3 Addresses for Notices. All notices and other communications provided for
hereunder shall be made as provided in, and subject to the terms of, Section 11.2 of the Credit
Agreement. All notices to each Grantor shall be sent care of Wells Timberland at the address set
forth in the Credit Agreement and all notices to the Administrative Agent shall be sent as provided
in the Credit Agreement.



     SECTION 7.4 Section Captions. Section captions used in this Agreement are for
convenience of reference only, and shall not affect the construction of this Agreement.



     SECTION 7.5 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions
of this Agreement or affecting the validity or enforceability of such provision in any other
jurisdiction.



     SECTION 7.6 Counterparts. This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of which shall
constitute but one and the same agreement.



-16-









 





     SECTION 7.7 Waivers. Each Grantor hereby waives any right, to the extent permitted by
applicable Law, to receive prior notice of a judicial or other hearing with respect to any action
or prejudgment remedy or proceeding by the Administrative Agent to take possession, exercise
control over or dispose of any item of Collateral, where such action is permitted under the terms
of this Agreement or any other Loan Document or by applicable Law, or of the time, place or terms
of sale in connection with the exercise of the Administrative Agent’s rights hereunder. Each
Grantor waives, to the extent permitted by applicable Law, any bonds, security or sureties required
by the Administrative Agent with respect to any of the Collateral. Without limiting the foregoing,
each Grantor agrees that such Grantor will not invoke, claim or assert any benefit of applicable
Law, or take or attempt to take any action that could reasonably be expected to have the effect of
delaying, impeding or preventing the Administrative Agent from exercising any of its rights or
remedies with respect to the Collateral as herein provided.



     SECTION 7.8 Governing Law, Entire Agreement, etc. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT
THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR
AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.



     SECTION 7.9 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY LENDER PARTY OR GRANTOR SHALL BE
BROUGHT AND MAINTAINED IN THE FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF MANHATTAN OF THE
STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT’S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GRANTOR AND LENDER
PARTY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE
PURPOSE OF ANY SUIT LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH GRANTOR FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH SUCH GRANTOR MAY HAVE OR HEREAFTER MAY
HAVE TO THE LAYING OF VENUE OF ANY SUCH



-17-









 







LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY GRANTOR HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO SUCH GRANTOR OR SUCH GRANTOR’S PROPERTY, SUCH GRANTOR, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF SUCH GRANTOR’S OBLIGATIONS
UNDER THIS AGREEMENT.



     SECTION 7.10 Waiver of Jury Trial, etc. EACH LENDER PARTY AND GRANTOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS SUCH GRANTOR MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF ANY LENDER PARTY OR GRANTOR. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT SUCH GRANTOR HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE ADMINISTRATIVE AGENT ENTERING INTO THIS AGREEMENT.



     SECTION 7.11 Waiver of Certain Claims. TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO
GRANTOR SHALL ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST EACH LENDER PARTY ON ANY THEORY OF
LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL
DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT OR ANY INSTRUMENT
CONTEMPLATED HEREBY.



     SECTION 7.12 No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.



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     IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered
as of the day and year first above written.



	 	 	 	 	 
	 	WELLS TIMBERLAND TRS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Randall D. Fretz 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	WELLS TRS HARVESTING OPERATIONS, LLC

 	 
	 	By:  	FOREST RESOURCE CONSULTANTS, INC., as Manager
 	 
	 	 	 	 
	 	 	 	 
	 



	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name: David Foil
	 	 
	 

	 	 	 	Title: President	 	 






ACKNOWLEDGED AND ACCEPTED:




	 	 	 	 	 
	COBANK, ACB,	 	 
	 

	 	as Administrative Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 






Pledge Agreement

Signature Page




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SCHEDULE I

to

Pledge Agreement




Item B. Pledged Shares




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Authorized	 	 	 	 	 	 
	 	 	Securities	 	Shares	 	Outstanding	 	% of Shares	 	Certificate
	Grantor	 	Issuer	 	Interests	 	Shares	 	Pledged	 	No.
	 

	 	 
	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 





Item C. Pledged Membership Interests




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Membership	 	 
	 	 	State of	 	 	 	No. of	 	Interests %	 	 
	 	 	Organization	 	Securities	 	Membership	 	of Interests	 	 
	Grantor	 	of Grantor	 	Issuer	 	Interests	 	Pledged	 	Certificate No.
	Wells Timberland TRS, Inc.
	 	Delaware
	 	Wells TRS Harvesting Operations, LLC	 	 	1,000	 	 	 	100	%	 	 	01	 






Item D. Pledged Partnership Interests




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Type of	 	Partnership	 	 
	 	 	State of	 	 	 	Pledged	 	% of Pledge	 	 
	 	 	Organization	 	Securities	 	Partnership	 	Partnership	 	Certificate
	Grantor	 	of Grantor	 	Issuer	 	Interests	 	Interest	 	No.
	 

	 	 
	 	 
	 	 
	 	 
	 	 





 









 





EXHIBIT A

to

Pledge Agreement




FORM OF PLEDGE AGREEMENT SUPPLEMENT




[Date]




CoBank, ACB,

     as Administrative Agent

5550 South Quebec Street

Greenwood Village, Colorado 80111




Attention: Syndications Coordinator, Corporate Finance Division




TIMBERLANDS II, LLC and

WELLS TIMBERLAND ACQUISITION, LLC




Ladies and Gentlemen:




     Reference is made to the Pledge Agreement, dated as of October 9, 2007 (as amended,
supplemented, restated or otherwise modified from time to time, the “Pledge Agreement”),
made by Wells Timberland TRS, Inc., a Delaware corporation (“Wells TRS”), Wells TRS
Harvesting Operations, LLC, a Delaware limited liability company (“Wells TRS Subsidiary”),
and each other Person (such capitalized term and all other capitalized terms not otherwise defined
herein to have the meanings provided for in Article I) that may from time to time become a
party thereto (Wells TRS, Wells TRS Subsidiary and such other Persons that become Additional
Grantors are collectively referred to as the “Grantors” and individually as a
“Grantor”), in favor of CoBank, ACB, as administrative agent (in such capacity, the
“Administrative Agent”) for each of the Lender Parties.



     The undersigned hereby agrees, as of the date first above written, to become a Grantor under
the Pledge Agreement as if the undersigned were an original party thereto and agrees that each
reference in the Pledge Agreement to a “Grantor” shall also mean and refer to the undersigned.



     The undersigned hereby collaterally assigns, mortgages and pledges to the Administrative Agent
for its benefit and the ratable benefit of the Lenders, and hereby grants to the Administrative
Agent for its benefit and the ratable benefit of the Lenders, as collateral for the Secured
Obligations, a pledge and assignment of, and a security interest in, all of the right, title and
interest of the undersigned in and to the undersigned’s Collateral, whether now owned or hereafter
acquired, subject to all of the terms and provisions of the Pledge Agreement, as if such



 









 







Collateral of the undersigned had been subject to the Pledge Agreement on the date of its
original execution.



     The undersigned has attached hereto a supplement to Schedule I to the Pledge Agreement, and
the undersigned hereby certifies that such supplement is accurate and complete as of the date first
above written.



Exhibit A-2


 









 





     The undersigned hereby makes each representation and warranty set forth in Article III of the
Pledge Agreement as to itself and as to the undersigned’s Collateral to the same extent as each
other Grantor, and hereby agrees to be bound as a Grantor by all of the terms and provisions of the
Pledge Agreement to the same extent as all the other Grantors.



     This letter shall be governed by and construed in accordance with the Laws of the State of New
York.



	 	 	 	 	 
	 	Very truly yours,





[NAME OF ADDITIONAL GRANTOR]

 	 
	 	By:  	___________________________
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



ACKNOWLEDGED AND ACCEPTED:




	 	 	 	 	 
	COBANK, ACB,	 	 
	 

	 	as Administrative Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 







 











 




EXHIBIT H



SECURITY AGREEMENT




     SECURITY AGREEMENT, dated as of October 9, 2007 (as amended, supplemented, restated or
otherwise modified from time to time, this “Agreement”), made by TIMBERLANDS II, LLC, a
Delaware limited liability company, WELLS TIMBERLAND ACQUISITION, LLC, a Delaware limited liability
company (each a “Borrower” and collectively, the “Borrowers”), WELLS TRS HARVESTING
OPERATIONS, LLC, a Delaware limited liability company (“Wells TRS Subsidiary”), and each
Additional Grantor (such capitalized term and all other capitalized terms not otherwise defined
herein to have the meanings provided for in Article I) that may from time to time become a
party hereto (the Borrowers, Wells TRS Subsidiary and the Additional Grantors are collectively
referred to as the “Grantors” and individually as a “Grantor”), in favor of COBANK,
ACB, as administrative agent (in such capacity, the “Administrative Agent”) for each of the
Lenders.



W I T N E S S E T H:




     WHEREAS, pursuant to the Credit Agreement, dated as of the date hereof (as amended,
supplemented, restated or otherwise modified from time to time, the “Credit Agreement”),
among the Borrowers, the various lending institutions as are, or may from time to time become,
parties thereto (collectively, the “Lenders”), and the Administrative Agent, the Lenders
have extended Commitments to make Loans to the Borrowers;



     WHEREAS, as a condition precedent to the occurrence of the Funding Date, each Grantor is
required to execute and deliver this Agreement; and



     WHEREAS, each Grantor has duly authorized the execution, delivery and performance of this
Agreement;



     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Lenders to make the Loans to the Borrowers pursuant
to the Credit Agreement, each Grantor agrees, with the Administrative Agent for its benefit and the
benefit of the other of the Lenders, as follows:



ARTICLE I

DEFINITIONS




     The following terms (whether or not underscored) when used in this Agreement, including its
preamble and recitals, shall have the following meanings (such definitions to be equally applicable
to the singular and plural forms thereof):



     “Additional Grantors” is defined in clause (b) of Section 7.2.



     “Administrative Agent” is defined in the preamble.



     “Agreement” is defined in the preamble.



     “Assigned Agreements” is defined in clause (p) of Section 2.1.



 









 





     “Borrowers” is defined in the preamble.



     “Collateral” is defined in Section 2.1.



     “Collateral Account” is defined in clause (a) of Section 4.15.



     “Computer Hardware and Software Collateral” means (a) all computer and other
electronic data processing hardware, integrated computer systems, central processing units, memory
units, display terminals, printers, features, computer elements, card readers, tape drives, hard
and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories
and all peripheral devices and other related computer hardware; (b) all software programs
(including both source code, object code and all related applications and data files) designed for
use on the computers and electronic data processing hardware described in clause (a); (c)
all licenses and leases of software programs; (d) all firmware associated therewith; (e) all
documentation (including flow charts, logic diagrams, manuals, guides and specifications) with
respect to such hardware, software and firmware described in the clauses (a) through
(c); and (f) all rights with respect to all of the foregoing, including any and all
copyrights, licenses, options, warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any of the foregoing.



     “Copyright Collateral” means all copyrights of each Grantor (including Community
designs, copyrights in software and databases and all Mask Works (as defined under 12 U.S.C. 901 of
the U.S. Copyright Act)), whether statutory or common law, registered or unregistered, now or
hereafter in force throughout the world including all of such Grantor’s right, title and interest
in and to all copyrights registered in the United States Copyright Office or anywhere else in the
world and also including the copyrights referred to in Item A of  IV attached
hereto (as such Schedule may be amended or supplemented from time to time), and all applications
for registration thereof, whether pending or in preparation, all copyright licenses, including each
copyright license referred to in Item B of Schedule IV attached hereto (as such
Schedule may be amended or supplemented from time to time), the right to sue for past, present and
future infringements of any thereof, all rights corresponding thereto throughout the world, all
extensions and renewals of any thereof and all proceeds of the foregoing, including licenses,
royalties, income, payments, claims, damages and proceeds of suit.



     “Credit Agreement” is defined in the first recital.



     “Deposit Account” has the meaning provided for in the U.C.C. and includes, without
limitation, each lock-box account, concentration account and other collateral accounts maintained
by each Grantor, together with all funds held therein and all certificates and instruments, if any,
from time to time representing or evidencing such accounts) maintained with a bank (including,
without limitation, those accounts identified on Item I of Schedule I attached
hereto, as such Schedule may be amended or supplemented from time to time).



     “Equipment” has the meaning provided for in the U.C.C. and includes, without
limitation, all Equipment wherever located and whether or not affixed to any real property,



-2-









 




including all accessories, additions, attachments, improvements, substitutions and
replacements thereto and therefor.




     “General Intangible” has the meaning provided for in the U.C.C. and includes, without
limitation, all Material Agreements, all Intellectual Property Collateral, all rights under or
evidenced by choses in action or causes of action, all judgments, tax refund claims, claims against
carriers and shippers, claims under liens and insurance policies, all rights under security
agreements, guarantees, indemnities and other instruments and contracts securing or otherwise
relating to any of the foregoing, and all other intangible personal property of every kind and
nature, and all accessions, additions, improvements, modifications and upgrades to, replacements of
and substitutions for the foregoing.



     “Grantor” and “Grantors” are defined in the preamble.



     “Intellectual Property Collateral” means, collectively, the Computer Hardware and
Software Collateral, the Copyright Collateral, the Patent Collateral, the Trademark Collateral and
the Trade Secrets Collateral.



     “Inventory” has the meaning provided for in the U.C.C. and includes, without
limitation, all goods manufactured, acquired or held for sale or lease, all raw materials,
component materials, work-in-progress and finished goods, all supplies, goods and other items and
materials used or consumed in the manufacture, production, packaging, shipping, selling, leasing or
furnishing of such inventory or otherwise in the operation of the business or each Grantor, all
goods in which each Grantor now or at any time hereafter has any interest or right of any kind, and
all goods that have been returned to or repossessed by or on behalf of each Grantor, in each case
whether or not the same is in transit or in the constructive, actual or exclusive occupancy or
possession of any Grantor or all accessions thereto, products thereof and documents therefor.



     “Investment Accounts” means, collectively, the Collateral Account, Commodities
Accounts, Deposit Account and Securities Accounts.



     “Lenders” are defined in the first recital.



     “Patent Collateral” means (a) all letters patent and applications for letters patent
throughout the world (including all patent applications in preparation for filing anywhere in the
world), including each patent and patent application referred to in Item A of Schedule
II attached hereto (as such Schedule may be amended or supplemented from time to time); (b) all
patent licenses, including each patent license referred to in Item B of Schedule II
attached hereto (as such Schedule may be amended or supplemented from time to time); (c) all
reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations
of any of the items described in clauses (a) and (b) above; and (d) all proceeds
of, and rights associated with, the foregoing (including license royalties and proceeds of
infringement suits), the right to sue third parties for past, present or future infringements of
any patent or patent application, including any patent or patent application referred to in
Item A of Schedule II attached hereto (as such Schedule may be amended or
supplemented from time to time), and for breach or enforcement of any patent license, including any
patent license referred to in Item B of Schedule II attached



-3-









 




hereto (as such Schedule may be amended or supplemented from time to time), and all rights
corresponding thereto throughout the world.




     “Proceeds” has the meaning provided for in the U.C.C. and includes, without
limitation, (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to
any Grantor from time to time with respect to any of the Collateral, (b) any and all payments (in
any form whatsoever) made or due and payable to any Grantor from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority, (c) any claim of any Grantor against third parties for
past, present or future infringement of any Intellectual Property Collateral, (d) any recoveries by
any Grantor against third parties with respect to any litigation or dispute concerning any of the
Collateral, including claims arising out of the loss or nonconformity of, interference with the use
of, defects in, or infringement of rights in, or damage to, the Collateral, and (e) any and all
other amounts, rights to payment or other property acquired upon the sale, lease, license, exchange
or other disposition of Collateral and all rights arising out of the Collateral.



     “Receivables Collateral” means all Collateral relating to the right of payment for
goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services
rendered or to be rendered, including, without limitation, all such rights evidenced by any
Account, Document, Instrument, Chattel Paper, General Intangible or Investment Property.



     “Secured Obligations” is defined in Section 2.2.



     “Securities Account” means all “securities accounts” as defined in Article 8 of the
U.C.C. and shall include, without limitation, all the accounts identified on Item 5 of
Schedule I attached hereto (as such Schedule may be amended or supplemented from time to
time).



     “Security Agreement Supplement” is defined in clause (b) of Section
7.2.



     “Supporting Obligation” means a Letter-of-Credit Right or secondary obligation that
supports the payment or performance of an Account, Chattel Paper, Document, General Intangible,
Instrument or Investment Property, including, without limitation, all security agreements,
guaranties, leases and other contracts securing or otherwise relating to any such Accounts, Chattel
Paper, Documents, Instruments, including Goods represented by the sale or lease of delivery which
gave rise to any of the foregoing, returned or repossessed merchandise and rights of stoppage in
transit, replevin, reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party.



     “Trademark” is defined in the definition “Trademark Collateral”.



     “Trademark Collateral” means (a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, trade dress, service marks,
certification marks, collective marks, logos, internet domain names, other source of business
identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and
general intangibles of a like nature (all of the foregoing items in this clause (a) being
collectively called a “Trademark”), now existing anywhere in the world or hereafter adopted
or acquired, whether currently in use or not, all registrations and recordings thereof and all
applications in connection therewith, whether pending or in preparation for filing, including



-4-









 




registrations, recordings and applications in the United States Patent and Trademark Office or
in any office or agency of the United States of America or any State thereof or any foreign
country, including those referred to in Item A of Schedule III attached hereto (as
such Schedule may be amended or supplemented from time to time); (b) all Trademark licenses,
including each Trademark license referred to in Item B of Schedule III attached
hereto (as such Schedule may be amended or supplemented from time to time); (c) all reissues,
extensions or renewals of any of the items described in clauses (a) and (b) above;
(d) all of the goodwill of the business connected with the use of, and symbolized by the items
described in, clauses (a) and (b) above; and (e) all proceeds of, and rights
associated with, the foregoing, including any claim by each Grantor against third parties for past,
present or future infringement or dilution of any Trademark, Trademark registration or Trademark
license, including any Trademark, Trademark registration or Trademark license referred to in
Item B of Schedule III attached hereto (as such Schedule may be amended or
supplemented from time to time), or for any injury to the goodwill associated with the use of any
such Trademark or for breach or enforcement of any Trademark license.




     “Trade Secret” is defined in the definition “Trade Secrets Collateral”.



     “Trade Secrets Collateral” means common law and statutory trade secrets and all other
confidential or proprietary information and all know-how obtained by or used in or contemplated at
any time for use in the business of any Grantor (all of the foregoing being collectively called a
“Trade Secret”), whether or not such Trade Secret has been reduced to a writing or other
tangible form (including all documents and things embodying, incorporating or referring in any way
to such Trade Secret, all Trade Secret licenses), including each Trade Secret license referred to
in Schedule V attached hereto (as such Schedule may be amended or supplemented from time to
time), and including the right to sue for and to enjoin and to collect damages for the actual or
threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade
Secret license.



     “U.C.C.” means the Uniform Commercial Code as in effect from time to time in the State
of New York; provided that if, by reason of applicable Law, the validity or perfection or
the effect of validity or perfection or non-perfection or the priority of any security interest in
any Collateral granted under this Agreement is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than New York, then as to such matters “U.C.C.” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction.



     SECTION 1.1. Credit Agreement Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Agreement, including its preamble and recitals, have
the meanings provided in the Credit Agreement.



     SECTION 1.2. U.C.C. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms for which meanings are provided in the U.C.C. are used in this Agreement,
including its preamble and recitals, with such meanings. Without limiting the foregoing the
following terms are used herein as defined in the U.C.C.: Account, Authenticate, Certificated
Securities, Chattel Paper, Commercial Tort Claim, Commodities Accounts, Control, Documents,
Electronic Chattel Paper, Entitlement Holder, Entitlement Orders, Fixtures, Goods,



-5-









 




Instruments, Investment Property, Letter-of-Credit Right, Money, Payment Intangibles, Security
Entitlements, Uncertificated Securities and Tangible Chattel Paper.




ARTICLE II

SECURITY INTEREST




     SECTION 2.1. Grant of Security Interest. Each Grantor hereby pledges, hypothecates,
collaterally assigns, charges, mortgages and pledges to the Administrative Agent for its benefit
and the ratable benefit of each of the Lender Parties, and hereby grants to the Administrative
Agent, for its benefit and the ratable benefit of each of the Lender Parties, a security interest
in, all of its right, title and interest in and to the following, whether now or hereafter existing
or acquired (collectively, the “Collateral”):



          (a) all Equipment in all of its forms of such Grantor;




          (b) all Inventory in all of its forms of such Grantor;




          (c) all Accounts in all of its forms of such Grantor;




          (d) all Intellectual Property Collateral in all of its forms of such Grantor;




          (e) all General Intangibles in all of its forms of such Grantor;




          (f) all Investment Property in all of its forms of such Grantor;




          (g) all Deposit Accounts in all of its forms of such Grantor;




          (h) all Chattel Paper in all of its forms of such Grantor;




          (i) all Commercial Tort Claims in all of its forms of such Grantor;




          (j) all Goods in all of its forms of such Grantor;




          (k) all Instruments in all of its forms of such Grantor;




          (l) all Payment Intangibles in all of its forms of such Grantor;




          (m) all Documents in all of its forms of such Grantor;




          (n) all Supporting Obligations in all of its forms of such Grantor;




          (o) all Letter-of-Credit Rights in all of its forms of such Grantor;




          (p) all of such Grantor’s right, title and interest in and to all of its Material Agreements
(including the Material Agreements specified in Schedule VI attached hereto), and each Rate
Protection Agreement to which such Grantor is now or may hereafter become a party, in each case as
such agreements may be amended or otherwise modified from time to time (collectively, the
“Assigned Agreements”), including (i) all rights of such Grantor to receive moneys due and
to become due under or pursuant to the Assigned Agreements; (ii) all rights of




-6-









 




such Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with
respect to the Assigned Agreements; (iii) all claims of such Grantor for damages arising out of or
for breach of or default under the Assigned Agreements; and (iv) the right of such Grantor to
terminate the Assigned Agreements, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder;




          (q) all Fixtures in all of its forms of such Grantor;




          (r) the Reserve Account, all amounts therein and all other Account Collateral;




          (s) the Interest Reserve Account and the Interest Reserve Collateral;




          (t) the Wells TRS Subsidiary Account and the Wells TRS Subsidiary Account Collateral;




          (u) the Subordinated Priority Collateral;




          (v) all of such Grantor’s other property and rights of every kind and description and
interests therein, including all moneys, securities and other property, now or hereafter held or
received by, or in transit to, the Administrative Agent or any Lender from or for such Grantor,
whether for safekeeping, pledge, custody, transmission, collection or otherwise;




          (w) all of such Grantor’s books, records, documents, instruments, electronic databases,
computer records, ledger cards, customer lists, manuals, files, correspondence, tapes, drafts and
related data processing software, writings, data bases, information and other property relating to,
used or useful in connection with, evidencing, embodying, incorporating or referring to, any and
all of the foregoing Collateral; and




          (x) all Proceeds of any and all of the foregoing Collateral;



provided, however, that any agreement to which any Grantor is a party shall be
excluded from the security interest granted by such Grantor under this Section to the extent that
the assignment thereof or the creation of a security interest therein would constitute a breach of
the terms of such agreement, or would permit any party to such agreement to terminate such
agreement, in each case as such agreement is in effect on the date of this Agreement or the date on
which such agreement is first entered into by the applicable Grantor; provided,
further, however, that (i) any of the agreements excluded in accordance with the
foregoing provision shall cease to be so excluded if, at such time, (A) the prohibition of
assignment or creation of a security interest in such agreement is no longer in effect, or is
rendered ineffective as a matter of law, or (B) the applicable Grantor has obtained all of the
consents of the other parties to such agreement necessary for the assignment of, or creation of a
security interest in, such agreement and (ii) with respect to any Material Agreement referred to in
clause (p), such Grantor shall use its commercially reasonable best efforts to obtain any
such necessary consent.




     SECTION 2.2. Security for Obligations. This Agreement secures the prompt payment in
full in cash of all Obligations, including all amounts payable by the Borrowers and each other Loan
Party under or in connection with the Credit Agreement, the Notes and each other Loan Document,
whether for principal, interest, costs, fees, expenses, indemnities or



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otherwise and whether now or hereafter existing (all of such obligations being the
“Secured Obligations”).




     SECTION 2.3. Continuing Security Interest; Transfer of Notes. This Agreement shall
create a continuing security interest in the Collateral and shall remain in full force and effect
until payment in full in cash of all Secured Obligations (on terms and pursuant to documentation in
form and substance reasonably satisfactory to the Administrative Agent) and the irrevocable
termination of all the Commitments, at which time the security interest granted herein shall
terminate and all rights to the Collateral shall revert to the Grantors. In the event that any part
of the Collateral is sold in connection with a sale permitted under the Credit Agreement (other
than a sale to a Grantor) the security interest granted herein shall terminate with respect to such
Collateral and all rights therein shall revert to the applicable Grantor or Grantors. Upon any such
termination or release, the Administrative Agent will, at each Grantor’s sole expense and without
any representations, warranties or recourse of any kind whatsoever, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such termination or
release.



     SECTION 2.4. Security Interest Absolute. All rights of the Administrative Agent and
the security interests granted to the Administrative Agent hereunder, and all obligations of each
Grantor hereunder, shall be absolute and unconditional, irrespective of:



          (a) any lack of validity, legality or enforceability of any Loan Document;




          (b) the failure of any Lender Party:





(i) to assert any claim or demand or to enforce any right or remedy against any Grantor, any
other Loan Party or any other Person under the provisions of any Loan Document or otherwise; or




(ii) to exercise any right or remedy against any other guarantor of, or collateral securing,
any Secured Obligation of any Grantor or of any other Loan Party;



          (c) any change in the time, manner or place of payment of, or in any other term of, all or any
of the Secured Obligations or any other extension, compromise or renewal of any Secured Obligation,
including any increase in the Secured Obligations resulting from the extension of additional credit
to any Grantor or any other Loan Party or otherwise;




          (d) any reduction, limitation, impairment or termination of any Secured Obligation of any
Grantor or of any other Loan Party for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives
any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability
of, or any other event or occurrence affecting, any Secured Obligation of any Grantor or of any
other Loan Party or otherwise;




          (e) any amendment to, rescission, waiver, or other modification of, or any consent to
departure from, any of the terms of any Loan Document;




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          (f) any addition, exchange, release, surrender or non-perfection of any collateral (including
the Collateral), or any amendment to or waiver or release of or addition to or consent to departure
from any guaranty, for any of the Secured Obligations; or




          (g) any other circumstances which might otherwise constitute a defense available to, or a
legal or equitable discharge of, any Grantor, any other Loan Party, any surety or any guarantor or
otherwise, including as a result of any proceeding of the nature referred to in Section 8.1.8 of
the Credit Agreement.




     SECTION 2.5. Grantors Remain Liable. Anything herein to the contrary notwithstanding:



          (a) each Grantor shall remain liable under the contracts and agreements included in the
Collateral (including the Assigned Agreements) to the extent set forth therein, and shall perform
all of its duties and obligations under such contracts and agreements to the same extent as if this
Agreement had not been executed;




          (b) each Grantor will comply in all material respects with all material Laws relating to the
ownership and operation of the Collateral, including, without limitation, all registration
requirements under applicable material Laws, and shall pay when due all taxes, fees and assessments
imposed on or with respect to the Collateral, except to the extent the validity thereof is (A)
being diligently contested in good faith by appropriate proceedings which (i) suspend the
collection thereof and any Lien therefrom and (ii) for which adequate reserves in accordance with
GAAP have been set aside by such Grantor, and (B) could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect;




          (c) the exercise by the Administrative Agent of any of its rights hereunder shall not release
any Grantor from any of its duties or obligations under any contracts or agreements included in the
Collateral; and




          (d) neither the Administrative Agent nor any other Lender Party shall have any obligation or
liability under any contracts or agreements included in the Collateral by reason of this Agreement,
nor shall the Administrative Agent or any other Lender Party be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.




     SECTION 2.6. Waiver of Subrogation. Each Grantor hereby irrevocably waives to the
extent permitted by applicable Law and until such time as the Secured Obligations shall have been
paid in full in cash (on terms and pursuant to documentation in form and substance reasonably
satisfactory to the Administrative Agent) and all the Commitments have irrevocably terminated, any
claim or other rights which it may now or hereafter acquire against the Borrowers or any other Loan
Party that arises from the existence, payment, performance or enforcement of such Grantor’s
obligations under this Agreement or any other Loan Document, including any right of subrogation,
reimbursement, exoneration or indemnification, and any right to participate in any claim or remedy
of any Lender Party against the Borrowers or any other Loan Party or any collateral which any
Lender Party now has or hereafter acquires, whether or not such claim, remedy or right arises in
equity or under contract or Law. If any amount shall be



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paid to any Grantor in violation of the preceding sentence, such amount shall be deemed to
have been paid to such Grantor for the benefit of, and held in trust for, the Lender Parties, and
shall forthwith be paid to the Administrative Agent to be credited and applied against the Secured
Obligations, whether matured or unmatured. Each Grantor acknowledges that it will receive direct
and indirect benefits for the financing arrangements contemplated by the Credit Agreement and that
the waiver set forth in this Section is knowingly made in contemplation of such benefits




ARTICLE III

REPRESENTATIONS AND WARRANTIES




     Each Grantor represents and warrants unto each Lender Party, as of the date it becomes a party
to this Agreement, as set forth in this Article.



     SECTION 3.1. Location of Grantors; Collateral, etc. Item E of Schedule
I attached hereto (as such Schedule may be amended or supplemented from time to time)
identifies for such Grantor the state in which it is organized and the relevant organizational
identification number (or states that one does not exist). All of the Equipment, Inventory (other
than Inventory that is in-transit to a location specified in Item B of Schedule I
attached hereto on a vehicle owned or leased by a Grantor) and Fixtures of such Grantor are located
at the places specified in Item A, Item B and Item H, respectively, of
Schedule I attached hereto (as such Schedule may be amended or supplemented from time to
time). The principal place of business and chief executive office of such Grantor and the office
where such Grantor keeps its records concerning the Collateral, and the original copies of each
Assigned Agreement and all originals of all Instruments and Tangible Chattel Paper, are located at
the places specified in Item C of Schedule I attached hereto (as such Schedule may
be amended or supplemented from time to time). Except as set forth in Item D of
Schedule I attached hereto such Grantor has no trade names and has not been known by any
legal name different from the one set forth on the signature page hereto. Except as notified by
such Grantor to the Administrative Agent, such Grantor is not a party to any one or more Federal,
state or local government contracts.



     SECTION 3.2. Ownership, No Liens, etc. Such Grantor owns its portion of the
Collateral free and clear of any Lien, except for the security interest created by this Agreement
and except as otherwise permitted by Section 7.2.3 of the Credit Agreement. Except as disclosed in
Item F of Schedule II attached hereto (as such Schedule may be amended or
supplemented from time to time) or from time to time to the Administrative Agent, none of the
Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor, located
on any leased property or subject to the Control of any Person, other than the Administrative Agent
or such Grantor.



     SECTION 3.3. Receivables Collateral and Assigned Agreements. (a) All Receivables
Collateral (i) is and will be the legal, valid and binding obligation of the Account Debtor in
respect thereof, representing an unsatisfied obligation of such Account Debtor, (ii) is and will be
enforceable in accordance with its terms, (iii) is not and will not be subject to any setoffs,
defenses, taxes, counterclaims (except with respect to refunds, returns and allowances in the
ordinary course of business with respect to damaged merchandise) and (iv) is and will be in
compliance with all applicable Law.



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          (b) Such Grantor has delivered to the Administrative Agent exclusive Control of all intangible
Chattel Paper and possession of all originals of all Instruments and Tangible Chattel Paper
currently owned or held by such Grantor (duly endorsed in blank in favor of the Administrative
Agent), and true and correct copies of each Assigned Agreement.




     SECTION 3.4. Intellectual Property Collateral. With respect to any Intellectual
Property Collateral that is material to the operations of any Grantor:



          (a) such Intellectual Property Collateral is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, and is valid and enforceable;




          (b) such Grantor has made all necessary filings and recordations to protect its interest in
such Intellectual Property Collateral, including recordations of all of its interests in (i) the
Patent Collateral and Trademark Collateral in the United States Patent and Trademark Office and in
corresponding offices throughout the world and (ii) the Copyright Collateral in the United States
Copyright Office and in corresponding offices throughout the world;




          (c) in the case of any such Intellectual Property Collateral that is owned by such Grantor,
such Grantor is the exclusive owner of the entire and unencumbered right, title and interest in and
to such Intellectual Property Collateral and no claim has been made that the use of such
Intellectual Property Collateral does or may violate the asserted rights of any third party;




          (d) in the case of any such Intellectual Property Collateral that is licensed by such Grantor,
such Grantor is in compliance with all the material terms of such license; and




          (e) such Grantor has performed and will continue to perform all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every item of such Intellectual
Property Collateral in full force and effect throughout the world.



Such Grantor owns directly or is entitled to use by license or otherwise, all patents, trademarks,
trade secrets, copyrights, licenses, technology, know-how, processes and other intellectual
property that is necessary for the proper conduct of such Grantor’s business.




     SECTION 3.5. Assigned Agreements. The Assigned Agreements of such Grantor, true and
complete copies of which have been furnished to the Administrative Agent, have been duly
authorized, executed and delivered by such Grantor and (to the best knowledge of such Grantor) each
other party thereto, are in full force and effect and are binding upon and enforceable against such
Grantor and (to the best knowledge of such Grantor) each other party thereto, in accordance with
their terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting creditor’s right generally and to the effect of general
principles of equity (regardless of whether considered in a proceeding in equity or at law). To the
knowledge of such Grantor, there exists no default under any Assigned Agreement by any party
thereto. With respect to each Assigned Agreement a duly executed Collateral Assignment of Material
Agreement as provided in the Credit Agreement has been delivered to the Administrative Agent with
respect thereto.



     SECTION 3.6. Commercial Tort Claims. Except for matters disclosed in Item G
of Schedule I attached hereto (as such Schedule may be amended or supplemented from time to



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time) no Grantor owns any Commercial Tort Claims. The Administrative Agent has a perfected
first priority security interest in such Commercial Tort Claims.




     SECTION 3.7. Investment Accounts. Item I of Schedule I attached
hereto (as such Schedule may be amended or supplemented from time to time) identifies each Deposit
Account of each Grantor, Item J of Schedule I attached hereto (as such Schedule may
be amended or supplemented from time to time) identifies each Securities Account of each Grantor
and Item K of Schedule I attached hereto (as such Schedule may be amended or
supplemented from time to time) identifies each Commodities Account of each Grantor. Each Grantor
is the sole Entitlement Holder of each such Investment Account, such Grantor has not consented or
has knowledge that any Person, other than the Administrative Agent, has Control over any interest
in any such Investment Account, and the Administrative Agent has exclusive Control over each such
Investment Account.



     SECTION 3.8. Inventory. All Inventory is, and will be, of good and merchantable
quality, free from any material defects. Such Inventory is not, and will not be, subject to any
licensing, patent, trademark, trade name or copyright agreement with any Person that restricts such
Grantor’s or Administrative Agent’s ability to manufacture and/or sell such Inventory. The
completion and manufacturing process of such Inventory by a Person other than such Grantor would be
permitted under any contract to which such Grantor is a party or to which the Inventory is subject.
Such Grantor does not sell any Inventory to any customer on approval or on any other basis that
entitles the customer to return, or which may obligate the Debtor to repurchase, such Inventory.



     SECTION 3.9. Letter of Credit Rights. Item L of Schedule I attached
hereto (as such Schedule may be amended or supplemented from time to time) identifies all letters
of credit to which such Grantor has rights. Such Grantor has obtained the consent of each issuer of
each such letter of credit to the assignment of the proceeds thereof to the Administrative Agent.
The Administrative Agent has exclusive Control over the Letter-of-Credit Rights related to such
letters of credit.



     SECTION 3.10. Valid Security Interest. Upon (a) the filing of U.C.C. financing
statements in the U.C.C. filing offices of each jurisdiction referred to in Item E of
Schedule I attached hereto that names each Grantor as “Debtor” and the Administrative Agent
as “Secured Party” and adequately describes the Collateral; (b) the filing of this Agreement with
the United States Patent and Trademark Office and the United States Copyright Office, as the case
may be, with respect to all Intellectual Property Collateral; (c) consent of each applicable issuer
with respect to Letter of Credit Rights and (d) execution of a control agreement establishing the
Administrative Agent’s Control with respect to each Investment Account, the security interest
granted pursuant to this Agreement creates a valid, first priority perfected security interest in
the Collateral (other than the Subordinated Priority Collateral) and a valid second priority
perfected security interest in the Subordinated Priority Collateral, in each case together with all
Proceeds thereof, subject to no other Liens other than Liens permitted under Section 7.2.3 of the
Credit Agreement, securing the payment of the Secured Obligations.



     SECTION 3.11. Authorization, Approval, etc. No authorization, approval or other
action by, and no notice to or filing with, any Governmental Authority is required either for (a)



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the grant by such Grantor of the security interest granted hereby or for the execution,
delivery and performance of this Agreement by such Grantor or (b) the perfection of or the exercise
by the Administrative Agent of its rights and remedies hereunder (other than the taking of those
actions referred to in Section 3.10).




     SECTION 3.12. Due Execution, Validity, Etc. Such Grantor has full power and
authority, and holds all requisite licenses, permits and other approvals of Governmental
Authorities, to enter into and perform its obligations under this Agreement. The execution,
delivery and performance by such Grantor of this Agreement does not contravene or result in a
default under such Grantor’s Organizational Documents or contravene or result in a default under
any contractual restriction, Lien or Law binding on such Grantor. This Agreement has been duly
authorized by such Grantor, has been duly executed and delivered on behalf of such Grantor and
constitutes the legal, valid and binding obligation of such Grantor enforceable in accordance with
its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting the rights of creditors generally, and subject to the effect
of general principles of equity (regardless of whether considered in a proceeding in equity or at
law).



ARTICLE IV

COVENANTS




     Each Grantor covenants and agrees that, until all the Secured Obligations have been paid in
full in cash (on terms and pursuant to documentation in form and substance reasonably satisfactory
to the Administrative Agent) and all the Commitments have been irrevocably terminated, such Grantor
will, perform the obligations set forth in this Section.



     SECTION 4.1. Equipment and Inventory. Each Grantor hereby agrees that it shall:



          (a) keep all of its Equipment, Inventory (other than Inventory sold in the ordinary course of
business or that is in-transit to a location specified in Item A or Item B of
Schedule I attached hereto (as such Schedule may be amended or supplemented from time to
time) on a vehicle owned or leased by a Grantor) and the Documents evidencing the same at the
places therefor specified in Item C of Schedule I attached hereto to (as such
Schedule may be amended or supplemented from time to time) unless such Grantor has given at least
30 days’ prior notice to the Administrative Agent of another location, and all action, if any,
necessary to maintain in accordance with the terms hereof the Administrative Agent’s perfected
first priority security interest therein shall have been taken with respect to such Equipment,
Inventory and Documents;




          (b) comply with the covenants contained in Section 7.1.3 of the Credit Agreement relating to
the maintenance of its properties;




          (c) comply with the covenants contained in clause (b) of Section 7.1.2 of the Credit Agreement
regarding the payment of taxes and other charges of Governmental Authorities; and




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          (d) not deliver any Document evidencing any Equipment or Inventory to any Person other than
the issuer of such Document to claim the Goods evidenced therefor or the Administrative Agent.




     SECTION 4.2. Receivables Collateral and General Intangibles. (a) Each Grantor shall
keep its principal place of business, chief executive office and the office where it keeps its
records concerning the Receivables Collateral and all originals of the Assigned Agreements
Instruments and Tangible Chattel Paper, at the places specified in Section 3.1 unless such
Grantor has given at least 30 days’ prior notice to the Administrative Agent and all actions, if
any, necessary to maintain the Administrative Agent’s perfected first priority security interest
shall have been taken with respect to such Collateral; not change its name or state of organization
unless such Grantor has given at least 30 days’ prior notice to the Administrative Agent and all
actions, if any, necessary to maintain the Administrative Agent’s perfected first priority security
interest (or, in the case of the Subordinated Priority Collateral, a second priority security
interest) shall have been taken with respect to all of the Collateral; hold and preserve such
records, Assigned Agreements, Instruments and Chattel Paper; and permit representatives of the
Administrative Agent at any time during normal business hours, upon reasonable notice, to inspect
and make abstracts of the same.



          (b) Each Grantor shall diligently endeavor to collect its Receivables Collateral and all
amounts owing to it thereunder in the ordinary course of its business consistent with past
practices and shall apply forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balances thereof, provided that during the continuance of any Event of
Default such Grantor shall, at the request of the Administrative Agent, take such action as the
Administrative Agent may deem necessary or advisable to enforce such collection. No Pledgor shall,
except to the extent done in the ordinary course of its business consistent with past practices and
in accordance with sound business judgment (i) grant any extension of the time for payment of any
Receivables Collateral, (ii) compromise or settle any Receivables Collateral for less than the full
amount thereof, (iii) release, in whole or in part, any Person or property liable for the payment
of any Receivables Collateral, or (iv) allow any credit or discount on any Receivables Collateral;
provided that during the continuance of any Event of Default each Grantor shall comply with
any limitations on the foregoing actions or specified by the Administrative Agent to such Grantor.
In no event shall any Grantor amend, modify, terminate or waive any provision of any Receivables
Collateral in a manner which could reasonably be expected to have a material adverse effect on such
Receivables Collateral. Each Grantor will use its best efforts to keep in full force and effect any
Supporting Obligation relating to any Receivables Collateral.




     SECTION 4.3. Investment Property. Each Grantor will take any and all actions
necessary to (a) cause the Administrative Agent to obtain exclusive Control of any Investment
Property owned by such Grantor in a manner acceptable to the Administrative Agent and (b) obtain
from any issuers of such Investment Property and such other Persons, for the benefit of the
Administrative Agent, written confirmation of the Administrative Agent’s Control over such
Investment Property upon terms and conditions acceptable to the Administrative Agent. For purposes
of this Section, the Administrative Agent shall have exclusive Control of Investment Property if
(i) such Investment Property consists of Certificated Securities and such Grantor delivers such
Certificated Securities to the Administrative Agent (with appropriate endorsements



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if such Certificated Securities are in registered form); (ii) such Investment Property
consists of Uncertificated Securities and the issuer thereof agrees, pursuant to documentation in
form and substance reasonably satisfactory to the Administrative Agent, that it will comply with
instructions originated by the Administrative Agent without further consent by such Grantor; and
(iii) such Investment Property consists of Security Entitlements and either (A) the Administrative
Agent becomes the Entitlement Holder thereof or (B) the appropriate Securities Intermediary agrees,
pursuant to documentation in form and substance satisfactory to Administrative Agent, that it will
comply with Entitlement Orders originated by the Administrative Agent without further consent by
such Grantor.




     SECTION 4.4. Intellectual Property Collateral. (a) No Grantor shall, unless such
Grantor shall either (i) reasonably and in good faith determine (and notice of such determination
shall have been delivered to the Administrative Agent) that any of the Patent Collateral is of
negligible economic value to such Grantor or (ii) have a valid business purpose (exercised in the
ordinary course of business that is consistent with past practice) to do otherwise, do any act, or
omit to do any act, whereby any of the Patent Collateral may lapse or become abandoned or dedicated
to the public or unenforceable.



          (b) No Grantor shall, and no Grantor shall permit any of its licensees to, unless such Grantor
shall either (i) reasonably and in good faith determine (and notice of such determination shall
have been delivered to the Administrative Agent) that any of the Trademark Collateral is of
negligible economic value to such Grantor or (ii) have a valid business purpose (exercised in the
ordinary course of business that is consistent with past practice) to do otherwise:





(A) fail to continue to use any of the Trademark Collateral in order to maintain all of the
Trademark Collateral in full force free from any claim of abandonment for non-use;




(B) fail to maintain as in the past the quality of products and services offered under all of
the Trademark Collateral;




(C) fail to employ all of the Trademark Collateral registered with any Federal or state or
foreign authority with an appropriate notice of such registration; or




(D) do or permit any act or knowingly omit to do any act whereby any of the Trademark
Collateral may lapse or become invalid or unenforceable.



          (c) No Grantor shall, unless such Grantor shall either reasonably and in good faith determine
(and notice of such determination shall have been delivered to the Administrative Agent) that any
of the Copyright Collateral or any of the Trade Secrets Collateral is of negligible economic value
to such Grantor or have a valid business purpose (exercised in the ordinary course of business that
is consistent with past practice) to do otherwise, do or permit any act or knowingly omit to do any
act whereby any of the Copyright Collateral or any of the Trade Secrets Collateral may lapse or
become invalid or unenforceable or placed in the public domain except upon expiration of the end of
an unrenewable term of a registration thereof.




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          (d) Each Grantor shall notify the Administrative Agent immediately if it knows that any
application or registration relating to any material item of the Intellectual Property Collateral
may become abandoned or dedicated to the public or placed in the public domain or invalid or
unenforceable, or of any adverse determination or development (including the institution of, or any
such determination or development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any foreign counterpart thereof or any court)
regarding such Grantor’s ownership of any of the Intellectual Property Collateral, its right to
register the same or to keep and maintain and enforce the same.




          (e) In no event shall any Grantor or any of its agents, employees, designees or licensees file
an application for the registration of any Intellectual Property Collateral with the United States
Patent and Trademark Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, unless it gives prior notice thereof to the
Administrative Agent and, if requested by the Administrative Agent, executes and delivers any and
all agreements, instruments, documents and papers as the Administrative Agent may reasonably
request to evidence the Administrative Agent first priority security interest in such Intellectual
Property Collateral.




          (f) Each Grantor shall take all necessary steps, including in any proceeding before the United
States Patent and Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain and pursue any
application (and to obtain the relevant registration) filed with respect to, and to maintain any
registration of, the Intellectual Property Collateral, including the filing of applications for
renewal, affidavits of use, affidavits of incontestability and opposition, interference and
cancellation proceedings and the payment of fees and taxes (except to the extent that dedication,
abandonment or invalidation is permitted under the foregoing clauses (a), (b) and
(c)).




     SECTION 4.5. Assigned Agreements. Each Grantor shall at its expense, with respect to
all Assigned Agreements, comply with the covenants contained in clause (n) of Section 7.1.1 and
Section 7.2.10 of the Credit Agreement. Without the prior consent of the Administrative Agent, no
Grantor shall waive, settle, release or discharge any Person with respect to any of its obligations
under any Assigned Agreement (other than upon due completion of such obligations by such Person).



     SECTION 4.6. Bailees, Warehouses and Leased Premises. No Collateral shall at any time
be in the possession or control of any warehouse, bailee or any of any Grantor’s agents or
processors, or located on any leased premises, without the Administrative Agent’s prior consent and
unless the Administrative Agent has received warehouse receipts or bailee lien waivers satisfactory
to the Administrative Agent prior to the commencement of such possession or control. Each Grantor
shall, upon the request of the Administrative Agent, notify any such warehouse, bailee, agent,
processor or lessor of the Administrative Agent’s first priority security interest in the
Collateral and shall instruct such Person to hold all such Collateral for the Administrative
Agent’s account subject to the Administrative Agent’s instructions given during the continuance of
any Event of Default.



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     SECTION 4.7. Chattel Paper and Instruments. Each Grantor will deliver to the
Administrative Agent all Tangible Chattel Paper and Instruments duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Administrative Agent. Each Grantor will provide the Administrative Agent with
exclusive Control over all Electronic Chattel Paper by having the Administrative Agent identified
as the assignee of the records pertaining to the single authoritative copy thereof and otherwise
complying with the applicable elements of Control set forth in the U.C.C. Each Grantor will also
deliver to the Administrative Agent all security agreements securing any Chattel Paper and
Instruments and execute U.C.C. financing statement amendments assigning to the Administrative Agent
any U.C.C. financing statements filed by such Grantor in connection with such security agreements.
Each Grantor will mark conspicuously all Chattel Paper and Instruments with a legend, in form and
substance reasonably satisfactory to the Administrative Agent, indicating that such Chattel Paper
and Instruments are subject to the Liens created hereunder.



     SECTION 4.8. Letters of Credit. Each Grantor will deliver to the Administrative Agent
all letters of credit in which it is the beneficiary thereof, duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance reasonably satisfactory
to the Administrative Agent. Each Grantor will take any and all actions necessary (or reasonably
requested by the Administrative Agent), from time to time, to cause the Administrative Agent to
obtain exclusive Control of any Letter-of-Credit Rights owned by such Grantor in a manner
reasonably acceptable to the Administrative Agent.



     SECTION 4.9. Commercial Tort Claims. Each Grantor shall advise the Administrative
Agent promptly upon such Grantor becoming aware, after the date hereof, that it owns any Commercial
Tort Claims. With respect to any such Commercial Tort Claims, such Grantor will execute and deliver
such documents as the Administrative Agent deems necessary to create, perfect and protect the
Administrative Agent’s first priority security interest in such Commercial Tort Claim.



     SECTION 4.10. Collateral Generally. (a) The Administrative Agent may, at any time
following the occurrence and during the continuance of any Event of Default, notify any parties
obligated on any of the Collateral to make payment to the Administrative Agent of any amounts due
or to become due thereunder and enforce collection of any of the Collateral by suit or otherwise
and surrender, release or exchange all or any part thereof, or compromise or extend or renew for
any period (whether or not longer than the original period) any Indebtedness thereunder or
evidenced thereby. Upon request of the Administrative Agent after the occurrence and during the
continuance of any Event of Default, each Grantor will, at its own expense, notify any parties
obligated on any of the Collateral to make payment to the Administrative Agent of any amounts due
or to become due thereunder.



          (b) Upon the occurrence and during the continuance of an Event of Default, the Administrative
Agent is authorized to endorse, in the name of each Grantor, any item, howsoever received by the
Administrative Agent, representing any payment on or other Proceeds of any of the Collateral.




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     SECTION 4.11. Insurance. Each Grantor will maintain or cause to be maintained
insurance as provided in Section 7.1.4 of the Credit Agreement. All proceeds of insurance
maintained by each Grantor so covering the Collateral shall be applied to the payment of the
Secured Obligations under the circumstances provided for in the Credit Agreement. Each Grantor
irrevocably makes, constitutes and appoints the Administrative Agent (and all officers, employees
or agents designated by the Administrative Agent) as such Grantor’s true and lawful agent and
attorney-in-fact for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of insurance, endorsing the
name of such Grantor on any check, draft, instrument or other item of payment for the Proceeds of
such policies of insurance and for making all determinations and decisions with respect thereto. In
the event that any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required by Section 7.1.4 of the Credit Agreement or to pay any premium in
whole or part relating thereto, the Administrative Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in its sole discretion,
obtain and maintain such policies of insurance and pay such premium and take any other actions with
respect thereto as the Administrative Agent deems advisable. All sums disbursed by the
Administrative Agent in connection with this Section including reasonable attorneys’ fees, court
costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Grantors
to the Administrative Agent and shall be additional Secured Obligations secured hereby.



     SECTION 4.12. Investment Accounts. Each Grantor will take any and all actions
necessary to cause the Administrative Agent to obtain exclusive Control of all Investment Accounts
owned by such Grantor in a manner acceptable to the Administrative Agent. No Grantor shall close or
terminate any Investment Account without the prior consent of the Administrative Agent and unless a
successor or replacement account has been established with the consent of the Administrative Agent
and is subject to a control agreement reasonably satisfactory to the Administrative Agent.



     SECTION 4.13. Transfers and Other Liens. No Grantor shall (a) sell, assign (by
operation of law or otherwise) or otherwise dispose of any of the Collateral, except as permitted
by the Credit Agreement, or (b) create or suffer to exist any Lien upon or with respect to any of
the Collateral, except for the security interest created by this Agreement and except those
permitted by Section 7.2.3 of the Credit Agreement.



     SECTION 4.14. Further Assurances, etc. Each Grantor agrees that, from time to time at
its own expense, such Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or that the
Administrative Agent may reasonably request, in order to perfect, preserve and protect any security
interest granted or purported to be granted hereby or to enable the Administrative Agent to
exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, each Grantor will:



          (a) mark conspicuously each asset forming a part of the Collateral with a legend, in form and
substance reasonably satisfactory to the Administrative Agent, indicating that such Collateral is
subject to the security interest granted hereby;




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          (b) execute and file such financing or continuation statements, or amendments thereto, and
such other instruments or notices (including any assignment of claim form under or pursuant to the
federal assignment of claims statute, 31 U.S.C. § 3726, any successor or amended version thereof or
any regulation promulgated under or pursuant to any version thereof), as may be necessary, or as
the Administrative Agent may reasonably request, in order to perfect and preserve the security
interests and other rights granted or purported to be granted to the Administrative Agent hereby;




          (c) furnish to the Administrative Agent, from time to time at the Administrative Agent’s
request, statements and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Administrative Agent may reasonably request, all
in reasonable detail;




          (d) if requested by the Administrative Agent, each Grantor which owns or leases Equipment
which is subject to a certificate of title statute that requires notation of a lien thereon to
perfect a security interest therein shall deliver to the Administrative Agent all original
certificates of title for such Equipment, shall take all necessary steps to cause the
Administrative Agent’s security interest be perfected in accordance with such statute and deliver
to the Administrative Agent a schedule in reasonable detail describing such Equipment,
registration number, license number and all other information required to comply with such statute;
provided, however, that until the Administrative Agent makes such a request under
this clause, the parties hereto acknowledge that the security interest of the Administrative Agent
in such Collateral has not been perfected and all the representations and warranties, covenants
and Events of Default contained herein and in the other Loan Documents which would otherwise be
violated shall be deemed modified to reflect the foregoing and not be violated; and




          (e) if requested by the Administrative Agent, execute and deliver confirmatory written
instruments, and obtain any consents, waivers or agreements, as may be necessary, or as the
Administrative Agent may reasonably request, in order to perfect and preserve the security
interests and other rights granted or purported to be granted to the Administrative Agent hereby,
but any such Grantor’s failure to do so shall not affect or limit the security interest granted
hereby or the Administrative Agent’s other rights in and to the Collateral.




     With respect to the foregoing and the grant of the security interest hereunder, each Grantor
hereby authorizes the Administrative Agent to Authenticate and to file one or more U.C.C. financing
or continuation statements, and amendments thereto, and make filings with the United States Patent
and Trademark Office or United States Copyright Office (or any successor office or any similar
office in any other country), in each case for the purpose of perfecting, confining, continuing,
enforcing or protecting the security interest granted by each Grantor, without the signature of any
Grantor, and naming any Grantor or the Grantors as debtors and the Administrative Agent as secured
party. A carbon, photographic, telecopied or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a financing statement
where permitted by Law.



     SECTION 4.15. Collateral Account.(a) (a) Upon notice by the Administrative Agent to
any Grantor pursuant to this Section following the occurrence and during the continuance of any



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Event of Default, all Proceeds of Collateral received by such Grantor shall be delivered in kind to
the Administrative Agent for deposit to a deposit account (the “Collateral Account”) of
such Grantor maintained by or on behalf of the Administrative Agent, and until such Proceeds are so
deposited they shall be held in trust for the benefit of the Administrative Agent and shall not be
commingled with the other assets of such Grantor.




          (b) The Administrative Agent shall have the right to apply any amount in the Collateral
Account to the payment of any Secured Obligations, subject to and in accordance with the terms of
the Credit Agreement. Subject to the rights of the Administrative Agent, each Grantor shall have
the right on each Business Day, with respect to and to the extent of collected funds in the
Collateral Account, to require the Administrative Agent to purchase any Cash Equivalent Investment,
provided that, in the case of Certificated Securities, the Administrative Agent will retain
possession thereof as Collateral and, in the case of other Investment Property, the Administrative
Agent will take such actions, including registration of such Investment Property in its name, as it
shall determine is necessary to perfect its security interest therein.




     SECTION 4.16. Notice of Material Adverse Effect. Each Grantor shall promptly notify
the Administrative Agent, after obtaining knowledge thereof, of any event that could reasonably be
expected to have a material adverse effect on any value of the Collateral, the ability of such
Grantor or the Administrative Agent to dispose of the Collateral or the rights or remedies of the
Administrative Agent in relation thereto.



     SECTION 4.17. General Intangibles. Each Grantor shall use commercially reasonable
efforts to obtain any consents, waivers or agreements necessary to enable Administrative Agent to
exercise remedies hereunder and under the other Loan Documents with respect to any of such
Grantor’s rights under any General Intangibles, including such Grantor’s rights as a licensee of
any Intellectual Property Collateral.



     SECTION 4.18. Additional Covenants. Each Grantor agrees that, until all the Secured
Obligations have been paid in full in cash on terms and pursuant to documentation in form and
substance reasonably satisfactory to the Administrative Agent and all Commitments shall have
irrevocably terminated, it will comply with all the terms and provisions of the Credit Agreement
and the other Loan Documents that are applicable to it.



ARTICLE V

THE ADMINISTRATIVE AGENT




     SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. Each Grantor hereby
irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of such Grantor or in
its own name, for the purpose of carrying out the terms of this Agreement, to take, upon the
occurrence and during the continuance of any Event of Default, any and all actions and
execute any and all documents and instruments that may, in the judgment of the Administrative
Agent, be necessary or desirable to accomplish the purposes of this Agreement. Without limiting the
generality of the foregoing, after the occurrence and during the continuance of any Event of



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Default each Grantor hereby gives the Administrative Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any or all of the following:




          (a) (i) demand payment of its Receivables Collateral; (ii) enforce payments of its Receivables
Collateral by legal proceedings or otherwise; (iii) exercise all of its rights and remedies with
respect to proceedings brought to collect its Receivables Collateral; (iv) sell or assign its
Receivables Collateral upon such terms, for such amount and at such times as the Administrative
Agent deems advisable; (v) settle, adjust, compromise, extend or renew any of its Receivables
Collateral; (vi) discharge and release any of its Receivables Collateral; (vii) prepare, file and
sign such Grantor’s name on any proof of claim in bankruptcy or other similar document against any
Loan Party of any of its Receivables Collateral; (viii) notify the post office authorities to
change the address for delivery of the such Grantor’s mail to an address designated by the
Administrative Agent, and open and dispose of all mail addressed to such Grantor; and (ix) endorse
such Grantor’s name upon any Chattel Paper, Document, Instrument, invoice, or similar document or
agreement relating to any Receivables Collateral or any goods pertaining thereto;




          (b) in the case of any Intellectual Property Collateral, execute and deliver, and have
recorded, any and all agreements, instruments, documents and papers as the Administrative Agent may
request to evidence the Lender Parties’ security interest in such Intellectual Property Collateral
and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;




          (c) take possession of and indorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under or in respect of any Collateral and file any claim
or take any other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due
under or in respect of any Collateral whenever payable;




          (d) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral,
effect any repairs or any insurance called for by the terms of this Agreement and pay all or any
part of the premiums therefor and the costs thereof;




          (e) execute, in connection with any sale or other disposition provided for in Section
6.1, any endorsements, assignments or other instruments of conveyance or transfer with respect
to the Collateral; and




          (f) (i) direct any Person liable for any payment under any of the Collateral to make payment
of any and all moneys due or to become due thereunder directly to the Administrative Agent or as
the Administrative Agent shall direct; (ii) ask or demand for, collect, and receive payment of and
give receipt for, any and all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (iii) sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (iv) commence and prosecute any suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (v) defend any suit, action or proceeding
brought




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against such Grantor with respect to any Collateral; (vi) settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, give such discharges or releases as
the Administrative Agent may deem appropriate; (vii) notify, or require any Grantor to notify,
Account Debtors to make all payments directly to the Administrative Agent and change the post
office box number or other address to which the Account Debtors make payments; (viii) assign any
Intellectual Property Collateral (along with the goodwill of the business to which any such
Intellectual Property Collateral pertains), throughout the world for such terms, on such
conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine;
and (ix) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative Agent’s option and such
Grantor’s expense, at any time, or from time to time, all acts and things that the Administrative
Agent deems necessary to protect, preserve or realize upon the Collateral and the Lender Parties’
security interests therein and to effect the intent of this Agreement, all as fully and effectively
as such Grantor might do.



Each Grantor hereby acknowledges, consents and agrees that the power of attorney granted pursuant
to this Section is irrevocable and coupled with an interest.




     SECTION 5.2. Administrative Agent May Perform. If any Grantor fails to perform any
agreement contained herein, the Administrative Agent may itself perform, or cause performance of,
such agreement, and the reasonable expenses of the Administrative Agent incurred in connection
therewith shall be payable by such Grantor.



     SECTION 5.3. Access and Examination. In order to give effect to the intent of this
Agreement the Administrative Agent may at all reasonable times upon reasonable advance notice (if
no Default or an Event of Default has occurred and is continuing) have access to, examine, audit,
make extracts from and inspect each Grantor’s records, files and books of account and the
Collateral, and may discuss each Grantor’s affairs with such Grantor’s officers and management.
Each Grantor will deliver to the Administrative Agent promptly following its request therefor any
instrument necessary for the Administrative Agent to obtain records from any service bureau
maintaining records for such Grantor. The Administrative Agent may, at expense of the Grantors, use
each Grantor’s personnel, supplies and premises as may be reasonably necessary for maintaining or
enforcing the security interest granted hereunder. The Administrative Agent shall have the right,
at any time, in each Grantor’s name to verify the validity, amount or any other matter relating to
the Receivables Collateral; provided that the Administrative Agent shall not communicate
with any account obligors of the Grantors unless an Event of Default has occurred and is
continuing.



     SECTION 5.4. Administrative Agent Has No Duty. (a) The powers conferred on the
Administrative Agent hereunder are solely to protect its interest (on behalf of the Lender Parties)
in the Collateral and shall not impose any duty on it to exercise any such powers. The
Administrative Agent’s sole duty with respect to the custody, safekeeping and physical preservation
of the Collateral in its possession, under Section 9-207 of the U.C.C. or otherwise,
shall be to deal with it in the same manner as the Administrative Agent deals with similar
property for its own account. Neither the Administrative Agent nor any of its officers, directors,
employees or agents shall be liable for failure to demand, collect or realize upon any of the




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Collateral or for any delay in doing so, nor shall any such Person be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or
to take any other action whatsoever with regard to the Collateral or any part thereof (including
the taking of any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral). Neither the Administrative Agent nor any of its officers, directors,
employees or agents shall be responsible to any Grantor for any loss, damages, depreciation or
other diminution in the value of any of the Collateral that may occur as a result of or in
connection with or that is in any way related to any exercise, except in respect of any damages
attributable solely to any such Person’s own gross negligence or willful misconduct as determined
by a final non-appealable judgment of a court of competent jurisdiction.




          (b) Each Grantor assumes all responsibility and liability arising from or relating to the use,
sale or other disposition of the Collateral. The Obligations shall not be affected by any failure
of the Administrative Agent to take any steps to perfect the security interest granted hereunder or
to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release
any Grantor from any of its Obligations.




ARTICLE VI

REMEDIES




     SECTION 6.1. Remedies. If any Event of Default shall have occurred and be continuing:



          (a) The Administrative Agent may exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to it (including, without
limitation, as provided in Section 5.1), all the rights and remedies of a secured party on
default under the U.C.C. and also may:




               (i) require each Grantor to, and each Grantor hereby agrees that it will, at its expense and
upon the request of the Administrative Agent forthwith, assemble all or part of the Collateral as
directed by the Administrative Agent and make it available to the Administrative Agent at its
premises or another place designated by the Administrative Agent (whether or not the U.C.C. applies
to the affected Collateral);



               (ii) without demand of performance or other demand, presentment, obtaining a final judgment,
protest, advertisement or notice of any kind (except any notice required by Law referred to below)
to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements
and notices are hereby waived), sell, lease, assign, give option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale, at any of the Administrative Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the
Administrative Agent may deem commercially reasonable. Each Grantor agrees that, to the extent
notice of sale shall be required by Law, 10 days’ prior notice to such Grantor of the time and
place of any public sale or the time after which any private sale is to be made shall constitute
reasonable notification. The Administrative Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any
public or private sale from time to time by



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announcement at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. In case any sale of all or any part of
the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by
the Administrative Agent until the sale price is paid by the purchase or purchasers thereof, but
the Administrative Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. At any public (or, to the extent permitted by Law,
private) sale made pursuant to this Section, any Lender Party may bid for or purchase, free (to the
extent permitted by Law) from any right of redemption, stay, valuation or appraisal on the part of
any Grantor (all said rights being also hereby waived and released to the extent permitted by Law),
the Collateral or any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Lender Party from any Grantor as a credit against the
purchase price, and such Lender Party may upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to any Grantor therefor;



               (iii) with respect to the Intellectual Property, on demand, to cause the security interest to
become an assignment, transfer and conveyance of any of or all such Collateral by the applicable
Grantors to the Administrative Agent, or to license or sublicense, whether general, special or
otherwise, and whether on an exclusive or non-exclusive basis, any such Collateral throughout the
world on such terms and conditions and in such manner as the Administrative Agent shall determine
(other than in violation of any then existing licensing arrangements to the extent that waivers
cannot be obtained);



               (iv) with or without legal process and with or without prior notice or demand for performance,
to take possession of the Collateral and without liability for trespass to enter any premises where
the Collateral may be located and occupy (without the requirement to pay rent) the same until the
Secured Obligations are paid in full in cash (on terms and pursuant to documentation in form and
substance reasonably satisfactory to the Administrative Agent) and all the Commitments have been
irrevocably terminated; and



               (v) to notify any or all depository institutions with which any Investment Accounts are
maintained to remit and transfer all monies, securities and other property on deposit in such
Investment Accounts or deposited or received for deposit thereafter to the Administrative Agent,
for deposit in the Collateral Account or such other accounts as may be designated by the
Administrative Agent, for application to the Secured Obligations as provided herein.



          (b) Without limiting clause (a), the Administrative Agent may exercise any and all
rights and remedies of each Grantor under or in connection with the Collateral, including the right
to sue upon or otherwise collect, extend the time for payment of, modify or amend the terms of,
compromise or settle for cash, credit, or otherwise upon any terms, grant other indulgences,
extensions, renewals, compositions, or releases, and take or omit to take any other action with
respect to the Collateral, any security therefor, any agreement relating thereto, any insurance
applicable thereto, or any Person liable directly or indirectly in connection with any of the
foregoing, without discharging or otherwise affecting the liability of any Grantor for the
Obligations or under this Agreement or any other Loan Document and the Assigned Agreements or
otherwise in respect of the Collateral, including any and all rights of such Grantor to demand




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or otherwise require payment of any amount under, or performance of any provision of, any
Collateral.




     SECTION 6.2. Application of Proceeds. All cash proceeds received by the Administrative
Agent in respect of any sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Administrative Agent, be held, to the extent permitted
under applicable Law, by the Administrative Agent as additional collateral security for all or any
part of the Secured Obligations, and/or then or at any time thereafter shall be applied (after
payment of any amounts payable to the Administrative Agent pursuant to Section 11.3 of the Credit
Agreement and Section 6.3) in whole or in part by the Administrative Agent for the ratable
benefit of the Lender Parties against all or any part of the Secured Obligations in accordance with
Section 8.6 of the Credit Agreement. Any surplus of such cash or cash proceeds held by the
Administrative Agent and remaining after payment in full in cash of all the Secured Obligations (on
terms and pursuant to documentation in form and substance reasonably satisfactory to the
Administrative Agent), and the irrevocable termination of all the Commitments, shall be paid over
to the Grantors or to whomsoever may be lawfully entitled to receive such surplus.



     SECTION 6.3. Indemnity and Expenses. Each Grantor agrees to jointly and severally
indemnify and hold harmless the Administrative Agent and its directors, officers, employees,
agents, Affiliates and their Related Parties from and against any and all claims, losses and
liabilities arising out of or resulting from this Agreement (including enforcement of this
Agreement), except claims, losses or liabilities resulting from any such Person’s gross negligence
or willful misconduct as determined by a final non-appealable judgment of a court of competent
jurisdiction. Each Grantor will promptly following demand pay to the Administrative Agent the
amount of any and all reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Administrative Agent may
incur in connection with (a) the administration of this Agreement, (b) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon, any of the
Collateral, (c) the exercise or enforcement of any of the rights of the Administrative Agent or the
other Lender Parties hereunder or (d) the failure by any Grantor to perform or observe any of the
provisions hereof.



     SECTION 6.4. Grant of License. Each Grantor hereby grants to the Administrative Agent
an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation
to any Grantor) to use, license or sublicense any Intellectual Property Collateral now owned or
licensed or hereafter acquired or licensed by such Grantor, wherever the same may be located
throughout the world, for such terms, on such conditions and in such manner as the Administrative
Agent shall determine, whether general, special or otherwise, and whether on an exclusive or
nonexclusive basis, and including in such license reasonable access to all media in which any of
the licensed items may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof; provided, however, that no such license or
sublicense is granted in the case of any such Collateral if such license or sublicense would be
prohibited by, or give rise to a right to terminate any contract governing such Collateral. The use
of such license or sublicense by the Administrative Agent shall be exercised, at the option of the
Administrative Agent, only upon the occurrence and during the continuation of an Event of Default;
provided that any license, sublicense or other transaction entered into by the



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Administrative Agent in accordance herewith shall be binding upon each applicable Grantor
notwithstanding any subsequent cure of an Event of Default.




ARTICLE VII

MISCELLANEOUS PROVISIONS




     SECTION 7.1. Loan Document. This Agreement is a Loan Document executed pursuant to
the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with the terms and provisions thereof, including Section 1.3
and Article XI thereof.



     SECTION
7.2. Amendments, etc.; Additional Grantors; Successors and Assigns.  (a) No
amendment to or waiver of any provision of this Agreement nor consent to any departure by any
Grantor herefrom, shall be effective unless the same shall be in writing and signed by the
Administrative Agent and the percentage of the Lenders as required by Section 11.1 of the Credit
Agreement, and then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given.



          (b) Upon the execution and delivery by any Person of a security agreement supplement in
substantially the form of Exhibit A hereto (each a “Security Agreement
Supplement”), (i) such Person shall be referred to as an “Additional Grantor” and shall
be and become a Grantor, and each reference in this Agreement to “Grantor” shall also mean and
refer to such Additional Grantor and (ii) the disclosure schedule attached to each Security
Agreement Supplement shall be incorporated into and become a part of and supplement Schedules
I through VI attached hereto, as appropriate, and the Administrative Agent may attach
such supplemental disclosure schedules to such Schedules, and each reference to such Schedules
shall refer to such Schedules as supplemented by such supplemental disclosure schedules.




          (c) This Agreement shall be binding upon each Grantor and its successors, transferees and
assignees, and shall inure to the benefit of and be enforceable by the Administrative Agent and
each other Lender Party and their respective successors and assigns; provided,
however, that no Grantor may assign its obligations hereunder without the prior written
consent of the Administrative Agent. Without limiting the generality of the foregoing, any Lender
may assign or otherwise transfer (in whole or in part) any Loans held by it to any other Person,
and such other Person shall thereupon become vested with all the rights and benefits in respect
thereof granted to such Lender under any Loan Document (including this Agreement) or otherwise,
subject, however, to the provisions of Section 10.10 of the Credit Agreement.




     SECTION 7.3. Protection of Collateral. The Administrative Agent may from time to
time, at its option and at the expense of the Grantors, perform any act which any Grantor agrees
hereunder to perform and which such Grantor shall fail to perform after being requested to so
perform (it being understood that no such request need be given after the occurrence and during the
continuance of any Event of Default), and the Administrative Agent may from time to time take any
other action which the Administrative Agent deems necessary or appropriate for the maintenance,
preservation or protection of any of the Collateral or of its security interest therein.



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     SECTION 7.4. Addresses for Notices. All notices and other communications provided for
hereunder shall be made as provided in, and subject to the terms of, Section 11.2 of the Credit
Agreement. All notices to each Grantor shall be sent care of the Borrowers at its address set forth
in the Credit Agreement and all notices to the Administrative Agent shall be sent as provided in
the Credit Agreement.



     SECTION 7.5. Section Captions. Section captions used in this Agreement are for
convenience of reference only, and shall not affect the construction of this Agreement.



     SECTION 7.6. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions
of this Agreement or affecting the validity or enforceability of such provision in any other
jurisdiction.



     SECTION 7.7. Counterparts. This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of which shall
constitute together but one and the same agreement.



     SECTION 7.8. Waivers. Each Grantor hereby waives any right, to the extent permitted
by applicable Law, to receive prior notice of a judicial or other hearing with respect to any
action or prejudgment remedy or proceeding by the Administrative Agent to take possession, exercise
control over or dispose of any item of Collateral, where such action is permitted under the terms
of this Agreement or any other Loan Document or by applicable Law, or of the time, place or terms
of sale in connection with the exercise of the Administrative Agent’s rights hereunder. Each
Grantor waives, to the extent permitted by applicable Law, any bonds, security or sureties required
by the Administrative Agent with respect to any of the Collateral. Without limiting the foregoing,
each Grantor agrees that it will not invoke, claim or assert any benefit of applicable Law, or take
or attempt to take any action that could reasonably be expected to have the effect of delaying,
impeding or preventing the Administrative Agent from exercising any of its rights or remedies with
respect to the Collateral as herein provided. Each Grantor also consents that the Administrative
Agent, in connection with the enforcement of the Administrative Agent’s rights and remedies under
this Agreement, may enter upon any premises owned by or leased to it without obligations to pay
rent or for use and occupancy, through self-help, without judicial process and without having first
obtained an order of any court.



     SECTION 7.9. Governing Law, Entire Agreement, etc. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR
AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.



-27-









 





     SECTION 7.10. Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF, ANY LENDER PARTY OR GRANTOR
SHALL BE BROUGHT AND MAINTAINED IN THE FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF MANHATTAN
OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT’S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GRANTOR
AND LENDER PARTY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH
COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH GRANTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY
HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND
ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
ANY GRANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID
OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH GRANTOR, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT.



     SECTION 7.11. Waiver of Jury Trial. EACH LENDER PARTY AND GRANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY LENDER
PARTY OR ANY GRANTOR. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
ADMINISTRATIVE AGENT ENTERING INTO THIS AGREEMENT.



     SECTION 7.12. Waiver of Certain Claims. TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO
GRANTOR SHALL ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST EACH LENDER PARTY ON ANY THEORY OF
LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED



-28-









 




TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS
AGREEMENT OR ANY INSTRUMENT CONTEMPLATED HEREBY.




     SECTION 7.13. No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.



-29-









 





     IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered
by its officer thereunto duly authorized as of the date and year first above written.



	 	 	 	 	 	 	 
	 	 	TIMBERLANDS II, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT	 	 
	 

	 	 	 	ORGANIZATION, LLC, as Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name: Jess E. Jarratt
	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS TIMBERLAND ACQUISITION, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT	 	 
	 

	 	 	 	ORGANIZATION, LLC, as Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS TRS HARVESTING OPERATIONS, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	FOREST RESOURCE CONSULTANTS, INC.,	 	 
	 

	 	 	 	as Manager	 	 






	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name: David Foil
	 	 
	 

	 	 	 	Title: President	 	 






ACKNOWLEDGED AND ACCEPTED:




COBANK, ACB, as Administrative

Agent




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 





Security
Agreement 

Signature Page


-30-









 






SCHEDULE I

to

Security Agreement




Item A. Location of Equipment




	 	 	 	 	 	 	 	 	 
	Grantor Mailing Address	 	County	 	 	State	 
	 
	 	 	 	 	 	 	 	 





Item B. Location of Inventory




	 	 	 	 	 	 	 	 	 
	Grantor Mailing Address	 	County	 	 	State	 
	 
	 	 	 	 	 	 	 	 





Item C. Principal Place of Business/Chief Executive Office




	 	 	 	 	 	 	 	 	 
	Grantor Mailing Address	 	County	 	 	State	 
	 
	 	 	 	 	 	 	 	 





Item D. Trade Names




	 	 	 	 	 
	Grantor	 	Trade Name	 
	 
	 	 	 	 





Item E.
State of Organization and Identification Number




	 	 	 	 	 	 	 	 	 
	Grantor	 	State of Organization	 	 	Identification Number	 
	 
	 	 	 	 	 	 	 	 





Item F.
Bailments




	 	 	 	 	 	 	 	 	 
	Grantor	 	Bailee	 	 	Address	 
	 
	 	 	 	 	 	 	 	 





 









 





Item G. Commercial Tort Claims




	 	 	 	 	 
	Grantor	 	Description of Commercial Tort Claim	 
	 
	 	 	 	 





Item H. Location of Fixtures




	 	 	 	 	 	 	 	 	 
	Grantor Mailing Address	 	County	 	 	State	 
	 
	 	 	 	 	 	 	 	 





Item I. Deposit Accounts




	 	 	 	 	 	 	 	 	 
	Grantor	 	Bank Mailing Address	 	 	Account Name and Number	 
	 
	 	 	 	 	 	 	 	 





Item J. Securities Accounts




	 	 	 	 	 	 	 	 	 
	Grantor	 	Bank Mailing Address	 	 	Account Name and Number	 
	 
	 	 	 	 	 	 	 	 





Item K. Commodities Accounts




	 	 	 	 	 	 	 	 	 
	Grantor	 	Bank Mailing Address	 	 	Account Name and Number	 
	 
	 	 	 	 	 	 	 	 





Item L. Letters of Credit




	 	 	 	 	 	 	 	 	 
	Grantor	 	Bank Mailing Address	 	 	Account Name and Number	 
	 
	 	 	 	 	 	 	 	 





Schedule I-2 









 





SCHEDULE II

to

Security Agreement




Item A. Patents




Issued Patents




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grantor	 	Country	 	 	Patent No.	 	 	Issue Date	 	 	Inventor(s)	 	 	Title	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Pending Patent Applications




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grantor	 	Country	 	 	Serial No.	 	 	Filing Date	 	 	Inventor(s)	 	 	Title	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Patent Applications in Preparation




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Expected	 	 	 	 	 	 	 
	Grantor	 	Country	 	 	Serial No.	 	 	Filing Date	 	 	Inventor(s)	 	 	Title	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Item B. Patent Licenses




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Country or	 	 	 	 	 	 	 	 	 	 	 	 	 	Effective	 	 	Expiration	 	 	 	 
	Territory  	 	Licensor	 	 	Licensee	 	 	Date	 	 	Date      	 	 	Date          	 	 	Matter	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 





SCHEDULE III

to

Security Agreement




Item A. Trademarks




Registered
Trademarks





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grantor	 	Country	 	 	Trademark	 	 	Registration No.	 	 	Registration Date	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Pending
Trademark Applications




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grantor	 	Country	 	 	Trademark	 	 	Serial No.	 	 	Filing Date	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Trademark
Applications in Preparation




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Expected	 	 	Products/	 
	Grantor	 	Country	 	 	Trademark	 	 	Docket No.	 	 	Filing Date	 	 	Services	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Item B. Trademark Licenses




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Country or	 	 	 	 	 	 	 	 	 	 	 	 	 	Effective	 	 	Expiration	 
	Territory   	 	Trademark	 	 	Licensor	 	 	Licensee	 	 	Date        	 	 	Date         	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 





SCHEDULE IV

to

Security Agreement




Item A. Copyrights




Registered Copyrights




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grantor	 	Country	 	 	Registration No.	 	 	Registration Date	 	 	Author(s)	 	 	Title	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Copyrights Pending Registration Applications




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grantor	 	Country	 	 	Series No.	 	 	Filing Date	 	 	Author(s)	 	 	Title	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Copyright Registration Applications in Preparation




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Expected	 	 	 	 	 	 	 
	Grantor	 	Country	 	 	Docket No.	 	 	Filing Date	 	 	Author(s)	 	 	Title	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Item B. Copyright Licenses




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Country or	 	 	 	 	 	 	 	 	 	 	Effective	 	 	Expiration	 	 	Subject	 
	Grantor	 	Territory  	 	 	Licensor	 	 	Licensee	 	 	Date       	 	 	Date         	 	 	Matter 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 





SCHEDULE V

to

Security Agreement




Trade Secrets




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Country or	 	 	 	 	 	 	 	 	 	 	Effective	 	 	Expiration	 	 	Subject	 
	Grantor	 	Territory	 	 	Licensor	 	 	Licensee	 	 	Date       	 	 	Date         	 	 	Matter	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 





SCHEDULE VI

to

Security Agreement




Assigned Agreements





	1.	 	Fiber Supply Agreement
	 
	2.	 	Master Stumpage Agreement
	 
	3.	 	Transaction Agreement
	 
	4.	 	Contribution Agreement
	 
	5.	 	Wells Timber Operating Agreement





 









 





EXHIBIT A

to

Security Agreement




FORM OF SECURITY AGREEMENT SUPPLEMENT




[Date]




CoBank, ACB,

          as Administrative Agent

5550 South Quebec Street

Greenwood Village, Colorado 80111




Attention: Syndications Coordinator, Corporate Finance Division




TIMBERLANDS II, LLC and

WELLS TIMBERLAND ACQUISITION, LLC




Ladies and Gentlemen:




     Reference is made to the Security Agreement, dated as of October 9, 2007 (as amended,
supplemented, restated or otherwise modified from time to time, the “Security Agreement”),
made by Timberlands II, LLC., a Delaware limited liability company (“Timberlands II”),
Wells Timberland Acquisition, LLC, a Delaware limited liability company (“Wells
Timberland”), Wells TRS Harvesting Operations, LLC, a Delaware limited liability company
(“Wells TRS Subsidiary”), and each other Person (such capitalized term and all other
capitalized terms not otherwise defined herein to have the meanings provided for in Article
I) that is may from time to time become a party thereto (Timberlands II, Wells Timberland,
Wells TRS Subsidiary and such other Persons that become Additional Grantors are collectively
referred to as the “Grantors” and individually as a “Grantor”), in favor of CoBank,
ACB, as administrative agent (in such capacity, the “Administrative Agent”) for each of the
Lender Parties.



     The undersigned hereby agrees, as of the date first above written, to become a Grantor under
the Security Agreement as if it were an original party thereto and agrees that each reference in
the Security Agreement to a “Grantor” shall also mean and refer to the undersigned.



     The undersigned hereby collaterally assigns, mortgages and pledges to the Administrative
Agent, for its benefit and the ratable benefit of the Lender Parties, and hereby grants to the
Administrative Agent for its benefit and the ratable benefit of the Lender Parties, as collateral
for the Secured Obligations, a pledge and assignment of, and a security interest in, all of the
right, title and interest of the undersigned in and to its Collateral, whether now owned or
hereafter acquired, subject to all of the terms and provisions of the Security Agreement, as if
such



 









 




Collateral of the undersigned had been subject to the Security Agreement on the date of its
original execution.




     The undersigned has attached hereto supplements to Schedules I through VI to
the Security Agreement, and the undersigned hereby certifies that such supplements are accurate and
complete as of the date first above written.



Exhibit A-2 









 





     The undersigned hereby makes each representation and warranty set forth in Article III of the
Security Agreement as to itself and as to its Collateral to the same extent as each other Grantor
and hereby agrees to be bound as a Grantor by all of the terms and provisions of the Security
Agreement to the same extent as all the other Grantors.



     This letter shall be governed by and construed in accordance with the Laws of the State of New
York.



	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	[NAME OF ADDITIONAL GRANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 






ACKNOWLEDGED AND ACCEPTED:




COBANK, ACB, as Administrative

Agent




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 







Exhibit A-3 












 





EXHIBIT I




LANDLORD ESTOPPEL CERTIFICATE




     The undersigned Lessor hereby certifies to Timberlands II, LLC, a Delaware limited liability
company (“Assignee”) and CoBank, ACB, as Administrative Agent (in such capacity, and
together with its successors and assigns, “Senior Administrative Agent”) for certain
lenders and Wachovia Bank, National Association, as administrative agent for certain subordinated
lenders (in such capacity, and together with its successors and assigns, the “Subordinated
Administrative Agent”) that:




     (i)                                          (“Lessor”) is the current lessor under
that certain                                          dated as of                     ,              
        [describe lease
and all amendments and assignments] (the “Lease”) with Timberlands II, LLC, whereby
Lessor sold and conveyed to Lessee the timber of every kind and species then lying, standing
or growing on the lands herewith described and leased to Lessee that certain real property
owned by Lessor in                      County,                      (the “Leased Premises”).




     (ii) Timberlands II, LLC is the present lessee under the Lease (“Lessee”);




     (ii) Lessor is the fee simple owner of the Leased Premises;




     (iii) Attached hereto as Exhibit A is a true, correct and complete copy of the
Lease (including all amendments thereto) in effect by and between Lessor and Lessee;




     (iv) The Lease is in full force and effect in accordance with its terms, and has not
been modified or amended except as set forth in Exhibit A;




     (v) The present term of the Lease expires on                      and is subject to                     
renewal options each of (___) years in duration;




     (vi) As of the dated indicated below, the current [monthly/annual rent] and other sums
due to Lessor under the Lease is $                    , and all current [monthly/annual rent] has been
paid to Lessor through and including the rental payment due                     , 2007;




     (vii) The current address for delivery of rental payments to Lessor is as follows:



	 	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	, and
	 

	 	 

	 	 






 









 






the current address for delivery of any written notice to Lessor required under the Lease is
as follows ( if different from the above address from rental payments):



	 	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	;
	 

	 	 

	 	 







     (viii) Neither Lessee nor Lessor is in default under the Lease, nor has any event
occurred which by the passage of time (subject to any notice provisions in the Lease) would
result in a default by either Lessee or Lessor under the Lease;




     (ix) Lessor consents to Assignee mortgaging its interest in the Lease from and after
the date Lessee assigns such Lease to Assignee, including the execution and delivery by
Assignee of leasehold mortgages or security deeds to Senior Administrative Agent and
Subordinated Administrative Agent (together with their respective successors and assigns,
and any other holder of a mortgage thereon, individually and collectively,
“Mortgagee”), and to any transfer of Assignee’s interest in the Lease to any
Mortgagee or incident to a foreclosure of any such mortgage, with any Mortgagee to be liable
under the Lease for matters arising from and after the date of such Mortgagee’s acquisition
of such interest;




     (x) Lessor shall provide notice of any default under the Lease to Mortgagee and afford
Mortgagee a reasonable time to cure same. Any default which is impossible for Mortgagee to
cure (such as bankruptcy of Assignee) shall be waived as long as Mortgagee diligently
proceeds to obtain possession of the Leased Premises and cures all other continuing
defaults. However, if the Lease shall terminate for any reason (other than a termination as
a result of the failure of Mortgagee to cure any default reasonably capable of being cured
by Mortgagee as provided above), Lessor agrees upon Mortgagee’s request to enter into a new
lease with Mortgagee as of the date of the termination on the same terms and priority as the
Lease and for the remainder of the term;




     (xi) Lessor agrees that amendments of the Lease made without Mortgagee’s consent will
not be binding on Mortgagee;




     (xii) Notwithstanding the foregoing provisions of this Landlord Estoppel Certificate,
Subordinated Administrative Agent shall have no rights under this Landlord Estoppel
Certificate unless and until Senior Administrative Agent gives written notice to Lessor that
the financing secured by the mortgage granted to Senior Administrative Agent has terminated;
and



- 2 -









 






     (xiii) Lessor has the power and right to execute this Landlord Estoppel Certificate
without obtaining the consent or approval of any other person or entity. The party executing
this Landlord Estoppel Certificate on behalf of Lessor is duly authorized to act for and on
behalf of Lessor.


Lessor acknowledges that Timberlands II, LLC, its members, successors and/or assigns, will rely on
this Landlord Estoppel Certificate in connection with Timberlands II, LLC’s acquisition of the
rights under the Lease from the Lessee and mortgaging its interest in the Lease in favor of
Mortgagee and that Lessor will be estopped from raising any claim or term with respect to the Lease
which is contrary to the certifications made by Lessor herein.



Lessor further acknowledges that Senior Administrative Agent and Subordinated Administrative Agent
and the respective lenders for whom they are agents and their respective successors and/or assigns
will rely on this Landlord Estoppel Certificate in connection with certain financings and that
Lessor will be estopped from raising any claim or term with respect to the Lease which is contrary
to the certifications made by Lessor herein.




	 	 	 	 	 	 	 
	 	 	LESSOR:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Date: October 9, 2007	 	 






- 3 -









 





EXHIBIT J-1




LIMITED GUARANTY




     LIMITED GUARANTY, dated as of October 9, 2007 (as amended, supplemented, restated or otherwise
modified from time to time, this “Guaranty”), made by WELLS TIMBERLAND REIT, INC., a
Delaware corporation (the “Guarantor”), in favor of COBANK, ACB, as administrative agent
(in such capacity, the “Administrative Agent”) for each of the Lender Parties.



W I T N E S S E T H:




     WHEREAS, pursuant to the Credit Agreement, dated as of the date hereof (as amended,
supplemented, restated or otherwise modified from time to time, the “Credit Agreement”),
among Timberlands II, LLC, a Delaware limited liability company, Wells Timberland Acquisition, LLC,
a Delaware limited liability company (each a “Borrower” and collectively, the
“Borrowers”), the various lending institutions as are, or may from time to time become,
parties thereto (collectively, the “Lenders”), and the Administrative Agent, the Lenders
have extended
Commitments (capitalized terms not otherwise defined herein, and all other capitalized terms
not otherwise defined herein, to have the meanings provided for in Article I) to make Loans
to the Borrowers; and



     WHEREAS, as a condition precedent to the Funding Date, the Guarantor is required to execute
and deliver this Guaranty; and



     WHEREAS, the Guarantor has duly authorized the execution, delivery and performance of this
Guaranty and will receive direct and indirect benefits by reason of the availability of such
Commitments and the making of the Loans to the Borrowers by the Lenders;



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Lenders to make the Loans to the Borrowers pursuant
to the Credit Agreement, the Guarantor hereby agrees with the Administrative Agent, for its benefit
and the benefit of each other Lender Party, as follows:



ARTICLE I

DEFINITIONS




     SECTION 1.1 Certain Terms. The following terms (whether or not underscored) when used
in this Guaranty, including its preamble and recitals, shall have the following meanings (such
definitions to be equally applicable to the singular and plural forms thereof):



     “Administrative Agent” is defined in the preamble.



     “Bankruptcy Code” is defined as Title 11 of the United States Code.



     “Borrower” and “Borrowers” are defined in the first recital.



     “Credit Agreement” is defined in the first recital.



 









 





     “Guaranteed Obligations” is defined in Section 2.1.



     “Guarantor” is defined in the preamble.



     “Guaranty” is defined in the preamble.



     “Insolvency or Liquidation Proceeding” has the meaning provided for in the
Intercreditor Agreement.



     "Lenders” is defined in the first recital.



     “Protective Advances” has the meaning provided for in the Intercreditor Agreement.



     SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Guaranty, including its preamble and recitals, have
the meanings provided in the Credit Agreement.



ARTICLE II

GUARANTY




     SECTION 2.1 Guaranty. The Guarantor hereby unconditionally and irrevocably guarantees
the full and prompt payment to the Administrative Agent (for the benefit of the Lender Parties) of
all losses, costs, expenses, and damages incurred or suffered by any of the Lender Parties as a
result of, or arising in connection with, any of the following (collectively, the “Guaranteed
Obligations”):



          (a) any fraud or intentional misrepresentation or omission by any Loan Party or any Loan
Party’s Affiliates, partners, members, officers, directors, shareholders or principals in
connection with (i) the performance of any of the conditions to the Lenders making the Loans; (ii)
any inducements to the Lenders to make the Loans; (iii) the execution and delivery of the Loan
Documents; (iv) any certificates, representations or warranties given in connection with the Loans;
or (v) any Loan Party’s performance of the Obligations;




          (b) any breach of any Loan Party’s obligations under Sections 6.25 or 7.2.19 of the Credit
Agreement;




          (c) any Lien on the Collateral not permitted by Section 7.2.3 of the Credit Agreement or by
any Loan Party incurring Indebtedness not permitted by Section 7.2.2 of the Credit Agreement;




          (d) the sale, transfer, lease, contribution, conveyance or other disposition by any Loan Party
of any Collateral other than as permitted by Section 7.2.9 of the Credit Agreement;




          (e) the replacement cost of any property removed by any Loan Party from the Real Property
without the consent of the Administrative Agent after an Event of Default has occurred and is
continuing;




-2-









 





          (f) any intentional acts or omissions by any Loan Party that result in waste (including
economic and non-physical waste) of all or any part of the Collateral;




          (g) all Protective Advances made by the Administrative Agent or any Lender pursuant to the
provisions of the Loan Documents;




          (h) the occurrence of any Insolvency or Liquidation Proceeding in which one or more Loan
Parties has acted in concert with, colluded or conspired with any other Person, to cause the
occurrence of any such Insolvency or Liquidation Proceeding;




          (i) any amendment, supplement, waiver or other modification, termination or assignment of any
MW Supply Agreement not permitted by clause (l) of Section 7.1.11 of the Credit Agreement;




          (j) the failure (i) of any Loan Party to deposit or cause to be deposited any payments in the
Revenue Account as required by Section 9.2 of the Credit Agreement and any payments in the Equity
Raise Account as required by Section 9.2 of the Subordinated Credit
Agreement, (ii) of any amounts on deposit in the Revenue Account to be applied in accordance
with the Revenue Waterfall (except as approved by the Administrative Agent or the Required Lenders)
or (iii) of any amounts on deposit in the Equity Raise Account to be applied in accordance with the
Equity Raise Waterfall (except as approved by the Subordinated Administrative Agent or the
requisite Subordinated Lenders thereunder);




          (k) the forfeiture or threatened forfeiture of the Collateral to any Governmental Authority
pursuant to the Racketeer Influenced and Corrupt Organizations Act or similar Law;




          (l) any breach of Section 6.23 of the Credit Agreement;




          (m) any payments in violation of Section 7.2.6 of the Credit Agreement;




          (n) any action by any Loan Party or any of their Affiliates, partners, members, officers,
directors, shareholders or principals takes action to frustrate, hinder or delay the Administrative
Agent’s or any Lender’s exercise of its remedies, it being understood that the foregoing shall not
include any reasonable action taken by a Loan Party in good faith to either contest the existence
of any Default or an Event of Default or dispute the meaning or construction of a contractual term
of any Loan Document; and




          (o) the willful misconduct of any Loan Party.




     This Guaranty constitutes a guaranty of payment when due and not merely of collection, and the
Guarantor specifically agrees that it shall not be necessary or required that any Lender Party
exercise any right, assert any claim or demand or enforce any remedy whatsoever against the
Borrowers, any other Loan Party or any Collateral before or as a condition to the obligations of
the Guarantor hereunder. Notwithstanding the foregoing, the obligations of the Guarantor hereunder
shall be limited to a maximum aggregate amount equal to the greatest amount that would not render
the Guarantor’s obligations hereunder subject to avoidance as a fraudulent



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transfer or conveyance
under Section 548 of the Bankruptcy Code or any provisions of applicable state Law.



     SECTION 2.2 Acceleration of Guaranty. The Guarantor agrees that, if any Event of
Default under Section 8.1.8 of the Credit Agreement shall occur or the Loans are declared due and
payable, the Guarantor will, automatically and without the requirement that any demand for payment
be made, pay to the Lender Parties forthwith the full amount of the Guaranteed Obligations that are
then due and payable.



     SECTION 2.3 Guaranty Absolute. This Guaranty is a continuing, absolute, unconditional
and irrevocable guaranty of payment and shall remain in full force and effect until all the
Guaranteed Obligations have been indefeasibly paid in full in cash and all Commitments shall have
irrevocably terminated. The Guarantor guarantees that the Guaranteed Obligations will be paid
strictly in accordance with the terms of the agreement under which they arise, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of any Lender Party with respect thereto. The liability of the Guarantor under this
Guaranty shall be absolute and unconditional irrespective of:



          (a) any lack of validity, legality or enforceability of any Loan Document or any other
agreement or instrument relating to any thereof;




          (b) the failure of any Lender Party:




               (i) to assert any claim or demand or to enforce any right or remedy against the Borrowers, any
other Loan Party or any other Person (including any other guarantor) under the provisions of any
Loan Document or otherwise, or



               (ii) to exercise any right or remedy against any other guarantor of, or collateral securing,
any of the Guaranteed Obligations;



          (c) any change in the time, manner or place of payment of, or in any other term of, all or any
of the Guaranteed Obligations, or any compromise, renewal, extension, acceleration or release with
respect thereto, or any other amendment or waiver of or any consent to departure from any Loan
Document;




          (d) any addition, exchange, release, impairment or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other guaranty, for all or any
of the Guaranteed Obligations;




          (e) any defense, set-off or counterclaim which may at any time be available to or be asserted
by the Borrowers or any other Loan Party against any Lender Party;




          (f) any reduction, limitation, impairment or termination of the Guaranteed Obligations for any
reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to (and the Guarantor hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence
affecting, the Guaranteed Obligations or otherwise; or



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          (g) any other circumstances which might otherwise constitute a defense available to, or a
legal or equitable discharge of, the Borrowers, any other Loan Party or the Guarantor, including as
a result of any proceeding of the nature referred to in Section 8.1.8 of the Credit Agreement.




     SECTION 2.4 Reinstatement, etc. The Guarantor agrees that this Guaranty shall continue
to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in
part) of any of the Guaranteed Obligations is rescinded or must otherwise be restored by any Lender
Party, upon the insolvency, bankruptcy or reorganization of the Borrowers, any other Loan Party or
otherwise, all as though such payment had not been made.



     SECTION 2.5 Waiver. The Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed Obligations and this
Guaranty, and any requirement that any Lender Party protect, secure, perfect or insure any Lien on
any property or exhaust any right or take any action against the Borrowers, any other Loan Party or
any other Person (including any other guarantor of the Guaranteed Obligations) or any collateral
securing the Guaranteed Obligations.



     SECTION 2.6 Waiver of Subrogation. The Guarantor hereby irrevocably waives to the
extent permitted by applicable Law and until such time as the Guaranteed Obligations shall have
been paid in full in cash and the Commitments have irrevocably terminated, any claim or other
rights which it may now or hereafter acquire against the Borrowers or any other Loan Party that
arise from the existence, payment, performance or enforcement of the Guarantor’s obligations under
this Guaranty or any other Loan Document, including any right of subrogation, reimbursement,
exoneration or indemnification, and any right to participate in any claim or remedy of any Lender
Party against the Borrowers or any other Loan Party or any collateral which any Lender Party now
has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under
contract or Law. If any amount shall be paid to the Guarantor in violation of the preceding
sentence, such amount shall be deemed to have been paid to the Guarantor for the benefit of, and
held in trust for, the Lender Parties, and shall forthwith be paid to the Administrative Agent on
behalf of the Lender Parties to be credited and applied against the Guaranteed Obligations, whether
matured or unmatured. The Guarantor acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth
in this Section is knowingly made in contemplation of such benefits.



     SECTION 2.7 Payments Free of Taxes. All payments made by the Guarantor hereunder shall
be free and clear of all Taxes.



ARTICLE III

REPRESENTATIONS AND COVENANTS




     SECTION 3.1 Representations and Warranties. The Guarantor hereby represents and
warrants, as of the date it becomes a party to this Guaranty, to the Administrative Agent as set
forth below:



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          (a) the Guarantor is duly organized, validly existing and in good standing under the Laws of
its jurisdiction of organization, and has full power and authority, and holds all requisite
licenses, permits and other approvals of Governmental Authorities, to enter into this Guaranty and
the other Loan Documents to which it is a party and to carry out the transactions contemplated
hereby and thereby;




          (b) the execution and delivery by the Guarantor of this Guaranty and the other Loan Documents
to which it is a party and the consummation by the Guarantor of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action of the Guarantor. This
Guaranty and such other Loan Documents to which the Guarantor is a party have each been duly
executed and delivered by the Guarantor and each constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject
to the effect of bankruptcy, insolvency, reorganization, moratorium or similar Laws at the time in
effect affecting the rights of creditors generally and subject to the effects of general principles
of equity (regardless of whether considered in a proceeding in law or equity); and




          (c) the execution and delivery of this Guaranty and the other Loan Documents to which the
Guarantor is a party and the consummation by the Guarantor of the transactions
contemplated hereby do not (i) contravene or result in a default under the Guarantor’s
Organizational Documents, (ii) contravene or result in a default under any material contractual
restriction or Law binding on the Guarantor, (iii) require any filings, consents or authorizations
which have not been duly obtained or (iv) result in the creation or imposition of any Lien on the
Guarantor’s properties (other than on behalf of the Administrative Agent).




     SECTION 3.2 Additional Covenants. The Guarantor agrees that, until all the Guaranteed
Obligations have been paid in full in cash on terms and pursuant to documentation in form and
substance reasonably satisfactory to the Administrative Agent and all Commitments shall have
irrevocably terminated, it will comply with all the terms and provisions of the Credit Agreement
and the other Loan Documents that are applicable to it.



ARTICLE IV

MISCELLANEOUS




     SECTION 4.1 Loan Document. This Guaranty is a Loan Document executed pursuant to the
Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered
and applied in accordance with the terms and provisions thereof, including Section 1.3 and Article
X thereof.



     SECTION 4.2 Amendments, etc.; Successors and Assigns.



          (a) No amendment to or waiver of any provision of this Guaranty nor consent to any departure
by the Guarantor herefrom, shall be effective unless the same shall be in writing and signed by the
Administrative Agent and the percentage of the Lenders as required by Section 10.1 of the Credit
Agreement, and then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given.



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          (b) This Agreement shall be binding upon the Guarantor and its successors, transferees and
assignees, and shall inure to the benefit of and be enforceable by the Administrative Agent and
each other Lender Party and their respective successors and assigns; provided,
however, that the Guarantor may not assign its obligations hereunder without the prior
written consent of the Administrative Agent. Without limiting the generality of the foregoing, any
Lender may assign or otherwise transfer (in whole or in part) its Loans to any other Person, and
such other Person shall thereupon become vested with all the rights and benefits in respect thereof
granted to such Lender under any Loan Document (including this Guaranty) or otherwise, subject,
however, to the provisions of Section 11.10 and Article X of the Credit Agreement.




     SECTION 4.3 Addresses for Notices. All notices and other communications provided for
hereunder shall be made as provided in, and subject to the terms of, Section 11.2 of the Credit
Agreement. All notices to the Guarantor shall be sent care of the Borrowers at their address set
forth in the Credit Agreement and all notices to the Administrative Agent shall be sent as provided
in the Credit Agreement.



     SECTION 4.4 No Waiver; Remedies. No failure on the part of the Administrative Agent or
any other Lender Party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other right. The
Administrative Agent and each other Lender Party shall have all remedies available at law or
equity, including without limitation, the remedy of specific performance for any breach of any
provision hereof. The remedies herein provided are cumulative and not exclusive of any remedies
provided by law or equity.



     SECTION 4.5 Right to Set-Off. Upon the occurrence and during the continuance of any
Event of Default, the Administrative Agent and each other Lender Party are hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all
deposits (general or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Administrative Agent or any such Lender Party, as the case
may be, to or for the credit or the account of the Guarantor against any and all of the Guaranteed
Obligations now or hereafter existing under this Guaranty, irrespective of whether the
Administrative Agent or any such Lender Party shall have made any demand under this Guaranty. Each
Lender Party agrees promptly to notify the Guarantor, the Borrowers and the Administrative Agent
after any such set-off and application made by the Administrative Agent or any such Lender Party,
provided that the failure to give such notice shall not affect the validity of such set-off
and application. The rights of the Administrative Agent and each other Lender Party under this
Section are in addition to other rights and remedies (including, without limitation, other rights
of set-off) which the Administrative Agent or any of the other Lender Parties may have.



     SECTION 4.6 Severability. Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions of this Guaranty
or affecting the validity or enforceability of such provisions in any other jurisdiction.



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     SECTION 4.7 Counterparts. This Guaranty may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of which shall
constitute but one and the same agreement.



     SECTION 4.8 Governing Law; Entire Agreement. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. THIS GUARANTY AND THE
OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.



     SECTION 4.9 Waiver of Jury Trial. THE GUARANTOR AND EACH LENDER PARTY HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF ANY LENDER PARTY OR THE GUARANTOR. THE GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE ADMINISTRATIVE AGENT ENTERING INTO THIS GUARANTY.



     SECTION 4.10 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF, ANY LENDER PARTY OR THE GUARANTOR
SHALL BE BROUGHT AND MAINTAINED IN THE FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF MANHATTAN
OF THE STATE OF NEW YORK. THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
EACH LENDER PARTY AND THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT,



-8-









 







ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE GUARANTOR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY.



     SECTION 4.11 Waiver of Certain Claims. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
GUARANTOR SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST EACH LENDER PARTY ON ANY THEORY OF
LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL
DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS GUARANTY OR ANY INSTRUMENT
CONTEMPLATED HEREBY.



     SECTION 4.12 No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Guaranty. In the event an ambiguity or question of intent or
interpretation arises, this Guaranty shall be construed as if drafted jointly by the parties hereto
and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provisions of this Guaranty.



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     IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and delivered
by its officer thereunto duly authorized as of the date and year first above written.



	 	 	 	 	 
	 	WELLS TIMBERLAND REIT, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Randall D. Fretz 	 
	 	 	Title: Senior Vice President 	 
	 



Acknowledged and Accepted:




COBANK, ACB,






as Administrative Agent



	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 






			
	wells reit Limited Guaranty 

Signature Page







 












 





EXHIBIT J-2




GUARANTY




     GUARANTY, dated as of October 9, 2007 (as amended, supplemented, restated or otherwise
modified from time to time, this “Guaranty”), made by WELLS TIMBERLAND TRS, INC., a
Delaware corporation (the “Guarantor”), in favor of COBANK, ACB, as administrative agent
(in such capacity, the “Administrative Agent”) for each of the Lender Parties.



W I T N E S S E T H:




     WHEREAS, pursuant to the Credit Agreement, dated as of the date hereof (as amended,
supplemented, restated or otherwise modified from time to time, the “Credit Agreement”),
among Timberlands II, LLC, a Delaware limited liability company, Wells Timberland Acquisition, LLC,
a Delaware limited liability company (each a “Borrower” and collectively, the
“Borrowers”), the various lending institutions as are, or may from time to time become,
parties thereto (collectively, the “Lenders”), and the Administrative Agent, the Lenders
have extended Commitments (capitalized terms not otherwise defined herein, and all other
capitalized terms not otherwise defined herein, to have the meanings provided for in Article
I) to make Loans to the Borrowers; and



     WHEREAS, as a condition precedent to the Funding Date, the Guarantor is required to execute
and deliver this Guaranty; and



     WHEREAS, the Guarantor has duly authorized the execution, delivery and performance of this
Guaranty and will receive direct and indirect benefits by reason of the availability of such
Commitments and the making of the Loans to the Borrowers by the Lenders;



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Lenders to make the Loans to the Borrowers pursuant
to the Credit Agreement, the Guarantor hereby agrees with the Administrative Agent, for its benefit
and the benefit of each other Lender Party, as follows:



ARTICLE I

DEFINITIONS




     SECTION 1.1 Certain Terms. The following terms (whether or not underscored) when used
in this Guaranty, including its preamble and recitals, shall have the following meanings (such
definitions to be equally applicable to the singular and plural forms thereof):



     “Administrative Agent” is defined in the preamble.



     “Bankruptcy Code” is defined as Title 11 of the United States Code.



     “Borrower” and “Borrowers” is defined in the first recital.



     “Credit Agreement” is defined in the first recital.



 









 





     “Guaranteed Obligations” is defined in Section 2.1.



     “Guarantor” is defined in the preamble.



     “Guaranty” is defined in the preamble.



     "Lenders” is defined in the first recital.



     SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Guaranty, including its preamble and recitals, have
the meanings provided in the Credit Agreement.



ARTICLE II

GUARANTY




     SECTION 2.1 Guaranty. The Guarantor hereby unconditionally and irrevocably guarantees
the full and prompt payment when due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, all amounts which would have become due but for the operation of
the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. 362(a)), of
the following (collectively, the “Guaranteed Obligations”):



          (a) all Obligations of the Borrowers and each other Loan Party to each Lender Party now or
hereafter existing under the Credit Agreement and each other Loan Document (including this
Guaranty), whether for principal, interest, fees, expenses or otherwise; and




          (b) any and all costs and expenses (including reasonable fees and expenses of legal counsel)
incurred by each Lender Party in enforcing any of its rights under this Guaranty.




     This Guaranty constitutes a guaranty of payment when due and not merely of collection, and the
Guarantor specifically agrees that it shall not be necessary or required that any Lender Party
exercise any right, assert any claim or demand or enforce any remedy whatsoever against any
Borrower, any other Loan Party or any Collateral before or as a condition to the obligations of the
Guarantor hereunder. Notwithstanding the foregoing, the only recourse that the Administrative Agent
and the other Lender Parties may have against the Guarantor pursuant to this Guaranty is to
foreclose upon the Equity Interests of Wells TRS Subsidiary that have been pledged by the Guarantor
to the Administrative Agent pursuant to the terms of the Pledge Agreement.



     SECTION 2.2 Acceleration of Guaranty. The Guarantor agrees that, if any Event of
Default under Section 8.1.8 of the Credit Agreement shall occur or the Loans are declared due and
payable, the Guarantor will, automatically and without the requirement that any demand for payment
be made, pay to the Lender Parties forthwith the full amount of the Guaranteed Obligations that are
then due and payable.



     SECTION 2.3 Guaranty Absolute. This Guaranty is a continuing, absolute, unconditional
and irrevocable guaranty of payment and shall remain in full force and effect until all the
Guaranteed Obligations have been indefeasibly paid in full in cash and all Commitments shall have
irrevocably terminated. The Guarantor guarantees that the Guaranteed Obligations



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will be paid strictly in accordance with the terms of the agreement under which they arise,
regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of any Lender Party with respect thereto. The liability of the
Guarantor under this Guaranty shall be absolute and unconditional irrespective of:



          (a) any lack of validity, legality or enforceability of any Loan Document or any other
agreement or instrument relating to any thereof;




          (b) the failure of any Lender Party:




               (i) to assert any claim or demand or to enforce any right or remedy against the Borrowers, any
other Loan Party or any other Person (including any other guarantor) under the provisions of any
Loan Document or otherwise, or



               (ii) to exercise any right or remedy against any other guarantor of, or collateral securing,
any of the Guaranteed Obligations;



          (c) any change in the time, manner or place of payment of, or in any other term of, all or any
of the Guaranteed Obligations, or any compromise, renewal, extension, acceleration or release with
respect thereto, or any other amendment or waiver of or any consent to departure from any Loan
Document;




          (d) any addition, exchange, release, impairment or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other guaranty, for all or any
of the Guaranteed Obligations;




          (e) any defense, set-off or counterclaim which may at any time be available to or be asserted
by the Borrowers or any other Loan Party against any Lender Party;




          (f) any reduction, limitation, impairment or termination of the Guaranteed Obligations for any
reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to (and the Guarantor hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence
affecting, the Guaranteed Obligations or otherwise; or




          (g) any other circumstances which might otherwise constitute a defense available to, or a
legal or equitable discharge of, the Borrowers, any other Loan Party or the Guarantor, including as
a result of any proceeding of the nature referred to in Section 8.1.8 of the Credit Agreement.




     SECTION 2.4 Reinstatement, etc. The Guarantor agrees that this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole
or in part) of any of the Guaranteed Obligations is rescinded or must otherwise be restored by any
Lender Party, upon the insolvency, bankruptcy or reorganization of the Borrowers, any other Loan
Party or otherwise, all as though such payment had not been made.



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     SECTION 2.5 Waiver. The Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed Obligations and this
Guaranty, and any requirement that any Lender Party protect, secure, perfect or insure any Lien on
any property or exhaust any right or take any action against the Borrowers, any other Loan Party or
any other Person (including any other guarantor of the Guaranteed Obligations) or any collateral
securing the Guaranteed Obligations.



     SECTION 2.6 Waiver of Subrogation. The Guarantor hereby irrevocably waives to the
extent permitted by applicable Law and until such time as the Guaranteed Obligations shall have
been paid in full in cash and the Commitments have irrevocably terminated, any claim or other
rights which it may now or hereafter acquire against the Borrowers or any other Loan Party that
arise from the existence, payment, performance or enforcement of the Guarantor’s obligations under
this Guaranty or any other Loan Document, including any right of subrogation, reimbursement,
exoneration or indemnification, and any right to participate in any claim or remedy of any Lender
Party against the Borrowers or any other Loan Party or any collateral which any Lender Party now
has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under
contract or Law. If any amount shall be paid to the Guarantor in violation of the preceding
sentence, such amount shall be deemed to have been paid to the Guarantor for the benefit of, and
held in trust for, the Lender Parties, and shall forthwith be paid to the Administrative Agent on
behalf of the Lender Parties to be credited and applied against the Guaranteed Obligations, whether
matured or unmatured. The Guarantor acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth
in this Section is knowingly made in contemplation of such benefits.



     SECTION 2.7 Payments Free of Taxes.  All payments made by the Guarantor hereunder
shall be free and clear of all Taxes.



ARTICLE III

REPRESENTATIONS AND COVENANTS




     SECTION 3.1 Representations and Warranties. The Guarantor hereby represents and
warrants, as of the date it becomes a party to this Guaranty, to the Administrative Agent as set
forth below:



          (a) the Guarantor is duly organized, validly existing and in good standing under the Laws of
its jurisdiction of organization, and has full power and authority, and holds all requisite
licenses, permits and other approvals of Governmental Authorities, to enter into this Guaranty and
the other Loan Documents to which it is a party and to carry out the transactions contemplated
hereby and thereby;




          (b) the execution and delivery by the Guarantor of this Guaranty and the other Loan Documents
to which it is a party and the consummation by the Guarantor of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action of the Guarantor. This
Guaranty and such other Loan Documents to which the Guarantor is a party have each been duly
executed and delivered by the Guarantor and each constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in




-4-









 







accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium or similar Laws at the time in effect affecting the rights of creditors generally and
subject to the effects of general principles of equity (regardless of whether considered in a
proceeding in law or equity); and




          (c) the execution and delivery of this Guaranty and the other Loan Documents to which the
Guarantor is a party and the consummation by the Guarantor of the transactions contemplated hereby
do not (i) contravene or result in a default under the Guarantor’s Organizational Documents, (ii)
contravene or result in a default under any material contractual restriction or Law binding on the
Guarantor, (iii) require any filings, consents or authorizations which have not been duly obtained
or (iv) result in the creation or imposition of any Lien on the Guarantor’s properties (other than
on behalf of the Administrative Agent).




     SECTION 3.2 Additional Covenants. The Guarantor agrees that, until all the Guaranteed
Obligations have been paid in full in cash on terms and pursuant to documentation in form and
substance reasonably satisfactory to the Administrative Agent and all Commitments shall have
irrevocably terminated, it will comply with all the terms and provisions of the Credit Agreement
and the other Loan Documents that are applicable to it.



ARTICLE IV

MISCELLANEOUS




     SECTION 4.1 Loan Document. This Guaranty is a Loan Document executed pursuant to the
Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered
and applied in accordance with the terms and provisions thereof, including Section 1.3 and Article
X thereof.



     SECTION 4.2 Amendments, etc.; Successors and Assigns.



          (a) No amendment to or waiver of any provision of this Guaranty nor consent to any departure
by the Guarantor herefrom, shall be effective unless the same shall be in writing and signed by the
Administrative Agent and the percentage of the Lenders as required by Section 10.1 of the Credit
Agreement, and then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given.




          (b) This Agreement shall be binding upon the Guarantor and its successors, transferees and
assignees, and shall inure to the benefit of and be enforceable by the Administrative Agent and
each other Lender Party and their respective successors and assigns; provided,
however, that the Guarantor may not assign its obligations hereunder without the prior
written consent of the Administrative Agent. Without limiting the generality of the foregoing, any
Lender may assign or otherwise transfer (in whole or in part) its Loans to any other Person, and
such other Person shall thereupon become vested with all the rights and benefits in respect thereof
granted to such Lender under any Loan Document (including this Guaranty) or otherwise, subject,
however, to the provisions of Section 11.10 and Article X of the Credit Agreement.




     SECTION 4.3 Addresses for Notices. All notices and other communications provided for
hereunder shall be made as provided in, and subject to the terms of, Section 11.2 of



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the Credit Agreement. All notices to the Guarantor shall be sent care of the Borrowers at
their address set forth in the Credit Agreement and all notices to the Administrative Agent shall
be sent as provided in the Credit Agreement.



     SECTION 4.4 No Waiver; Remedies. No failure on the part of the Administrative Agent
or any other Lender Party to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other right. The
Administrative Agent and each other Lender Party shall have all remedies available at law or
equity, including without limitation, the remedy of specific performance for any breach of any
provision hereof. The remedies herein provided are cumulative and not exclusive of any remedies
provided by law or equity.



     SECTION 4.5 Right to Set-Off. Upon the occurrence and during the continuance of any
Event of Default, the Administrative Agent and each other Lender Party are hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all
deposits (general or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Administrative Agent or any such Lender Party, as the case
may be, to or for the credit or the account of the Guarantor against any and all of the Guaranteed
Obligations now or hereafter existing under this Guaranty, irrespective of whether the
Administrative Agent or any such Lender Party shall have made any demand under this Guaranty. Each
Lender Party agrees promptly to notify the Guarantor, the Borrowers and the Administrative Agent
after any such set-off and application made by the Administrative Agent or any such Lender Party,
provided that the failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Administrative Agent and each other Lender Party under this Section
are in addition to other rights and remedies (including, without limitation, other rights of
set-off) which the Administrative Agent or any of the other Lender Parties may have.



     SECTION 4.6 Severability. Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions of this Guaranty
or affecting the validity or enforceability of such provisions in any other jurisdiction.



     SECTION 4.7 Counterparts. This Guaranty may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of which shall
constitute but one and the same agreement.



     SECTION 4.8 Governing Law; Entire Agreement. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. THIS GUARANTY AND THE
OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.



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     SECTION 4.9 Waiver of Jury Trial. THE GUARANTOR AND LENDER PARTY HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS GUARANTY, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY LENDER
PARTY OR THE GUARANTOR. THE GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE ADMINISTRATIVE AGENT ENTERING INTO THIS GUARANTY.



     SECTION 4.10 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF, ANY LENDER PARTY OR THE
GUARANTOR SHALL BE BROUGHT AND MAINTAINED IN THE FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF
MANHATTAN OF THE STATE OF NEW YORK. THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
EACH LENDER PARTY AND GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE GUARANTOR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY.



     SECTION 4.11 Waiver of Certain Claims. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
GUARANTOR SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST EACH LENDER PARTY ON ANY THEORY OF
LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL
DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS GUARANTY OR ANY INSTRUMENT
CONTEMPLATED HEREBY.



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     SECTION 4.12 No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Guaranty. In the event an ambiguity or question of intent or
interpretation arises, this Guaranty shall be construed as if drafted jointly by the parties hereto
and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provisions of this Guaranty.




-8-









 








     IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and delivered
by its officer thereunto duly authorized as of the date and year first above written.



	 	 	 	 	 
	 	WELLS TIMBERLAND TRS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Randall D. Fretz 	 
	 	 	Title:  	Senior Vice President 	 
	 



Acknowledged and Accepted:




	 	 	 	 	 
	COBANK, ACB,

   as Administrative Agent

 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 





			
	WELLS
TRS  Guaranty 

Signature Page






 









 





EXHIBIT J-3




GUARANTY




     GUARANTY, dated as of October 9, 2007 (as amended, supplemented, restated or otherwise
modified from time to time, this “Guaranty”), made by WELLS TRS HARVESTING OPERATIONS, LLC,
a Delaware limited liability company(the “Guarantor”), in favor of COBANK, ACB, as
administrative agent (in such capacity, the “Administrative Agent”) for each of the Lender
Parties.



W I T N E S S E T H:




     WHEREAS, pursuant to the Credit Agreement, dated as of the date hereof (as amended,
supplemented, restated or otherwise modified from time to time, the “Credit Agreement”),
among Timberlands II, LLC, a Delaware limited liability company, Wells Timberland Acquisition, LLC,
a Delaware limited liability company (each a “Borrower” and collectively, the
“Borrowers”), the various lending institutions as are, or may from time to time become,
parties thereto (collectively, the “Lenders”), and the Administrative Agent, the Lenders
have extended Commitments (capitalized terms not otherwise defined herein, and all other
capitalized terms not otherwise defined herein, to have the meanings provided for in Article
I) to make Loans to the Borrowers; and



     WHEREAS, as a condition precedent to the Funding Date, the Guarantor is required to execute
and deliver this Guaranty; and



     WHEREAS, the Guarantor has duly authorized the execution, delivery and performance of this
Guaranty and will receive direct and indirect benefits by reason of the availability of such
Commitments and the making of the Loans to the Borrowers by the Lenders;



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Lenders to make the Loans to the Borrowers pursuant
to the Credit Agreement, the Guarantor hereby agrees with the Administrative Agent, for its benefit
and the benefit of each other Lender Party, as follows:



ARTICLE I

DEFINITIONS




     SECTION 1.1 Certain Terms. The following terms (whether or not underscored) when used
in this Guaranty, including its preamble and recitals, shall have the following meanings (such
definitions to be equally applicable to the singular and plural forms thereof):



     “Administrative Agent” is defined in the preamble.



     “Bankruptcy Code” is defined as Title 11 of the United States Code.



     “Borrower” and “Borrowers” is defined in the first recital.



     “Credit Agreement” is defined in the first recital.



 









 





     “Guaranteed Obligations” is defined in Section 2.1.



     “Guarantor” is defined in the preamble.



     “Guaranty” is defined in the preamble.



     “Lenders” is defined in the first recital.



     SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Guaranty, including its preamble and recitals, have
the meanings provided in the Credit Agreement.



ARTICLE II

GUARANTY




     SECTION 2.1 Guaranty. The Guarantor hereby unconditionally and irrevocably guarantees
the full and prompt payment when due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, all amounts which would have become due but for the operation of
the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. 362(a)), of
the following (collectively, the “Guaranteed Obligations”):



          (a) all Obligations of the Borrowers and each other Loan Party to each Lender Party now or
hereafter existing under the Credit Agreement and each other Loan Document (including this
Guaranty), whether for principal, interest, fees, expenses or otherwise; and




          (b) any and all costs and expenses (including reasonable fees and expenses of legal counsel)
incurred by each Lender Party in enforcing any of its rights under this Guaranty.




     This Guaranty constitutes a guaranty of payment when due and not merely of collection, and the
Guarantor specifically agrees that it shall not be necessary or required that any Lender Party
exercise any right, assert any claim or demand or enforce any remedy whatsoever against any
Borrower, any other Loan Party or any Collateral before or as a condition to the obligations of the
Guarantor hereunder. Notwithstanding the foregoing, the obligations of the Guarantor hereunder
shall be limited to a maximum aggregate amount equal to the greatest amount that would not render
the Guarantor’s obligations hereunder subject to avoidance as a fraudulent transfer or conveyance
under Section 548 of the Bankruptcy Code or any provisions of applicable state Law.



     SECTION 2.2 Acceleration of Guaranty. The Guarantor agrees that, if any Event of
Default under Section 8.1.8 of the Credit Agreement shall occur or the Loans are declared due and
payable, the Guarantor will, automatically and without the requirement that any demand for payment
be made, pay to the Lender Parties forthwith the full amount of the Guaranteed Obligations that are
then due and payable.



     SECTION 2.3 Guaranty Absolute. This Guaranty is a continuing, absolute, unconditional
and irrevocable guaranty of payment and shall remain in full force and effect until all the
Guaranteed Obligations have been indefeasibly paid in full in cash and all Commitments shall have
irrevocably terminated. The Guarantor guarantees that the Guaranteed Obligations



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will be paid strictly in accordance with the terms of the agreement under which they arise,
regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of any Lender Party with respect thereto. The liability of the
Guarantor under this Guaranty shall be absolute and unconditional irrespective of:



          (a) any lack of validity, legality or enforceability of any Loan Document or any other
agreement or instrument relating to any thereof;




          (b) the failure of any Lender Party:




               (i) to assert any claim or demand or to enforce any right or remedy against the Borrowers, any
other Loan Party or any other Person (including any other guarantor) under the provisions of any
Loan Document or otherwise, or



               (ii) to exercise any right or remedy against any other guarantor of, or collateral securing,
any of the Guaranteed Obligations;



          (c) any change in the time, manner or place of payment of, or in any other term of, all or any
of the Guaranteed Obligations, or any compromise, renewal, extension, acceleration or release with
respect thereto, or any other amendment or waiver of or any consent to departure from any Loan
Document;




          (d) any addition, exchange, release, impairment or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other guaranty, for all or any
of the Guaranteed Obligations;




          (e) any defense, set-off or counterclaim which may at any time be available to or be asserted
by the Borrowers or any other Loan Party against any Lender Party;




          (f) any reduction, limitation, impairment or termination of the Guaranteed Obligations for any
reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to (and the Guarantor hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence
affecting, the Guaranteed Obligations or otherwise; or




          (g) any other circumstances which might otherwise constitute a defense available to, or a
legal or equitable discharge of, the Borrowers, any other Loan Party or the Guarantor, including as
a result of any proceeding of the nature referred to in Section 8.1.8 of the Credit Agreement.




     SECTION 2.4 Reinstatement, etc. The Guarantor agrees that this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole
or in part) of any of the Guaranteed Obligations is rescinded or must otherwise be restored by any
Lender Party, upon the insolvency, bankruptcy or reorganization of the Borrowers, any other Loan
Party or otherwise, all as though such payment had not been made.



-3-









 





     SECTION 2.5 Waiver. The Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed Obligations and this
Guaranty, and any requirement that any Lender Party protect, secure, perfect or insure any Lien on
any property or exhaust any right or take any action against the Borrowers, any other Loan Party or
any other Person (including any other guarantor of the Guaranteed Obligations) or any collateral
securing the Guaranteed Obligations.



     SECTION 2.6 Waiver of Subrogation. The Guarantor hereby irrevocably waives to the
extent permitted by applicable Law and until such time as the Guaranteed Obligations shall have
been paid in full in cash and the Commitments have irrevocably terminated, any claim or other
rights which it may now or hereafter acquire against the Borrowers or any other Loan Party that
arise from the existence, payment, performance or enforcement of the Guarantor’s obligations under
this Guaranty or any other Loan Document, including any right of subrogation, reimbursement,
exoneration or indemnification, and any right to participate in any claim or remedy of any Lender
Party against the Borrowers or any other Loan Party or any collateral which any Lender Party now
has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under
contract or Law. If any amount shall be paid to the Guarantor in violation of the preceding
sentence, such amount shall be deemed to have been paid to the Guarantor for the benefit of, and
held in trust for, the Lender Parties, and shall forthwith be paid to the Administrative Agent on
behalf of the Lender Parties to be credited and applied against the Guaranteed Obligations, whether
matured or unmatured. The Guarantor acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth
in this Section is knowingly made in contemplation of such benefits.



     SECTION 2.7 Payments Free of Taxes.  All payments made by the Guarantor hereunder
shall be free and clear of all Taxes.



ARTICLE III

REPRESENTATIONS AND COVENANTS




     SECTION 3.1 Representations and Warranties. The Guarantor hereby represents and
warrants, as of the date it becomes a party to this Guaranty, to the Administrative Agent as set
forth below:



          (a) the Guarantor is duly organized, validly existing and in good standing under the Laws of
its jurisdiction of organization, and has full power and authority, and holds all requisite
licenses, permits and other approvals of Governmental Authorities, to enter into this Guaranty and
the other Loan Documents to which it is a party and to carry out the transactions contemplated
hereby and thereby;




          (b) the execution and delivery by the Guarantor of this Guaranty and the other Loan Documents
to which it is a party and the consummation by the Guarantor of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action of the Guarantor. This
Guaranty and such other Loan Documents to which the Guarantor is a party have each been duly
executed and delivered by the Guarantor and each constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in




-4-









 







accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium or similar Laws at the time in effect affecting the rights of creditors generally and
subject to the effects of general principles of equity (regardless of whether considered in a
proceeding in law or equity); and




          (c) the execution and delivery of this Guaranty and the other Loan Documents to which the
Guarantor is a party and the consummation by the Guarantor of the transactions contemplated hereby
do not (i) contravene or result in a default under the Guarantor’s Organizational Documents, (ii)
contravene or result in a default under any material contractual restriction or Law binding on the
Guarantor, (iii) require any filings, consents or authorizations which have not been duly obtained
or (iv) result in the creation or imposition of any Lien on the Guarantor’s properties (other than
on behalf of the Administrative Agent).




     SECTION 3.2 Additional Covenants. The Guarantor agrees that, until all the Guaranteed
Obligations have been paid in full in cash on terms and pursuant to documentation in form and
substance reasonably satisfactory to the Administrative Agent and all Commitments shall have
irrevocably terminated, it will comply with all the terms and provisions of the Credit Agreement
and the other Loan Documents that are applicable to it.



ARTICLE IV

MISCELLANEOUS




     SECTION 4.1 Loan Document. This Guaranty is a Loan Document executed pursuant to the
Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered
and applied in accordance with the terms and provisions thereof, including Section 1.3 and Article
X thereof.



     SECTION 4.2 Amendments, etc.; Successors and Assigns.



          (a) No amendment to or waiver of any provision of this Guaranty nor consent to any departure
by the Guarantor herefrom, shall be effective unless the same shall be in writing and signed by the
Administrative Agent and the percentage of the Lenders as required by Section 10.1 of the Credit
Agreement, and then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given.




          (b) This Agreement shall be binding upon the Guarantor and its successors, transferees and
assignees, and shall inure to the benefit of and be enforceable by the Administrative Agent and
each other Lender Party and their respective successors and assigns; provided,
however, that the Guarantor may not assign its obligations hereunder without the prior
written consent of the Administrative Agent. Without limiting the generality of the foregoing, any
Lender may assign or otherwise transfer (in whole or in part) its Loans to any other Person, and
such other Person shall thereupon become vested with all the rights and benefits in respect thereof
granted to such Lender under any Loan Document (including this Guaranty) or otherwise, subject,
however, to the provisions of Section 11.10 and Article X of the Credit Agreement.




     SECTION 4.3 Addresses for Notices. All notices and other communications provided for
hereunder shall be made as provided in, and subject to the terms of, Section 11.2 of



-5-









 







the Credit Agreement. All notices to the Guarantor shall be sent care of the Borrowers at
their address set forth in the Credit Agreement and all notices to the Administrative Agent shall
be sent as provided in the Credit Agreement.



     SECTION 4.4 No Waiver; Remedies. No failure on the part of the Administrative Agent
or any other Lender Party to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other right. The
Administrative Agent and each other Lender Party shall have all remedies available at law or
equity, including without limitation, the remedy of specific performance for any breach of any
provision hereof. The remedies herein provided are cumulative and not exclusive of any remedies
provided by law or equity.



     SECTION 4.5 Right to Set-Off. Upon the occurrence and during the continuance of any
Event of Default, the Administrative Agent and each other Lender Party are hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all
deposits (general or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Administrative Agent or any such Lender Party, as the case
may be, to or for the credit or the account of the Guarantor against any and all of the Guaranteed
Obligations now or hereafter existing under this Guaranty, irrespective of whether the
Administrative Agent or any such Lender Party shall have made any demand under this Guaranty. Each
Lender Party agrees promptly to notify the Guarantor, the Borrowers and the Administrative Agent
after any such set-off and application made by the Administrative Agent or any such Lender Party,
provided that the failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Administrative Agent and each other Lender Party under this Section
are in addition to other rights and remedies (including, without limitation, other rights of
set-off) which the Administrative Agent or any of the other Lender Parties may have.



     SECTION 4.6 Severability. Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions of this Guaranty
or affecting the validity or enforceability of such provisions in any other jurisdiction.



     SECTION 4.7 Counterparts. This Guaranty may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of which shall
constitute but one and the same agreement.



     SECTION 4.8 Governing Law; Entire Agreement. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. THIS GUARANTY AND THE
OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.



-6-









 





     SECTION 4.9 Waiver of Jury Trial. THE GUARANTOR AND LENDER PARTY HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS GUARANTY, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY LENDER
PARTY OR THE GUARANTOR. THE GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE ADMINISTRATIVE AGENT ENTERING INTO THIS GUARANTY.



     SECTION 4.10 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF, ANY LENDER PARTY OR THE
GUARANTOR SHALL BE BROUGHT AND MAINTAINED IN THE FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF
MANHATTAN OF THE STATE OF NEW YORK. THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
EACH LENDER PARTY AND GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE GUARANTOR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY.



     SECTION 4.11 Waiver of Certain Claims. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
GUARANTOR SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST EACH LENDER PARTY ON ANY THEORY OF
LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL
DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS GUARANTY OR ANY INSTRUMENT
CONTEMPLATED HEREBY.



-7-









 





     SECTION 4.12 No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Guaranty. In the event an ambiguity or question of intent or
interpretation arises, this Guaranty shall be construed as if drafted jointly by the parties hereto
and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provisions of this Guaranty.



-8-









 





     IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and delivered
by its officer thereunto duly authorized as of the date and year first above written.



	 	 	 	 	 	 	 	 	 
	 	 	WELLS TRS HARVESTING OPERATIONS,	 	 
	 

	 	LLC	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	FOREST RESOURCE CONSULTANTS,	 	 
	 

	 	 	 	INC.,
	 	as Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: David Foil	 	 
	 

	 	 	 	 	 	Title: President	 	 






Acknowledged and Accepted:




	 	 	 	 	 
	COBANK, ACB,	 	 
	   as Administrative Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 








			
	WELLS
TRS SUBSIDIARY Guaranty 

Signature Page



















 




EXHIBIT
K-1



Prepared By and After Recordation

Return to:

Sutherland Asbill & Brennan LLP

999 Peachtree Street NE

Atlanta, Georgia 30309

Attn: Victor P. Haley

(404) 853-8000




DEED TO SECURE DEBT, ASSIGNMENT OF LEASES AND RECEIPTS

AND SECURITY AGREEMENT*




by




TIMBERLANDS II, LLC

as Borrower




in favor of




COBANK, ACB, as Administrative Agent




 






Dated as of October 9, 2007

 








 




			
	*	 	THIS INSTRUMENT SECURES INDEBTEDNESS FALLING DUE WITHIN THREE (3)
YEARS FROM THE DATE OF THE NOTES EVIDENCING THE INDEBTEDNESS SECURED BY THIS
INSTRUMENT; THEREFORE NO INTANGIBLE RECORDING TAX IS DUE PURSUANT TO O.C.G.A.
48-6-60 ET. SEQ.




 









 










DEED TO SECURE DEBT, ASSIGNMENT OF LEASES AND RECEIPTS

AND SECURITY AGREEMENT




     THIS DEED TO SECURE DEBT, ASSIGNMENT OF LEASES AND RECEIPTS AND SECURITY AGREEMENT
(hereinafter, together with all amendments thereto, being referred to as this “Security
Instrument”), made and entered into as of October 9, 2007, by and between TIMBERLANDS II, LLC a
Delaware limited liability company with an address c/o Wells REIT, Inc., 6200 The Corners Parkway,
Norcross, Georgia 30092-3365 (hereinafter, together with its successors and assigns, referred to as
the “Borrower”), and COBANK, ACB, with an address at 5550 South Quebec Street, Greenwood
Village, Colorado 80111, as administrative agent (in such capacity and including any successor
administrative agent, “Administrative Agent” or “Grantee”) for the various
financial institutions that are, or may from time to time become, parties to the Credit Agreement
(as defined below) (such financial institutions being collectively referred to herein as the
“Lenders”).



PRELIMINARY STATEMENT




          Pursuant to the terms of that certain Credit Agreement, dated as of the date hereof (together
with all amendments, restatements, refinancings and other modifications, if any, from time to time
thereafter made thereto, the “Credit Agreement”), among the Borrower, Wells Timberland
Acquisition, LLC (the Borrower and Wells Timberland Acquisition, LLC, together with their
successors and assigns, are sometimes herein collectively referred to as the “Borrowers”),
the Administrative Agent and the Lenders, the Lenders have agreed to make Loans to the Borrowers,
in an aggregate maximum principal amount at any one time outstanding of Two Hundred Twelve Million
and 00/100 US Dollars (US $212,000,000.00), such Loans having a latest maturity date of September
                    , 2010;




          As a condition precedent to funding the Loans under the Credit Agreement, the Borrower is
required to execute and deliver this Security Instrument for the benefit of the Grantee to secure
the payment and performance of the Obligations;




          This Security Instrument secures not only present Obligations, but also future advances made
pursuant to the Credit Agreement and the other Loan Documents, whether such future advances are
obligatory or are to be made at the option of Lenders or otherwise;




          The Borrower has duly authorized the execution, delivery and performance under this Security
Instrument.




          (Such capitalized terms above and all other capitalized terms not defined herein have the
respective meanings ascribed to them in the Credit Agreement).




     NOW, THEREFORE, in consideration of the Obligations, and the sum of Ten Dollars ($10) cash in
hand paid to the Borrower and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower does hereby GRANT, BARGAIN, SELL,
CONVEY, PLEDGE, ASSIGN CONFIRM and PLEDGE unto the Grantee, its successors and assigns, all of
their right, title and interest, and all right, title and interest of each of them, of whatever
character (whether vested or contingent and whether now owned or hereafter acquired), in and to the
following, ( collectively, the “Collateral”):



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          (a) All right, title and interest in and to the pieces or parcels of land described on
Exhibit A attached hereto and incorporated herein by reference (the “Fee
Premises”), together with all improvements, buildings, structures, fixtures of every
description and appurtenances now or hereafter located thereon or therein (the
“Improvements”) and all right, title and interest in and to the leasehold and profit a
prendre estate (the “Leasehold Estate”) created by those certain Timber sale agreements ,
timberland management agreements and other instruments, if any, described on Exhibit B
attached hereto and incorporated herein by reference (such instruments, as so amended, and as each
may, with Grantee’s consent, be further modified and supplemented, are hereinafter collectively
referred to as the “Timber Lease”) which Timber Lease affects those pieces or parcels of
land and the improvements thereon described therein and described herein on Exhibit A-1
(the “Leasehold Premises”), together with all of Borrower’s right, title and interest in,
to and under the Timber Lease, as the Timber Lease may, with the consent of Grantee, be amended
from time to time, including, but not limited to, the right, if any, to renew or extend the Timber
Lease for a succeeding term or terms (the Leasehold Premises and the Fee Premises are collectively
referred to herein as the “Premises”);




          (b) All right, title and interest in and to all timber of every kind and description, now or
hereafter growing, standing or lying on, or to be grown, harvested from, pertaining to and located
on, the Premises (including owned or leased), goods, inventory and proceeds thereof, and including,
without limitation all property related to nursery operations or replanting and reforestation,
seedlings, nursery stock, trees, growing trees, standing timber, timber lying on the ground, timber
cut and to be cut, severed timber, stumpage, forest products, lumber, pulpwood, and all products
and by-products of any timber operations conducted or to be conducted on the Premises, and all
proceeds, accounts and general intangibles resulting from the sale of such timber and timber to be
cut and timber interests (sometimes collectively referred to herein as “Timber”) (the
Premises, the Improvements, the Minerals (as herein defined) and the Timber hereinafter sometimes
collectively referred to as the “Real Estate”);




          (c) All right, title and interest in and to all farm products, crops, biomass and other
organic products now or hereafter growing, standing or lying on, or to be grown, harvested from,
pertaining to and located on, the Premises, goods, inventory and proceeds thereof, and all products
and by-products of any agricultural operations conducted or to be conducted on the Premises, and
all proceeds, accounts and general intangibles resulting from the sale of such agricultural
products;




          (d) All right, title and interest in and to all coal, oil, gas and other minerals owned by
Borrower and located on, in or under the Premises and extracted or to be extracted, as extracted
collateral and all mineral interests and all proceeds, accounts and general intangibles resulting
from the sale of such minerals or mineral interests (sometimes collectively referred to herein as
the “Minerals”);




          (e) (i) All of Borrower’s rights (but not its obligations except as otherwise expressly agreed
in writing by Grantee) under any and all leases, all Timber sale




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agreements, Timber purchase agreements or stumpage agreements and other contracts and
agreements pursuant to which Borrower has agreed to sell or purchase any standing or severed
Timber, pulpwood or other Timber products from the Real Estate, whether deemed to be an easement,
lease, Timber deed or profit a prendre, and subleases, surface leases, licenses, written or oral,
and all agreements for use or occupancy, or exploration, drilling, mining, extraction, storage,
transportation, processing and handling of Minerals, affecting all or any portion of the Real
Estate with respect to which the Borrower is the landlord or sublandlord (the “Existing
Leases”), any and all extensions and renewals of said leases and agreements and any and all
further leases or agreements, now existing or hereafter made including subleases thereunder, upon,
covering or affecting all or any part of the Real Estate or the Improvements, together with any and
all guaranties of the lessee’s, any sublessee’s, or contracting party’s performance thereunder (all
such existing or future leases, subleases, agreements and tenancies heretofore mentioned, including
but not limited to the Existing Leases, any use or occupancy arrangements created pursuant to
Section 365(h) of Title 11 of the United States Code or otherwise in connection with the
commencement or continuance of any bankruptcy, reorganization, arrangement, insolvency,
dissolution, receivership or similar proceedings or any assignment for the benefit of creditors in
respect of any tenant or occupant of any portion of the Real Estate being hereinafter collectively
referred to as the “Leases”) and all right, title and interest of Borrower in and to
property of any tenant or other Person under any such lease or under any other arrangement entered
into in connection with any such lease, and any and all cash, security deposits, advance rentals
and deposits or payments of a similar nature under any such lease or other arrangement and together
with all money payable thereunder or in connection therewith (including, without limitation, any
and all cancellation or termination payments), subject, however, to the revocable license given to
Borrower to collect and use the Receipts (as herein defined), income and other benefits arising
under any such Lease as provided below;




               (ii) All permits, special permits, licenses, approvals, maps, surveys, title records, studies,
reports, contracts and other rights, privileges and agreements affecting the operation of the Real
Estate now owned or hereafter acquired by Borrower;



               (iii) All right, title and interest in and to all water and water rights, royalties, coal,
oil, gas and other mineral royalties, profits, proceeds, fees, farm products revenue, hunting lease
or other recreational lease revenue and other income of any kind or manner whatsoever arising from
or related to operations on or any proceeds, profits or profits a prendre arising from the Real
Estate, including income from nursery operations, seedling operations, Timber and pulpwood
contracts, option agreements, coal, oil, gas or mineral leases, coal tipple leases, hunting,
fishing and recreational leases and licenses, option agreements and land sales;



               (iv) The immediate and continuing right to collect and receive all of the Receipts, income,
royalties, receipts, revenues, issues and profits now due or which may become due or to which the
Borrower may now or shall hereafter (including during the period of redemption, if any) become
entitled or may demand or claim, arising or issuing from or out of any Timber contracts, leases,
licenses, bills of sale or deeds, the Master Stumpage Agreement, the Fiber Supply Agreement, the
Leases or from or out of the Real Estate, or any part thereof, including but not limited to any and all rights and claims of any kind that the Borrower may
have



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against any such lessee under the Leases or against any subtenants, occupants or licenses of
the Real Estate or the Improvements, or against the purchaser under any Timber deed, cutting
agreement lease, mineral lease, contract or other agreement in any way relating to the Timber or
Minerals, (including any payments received pursuant to Section 502(b) of the Bankruptcy Code or
otherwise in connection with the commencement or continuance of any bankruptcy, reorganization,
arrangement, insolvency, dissolution, receivership or similar proceedings or any assignment for the
benefit of creditors in respect of any tenant or occupant of any portion of the Real Estate and all
claims as a creditor in connection with any of the foregoing), all such moneys, rights and claims
in this paragraph described being hereinafter referred to as the “Receipts;”
provided, however, so long as no Event of Default has occurred and is continuing
under this Security Instrument, the Borrower shall have the right under a license granted hereby
(but limited as provided below) to collect, receive and retain the Receipts, but no Receipts shall
be collected in advance of the due date thereof;




          (f) All accounts, accounts receivable, general intangibles, payment intangibles, trade names,
trademarks, commercial tort claims, letter of credit rights and proceeds, supporting obligations of
every kind and nature, documents, contract rights, construction contracts, commercial paper, notes,
drafts, acceptances, instruments, chattel paper, bonuses, actions and rights in action arising from
or relating to any such property now owned or hereafter acquired by Borrower which relate to the
Real Estate or the proceeds thereof, but not Borrower’s obligations thereunder, and all funds and
deposit accounts and other accounts into which any funds of the Borrower are now or hereafter
deposited to be held by or on behalf of Lender (and each of such terms shall have the definition
thereof set forth in the Code, as the same may be revised from time to time, it being the intention
of the parties hereto that the description of collateral set forth herein be construed to include
the broadest possible range of property and assets);




          (g) All building materials, supplies and other property owned by Borrower now or hereafter
stored at or delivered to the Premises or the Improvements, and all fixtures, fittings,
furnishings, apparatus, machinery, appliances, equipment, goods, inventory and all other articles
of personal property of every nature whatsoever owned by Borrower now or hereafter located in or
on, or attached to, and used or intended to be used in the connection with the Real Estate or any
of the Improvements, or in connection with any operations conducted or intended to be conducted on
the Real Estate or with respect to the Improvements, including without limitation with respect to
Timber harvesting and management (collectively, the “Equipment”) (all of the Equipment, so
far as permitted by Law, shall be deemed to be fixtures and part of the Real Estate and of the
Improvements), and any and all title information, opinions, reports, abstracts of title, plans,
specifications, drawings, books, records and similar items relating to the Real Estate, the
Improvements or the Equipment, the operation thereof, any rights thereto or any interest therein;




          (h) All proceeds, products, extensions, additions, improvements, betterments, renewals,
reversions, substitutions, replacements, accessions, accretions and relictions of and to all or any
part of the Real Estate, Minerals, Timber, Improvements or Equipment and on the




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other property referenced in these Granting Clauses or encumbered by this Security Instrument,
including, without limitation, all proceeds arising from the sale or other disposition thereof;




          (i) All right, title and interest of Borrower, of whatever character (whether vested or
contingent and whether now owned or hereafter acquired), in and to (1) all streets, roads, railroad
rights of way, riparian and littoral rights and public places (whether open or proposed) adjoining
or otherwise providing access to the Real Estate, (2) the Real Estate lying in the bed of such
streets, roads, railroad rights of way and public places, and (3) all other sidewalks, alleys,
ways, passages, vaults, water courses, strips and gores of Real Estate adjoining or used or
intended to be used in connection with all or any part of the Real Estate, Minerals, Timber,
Improvements or Equipment or appurtenances thereto;




          (j) All easements, rights-of-way, gores of land, ways, riparian rights and rights of use or
passage (whether public or private), estates, interests, benefits, powers, rights (including,
without limitation, any and all lateral support, drainage, slope, sewer, water, air, mineral, oil,
gas and subsurface rights), privileges, claims, franchises, licenses, profits, Receipts, royalties,
tenements, hereditaments, reversions, remainders and appurtenances of every nature whatsoever,
whether appurtenant or in gross, and owned by Borrower, in any way now or hereafter belonging,
relating, appertaining to or useful in the operation of all or any part of Real Estate, Minerals,
Timber, Improvements or Equipment, whether legal or equitable (“Easements”);




          (k) All right, title and interest of Borrower (but not its obligations except as otherwise
expressly agreed in writing by Grantee), whether now owned or hereafter acquired, in and to: (1)
each and every policy of insurance now or hereafter in effect which insures the Collateral, or any
part thereof, (2) any and all judgments, settlements, claims, awards, insurance proceeds and other
proceeds and compensation, and interest thereon, now or hereafter made or payable in connection
with any casualty or other damage to all or any part of the Real Estate, Timber, Minerals,
Improvements or Equipment or appurtenances thereto, or in connection with any condemnation
proceedings affecting any such property or any taking under power of eminent domain (or any
conveyance in lieu of or under threat of any such taking) of any such property or any rights
thereto or any interest therein, including, without limitation, any and all compensation for change
of grade of streets or any other injury to or decrease in the value of such property, (3) all
inventory and any and all proceeds of any sales, assignments or other dispositions of any such
property or any rights thereto or any interest therein (inventory shall mean and include, without
limitation, all goods now owned or hereafter acquired and owned from time to time by Borrower which
are held for sale or lease or are to be furnished under contracts of service and all goods,
materials, raw materials, work in process, finished goods or materials used or consumed in the
business of Borrower, which are products of or related to Timber or Minerals), (4) any and all
proceeds of any other conversion (whether voluntary or involuntary) of any such property into cash
or any liquidated claim, (5) any and all refunds or rebates of or with respect to any insurance
premiums and real estate taxes, impositions or levies, and tax credits or benefits or deposits
relating thereto, with respect to such property, and (6) all contractual and other indemnities,
assurances, guaranties and similar agreements, and all rights, benefits and privileges of Borrower
in and to any and all contracts relating to operation,



6









 






maintenance, management or security of any such property), and (7) all investment property,
relating to such property, whether now owned or hereafter acquired, including all securities,
whether certificated or uncertificated, security entitlements, securities accounts, commodity
contracts and commodity accounts;




          (l) All right, title and interest of Borrower (whether as seller, purchaser or otherwise), but
not its obligations, in and to any and all agreements in the nature of options or for the sale or
any other transfer of all or any part of the Collateral, together with any and all down payments,
earnest money deposits and other sums paid or payable or deposited in connection therewith, and all
rights which Borrower now has or may hereafter acquire to be indemnified and/or held harmless from
any liability, loss, damage, cost or expense (including, without limitation, attorneys’ fees and
disbursements) relating to the Real Estate or Collateral or any part thereof;




          (m) All rights, hereditaments and appurtenances pertaining to the foregoing; and all other
interests of every kind and character that Borrower now has or at any time hereafter acquires in
and to the Premises, Improvements, Equipment or the Timber described herein and all property that
is used or useful in connection therewith, including rights of ingress and egress and all
reversionary rights or interests of Borrower with respect to such property;




          (n) And including all property and rights of the type and nature set forth above hereafter
acquired by Borrower, relating to the Real Estate and any and all further or greater estate, right,
title, interest, claim and demand of Borrower, of whatever character (whether vested or contingent
and whether now owned or hereafter acquired), in and to any of the property described in the
foregoing paragraphs or any rights or interests appurtenant thereto; including, without limitation,
all additional title, estate, interest, and other rights that may hereafter be acquired by Borrower
in the property demised under the Timber Lease creating the Leasehold Estate;




          (o) All other Collateral defined in the Credit Agreement or in any other Loan Document now or
hereafter signed by Borrower in favor of Grantee or Lender; and




          (p) Any and all proceeds of any or all of the foregoing.




     SUBJECT, HOWEVER, to the matters described on Exhibit C attached hereto and
incorporated herein by reference (the “Permitted Encumbrances”).



     FURTHER, all of the property described in the foregoing Granting Clauses is herein sometimes
collectively referred to as the “Collateral.” That portion of the Collateral which
constitutes real property or fixtures is referred to as the “Real Property Collateral” and
all other Collateral is referred to as the “UCC Collateral” or the “Code
Collateral,” and Borrower does hereby grant and convey a security interest in and pledge of the
Code Collateral to Grantee as security for the Obligations, as that term is hereinafter defined.



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     TO HAVE AND TO HOLD the Real Property Collateral, together with the rights, privileges and
appurtenances thereto belonging, unto Grantee and its successors and assigns, forever, and Borrower
hereby binds itself and its heirs, executors, administrators, personal representatives, successors
and assigns to warrant and forever defend the Real Property Collateral unto Grantee and its
successors and assigns, against the claim or claims of all Persons claiming or to claim the same or
any part thereof, and the Code Collateral, together with the rights, privileges and appurtenances
thereto belonging, unto the Grantee and its successors and assigns, forever, and Borrower hereby
binds itself and its heirs, executors, administrators, personal representatives, successors and
assigns to warrant and forever defend the Code Collateral unto the Grantee, it successors and
assigns, against the claim or claims of all Persons claiming or to claim the same or any part
thereof.



     This Security Instrument is intended to operate and is to be construed as a deed passing title
to the Real Estate (and is made under those provisions of O.C.G.A. §§ 44-14-60 through 44-14-85 and
other relevant provisions of Law) and not as a mortgage, and is given to secure the obligations of
Borrower pursuant to the Credit Agreement and the other Loan Documents.



1. Credit Agreement; Note.




     This Security Instrument is being executed pursuant to the terms of the Credit Agreement.
Pursuant to the Credit Agreement, the Borrowers are or hereafter shall be justly indebted, jointly
and severally, to the Lenders with respect to the Loans in the original principal amount of Two
Hundred Twelve Million and 00/100 US Dollars (US $212,000,000.00), as may be evidenced by certain
Notes from one or more of the Borrowers to one or more of the Lenders, bearing interest as set
forth therein and in the Credit Agreement, and all successive extensions and renewals of the
indebtedness represented thereby.



     1.1
Obligations. Accordingly, this Security Instrument is made for the following uses
and purposes, and is given to secure and shall secure the prompt payment of the following, which
Borrower agrees to pay and perform (hereinafter sometimes referred to collectively as the
“Obligations” or “Secured Obligations”):



          1.1.1 Payment and performance of all of Borrower’s obligations pursuant to the Notes and the
Credit Agreement, including without limitation, payment of the aggregate principal obligations
evidenced by the Notes, together with interest thereon at the rate or rates specified in the Notes
or the Credit Agreement, including without limitation interest at the rates set forth in Section
3.2.2 of the Credit Agreement, as applicable, in accordance with the terms of the Notes and the
Credit Agreement, and all premiums payable thereon and all other obligations evidenced by the Notes
and the Credit Agreement, all of which obligations are payable in lawful money of the United States
of America;




          1.1.2 Any and all sums now or hereafter becoming due and payable by the Borrower to the
Grantee under the terms of this Security Instrument, including but not limited to advancements made
by the Grantee pursuant to the terms and conditions of this Security Instrument with interest as
herein provided and any debt or obligation arising as a result of the breach of any warranty or
representation set forth in this Security Instrument;



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          1.1.3 Payment and performance and discharge of each and every obligation, promise and
agreement of Borrower contained in this Security Instrument, the Notes, the Credit Agreement and
the other Loan Documents, and in any and all assignments of Receipts and leases, security
agreements, collateral assignments, cash collateral agreements, supplemental agreements and any and
all other Loan Documents which apply to all of the Loans under the Credit Agreement, and payment
and performance of all other “Obligations” as defined in the Credit Agreement; and




          1.1.4 All renewals, extensions and refinancings of any or all of the obligations of the
Borrower described in the foregoing subsections, whether or not any renewal or extension agreement
is executed in connection therewith.




     1.2
Future Advances and Other Debts. It is expressly understood that this Security
Instrument is intended to and does secure, not only the Obligations herein specifically mentioned,
but also future advances and any and all other Obligations and other obligations and liabilities,
direct or contingent, of said Borrower to said Lender, whether now existing or hereafter arising,
and any and all extensions, renewals and modifications of same, or any part thereof, at any time
before actual cancellation of this instrument on the land records of the county where the
Collateral is located, and whether the same be evidenced by note, open account, assignment,
endorsement, guaranty, pledge or otherwise (all of which future advances and other Obligations
shall be deemed to be included in the definition of “Obligations” and “Secured Obligations”
hereunder).



2. BORROWER’S REPRESENTATIONS, COVENANTS AND WARRANTIES




     In order to induce the Lenders to extend credit to the Borrower, the Borrower represents,
covenants and warrants to the Grantee that:



     2.1
Valid Title, etc. The Borrower has good and marketable fee simple title in and to
the Fee Premises, along with any other property set forth on Exhibit A. The Borrower owns
leasehold title to the Leasehold Premises, along with any other property set forth on Exhibit
A-1, pursuant to the Leasehold Estate described on Exhibit B. The Borrower owns good
and marketable title to personal property in which a security interest is granted under the Loan
Documents; Borrower further has a good right to sell and Grantee, grant a security interest in, and
assign, the Collateral; the Collateral is free and clear of any Liens other than Permitted
Encumbrances; and the Borrower will forever warrant and defend the title to the Collateral unto the
Grantee against the claims of all Persons whomsoever, except those claiming under Permitted
Encumbrances.



     With respect to the Timber Lease, Borrower represents and warrants, to the best of its
knowledge after diligent inquiry, that (i) the Timber Lease is in full force and effect and has not
been modified or amended in any manner whatsoever except as may be set forth on Exhibit B,
(ii) there are no defaults under the Timber Lease and no event has occurred which, but for the
passage of time, or notice, or both, would constitute a default under the Timber Lease, (iii) all
Receipts, additional Receipts and other sums due and payable under the Timber Lease have been paid
in full, (iv) neither Borrower nor the landlord under the Timber Lease has commenced any



9









 




action or
given or received any notice for the purpose of terminating the Timber Lease which has not been
cured.




     2.2
Maintenance of Priority. This Security Instrument constitutes a valid and
subsisting first priority security instrument and conveys security title to the Collateral, subject
to the Permitted Encumbrances, and Borrower shall take all steps necessary to preserve and protect
the validity and priority of such security title to, security interests in, and assignments of, the
Collateral created hereby. The Borrower shall execute, acknowledge and deliver such additional
instruments as the Grantee may deem necessary in order to preserve, protect, continue, extend or
maintain the security title, security interests and assignments created hereby as first security
title to, security interests in, and assignments of, the Collateral, except as otherwise permitted
under the terms of this Security Instrument. If any Lien not otherwise permitted under the terms
of this Security Instrument is asserted against the Collateral, Borrower will promptly, at its own
cost and expense, (a) pay the underlying claim in full or take such other action so as to cause
same to be released, and (b) within fifteen (15) days from the date such Lien interest is so
asserted, give Grantee notice of such Lien. Such notice shall specify who is asserting such Lien
and shall detail the origin and nature of the underlying claim giving rise to such asserted Lien.
Without limiting the generality of the foregoing, Borrower will pay in full all sums owing or
claimed for labor, materials, supplies, personal property (whether or not forming a fixture
hereunder), and services of every kind and character used, furnished or installed in or on the
Collateral, provided, however, that Borrower shall have the right to contest in good faith the
amount or validity of any such Liens by appropriate legal proceedings and in accordance with all
applicable Law, after notice to, but without cost or expense to, Grantee, provided that (i) no
Event of Default has occurred and is continuing, (ii) Borrower pays such Liens when due and
payable, unless Borrower delivers evidence satisfactory to Grantee that, as a result of Borrower’s
contest, Borrower’s obligation to pay such Liens has been deferred by the posting of a bond as
required by applicable Law and rules, (iii) such contest shall be promptly and diligently
prosecuted by and at the expense of Borrower, (iv) such contest shall be discontinued and the Lien
paid in full if any proceedings to foreclose such Lien are initiated or if the priority or security
interest created by this Security Instrument shall be in imminent danger of being impaired, and (v)
in any case where Borrower has not posted bond under clause (ii) above, Borrower shall have set
aside adequate reserves (in Grantee’s judgment) for the payment of such Liens, together with all
interest and penalties thereon. All costs and expenses incurred in connection with the protection,
preservation, maintaining of the Liens hereby created, including without limitation costs, fees and
expenses incurred in correcting, reforming or altering this Security Instrument, shall be paid by
the Borrower.



     2.3
Operation for Permitted Use. Borrower will operate the Collateral only for the
growing, harvesting, management and cultivation of trees and Timber and related activities or as
otherwise permitted in the Credit Agreement and will not use, maintain, operate or occupy, or allow
the use, maintenance, operation or occupancy of, the Collateral in any manner which violates any
provisions governing the use, operation, occupancy or maintenance of the Collateral set forth in
this Security Instrument, the Credit Agreement or any of the other Loan Documents.



     2.4
Maintenance of Rights of Way, Easements and Licenses. Borrower will maintain,
preserve and renew (to the extent Borrower has the right to renew on commercially



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reasonable terms)
all rights of way, easements, grants, privileges, licenses and franchises reasonably necessary for
the use of the Collateral from time to time. Borrower will not, without the prior consent of
Grantee, which consent will not be unreasonably withheld, initiate, join in or consent to any
private restrictive covenant or other public or private restriction as to the use of the
Collateral, or any condominium declaration, plat or other document having the effect of subjecting
the Collateral to the condominium or cooperative form of ownership. Borrower shall, however,
comply with all easements and restrictive covenants which may at any time affect the Collateral,
zoning ordinances and other public or private restrictions relating to the use of the Collateral.




3. COVENANTS AND AGREEMENTS OF BORROWER




     The Borrower covenants and agrees that, until the Obligations are paid in full in cash and
this Security Instrument is satisfied in writing by the Grantee:



     3.1
Payment of Taxes and Other Assessments. The Borrower will fulfill all of its
obligations in connection with the payment of taxes and other assessments as more fully set forth
in the Credit Agreement.



     3.2
Insurance. The Borrower shall keep or cause to be kept insurance with respect to
the Collateral in accordance with the Credit Agreement.



     3.3 Title Insurance. Concurrently with the recordation of this Security
Instrument, the Borrower, at its expense, has obtained and delivered to the Grantee a loan policy
or policies of title insurance in an amount satisfactory to the Grantee naming the Grantee as the
insured, insuring the Grantee’s security title to the Premises pursuant to this Security
Instrument, with endorsements specified in clause (c) of Section 5.1.18 of the Credit Agreement and
as otherwise reasonably requested by Grantee. The Borrower has duly paid in full all premiums and
other charges due in connection with the issuance of such policy or policies of title insurance.
All proceeds received by and payable to the Grantee for any loss under the loan policy or policies
of title insurance delivered to the Grantee pursuant to this Section 3.2, or under any policy or
policies of title insurance delivered to the Grantee in substitution therefor or replacement
thereof, shall be the property of the Grantee and shall, except as expressly provided to the
contrary in the Credit Agreement, be applied by the Grantee in accordance with this Security
Instrument.



     3.4
Compliance with Law. The Borrower shall comply in all material respects with all
applicable Laws, ordinances, regulations, covenants, conditions and restrictions affecting the
Collateral, and shall obtain any and all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of the Collateral or the conduct of its business, and
Borrower shall not suffer nor permit any act to be done in or upon the Collateral in violation
thereof.



     3.5
Waste, Demolition, Alteration or Replacement and Preservation and Use of
Collateral. The Borrower shall cause the Collateral and every part thereof to be maintained,
preserved and kept in safe and good repair, working order and condition (consistent with good
general forestry practices), normal wear and tear excepted (subject to damage by casualties) shall



11









 




not commit or permit waste thereon, without the express prior written consent of the Grantee and
shall from time to time make all necessary and proper repairs, renewals, additions and restorations
thereto (consistent with good general forestry practices) so that the value and efficient use
thereof shall be preserved and maintained. Upon any material failure to maintain the Collateral in
accordance with the provisions of the Credit Agreement and this Security Instrument, and after
notice to Borrower of such failure, which is not cured by Borrower within thirty (30) days of
receipt of such notice, Grantee, at its option, may cause reasonable repair and maintenance work to
be performed at the cost of Borrower.




     3.6
Protection of Security. Grantee may appear in and defend any action or proceeding
purporting to affect the security hereof and may bring any action or proceeding, in its own name or
in the name of and on behalf of Borrower, which Grantee shall decide should be brought to protect
its interests in the Real Estate, including, without limitation, any material title defect or
claim, and Borrower shall pay all reasonable costs and expenses, including reasonable costs of
evidence of title and attorneys’ fees incurred by Grantee in connection with any such actions or
proceedings.



     3.7
Timber Management and Harvest Provisions. Borrower shall comply with all of the
covenants and restrictions regarding the management and harvesting of Timber and the management,
extraction, processing and handling of coal, oil, gas or other minerals located on the Real
Property Collateral in accordance with the terms and conditions of the Credit Agreement. If no
Event of Default has occurred and is continuing, Borrower may cut, or allow others to cut, Timber
from the Real Estate on the conditions set forth in the Credit Agreement.



     3.8
Assignment of Receipts and Profits.



          3.8.1 Borrower does hereby absolutely and unconditionally assign to Grantee all of its right,
title and interest in all Leases and Receipts and all proceeds from the sale, cancellation,
surrender or other disposition of the Leases, it being intended by Borrower that this assignment
constitutes a present, absolute assignment and not an assignment for additional security only.
Such assignment to Grantee shall not be construed to bind Grantee to the performance of any of the
covenants, conditions or provisions contained in any such Lease or otherwise to impose any
obligation upon Grantee. Borrower agrees to execute and deliver to Grantee such additional
instruments in form and substance satisfactory to Grantee, as may hereafter be reasonably requested
by Grantee to further evidence and confirm such assignment. Nevertheless, subject to the terms of
this Section, Grantee grants to Borrower a revocable license to collect the Receipts. Upon the
occurrence of an Event of Default, the license granted to Borrower herein shall be automatically
revoked and Grantee shall immediately be entitled to receive all Receipts, whether or not Grantee
enters upon or takes control of the Collateral. Grantee is hereby granted and assigned by Borrower
the right, at its option, upon the revocation of the license granted herein to enter upon the
Collateral in person, by agent or by court-appointed receiver to collect the Receipts. Any
Receipts collected after the revocation of the license herein granted may be applied toward payment
of the Obligations in such priority and proportion as Grantee, acting reasonably, shall deem
proper. Delivery of written notice of Grantee’s exercise of the rights granted herein to any
tenant under a Lease shall be sufficient to require said tenant to pay said rent to Grantee until
further notice, and upon such payment any



12









 






such tenant shall be relieved of all duty, liability or
obligation to Borrower in respect of all payments so made. It is further the intent of Borrower
and Grantee that the Receipts hereby absolutely assigned are no longer, during the term of this
Security Instrument, property of Borrower or property of any estate of Borrower as defined in
Section 541 of the Bankruptcy Code and shall not constitute collateral, cash or otherwise, of
Borrower. The term “Receipts” as used herein shall mean the gross Receipts without deduction or
offsets of any kind.




          3.8.2 It is the intention of Grantee and Borrower that the assignment effectuated by this
Security Instrument with respect to the Receipts shall be a direct and currently effective
assignment and shall not constitute merely the granting of a Lien for the purpose of securing the
Obligations. In the event that a court of competent jurisdiction determines that, notwithstanding
such expressed intent of the parties, Grantee’s interest in the Receipts constitutes a Lien on the
Receipts, it is agreed and understood that such Lien shall be deemed to be perfected upon the
filing of this Security Instrument and that the forwarding of a notice to Borrower and/or the other
parties to such Leases after the occurrence of an Event of Default, advising Borrower of the
revocation of Borrower’s license to collect such Receipts, shall be sufficient action by Grantee to
(a) enforce the perfected Lien on the Receipts, (b) take possession thereof and (c) entitle Grantee
to immediate and direct payment of the Receipts, for application as provided in this Security
Instrument, all without the necessity of any further action by Grantee, including, without
limitation, any action to obtain possession of the Collateral or any portion thereof.




          3.8.3 All Leases executed after the date of this Security Instrument, except as provided in
the Credit Agreement, shall provide that they are subordinate to this Security Instrument and that
the lessee agrees to attorn to Grantee; provided, however, that nothing herein
shall affect Grantee’s right to designate from time to time any one or more Leases as being
superior to this Security Instrument and Borrower shall execute and deliver to Grantee and shall
cause to be executed and delivered to Grantee from each tenant under such Lease any instrument or
agreement as Grantee may deem necessary to make such Lease superior to this Security Instrument.




          3.8.4 Borrower shall not, without the prior written consent of Grantee, enter into any Lease
for all or any portion of the Real Estate, other than leases or licenses permitted under the Credit
Agreement.




          3.8.5 With respect to any Lease (other than as provided in the Credit Agreement), (a) Borrower
shall not, without the prior written consent of Grantee, which consent shall not be unreasonably
withheld, (i) alter, amend, change or waive the terms of any such Lease or cancel, terminate,
abridge, release a party thereto or otherwise modify the terms of any such Lease, whether by
written document, course of dealing or otherwise, (ii) consent to any assignment of or subletting
under any such Lease, (iii) cancel, terminate, abridge or otherwise modify any guaranty of any such
Agreement or the terms thereof, or (iv) collect or accept prepayments of installments of Receipts
in advance of the due date thereof, and (b) Borrower shall enforce (not including termination) at
its cost and expense the obligations of the other parties under the Leases and the obligations of
any Guarantor under any Guarantee, to the full extent thereof. Borrower hereby represents,
warrants and covenants to Grantee that (aa) true, correct and complete copies of the Leases have
been delivered to Grantee, including all



13









 






amendments, modifications, exhibits or addenda thereto;
(bb) the Leases were or shall be duly executed and delivered by the parties thereto and are legal,
valid, binding and enforceable in accordance with their respective terms, except to the extent
limited by applicable bankruptcy, insolvency, liquidation, conservatorship, receivership or other
debtor relief Laws affecting the enforcement of creditor rights generally; (cc) Borrower has or
shall have good title to and the right to assign the Leases to Grantee and no other Person or
entity has any right, title or interest in any of the Leases, except for those Persons or entities
who are stated therein to be parties thereto; (dd) to the best of Borrower’s knowledge after
diligent inquiry, the Leases are in full force and effect, and no default exists under any of the
Leases and no fact or circumstance exists under any of the Leases which, with the lapse of time or
giving of notice or both, would constitute a default by any party thereunder, and (ee) Borrower has
not previously assigned, pledged or hypothecated, whether absolutely, conditionally, collaterally
or otherwise or by operation of Law, or otherwise transferred its interests under any of the Leases
or to the Receipts and shall not make, consent to, suffer or permit any such assignment, pledge,
hypothecation or transfer without the prior written consent of Grantee.




          3.8.6 With respect to each Lease (other than as provided in the Credit. Agreement) Borrower
shall (i) observe and perform each and every material provision thereof on the lessor’s part to be
fulfilled or performed under each Lease and not do or permit to be done anything to impair the
value of the Lease as security for the Loan, including surrender or voluntary termination of any
Agreement, (ii) promptly send to Grantee copies of all notices of default which Borrower shall send
or receive thereunder, (iii) execute and deliver, at the request of Grantee, all such further
assurances, confirmations and assignments in connection with the Collateral as Grantee shall, from
time to time, reasonably require, and (iv) upon request, furnish Grantee with executed copies of
all Leases entered into after the date hereof, and (v) not perform
any act or execute any other instrument that might prevent Grantee from enjoying and exercising any
of its rights and privileges evidenced hereby. Borrower shall from time to time upon request of
Grantee, deliver to Grantee a list of all Leases, with terms, rent, payments, information on all
parties and other information required by Grantee which shall be certified as true and correct by
Borrower.




          3.8.7 GRANTEE SHALL NOT BE OBLIGATED TO PERFORM OR DISCHARGE, NOR DOES IT HEREBY UNDERTAKE TO
PERFORM OR DISCHARGE, ANY OBLIGATION, DUTY OR LIABILITY UNDER THE LEASES OR CONTRACTS BY REASON OF
THIS SECURITY INSTRUMENT. BORROWER SHALL AND DOES HEREBY AGREE TO INDEMNIFY GRANTEE FOR AND TO
HOLD GRANTEE HARMLESS FROM ANY AND ALL LIABILITY, LOSS OR DAMAGE WHICH IT MAY OR MIGHT INCUR UNDER
ANY OF THE LEASES OR CONTRACTS BY REASON OF THIS SECURITY INSTRUMENT AND FROM ANY AND ALL CLAIMS
AND DEMANDS WHATSOEVER WHICH MAY BE ASSERTED AGAINST IT BY REASON OF ANY ALLEGED OBLIGATIONS OR
UNDERTAKINGS ON ITS PART TO PERFORM OR DISCHARGE ANY OF THE TERMS, COVENANTS, OR AGREEMENTS
CONTAINED IN ANY OF THE LEASES OR CONTRACTS, EXCEPTING ANY SUCH OBLIGATIONS OR UNDERTAKINGS
EXPRESSLY ASSUMED BY GRANTEE FROM AND AFTER IT ACQUIRES TITLE TO THE COLLATERAL BY FORECLOSURE OR
OTHERWISE.




14









 







SHOULD GRANTEE INCUR ANY SUCH LIABILITY, LOSS OR DAMAGE BY REASON OF THIS SECURITY INSTRUMENT OR IN THE DEFENSE OF ANY SUCH CLAIMS OR DEMANDS, THE AMOUNT THEREOF, INCLUDING ALL
COSTS, EXPENSES AND ATTORNEYS’ FEES, SHALL BE SECURED HEREBY, AND BORROWER SHALL REIMBURSE GRANTEE
THEREFOR IMMEDIATELY UPON DEMAND, PROVIDED, HOWEVER, THIS INDEMNITY SHALL NOT APPLY TO LIABILITY,
LOSS OR DAMAGE INCURRED BY GRANTEE DUE SOLELY TO ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IN
TAKING ANY ACTIONS TO EXERCISE ITS RIGHTS OR REMEDIES UNDER THIS SECTION 3.




          3.8.8 Grantee’s acceptance of this assignment shall not, prior to entry upon and taking
possession of the Collateral by Grantee, be deemed to constitute Grantee a “mortgagee in
possession,” nor obligate Grantee to appear in or defend any proceeding relating to any of the
Leases or to the Collateral, take any action hereunder, expend any money, incur any expenses, or
perform any obligation or liability under the Lease, or assume any obligation for any deposits
delivered to Borrower by any lessee and not delivered to Grantee. Grantee shall not be liable for
any injury or damage to person or property in or about the Collateral. This Section 3 shall not
place responsibility upon Grantee for control, care, management or payment of taxes with respect to
any property which is the subject of the Leases or make Grantee responsible or liable for any
negligence in the management, operation, or control of said property resulting in any loss or
damage.




          3.8.9 Borrower hereby irrevocably authorizes and directs the parties under the Leases to pay
all Receipts to Grantee upon written demand by Grantee, without further consent of Borrower and
regardless of whether Grantee has taken possession of any other portion of the Collateral, and said
parties may rely upon any written statement delivered by Grantee to them.
Any such party is hereby authorized by Borrower to rely upon and comply with any notice or demand
by the Grantee for the payment to the Grantee of any amounts that may be or become due under the
Lease to which it is a party, or for the performance of any obligations under such Lease. Borrower
agrees that any party following such instructions from Grantee shall not be liable to Borrower or
any Person claiming under Borrower, for making any payment or rendering any performance to Grantee.
No party shall have any obligation or right to inquire whether any default has actually occurred
or is then existing. BY ITS EXECUTION OF THIS SECURITY INSTRUMENT, BORROWER AGREES TO INDEMNIFY,
DEFEND AND HOLD HARMLESS ANY PARTY FROM ANY LOSS, DAMAGE OR CLAIM ARISING FROM SUCH PARTY MAKING
ANY PAYMENT OR TAKING ANY ACTION IN RELIANCE UPON THE TERMS HEREOF. Grantee agrees that it shall
not exercise its rights under this Section 3.8.9 except after occurrence of an Event of Default.




          3.8.10 Borrower shall keep Grantee reasonably informed as to the status of the Leases and the
compliance by the parties thereto with their respective obligations thereunder. Borrower shall
give Grantee copies of any notices or communications of a material substantive nature to or from
any other party to the Leases, including, without limitation, any such notices or communications
claiming any default, breach or violation by any party thereto.




     3.9 Transfer or Further Encumbrance of the Collateral.



15









 





          3.9.1 Borrower shall not, without the prior written consent of Grantee, or except in
accordance with the Credit Agreement and except pursuant to any Permitted Encumbrances, sell,
convey, alienate, mortgage, encumber, pledge or otherwise transfer the Collateral or any part
thereof, or permit or suffer the Collateral or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, pledged or otherwise transferred. A sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Collateral within the meaning of this Section and as set
forth in the Credit Agreement shall be deemed to include (i) an installment sales agreement wherein
Borrower agrees to sell the Collateral or any part thereof for a price to be paid in installments,
(ii) an agreement by Borrower leasing all or a substantial part of the Collateral or a sale,
assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title
and interest in and to any Leases or any Receipts, or (iii) the voluntary or involuntary sale,
conveyance, encumbrance, pledge, hypothecation, dilution or transfer of any direct or indirect
ownership or beneficial interest in Borrower, or a change in control of Borrower, which is not
permitted under the Credit Agreement.




          3.9.2 Any purchaser, transferee or future ground lessee of a substantial portion of the
Collateral pledged and assigned herein shall be deemed to have assumed and agreed to pay the
Secured Obligations and to have assumed and agreed to be bound by and to keep, observe, perform and
comply with all covenants, agreements, conditions and provisions of this Security Instrument
(including, without limitation, the terms of this Section) unless Grantee specifically agrees in
writing to the contrary. Without limiting the generality of the foregoing, each such purchaser,
transferee, lessee, pledgee and assignee shall be deemed to have made and agreed to each waiver,
consent, authorization, direction and appointment made by or agreed to by Borrower under this
Security Instrument. Borrower agrees that, in the event ownership of all or any part of the
Collateral becomes vested in a Person other than Borrower, Grantee may, without
notice to Borrower, deal in any way with such successor or successors in interest with reference to
this Security Instrument, the other Loan Documents and the Obligations, without in any way
vitiating or discharging Borrower’s liability with respect thereto. Any such purchaser,
transferee, lessee, pledgee or assignee shall confirm the above in writing at the request of
Grantee and shall furnish any other performance or documentation required by Grantee. No sale,
conveyance, transfer, pledge, encumbrance, assignment or lease referred to in the immediately
preceding Section, and no forbearance, extension or assumption by or to any Person with respect to
the Obligations or any of the Loan Documents, shall operate to release, discharge, modify, change
or affect the liability of Borrower, either in whole or in part, unless Grantee specifically agrees
in writing to the contrary.




     3.10
Inspection. Borrower agrees that Grantee and/or its agents and independent
contractors, shall have the right to enter the Real Estate at reasonable times and intervals, to
inspect and test the Real Estate, for the purpose of determining whether Borrower is in compliance
with the provisions of this Security Instrument and the other Loan Documents.



     3.11
Security Agreement and Financing Statement.



          3.11.1 This Security Instrument is a real property Security Instrument and a “security
agreement” and a “financing statement” within the meaning of the applicable Uniform Commercial Code
(the “Code”). The Collateral includes both real and personal property,




16









 







including timber to be cut, as-extracted collateral and goods, including goods which are or are to become fixtures, and
all other rights and interests, whether tangible or intangible in nature, of Borrower in the
Collateral. Borrower, by executing and delivering this Security Instrument, grants to Grantee, as
security for the Obligations, a security interest in and Lien upon the Code Collateral and in all
other Collateral to the full extent that the Code Collateral and such other Collateral may be
subject to the Code. Grantee, by accepting this Security Instrument, agrees to and enters into
this Security Agreement. Borrower authorizes Grantee to prepare and file such financing statements
and further assurances as Grantee may, from time to time, deem necessary in order to create,
perfect, and preserve the Liens granted in this Section. This Security Instrument shall also
constitute a financing statement covering goods and inventory, including goods that are to become
fixtures and a financing statement covering timber to be cut and as-extracted collateral, for the
purposes of the Code. Information concerning the security interest(s) herein granted in the Code
Collateral may be obtained from Grantee upon request at the address given herein.




          3.11.2 Borrower has made certain representations and covenants, including but not limited to
the following information and covenants, to Grantee in the Credit Agreement regarding information
necessary to assure compliance with the Code and Borrower represents and warrants to the Grantee
that all such information pertaining to the Borrower is accurate and complete in all respects.




          3.11.3 Because this Security Instrument also constitutes a UCC financing statement, the
following information is included herein, and Borrower represents and warrants the truth and
accuracy thereof:





	 	(a)	 	The name of the Debtor is Timberlands II, LLC.
	 
	 	(b)	 	The mailing address of Debtor is c/o Wells REIT, Inc., 6200 The Corners
Parkway, Norcross, Georgia 30092-3365.
	 
	 	(c)	 	The type of organization of Debtor is limited liability company.
	 
	 	(d)	 	The jurisdiction of organization of Debtor is Delaware.
	 
	 	(e)	 	The organizational identification number, if any, of Debtor is 4335699.
	 
	 	(f)	 	The name of Secured Party is CoBank, ACB, as Administrative Agent.
	 
	 	(g)	 	The mailing address of Secured Party is 5550 South Quebec Street, Greenwood
Village, Colorado 80111.
	 
	 	(h)	 	This financing statement covers the following collateral: all property and
assets of Debtor, including but not limited to fixtures and timber to be cut, more
particularly described herein, which relate to the real property more particularly
described on Exhibit A and Exhibit A-1 attached hereto and made a part
hereof.
	 
	 	(i)	 	This financing statement is to be recorded in the real estate records.
	 
	 	(j)	 	This financing statement covers timber to be cut and as-extracted collateral.
The real estate is more particularly described on Exhibit A and Exhibit
A-1 attached hereto and made a part hereof.
	 
	 	(k)	 	The address of Borrower’s chief executive office and principal place of
business is c/o Wells REIT, Inc., 6200 The Corners Parkway, Norcross, Georgia
30092-3365, and the location of Borrower under the Code is Delaware.





17









 











	 	(l)	 	With the exception of inventory in transit, all tangible (corporeal) assets
comprising the Code Collateral are situated on the Real Estate.
	 
	 	(m)	 	The owners of the Leasehold Premises are as described on Exhibit A-1.





          3.11.4 The following covenants are made in connection with the UCC Collateral:




               (a)
Borrower shall prevent any Code Collateral from being or becoming an accession to any
property not subject to security interests created by this Security Instrument.



               (b)
From time to time hereafter at the request of Grantee, Borrower shall deliver to Grantee up
to date schedules of any items of Code Collateral.



               (c)
Borrower shall not change its name, its mailing address, its state of organization, its
form of organization, its state-issued organizational identification number or the location of its
chief executive office without giving at least thirty (30) days prior written notice to Grantee.



               (d)
If the Borrower shall at any time hold or acquire a commercial tort claim with respect to
the Collateral, the Borrower shall immediately notify the Grantee in a writing signed by the
Borrower of the brief details thereof and grant to the Grantee in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to the Grantee.



          3.11.5 Without limiting the other remedies set forth herein, on the happening of any Event of
Default or at any time thereafter, the Grantee shall have and may exercise with respect to the
personal property and other non-real estate collateral included in the UCC Collateral all rights,
remedies and powers of a secured party under the Code with reference to the UCC Collateral or any
other items in which a security interest has been granted herein, including without limitation the
right and power to sell at public or private sale or sales or otherwise dispose of, lease or
utilize the UCC Collateral and any part or parts thereof in any manner to the fullest extent
authorized or permitted under the Code after default hereunder, without regard to preservation of
the UCC Collateral or its value and without the necessity of a court order. The Grantee shall have,
among other rights, the right to take possession of the UCC Collateral and to enter upon any
premises where the same may be situated for the purpose of repossessing the same without being
guilty of trespass and without liability for damages occasioned thereby and to take any action
deemed appropriate or desirable by the Grantee, at its option and its sole discretion, to repair,
restore or otherwise prepare the UCC Collateral for sale, lease or other use or disposition. At the
Grantee’s request, the Borrower, at Borrower’s expense, shall assemble the UCC Collateral and make
the UCC Collateral available to the Grantee at any place designated by the Grantee. To the extent
permitted by Law, the Borrower expressly waives any notice of sale or any other disposition of the
Collateral and any rights or remedies of the Grantee with respect to, and the formalities
prescribed by Law relative to, the sale or disposition of the Collateral or to the exercise of any
other right or remedy of the Grantee existing after default. To the extent that such notice is
required and cannot be waived, the Borrower agrees that if such notice is given to the Borrower in
accordance with the provisions of Section 5.8 below, at least ten (10) days before the time of the
sale or other disposition, such notice shall be deemed reasonable and shall



18









 






fully satisfy any
requirement for giving said notice. Borrower shall pay to Grantee on demand any and all reasonable
expenses, including reasonable legal expenses and attorneys’ fees and disbursements, incurred or
paid by Grantee in protecting its interest in the Code Collateral and in enforcing its rights
hereunder with respect to the Code Collateral. Any notice of sale, disposition or other intended
action by Grantee with respect to the Code Collateral sent to Borrower in accordance with the
provisions hereof at least ten (10) days prior to such sale, disposition or action shall constitute
reasonable notice to Borrower. The proceeds of any disposition of the Code Collateral, or any part
thereof, may be applied by Grantee to the payment of the Obligations in such priority and
proportions as Grantee in its discretion shall deem proper.




          3.11.6 The Borrower hereby irrevocably authorizes the Grantee at any time and from time to
time to file in any Uniform Commercial Code jurisdiction any initial financing statements and
amendments thereto that (a) indicate the Collateral as being assets of the Borrower or words of
similar effect, regardless of whether any particular asset comprised in the Collateral falls within
the scope of Article 9 of the Uniform Commercial Code of such jurisdiction, or with greater detail,
and (b) contain any other information required by part 5 of Article 9 of the Uniform Commercial
Code of the state where this Security Instrument is recorded for the sufficiency or filing office
acceptance of any financing statement or amendment, including (i) whether the Borrower is an
organization, the type of organization and any organization identification number issued to the
Borrower and, (ii) that is as-extracted collateral or timber to be cut, a sufficient description of
real property to which the Collateral relates and, if Mortgagor does not have an interest of record
in the real property, the name of the record owner.
The Borrower agrees to furnish any such information to the Grantee promptly upon request. The
Borrower also ratifies its authorization for the Grantee to have filed in any Uniform Commercial
Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the
date hereof. Borrower shall promptly execute, file and record, at its sole cost and expense, such
Code forms as are necessary to maintain the validity and priority of the Lien on the Code
Collateral. In addition, Borrower shall promptly execute, file and record such additional Code
forms or continuation statements and further assurances as Grantee shall deem necessary to insure
the attachment, perfection and first priority of, and the ability of the Grantee to enforce, the
Grantee’s security interest in any and all of the Collateral, and shall pay all expenses and fees
in connection with the filing and recording thereof. Borrower hereby grants to Grantee an
irrevocable power of attorney, coupled with an interest, to file with the appropriate public office
on its behalf any financing or other statements signed only by Grantee, as secured party, in
connection with the Code Collateral covered by this Security Instrument.




          3.11.7 For avoidance of doubt it is expressly understood and agreed that any terms not defined
herein or in the Credit Agreement shall refer to any definitions thereof in the Code, as the same
may be revised from time to time, it being the intention of the parties hereto that the description
of Collateral set forth herein be construed to include the broadest possible range of property and
assets.




          3.11.8 This Section 3.11 shall be governed by the Laws of the State of New York, except that
the Laws of the State of Georgia shall govern perfection, the effect of perfection or
nonperfection, and the priority of a security interest in such Collateral.





19












 





     3.12 Personal Property.  Except as permitted by the Credit Agreement and the other
Loan Documents, that portion of the Collateral consisting of personal property and equipment, shall
be owned by Borrower and shall not be the subject matter of any lease or other transaction whereby
the ownership or any beneficial interest in any of such property is held by any Person or entity
other than Borrower nor shall Borrower create or suffer to be created any security interest, other
than a Permitted Encumbrance, covering any such property as it may from time to time be replaced,
other than the security interest created herein.



     3.13 Subrogation.  To the extent permitted by Law and the provisions of the Credit
Agreement, Grantee shall be subrogated, notwithstanding their release of record, to any mechanic’s
or vendor’s Lien or Liens of any kind heretofore or hereafter existing on the Real Estate to the
extent that the same are paid or discharged by Grantee, whether or not from the proceeds of the
Notes; provided, however, this Section shall not be deemed or construed to obligate Grantee to pay
or discharge the same.



     3.14 Condemnation.  Immediately upon Borrower’s obtaining knowledge of the institution
of any proceeding for the condemnation of, or for the exercise of the right of eminent domain with
respect to, the Collateral, or any part thereof, Borrower shall notify Grantee of such fact.
Borrower shall then, if requested by Grantee, file or defend its claim thereunder and prosecute
same with due diligence to its final disposition and shall cause any awards or settlements to be
paid over to Grantee for disposition pursuant to the terms of this Security Instrument. Borrower
may be the nominal party in such proceeding, but Grantee shall be entitled to participate in and to
control same and to be represented therein by counsel of its own choice, and Borrower will deliver,
or cause to be delivered, to Grantee such instruments as may be requested by Grantee from time to
time to permit such participation. If the Collateral is taken or diminished in value, or if a
consent settlement is entered, by or under threat of such proceeding, the award or settlement
payable to Borrower by virtue of its interest in the Collateral shall be, and by these presents is,
assigned, transferred and set over unto Grantee to be held by it, subject to the security title and
security interest of this Security Instrument, and may, at the Grantee’s election, but subject to
the provisions of the Credit Agreement be used in any one or more of the following ways: (a) apply
the same in the manner set forth in the Notes and the Credit Agreement; (b) use the same or any
part thereof to perform or discharge any of the Obligations; (c) use the same or any part thereof
to restore, repair or replace the Collateral to a condition satisfactory to the Grantee (with the
disbursement of such funds being made in accordance with the procedures approved by Grantee); or
(d) release the same to Borrower. Grantee is empowered to collect and receive the proceeds of any
condemnation or eminent domain award or settlement; Borrower hereby irrevocably appoints Grantee as
Borrower’s attorney-in-fact (coupled with an interest) to collect
and receive such proceeds. Grantee shall not be obligated to collect, and shall not be liable
for failure to collect, any such proceeds.



     3.15 Intentionally Deleted.



     3.16 HOLD HARMLESS.  BORROWER WILL DEFEND, AT ITS OWN COST AND EXPENSE, AND HOLD
GRANTEE AND THE LENDERS HARMLESS FROM, ANY ACTION, PROCEEDING OR CLAIM AFFECTING GRANTEE OR THE
LENDERS, THE



20









 







COLLATERAL OR THE LOAN DOCUMENTS, OR RESULTING FROM OR ARISING OUT OF THE FAILURE OF
BORROWER TO PERFORM OR DISCHARGE THE OBLIGATIONS OR OTHERWISE TO COMPLY WITH THE PROVISIONS OF THE
LOAN DOCUMENTS, INCLUDING ANY ACTIONS TAKEN BY GRANTEE UNDER SECTION 4.3 BELOW NOTWITHSTANDING THE
SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE OF GRANTEE, AND ALL COSTS AND EXPENSES INCURRED BY
GRANTEE IN PROTECTING ITS INTERESTS HEREUNDER (INCLUDING ALL COURT COSTS AND ATTORNEYS’ FEES) SHALL
BE BORNE BY BORROWER, PROVIDED THAT BORROWER SHALL HAVE NO OBLIGATION TO DEFEND OR INDEMNIFY
GRANTEE OR THE LENDERS WITH RESPECT TO THE CONSEQUENCES OF GRANTEE’S OR THE LENDERS’ GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.




	4.      DEFAULT AND REMEDIES.





     4.1 Events of Default.  The term “Event of Default,” as used in this Security
Instrument, shall mean the occurrence or happening, at any time and from time to time, of an “Event
of Default” under the Credit Agreement.



     4.2 Rights and Remedies of the Grantee Upon Default. Rights and Remedies of the Grantee
Upon Default.  If an Event of Default shall occur, Grantee may exercise any one or more of the
following remedies, without notice (unless notice is required by applicable statute):


Grantee may declare the Obligations, or any part thereof, immediately due and payable, without
notice, whereupon the same shall become immediately due and payable, provided, however, that all
Obligations shall be automatically due and payable upon an Event of Default described in Section
8.1 of the Credit Agreement and Borrower hereby waives notice of intent to accelerate and notice
of acceleration.



Without limiting the generality of the foregoing, upon the occurrence of an Event of Default or at
any time thereafter:




               (a)      The Grantee at its option, shall have the right, power and authority to exercise and
enforce any or all of the following rights and remedies with respect to Receipts and Leases:



                    (i)      to enforce the termination of the license granted to the Borrower hereunder to
collect the Receipts, and, without taking possession, in the Grantee’s own name to demand, collect,
receive, sue for, attach and levy upon the Receipts (including all income received or receivable
with respect to any of the Collateral), to give proper receipts, releases and acquittances
therefor, and after deducting all necessary and reasonable costs and expenses of collection,
including reasonable attorney’s fees, to apply the net proceeds thereof to the Obligations in such
order and amounts as the Grantee may choose (or hold the same in a cash collateral reserve as
security for the Obligations);



                    (ii)      without regard to the adequacy of the security, with or without any action or
proceeding, through any Person or by agent, or by a receiver or keeper to



21









 







be appointed by court, to
enter upon, take possession of, manage and operate the property or any part thereof for the account
of the Borrower; make, modify, enforce, cancel or accept surrender of any Lease; remove and evict
any lessee; increase or reduce rents; cut, remove, sell and dispose of Timber and exercise all
rights under deeds or contracts and otherwise do any act, or incur any cost or expense the Grantee
shall deem proper to protect the security hereof, as fully and to the same extent as the Borrower
could and to apply any funds to the operation and management of the Collateral (including payment
of reasonable management, brokerage and attorneys’ fees) and payment of any Obligations in such
order and amounts as the Grantee may choose (or hold the same in cash collateral reserve as
security);



                    (iii)      to require Borrower to transfer and pay over to Grantee all security deposits and
records thereof, together with all original Leases; and



                    (iv)      to take whatever legal proceedings may appear necessary or desirable to enforce any
obligation or covenant or agreement of the Borrower under this Security Instrument.



               (b)      The collection of the Receipts and application thereof (or holding thereof in
reserve) as aforesaid or the entry upon and taking possession of the Collateral or both shall not
cure or waive any default or waive, modify or affect any notice of default under this Security
Instrument, or invalidate any act done pursuant to such notice, and the enforcement of such right
or remedy by the Grantee, once exercised, shall continue for so long as the Grantee shall elect,
notwithstanding that the collection and application aforesaid of the Receipts may have cured the
original default. If the Grantee shall thereafter elect to discontinue the exercise of any such
right or remedy, the same or any other right or remedy hereunder may be reasserted at any time and
from time to time following any subsequent default.


At any time after the occurrence of any Event of Default, Grantee, at its option, may sell all or
any part of the Collateral at one or more public sale or sales before the door of the courthouse of
the County in which the Collateral, or any such part thereof, is situated, to the highest bidder
for cash, in order to pay the Secured Obligations, any other amounts secured hereby and any unpaid
insurance premiums, Taxes and Other Charges relating to the Collateral, with accrued interest
thereon, and all expenses of the sale and of all proceedings in connection therewith (including
reasonable attorneys’ fees actually incurred), after advertising the time, place and terms of sale
once a week for four (4) weeks (without regard to the actual number of days) in a newspaper in
which Sheriff’s sales are advertised in said County, all other notice being hereby waived by the
Borrower. Any such sale may be adjourned by announcement at the time and place appointed for such
sale, without further notice, except as may be required by applicable Law. The failure to complete
any sale hereunder or any defect in any sale hereunder shall not exhaust the power of sale herein
granted and, in any such event, Grantee shall have the right to cause a subsequent sale or sales to
be made hereunder. At any such sale, Grantee may execute and deliver to the purchaser or
purchasers at such sale a conveyance of the Collateral, or the part or parts of the Collateral so
sold. Any such conveyance may contain recitals as to the happening of a default or Event of
Default hereunder. To this end, the Borrower hereby constitutes and appoints Grantee as its agent
and attorney-in-fact to make such sale and conveyance, and thereby to divest the Borrower of its
right, title or equity in and to the Collateral and to vest the same in the purchaser


22









 






or purchasers
at such sale or sales, and all acts and doings of said agent and attorney-in-fact are hereby
ratified and confirmed. Any recitals in said conveyance or conveyances as to facts essential to a
valid sale shall be binding and conclusive on the Borrower. Any such conveyance (and, in the event
of a deed in lieu of foreclosure, then such deed) shall be effectual to bar all right, title and
interest, equity of redemption (including all statutory redemption), homestead, dower, curtesy and
all other exemptions of the Borrower or its successors in interest, in and to the Collateral. The
aforesaid power of sale and agency are coupled with an interest and are irrevocable, whether by
dissolution or otherwise, are granted as cumulative of the other remedies provided by Law for
collection of the Secured Obligations.



All payments received by the Grantee as proceeds of the Collateral, or any part thereof, as well as
any and all amounts realized by the Grantee in connection with the enforcement of any right or
remedy under or with respect to this Security Instrument, shall be applied by the Grantee as
provided in the Credit Agreement.



In case of any sale of the Collateral as authorized by this Section 4.2, all prerequisites to the
sale shall be presumed to have been performed, and in any conveyance given hereunder all statements
of facts, or other recitals therein made, as to the nonpayment of any of the Obligations or as to
the advertisement of sale, or the time, place and manner of sale, or as to any other fact or thing,
shall be taken in all courts of Law or equity as prima facie evidence that the facts so
stated or recited are true.



It is specifically understood and agreed that the foregoing acceleration provisions will be
applicable not only to the maturities recited in the original Note but also to any substituted
maturities created by extension or renewal. The failure of the holder(s) of the secured
indebtedness to declare an acceleration of maturities when a ground therefor exists, even though
such forbearance may be repeated from time to time, will not constitute a waiver of the right of
such holder(s) to accelerate maturities upon a recurrence of the same ground therefor; nor will the
act of such holder(s) in remedying any condition resulting from declaring an acceleration of
maturities by reason of such default.



If Grantee shall expend any sum or sums for the protection of any of the Collateral or the security
title pursuant to this Security Instrument (such Grantee to have uncontrolled discretion as to the
necessity of making any such expenditures), the repayment of such sum or sums on demand (with
interest thereon at the highest rate allowed by Law from the date of each expenditure) shall be the
personal obligation of the Borrower; and such obligation to repay will constitute a part of the
indebtedness secured hereby. The expenditures thus made reimbursable will include, without
limitation, taxes, special improvement assessments, insurance premiums, repairs and maintenance
expenses, security expenditures, sums paid to discharge prior liens, rents on premises in which
mortgaged personalty may be situated, etc. The cost of any abstract or supplemental abstract
procured by Grantee to facilitate foreclosure will also constitute a part of the reimbursable
expenses secured hereby.




     4.3 Other Matters Regarding Remedies.



23









 





     4.3.1 The proceeds or avails of any sale made under or by virtue of this Section, together
with any other sums which then may be held by Grantee under this Security Instrument, whether under
the provisions of this Section or otherwise, shall be applied as set forth in the Credit Agreement



     4.3.2 Grantee shall be entitled to bid for and purchase all or any part of the Collateral, or
any interest therein, at any sale pursuant to the power of sale herein granted or pursuant to any
judgment, order, writ of execution or decree of any court of competent jurisdiction and, upon
compliance with the terms of sale, may hold, retain, possess and dispose of such Collateral or
interest without further accountability (except that Grantee shall be accountable to the Grantees,
as contemplated by the Financing Documents). In paying the purchase price in connection with any
such sale, Grantee, after allowing for the costs and expenses of such sale, may, to the fullest
extent permitted by Law, apply all or any part of the Secured Obligations, in lieu of cash, as a
credit against such purchase price and any other amounts payable in connection therewith.



     4.3.3 Until full, final and indefeasible payment in cash of the Secured Obligations,
possession of the Collateral by the Borrower or by any Person claiming under either or both of
them, shall be that of a tenant under Grantee, and in the event of any sale pursuant to the
aforesaid power of sale and agency, the Borrower and any such Person shall be deemed a tenant or
tenants holding over and shall forthwith deliver possession to the purchaser or purchasers at such
sale or be summarily dispossessed according to provisions of Law applicable to tenants holding
over. Any foreclosure of this Security Instrument may, at Grantee’s option, be subject to any or
all Leases and the rights of tenants thereunder. No failure to make any tenant a party defendant
in any foreclosure proceeding or to foreclose any Lease and the rights of the tenant thereunder
shall be, or shall be asserted to be, a defense or hindrance to any foreclosure proceeding or to
any proceedings seeking collection of all or any part of the Secured Obligations.



     4.3.4 In the event of any sale pursuant to the power of sale herein granted or pursuant to any
judgment, order, writ of execution or decree of any court of competent jurisdiction, the
Collateral, or the part thereof which is the subject of such sale, may be sold in one parcel and as
an entirety, or in such parcels, manner or order as Grantee, in its sole discretion, may elect.
Any sale of less than all of the Collateral shall not exhaust the power of sale herein granted, and
Grantee is specifically authorized and empowered to make successive sales from time to time under
such power of sale until the Secured Obligations shall have been fully, finally and indefeasibly
paid or until all of the Collateral shall have been sold. If the proceeds of any sale of less than
all of the Collateral shall be less than the then-outstanding balance of the Secured Obligations
and any other amounts secured hereby, then, to the fullest extent permitted by Law, this Security
Instrument and the security title hereof shall remain in full force and effect as to the unsold
portion of the Collateral just as though no sale had been made hereunder.



     4.3.5 Any provision in this Security Instrument to the contrary notwithstanding, to the extent
applicable Laws may limit (i) the availability of the exercise of any remedies set forth in this
Security Instrument, including the remedies involving a power of sale on the part of Grantee or the
right of the Grantee to exercise self-help in connection with the enforcement of the provisions of
this Security Instrument, or (ii) the enforcement of waivers, indemnities or powers of attorney
made by the Borrower, such remedies, waivers, indemnities and powers of attorney



24









 







shall be
exercisable or enforceable if, and to the extent, permitted by the Laws enforced at the time of
exercise of such remedies or the enforcement of such remedies, waivers, indemnities or powers of
attorney, without regard to the enforceability of such remedies, waivers, powers of attorney or
indemnities at the time of the execution and delivery of this Security Instrument.



     4.3.6 The obtaining of any judgment by Grantee and any levy of any execution under any
judgment upon the Collateral or any of the properties encumbered by any other security instrument
in favor of Grantee shall not affect in any manner or to any extent the security title to the
Collateral or any part thereof pursuant to this Security Instrument, the Lien of any of the other
security instruments on the property encumbered thereby, or any Liens, powers, rights or remedies
of Grantee hereunder or thereunder, but such Liens, powers, rights and remedies shall continue
unimpaired as before until the judgment or levy is satisfied. Grantee may proceed by a suit or
suits in equity or at Law, whether for the specific performance of any covenant or agreement herein
contained or in aid of the execution of any power herein granted, or for any foreclosure hereunder
or for the sale of the Collateral under the judgment or decree of any court or courts of competent
jurisdiction.



     4.3.7 Upon occurrence and during the continuance of an Event of Default hereunder, Grantee may
enter into and upon and take possession of all or any part of the Collateral, and may exclude
Borrower, and all Persons claiming under Borrower, and its or their agents or servants, wholly or
partly therefrom; and, holding the same, Grantee may use, administer, manage, operate, and control
the Collateral and may exercise all rights and powers of Borrower in the name, place and stead of
Borrower, or otherwise, as the Grantee shall deem best; and in the exercise of any of the foregoing
rights and powers Grantee shall not be liable to Borrower for any loss or damage thereby sustained
unless due solely to the willful misconduct or gross negligence of Grantee.



     4.3.8 Grantee may make application to a court of competent jurisdiction, as a matter of strict
right and without notice to Borrower or regard to the adequacy of the Collateral for the repayment
of the Obligations, for appointment of a receiver of the Collateral, and Borrower does hereby
irrevocably consent to such appointment. Any such receiver shall have all the usual powers and
duties of receivers in similar cases, including the full power to rent, maintain and
otherwise operate the Collateral upon such terms as may be approved by the court, and shall apply
the Receipts in accordance with the provisions of Article III hereof.



     4.4 Advances by Grantee.  If the Borrower shall fail to comply with the provisions
hereof with respect to the securing of insurance, the payment of taxes, assessments and other
charges, the keeping of the Collateral in repair, the performance of the Borrower’s obligations
under any lease, the payment of any prior mortgages, or the protection of any of the Collateral or
the security title conveyed by this Security Instrument or the performance of any other term or
covenant herein contained, the Grantee may, without further notice to or demand upon Borrower and
without waiving or releasing any other right, remedy or recourse, (but shall not be obligated to)
make such payment or perform such act for the account of and at the expense of Borrower (such
Grantee to have uncontrolled discretion as to the necessity of making any such expenditures), and
shall have the right to enter upon the Collateral for such purpose and to take all such action as
it may deem necessary or appropriate. The repayment of any such sum or



25









 







sums on demand (with
interest thereon at the highest rate allowed by Law from the date of each expenditure) shall be the
personal obligation of the Borrower; and such obligation to repay will constitute a part of the
indebtedness secured hereby. The expenditures thus made reimbursable shall include, without
limitation, taxes, special improvement assessments, insurance premiums, repairs and maintenance
expenses, security expenditures, sums paid to discharge prior Liens, and rents on premises in which
mortgaged personalty may be situated. The Borrower agrees to repay all such sums advanced upon
demand, with interest from the date such advances are made at the rates set forth in Section 3.2.2
of the Credit Agreement, or the highest rate permitted by Law, whichever shall be less, and all
sums so advanced with interest shall constitute Obligations and shall be secured hereby. The cost
of any title abstract or report or supplemental abstract or report procured by Grantee to
facilitate foreclosure will also constitute a part of the reimbursable expenses secured hereby.



     4.5 Other Rights.  Grantee may exercise any and all other rights, remedies and
recourses granted under the Loan Documents now or hereafter existing in equity or at Law for the
protection and preservation of the Collateral.



     4.6 Remedies Cumulative, Concurrent and Nonexclusive.  Grantee shall have all rights,
remedies and recourses granted in the Loan Documents and available at Law or equity (including,
without limitation, those granted by the Code and applicable to the Collateral, or any portion
thereof), and same (1) shall be cumulative and concurrent, (2) may be pursued separately,
successively or concurrently against Borrower or others obligated for the Obligations, or any part
thereof or against any one or more of them, or against the Collateral, at the sole discretion of
Grantee, (3) may be exercised as often as occasion therefor shall arise, it being agreed by
Borrower that the exercise of or failure to exercise any of same shall in no event be construed as
a waiver or release thereof or of any other right, remedy or recourse, and (4) are intended to be,
and shall be, nonexclusive, and Grantee may pursue
inconsistent remedies, and no action hereunder by Grantee shall be deemed to prejudice
Grantee’s right thereafter to foreclose this Security Instrument. Nothing herein and no action of
Grantee shall be construed as an election to proceed under any provision to the exclusion of any
other provision or as prohibiting Grantee from seeking a deficiency judgment against Borrower to
the extent such action is permitted by Law.



     4.7 Rights and Remedies of Sureties.  Borrower waives any right or remedy which
Borrower may have or be able to assert pursuant to the Laws of the State of Georgia pertaining to
the rights and remedies of sureties.



     4.8 General Remedies.  In addition to the remedies set forth in Sections 4.2 and 4.3.7
of this Security Instrument, if an Event of Default shall have occurred and be then in existence,
Grantee may take such action, without notice or demand, as it shall deem advisable to protect and
enforce its rights against Borrower and in and to the Collateral or any part thereof or interest
therein, including, but not limited to, the following actions, each of which may be pursued
concurrently or otherwise, at such time and in such order as Grantee may determine, in its sole
discretion, without impairing or otherwise affecting the other rights and remedies of Grantee (i)
enter into or upon the Collateral, either personally or by its agents, nominees or attorneys and
dispossess Borrower and its agents and servants therefrom, and thereupon Grantee may (A) use,



26









 







operate, manage, control, insure, maintain, repair, restore, harvest and sell Timber and otherwise
deal with all and every part of the Collateral and conduct the business thereat, (B) complete any
construction on the Collateral in such manner and form as Grantee deems advisable, (C) make
alterations, additions, renewals, replacements and improvements to or on the Collateral, (D)
exercise all rights and powers of Borrower with respect to the Collateral, whether in the name of
Borrower or otherwise, including, without limitation, the right to make, cancel, enforce or modify,
Timber sale contracts, log or pulpwood sale contracts, stumpage sale agreements, leases, and other
agreements and demand, sue for, collect and receive all earnings, revenues, rents, issues, profits
and other income of the Collateral and every part thereof and (E) receive and collect the receipts
from the Collateral, give proper receipts, releases and acquittances therefor, and apply the same
to the payment of the Secured Obligations, after deducting therefrom all expenses (including
reasonable attorneys’ fees and expenses) incurred in connection with the aforesaid operations and
all amounts necessary to pay the taxes, assessments, insurance and other charges in connection with
the Collateral, as well as just and reasonable compensation for the services of the Grantee and its
counsel, agents and employees, or (ii) institute proceedings for the complete foreclosure of this
Security Instrument in which case the Collateral may be sold for cash or upon credit in one or more
parcels, or (iii) with or without entry, to the extent permitted and pursuant to the procedures
provided by applicable Law, institute proceedings for the partial foreclosure of this Security
Instrument for the portion of the Secured Obligations then due and payable, subject to the
continuing security title of this Security Instrument for the balance of the Secured Obligations
not then due, or (iv) sell for cash or upon credit the Collateral or any part thereof and all or
any part of any estate, claim, demand, right, title and interest of Borrower therein and rights of
redemption thereof, pursuant to power of sale or otherwise, at one or more sales, as an entirety or
in parcels, at such time and place, upon such terms and after such notice
thereof as may be required or permitted by Law, and in the event of a sale, by foreclosure or
otherwise, of less than all of the Collateral, Grantee’s security title to the remaining portion of
or estate in the Collateral shall continue pursuant to this Security Instrument, or (v) institute
an action, suit or proceeding in equity for the specific performance of any covenant, condition or
agreement contained herein or in the Note or any other Loan Document, or (vi) recover judgment on
the Note or any guaranty either before, during or after any proceedings for the enforcement of this
Security Instrument or (vii) pursue such other remedies as Grantee may have under applicable Law or
equity. Further, once Grantee has exercised any of its rights or remedies hereunder, or under the
Loan Documents, during the existence of an Event of Default, all actions theretofore or thereafter
taken by Grantee in pursuit of such rights and remedies shall not be affected by any cure of such
Event of Default, unless Grantee shall accept the cure and terminate pursuit of any such right or
remedy, in which case, the parties shall be restored to their position which existed prior to
Grantee’s exercise of its rights or remedies.



     4.9 Waiver of Jury Trial.  BORROWER, TO THE FULLEST EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES,
RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY BORROWER AGAINST GRANTEE OR LENDER BASED
UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO OR IN



27









 







CONNECTION WITH THE LOAN DOCUMENTS, THE LOAN
OR ANY COURSE OF CONDUCT, ACT, OMISSION, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF ANY PERSON (INCLUDING, WITHOUT LIMITATION, SUCH PERSON’S DIRECTORS, OFFICERS,
PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH SUCH
PERSON), IN CONNECTION WITH THE LOAN OR THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, IN ANY
COUNTERCLAIM WHICH BORROWER MAY BE PERMITTED TO ASSERT THEREUNDER OR WHICH MAY BE ASSERTED BY
GRANTEE OR LENDER OR ANY OF ITS AGENTS AGAINST BORROWER, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. THIS WAIVER BY BORROWER OF ITS RIGHT TO A JURY TRIAL IS A MATERIAL INDUCEMENT FOR THE
MAKING OF THE LOAN.




	5.      MISCELLANEOUS PROVISIONS





     5.1 Waiver and Election.  The exercise by the Grantee of any right, power or remedy
given under the terms of this Security Instrument shall not be considered as a waiver of the right
to exercise any other right, power or remedy given herein, and the filing of a suit to foreclose
the security title, security interest and assignment granted by this Security Instrument, either on
any matured portion of the Obligations or for the whole of the Obligations, shall not be considered
an election so as to preclude foreclosure under power of sale after a dismissal of the suit; nor
shall the publication of notices for foreclosure preclude the prosecution of a later suit thereon. No failure or delay
on the part of the Grantee in exercising any right, power or remedy under this Security Instrument
shall operate as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise of any other right,
power or remedy hereunder or thereunder. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or other circumstances.
The Borrower expressly waives the right to any notice of the assignment of the Notes or this
Security Instrument and the right to enforce the provisions of any applicable Law requiring such
notice.



     5.2 Enforceability.  If any provision of this Security Instrument is held to be
illegal, invalid, or unenforceable under present or future Laws effective while this Security
Instrument is in effect, the legality, validity and enforceability of the remaining provisions of
this Security Instrument shall not be affected thereby, and in lieu of each such illegal, invalid
or unenforceable provision there shall be added automatically as a part of this Security Instrument
a provision that is legal, valid and enforceable and as similar in terms to such illegal, invalid
or unenforceable provision as may be possible.



     5.3 Application of Payments.  If the security title, assignment or security interest
created by this Security Instrument is invalid or unenforceable as to any part of the Obligations
or is invalid or unenforceable as to any part of the Collateral, the unsecured or partially secured
portion of the Obligations shall be completely paid prior to the payment of the remaining secured
or partially secured portion of the Obligations, and all payments made on the Obligations, whether
voluntary or under foreclosure or other enforcement action or procedures, shall be considered to
have been first paid on and applied to the full payment of that portion of the



28









 







Obligations that is
not secured or not fully secured by said security title, assignment or security interest created
hereby.



     5.4 Applicable Law.  Except as otherwise expressly provided in Section 3.11.8 hereof,
the creation, perfection, Lien priority, and the exercise of remedies and enforcement, and all
other provisions of this Security Instrument shall be governed by the internal Laws of the State in
which the Premises is located, without regard to principles of conflicts of Laws. The Notes, the
Credit Agreement and all other Loan Documents (other than mortgages or other security documents
filed in other States which shall be governed by the Laws of those States) shall be governed by the
internal Laws of the State of New York, also without regard to principles of conflicts of Laws In
the event of a conflict between the Laws of the State of New York and the Laws with respect to
creation, perfection and enforcement of the Lien created by this Security Instrument, the Laws of
the State in which the Premises is located shall govern.



     THIS SECURITY INSTRUMENT CONSTITUTES THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH
RESPECT TO THE
SUBJECT MATTER HEREOF AND SUPERSEDES ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
SECURITY INSTRUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF ANY LENDER PARTY OR BORROWER MAY BE BROUGHT AND MAINTAINED IN THE FEDERAL
AND STATE COURTS LOCATED IN THE STATE OF NEW YORK IN THE BOROUGH OF MANHATTAN. THE BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE
OF ANY SUIT LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE BORROWER, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS SECURITY INSTRUMENT. THE
PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY



29









 







JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS SECURITY INSTRUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) RELATING THERETO. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED
FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR SUCH PARTY TO ENTER INTO THIS AGREEMENT. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE BORROWER SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST THE SECURITY INSTRUMENT ON ANY
THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT
OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS SECURITY INSTRUMENT
OR ANY INSTRUMENT CONTEMPLATED HEREBY.



     5.5 Meaning of Particular Terms. Whenever used, the singular number shall include the plural and the plural, the singular,
the pronouns of one gender shall include all genders; and the words “Borrower” and “Lender” shall
include their respective heirs, personal representatives, successors and assigns. The term
“Borrower” as used in this Security Instrument refers to the undersigned, whether one or more
natural Persons, partnerships, limited liability companies, corporations, associations, trusts or
other entities or organizations. In addition, the rules of construction set forth in Section 1.3
of the Credit Agreement shall apply to this Security Instrument.



     5.6 Release or Extension by Grantee.  The Grantee, without notice to the Borrower and
without in any way affecting the rights of the Grantee hereunder as to any part of the Collateral
not expressly released, may release any part of the Collateral or any Person liable for any of the
Obligations and may agree with any party with an interest in the Collateral to extend the time for
payment of all or any part of the Obligations or to waive the prompt and full performance of any
term, condition or covenant of the Notes, any of the Loan Documents, this Security Instrument or
any other instrument evidencing or securing any of the Obligations.



     5.7 Partial Payments.  Acceptance by the Grantee of any payment of less than the full
amount due on the Obligations shall be deemed acceptance on account only, and the failure of the
Borrower to pay the entire amount then due shall be and continue to constitute an Event of Default,
and at any time thereafter and until the entire amount due on the Obligations has been paid, the
Grantee shall be entitled to exercise all rights conferred on it by the terms of this Security
Instrument in case of the occurrence of an Event of Default.



     5.8 Addresses for Notices.  All notices, requests, demands and other communications
provided for hereunder shall be in writing and shall be sent by Federal Express or other recognized
national courier, personal service or United States mail, certified with return receipt requested,
to the applicable party at its address indicated on the first page of this Security Instrument, or
shall be sent in accordance with the Credit Agreement, and shall be deemed given upon receipt or
refusal to accept, and any party may designate another address in accordance



30









 







herewith or with the
Credit Agreement. All notices to Grantee shall also be sent to Sutherland Asbill & Brennan LLP,
999 Peachtree Street, NE, Atlanta Georgia 30309, Attn: Victor P. Haley.



     5.9 Titles.  All section, paragraph, subparagraph or other titles contained in this
Security Instrument are for reference purposes only, and this Security Instrument shall be
construed without reference to said titles.



     5.10 Construction and Presumption. This Security Instrument may be construed as a security instrument, deed to secure debt,
chattel mortgage, conveyance, assignment, security agreement, pledge, financing statement,
hypothecation, or contract, or any one or more of them, in order fully to effectuate the security
title, security interest and assignment created hereby and the purposes and agreements herein set
forth. The parties hereto have participated jointly in the negotiation and drafting of this
Security Instrument. In the event an ambiguity or question of intent or interpretation arises,
this Security Instrument shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Security Instrument.



     5.11 Collection Costs.  The Borrower agrees to pay all costs, including reasonable
attorneys’ fees, actually incurred by the Grantee in enforcing the Security Instrument’s rights
hereunder and in collecting or securing, or attempting to collect or secure, the Obligations, or
any part thereof, or in defending or attempting to defend the priority of this Security Instrument
against any Lien on the Collateral, or any part thereof, unless this Security Instrument is herein
expressly made subject to any such Lien; and all costs incurred in the foreclosure of this Security
Instrument, either under the power of sale contained herein, or by virtue of the decree of any
court of competent jurisdiction. The full amount of such costs incurred by the Grantee shall be a
part of the Obligations, and shall bear interest at the rates set forth in Section 3.2.2 of the
Credit Agreement or such lesser amount as shall be the maximum amount permitted by Law, and shall
be secured by this Security Instrument.



     5.12 Reconveyance.  If all of the Obligations have been paid in full in cash,
including but not limited to all sums (principal, interest, premium and charges) payable under the
Notes and any and all extensions and renewals of the same; and all sums due, or to become due, and
payable by the Borrower under the terms of this Security Instrument, the Credit Agreement and any
of the other Loan Documents, including but not limited to advancements made by the Grantee pursuant
to the terms and conditions of this Security Instrument, and if Borrower has kept and performed
each and every obligation, covenant, duty, condition and agreement herein and in the Credit
Agreement, Notes and other Loan Documents imposed on or agreed to by the Borrower; then Grantee
shall promptly cancel or satisfy this Security Instrument and the Collateral shall be conveyed to
the Borrower, and the entire estate, right, title and interest of the Grantee will thereupon cease;
and the Grantee in such case shall, upon the request of the Borrower and at the Borrower’s cost and
expense, deliver to the Borrower proper instrument(s) acknowledging satisfaction of this
instrument; otherwise, this Security Instrument shall remain in full force and effect. No release
or modification of this conveyance, or of the security title, security interest or assignment
created and evidenced thereby, shall be valid unless executed by Borrower.



31









 





     5.13 Change in Ownership.  Subject to the provisions of the Credit Agreement, if the
ownership (legal or beneficial) of the Collateral or any part thereof becomes vested in a Person or
entity other than Borrower, or
in the event of a change of any ownership of Borrower legal or beneficial, Grantee may,
without notice to Borrower, deal with such successor or successors in interest with reference to
this Security Instrument and to the Obligations in the same manner as with Borrower without in any
way vitiating or discharging Borrower’s liability hereunder or with respect to the Obligations and
without affecting any default created hereunder by such ownership change, including, without
limitation, all of Grantee’s rights and remedies arising from such default. No sale of the
Collateral, and no forbearance on the part of Security Instrument, and no extension of the time for
the payment of the Obligations, shall operate to release or affect the original liability of
Borrower.



     5.14 Partial Release of Security Title, Extension, Subdivision etc.  Any part of the
Collateral or any other property which is security for the Loan may be released by Grantee without
affecting the security title, security interest and assignment hereof against the remainder. The
security title, security interest and other rights granted hereby shall not affect or be affected
by any other security taken for the Obligations. The taking of additional security, or the
extension or renewal of the Obligations or any part thereof, shall not release or impair the
security title, security interest and other rights granted hereby, or affect the liability of any
endorser or guarantor or improve the right of any permitted junior lienholder; and this Security
Instrument, as well as any instrument given to secure any renewal or extension of the Obligations,
or any part thereof, shall be and remain a first and prior encumbrance, except as otherwise
provided herein, on all of the Collateral not expressly released until the Obligations are paid.
From time to time at Grantee’s option, by instrument executed by Grantee and recorded in the real
property records where this Security Instrument has been recorded, Grantee may subordinate the
security title created by this Security Instrument to any interest in the Collateral, provided,
however, that any such subordination shall be solely at Grantee’s option, and in no event shall
Grantee be obligated to subordinate the security title created by this Security Instrument.



     5.15 Entire Agreement and Modification.  There are no oral agreements between the
parties. The Loan Documents contain the entire agreements between the parties relating to the
subject matter hereof and thereof and all prior agreements relative thereto which are not contained
herein or therein are terminated. The Loan Documents may not be amended, revised, waived,
discharged, released or terminated orally but only by a written instrument or instruments executed
by the party against which enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge, release or
termination which is not so documented shall not be effective as to any party.



     5.16 Relationship; Joint and Several Liability.  The relationship of Grantee to
Borrower under this Security Instrument and with respect to the Loan Documents is strictly and
solely that of creditor and debtor and nothing contained in this Security Instrument or any other
Loan Document is intended to create, or shall in any event or under any circumstance be construed
to create, a partnership, joint venture, tenancy in
common, joint tenancy or other relationship of any nature whatsoever between Grantee and
Borrower, or in any way make Grantee a co-principal with Borrower with reference to the Collateral,
and any inferences to the



32









 







contrary are hereby expressly negated. The parties which are together
referred to herein as Borrower, hereby each agree that each of them shall be jointly and severally
liable for all obligations and liabilities of Borrower under this Security Instrument and further
each agree that Grantee may, in its sole discretion, take any action hereunder against both of
them, or either of them, without prejudice to or effect on any future action against either or both
of them, and that any notice to or from either of them shall be deemed to be received or given by
them both.



     5.17 Further Assurances.  Borrower, upon the request of Grantee, will execute,
acknowledge, deliver and record and/or file such further instruments and do such further acts as
may be necessary, desirable or proper to carry out more effectively the purpose of the Loan
Documents and to subject to the Liens thereof any property intended by the terms thereof to be
covered thereby, including specifically but without limitation, any renewals, additions,
substitutions, replacements, betterments or appurtenances to the then Collateral.



     5.18 Recording and Filing.  Borrower will cause this Security Instrument and any
Financing Statements and all amendments and supplements thereto and substitutions therefor to be
recorded, filed, rerecorded and refiled in such manner and in such places as Grantee shall
reasonably request, and will pay all such recording, filing, rerecording and refiling taxes, fees
and other charges



     5.19 Successors and Assigns.  All of the terms of the Loan Documents shall apply to,
be binding upon and inure to the benefit of the parties thereto, their successors, assigns, heirs
and legal representatives, and all other Persons claiming by, through or under them, and all of the
obligations and liabilities of Borrower contained herein and in the Loan Documents are intended by
the parties to be, and shall be construed as, covenants running with the Collateral.




	 	 	6.      ADDITIONAL COVENANTS AND AGREEMENTS OF BORROWER.





     The Borrower covenants and agrees that, until the Obligations are paid in full in cash and
this Security Instrument is cancelled in writing by the Grantee:



     6.1 Additional Security Documents.  Borrower has heretofore executed and delivered,
and will hereafter execute and deliver, to or for the benefit of Grantee certain other mortgages,
deeds of trust, deeds to secure debt and other documents and instruments encumbering or relating to
certain other property of Borrower
located in other counties in the State of Georgia and/or in various other Counties and States
of The United States of America as additional security for the Obligations (collectively,
sometimes, the “Additional Mortgages”). The Additional Mortgages and this Security
Instrument shall each and all constitute security for the Note, the Indebtedness referred to
therein and the Obligations. If there should be an Event of Default in any of the terms,
conditions or obligations of any of the Additional Mortgages, such default shall constitute an
Event of Default under this Security Instrument. The Grantee may foreclose or otherwise enforce
such security under the Additional Mortgages and in any order as Grantee may choose, enforce its
rights, powers and remedies with respect to, and realize upon, such security or otherwise enforce
its rights, powers and remedies with respect to, and realize upon, such security, either before or
concurrently with or after a foreclosure or other enforcement of this Security Instrument, any
other such security or any of the other Loan Documents (whether



33









 







or not every aspect of any such
foreclosure or other enforcement may be commercially reasonable), all without impairing or being
deemed to have waived any rights , benefits, Liens or security evidenced by or arising under or in
connection with this Security Instrument, any other such security or any of the other Loan
Documents, and without being deemed to have made an election thereby or to have accepted the
benefits of such security (or the proceeds thereof) in full settlement of the Obligations and of
its rights with respect thereto. No judgment, order or decree rendered against Borrower with
respect to any such other security or any of the other Loan Documents, whether rendered in the
State in which the Collateral is situated or elsewhere, shall in any manner affect the security of
this Security Instrument, and any deficiency or other debt represented by any such judgment, order
or decree shall, to the extent permitted by Law, be secured by this Security Instrument to the same
extent that the Obligations shall have been secured by this Security Instrument prior to the
rendering of such judgment, order or decree. Borrower for itself and for any and all Persons who
may at any time claim through or under Borrower or who hereafter may otherwise acquire any interest
in or title to all or any part of the Collateral or any other security for the Obligations, hereby
irrevocably waives and releases, to the extent permitted by Law, all benefit of any and all Laws
that would limit or prohibit the effectiveness of anything set forth in this Section.



     Notwithstanding anything contained herein to the contrary, Grantee shall be under no duty to
Borrower or any other Person or entity, including, without limitation, any holder of a junior,
senior or subordinate deed to secure debt on the Collateral or any part thereof or on any other
security held by Grantee, to exercise, exhaust or first resort to all or any of the rights, powers
and remedies available to Grantee, whether under this Security Instrument, the other Loan Documents
or the Additional Mortgages prior to the sale of the Collateral or any other enforcement of this
Security Instrument. Furthermore, Borrower and such other Persons and entities waive all rights
relating to marshaling and agree that Grantee shall not be compelled to release any part of the
security of this Security Instrument, the other Loan Documents or the Additional Mortgages or be
prevented from foreclosing or enforcing this Security Instrument, the other Loan Documents or the
Additional Mortgages upon all or any part of such security unless the Obligations shall have been
paid in full and that Grantee shall not be compelled to accept or allow any apportionment of the
Obligations to or among any of the property encumbered by this Security Instrument, the other Loan
Documents or the Additional Mortgages.



     6.2 After Acquired Collateral. Borrower covenants and agrees that, if and to the extent that any of its respective rights,
titles, estates and interests in any of the Collateral is not acquired until after delivery of this
Security Instrument, to the extent permitted by applicable Law, this Security Instrument shall
nonetheless apply thereto and the security title and security interest of Grantee hereby created
shall attach to such Collateral at the same time as Borrower acquires rights therein, without the
necessity of any further deed to secure debt, charge, pledge, assignment or assurance and
thereafter such Collateral shall be subject to the security interests created under this Security
Instrument.



     6.3 Waiver of Marshaling and Certain Rights.  



     6.3.1 Borrower agrees, to the extent permitted by Law, that neither Borrower nor any Person at
any time claiming through or under Borrower shall set up, claim or seek to take



34









 







advantage of any
appraisement, valuation, stay, notice of election to accelerate, mature or declare due the
Obligations, extension, redemption or moratorium Laws, any right of division, or any exemption from
execution or sale, or any rights of dower, curtesy or homestead, now or hereafter in force, in
order to prevent or hinder the enforcement of this Security Instrument after the occurrence of any
Event of Default, the final and absolute sale of all or any part of the Collateral or the final and
absolute putting into possession thereof, immediately after any such sale, of the purchaser or
purchasers at such sale or the enforcement of any other rights or remedies of Grantee under this
Security Instrument or any other Loan Documents. Borrower, for itself and for all who may at any
time claim through or under Borrower or who hereafter may otherwise acquire any interest in or
title to all or any part of the Collateral, hereby waives, releases and renounces to the extent
permitted by Law, all benefit of any such Law or Laws, any and all rights of redemption from sale
under any power of sale permitted by Law or pursuant to any judgment, order or decree of
foreclosure of this Security Instrument, and any and all right to have the assets constituting the
Collateral marshaled upon any foreclosure or other enforcement of this Security Instrument or to
direct the order in which any of the Collateral shall be sold in the event of any sale or sales
pursuant hereto, as well as rights regarding the administration of estates of decedents or any
other rights which might defeat, reduce or affect the right of Grantee to sell the Collateral for
the collection of its obligations. Grantee or any court having jurisdiction to exercise or enforce
rights with respect to this Security Instrument may sell the Collateral in part or as an entirety.
Grantee shall not be required to accept any part or parts of the Collateral in satisfaction of all
or any part of the Secured Obligations. Grantee shall not be required to accept any apportionment
of the Secured Obligations to or among any part or parts of the Collateral.


BY EXECUTION OF THIS SECURITY INSTRUMENT, BORROWER EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT OF GRANTEE
TO ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE AND ANY OTHER SECURED OBLIGATIONS AND THE
POWER OF ATTORNEY GIVEN HEREIN TO GRANTEE TO SELL THE COLLATERAL BY NON-JUDICIAL FORECLOSURE UPON
THE OCCURRENCE OF AN EVENT OF DEFAULT WITHOUT ANY JUDICIAL HEARING AND WITHOUT ANY NOTICE OTHER
THAN SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE PROVISIONS OF THIS
SECURITY INSTRUMENT; (B) WAIVES ANY AND
ALL RIGHTS WHICH BORROWER MAY HAVE UNDER THE CONSTITUTION OF THE UNITED STATES OF AMERICA
(INCLUDING, WITHOUT LIMITATION, THE FIFTH AND FOURTEENTH AMENDMENTS THEREOF), THE VARIOUS
PROVISIONS OF THE CONSTITUTION OF THE STATE OF GEORGIA, OR BY REASON OF ANY OTHER APPLICABLE LAW,
(1) TO NOTICE AND TO JUDICIAL HEARING PRIOR TO THE EXERCISE BY GRANTEE OF ANY RIGHT OR REMEDY
HEREIN PROVIDED TO GRANTEE, EXCEPT SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN
UNDER THE PROVISIONS OF THIS SECURITY INSTRUMENT AND (2) CONCERNING THE APPLICATION, RIGHTS OR
BENEFITS OF ANY STATUTE OF LIMITATION OR ANY MORATORIUM, REINSTATEMENT, MARSHALING, FORBEARANCE,
APPRAISEMENT, VALUATION, STAY EXTENSION, HOMESTEAD, EXEMPTION OR REDEMPTION LAWS; (C) ACKNOWLEDGES
THAT IT HAS READ THIS SECURITY INSTRUMENT AND ANY AND ALL QUESTIONS OF BORROWER REGARDING THE LEGAL
EFFECT OF THIS SECURITY INSTRUMENT AND ITS


35









 






 PROVISIONS HAVE BEEN EXPLAINED FULLY TO BORROWER, AND
BORROWER HAS CONSULTED WITH COUNSEL OF BORROWER’S CHOICE PRIOR TO EXECUTING THIS SECURITY
INSTRUMENT AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF BORROWER HAVE BEEN MADE
KNOWINGLY, INTENTIONALLY AND WILLINGLY BY BORROWER AS PART OF A BARGAINED FOR LOAN TRANSACTION AND
THAT THIS SECURITY INSTRUMENT IS VALID AND ENFORCEABLE BY GRANTEE AGAINST BORROWER IN ACCORDANCE
WITH ALL THE TERMS AND CONDITIONS HEREOF.




     6.4 Statute of Limitations.  Borrower hereby expressly waives and releases to the
fullest extent permitted by Law, the pleading of any statute of limitations as a defense to payment
of any and all Secured Obligations secured by this Security Instrument.



     6.5 Time of Essence.  Time is of the essence of the obligations of Borrower in this
Security Instrument and each and every term, covenant and condition made herein by or applicable to
Borrower.



     6.6 The Timber Lease.


In addition to making payment of all rent, additional rent, tax and other payments and charges
required to be made by Borrower, Borrower, as tenant under and pursuant to the provisions of the
Timber Lease, covenants that it will:




               (a)      Diligently perform and observe all of the material terms, conditions and covenants of
the Timber Lease required to be performed and observed by Borrower, to the end that all things
shall be done which are reasonably necessary to keep unimpaired Borrower’s rights under the Timber
Lease, and Borrower covenants that no release or forbearance of any of the obligations of Borrower
under the Timber Lease, pursuant to the Timber Lease or otherwise
shall release Borrower from any of its obligations under this Security Instrument, including,
without limitation, Borrower’s obligations under subparagraph (a) of this Paragraph;



               (b)      Upon having actual knowledge thereof, promptly notify Grantee in writing of any
default by any party in the performance and observance of any of the terms, conditions or covenants
to be performed or observed under the Timber Lease;



               (c)      Promptly notify Grantee in writing of the giving of any notice under the Timber Lease
of any default of Borrower in the observance of any terms, covenants or conditions of the Timber
Lease and deliver to Grantee a true copy of each such notice; and



               (d)      Not surrender the Leasehold Estate nor terminate or cancel the Timber Lease or enter
into any agreement (whether oral or written) modifying, supplementing or amending the Timber Lease
without the prior written consent of Grantee pursuant to Section 7.11(r) of the Credit Agreement.


Grantee shall have the right (but shall not be obligated) to take any action Grantee deems
reasonably necessary or desirable to prevent or to cure any default by Borrower in the


36









 






 performance
of or compliance with any of Borrower’s obligations under the Timber Lease. Upon receipt by
Grantee of any written notice of default by Borrower under the Timber Lease, Grantee may rely
thereon and take any action as aforesaid to cure such default even though the existence of such
default or the nature thereof be questioned or denied by Borrower or by any party on behalf of
Borrower. Borrower hereby expressly grants to Grantee, and agrees that Grantee shall have, the
absolute and immediate right to enter in and upon the Premises or any part thereof to such extent
and as often as Grantee, in its sole discretion, deems necessary or desirable in order to prevent
or to cure any such default by Borrower. Grantee may pay and expend such sums of money as Grantee
in its sole discretion deems necessary for any such purpose, and Borrower hereby agrees to pay to
Grantee, immediately and without demand, all such sums so paid and expended by Grantee, together
with interest thereon from the date of each such payment at the rates set forth in Section 3.2.2 of
the Credit Agreement. All sums so paid and expended by Grantee, and the interest thereon, shall be
added to and be secured by this Security Instrument.



As further security for the repayment of the Obligations secured hereby and for the performance of
the covenants contained herein and in the Timber Lease, Borrower hereby assigns to Grantee all of
its rights, privileges and prerogatives as lessee under the Timber Lease to terminate, cancel,
modify, change, supplement, alter or amend the Timber Lease, and any such termination,
cancellation, modification, change, supplement, alteration or amendment without the prior written
consent thereto by Grantee shall be void and of no force and effect; provided,
however, that so long no Event of Default has occurred or is continuing under this Security
Agreement, Grantee shall have no right to terminate, cancel, modify, change, supplement, alter or
amend the Timber Lease. Borrower represents and warrants that it has delivered to Grantee a true
and accurate copy of the Timber Lease, together with all amendments thereto if any.



Unless Grantee shall otherwise expressly consent in writing, the fee title to the Leasehold Parcel
and the leasehold estate in the Leasehold Parcel shall not merge but shall always remain separate
and distinct, notwithstanding the union of said estates either in the lessor or in the lessee under
the Timber Lease, or in a third party by purchase or otherwise.




     6.7 Appointment, Rights and Obligations of Grantee as Collateral Agent.  (a) The
Lenders, by their acceptance of the benefits of this Security Instrument and their execution of the
Credit Agreement, hereby designate Grantee as agent to act as specified herein. Administrative
Agent and Lenders hereby authorize, and each subsequent holder of any of the Notes by the
acceptance of such Note shall be deemed irrevocably to authorize, Grantee to take such action on
its behalf pursuant to the Credit Agreement and under the provisions of this Security Instrument
and to exercise such powers and to perform such duties hereunder as are specifically delegated to
or required of Lenders by the terms hereof and such other powers as are reasonably incidental
thereto. Lenders may perform any of its duties hereunder by or through its agents or employees.



          (b) If a Lenders shall request instructions from the other Lenders pursuant to the Credit
Agreement with respect to any act or action (including failure to act) in connection with this
Security Instrument, the Credit Agreement or any other Loan Document, such Lenders shall


37









 







be entitled to refrain from such act or taking such action unless and until it shall have received
instructions from the Lenders and shall not incur liability to any party by reason of so
refraining.




          (c) Borrower shall be entitled to rely, and shall be fully protected in relying, on the fact
that Grantee is acting as agent on behalf of the Lenders until such time as Borrower shall have
received a written notice from Lenders stating that Grantee is no longer acting in its capacity as
agent for the Lenders.




     6.8 Conflict. In the event of any conflict between the terms of this Security
Instrument and the terms of the Credit Agreement, the terms of the Credit Agreement shall control.



     6.9 Survival. The obligations of the Borrower under any provision hereof specifically
providing for indemnification or reimbursement of fees, costs and expenses incurred by any of the
Lenders in connection with this Security Instrument and the other Loan Documents shall in each case
survive the payment in full in cash of all the Obligations. All covenants, agreements,
representations and warranties made by Borrower herein or in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to this Security
Instrument or any other Loan Document shall be considered to have been relied upon by the Lenders
and shall survive the execution and delivery of this Security Instrument and the Loan Documents and
the making of any Loan, regardless of any investigation made by Lenders or on its behalf and
notwithstanding that Lenders may have had notice or knowledge of any Default or Event of Default or
incorrect representation or warranty at the time any credit is extended under the Loan Documents.



[Remainder of page intentionally left blank; signature page to follow.]




38









 





     IN WITNESS WHEREOF, Borrower has executed this Security Instrument under seal as of the day
and year first written above.



	 	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED IN THE PRESENCE OF:	 	 	 	BORROWER:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	TIMBERLANDS II, LLC ,

a Delaware limited liability company
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Unofficial Witness	 	 	 	By:	 	WELLS TIMBERLAND MANAGEMENT
	Print Name:	 	 	 	 	 	ORGANIZATION, LLC, a Georgia
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	limited liability company, Its Manager
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Notary Public
 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: Jess E. Jarratt

Title: President
	 
	 	 	 	 	 	 	 	 
	My commission expires:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	[NOTARY SEAL]	 	 	 	(Seal)






[Signature and Acknowledgement Page to Deed to Secure Debt, Assignment of Leases and Reciepts and Security Agreement]





- 39 -









 








EXHIBIT A




FEE PREMISES




 









 





EXHIBIT A-1




LEASEHOLD PREMISES




 









 





EXHIBIT B




LEASEHOLD ESTATE INSTRUMENTS




 









 





EXHIBIT C




PERMITTED ENCUMBRANCES




     All matters shown as pertaining to                                         County, Georgia on Schedule B of that certain
Loan Title Commitment Number                     (fee) and that certain Loan Title Commitment Number
                    (leasehold) issued by First American Title Insurance Company, as such Commitments are
marked at closing by First American Title Company and approved by Administrative Agent.




 











 





			
	[Form — Alabama]
	 	 
	 	 	 
	THIS INSTRUMENT WAS PREPARED BY:
	 	EXHIBIT K-2






Victor P. Haley

Sutherland Asbill & Brennan LLP

999 Peachtree Street NE

Atlanta, Georgia 30309

(404) 853-8000




UPON RECORDING RETURN TO:




Sutherland Asbill & Brennan LLP

999 Peachtree Street NE

Atlanta, Georgia 30309

Attn: Victor P. Haley

(404) 853-8000




MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS

AND FINANCING STATEMENT




by




TIMBERLANDS II, LLC

as Borrower




in favor of




COBANK, ACB, as Administrative Agent




______________________




Dated as of October __, 2007




______________________




 









 








MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT

OF LEASES AND RENTS AND FINANCING STATEMENT




     THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FINANCING STATEMENT
(hereinafter, together with all amendments thereto, being referred to as this “Mortgage”),
made and entered into as of October ___, 2007, by and between TIMBERLANDS II, LLC, a Delaware
limited liability company with an address c/o Wells REIT, Inc., 6200 The Corners Parkway, Norcross,
Georgia 30092-3365 (hereinafter, together with its successors and assigns, referred to as the
“Mortgagor” or the “Borrower”), and COBANK, ACB, with an address at 5550 South
Quebec Street, Greenwood Village, Colorado 80111, as administrative agent (in such capacity and
including any successor administrative agent, “Administrative Agent” or
“Mortgagee”) for the various financial institutions that are, or may from time to time
become, parties to the Credit Agreement (as defined below) (such financial institutions being
collectively referred to herein as the “Lenders”).



     WHEREAS, pursuant to the terms of that certain Credit Agreement, dated as of the date hereof
(together with all amendments, restatements, refinancings and other modifications, if any, from
time to time thereafter made thereto, the “Credit Agreement”), among the Mortgagor, Wells
Timberland Acquisition, LLC (the Mortgagor and Wells Timberland Acquisition, LLC, together with
their successors and assigns, are sometimes herein collectively referred to as the
“Borrowers”), the Administrative Agent and the Lenders, the Lenders have agreed to make
Loans to the Borrowers, in an aggregate maximum principal amount at any one time outstanding of Two
Hundred Twelve Million and 00/100 US Dollars (US $212,000,000.00), such Loans having a latest
maturity date of September ___, 2010;



     WHEREAS, as a condition precedent to funding the Loans under the Credit Agreement, the
Mortgagor is required to execute and deliver this Mortgage for the benefit of the Mortgagee to
secure the payment and performance of the Obligations;



     WHEREAS, this Mortgage secures not only present indebtedness, but also future advances made
pursuant to the Credit Agreement and the other Loan Documents, whether such future advances are
obligatory or are to be made at the option of Lenders or otherwise.



     WHEREAS, the Mortgagor has duly authorized the execution, delivery and performance of this
Mortgage.



     (Such capitalized terms above and all other capitalized terms not defined herein have the
respective meanings ascribed to them in the Credit Agreement).



     THIS MORTGAGE IS FILED AS AND SHALL CONSTITUTE A FIXTURE FILING AND A FINANCING STATEMENT
COVERING TIMBER TO BE CUT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7-9A-502(c) OF THE CODE OF
ALABAMA.



     WITNESSETH: MORTGAGOR DOES HEREBY GRANT, BARGAIN, SELL, ASSIGN AND CONVEY UNTO MORTGAGEE the
property and interests in Collateral described in the following Granting Clauses, which constitute
or may constitute an interest in real property or fixtures and does hereby grant to the Mortgagee a
security interest in and a



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pledge of the property and interests, which constitute or may constitute goods or personal
property in and to the following (collectively, the “Collateral”) described in the
following Granting Clauses:




          (a) All right, title and interest in and to the pieces or parcels of land described on
Exhibit A attached hereto and incorporated herein by reference (the “Fee
Premises”), together with all improvements, buildings, structures, fixtures of every
description and appurtenances now or hereafter located thereon or therein (the
“Improvements”); and all right, title and interest in and to the leasehold and profit a
prendre estate (the “Leasehold Estate”) created by those certain timber sale agreements,
timberland management agreements and other instruments, if any, described on Exhibit B
attached hereto and incorporated herein by reference (such instruments, as so amended, and as each
may, with Mortgagee’s consent, be further modified and supplemented, are hereinafter collectively
referred to as the “Timber Lease”) which Timber Lease affects those pieces or parcels of
land and the improvements thereon described therein and described herein on Exhibit A-1
(the “Leasehold Premises”), together with all of Mortgagor’s right, title and interest in,
to and under the Timber Lease, as the Timber Lease may, with the consent of Mortgagee, be amended
from time to time, including, but not limited to, the right, if any, to renew or extend the Timber
Lease for a succeeding term or terms (the Leasehold Premises and the Fee Premises are collectively
referred to herein as the “Premises”);




          (b) All timber of every kind and description, now or hereafter growing, standing or lying on,
or to be grown, harvested from, pertaining to and located on, the Premises (including owned or
leased), goods, inventory and proceeds thereof, and including, without limitation all property
related to nursery operations or replanting and reforestation, seedlings, nursery stock, trees,
growing trees, standing timber, timber lying on the ground, timber cut and to be cut, severed
timber, stumpage, forest products, lumber, pulpwood, and all products and by-products of any timber
operations conducted or to be conducted on the Premises, and all proceeds, accounts and general
intangibles resulting from the sale of such timber and timber to be cut and timber interests
(sometimes collectively referred to herein as “Timber”) (the Premises, the Improvements,
the Minerals and the Timber hereinafter sometimes collectively referred to as the “Real
Estate”);




          (c) All farm products, crops, biomass and other organic products now or hereafter growing,
standing or lying on, or to be grown, harvested from, pertaining to and located on, the Premises,
goods, inventory and proceeds thereof, and all products and by-products of any agricultural
operations conducted or to be conducted on the Premises, and all proceeds, accounts and general
intangibles resulting from the sale of such agricultural products;




          (d) All coal, oil, gas and other minerals owned by Mortgagor and located on, in or under the
Premises and extracted or to be extracted, as extracted collateral and all mineral interests and
all proceeds, accounts and general intangibles resulting from the sale of such minerals or mineral
interests (sometimes collectively referred to herein as the “Minerals”);




          (e) (i) All of Mortgagor’s rights (but not its obligations except as otherwise expressly
agreed in writing by Mortgagee) under any and all leases, all Timber sale agreements, Timber
purchase agreements or stumpage agreements and other contracts and agreements pursuant to which
Mortgagor has agreed to sell or purchase any standing or severed




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Timber, pulpwood or other Timber products from the Real Estate, whether deemed to be an
easement, lease, timber deed or profit a prendre, and subleases, surface leases, licenses, written
or oral, and all agreements for use or occupancy, or exploration, drilling, mining, extraction,
storage, transportation, processing and handling of Minerals, affecting all or any portion of the
Real Estate with respect to which the Mortgagor is the landlord or sublandlord (the “Existing
Leases”), any and all extensions and renewals of said leases and agreements and any and all
further leases or agreements, now existing or hereafter made including subleases thereunder, upon,
covering or affecting all or any part of the Real Estate or the Improvements, together with any and
all guaranties of the lessee’s, any sublessee’s, or contracting party’s performance thereunder (all
such existing or future leases, subleases, agreements and tenancies heretofore mentioned, including
but not limited to the Existing Leases, any use or occupancy arrangements created pursuant to
Section 365(h) of Title 11 of the United States Code or otherwise in connection with the
commencement or continuance of any bankruptcy, reorganization, arrangement, insolvency,
dissolution, receivership or similar proceedings or any assignment for the benefit of creditors in
respect of any tenant or occupant of any portion of the Real Estate being hereinafter collectively
referred to as the “Leases”) and all right, title and interest of Mortgagor in and to
property of any tenant or other Person under any such lease or under any other arrangement entered
into in connection with any such lease, and any and all cash, security deposits, advance rentals
and deposits or payments of a similar nature under any such lease or other arrangement and together
with all money payable thereunder or in connection therewith (including, without limitation, any
and all cancellation or termination payments), subject, however, to the revocable license given to
Mortgagor to collect and use the rents, income and other benefits arising under any such Lease as
provided below;




               (ii) All permits, special permits, licenses, approvals, maps, surveys, title records, studies,
reports, contracts and other rights, privileges and agreements affecting the operation of the Real
Estate now owned or hereafter acquired by Mortgagor;



               (iii) All water and water rights, royalties, coal, oil, gas and other mineral royalties,
profits, proceeds, fees, farm products revenue, hunting lease or other recreational lease revenue
and other income of any kind or manner whatsoever arising from or related to operations on or any
proceeds, profits or profits a prendre arising from the Real Estate, including income from nursery
operations, seedling operations, Timber and pulpwood contracts, option agreements, coal, oil, gas
or mineral leases, coal tipple leases, hunting, fishing and recreational leases and licenses,
option agreements and land sales;



               (iv) The immediate and continuing right to collect and receive all of the rents, income,
royalties, receipts, revenues, issues and profits now due or which may become due or to which the
Mortgagor may now or shall hereafter (including during the period of redemption, if any) become
entitled or may demand or claim, arising or issuing from or out of any Timber contracts, leases,
licenses, bills of sale or deeds, the Master Stumpage Agreement, the Fiber Supply Agreement, the
Leases or from or out of the Real Estate, or any part thereof, including but not limited to any and
all rights and claims of any kind that the Mortgagor may have against any such lessee under the
Leases or against any subtenants, occupants or licenses of the Real Estate or the Improvements, or
against the purchaser under any Timber deed, cutting agreement lease, mineral lease, contract or
other agreement in any way relating to the Timber or Minerals, (including any payments received
pursuant to Section 502(b) of the Bankruptcy Code



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or otherwise in connection with the commencement or continuance of any bankruptcy,
reorganization, arrangement, insolvency, dissolution, receivership or similar proceedings or any
assignment for the benefit of creditors in respect of any tenant or occupant of any portion of the
Real Estate and all claims as a creditor in connection with any of the foregoing), all such moneys,
rights and claims in this paragraph described being hereinafter referred to as the “Rents;”
provided, however, so long as no Event of Default has occurred and is continuing
under this Mortgage, the Mortgagor shall have the right under a license granted hereby (but limited
as provided below) to collect, receive and retain the Rents, but no Rents shall be collected in
advance of the due date thereof;




          (f) All accounts, accounts receivable, general intangibles, payment intangibles, trade names,
trademarks, commercial tort claims, letter of credit rights and proceeds, supporting obligations of
every kind and nature, documents, contract rights, construction contracts, commercial paper, notes,
drafts, acceptances, instruments, chattel paper, bonuses, actions and rights in action arising from
or relating to any such property now owned or hereafter acquired by Mortgagor which relate to the
Real Estate or the proceeds thereof, but not Mortgagor’s obligations thereunder, and all funds and
deposit accounts and other accounts into which any funds of the Mortgagor are now or hereafter
deposited to be held by or on behalf of Mortgagee (and each of such terms shall have the definition
thereof set forth in the Code, as the same may be revised from time to time, it being the intention
of the parties hereto that the description of collateral set forth herein be construed to include
the broadest possible range of property and assets);




          (g) All building materials, supplies and other property owned by Borrower now or hereafter
stored at or delivered to the Premises or the Improvements, and all fixtures, fittings,
furnishings, apparatus, machinery, appliances, equipment, goods, inventory and all other articles
of personal property of every nature whatsoever owned by Borrower now or hereafter located in or
on, or attached to, and used or intended to be used in the connection with the Real Estate or any
of the Improvements, or in connection with any operations conducted or intended to be conducted on
the Real Estate or with respect to the Improvements, including without limitation with respect to
Timber harvesting and management (collectively, the “Equipment”) (all of the Equipment, so
far as permitted by Law, shall be deemed to be fixtures and part of the Real Estate and of the
Improvements), and any and all title information, opinions, reports, abstracts of title, plans,
specifications, drawings, books, records and similar items relating to the Real Estate, the
Improvements or the Equipment, the operation thereof, any rights thereto or any interest therein;




          (h) All proceeds, products, extensions, additions, improvements, betterments, renewals,
reversions, substitutions, replacements, accessions, accretions and relictions of and to all or any
part of the Real Estate, Minerals, Timber, Improvements or Equipment and on the other property
referenced in these Granting Clauses or encumbered by this Mortgage, including, without limitation,
all proceeds arising from the sale or other disposition thereof;




          (i) All right, title and interest of Mortgagor, of whatever character (whether vested or
contingent and whether now owned or hereafter acquired), in and to (1) all streets, roads, railroad
rights of way, riparian and littoral rights and public places (whether open or proposed) adjoining
or otherwise providing access to the Real Estate, (2) the Real Estate lying in




5









 







the bed of such streets, roads, railroad rights of way and public places, and (3) all other
sidewalks, alleys, ways, passages, vaults, water courses, strips and gores of Real Estate adjoining
or used or intended to be used in connection with all or any part of the Real Estate, Minerals,
Timber, Improvements or Equipment or appurtenances thereto;




          (j) All easements, rights-of-way, gores of land, ways, riparian rights and rights of use or
passage (whether public or private), estates, interests, benefits, powers, rights (including,
without limitation, any and all lateral support, drainage, slope, sewer, water, air, mineral, oil,
gas and subsurface rights), privileges, claims, franchises, licenses, profits, rents, royalties,
tenements, hereditaments, reversions, remainders and appurtenances of every nature whatsoever,
whether appurtenant or in gross, and owned by Mortgagor, in any way now or hereafter belonging,
relating, appertaining to or useful in the operation of all or any part of Real Estate, Minerals,
Timber, Improvements or Equipment, whether legal or equitable (“Easements”);




          (k) All right, title and interest of Mortgagor (but not its obligations except as otherwise
expressly agreed in writing by Mortgagee), whether now owned or hereafter acquired, in and to: (1)
each and every policy of insurance now or hereafter in effect which insures the Collateral, or any
part thereof, (2) any and all judgments, settlements, claims, awards, insurance proceeds and other
proceeds and compensation, and interest thereon, now or hereafter made or payable in connection
with any casualty or other damage to all or any part of the Real Estate, Timber, Minerals,
Improvements or Equipment or appurtenances thereto, or in connection with any condemnation
proceedings affecting any such property or any taking under power of eminent domain (or any
conveyance in lieu of or under threat of any such taking) of any such property or any rights
thereto or any interest therein, including, without limitation, any and all compensation for change
of grade of streets or any other injury to or decrease in the value of such property, (3) all
inventory and any and all proceeds of any sales, assignments or other dispositions of any such
property or any rights thereto or any interest therein (inventory shall mean and include, without
limitation, all goods now owned or hereafter acquired and owned from time to time by Mortgagor
which are held for sale or lease or are to be furnished under contracts of service and all goods,
materials, raw materials, work in process, finished goods or materials used or consumed in the
business of Mortgagor, which are products of or related to Timber or Minerals), (4) any and all
proceeds of any other conversion (whether voluntary or involuntary) of any such property into cash
or any liquidated claim, (5) any and all refunds or rebates of or with respect to any insurance
premiums and real estate taxes, impositions or levies, and tax credits or benefits or deposits
relating thereto, with respect to such property, and (6) all contractual and other indemnities,
assurances, guaranties and similar agreements, and all rights, benefits and privileges of Mortgagor
in and to any and all contracts relating to operation, maintenance, management or security of any
such property), and (7) all investment property, relating to such property, whether now owned or
hereafter acquired, including all securities, whether certificated or uncertificated, security
entitlements, securities accounts, commodity contracts and commodity accounts;




          (l) All right, title and interest of Mortgagor (whether as seller, purchaser or otherwise),
but not its obligations, in and to any and all agreements in the nature of options or for the sale
or any other transfer of all or any part of the Collateral, together with any and all down




6









 







payments, earnest money deposits and other sums paid or payable or deposited in connection
therewith, and all rights which Mortgagor now has or may hereafter acquire to be indemnified and/or
held harmless from any liability, loss, damage, cost or expense (including, without limitation,
attorneys’ fees and disbursements) relating to the Real Estate or Collateral or any part thereof;




          (m) All rights, hereditaments and appurtenances pertaining to the foregoing; and all other
interests of every kind and character that Mortgagor now has or at any time hereafter acquires in
and to the Premises, Improvements, Equipment or the Timber described herein and all property that
is used or useful in connection therewith, including rights of ingress and egress and all
reversionary rights or interests of Mortgagor with respect to such property;




          (n) And including all property and rights of the type and nature set forth above hereafter
acquired by Mortgagor, relating to the Real Estate and any and all further or greater estate,
right, title, interest, claim and demand of Mortgagor, of whatever character (whether vested or
contingent and whether now owned or hereafter acquired), in and to any of the property described in
the foregoing paragraphs or any rights or interests appurtenant thereto; including, without
limitation, all additional title, estate, interest, and other rights that may hereafter be acquired
by Mortgagor in the property demised under the Timber Lease creating the Leasehold Estate;




          (o) All other Collateral defined in the Credit Agreement or in any other Loan Document now or
hereafter signed by Mortgagor in favor of Mortgagee; and




          (p) Any and all proceeds of any or all of the foregoing.




     SUBJECT, HOWEVER, to the matters described on Exhibit C attached hereto and
incorporated herein by reference (the “Permitted Encumbrances”).



     FURTHER, all of the property described in the foregoing Granting Clauses is herein sometimes
collectively referred to as the “Collateral.” That portion of the Collateral which
constitutes real property or fixtures is referred to as the “Real Property Collateral” and
all other Collateral is referred to as the “UCC Collateral” or the “Code
Collateral,” and Mortgagor does hereby grant and convey a security interest in and pledge of
the Code Collateral to Mortgagee as security for the Obligations, as that term is hereinafter
defined.



     TO HAVE AND TO HOLD the Real Property Collateral, together with the rights, privileges and
appurtenances thereto belonging, unto Mortgagee and its successors and assigns, forever, and
Mortgagor hereby binds itself and its heirs, executors, administrators, personal representatives,
successors and assigns to warrant and forever defend the Real Property Collateral unto Mortgagee
and its successors and assigns, against the claim or claims of all Persons claiming or to claim the
same or any part thereof, and the Code Collateral, together with the rights, privileges and
appurtenances thereto belonging, unto the Mortgagee and its successors and assigns, forever, and
Mortgagor hereby binds itself and its heirs, executors, administrators, personal representatives,
successors and assigns to warrant and forever defend the Code Collateral unto the Mortgagee, it
successors and assigns, against the claim or claims of all Persons claiming or to claim the same or
any part thereof.



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1.     CREDIT AGREEMENT; NOTE.




     This Mortgage is being executed pursuant to the terms of the Credit Agreement. Pursuant to
the Credit Agreement, the Borrowers are or hereafter shall be justly indebted, jointly and
severally, to the Lenders with respect to the Loans in the original principal amount of Two Hundred
Twelve Million and 00/100 US Dollars (US $212,000,000.00), as may be evidenced by certain Notes
from one or more of the Borrowers to one or more of the Lenders, bearing interest as set forth
therein and in the Credit Agreement, and all successive extensions and renewals of the indebtedness
represented thereby.



     1.1 Obligations. Accordingly, this Mortgage is made for the following uses and purposes,
and is given to secure and shall secure the prompt payment of the following, which Mortgagor agrees
to pay and perform (hereinafter sometimes referred to collectively as the “Obligations” or
“Secured Obligations”):



          1.1.1     Payment and performance of all of Mortgagor’s obligations pursuant to the Notes and
the Credit Agreement, including without limitation, payment of the aggregate principal obligations
evidenced by the Notes, together with interest thereon at the rate or rates specified in the Notes
or the Credit Agreement, including without limitation interest at the rates set forth in Section
3.2.2 of the Credit Agreement, as applicable, in accordance with the terms of the Notes and the
Credit Agreement, and all premiums payable thereon and all other obligations evidenced by the Notes
and the Credit Agreement, all of which obligations are payable in lawful money of the United States
of America;




          1.1.2     Any and all sums now or hereafter becoming due and payable by the Mortgagor to the
Mortgagee under the terms of this Mortgage, including but not limited to advancements made by the
Mortgagee pursuant to the terms and conditions of this Mortgage with interest as herein provided
and any debt or obligation arising as a result of the breach of any warranty or representation set
forth in this Mortgage;




          1.1.3     Payment and performance and discharge of each and every obligation, promise and
agreement of Mortgagor contained in this Mortgage, the Notes, the Credit Agreement and the other
Loan Documents, and in any and all assignments of rents and leases, security agreements, collateral
assignments, cash collateral agreements, supplemental agreements and any and all other Loan
Documents which apply to all of the Loans under the Credit Agreement, and payment and performance
of all other “Obligations” as defined in the Credit Agreement; and




          1.1.4     All renewals, extensions and refinancings of any or all of the obligations of the
Mortgagor described in the foregoing subsections, whether or not any renewal or extension agreement
is executed in connection therewith.




     1.2 Other Obligations.
It is expressly understood that this Mortgage is intended to and does secure all obligations
and liabilities, direct or contingent, of said Mortgagor to Mortgagee hereunder, whether now
existing or hereafter arising, and any and all extensions, renewals and modifications of same, or
any part thereof, at any time before actual cancellation of this instrument on the land records of
the county where the Collateral is located, and whether the



8









 




same be evidenced by note, open
account, assignment, endorsement, guaranty, pledge or otherwise (all of which obligations shall be
deemed to be included in the definition of “Obligations” and “Secured Obligations” hereunder).




2.     MORTGAGOR’S REPRESENTATIONS, COVENANTS AND WARRANTIES




     In order to induce the Lenders to extend credit to the Mortgagor, the Mortgagor represents,
covenants and warrants to the Mortgagee that:



     2.1 Valid Title, etc.  The Mortgagor has good and marketable fee simple title in and to
the Fee Premises, along with any other property set forth on Exhibit A. The Mortgagor owns
leasehold title to the Leasehold Premises, along with any other property set forth on Exhibit
A-1, pursuant the Leasehold Estate described on Exhibit B. The Mortgagor owns good
and marketable title to personal property in which a security interest is granted under the Loan
Documents; Mortgagor further has a good right to sell and mortgage, grant a security interest in,
and assign, the Collateral; the Collateral is free and clear of any Liens other than Permitted
Encumbrances; and the Mortgagor will forever warrant and defend the title to the Collateral unto
the Mortgagee against the claims of all Persons whomsoever, except those claiming under Permitted
Encumbrances.



     With respect to the Timber Lease, Mortgagor represents and warrants, to the best of its
knowledge after diligent inquiry, that (i) the Timber Lease is in full force and effect and has not
been modified or amended in any manner whatsoever except as may be set forth on Exhibit B,
(ii) there are no defaults under the Timber Lease and no event has occurred which, but for the
passage of time, or notice, or both, would constitute a default under the Timber Lease, (iii) all
rents, additional rents and other sums due and payable under the Timber Lease have been paid in
full, (iv) neither Mortgagor nor the landlord under the Timber Lease has commenced any action or
given or received any notice for the purpose of terminating the Timber Lease which has not been
cured.



     2.2 Maintenance of Lien Priority. This Mortgage constitutes a valid and subsisting first
priority Mortgage on the Real Estate and Lien on the Code Collateral, subject to the Permitted
Encumbrances, and Mortgagor shall take all steps necessary to preserve and protect the validity and
priority of the first Mortgage and first Lien on, security interests in, and assignments of, the
Collateral created hereby. The Mortgagor shall execute, acknowledge and deliver such additional
instruments as the Mortgagee may deem necessary in order to preserve, protect, continue, extend or
maintain the Liens created hereby as first Liens on the Collateral, except as otherwise permitted
under the terms of this Mortgage. If any such Lien not otherwise permitted under the terms of
this Mortgage is asserted against the Collateral, Mortgagor will promptly, at its own cost and
expense, (a) pay the underlying claim in full or take such other action so as to cause same to be
released, and (b) within fifteen (15) days from the date such Lien is so asserted, give Mortgagee
notice of such Lien. Such notice shall specify who is asserting such Lien and shall detail the
origin and nature of the underlying claim giving rise to such asserted Lien. Without limiting the
generality of the foregoing, Mortgagor will pay in full all sums owing or claimed for labor,
materials, supplies, personal property (whether or not forming a Fixture hereunder), and services
of every kind and character used, furnished or installed in or on the Collateral. All costs and
expenses incurred in connection with the protection,



9









 




preservation, maintaining of the Liens hereby
created, including without limitation costs, fees and expenses incurred in correcting, reforming or
altering this Mortgage, shall be paid by the Mortgagor.




     2.3 Operation for Permitted Use: Mortgagor will operate the Collateral only for the
growing, harvesting, management and cultivation of trees and Timber and related activities or as
otherwise permitted by the Credit Agreement and will not use, maintain, operate or occupy, or allow
the use, maintenance, operation or occupancy of, the Collateral in any manner which violates any
provisions governing the use, operation, occupancy or maintenance of the Collateral set forth in
this Mortgage, the Credit Agreement or any of the other Loan Documents.



     2.4 Maintenance of Rights of Way, Easements and Licenses: Mortgagor will maintain,
preserve and renew (to the extent Mortgagor has the right to renew on commercially reasonable
terms) all rights of way, easements, grants, privileges, licenses and franchises reasonably
necessary for the use of the Collateral from time to time. Mortgagor will not, without the prior
consent of Mortgagee, which consent will not be unreasonably withheld, initiate, join in or consent
to any private restrictive covenant or other public or private restriction as to the use of the
Collateral, or any condominium declaration, plat or other document having the effect of subjecting
the Collateral to the condominium or cooperative form of ownership. Mortgagor shall, however,
comply with all easements and restrictive covenants which may at any time affect the Collateral,
zoning ordinances and other public or private restrictions relating to the use of the Collateral.



3.     COVENANTS AND AGREEMENTS OF MORTGAGOR




     The Mortgagor covenants and agrees that, until the Obligations are paid in full in cash and
this Mortgage is satisfied in writing by the Mortgagee:



     3.1 Payment of Taxes and Other Assessments. The Mortgagor will fulfill all of its
obligations in connection with the payment of taxes and other assessments as more fully set forth
in the Credit Agreement.



     3.2 Insurance. The Mortgagor shall keep or cause to be kept insurance with respect to the
Collateral in accordance with the Credit Agreement.



     3.3 Title Insurance. Concurrently with the recordation of this Mortgage, the
Mortgagor, at its expense, has obtained and delivered to the Mortgagee a loan policy or policies of
title insurance in an amount satisfactory to the Mortgagee naming the Mortgagee as the insured,
insuring the title to and the first mortgage priority of this Mortgage on the Premises with
endorsements specified in clause (c) of Section 5.1.18 of the Credit Agreement and as otherwise
reasonably requested by Mortgagee. The Mortgagor has duly paid in full all premiums and other
charges due in connection with the issuance of such policy or policies of title insurance. All
proceeds received by and payable to the Mortgagee for any loss under the loan policy or policies of
title insurance delivered to the Mortgagee pursuant to this Section 3.3, or under any policy or
policies of title insurance delivered to the Mortgagee in substitution therefor or replacement
thereof, shall be the property of the Mortgagee and shall, except as expressly provided to the



10









 




contrary in the Credit Agreement, be applied by the Mortgagee in accordance with this Mortgage.




     3.4 Compliance with Law. The Mortgagor shall comply in all material respects with all
applicable Laws, ordinances, regulations, covenants, conditions and restrictions affecting the
Collateral, and shall obtain any and all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of the Collateral or the conduct of its business, and
Mortgagor shall not suffer nor permit any act to be done in or upon the Collateral in violation
thereof.



     3.5 Waste, Demolition, Alteration or Replacement and Preservation and Use of
Collateral. The Mortgagor shall cause the Collateral and every part thereof to be maintained,
preserved and kept in safe and good repair, working order and condition (consistent with good
general forestry practices), normal wear and tear excepted (subject to damage by casualties) shall
not commit or permit waste thereon, without the express prior written consent of the Mortgagee and
shall from time to time make all necessary and proper repairs, renewals, additions and restorations
thereto (consistent with good general forestry practices) so that the value and efficient use
thereof shall be preserved and maintained. Upon any material failure to maintain the Collateral in
accordance with the provisions of the Credit Agreement and this Mortgage, and after notice to
Mortgagor of such failure, which is not cured by Mortgagor within thirty (30) days of receipt of
such notice, Mortgagee, at its option, may cause reasonable repair and maintenance work to be
performed at the cost of Mortgagor.



     3.6 Protection of Security. Mortgagee may appear in and defend any action or
proceeding purporting to affect the security hereof and may bring any action or proceeding, in its
own name or in the name of and on behalf of Mortgagor, which Mortgagee shall decide should be
brought to protect its interests in the Real Estate, including, without limitation, any material
title defect or claim, and Mortgagor shall pay all reasonable costs and expenses, including
reasonable costs of evidence of title and attorneys’ fees incurred by Mortgagee in connection with
any such actions or proceedings.



     3.7 Timber Management and Harvest Provisions.
Mortgagor shall comply with all of the covenants and restrictions regarding the management and
harvesting of Timber and the management, extraction, processing and handling of the Minerals
located on the Real Property Collateral in accordance with the terms and conditions of the Credit
Agreement. If no Event of Default has occurred and is continuing, Mortgagor may cut, or allow
others to cut, Timber from the Real Estate on the conditions set forth in the Credit Agreement.



     3.8 Assignment of Rents and Profits. 



          3.8.1 Mortgagor does hereby absolutely and unconditionally assign to Mortgagee all of its
right, title and interest in all Leases and Rents and all proceeds from the sale, cancellation,
surrender or other disposition of the Leases, it being intended by Mortgagor that this assignment
constitutes a present, absolute assignment and not an assignment for additional security only.
Such assignment to Mortgagee shall not be construed to bind Mortgagee to the performance of any of
the covenants, conditions or provisions contained in any such Lease or otherwise to impose any
obligation upon Mortgagee. Mortgagor agrees to execute and deliver




11









 







to Mortgagee such additional
instruments in form and substance satisfactory to Mortgagee, as may hereafter be reasonably
requested by Mortgagee to further evidence and confirm such assignment. Nevertheless, subject to
the terms of this Section, Mortgagee grants to Mortgagor a revocable license to collect the Rents.
Upon the occurrence of an Event of Default, the license granted to Mortgagor herein shall be
automatically revoked and Mortgagee shall immediately be entitled to receive all Rents, whether or
not Mortgagee enters upon or takes control of the Collateral. Mortgagee is hereby granted and
assigned by Mortgagor the right, at its option, upon the revocation of the license granted herein
to enter upon the Collateral in person, by agent or by court-appointed receiver to collect the
Rents. Any Rents collected after the revocation of the license herein granted may be applied
toward payment of the Obligations in such priority and proportion as Mortgagee, acting reasonably,
shall deem proper. Delivery of written notice of Mortgagee’s exercise of the rights granted herein
to any tenant under a Lease shall be sufficient to require said tenant to pay said rent to
Mortgagee until further notice, and upon such payment any such tenant shall be relieved of all
duty, liability or obligation to Mortgagor in respect of all payments so made. It is further the
intent of Mortgagor and Mortgagee that the Rents hereby absolutely assigned are no longer, during
the term of this Mortgage, property of Mortgagor or property of any estate of Mortgagor as defined
in Section 541 of the Bankruptcy Code and shall not constitute collateral, cash or otherwise, of
Mortgagor. The term “Rents” as used herein shall mean the gross rents without deduction or offsets
of any kind.




          3.8.2 It is the intention of Mortgagee and Mortgagor that the assignment effectuated by this
Mortgage with respect to the Rents shall be a direct and currently effective assignment and shall
not constitute merely the granting of a Lien for the purpose of securing the Obligations. In the
event that a court of competent jurisdiction determines that, notwithstanding such expressed intent
of the parties, Mortgagee’s interest in the Rents constitutes a Lien on the Rents, it is agreed and
understood that such Lien shall be deemed to be perfected upon the filing of this Mortgage and that
the forwarding of a notice to Mortgagor and/or the other parties to such Leases after the
occurrence of an Event of Default, advising Mortgagor of the revocation of Mortgagor’s license to
collect such Rents, shall be sufficient action by Mortgagee to (a) enforce the perfected Lien on
the Rents, (b) take possession thereof and (c) entitle Mortgagee to immediate and direct payment of
the Rents, for application as provided in this Mortgage, all
without the necessity of any further action by Mortgagee, including, without limitation, any
action to obtain possession of the Collateral or any portion thereof.




          3.8.3 All Leases executed after the date of this Mortgage, except as provided in the Credit
Agreement, shall provide that they are subordinate to this Mortgage and that the lessee agrees to
attorn to Mortgagee; provided, however, that (i) nothing herein shall affect
Mortgagee’s right to designate from time to time any one or more Leases as being superior to this
Mortgage and Mortgagor shall execute and deliver to Mortgagee and shall cause to be executed and
delivered to Mortgagee from each tenant under such Lease any instrument or agreement as Mortgagee
may deem necessary to make such Lease superior to this Mortgage and (ii) that so long as the Lease
is then in full force and effect, Mortgagee agrees for itself and its successors in interest and
for any other Person acquiring title to the Collateral through a foreclosure, that such tenant’s
possession of the Collateral as described in the Lease will not be disturbed during the term of the
Lease, as said term may be extended pursuant to the terms of the Lease by reason of a foreclosure;
provided, however that such tenant continues to comply with the terms of the Lease.




12









 








          3.8.4 Mortgagor shall not, without the prior written consent of Mortgagee, enter into any
Lease for all or any portion of the Real Estate, other than leases or licenses permitted under the
Credit Agreement.




          3.8.5 With respect to any Lease (other than as provided in the Credit Agreement), (x)
Mortgagor shall not, without the prior consent of Mortgagee, which shall not be unreasonably
withheld, (i) alter or change the terms of any such Lease or cancel or terminate, abridge or
otherwise modify the terms of any such Lease, (ii) consent to any assignment of or subletting under
any such Lease (except where consent may be required under the terms of the Lease), (iii) cancel,
terminate, abridge or otherwise modify any guaranty of any such Lease or the terms thereof, or (iv)
collect or accept prepayments of installments of Rents in advance of the due date thereof, and (y)
Mortgagor shall not, without the prior consent of Mortgagee, further assign the whole or any part
of any such Lease or the Rents therefrom.




          3.8.6 With respect to each Lease (other than as provided in the Credit Agreement) Mortgagor
shall (i) observe and perform each and every material provision thereof on the lessor’s part to be
fulfilled or performed under each Lease and not do or permit to be done anything to impair the
value of the Lease as security for the Loan, including surrender or voluntary termination of any
Lease, (ii) promptly send to Mortgagee copies of all notices of default which Mortgagor shall send
or receive thereunder, (iii) enforce all of the terms, covenants and conditions contained in such
Lease upon the lessee’s part to be performed, short of termination thereof, (iv) execute and
deliver, at the request of Mortgagee, all such further assurances, confirmations and assignments in
connection with the Collateral as Mortgagee shall, from time to time, reasonably require and (v)
upon request, furnish Mortgagee with executed copies of all Leases. Mortgagor shall from time to
time upon request of Mortgagee, deliver to Mortgagee a Rent Roll showing all leases and licenses,
with terms, rent, tenant information and other information required by Mortgagee and certified as
true and correct by Mortgagor.




          3.8.7 MORTGAGEE SHALL NOT BE OBLIGATED TO PERFORM OR DISCHARGE, NOR DOES IT HEREBY UNDERTAKE
TO PERFORM OR
DISCHARGE, ANY OBLIGATION, DUTY OR LIABILITY UNDER THE LEASES OR CONTRACTS BY REASON OF THIS
MORTGAGE. MORTGAGOR SHALL AND DOES HEREBY AGREE TO INDEMNIFY MORTGAGEE FOR AND TO HOLD MORTGAGEE
HARMLESS FROM ANY AND ALL LIABILITY, LOSS OR DAMAGE WHICH IT MAY OR MIGHT INCUR UNDER ANY OF THE
LEASES OR CONTRACTS BY REASON OF THIS MORTGAGE AND FROM ANY AND ALL CLAIMS AND DEMANDS WHATSOEVER
WHICH MAY BE ASSERTED AGAINST IT BY REASON OF ANY ALLEGED OBLIGATIONS OR UNDERTAKINGS ON ITS PART
TO PERFORM OR DISCHARGE ANY OF THE TERMS, COVENANTS, OR AGREEMENTS CONTAINED IN ANY OF THE LEASES
OR CONTRACTS, EXCEPTING ANY SUCH OBLIGATIONS OR UNDERTAKINGS EXPRESSLY ASSUMED BY MORTGAGEE FROM
AND AFTER IT ACQUIRES TITLE TO THE COLLATERAL BY FORECLOSURE OR OTHERWISE. SHOULD MORTGAGEE INCUR
ANY SUCH LIABILITY, LOSS OR DAMAGE BY REASON OF THIS MORTGAGE OR IN THE DEFENSE OF ANY SUCH CLAIMS
OR DEMANDS, THE AMOUNT THEREOF, INCLUDING ALL COSTS, EXPENSES AND ATTORNEYS’ FEES, SHALL BE SECURED
HEREBY, AND MORTGAGOR SHALL REIMBURSE MORTGAGEE THEREFOR IMMEDIATELY UPON DEMAND.




13









 








          3.8.8 Mortgagee’s acceptance of this assignment shall not, prior to entry upon and taking
possession of the Collateral by Mortgagee, be deemed to constitute Mortgagee a “mortgagee in
possession,” nor obligate Mortgagee to appear in or defend any proceeding relating to any of the
Leases or to the Collateral, take any action hereunder, expend any money, incur any expenses, or
perform any obligation or liability under the Leases, or assume any obligation for any deposits
delivered to Mortgagor by any lessee and not delivered to Mortgagee. Mortgagee shall not be liable
for any injury or damage to person or property in or about the Collateral.




          3.8.9 Mortgagor hereby authorizes and directs the tenants under the Leases to pay Rents to
Mortgagee upon written demand by Mortgagee, without further consent of Mortgagor and regardless of
whether Mortgagee has taken possession of any other portion of the Collateral, and the tenants may
rely upon any written statement delivered by Mortgagee to the tenants. Any such payment to
Mortgagee shall constitute payment to Mortgagor under the Leases, and Mortgagor hereby appoints
Mortgagee as Mortgagor’s lawful attorney-in-fact for giving, and is hereby empowered to give,
acquittances to any tenants for such payments to Mortgagee after the occurrence of an Event of
Default.




     3.9 Transfer or Further Encumbrance of the Collateral.



          3.9.1 Mortgagor shall not, without the prior written consent of Mortgagee, or in accordance
with the Credit Agreement or with any Permitted Encumbrances, sell, convey, alienate, mortgage,
encumber, pledge or otherwise transfer the Collateral or any part thereof, or permit or suffer the
Collateral or any part thereof to be sold, conveyed, alienated, mortgaged, encumbered, pledged or
otherwise transferred. A sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer
of the Collateral within the meaning of this Section and as set forth in the Credit Agreement shall
be deemed to include (i) an installment sales agreement wherein Mortgagor agrees to sell the
Collateral or any part thereof for a price to be paid in installments, (ii) an agreement by
Mortgagor leasing all or a substantial part of the
Collateral or a sale, assignment or other transfer of, or the grant of a security interest in,
Mortgagor’s right, title and interest in and to any Leases or any Rents, or (iii) the voluntary or
involuntary sale, conveyance, encumbrance, pledge, hypothecation, dilution or transfer of any
direct or indirect ownership or beneficial interest in Mortgagor, or a change in control of
Mortgagor, which is not permitted under the Credit Agreement.




          3.9.2 Any purchaser, transferee or future ground lessee of a substantial portion of the
Collateral pledged and assigned herein shall be deemed to have assumed and agreed to pay the
Secured Obligations and to have assumed and agreed to be bound by and to keep, observe, perform and
comply with all covenants, agreements, conditions and provisions of this Mortgage (including,
without limitation, the terms of this Section) unless Mortgagee specifically agrees in writing to
the contrary. Without limiting the generality of the foregoing, each such purchaser, transferee,
lessee, pledgee and assignee shall be deemed to have made and agreed to each waiver, consent,
authorization, direction and appointment made by or agreed to by Mortgagor under this Mortgage.
Mortgagor agrees that, in the event ownership of all or any part of the Collateral becomes vested
in a Person other than Mortgagor, Mortgagee may, without notice to Mortgagor, deal in any way with
such successor or successors in interest with reference to this Mortgage, the other Loan Documents
and the Obligations, without in any way vitiating or




14









 







discharging Mortgagor’s liability with respect
thereto. Any such purchaser, transferee, lessee, pledgee or assignee shall confirm the above in
writing at the request of Mortgagee and shall furnish any other performance or documentation
required by Mortgagee. No sale, conveyance, transfer, pledge, encumbrance, assignment or lease
referred to in the immediately preceding Section, and no forbearance, extension or assumption by or
to any Person with respect to the Obligations or any of the Loan Documents, shall operate to
release, discharge, modify, change or affect the liability of Mortgagor, either in whole or in
part, unless Mortgagee specifically agrees in writing to the contrary.




     3.10 Inspection. Mortgagor agrees that Mortgagee and/or its agents and independent
contractors, shall have the right to enter the Real Estate at reasonable times and intervals, to
inspect and test the Real Estate, for the purpose of determining whether Mortgagor is in compliance
with the provisions of this Mortgage and the other Loan Documents.



     3.11 Security Agreement, Financing Statements and Fixture Filing.



          3.11.1 This Mortgage is a real property Mortgage and a “security agreement” and a “financing
statement” and a “fixture filing” within the meaning of the applicable Uniform Commercial Code (the
“Code”). The Collateral includes both real and personal property, including timber to be
cut, as-extracted collateral and goods, including goods which are or are to become fixtures, and
all other rights and interests, whether tangible or intangible in nature, of Mortgagor in the
Collateral. Mortgagor, by executing and delivering this Mortgage, grants to Mortgagee, as security
for the Obligations, a security interest in and Lien upon the Code Collateral and in all other
Collateral to the full extent that the Code Collateral and such other Collateral may be subject to
the Code. Mortgagee, by accepting this Mortgage, agrees to and enters into this Security
Agreement. Mortgagor authorizes Mortgagee to prepare and file such financing statements and
further assurances as Mortgagee may, from time to time, deem
necessary in order to create, perfect, and preserve the Liens granted in this Section. This
Mortgage shall also constitute a fixture filing and a financing statement covering goods and
inventory, including goods that are to become fixtures and a financing statement covering timber to
be cut and as-extracted collateral, for the purposes of the Code. Information concerning the
security interest(s) herein granted in the Code Collateral may be obtained from Mortgagee upon
request at the address given herein.




          3.11.2 Mortgagor has made certain representations and covenants, including but not limited to
the following information and covenants, to Mortgagee in the Credit Agreement regarding information
necessary to assure compliance with the Code and Mortgagor represents and warrants to the Mortgagee
that all such information pertaining to the Mortgagor is accurate and complete in all respects.




          3.11.3 Because this Mortgage also constitutes a UCC financing statement and fixture filing,
the following information is included herein, and Mortgagor represents and warrants the truth and
accuracy thereof:




	 	 	 	 	 
	 

	 	(a)
	 	The name of the Debtor is Timberlands II, LLC.
	 

	 	(b)
	 	The mailing address of Debtor is c/o Wells REIT, Inc., 6200 The Corners
Parkway, Norcross, Georgia 30092-3365.






15









 






	 	 	 	 	 
	 

	 	(c)
	 	The type of organization of Debtor is limited liability company.
	 

	 	(d)
	 	The jurisdiction of organization of Debtor is Delaware.
	 

	 	(e)
	 	The organizational identification number, if any, of Debtor is 4335699.
	 

	 	(f)
	 	The name of Secured Party is CoBank, ACB, as Administrative Agent.
	 

	 	(g)
	 	The mailing address of Secured Party is 5550 South Quebec Street, Greenwood
Village, Colorado 80111.
	 

	 	(h)
	 	This financing statement covers the following collateral: all property and
assets of Debtor, including but not limited to fixtures and timber to be cut, more
particularly described herein, which relate to the real property more particularly
described on Exhibit A and Exhibit A-1 attached hereto and made a part
hereof.
	 

	 	(i)
	 	This financing statement is to be recorded in the real estate records.
	 

	 	(j)
	 	This financing statement covers timber to be cut and as-extracted collateral
and is filed as a fixture filing. The real estate is more particularly described on
Exhibit A and Exhibit A-1 attached hereto and made a part hereof.
	 

	 	(k)
	 	The address of Mortgagor’s chief executive office and principal place of
business is c/o Wells REIT, Inc., 6200 The Corners Parkway, Norcross, Georgia
30092-3365, and the location of Mortgagor under the Code is Delaware.
	 

	 	(l)
	 	With the exception of inventory in transit, all tangible (corporeal) assets
comprising the Code Collateral are situated on the Real Estate.
	 

	 	(m)
	 	The owners of the Leasehold Premises are as described on Exhibit A-1.






          3.11.4 The following covenants are made in connection with the UCC Collateral:




               (a)     Mortgagor shall prevent any Code Collateral from being or becoming an accession to any
property not subject to security interests created by this Mortgage.



               (b)     From time to time hereafter at the request of Mortgagee, Mortgagor shall deliver to
Mortgagee up to date schedules of any items of Code Collateral.



               (c)     Mortgagor shall not change its name, its mailing address, its state of organization,
its form of organization, its state-issued organizational identification number or the location of
its chief executive office without giving at least thirty (30) days prior written notice to
Mortgagee.



               (d)     If the Mortgagor shall at any time hold or acquire a commercial tort claim with
respect to the Collateral, the Mortgagor shall immediately notify the Mortgagee in a writing signed
by the Mortgagor of the brief details thereof and grant to the Mortgagee in such writing a security
interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the Mortgagee.



          3.11.5 Without limiting the other remedies set forth herein, on the happening of any Event of
Default or at any time thereafter, the Mortgagee shall have and may exercise with respect to the
personal property and other non-real estate collateral included in the UCC Collateral all rights,
remedies and powers of a secured party under the Code with reference to the UCC Collateral or any
other items in which a security interest has been granted herein,




16









 







including without limitation the
right and power to sell at public or private sale or sales or otherwise dispose of, lease or
utilize the UCC Collateral and any part or parts thereof in any manner to the fullest extent
authorized or permitted under the Code after default hereunder, without regard to preservation of
the UCC Collateral or its value and without the necessity of a court order. The Mortgagee shall
have, among other rights, the right to take possession of the UCC Collateral and to enter upon any
premises where the same may be situated for the purpose of repossessing the same without being
guilty of trespass and without liability for damages occasioned thereby and to take any action
deemed appropriate or desirable by the Mortgagee, at its option and its sole discretion, to repair,
restore or otherwise prepare the UCC Collateral for sale, lease or other use or disposition. At the
Mortgagee’s request, the Mortgagor, at Mortgagor’s expense, shall assemble the UCC Collateral and
make the UCC Collateral available to the Mortgagee at any place designated by the Mortgagee. To the
extent permitted by Law, the Mortgagor expressly waives any notice of sale or any other disposition
of the Collateral and any rights or remedies of the Mortgagee with respect to, and the formalities
prescribed by Law relative to, the sale or disposition of the Collateral or to the exercise of any
other right or remedy of the Mortgagee existing after default. To the extent that such notice is
required and cannot be waived, the Mortgagor agrees that if such notice is given to the Mortgagor
in accordance with the provisions of Section 5.8 below, at least ten (10) days before the time of
the sale or other disposition, such notice shall be deemed reasonable and shall fully satisfy any
requirement for giving said notice. Mortgagor shall pay to Mortgagee on demand any and all
reasonable expenses, including reasonable legal expenses and attorneys’ fees and disbursements,
incurred or paid by Mortgagee in protecting its interest in the Code Collateral and in enforcing
its rights hereunder with respect to the Code Collateral. Any notice of sale, disposition or other
intended action by Mortgagee with respect to the Code Collateral sent to Mortgagor in accordance
with the provisions hereof at least ten (10) days prior to such sale, disposition or action shall
constitute reasonable notice to Mortgagor. The proceeds of any disposition of the Code
Collateral, or any part thereof, may be applied by Mortgagee to the payment of the Obligations
in such priority and proportions as Mortgagee in its discretion shall deem proper.




          3.11.6 The Mortgagor hereby irrevocably authorizes the Mortgagee at any time and from time to
time to file in any Uniform Commercial Code jurisdiction any initial financing statements and
amendments thereto that (a) indicate the Collateral as being assets of the Mortgagor or words of
similar effect, regardless of whether any particular asset comprised in the Collateral falls within
the scope of Article 9 of the Uniform Commercial Code of such jurisdiction, or with greater detail,
and (b) contain any other information required by part 5 of Article 9 of the Uniform Commercial
Code of the state where this Mortgage is recorded for the sufficiency or filing office acceptance
of any financing statement or amendment, including (i) whether the Mortgagor is an organization,
the type of organization and any organization identification number issued to the Mortgagor and,
(ii) in the case of a financing statement filed as a fixture filing or indicating Collateral that
is as-extracted collateral or timber to be cut, a sufficient description of real property to which
the Collateral relates and, if Mortgagor does not have an interest of record in the real property,
the name of the record owner. The Mortgagor also ratifies its authorization for the Mortgagee to
have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or
amendments thereto if filed prior to the date hereof. Mortgagor shall promptly execute, file and
record, at its sole cost and expense, such Code forms as are necessary to maintain the validity and
priority of the Lien of Mortgagee upon and security interest in the Code Collateral. In addition,
Mortgagor shall promptly execute, file




17









 







and record such additional Code forms or continuation
statements and further assurances as Mortgagee shall deem necessary to insure the attachment,
perfection and first priority of, and the ability of the Mortgagee to enforce, the Mortgagee’s
security interest in any and all of the Collateral, and shall pay all expenses and fees in
connection with the filing and recording thereof. Mortgagor hereby grants to Mortgagee an
irrevocable power of attorney, coupled with an interest, to file with the appropriate public office
on its behalf any financing or other statements signed only by Mortgagee, as secured party, in
connection with the Code Collateral covered by this Mortgage.




          3.11.7 For avoidance of doubt it is expressly understood and agreed that any terms not defined
herein or in the Credit Agreement shall refer to any definitions thereof in the Code, as the same
may be revised from time to time, it being the intention of the parties hereto that the description
of Collateral set forth herein be construed to include the broadest possible range of property and
assets.




     3.12 Personal Property. Except as permitted by the Credit Agreement and the other
Loan Documents, that portion of the Collateral consisting of personal property and equipment, shall
be owned by Mortgagor and shall not be the subject matter of any lease or other transaction whereby
the ownership or any beneficial interest in any of such property is held by any Person or entity
other than Mortgagor nor shall Mortgagor create or suffer to be created any security interest,
other than a Permitted Encumbrance, covering any such property as it may from time to time be
replaced, other than the security interest created herein.



     3.14 Subrogation.
To the extent permitted by Law and the provisions of the Credit Agreement, Mortgagee shall be
subrogated, notwithstanding their release of record, to any mechanic’s or vendor’s Lien or Liens of
any kind heretofore or hereafter existing on the Real Estate to the extent that the same are paid
or discharged by Mortgagee, whether or not from the proceeds of the Notes; provided, however, this
Section shall not be deemed or construed to obligate Mortgagee to pay or discharge the same.



     3.15 Condemnation. Immediately upon Mortgagor’s obtaining knowledge of the
institution of any proceeding for the condemnation of, or for the exercise of the right of eminent
domain with respect to, the Collateral, or any part thereof, Mortgagor shall notify Mortgagee of
such fact. Mortgagor shall then, if requested by Mortgagee, file or defend its claim thereunder
and prosecute same with due diligence to its final disposition and shall cause any awards or
settlements to be paid over to Mortgagee for disposition pursuant to the terms of this Mortgage.
Mortgagor may be the nominal party in such proceeding, but Mortgagee shall be entitled to
participate in and to control same and to be represented therein by counsel of its own choice, and
Mortgagor will deliver, or cause to be delivered, to Mortgagee such instruments as may be requested
by Mortgagee from time to time to permit such participation. If the Collateral is taken or
diminished in value, or if a consent settlement is entered, by or under threat of such proceeding,
the award or settlement payable to Mortgagor by virtue of its interest in the Collateral shall be,
and by these presents is, assigned, transferred and set over unto Mortgagee to be held by it,
subject to the Lien of this Mortgage, and may, at the Mortgagee’s election, but subject to the
provisions of the Credit Agreement, be used in any one or more of the following ways: (a) apply
the same in the manner set forth in the Notes and the Credit Agreement; (b) use the same or any
part thereof to perform or discharge any of the Obligations; (c) use the same or



18









 





any part thereof
to restore, repair or replace the Collateral to a condition satisfactory to the Mortgagee (with the
disbursement of such funds being made in accordance with the procedures approved by Mortgagee); or
(d) release the same to Mortgagor. Mortgagee is empowered to collect and receive the proceeds of
any condemnation or eminent domain award or settlement; Mortgagor hereby irrevocably appoints
Mortgagee as Mortgagor’s attorney-in-fact (coupled with an interest) to collect and receive such
proceeds. Mortgagee shall not be obligated to collect, and shall not be liable for failure to
collect, any such proceeds.




     3.16 Intentionally Deleted.



     3.17 HOLD HARMLESS. MORTGAGOR WILL DEFEND, AT ITS OWN COST AND EXPENSE, AND HOLD
MORTGAGEE AND THE LENDERS HARMLESS FROM, ANY ACTION, PROCEEDING OR CLAIM AFFECTING MORTGAGEE OR THE
LENDERS, THE COLLATERAL OR THE LOAN DOCUMENTS, OR RESULTING FROM OR ARISING OUT OF THE FAILURE OF
MORTGAGOR TO PERFORM OR DISCHARGE THE OBLIGATIONS OR OTHERWISE TO COMPLY WITH THE PROVISIONS OF THE
LOAN DOCUMENTS, INCLUDING ANY ACTIONS TAKEN BY MORTGAGEE UNDER SECTION 4.3 BELOW NOTWITHSTANDING
THE SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE OF MORTGAGEE, AND ALL COSTS AND EXPENSES INCURRED BY
MORTGAGEE IN
PROTECTING ITS INTERESTS HEREUNDER (INCLUDING ALL COURT COSTS AND ATTORNEYS’ FEES) SHALL BE
BORNE BY MORTGAGOR, PROVIDED THAT MORTGAGOR SHALL HAVE NO OBLIGATION TO DEFEND OR INDEMNIFY
MORTGAGEE OR THE LENDERS WITH RESPECT TO THE CONSEQUENCES OF MORTGAGEE’S OR THE LENDERS’ GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.



4.     DEFAULT AND REMEDIES.




     4.1
Events of Default. 4.1.1      The term “Event of Default,” as used in this Mortgage,
shall mean the occurrence or happening, at any time and from time to time, of an “Event of Default”
under the Credit Agreement.



     4.2     Rights and Remedies of the Mortgagee Upon Default.



          4.2.1     Upon the occurrence and during the continuance of an Event of Default, Mortgagee
may, at its option and without demand upon or notice to the Mortgagor, declare all or any part of
the Obligations to be immediately due and payable, whereupon all such Obligations shall become due
and payable without presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Mortgagor (provided, that all Obligations shall be automatically due and
payable upon an Event of Default described in Section 8.1 of the Credit Agreement), and the
Mortgagee may immediately enforce payment of all such amounts and may exercise any or all or its
rights and remedies under this Mortgage, the Notes, any of the other Loan Documents and applicable
Law and equity. The Mortgagor also waives any and all rights the Mortgagor may have to a hearing
before any judicial authority prior to the exercise by the Mortgagee of any of its rights under
this Mortgage, the Notes, any of the other Loan Documents and applicable Law, and waives the right
to a jury in any litigation arising between Mortgagor and Mortgagee. In addition, Mortgagee may,
to the fullest extent permitted by applicable Law:




19









 








               (a)     In person or by agent or by a receiver appointed by a court, with or without bringing
any action or proceeding and without regard to the adequacy of its security, the solvency of
Mortgagor or the existence of waste, enter upon and take possession of the Collateral, or any part
thereof, in its own name or in the name of Mortgagee, and do any acts that it deems necessary or
desirable to preserve the value, marketability or rentability of the Collateral, or part thereof or
interest therein, to increase the income therefrom or to protect the security hereof; and, with or
without taking possession of the Collateral, sue for or otherwise collect the Rents, including
those past due and unpaid, and apply the same, less costs and expenses of operation and collection
including attorneys’ fees, upon any indebtedness secured by this Mortgage, all in such order as
Mortgagee may determine. The entering upon and taking possession of the Collateral, the collection
of such Rents and the application thereof, as aforesaid shall not cure or waive any Event of
Default or notice of default hereunder or invalidate any act done in response to such Event of
Default or pursuant to such notice of default and, notwithstanding the continuance in possession of
the Collateral, the collection, receipt and application of Rents, Mortgagee shall be entitled to
exercise every right provided for in any of
the Loan Documents or by Law upon occurrence of any Event of Default, including any right to
exercise a power of sale under applicable Law;



               (b)     Sell the Collateral (or such part or parts thereof as the Mortgagee may from time to
time elect to sell) under the power of sale which is hereby given to the Mortgagee, in person or by
auctioneer before the courthouse door in the county or counties in the state of Alabama where the
Collateral is located, at public outcry, to the highest bidder for cash, after having first given
twenty-one (21) days notice (or such other time period otherwise provided by Law) of the time,
place and terms of sale, together with a description of the Collateral to be sold, by publication,
once a week for three successive weeks prior to said sale in some newspaper published in said
county or counties, as may be required, and, upon payment of the purchase money, the Mortgagee or
any Person conducting the sale for Mortgagee is authorized to execute to the purchaser at said
sale, a deed to the Collateral or portion thereof so purchased. The sale shall be held between the
hours of 11:00 a.m. and 4:00 p.m. on the day designated for the exercise of the power of sale
hereunder. Mortgagee may bid at said sale and purchase the Collateral or portion thereof if the
highest bidder therefor. At the foreclosure sale the Collateral may be offered for sale and sold
as a whole without first offering it in any other manner or may be offered for sale and sold in any
other manner as Mortgagee may elect;



               (c)     Foreclose the Mortgage in a court having jurisdiction thereof for which the Mortgagor
will pay a reasonable attorney’s fee and all court costs therefore, which fee and costs shall be
and constitute a part of the obligations secured hereby.



               (d)     Proceed as to both the real and personal property in accordance with Mortgagee’s
rights and remedies in respect of the Collateral, or proceed to sell any personal property
separately and without regard to the Collateral in accordance with Mortgagee’s rights and remedies.
Mortgagee shall have all rights and remedies under this Mortgage and the other Loan Documents, at
Law and in equity.



     If an Event of Default shall have occurred and be continuing, Mortgagee, as a matter of right
and without notice to Mortgagor or anyone claiming under Mortgagor, and without regard to the then
value of the Collateral or the interest of Mortgagor herein, shall have the right to



20









 




apply to any
court having jurisdiction to appoint a receiver or receivers of the Collateral, and Mortgagor
hereby irrevocably consents to such appointment and waives notice of any application therefor. Any
such receiver or receivers shall have all the powers and duties available to receivers under Law
and all the powers and duties of Mortgagee in case of entry as provided above and shall continue as
such and exercise all such powers until the date of confirmation of sale of the Collateral unless
such receivership is sooner terminated.




     Mortgagee may postpone sale of all or any portion of the Collateral by public announcement at
such time and place of sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement or subsequently noticed sale, and
without further notice make such sale at the time fixed by the last postponement; or Mortgagee may,
in its discretion, give a new notice of sale. Mortgagee may rescind any such notice of default at
any time before Mortgagee’s sale. The exercise by Mortgagee of the right of rescission shall not
constitute a waiver of any default and demand for
sale, or notices of default and of election to cause the Collateral to be sold, nor otherwise
affect the Notes or this Mortgage, or any of the rights, obligations or remedies of Mortgagee
hereunder.



     In the event the foreclosure sale is not concluded and Mortgagee has allowed Mortgagor to cure
any and all defaults occasioned hereunder, Mortgagor shall pay to Mortgagee all costs and expenses
incurred by Mortgagee as a result of Mortgagor’s default, including reasonable attorneys’ fees. In
case the Mortgagee, in the exercise of the power of sale herein given, elects to sell the
Collateral in parts or parcels, sales thereof may be held from time to time, and the power of sale
granted herein shall not be fully exercised until all of the Collateral not previously sold shall
have been sold or all the Obligations shall have been paid in full and this Mortgage shall have
been terminated as provided herein.



     In the event of a sale of the Collateral or any part thereof, and the execution of a deed or
deeds therefor, the recital therein of default, and of the giving of notice of sale, and of a
demand by Mortgagee, or its successors or assigns, that such sale should be made, shall be
conclusive proof of such default, and of the due giving of such notice, and that the sale was
regularly and validly made on due and proper demand by Mortgagee, its successors or assigns; and
any such deed or deeds with such recitals therein and otherwise conforming with applicable Law
shall be effectual and conclusive against Mortgagor, its successors and assigns, and all other
Persons; and the receipt for the purchase money recited or contained in any deed executed to the
purchaser as aforesaid shall be sufficient discharge to such purchaser from all obligations to see
to the proper application of the purchase money.



          4.2.2     Without limiting the generality of the foregoing, upon the occurrence of an Event of
Default, or at any time thereafter:




               (a)     The Mortgagee at its option, shall have the right, power and authority to exercise and
enforce any or all of the following rights and remedies with respect to Rents and Leases:




          (i)     to enforce the termination of the license granted to the Mortgagor
hereunder to collect the Rents, and, without taking possession, in the Mortgagee’s
own name to demand, collect, receive, sue for, attach and levy upon



21









 






the Rents (including all income received or receivable with respect to any of the Collateral),
to give proper receipts, releases and acquittances therefor, and after deducting all
necessary and reasonable costs and expenses of collection, including reasonable
attorneys’ fees, to apply the net proceeds thereof to the Obligations in such order
and amounts as the Mortgagee may choose (or hold the same in a cash collateral
reserve as security for the Obligations);




          (ii)     without regard to the adequacy of the security, with or without any
action or proceeding, through any Person or by agent, or by a receiver or keeper to
be appointed by court, to enter upon, take possession of, manage and operate the
property or any part thereof for the account of the Mortgagor; make, modify,
enforce, cancel or accept surrender of any Lease; remove and evict any lessee;
increase or reduce rents; cut, remove, sell and dispose of Timber and exercise all
rights under deeds or contracts and otherwise do any act, or incur any
cost or expense the Mortgagee shall deem proper to protect the security hereof,
as fully and to the same extent as the Mortgagor could and to apply any funds to the
operation and management of the Collateral (including payment of reasonable
management, brokerage and attorneys’ fees) and payment of any Obligations in such
order and amounts as the Mortgagee may choose (or hold the same in cash collateral
reserve as security);




          (iii)     to require Mortgagor to transfer and pay over to Mortgagee all
security deposits and records thereof, together with all original Leases; and




          (iv)     to take whatever legal proceedings may appear necessary or desirable
to enforce any obligation or covenant or agreement of the Mortgagor under this
Mortgage.



               (b)     the collection of the Rents and application thereof (or holding thereof in reserve) as
aforesaid or the entry upon and taking possession of the Collateral or both shall not cure or waive
any default or waive, modify or affect any notice of default under this Mortgage, or invalidate any
act done pursuant to such notice, and the enforcement of such right or remedy by the Mortgagee,
once exercised, shall continue for so long as the Mortgagee shall elect, notwithstanding that the
collection and application aforesaid of the Rents may have cured the original default. If the
Mortgagee shall thereafter elect to discontinue the exercise of any such right or remedy, the same
or any other right or remedy hereunder may be reasserted at any time and from time to time
following any subsequent default.



          4.2.3     All payments received by the Mortgagee as proceeds of the Collateral, or any part
thereof, as well as any and all amounts realized by the Mortgagee in connection with the
enforcement of any right or remedy under or with respect to this Mortgage, shall be applied as set
forth in the Credit Agreement.




          4.2.4     In case of any sale of the Collateral as authorized by this Section 4.2, all
prerequisites to the sale shall be presumed to have been performed, and in any conveyance given
hereunder all statements of facts, or other recitals therein made, as to the nonpayment of any of
the Obligations or as to the advertisement of sale, or the time, place and manner of sale, or as to





22












 




any other fact or thing, shall be taken in all courts of Law or equity as prima facie
evidence that the facts so stated or recited are true.




          4.2.5      It is specifically understood and agreed that the foregoing acceleration provisions
will be applicable not only to the maturities recited in the original Notes but also to any
substituted maturities created by extension or renewal. The failure of the holder(s) of the
secured indebtedness to declare an acceleration of maturities when a ground therefor exists, even
though such forbearance may be repeated from time to time, will not constitute a waiver of the
right of such holder(s) to accelerate maturities upon a recurrence of the same ground therefor; nor
will the act of such holder(s) in remedying any condition resulting from declaring an acceleration
of maturities by reason of such default.




          4.2.6      If Mortgagee shall expend any sum or sums for the protection of any of the
Collateral or the Lien of this Mortgage (such Mortgagee to have uncontrolled discretion as to
the necessity of making any such expenditures), the repayment of such sum or sums on demand
(with interest thereon at the highest rate allowed by Law from the date of each expenditure) shall
be the personal obligation of the Mortgagor; and such obligation to repay will constitute a part of
the indebtedness secured hereby. The expenditures thus made reimbursable will include, without
limitation, taxes, special improvement assessments, insurance premiums, repairs and maintenance
expenses, security expenditures, sums paid to discharge prior Liens, rents on premises in which
mortgaged personalty may be situated, etc. The cost of any abstract or supplemental abstract
procured by Mortgagee to facilitate foreclosure will also constitute a part of the reimbursable
expenses secured hereby.




     4.3      Advances by Mortgagee.  If the Mortgagor shall fail to comply with the
provisions hereof with respect to the securing of insurance, the payment of taxes, assessments and
other charges, the keeping of the Collateral in repair, the performance of the Mortgagor’s
obligations under any lease, the payment of any prior mortgages, or the protection of any of the
Collateral or the Lien of this Mortgage or the performance of any other term or covenant herein
contained, the Mortgagee may, without further notice to or demand upon Mortgagor and without
waiving or releasing any other right, remedy or recourse, (but shall not be obligated to) make such
payment or perform such act for the account of and at the expense of Mortgagor (such Mortgagee to
have uncontrolled discretion as to the necessity of making any such expenditures), and shall have
the right to enter upon the Collateral for such purpose and to take all such action as it may deem
necessary or appropriate. The repayment of any such sum or sums on demand (with interest thereon
at the highest rate allowed by Law from the date of each expenditure) shall be the personal
obligation of the Mortgagor; and such obligation to repay will constitute a part of the
indebtedness secured hereby. The expenditures thus made reimbursable shall include, without
limitation, taxes, special improvement assessments, insurance premiums, repairs and maintenance
expenses, security expenditures, sums paid to discharge prior liens, and rents on premises in which
mortgaged personalty may be situated. The Mortgagor agrees to repay all such sums advanced upon
demand, with interest from the date such advances are made at the rates set forth in Section 3.2.2
of the Credit Agreement, or the highest rate permitted by Law, whichever shall be less, and all
sums so advanced with interest shall constitute Obligations and shall be secured hereby. The cost
of any title abstract or report or supplemental abstract or report procured by Mortgagee to
facilitate foreclosure will also constitute a part of the reimbursable expenses secured hereby.



23









 





     4.4      Other Rights.  Mortgagee may exercise any and all other rights, remedies and
recourses granted under the Loan Documents or now or hereafter existing in equity or at Law for the
protection and preservation of the Collateral.



     4.5      Remedies Cumulative, Concurrent and Nonexclusive.  Mortgagee shall have all
rights, remedies and recourses granted in the Loan Documents and available at Law or equity
(including, without limitation, those granted by the Code and applicable to the Collateral, or any
portion thereof), and same (1) shall be cumulative and concurrent, (2) may be pursued separately,
successively or concurrently against Mortgagor or
others obligated for the Obligations, or any part thereof or against any one or more of them,
or against the Collateral, at the sole discretion of Mortgagee, (3) may be exercised as often as
occasion therefor shall arise, it being agreed by Mortgagor that the exercise of or failure to
exercise any of same shall in no event be construed as a waiver or release thereof or of any other
right, remedy or recourse, and are intended to be, and shall be, nonexclusive, and Mortgagee may
pursue inconsistent remedies, and no action hereunder by Mortgagee shall be deemed to prejudice
Mortgagee’s right thereafter to foreclose this Mortgage. Nothing herein and no action of Mortgagee
shall be construed as an election to proceed under any provision to the exclusion of any other
provision or as prohibiting Mortgagee from seeking a deficiency judgment against Mortgagor to the
extent such action is permitted by Law.



     4.6      General Remedies. In addition to the remedies set forth in Section 4.2 of
this Mortgage, if an Event of Default shall have occurred and be then in existence, Mortgagee may
take such action, without notice or demand, as it shall deem advisable to protect and enforce its
rights against Mortgagor and in and to the Collateral or any part thereof or interest therein,
including, but not limited to, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as Mortgagee may determine, in its sole discretion,
without impairing or otherwise affecting the other rights and remedies of Mortgagee: (i) enter
into or upon the Collateral, either personally or by its agents, nominees or attorneys and
dispossess Mortgagor and its agents and servants therefrom, and thereupon Mortgagee may (A) use,
operate, manage, control, insure, maintain, repair, restore, harvest and sell Timber and otherwise
deal with all and every part of the Collateral and conduct the business thereat, (B) complete any
construction on the Collateral in such manner and form as Mortgagee deems advisable, (C) make
alterations, additions, renewals, replacements and improvements to or on the Collateral, (D)
exercise all rights and powers of Mortgagor with respect to the Collateral, whether in the name of
Mortgagor or otherwise, including, without limitation, the right to make, cancel, enforce or
modify, timber sales contracts, stumpage sale agreements, leases, and other agreements and demand,
sue for, collect and receive all earnings, revenues, rents, issues, profits and other income of the
Collateral and every part thereof and (E) receive and collect the receipts from the Collateral,
give proper receipts, releases and acquittances therefore, and apply the same to the payment of the
Secured Obligations, after deducting therefrom all expenses (including reasonable attorneys’ fees
and expenses) incurred in connection with the aforesaid operations and all amounts necessary to pay
the taxes, assessments, insurance and other charges in connection with the Collateral, as well as
just and reasonable compensation for the services of the Mortgagee and its counsel, agents and
employees, or (ii) institute proceedings for the complete foreclosure of this Mortgage in which
case the Collateral may be sold for cash or upon credit in one or more parcels, or (iii) with or
without entry, to the extent permitted and pursuant to the procedures provided by applicable Law,
institute proceedings for the partial foreclosure of



24









 




this Mortgage for the portion of the Secured
Obligations then due and payable, subject to the continuing Lien of this Mortgage for the balance
of the Secured Obligations not then due, or (iv) sell for cash or upon credit the Collateral or any
part thereof and all or any part of any estate, claim, demand, right, title and interest of
Mortgagor therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one
or more sales, as an entirety or in parcels, at such time and place, upon such terms and after such
notice thereof as may be required or permitted by Law, and in the event of a sale, by foreclosure
or otherwise, of less than all of the Collateral, this Mortgage shall continue
as a Lien on the remaining portion of or estate in the Collateral, or (v) institute an action,
suit or proceeding in equity for the specific performance of any covenant, condition or agreement
contained herein or in the Notes or any other Loan Document, or (vi) recover judgment on the Notes
or any guaranty either before, during or after any proceedings for the enforcement of this Mortgage
or (vii) pursue such other remedies as Mortgagee may have under applicable Law or equity. Further,
once Mortgagee has exercised any of its rights or remedies hereunder, or under the Loan Documents,
during the existence of an Event of Default, all actions theretofore or thereafter taken by
Mortgagee in pursuit of such rights and remedies shall not be affected by any cure of such Event of
Default, unless Mortgagee shall accept the cure and terminate pursuit of any such right or remedy,
in which case, the parties shall be restored to their position which existed prior to Mortgagee’s
exercise of its rights or remedies.




5.      MISCELLANEOUS PROVISIONS




     5.1      Waiver and Election.  The exercise by the Mortgagee of any right, power or
remedy given under the terms of this Mortgage shall not be considered as a waiver of the right to
exercise any other right, power or remedy given herein, and the filing of a suit to foreclose the
Lien granted by this Mortgage, either on any matured portion of the Obligations or for the whole of
the Obligations, shall not be considered an election so as to preclude foreclosure under power of
sale after a dismissal of the suit; nor shall the publication of notices for foreclosure preclude
the prosecution of a later suit thereon. No failure or delay on the part of the Mortgagee in
exercising any right, power or remedy under this Mortgage shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy hereunder or
thereunder. No notice to or demand on the Mortgagor in any case shall entitle the Mortgagor to any
other or further notice or demand in similar or other circumstances. The Mortgagor expressly waives
the right to any notice of the assignment of the Notes or this Mortgage and the right to enforce
the provisions of any applicable Law requiring such notice.



     5.2      Enforceability.  If any provision of this Mortgage is held to be illegal,
invalid, or unenforceable under present or future Laws effective while this Mortgage is in effect,
the legality, validity and enforceability of the remaining provisions of this Mortgage shall not be
affected thereby, and in lieu of each such illegal, invalid or unenforceable provision there shall
be added automatically as a part of this Mortgage a provision that is legal, valid and enforceable
and as similar in terms to such illegal, invalid or unenforceable provision as may be possible.



     5.3      Application of Payments.  If the Lien created by this Mortgage is invalid or
unenforceable as to any part of the Obligations or is invalid or unenforceable as to any part of
the Collateral, the unsecured or partially secured portion of the Obligations shall be completely
paid prior to the payment of the remaining secured or partially secured portion of the Obligations,
and



25









 




all payments made on the Obligations, whether voluntary or under foreclosure or other
enforcement action or procedures,
shall be considered to have been first paid on and applied to the full payment of that portion
of the Obligations that is not secured or not fully secured by said Lien created hereby.




     5.4      Applicable Law.  The creation, perfection, Lien priority, and the exercise of
remedies and enforcement, and all other provisions of this Mortgage shall be governed by the
internal Laws of the State in which the Premises is located, without regard to principles of
conflicts of Laws. The Notes, the Credit Agreement and all other Loan Documents (other than
mortgages or other security documents filed in other States which shall be governed by the Laws of
those States) shall be governed by the internal Laws of the State of New York, also without regard
to principles of conflicts of Laws In the event of a conflict between the Laws of the State of New
York and the Laws with respect to creation, perfection and enforcement of the Lien created by this
Mortgage, the Laws of the State in which the Premises is located shall govern.



     THIS MORTGAGE CONSTITUTES THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND SUPERSEDES ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
MORTGAGE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF ANY LENDER PARTY OR MORTGAGOR MAY BE BROUGHT AND MAINTAINED IN THE FEDERAL AND STATE
COURTS LOCATED IN THE STATE OF NEW YORK, BOROUGH OF MANHATTAN. THE MORTGAGOR HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUIT
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE MORTGAGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE. THE
MORTGAGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE MORTGAGOR HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE MORTGAGOR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS MORTGAGE. THE PARTIES
HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS MORTGAGE OR ANY COURSE OF



26









 




CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) RELATING THERETO. EACH PARTY
HERETO ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR SUCH PARTY TO ENTER INTO THIS
AGREEMENT. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE MORTGAGOR SHALL NOT ASSERT, AND HEREBY
WAIVES, ANY CLAIM AGAINST THE MORTGAGEE OR THE LENDERS ON ANY THEORY OF LIABILITY FOR SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT
OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS MORTGAGE OR ANY INSTRUMENT CONTEMPLATED HEREBY.




     5.5      Meaning of Particular Terms.  Whenever used, the singular number shall
include the plural and the plural, the singular, the pronouns of one gender shall include all
genders; and the words “Mortgagor,” “Borrower” and “Mortgagee” shall include their respective
heirs, personal representatives, successors and assigns. The term “Mortgagor” as used in this
Mortgage refers to the undersigned, whether one or more natural Persons, partnerships, limited
liability companies, corporations, associations, trusts or other entities or organizations. In
addition, the rules of construction set forth in Section 1.3 of the Credit Agreement shall apply to
this Mortgage.



     5.6      Release or Extension by Mortgagee.  The Mortgagee, without notice to the
Mortgagor and without in any way affecting the rights of the Mortgagee hereunder as to any part of
the Collateral not expressly released, may release any part of the Collateral or any Person liable
for any of the Obligations and may agree with any party with an interest in the Collateral to
extend the time for payment of all or any part of the Obligations or to waive the prompt and full
performance of any term, condition or covenant of the Notes, any of the Loan Documents, this
Mortgage or any other instrument evidencing or securing any of the Obligations.



     5.7      Partial Payments.  Acceptance by the Mortgagee of any payment of less than
the full amount due on the Obligations shall be deemed acceptance on account only, and the failure
of the Mortgagor to pay the entire amount then due shall be and continue to constitute an Event of
Default, and at any time thereafter and until the entire amount due on the Obligations has been
paid, the Mortgagee shall be entitled to exercise all rights conferred on it by the terms of this
Mortgage in case of the occurrence of an Event of Default.



     5.8      Addresses for Notices.  All notices, requests, demands and other
communications provided for hereunder shall be in writing and shall be sent by Federal Express or
other recognized national courier, personal service or United States mail, certified with return
receipt requested, to the applicable party at its
address indicated on the first page of this Mortgage, or shall be sent in accordance with the
Credit Agreement, and shall be deemed given upon receipt or refusal to accept, and any party may
designate another address in accordance herewith or with the Credit Agreement. All notices to
Mortgagee shall also be sent to Sutherland Asbill & Brennan LLP, 999 Peachtree Street, NE, Atlanta,
Georgia 30309, Attn: Victor P. Haley.



27









 





     5.9      Titles.  All section, paragraph, subparagraph or other titles contained in
this Mortgage are for reference purposes only, and this Mortgage shall be construed without
reference to said titles.



     5.10      Construction and Presumption.  This Mortgage may be construed as a deed of
trust, mortgage, chattel mortgage, conveyance, assignment, security agreement, pledge, financing
statement, hypothecation, or contract, or any one or more of them, in order fully to effectuate the
Lien created hereby and the purposes and agreements herein set forth. The parties hereto have
participated jointly in the negotiation and drafting of this Mortgage. In the event an ambiguity
or question of intent or interpretation arises, this Mortgage shall be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this Mortgage.



     5.11      Collection Costs.  The Mortgagor agrees to pay all costs, including
reasonable attorneys’ fees, actually incurred by the Mortgagee in enforcing the Mortgagee’s rights
hereunder and in collecting or securing, or attempting to collect or secure, the Obligations, or
any part thereof, or in defending or attempting to defend the priority of this Mortgage against any
Lien on the Collateral, or any part thereof, unless this Mortgage is herein expressly made subject
to any such Lien; and all costs incurred in the foreclosure of this Mortgage, either under the
power of sale contained herein, or by virtue of the decree of any court of competent jurisdiction.
The full amount of such costs incurred by the Mortgagee shall be a part of the Obligations, and
shall bear interest at the rates set forth in Section 3.2.2 of the Credit Agreement or such lesser
amount as shall be the maximum amount permitted by Law, and shall be secured by this Mortgage.



     5.12      Defeasance.  If all of the Obligations have been paid in full in cash,
including but not limited to all sums (principal, interest, premium and charges) payable under the
Notes and any and all extensions and renewals of the same; and all sums due, or to become due, and
payable by the Mortgagor under the terms of this Mortgage, the Credit Agreement and any of the
other Loan Documents, including but not limited to advancements made by the Mortgagee pursuant to
the terms and conditions of this Mortgage, and if Mortgagor has kept and performed each and every
obligation, covenant, duty, condition and agreement herein and in the Credit Agreement, Notes and
other Loan Documents imposed on or agreed to by the Mortgagor; then this conveyance and the grants
and conveyances contained herein shall become null and void, and the Collateral shall revert to the
Mortgagor, and the entire estate, right, title and interest of the Mortgagee will
thereupon cease; and the Mortgagee in such case shall, upon the request of the Mortgagor and
at the Mortgagor’s cost and expense, deliver to the Mortgagor proper instrument(s) acknowledging
satisfaction of this instrument; otherwise, this Mortgage shall remain in full force and effect.
No release or modification of this conveyance, or of the Lien created and evidenced thereby, shall
be valid unless executed by Mortgagor.



     5.13      Change in Ownership.  Subject to the provisions of the Credit Agreement, if
the ownership (legal or beneficial) of the Collateral or any part thereof becomes vested in a
Person or entity other than Mortgagor, or in the event of a change of any ownership of Mortgagor
legal or beneficial, Mortgagee may, without notice to Mortgagor, deal with such successor or
successors in interest with reference to this Mortgage and to the Obligations in the same manner as
with Mortgagor without in any way vitiating or discharging Mortgagor’s liability hereunder or



28









 




with respect to the Obligations and without affecting any default created hereunder by such ownership
change, including, without limitation, all of Mortgagee’s rights and remedies arising from such
default. No sale of the Collateral, and no forbearance on the part of Mortgagee, and no extension
of the time for the payment of the Obligations, shall operate to release or affect the original
liability of Mortgagor.




     5.14      Partial Release of Lien, Extension, Subdivision etc.  Any part of the
Collateral or any other property which is security for the Loan may be released by Mortgagee
without affecting the Lien hereof against the remainder. The Lien and other rights granted hereby
shall not affect or be affected by any other security taken for the Obligations. The taking of
additional security, or the extension or renewal of the Obligations or any part thereof, shall not
release or impair the Lien and other rights granted hereby, or affect the liability of any endorser
or guarantor or improve the right of any permitted junior lienholder; and this Mortgage, as well as
any instrument given to secure any renewal or extension of the Obligations, or any part thereof,
shall be and remain a first and prior Lien, except as otherwise provided herein, on all of the
Collateral not expressly released until the Obligations are paid. From time to time at Mortgagee’s
option, by instrument executed by Mortgagee and recorded in the real property records where this
Mortgage has been recorded, Mortgagee may subordinate the Lien created by this Mortgage to any
interest in the Collateral, provided, however, that any such subordination shall be solely at
Mortgagee’s option, and in no event shall Mortgagee be obligated to subordinate the Lien created by
this Mortgage.



     5.15      Entire Agreement and Modification.  There are no oral agreements between the
parties. The Loan Documents contain the entire agreements between the parties relating to the
subject matter hereof and thereof and all prior agreements relative thereto which are not contained
herein or therein are terminated. The Loan Documents may not be amended, revised, waived,
discharged, released or terminated orally but only by a written instrument or instruments executed
by the party against which enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge, release or
termination which is not so documented shall not be effective as to any party.



     5.16      Relationship; Joint and Several Liability.  The relationship of Mortgagee to
Mortgagor under this Mortgage and with respect to the Loan Documents is strictly and solely that of
creditor and debtor and nothing contained in this Mortgage or any other Loan Document is intended
to create, or shall in any event or under any circumstance be construed to create, a partnership,
joint venture, tenancy in common, joint tenancy or other relationship of any nature whatsoever
between Mortgagee and Mortgagor, or in any way make Mortgagee a co-principal with Mortgagor with
reference to the Collateral, and any inferences to the contrary are hereby expressly negated. The
parties which are together referred to herein as Mortgagor, hereby each agree that each of them
shall be jointly and severally liable for all obligations and liabilities of Mortgagor under this
Mortgage and further each agree that Mortgagee may, in its sole discretion, take any action
hereunder against both of them, or either of them, without prejudice to or effect on any future
action against either or both of them, and that any notice to or from either of them shall be
deemed to be received or given by them both.



     5.17      Further Assurances.  Mortgagor, upon the request of Mortgagee, will execute,
acknowledge, deliver and record and/or file such further instruments and do such further acts as



29









 




may be necessary, desirable or proper to carry out more effectively the purpose of the Loan
Documents and to subject to the Lien thereof any property intended by the terms thereof to be
covered thereby, including specifically but without limitation, any renewals, additions,
substitutions, replacements, betterments or appurtenances to the then Collateral.




     5.18      Recording and Filing.  Mortgagor will cause this Mortgage and any Financing
Statements and all amendments and supplements thereto and substitutions therefor to be recorded,
filed, rerecorded and refiled in such manner and in such places as Mortgagee shall reasonably
request, and will pay all such recording, filing, rerecording and refiling taxes, fees and other
charges.



     5.19      Successors and Assigns.  All of the terms of the Loan Documents shall apply
to, be binding upon and inure to the benefit of the parties thereto, their successors, assigns,
heirs and legal representatives, and all other Persons claiming by, through or under them, and all
of the obligations and liabilities of Mortgagor contained herein and in the Loan Documents are
intended by the parties to be, and shall be construed as, covenants running with the Collateral.



6.      ADDITIONAL COVENANTS AND AGREEMENTS OF MORTGAGOR.




     The Mortgagor covenants and agrees that, until the Obligations are paid in full in cash and
this Mortgage is discharged in writing by the Mortgagee:



     6.1      Additional Security Documents.



       (a) Mortgagor has simultaneously herewith executed and delivered to or for the benefit of
Mortgagee certain other mortgages, deeds of trust and other documents and instruments encumbering
or relating to certain other property of Mortgagor located in various other counties and states of
The United States of America as additional security for the Notes and the Obligations
(collectively, sometimes, the “Additional Mortgages”).



     (b) The Additional Mortgages and this Mortgage shall each and all constitute security for the
Notes, the indebtedness referred to therein and the Obligations. If there should be an Event of
Default in any of the terms, conditions or obligations of any of the Additional Mortgages, such
default shall constitute an Event of Default under this Mortgage. The Mortgagee, whether acting as
a fiduciary or otherwise, may foreclose or otherwise enforce such security under the Additional
Mortgages, enforce its rights, powers and remedies with respect to, and realize upon, such security
or otherwise enforce its rights, powers and remedies with respect to, and realize upon, such
security, either before or concurrently with or after a foreclosure or other enforcement of this
Mortgage, any other such security or any of the other Loan Documents, and in any order as Mortgagee
may choose (whether or not every aspect of any such foreclosure or other enforcement may be
commercially reasonable), all without impairing or being deemed to have waived any rights,
benefits, Liens or security evidenced by or arising under or in connection with this Mortgage, any
other such security or any of the other Loan Documents, and without being deemed to have made an
election thereby or to have accepted the benefits of such security (or the proceeds thereof) in
full settlement of the Obligations and of its rights with respect thereto. No judgment, order or
decree rendered against Mortgagor with respect to any such other security or any of the other Loan
Documents, whether rendered in the State in which the Collateral is situated or elsewhere, shall in
any manner affect the security of this Mortgage, and any



30









 




deficiency or other debt represented by
any such judgment, order or decree shall, to the extent permitted by Law, be secured by this
Mortgage to the same extent that the Obligations shall have been secured by this Mortgage prior to
the rendering of such judgment, order or decree. Mortgagor for itself and for any and all Persons
who may at any time claim through or under Mortgagor or who hereafter may otherwise acquire any
interest in or title to all or any part of the Collateral or any other security for the
Obligations, hereby irrevocably waives and releases, to the extent permitted by Law, all benefit of
any and all Laws that would limit or prohibit the effectiveness of anything set forth in this
Section.




     (c) As set forth above in Section 1, Mortgagor has also executed and delivered to or for the
benefit of Mortgagee another mortgage encumbering the Collateral and securing the four other Loans
made by the Lenders to the Borrowers pursuant to the Credit Agreement, which mortgage is
subordinate and junior in priority to this Mortgage. Such mortgage is intended to be recorded
immediately following this Mortgage.



     (d) Notwithstanding anything contained herein to the contrary, Mortgagee shall be under no
duty to Mortgagor or any other Person or entity, including, without limitation, any holder of a any
other junior, senior or subordinate mortgage on the Collateral or any part thereof or on any other
security held by Mortgagee, to exercise, exhaust or first resort to all or any of the rights,
powers and remedies available to Mortgagee, whether under this Mortgage, the other Loan Documents
or the Additional Mortgages prior to the sale of the Collateral or any other enforcement of this
Mortgage. Furthermore, Mortgagor and such other Persons and entities waive all rights relating to
marshaling and agree that Mortgagee shall not be compelled to release
any part of the security of this Mortgage, the other Loan Documents or the Additional
Mortgages or be prevented from foreclosing or enforcing this Mortgage, the other Loan Documents or
the Additional Mortgages upon all or any part of such security unless the Obligations shall have
been paid in full and that Mortgagee shall not be compelled to accept or allow any apportionment of
the Obligations to or among any of the property encumbered by this Mortgage, the other Loan
Documents or the Additional Mortgages.



     6.2      After Acquired Collateral.  Mortgagor covenants and agrees that, if and to
the extent that any of its respective rights, titles, estates and interests in any of the
Collateral is not acquired until after delivery of this Mortgage, to the extent permitted by
applicable Law, this Mortgage shall nonetheless apply thereto and the Lien of Mortgagee hereby
created shall attach to such Collateral at the same time as Mortgagor acquires rights therein,
without the necessity of any further mortgage, charge, pledge, assignment or assurance and
thereafter such Collateral shall be subject to the security interests created under this Mortgage.



     6.3      Waiver of Marshaling and Certain Rights.  Mortgagor agrees, to the extent
permitted by Law, that neither Mortgagor nor any Person at any time claiming through or under
Mortgagor shall set up, claim or seek to take advantage of any appraisement, valuation, stay,
notice of election to accelerate, mature or declare due the Obligations, extension, redemption or
moratorium Laws, any right of division, or any exemption from execution or sale, or any rights of
dower, curtesy or homestead, now or hereafter in force, in order to prevent or hinder the
enforcement of this Mortgage after the occurrence of any Event of Default, the final and absolute
sale of all or any part of the Collateral or the final and absolute putting into possession
thereof, immediately after any such sale, of the purchaser or purchasers at such sale or the
enforcement of



31









 




any other rights or remedies of Mortgagee under this Mortgage or any other Loan
Documents. Mortgagor, for itself and for all who may at any time claim through or under Mortgagor
or who hereafter may otherwise acquire any interest in or title to all or any part of the
Collateral, hereby waives, releases and renounces to the extent permitted by Law, all benefit of
any such Law or Laws, any and all rights of redemption from sale under any power of sale permitted
by Law or pursuant to any judgment, order or decree of foreclosure of this Mortgage, and any and
all right to have the assets constituting the Collateral marshaled upon any foreclosure or other
enforcement of this Mortgage or to direct the order in which any of the Collateral shall be sold in
the event of any sale or sales pursuant hereto, as well as rights regarding the administration of
estates of decedents or any other rights which might defeat, reduce or affect the right of
Mortgagee to sell the Collateral for the collection of its obligations. Mortgagee or any court
having jurisdiction to exercise or enforce rights with respect to this Mortgage may sell the
Collateral in part or as an entirety. Mortgagee shall not be required to accept any part or parts
of the Collateral in satisfaction of all or any part of the Secured Obligations. Mortgagee shall
not be required to accept any apportionment of the Secured Obligations to or among any part or
parts of the Collateral.




     6.4      Statute of Limitations.
  Mortgagor hereby expressly waives and releases to the fullest extent permitted by Law, the
pleading of any statute of limitations as a defense to payment of any and all Secured Obligations
secured by this Mortgage.



     6.5      Time of Essence.  Time is of the essence of the obligations of Mortgagor in
this Mortgage and each and every term, covenant and condition made herein by or applicable to
Mortgagor.



     6.6      The Timber Lease.



          6.6.1      In addition to making payment of all rent, additional rent, tax and other payments
and charges required to be made by Mortgagor, Mortgagor, as tenant under and pursuant to the
provisions of the Timber Lease, covenants that it will:




               (a)      Diligently perform and observe all of the material terms, conditions and covenants of
the Timber Lease required to be performed and observed by Mortgagor, to the end that all things
shall be done which are reasonably necessary to keep unimpaired Mortgagor’s rights under the Timber
Lease, and Mortgagor covenants that no release or forbearance of any of the obligations of
Mortgagor under the Timber Lease, pursuant to the Timber Lease or otherwise shall release Mortgagor
from any of its obligations under this Mortgage, including, without limitation, Mortgagor’s
obligations under subparagraph (a) of this Paragraph.;



               (b)      Upon having actual knowledge thereof, promptly notify Mortgagee in writing of any
default by any party in the performance and observance of any of the terms, conditions or covenants
to be performed or observed under the Timber Lease;



               (c)      Promptly notify Mortgagee in writing of the giving of any notice under the Timber
Lease of any default of Mortgagor in the observance of any terms, covenants or conditions of the
Timber Lease and deliver to Mortgagee a true copy of each such notice; and



32









 





               (d)      Not surrender the Leasehold Estate nor terminate or cancel the Timber Lease or enter
into any agreement (whether oral or written) modifying, supplementing or amending the Timber Lease
without the prior written consent of Mortgagee pursuant to Section 7.11(r) of the Credit Agreement.



          6.6.2      Mortgagee shall have the right (but shall not be obligated) to take any action
Mortgagee deems reasonably necessary or desirable to prevent or to cure any default by Mortgagor in
the performance of or compliance with any of Mortgagor’s obligations under the Timber Lease. Upon
receipt by Mortgagee of any written notice of default by Mortgagor under the Timber Lease,
Mortgagee may rely thereon and take any action as aforesaid to cure such default even though the
existence of such default or the nature thereof be questioned or denied by Mortgagor or by any
party on behalf of Mortgagor. Mortgagor hereby expressly grants to Mortgagee, and agrees that
Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any
part thereof to such extent and as often as Mortgagee, in its sole discretion, deems necessary or
desirable in order to prevent or to cure any such default by Mortgagor. Mortgagee may pay and
expend such sums of money as Mortgagee in its sole discretion deems necessary for any such purpose,
and Mortgagor hereby agrees to pay to
Mortgagee, immediately and without demand, all such sums so paid and expended by Mortgagee,
together with interest thereon from the date of each such payment at the rates set forth in Section
3.2.2 of the Credit Agreement. All sums so paid and expended by Mortgagee, and the interest
thereon, shall be added to and be secured by the Lien of this Mortgage.




          6.6.3      As further security for the repayment of the Obligations secured hereby and for the
performance of the covenants contained herein and in the Timber Lease, Mortgagor hereby assigns to
Mortgagee all of its rights, privileges and prerogatives as lessee under the Timber Lease to
terminate, cancel, modify, change, supplement, alter or amend the Timber Lease, and any such
termination, cancellation, modification, change, supplement, alteration or amendment without the
prior written consent thereto by Mortgagee shall be void and of no force and effect;
provided, however, that so long as no Event of Default has occurred and is
continuing under this Mortgage, Mortgagee shall have no right to terminate, cancel, modify, change,
supplement, alter or amend the Timber Lease. Mortgagor represents and warrants that it has
delivered to Mortgagee a true and accurate copy of the Timber Lease, together with all amendments
thereto if any.




          6.6.4      Unless Mortgagee shall otherwise expressly consent in writing, the fee title to the
Leasehold Premises and the leasehold estate in the Leasehold Premises shall not merge but shall
always remain separate and distinct, notwithstanding the union of said estates either in the lessor
or in the lessee under the Timber Lease, or in a third party by purchase or otherwise.




     6.7      Appointment, Rights and Obligations of Mortgagee as Collateral Agent.  (a)
The Lenders, by their acceptance of the benefits of this Mortgage and their execution of the Credit
Agreement, hereby designate Mortgagee as agent to act as specified herein. Administrative Agent
and Lenders hereby authorize, and each subsequent holder of any of the Notes by the acceptance of
such Note shall be deemed irrevocably to authorize, Mortgagee to take such action on its behalf
pursuant to the Credit Agreement and under the provisions of this Mortgage and to exercise such
powers and to perform such duties hereunder as are specifically



33









 




delegated to or required of Lenders
by the terms hereof and such other powers as are reasonably incidental thereto. Lenders may
perform any of its duties hereunder by or through its agents or employees.




          (b) If Lenders shall request instructions from the other Lenders pursuant to the Credit
Agreement with respect to any act or action (including failure to act) in connection with this
Mortgage, the Credit Agreement or any other Loan Document, such Lenders shall be entitled to
refrain from such act or taking such action unless and until it shall have received instructions
from the Lenders and shall not incur liability to any party by reason of so refraining.




          (c) Borrower shall be entitled to rely, and shall be fully protected in relying, on the fact
that Mortgagee is acting as agent on behalf of the Lenders until such time as Borrower shall have
received a written notice from Lenders stating that Mortgagee is no longer acting in its capacity
as agent for the Lenders.




     6.8      Date of Mortgage. The date of this Mortgage is intended as a date for the
convenient identification of this Mortgage and is not intended to indicate that this Mortgage was
executed and delivered on that date.



     6.9 Conflict. In the event of any conflict between the terms of this Mortgage and the
terms of the Credit Agreement, the terms of the Credit Agreement shall control.



     6.10 Survival. The obligations of the Mortgagor under any provision hereof
specifically providing for indemnification or reimbursement of fees, costs and expenses incurred by
any of the Lenders in connection with this Mortgage and the other Loan Documents shall in each case
survive the payment in full in cash of all the Obligations. All covenants, agreements,
representations and warranties made by Mortgagor herein or in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to this Mortgage or any
other Loan Document shall be considered to have been relied upon by the Lenders and shall survive
the execution and delivery of this Mortgage and the Loan Documents and the making of any Loan,
regardless of any investigation made by Lenders or on its behalf and notwithstanding that Lenders
may have had notice or knowledge of any Default or Event of Default or incorrect representation or
warranty at the time any credit is extended under the Loan Documents.



[Remainder of page intentionally left blank; signature page to follow.]




34









 





     IN WITNESS WHEREOF, the undersigned Mortgagor has caused this Mortgage to be executed by its
duly authorized Manager on the date of the acknowledgment of the Mortgagor’s signature below, to be
effective as of the day and year first written above.



	 	 	 	 	 	 	 
	 	 	 MORTGAGOR:  
	 
	 	 	 	 	 	 
	 	 	TIMBERLANDS II, LLC ,
	 	 	a Delaware limited liability company
	 
	 	 	 	 	 	 
	 	 	By:
     WELLS TIMBERLAND MANAGEMENT 
	 	 	ORGANIZATION, LLC,
	 	 	a Georgia limited
liability company, Its Manager
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Jess E. Jarratt
	 	 	Title: President






STATE OF GEORGIA

COUNTY OF                     




     I, the undersigned authority, a Notary Public in and for said County in said State, hereby
certify that Jess E. Jarratt, whose name as President of Wells Timberland Management Organization,
LLC, a Georgia limited liability company, as Manager of TIMBERLANDS II, LLC, a Delaware limited
liability company, is signed to the foregoing instrument, and who is known to me, acknowledged
before me on this day that, being informed of the contents of said instrument, he, as such
President and with full authority, executed the same voluntarily for and as the act of said limited
liability company, acting in its capacity as Manager of said limited liability company as
aforesaid.



     Given under my hand and official seal this the                      day of October, 2007.



	 	 	 	 	 	 	 
	 	 	 
	 	 	Notary Public

	 
	 	 	 	 	 	 
	[AFFIX SEAL]

	 	My Commission expires:	 	 	 	 
	 

	 	 	 	 	 	 





[Signature and Acknowledgement Page to Mortgage, Security Agreement,

Assignment of Leases and Rents and Financing Statement]




-35-









 





EXHIBIT A




FEE PREMISES




 









 








EXHIBIT A-1




LEASEHOLD PREMISES




 









 








EXHIBIT B




LEASEHOLD ESTATE INSTRUMENTS




 









 








EXHIBIT C

PERMITTED ENCUMBRANCES



All matters shown as pertaining to                                          County, Alabama on Schedule B of that certain
Loan Title Commitment Number                     (fee) and that certain Loan Title Commitment Number
                    (leasehold) issued by First American Title Insurance Company, as such Commitments are
marked at closing by First American Title Company and approved by Administrative Agent.





 












 




Exhibit L




[Intentionally omitted]

















 




Exhibit M




[Intentionally omitted]

















 




Exhibit N




[Intentionally omitted]

















 





EXHIBIT O




DEPOSIT ACCOUNT CONTROL AGREEMENT

(No Notification1)



NOTE: This Deposit Account Control Agreement is one of two (2) deposit account control agreements
affecting the Account(s) identified on Exhibit A hereto. The Secured Party named below in this
Agreement states that it is the senior secured party and has the first priority security interest
in the Account(s). This Agreement shall be implemented with reference to that certain Deposit
Account Control Agreement with the Second Lien Secured Creditor (identified below) dated the date
hereof and in connection with the same Account(s). Consult with the Wachovia Treasury Services
Legal Risk Management Designated Officer of the Bank (named below in Section 7) if you have any
inquiry in connection with the operation of this Agreement.



This DEPOSIT ACCOUNT CONTROL AGREEMENT (“Agreement”) is made and entered into as of this 9th day of
October, 2007, by and among WACHOVIA BANK, NATIONAL ASSOCIATION as depositary bank (the “Bank”),
the Bank’s depositor customer, TIMBERLANDS II, LLC, a Delaware limited liability company (the
"Company”), and COBANK, ACB, as the administrative agent under the Senior Credit Agreement defined
below (the “Secured Party”).




Statement of Facts



The Bank acknowledges that, as of the date hereof, it maintains in the name of the Company the
deposit account(s) identified on Exhibit A attached hereto and made a part hereof (each an
"Account” and, collectively, the “Accounts”). One or more of the Accounts may be served by one or
more lockboxes operated by the Bank, which lockboxes (if any) also are listed on Exhibit A (each a
"Lockbox” and, collectively, the “Lockboxes”). The Account(s) and any Lockbox(es) are governed by
the terms and conditions of the Company’s commercial deposit account agreement published by the
Bank from time to time and, with respect to any Lockbox, also may be governed by a lockbox service
description between the Bank and the Company (collectively, with all applicable services
descriptions and/or agreements, the “Deposit Agreement”).



The Company and Wells Timberland Acquisition, LLC have entered in a Credit Agreement, dated as of
the date hereof (together with all extensions, modifications, consolidations, supplements,
amendments, replacements, renewals, refinancings and restatements thereto and thereof, the “Senior
Credit Agreement”), with various lenders that are or may become parties thereto and the Secured
Party.



The Company hereby confirms to the Bank that the Company has granted to the Secured Party a
security interest in the following (collectively, the “Account Collateral”): (a) the Account(s),
(b) the Lockbox(es) and (c) the Items Collateral. The term “Items Collateral” means, collectively,
all checks, drafts, instruments, cash and other items at any time received in any Lockbox or for
deposit in any Account (subject to specific Lockbox instructions in effect for processing items),
wire transfers of funds, automated clearing house (“ACH”) entries, credits from merchant card






 




			
	1	 	Form will vary with each pledged account.




1









 









transactions and other electronic funds transfers or other funds deposited in, credited to, or held
for deposit in or credit to, any Account.



The parties desire to enter into this Agreement in order to set forth their relative rights and
duties with respect to the Account Collateral. In consideration of the mutual covenants herein as
well as other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:




1. Control of the Accounts



(a) The Statement of Facts is incorporated herein by reference. The Bank represents that it is a
“bank”. The Company and the Bank acknowledge that each Account is a “deposit account”. Each party
to this Agreement acknowledges that this Agreement is an “authenticated” record and that the
arrangements established under this Agreement constitute “control” of each Account. Each of these
terms is used in this Agreement as defined in Article 9 of the Uniform Commercial Code as adopted
by the State of Georgia (the “Georgia UCC”).



(b) The Company represents and warrants to the Secured Party that Exhibit A contains a complete and
accurate list of all Accounts and Lockboxes maintained by the Company with the Bank and subject to
this Agreement. Nothing in this Agreement shall impose upon the Bank any duty to monitor or assure
the Company’s compliance with this Section 1(b).



(c) The Bank confirms that, as of the date of this Agreement, the Company and the Bank have not
entered into any agreement (other than the Deposit Agreement) with any person pursuant to which the
Bank is obligated to comply with instructions from such person as to the disposition of funds in
any Account or of Items Collateral except for that certain Deposit Account Control
Agreement among the Bank, the Company and Wachovia Bank, National Association, as administrative
agent (the “Second Lien Secured Creditor”), dated the date hereof (the “Second Lien Control
Agreement”). During the term of this Agreement the Bank will not enter into any agreement with any
person other than the Secured Party and the Second Lien Secured Creditor pursuant to which the Bank
will be obligated to comply with instructions from such person as to the disposition of funds in
any Account or of Items Collateral.



(d) The Company authorizes and directs the Bank to comply with all instructions given by the
Secured Party in accordance with this Agreement and permissible under the Deposit Agreement,
including directing the disposition of funds in any Account or as to any other matter relating to
any Account or other Account Collateral, without further consent by the Company.



(e) Each of the Company and the Secured Party hereby authorizes and instructs the Bank to act
solely upon the instructions of the Secured Party concerning the Lockbox(es) and the Account(s)
including, but not limited to, instructions to: (i) direct disposition of funds in the Account(s)
(including, but not limited to, dispositions to or for the benefit of the Secured Party and/or the
Bank), (ii) withdraw any amount from the Account(s), and (iii) otherwise exercise any authority or
power with respect to the Lockbox(es), the Account(s) and other Account Collateral, which
instructions shall be delivered to the Bank in accordance with the provisions of Section 7 of this
Agreement. The Secured Party’s right to give instructions to the Bank regarding any Account
Collateral also shall include the right to give “stop payment orders” to the Bank for any item




2









 







presented to it against any Account even if it results in dishonor of the item presented against
the Account.



(f) Effective as of the date of this Agreement, all Items Collateral received by the Bank in a
Lockbox (subject to specific Lockbox instructions for processing the contents of mail received in
the Lockbox) shall be deposited to the Account listed opposite such Lockbox in Exhibit A; and all
other Items Collateral received directly by the Bank for credit to an Account shall be credited to
such Account. The Bank shall not permit any of the officers, agents or other representatives of
the Company or any of its affiliates or the Second Lien Secured Creditor to direct the disposition
of funds in any Account or to otherwise exercise any authority or power with respect to any
Lockbox, Account or other Account Collateral.



(g) Federal Reserve Regulations and Operating Circulars, ACH or other clearing house rules and
other applicable law (including, without limitation, the Uniform Commercial Code as adopted by the
State in which the respective Account identified on Exhibit A is located (hereinafter, the
"Applicable UCC”)) and the Deposit Agreement shall also apply to the Secured Party’s exercise of
control over the Account(s) and the Account Collateral and to the performance of services hereunder
by the Bank. Each of the Company and the Secured Party authorizes and instructs the Bank to supply
the Company’s or the Secured Party’s endorsement, as appropriate, to any Items Collateral that the
Bank shall receive for deposit to any Account.



2. Statements and Other Information The Bank will send to the Secured Party (in a manner
consistent with the Bank’s standard practices) at the Secured Party’s address specified in Section
7, copies of all Account statements and communications (but not canceled checks) that the Bank is
required to send to the Company under the Deposit Agreement. The Bank also shall provide to each
of the Company and the Secured Party (as a service under this Agreement and/or the Deposit
Agreement) copies of Account statements and other deposit account information, including Account
balances, by telephone and by computer communication, to the extent practicable when requested by
the Company or by the Secured Party. The Company consents to the Bank’s release of such Account
information to the Secured Party. The Bank’s liability for its failure to comply with this Section
2 shall not exceed its cost of providing such information.




3. Setoff; Returned Items and Charges



(a) The Bank will not exercise any security interest (except for the security interest provided in
Section 4-210, “Security Interest of Collecting Bank in Items, Accompanying Documents and
Proceeds”, of the Applicable UCC), lien, right of setoff, deduction, recoupment or banker’s lien or
any other interest in or against any Account or any other Account Collateral, and the Bank hereby
subordinates to the Secured Party any such security interest (except for such security interest
provided in such Section 4-210 of the Applicable UCC), lien or right which the Bank may have
against any Account or other Account Collateral. Notwithstanding the preceding sentence, the
Secured Party and the Company agree that the Bank at all times (including following commencement of
any bankruptcy or insolvency proceeding by or against the Company) may set off and charge against
any Account (regardless of any agreement by the Company to compensate the Bank by means of balances
in the Account) all of the following as permitted by the Deposit Agreement (collectively, the
"Permitted Debits”): (i) the face amount of each Returned Item (hereinafter defined), (ii) usual
and customary service charges and fees, (iii) account maintenance




3









 







fees, (iv) transfer fees, (v) out-of-pocket fees and expenses (including attorneys’ reasonable
fees) incurred by the Bank (including those in connection with the negotiation, administration or
enforcement of this Agreement), and (vi) adjustments or corrections of posting or encoding errors;
whether any Permitted Debit shall have accrued or been incurred before or after the date of this
Agreement. “Returned Item” means any (i) Items Collateral deposited into or credited to an Account
before or after the date of this Agreement and returned unpaid or otherwise uncollected or subject
to an adjustment entry, whether for insufficient funds or any other reason, and without regard to
the timeliness of such return or adjustment or the occurrence or timeliness of any other party’s
notice of nonpayment or adjustment; (ii) Items Collateral subject to a claim against the Bank for
breach of transfer, presentment, encoding, retention or other warranty under Federal Reserve
Regulations or Operating Circulars, ACH or other clearing house rules, or applicable law
(including, without limitation, Articles 3, 4 and 4A of the Applicable UCC); and (iii) demand for
chargeback in connection with a merchant card transaction.



(b) If (i) the Bank were unable to set off or charge any Permitted Debit against any Account
because of insufficient funds in the Account, or (ii) the Bank in good faith were to believe that
any legal process or applicable law prohibited such setoff or charge against any Account, or (iii)
the Account were closed, then: (A) the Bank may charge such Permitted Debits to and set off same
against any other Account; and (B) if there were insufficient funds in the Account(s) against which
to charge or set off such Permitted Debits, then the Bank shall demand (unless the Bank shall
believe in good faith that any legal process or applicable law prohibits such demand) that the
Company pay, and the Company shall pay, to the Bank promptly upon the Company’s receipt of the
Bank’s written demand therefor, the full amount of all unpaid Permitted Debits.



(c) If there were insufficient funds in the Account(s) against which the Bank could charge or set
off Permitted Debits and the Company shall have failed to pay the Bank the full amount of unpaid
Permitted Debits as described in paragraph (b) of this Section 3, then the Bank may demand that the
Secured Party pay, and the Secured Party shall pay, to the Bank within five (5) business days of
the Secured Party’s receipt of the Bank’s written demand therefor, the full amount of unpaid
Permitted Debits; provided, however, as to unpaid Permitted Debits that are service charges, fees
or expenses, the Secured Party shall be required to pay to the Bank only those service charges,
fees or expenses attributable to any Account that shall have been incurred in connection with any
Account on or after the date of this Agreement and on or before the date of termination of this
Agreement.




4. Exculpation of Bank



(a) At all times the Bank shall be entitled to rely upon any communication it receives from the
Secured Party in connection with this Agreement or that the Bank shall believe in good faith to be
a communication received from the Secured Party in connection with this Agreement, and the Bank
shall have no obligation to investigate or verify the authenticity or correctness of any such
communication. The Bank shall have no liability to the Company or the Secured Party for (i)
honoring or following any instruction the Bank shall receive from (or shall believe in good faith
to be from) the Secured Party in accordance with this Agreement and (ii) not honoring or following
any instruction the Bank shall receive from (or shall believe in good faith to be from) the Company
in accordance with this Agreement or the Deposit Agreement. The Bank shall not be responsible for
the validity, priority or enforceability of the Secured Party’s security interest in




4









 







any Account Collateral, nor shall the Bank be responsible for enforcement of any agreement between
the Company and the Secured Party.



(b) The Bank shall be responsible only for the actual loss that a court having jurisdiction over
the Account(s) shall have determined had been incurred by the Company or the Secured Party and had
been caused by the Bank’s gross negligence or willful misconduct in its performance of its
obligations under this Agreement. The Bank shall have no liability to any party for failure of, or
delay in, its performance under this Agreement resulting from any “act of God”, war or terrorism,
fire, other catastrophe or force majeure, electrical or computer or telecommunications failure, any
event beyond the control of the Bank, or fraud committed by any third party. Nothing in this
Agreement shall create any agency, fiduciary, joint venture or partnership relationship between the
Bank and the Company or between the Bank and the Secured Party. Except as shall be specifically
required under this Agreement or the Deposit Agreement or applicable law, the Bank shall have no
duty whatsoever to the Company in connection with the subject matter of this Agreement. Except as
shall be specifically required under this Agreement or applicable law, the Bank shall have no duty
whatsoever to the Secured Party in connection with the subject matter of this Agreement.




5. Indemnification



(a) The Company hereby indemnifies the Bank and holds it harmless against, and shall reimburse the
Bank for, any loss, damage or expense (including attorneys’ reasonable fees and expenses, court
costs and other expenses) including, but not limited to, (i) unpaid charges, fees, and Returned
Items for which the Company and/or the Secured Party originally received credit or remittance by
the Bank, and (ii) any loss, damage or expense the Bank shall incur as a result of (A) entering
into or acting pursuant to this Agreement, (B) honoring and following any instruction the Bank may
receive from (or shall believe in good faith to be from) the Secured Party, and (C) not honoring or
following any instruction it shall receive from (or shall believe in good faith to be from) the
Company in accordance with this Agreement. The Company shall not be responsible for any loss,
damage, or expense that a court having jurisdiction shall have determined had been caused by the
Bank’s gross negligence or willful misconduct in its performance of its obligations under this
Agreement.



(b) Without limiting in any way the Secured Party’s obligation to pay or reimburse the Bank as
otherwise specified in this Agreement, the Secured Party hereby indemnifies the Bank and holds it
harmless against any loss, damage or expense (including attorneys’ reasonable fees and expenses,
court costs and other expenses) which the Bank shall incur as a result of honoring or following any
instruction it shall receive from (or shall believe in good faith to be from) the Secured Party
under this Agreement and not honoring or following any instruction the Bank shall receive from (or
shall believe in good faith to be from) the Company in accordance with this Agreement. The Secured
Party shall not be responsible for any loss, damage, or expense that a court having jurisdiction
shall have determined had been caused by the Bank’s gross negligence or willful misconduct in its
performance of its obligations under this Agreement.



(c) No party hereto shall be liable to any other party under this Agreement for lost profits or
special, indirect, exemplary, consequential or punitive damages, even if such party shall have been
advised of the possibility of such damages.




5









 








6. Third Party Claims; Insolvency of Company



(a) In the event that the Bank shall receive notice that any third party shall have asserted an
adverse claim by legal process against any Account or any sums on deposit therein, any Lockbox or
other Account Collateral, whether such claim shall have arisen by tax lien, execution of judgment,
statutory attachment, garnishment, levy, claim of a trustee in bankruptcy, debtor-in-possession,
post-bankruptcy petition lender, court appointed receiver, or other judicial or regulatory order or
process (each, a “Claim”), the Bank may, in addition to other remedies it possesses under the
Deposit Agreement, this Agreement or at law or in equity: (i) suspend disbursements from such
Account without any liability until the Bank shall have received an appropriate court order or
other assurances reasonably acceptable to the Bank in its sole discretion establishing that funds
may continue to be disbursed according to instructions then applicable to such Account, and/or (ii)
interplead such funds in such Account as permitted by applicable law. The Bank’s costs, expenses
and attorneys’ reasonable fees incurred in connection with any such Claim are Permitted Debits and
shall be reimbursed to the Bank in accordance with the provisions of Section 3 above.



(b) If a bankruptcy or insolvency proceeding were commenced by or against the Company, the Bank
shall be entitled, without any liability, to refuse to permit withdrawals or transfers from the
Account(s) until the Bank shall have received an appropriate court order or other assurances
reasonably acceptable to the Bank in its sole discretion establishing that (i) continued
withdrawals or transfers from the Account(s) or honoring or following any instruction from either
the Company or the Secured Party are authorized and shall not violate any law, regulation, or order
of any court and (ii) the Bank shall have received adequate protection for its right to set off
against or charge the Account(s) or otherwise be reimbursed for all Permitted Debits.




7. Notice and Communications



(a) All communications given by any party to another as required or permitted under this Agreement
must be in writing, directed to the respective designated officer (“Designated Officer”) set forth
under paragraph (c) of this Section 7, and delivered to each recipient party at its address (or at
such other address and to such other Designated Officer as such party may designate in writing to
the other parties in accordance with this Section 7) either by U.S. Mail, receipted delivery
service or via telecopier facsimile transmission. All communications given by the Secured Party to
the Bank must be addressed and delivered contemporaneously to both the Bank’s Designated Officer
and the Bank’s “with copy to” addressee at their respective addresses set forth below.



(b) Any communication made to the Bank under this Agreement shall be deemed delivered to the Bank
if delivered by: (i) U.S. Mail, on the date that such communication shall have been delivered to
the Bank’s Designated Officer; (ii) receipted delivery service, on the date and time that such
communication shall have been delivered to the Bank’s Designated Officer and receipted by the
delivery service; or (iii) telecopier facsimile transmission, on the date and at the time that such
communication shall have been delivered to the Bank’s Designated Officer and receipt of such
delivery shall have been acknowledged by the recipient telecopier equipment. Notwithstanding the
provisions of the preceding sentence, any communication hereunder to the




6









 







Bank that is an instruction delivered to the Bank and made by (or believed by the Bank in good
faith to be made by) the Secured Party shall be deemed received by the Bank when actually delivered
to the Bank’s Designated Officer if delivered before 2:00 PM Eastern time on a banking day or, if
such communication were delivered after 2:00 PM Eastern time on a banking day or delivered on a day
that is not a banking day, then such communication shall be deemed delivered to the Bank’s
Designated Officer at the Bank’s opening of its business on the next succeeding banking day. A
“banking day” means any day other than any Saturday or Sunday or other day on which the Bank is
authorized or required by law to close.



(c) Any instruction delivered to the Bank shall be implemented by the Bank by the close of the
Bank’s business on the banking day that shall be two (2) banking days after the banking day on
which such instruction was actually received by the Bank’s Designated Officer.




	 	 	 	 	 	 	 	 	 	 	 
	 	 	Address for Secured Party:	 	CoBank, ACB	 	 	 	 
	 	 	 	 	as Administrative Agent	 	 	 	 
	 	 	 	 	5500 South Quebec St.	 	 	 	 
	 	 	 	 	Greenwood Village, Colorado 80111	 	 	 	 
	 	 	 	 	Attention: Syndications Coordinator, Corporate Finance	 	 	 	 
	 	 	 	 	Telecopier No.: 303-694-5830	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Address for Bank:	 	Wachovia Bank, National Association	 	 	 	 
	 	 	 	 	Mail Code NC 0817	 	 	 	 
	 	 	 	 	301 South Tryon Street — Floor M7	 	 	 	 
	 	 	 	 	Charlotte, North Carolina 28288	 	 	 	 
	 	 	 	 	Attention: TS Legal Risk Mgmt	 	 	 	 
	 	 	 	 	Fax: 704.374.4224	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	with copy to:	 	Wachovia Bank, National Association	 	 	 	 
	 

	 	 	 	Mail Code	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Attn: Mr/s
	 	 
	 	, Designated Officer	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Fax:	 	 	 	 
	 

	 	 	 	 



	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Address for Company: 	 	Timberlands II, LLC
c/o Wells REIT, Inc.	 	 	 	 
	 	 	 	 	6200 The Corners Parkway	 	 	 	 
	 	 	 	 	Norcross, GA 30092-3365	 	 	 	 
	 	 	 	 	Attention: Don Warden	 	 	 	 
	 	 	 	 	Facsimile No.: (770) 243-8367	 	 	 	 






8. Termination



(a) This Agreement may be terminated by the Secured Party at any time upon receipt by the Bank of
the Secured Party’s written notice of termination issued substantially in the form of Exhibit B
attached hereto and made a part hereof. This Agreement may be terminated by the




7









 







Company only with the express prior written consent of the Secured Party and, in that case, the
Secured Party and the Company shall jointly so notify the Bank in writing.



(b) This Agreement may be terminated by the Bank at any time on not less than thirty (30) calendar
days’ prior written notice given to each of the Company and the Secured Party.



(c) The Bank’s rights to demand and receive reimbursement from the Company under Section 3 above
and the Company’s indemnification of the Bank under Section 5 above shall survive termination of
this Agreement. The Bank’s right to demand reimbursement from the Secured Party under Section 3
above shall survive termination of this Agreement for a period of ninety (90) calendar days after
the date of termination of this Agreement. The Bank’s right to demand indemnification of the Bank
from the Secured Party under Section 5 above shall survive termination of this Agreement for a
period of one hundred eighty (180) calendar days after the date of termination of this Agreement.



(d) Upon termination of this Agreement but subject to the provisions of the Second Lien Control
Agreement, unless otherwise required by the provisions of the Second Lien Control Agreement, all
funds thereafter on deposit or deposited in the Accounts and all Items Collateral thereafter
received by the Bank shall be subject solely to the provisions of the Deposit Agreement between the
Company and the Bank.




9. Miscellaneous



(a) The Company shall not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Bank and the Secured Party. The Secured Party shall not
assign or transfer any of its rights or obligations under this Agreement without the prior written
consent of the Bank. The Bank shall not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of the Secured Party and the Company, except that
the Bank may transfer its rights and obligations under this Agreement to any direct or indirect
depositary subsidiary of Wachovia Corporation or, in the event of a merger or acquisition of the
Bank, to the Bank’s successor depositary institution (which subsidiary or successor shall be a
“bank” as defined in Section 9-102 of the Georgia UCC).



(b) The law governing the perfection and priority of the Secured Party’s security interest in the
Account Collateral shall be the law of the State of Georgia, which State shall also be the
“jurisdiction” of the Bank within the meaning of Section 9-304 of the Georgia UCC. The Accounts,
Items Collateral, operation of the Accounts, and Deposit Agreement shall be governed by the
Applicable UCC, Federal Regulations and Operating Circulars, ACH or other clearing house rules, and
other applicable laws.



(c) This Agreement may be executed in any number of counterparts, each of which shall be an
original and all of which taken together shall constitute one and the same Agreement. Delivery of
an executed signature page counterpart to this Agreement via telecopier facsimile transmission
shall be effective as if it were delivery of a manually delivered, original, executed counterpart
thereof. This Agreement can be modified or amended only by written agreement of all of the parties
hereto evidencing such modification or amendment.




8









 







(d) To the extent that any conflict may exist between the provisions of any other agreement between
the Company and the Bank and the provisions of this Agreement, then this Agreement shall control.
It is understood and agreed that nothing in this Agreement shall give the Secured Party any benefit
or legal or equitable right, remedy or claim against the Bank under the Deposit Agreement.



(e) Each of the Secured Party and the Bank respectively agrees that it shall not cite or refer to
this Agreement as precedent in any negotiation of any other Deposit Account Control Agreement to
which the Secured Party or any of its affiliates and the Bank shall be party.




[THE REMAINING SPACE ON THIS PAGE IS LEFT BLANK INTENTIONALLY.]





9









 







10. Waiver of Jury Trial EXCEPT AS PROHIBITED BY APPLICABLE LAW, EACH PARTY HERETO
IRREVOCABLY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING ANY
COUNTERCLAIM) OF ANY TYPE IN WHICH ANOTHER PARTY SHALL BE A PARTY AS TO ALL MATTERS ARISING
DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT.



IN WITNESS WHEREOF, each of the parties by its respective duly authorized officer has executed and
delivered this Agreement as of the day and year first written above.




	 	 	 	 	 	 	 	 	 
	 	 	BANK:	 	WACHOVIA BANK, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	 	 	Name: 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	COMPANY:	 	TIMBERLANDS II, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	WELLS TIMBERLAND MANAGEMENT	 	 
	 

	 	 	 	 	 	ORGANIZATION, LLC, as Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	 	 	Name: Jess E. Jarratt	 	 
	 	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SECURED PARTY: COBANK, ACB, as Administrative Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 

	 	 
	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 

	 	 






DEPOSIT
ACCOUNT CONTROL AGREEMENT 

SIGNATURE PAGE




10









 








EXHIBIT A

ACCOUNTS OF COMPANY




	 	 	 	 	 	 	 
	 	 	Related Lockbox	 	 	 	State in Which
	Account Number	 	Number, if any	 	Account Name	 	Account is Located
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 






11









 








EXHIBIT B




[To be Issued on Letterhead of Secured Party]




_______________200_




WACHOVIA BANK, NATIONAL ASSOCIATION

Mail Code NC 0817

301 South Tryon Street — Floor M7

Charlotte, North Carolina 28288

Attention: TS Legal Risk Mgmt, Designated Officer




TIMBERLANDS II, LLC

c/o Wells REIT, Inc.

6200 The Corners Parkway

Norcross, GA 30092-3365

Attention: Don Warden

Facsimile No.: (770) 243-8367




NOTICE OF TERMINATION OF DEPOSIT ACCOUNT CONTROL AGREEMENT




Ladies and Gentlemen:




     We refer you to the Deposit Account Control Agreement (No Notification) among Timberlands II,
LLC (the “Company”), you and us dated as of October 9, 2007 (the “Agreement”), a photocopy of which
is attached hereto. Capitalized terms used but not defined in this letter shall have the meanings
given them in the Agreement.



     We hereby notify you that by this letter we are exercising our right under Section 8(a) of the
Agreement (subject to your rights as set forth in the Agreement) to terminate the Agreement in
accordance with its terms. Accordingly the Agreement shall terminate at the close of the Bank’s
business [this day] [on ___, 200_], subject to those undertakings that shall survive
termination of the Agreement. Upon termination of the Agreement, all funds thereafter on deposit
or deposited in the Account(s) and all Items Collateral received by the Bank shall be subject
solely to the provisions of the Deposit Agreement between the Company and the Bank.



	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	COBANK, ACB, as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 






Attachment

WachDACC(nn)/BPB/1204/aw0906





12











 





EXHIBIT P




INTERCREDITOR AGREEMENT




among




COBANK, ACB,




as Administrative Agent for the Senior Lenders,




and




WACHOVIA BANK, NATIONAL ASSOCIATION,




as Administrative Agent for the Subordinated Lenders,




and




TIMBERLANDS II, LLC




and




WELLS TIMBERLAND ACQUISITION, LLC




as Borrowers,




and




The Other Loan Parties Identified Herein




Dated as of October 9, 2007




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	 	Page
	Section 1.
	 	Certain Definitions; Rules of Construction	 	2
	 
	 	 	 	 
	Section 2.
	 	Lien Priorities	 	10
	 
	 	 	 	 
	Section 3.
	 	Representations and Warranties	 	13
	 
	 	 	 	 
	Section 4.
	 	Transfer of Subordinated Loans or Senior Loans	 	15
	 
	 	 	 	 
	Section 5.
	 	Modifications, Amendments, Etc.	 	16
	 
	 	 	 	 
	Section 6.
	 	Lien Subordination	 	19
	 
	 	 	 	 
	Section 7.
	 	Releases of Subordinated Liens	 	29
	 
	 	 	 	 
	Section 8.
	 	Payment Subordination	 	30
	 
	 	 	 	 
	Section 9.
	 	Insurance	 	31
	 
	 	 	 	 
	Section 10.
	 	Waivers	 	31
	 
	 	 	 	 
	Section 11.
	 	Enforcement Action Against the Subordinated Exclusive Collateral	 	32
	 
	 	 	 	 
	Section 12.
	 	Rights of Subrogation; Bankruptcy	 	33
	 
	 	 	 	 
	Section 13.
	 	Rights of Cure	 	41
	 
	 	 	 	 
	Section 14.
	 	Right to Purchase Senior Loans	 	42
	 
	 	 	 	 
	Section 15.
	 	Obligations Hereunder not Affected	 	43
	 
	 	 	 	 
	Section 16.
	 	Notices	 	44
	 
	 	 	 	 
	Section 17.
	 	Estoppel	 	45
	 
	 	 	 	 
	Section 18.
	 	Further Assurances	 	45
	 
	 	 	 	 
	Section 19.
	 	No Third Party Beneficiaries; No Modification	 	46
	 
	 	 	 	 
	Section 20.
	 	Successors and Assigns	 	46
	 
	 	 	 	 
	Section 21.
	 	Counterpart Originals	 	46
	 
	 	 	 	 
	Section 22.
	 	Legal Construction	 	46
	 
	 	 	 	 
	Section 23.
	 	No Waiver; Remedies	 	46






i 




 









 








	 	 	 	 	 
	Section 24.
	 	No Joint Venture	 	46
	 
	 	 	 	 
	Section 25.
	 	Captions	 	46
	 
	 	 	 	 
	Section 26.
	 	Conflicts	 	47
	 
	 	 	 	 
	Section 27.
	 	No Release	 	47
	 
	 	 	 	 
	Section 28.
	 	Continuing Agreement	 	47
	 
	 	 	 	 
	Section 29.
	 	Severability	 	47
	 
	 	 	 	 
	Section 30.
	 	Injunction	 	47
	 
	 	 	 	 
	Section 31.
	 	Mutual Disclaimer	 	48
	 
	 	 	 	 
	Section 32.
	 	Legend	 	48
	 
	 	 	 	 
	Section 33.
	 	Bailee for Perfection, etc.	 	49
	 
	 	 	 	 
	Section 34.
	 	When Discharge of Obligations Deemed to not Have Occurred	 	50






ii 




 









 








INTERCREDITOR AGREEMENT




     THIS INTERCREDITOR AGREEMENT (this “Agreement”), dated as of October 9, 2007, among
(i) COBANK, ACB, in its capacity as the administrative agent (in such capacity, the “Senior
Administrative Agent”) for the Senior Lenders (such capitalized term and all other capitalized
terms used herein shall have the meanings provided in Section 1), (ii) WACHOVIA BANK,
NATIONAL ASSOCIATION, in its capacity as the administrative agent (in such capacity, the
“Subordinated Administrative Agent”) for the Subordinated Lenders, (iii) TIMBERLANDS II,
LLC, a Delaware limited liability company (“Wells Timberland”), and WELLS TIMBERLAND
ACQUISITION, LLC, a Delaware limited liability company, as the borrowers (“Wells
Acquisition” and, together with Wells Timberland, each a “Borrower” and collectively,
the “Borrowers”), and (iv) WELLS TIMBERLAND REIT, INC., a Maryland corporation, WELLS
TIMBERLAND TRS, INC., a Delaware corporation, and WELLS TRS HARVESTING OPERATIONS, LLC, a Delaware
limited liability company (“Wells TRS Subsidiary”), WELLS TIMBERLAND MANAGEMENT
ORGANIZATION, LLC, a Delaware limited liability company, WELLS REAL ESTATE FUNDS, INC., a Delaware
corporation, and WELLS TIMBERLAND OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
(together with the Borrowers, each, a “Loan Party” and collectively, the “Loan
Parties”).



W I T N E S S E T H:




     WHEREAS, pursuant to the Credit Agreement, dated as of the date hereof (together with all
extensions, modifications, consolidations, supplements, amendments, replacements, restatements and
Refinancings thereto and thereof permitted hereunder, the “Senior Credit Agreement”), among
the Borrowers, various lenders that are or may become a party thereto (each, a “Senior
Lender” and collectively, the “Senior Lenders”), and the Senior Administrative Agent,
the Senior Lenders have given their several commitments to make loans (collectively, the
“Senior Loans”) to the Borrowers in the original principal amount of $212,000,000.00, which
Senior Loans are secured (i) on a first priority basis by security interests on the Senior Priority
Collateral, (ii) on a second priority basis by security interests in the Subordinated Priority
Collateral and (iii) on an exclusive basis by first priority security interests on the Senior
Exclusive Collateral;



     WHEREAS, pursuant to the Subordinated Credit Agreement, dated as of the date hereof (together
with all extensions, modifications, consolidations, supplements, amendments, replacements,
restatements and Refinancings thereto and thereof permitted hereunder, the “Subordinated Credit
Agreement”), among the Borrowers, various lenders that are or may become a party thereto (each,
a “Subordinated Lender” and collectively, the “Subordinated Lenders”), and the
Subordinated Administrative Agent, the Subordinated Lenders have given their several commitments to
make loans (collectively, the “Subordinated Loans”) to the Subordinated Borrowers in the
original principal amount of $160,000,000.00, which Subordinated Loans and are secured (i) (a) on a
first priority basis by a security interest in the Subordinated Priority Collateral and (b) prior
to the Subordinated Exclusive Collateral Transfer Date, on a second priority basis by security
interests on the Senior Priority Collateral and (ii) on an exclusive basis by first priority
security interests on the Subordinated Exclusive Collateral;



1









 





     WHEREAS, the Senior Administrative Agent, on behalf of the Senior Lenders, and the
Subordinated Administrative Agent, on behalf of the Subordinated Lenders, desire to provide for
certain agreements with respect to the relationship between the Senior Loans and the Senior Loan
Documents, on the one hand, and the Subordinated Loans and the Subordinated Loan Documents, on the
other hand;



     WHEREAS, a condition precedent to the making of the Senior Loans and the Subordinated Loans is
that the Senior Administrative Agent, the Subordinated Administrative Agent and the Loan Parties
enter into this Agreement;



     NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Senior
Administrative Agent, on behalf of the Senior Lenders, the Subordinated Administrative Agent, on
behalf of the Subordinated Lenders, and the Loan Parties hereby agree as follows:



     Section 1. Certain Definitions; Rules of Construction.



     (a) The following terms (whether or not in bold lettering) when used in this Agreement,
including its preamble and recitals, shall, except where the context otherwise
requires, have the following meanings (such meanings to be equally applicable to the singular and
plural forms thereof and the use of any gender herein shall be deemed to include the other gender):



     “Affiliate”  is defined in the Senior Credit Agreement as in effect on the date
hereof.



     “Agreement”  is defined in the preamble and includes all amendments,
supplements, amendments and restatements or other modifications hereto in effect from time to time.



     “Bankruptcy Code” means Title 11 of the United States Code, as amended, supplemented,
restated or otherwise modified from time to time, together with all rules and regulations
promulgated thereunder.



     “Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or foreign
law for the relief of debtors.



     “Borrower”  and “Borrowers”  are defined in the preamble.



     “Business Day” means any day other than a Saturday, Sunday or other day on which banks
are authorized or required to be closed in New York, New York or Denver, Colorado.



     “Cash Collateral” has the meaning provided for in Section 363(a) of the Bankruptcy
Code.



     “Collateral” means, collectively, the Common Collateral, the Senior Exclusive
Collateral and the Subordinated Exclusive Collateral.



2









 





     “Collateral Disposition Proceeds”  means all Collateral Disposition Proceeds (as
defined in the Senior Credit Agreement as in effect on the date hereof) that have been paid on
account of any of the Senior Priority Collateral.



     “Collateral Insurance Proceeds”  means all insurance proceeds that have been paid on
account of any of the Senior Priority Collateral.



     “Common Collateral” means, collectively, all of Senior Priority Collateral and the
Subordinated Priority Collateral, but expressly excluding the Senior Exclusive Collateral and the
Subordinated Exclusive Collateral.



     “Cure Period”  is defined in clause (a) of Section 13.



     “Default”  means “Default” as defined in the Senior Credit Agreement or the
Subordinated Credit Agreement, as the case may be, as in effect on the date hereof.



     “DIP Financing”  is defined in clause (h) of Section 12.



     “Discharge of the Senior Obligations” means, except to the extent otherwise provided
in clause (i) of Section 34, with respect to the Senior Obligations confirmation by
the Senior Administrative Agent of (i) payment in full in cash of the principal of and interest
(including interest accruing on or after the commencement of any Insolvency or Liquidation
Proceeding at the rate set forth in the Senior Credit Agreement, whether or not such interest would
be allowed or allowable in such Insolvency or Liquidation Proceeding) and premium, if any, on all
Indebtedness outstanding under the Senior Loan Documents; (ii) payment in full in cash of all other
Senior Obligations (including monetary obligations incurred during the pendency of any Insolvency
or Liquidation Proceeding, regardless of whether such monetary obligations would be allowed or
allowable in such proceeding) other than Unasserted Contingent Obligations; (iii) termination or
cash collateralization of all Obligations under Interest Rate Agreements entered into by the
Borrowers with any Senior Lender (or any of its Affiliates) in connection with the Senior Credit
Agreement (in an amount satisfactory to the Senior Administrative Agent); and (iv) termination of
all other commitments of the Senior Secured Parties under the Senior Loan Documents.



     “Discharge of the Subordinated Obligations” means, except to the extent otherwise
provided in clause (ii) of Section 34, with respect to the Subordinated Obligations
confirmation by the Subordinated Administrative Agent of (i) payment in full in cash of the
principal of and interest (including interest accruing on or after the commencement of any
Insolvency or Liquidation Proceeding at the rate set forth in the Subordinated Credit Agreement,
whether or not such interest would be allowed or allowable in such Insolvency or Liquidation
Proceeding) and premium, if any, on all Indebtedness outstanding under the Subordinated Loan
Documents; (ii) payment in full in cash of all other Subordinated Obligations (including monetary
obligations incurred during the pendency of any Insolvency or Liquidation Proceeding, regardless of
whether such monetary obligations would be allowed or allowable in such proceeding) other than
Unasserted Contingent Obligations; and (iii) termination of all other commitments of the
Subordinated Secured Parties under the Subordinated Loan Documents.



     “Disposition” is defined in clause (a)(ii) of Section 7.



3









 





     “Distribution” means, with respect to any Indebtedness, other obligation or security,
(a) any payment or distribution by any Person of cash, securities or other property, by set-off or
in any other manner, on account of such Indebtedness, other obligation or security; (b) any
redemption, purchase or other acquisition of such Indebtedness, other obligation or security by any
Person, including, without limitation, upon the exercise of any rights with respect of such
Indebtedness, other obligation or security; or (c) the granting of any lien or security interest to
or for the benefit of the holders of such Indebtedness or other obligation in or upon any property
of any Person.



     “Eligibility Requirements” means any Person that (i) has total assets (in name or
under management) in excess of $600,000,000 and (except with respect to a pension advisory firm or
similar fiduciary) capital/statutory surplus or shareholder’s equity of $250,000,000, (ii) is
regularly engaged in the business of making or owning (or, in the case of a pension fund advisory
firm or similar fiduciary, managing investments in) commercial real estate loans (including
mezzanine and second lien loans) or operating commercial mortgage properties and (iii) is not a
Prohibited Person.



     “Enforcement Action” means any (i) judicial or non-judicial foreclosure proceeding,
the exercise of any power of sale, the taking of a deed or assignment in lieu of foreclosure, the
obtaining of a receiver or the taking of any other enforcement action against all or any part of
the Collateral or any Loan Party, as the case may be, including, without limitation, the taking of
possession or control thereof, (ii) U.C.C. sale, (iii) acceleration of, or demand or action taken
in order to collect, any Indebtedness, or portion thereof, secured by all or any part of the
Collateral (other than giving of notices of default and statements of overdue amounts), (iv)
exercise of any right or remedy available to the Senior Administrative Agent or the Senior Lenders
under the Senior Loan Documents, or to the Subordinated Administrative Agent or the Subordinated
Lenders under the Subordinated Loan Documents, at law, in equity or otherwise with respect to the
Collateral or any Loan Party, as the case may be, or (v) the commencement by any Senior Secured
Party or Subordinated Secured Party of any legal proceedings or actions against or with respect to
all or any part of the Collateral or any Loan Party, as the case may be, to facilitate the actions
described in clause (i), (ii), (iii) or (iv).



     “Equity Interests” is defined in the Senior Credit Agreement as in effect on the date
hereof.



     “Equity Raise Account” is defined in the Subordinated Credit Agreement as in effect on
the date hereof.



     “Equity Raise Waterfall” is defined in the Subordinated Credit Agreement as in effect
on the date hereof.



     “Event of Default” means “Event of Default” as defined in the Senior Credit Agreement
or the Subordinated Credit Agreement, as the case may be, as in effect on the date hereof.



     “Indebtedness” means all Obligations that constitute “Indebtedness” as defined in the
Senior Credit Agreement as in effect on the date hereof.



4









 





     “Insolvency or Liquidation Proceeding”  means (i) any voluntary or involuntary case or
proceeding under the Bankruptcy Code with respect to any Loan Party; (ii) any other voluntary or
involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding with respect to any Loan Party or
with respect to a substantial portion of their respective assets; (iii) any liquidation,
dissolution, reorganization or winding up of any Loan Party whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy; or (iv) any assignment for the benefit of
creditors or any other marshalling of assets and liabilities of any Loan Party.



     “Interest Rate Agreement”  means any interest rate swap, hedge, cap, collar or similar
agreement or arrangement designed to protect any Borrower against fluctuations in interest rates.



     “Interest Reserve”  is defined in the Senior Credit Agreement as in effect on the date
hereof.



     “Lien”  is defined in the Senior Credit Agreement as in effect on the date hereof.



     “Loan Party”  and “Loan Parties”  are defined in the preamble.



     “New Senior Agent”  is defined in Section 34.



     “New Subordinated Agent”  is defined in Section 34.



     “Obligations” means all obligations (including, without limitation, the Senior
Obligations and Subordinated Obligations) of every nature of each Loan Party from time to time owed
to any Senior Secured Party, any Subordinated Secured Party or their respective Affiliates under
the Senior Loan Documents, the Subordinated Loan Documents or Interest Rate Agreements with a
Senior Lender, whether for principal, interest or payments for early termination of Interest Rate
Agreements, fees, expenses, indemnification or otherwise and all guarantees of any of the foregoing
(in each case whether direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary or liquidated or unliquidated).



     “Person”  is defined in the Senior Credit Agreement as in effect on the date hereof.



     “Pledged Collateral”  is defined in Section 33.



     “Prohibited Person”  means a Person (i) whose property or interest in property is
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) who engages in any dealings or transactions
prohibited by Section 2 of such Executive Order, or is otherwise associated with any such Person in
any manner that violates such Section 2, or (iii) is on the list of Specially Designated Nationals
and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department
of Treasury’s Office of Foreign Assets Control regulation or executive order.



     “Protective Advances”  means (i) all sums advanced by the Senior Administrative Agent
or the Senior Lenders (or the Subordinated Administrative Agent or the Subordinated Lenders if



5









 




the Subordinated Administrative Agent has provided the Senior Administrative Agent at least
five Business Days’ prior written notice of the intention of the Subordinated Secured Parties to
make Protective Advances with respect to the Senior Priority Collateral and the Senior
Administrative Agent or Senior Lenders have failed to take reasonable steps to protect the Senior
Priority Collateral) for the purpose of payment of real estate taxes (including special payments in
lieu of real estate taxes), maintenance costs, insurance premiums or other items (including capital
items) reasonably necessary to protect the Senior Priority Collateral from forfeiture, casualty,
loss or waste and (ii) all sums advanced by the Subordinated Administrative Agent or the
Subordinated Lenders (or the Senior Administrative Agent or the Senior Lenders if the Senior
Administrative Agent has provided the Subordinated Administrative Agent at least five Business
Days’ prior written notice of the intention of the Senior Secured Parties to make Protective
Advances with respect to the Subordinated Priority Collateral and the Subordinated Administrative
Agent or Subordinated Lenders have failed to take reasonable steps to protect the Subordinated
Priority Collateral) for the purpose of payment of real estate taxes (including special payments in
lieu of real estate taxes), maintenance costs, insurance premiums or other items (including capital
items) reasonably necessary to protect the Subordinated Priority Collateral from forfeiture,
casualty, loss or waste.




     “Qualified Manager” means (a) Forest Investment Associates, Resource Management
Service LLC, Molpus Woodlands Group, American Forest Management, Inc., Timberland Investment
Resources LLC, RMK Timberland Group and Hancock Timber Resource Group and (b) each other reputable
and experienced manager of national standing possessing experience in managing properties of
similar size, scope and value as the Common Collateral, provided that such manager has been
approved by Senior Administrative Agent, which consent shall not be unreasonably withheld or
delayed.



     “Qualified Transferee” means (a) the Subordinated Administrative Agent or an Affiliate
of the Subordinated Administrative Agent; (b) a real estate investment trust, bank, saving and loan
association, investment bank, insurance company, trust company, commercial credit corporation,
pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan,
provided that any such Person referred to in this clause (b) satisfies the Eligibility
Requirements; (c) an investment company, money management firm or “qualified institutional buyer”
within the meaning of Rule 144A under the Securities Act of 1933, as amended, or an institutional
“accredited investor” within the meaning of Regulation D under the Securities Act of 1933, as
amended, provided that any such Person referred to in this clause (c) satisfies the
Eligibility Requirements; (d) an institution substantially similar to any of the foregoing entities
described in clauses (a), (b) or (c) that satisfies the Eligibility
Requirements; or (e) any Affiliate of any of the entities described in clauses (a),
(b) or (c) that satisfies the Eligibility Requirements and which such entity owns,
directly or indirectly, not less than 51% of the Equity Interest in such Affiliate, free and clear
of all Liens. Notwithstanding the foregoing, in no event shall any Loan Party or Affiliate thereof
be a Qualified Transferee.



     “Refinance” means, in respect of any Indebtedness, to refinance, extend, renew,
defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other
Indebtedness, in exchange or replacement for, such Indebtedness, in whole or in part. “Refinanced”
and “Refinancing” shall have correlative meanings.



6









 





     “Revenue Account” is defined in the Senior Credit Agreement as in effect on the date
hereof.



     “Revenue Waterfall” is defined in the Senior Credit Agreement as in effect on the date
hereof.



     “Senior Administrative Agent” is defined in the preamble.



     “Senior Cap Amount” is defined in clause (a) of Section 5.



     “Senior Credit Agreement” is defined in the first recital.



     “Senior Default Blockage Period” is defined in clause (c) of Section
8.



     “Senior Exclusive Collateral” means, collectively, (a) the Interest Reserve and the
other Interest Reserve Collateral (as defined in the Senior Credit Agreement as in effect on the
date hereof) and (b) the Equity Interests of Wells TRS Subsidiary and related collateral as
provided in the Senior Exclusive Collateral Pledge Agreement.



     “Senior Exclusive Collateral Pledge Agreement” means the Pledge Agreement in the form
of Exhibit G to the Senior Credit Agreement as in effect on the date hereof covering the pledge of
the Equity Interests of Wells TRS Subsidiary.



     “Senior Lender” and “Senior Lenders” are defined in the first
recital.



     “Senior Loan Documents” means the Senior Credit Agreement, the other Loan Documents
(as defined in the Senior Credit Agreement as in effect on the date hereof), including Interest
Rate Agreements entered into by either Borrower with a Senior Lender or its Affiliates, and each
other agreement, document and instrument providing for or evidencing any Senior Obligation, and any
other agreement, document or instrument executed or delivered at any time in connection with any
Senior Obligation, including any intercreditor or joinder agreement among holders of, Refinanced,
replaced, extended or renewed Senior Obligations, as each of the foregoing may be amended,
supplemented, restated, modified, Refinanced, replaced, extended or renewed from time to time in
accordance with the terms of this Agreement.



     “Senior Loan Modification” is defined in clause (a) of Section 5.



     “Senior Loans” is defined in the first recital.



     “Senior Obligations” means all obligations (monetary or otherwise) of any Senior Loan
Party arising under or in connection with the Senior Loan Documents, including principal, interest
(including post-default interest and interest accruing after the commencement of any Insolvency or
Liquidation Proceeding, whether or not a claim for post-filing or post-petition interest is allowed
in any such proceeding), reimbursement obligations, fees, indemnities, costs and expenses
(including the reasonable fees and disbursements of counsel to the Senior Administrative Agent and
each Senior Lender required to be paid by the Borrowers) that are owing under the Senior Loan
Documents, in each case whether now existing or hereafter incurred, direct or indirect, absolute or
contingent, and due or to become due.



7









 





     “Senior Priority Collateral”  means all of the assets and property of any Loan Party,
whether real, personal or mixed, with respect to which a Lien is granted as security for any Senior
Obligations, other than the Subordinated Priority Collateral, the Subordinated Exclusive Collateral
and the Senior Exclusive Collateral.



     “Senior Secured Parties” means, at any relevant time, the holders of Senior
Obligations at such time, including the Senior Administrative Agent and the Senior Lenders.



     “Senior Standstill Period” is defined in clause (a)(ii) of Section 6.



     “Subordinated Administrative Agent”  is defined in the preamble.



     “Subordinated Cap Amount”  is defined in clause (b) of Section 5.



     “Subordinated Credit Agreement”  is defined in the second recital.



     “Subordinated Exclusive Collateral”  means the Equity Interests of Wells Acquisition
and Wells Timberland, and related collateral as provided in the Subordinated Exclusive Collateral
Pledge Agreement.



     “Subordinated Exclusive Collateral Enforcement Conditions”  is defined in clause
(a) of Section 11.



     “Subordinated Exclusive Collateral Transfer Date”  is defined in clause (d) of
Section 11.



     “Subordinated Exclusive Guarantor”  means Wells Real Estate Funds, Inc., a Georgia
corporation.



     “Subordinated Exclusive Guaranty”  means the Guaranty of the Subordinated Exclusive
Guarantor in the form of Exhibit J-1 to the Subordinated Credit Agreement as in effect on the date
hereof.



     “Subordinated Exclusive Collateral Pledge Agreement”  means, collectively, the Pledge
Agreements in the form of Exhibit G-1 and G-2 to the Subordinated Credit Agreement
as in effect on the date hereof and covering the pledge of the Equity Interests of Wells
Acquisition and Wells Timberland.



     “Subordinated Lender”  and “Subordinated Lenders”  are defined in the
second recital.



     “Subordinated Loan Documents”  means the Subordinated Credit Agreement and the Loan
Documents (as defined in the Subordinated Credit Agreement as in effect as of the date hereof),
including each other agreement, document and instrument providing for or evidencing any
Subordinated Obligation, and any other document or instrument executed or delivered at any time in
connection with any Subordinated Obligations, including any intercreditor or joinder agreement
among holders of Refinanced, replaced, extended or renewed Subordinated Obligations, as each of the
foregoing may be amended, supplemented, restated, modified,



8









 




Refinanced, replaced, extended or renewed from time to time in accordance with the terms of
this Agreement.




     “Subordinated Loan Modification” is defined in clause (b) of Section
5.



     “Subordinated Loans” is defined in the second recital.



     “Subordinated Obligations” means all obligations (monetary or otherwise) of any
Subordinated Loan Party arising under or in connection with the Subordinated Loan Documents,
including principal, interest (including post-default interest and interest accruing after the
commencement of any Insolvency or Liquidation Proceeding, whether or not a claim for post-filing or
post-petition interest is allowed in any such proceeding), reimbursement obligations, fees,
indemnities, costs and expenses (including the reasonable fees and disbursements of counsel to the
Subordinated Administrative Agent and each Subordinated Lender required to be paid by the
Borrowers) that are owing under the Subordinated Loan Documents, in each case whether now existing
or hereafter incurred, direct or indirect, absolute or contingent, and due or to become due.



     “Subordinated Priority Collateral” means the Equity Raise Account and the right to
receive payments under the Equity Raise Waterfall.



     “Subordinated Secured Parties” means, at any relevant time, the holders of
Subordinated Obligations at such time, including the Subordinated Administrative Agent and the
Subordinated Lenders.



     “Subordinated Standstill Period” is defined in clause (a)(i)(A) of Section
6.



     “Transfer” means any assignment, pledge, conveyance, sale, transfer, mortgage,
encumbrance, grant of a security interest, issuance of a participation interest, or other
disposition, either directly or indirectly, by operation of law or otherwise.



     “U.C.C.” means the Uniform Commercial Code as in effect in the State of New York,
provided, however, that if pursuant to the applicable provisions of any mandatory
law any or all of the attachment, perfection, priority or remedies with respect to the Common
Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of New York, the term U.C.C. shall mean the Uniform Commercial Code as in effect in such
other jurisdiction solely for purposes relating to such attachment, perfection, priority or
remedies.



     “Unasserted Contingent Obligations” means Obligations for taxes, costs,
indemnifications, reimbursements, damages and other liabilities in respect of which no assertion of
liability (whether oral or written) and no claim or demand for payment (whether oral or written)
has been made (and, in the case of Obligations for indemnification, no notice for indemnification
has been issued by the indemnitee) at such time.



     “Wells Acquisition” is defined in the preamble.



     “Wells Timberland” is defined in the preamble.



9









 





     “Wells TRS Subsidiary” is defined in the preamble.



     “Wells TRS Subsidiary Account” is defined in the Senior Credit Agreement as in effect
on the date hereof.



     (b) Unless otherwise specified, references in this Agreement to any Article or Section are
references to such Article or Section of this Agreement. The words “herein,” “hereof” and
“hereunder” and other words of similar import refer, as the context may require, this Agreement as
a whole, including all exhibits, and not to any particular section, subsection or clause contained
in this Agreement or such exhibit. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter
genders. The words “including”, “includes” and “include” shall be deemed to be followed by the
words “without limitation”, and where general words are followed by a specific listing of items,
the general words shall be given their widest meaning and shall not be limited by an enumeration of
specific matters; the word “or” is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the Senior Loan
Documents, the Subordinated Loan Documents and this Agreement, as the case may be); all references
to any law shall include any amendments and successors of the same; all references to any
agreement, instrument or document shall refer to each such agreement, instrument or document as
amended, restated or otherwise modified from time to time (subject to any restrictions regarding
the foregoing as may be set forth in this Agreement); and the words “asset” and “property” shall
have the same meaning and refer to tangible and intangible assets and properties, including cash,
securities, accounts and contract rights. Whenever any provision in this Agreement refers to the
knowledge (or an analogous phrase) of any Person, such words are intended to signify that a member
of management or officer or member of the board of directors of such Person has actual knowledge or
awareness of a particular fact or circumstance or a member of management or officer or director of
such Person, if it had exercised reasonable diligence, would have known or been aware of such fact
or circumstance. For purposes of computing a period of time from a specified date, the word “from”
means “from and including” and the word “to” and “until” each mean “to, but excluding.” Any
reference to a Loan Party that is an individual as “it” shall refer to such Loan Party in his or
her individual capacity.



     Section 2. Lien Priorities.



     (a) Notwithstanding the date, time, method, manner or order of grant, attachment or perfection
of any Liens securing the Subordinated Obligations granted on the Senior Priority Collateral or of
any Liens securing the Senior Obligations granted on the Senior Priority Collateral, and
notwithstanding any provision of the U.C.C. or any other applicable law, the Subordinated Loan
Documents or any defect or deficiencies in, or failure to perfect, the Liens securing the Senior
Obligations or any other circumstance whatsoever (including any Lien securing the Senior
Obligations being subordinated, voided, invalidated or lapsed), the Subordinated Administrative
Agent, on behalf of itself and the other Subordinated Secured Parties, hereby agrees that: (i) any
Lien purported to be granted on the Senior Priority Collateral securing any Senior Obligations now
or hereafter held by or on behalf of the Senior Administrative Agent, any other Senior Secured
Party or any agent or trustee therefor, regardless



10









 




of how or when acquired, whether by grant, possession, statute, operation of law, subrogation
or otherwise, shall be senior in all respects and prior to any Lien on the Senior Priority
Collateral securing the Subordinated Obligations; and (ii) any Lien purported to be granted on the
Senior Priority Collateral securing the Subordinated Obligations now or hereafter held by or on
behalf of the Subordinated Administrative Agent, any other Subordinated Secured Party or any agent
or trustee therefor, regardless of how acquired, whether by grant, possession, statute, operation
of law, subrogation or otherwise, shall be junior and Subordinated in all respects to all Liens on
the Senior Priority Collateral securing any Senior Obligations. All Liens on the Senior Priority
Collateral securing any Senior Obligations shall be and remain senior in all respects and prior to
all Liens on the Senior Priority Collateral securing any Subordinated Obligations for all purposes,
whether or not such Liens securing any Senior Loan Obligations are subordinated to any Lien
securing any other obligation of any Borrower, any other Loan Party or any other Person.




     (b) Notwithstanding the date, time, method, manner or order of grant, attachment or perfection
of any Liens securing the Senior Obligations granted on the Subordinated Priority Collateral or of
any Liens securing the Subordinated Obligations granted on the Subordinated Priority Collateral,
and notwithstanding any provision of the U.C.C. or any other applicable law, the Senior Loan
Documents or any defect or deficiencies in, or failure to perfect, the Liens securing the
Subordinated Obligations or any other circumstance whatsoever (including any Lien securing the
Subordinated Obligations being subordinated, voided, invalidated or lapsed), the Senior
Administrative Agent, on behalf of itself and the other Senior Secured Parties, hereby agrees that:
(i) any Lien purported to be granted on the Subordinated Priority Collateral securing any
Subordinated Obligations now or hereafter held by or on behalf of the Subordinated Administrative
Agent, any other Subordinated Secured Party or any agent or trustee therefor, regardless of how or
when acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise,
shall be senior in all respects and prior to any Lien on the Subordinated Priority Collateral
securing the Senior Obligations; and (ii) any Lien purported to be granted on the Subordinated
Priority Collateral securing the Senior Obligations now or hereafter held by or on behalf of the
Senior Administrative Agent, any other Senior Secured Party or any agent or trustee therefor,
regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or
otherwise, shall be junior and Subordinated in all respects to all Liens on the Subordinated
Priority Collateral securing any Subordinated Obligations. All Liens on the Subordinated Priority
Collateral securing any Subordinated Obligations shall be and remain senior in all respects and
prior to all Liens on the Subordinated Priority Collateral securing any Senior Obligations for all
purposes, whether or not such Liens securing any Subordinated Obligations are subordinated to any
Lien securing any other obligation of any Borrower, any other Loan Party or any other Person.



     (c) (i) Notwithstanding any provision of the Subordinated Loan Documents, the Subordinated
Administrative Agent, on behalf of itself and the other Subordinated Secured Parties, hereby agrees
that the Subordinated Obligations shall not be secured by any Lien purported to be granted on the
Senior Exclusive Collateral. The Subordinated Administrative Agent, on behalf of itself and the
other Subordinated Secured Parties, hereby acknowledges that the Senior Exclusive Collateral shall
only secure the Senior Obligations and that the Subordinated Administrative Agent and the other
Subordinated Secured Parties will have no right or interest, including any Lien, in the Senior
Exclusive Collateral. Without limiting the



11









 




foregoing, the Senior Secured Parties shall have the exclusive right to manage, enforce
rights, exercise all rights and remedies (including any Enforcement Action) and make determinations
with respect to the Senior Exclusive Collateral without regard to any interests of the Subordinated
Secured Parties, and the Subordinated Secured Parties will not take any action that would hinder
the exercise of any such rights by the Senior Secured Parties.




     (ii) Notwithstanding any provision of the Senior Loan Documents, the Senior Administrative
Agent, on behalf of itself and the other Senior Secured Parties, hereby agrees that the Senior
Obligations shall not be secured by any Lien purported to be granted on the Subordinated Exclusive
Collateral. The Senior Administrative Agent, on behalf of itself and the other Senior Secured
Parties, hereby acknowledges that the Subordinated Exclusive Collateral shall only secure the
Subordinated Obligations and that the Senior Administrative Agent and the other Senior Secured
Parties will have no right or interest, including any Lien, in the Subordinated Exclusive
Collateral. Without limiting the foregoing, the Subordinated Secured Parties shall have the
exclusive right to manage, enforce rights, exercise all rights and remedies (including any
Enforcement Action) and make determinations with respect to the Subordinated Exclusive Collateral
without regard to any interests of the Senior Secured Parties, and the Senior Secured Parties will
not take any action that would hinder the exercise of any such rights by the Subordinated Secured
Parties.



     (iii) The Senior Administrative Agent, on behalf of itself and the other Senior Secured
Parties, hereby acknowledges that the Subordinated Exclusive Guaranty shall guarantee only the
Subordinated Obligations and shall not guarantee the Senior Obligations, and this Agreement shall
not impair or limit the Subordinated Administrative Agent or the Subordinated Lenders making
demands under or otherwise exercising remedies under the Subordinated Exclusive Guaranty. Without
limiting the foregoing, the Subordinated Secured Parties shall have the exclusive right to manage,
enforce rights, exercise all rights and remedies (including any Enforcement Action) and make
determinations with respect to the Subordinated Exclusive Guaranty without regard to any interests
of the Senior Secured Parties, and the Senior Secured Parties will not take any action that would
hinder the exercise of any such rights by the Subordinated Secured Parties.



     (d) The Subordinated Administrative Agent, for itself and on behalf of each other Subordinated
Secured Party, and the Senior Administrative Agent, for itself and on behalf of each other Senior
Secured Party, agrees that it shall not (and hereby waives any right to) contest or support any
action or other Person in contesting, in any action or proceeding (including any Insolvency or
Liquidation Proceeding), the perfection, priority, validity or enforceability of any Lien held by
or on behalf of any of the Senior Secured Parties in the Senior Priority Collateral or the Senior
Exclusive Collateral, or any Lien held by or on behalf of the Subordinated Secured Parties in the
Subordinated Priority Collateral or the Subordinated Exclusive Collateral, as the case may be, or
the provisions of this Agreement; provided that nothing in this Agreement shall be
construed to prevent or impair the rights of the parties hereto to enforce this Agreement.



     (f) Until the Discharge of the Senior Obligations has occurred, whether or not any Insolvency
or Liquidation Proceeding has commenced and is continuing, the parties hereto agree that no Loan
Party shall (i) grant or permit any additional Liens on any asset or property to secure any
Subordinated Obligation unless it has granted or concurrently grants on a first priority



12









 




basis a Lien on such asset or property to secure the Senior Obligations; or (ii) grant or
permit any additional Liens on any asset or property to secure any Senior Obligations unless it has
granted or concurrently grants on a second priority basis a Lien on such asset or property to
secure the Subordinated Obligations. Promptly upon the occurrence of the foregoing, the
Subordinated Administrative Agent and Senior Administrative Agent, as the case may be, shall
provide notice of the same to each other and (x) take all actions requested by the Senior
Administrative Agent to grant it a first priority perfected security interest therein in the
relevant assets or property and (y) take all actions requested by the Subordinated Administrative
Agent to grant it a second priority security interest in the relevant assets or property, as the
case may be. To the extent that the foregoing provisions are not complied with for any reason,
without limiting any other rights and remedies available to the Senior Administrative Agent or the
Subordinated Administrative Agent, each of the Senior Administrative Agent and the Subordinated
Administrative Agent agrees that any amounts received by or distributed to any of them pursuant to
or as a result of Liens granted in contravention of this Section shall be subject to clause
(i)(i) or (i)(ii) of Section 6, as applicable.




     Section 3. Representations and Warranties.



     (a) The Subordinated Administrative Agent hereby represents and warrants as follows:




     (i) To the knowledge of the Subordinated Administrative Agent, there currently exists
no default or event which, with the giving of notice or the lapse of time, or both, would
constitute a default under any of the Subordinated Loan Documents.




     (ii) There are no conditions precedent to the effectiveness of this Agreement that have
not been satisfied or waived by the Subordinated Administrative Agent.




     (iii) The Subordinated Administrative Agent is duly organized and is validly existing
under the laws of the jurisdiction under which it was organized with full power to execute,
deliver, and perform this Agreement and consummate the transactions contemplated hereby.




     (iv) All actions necessary to authorize the execution, delivery, and performance of
this Agreement by the Subordinated Administrative Agent on behalf of the Subordinated
Lenders have been duly taken, and all such actions continue in full force and effect as of
the date hereof.




     (v) The Subordinated Administrative Agent has duly executed and delivered this
Agreement on behalf of the Subordinated Lenders, and this Agreement constitutes the legal,
valid, and binding agreement of the Subordinated Administrative Agent and the Subordinated
Lenders enforceable against them in accordance with its terms (except, in any case above, as
such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally and by principles of equity).




     (vi) No consent of any other Person and no consent, license, approval, or authorization
of, or exemption by, or registration or declaration or filing with, any



13









 




governmental authority is required in connection with the execution, delivery or
performance by the Subordinated Administrative Agent of this Agreement or consummation by
the Subordinated Administrative Agent of the transactions contemplated by this Agreement
that has not been obtained.




     (vii) As of the date hereof, the Subordinated Loans have been fully funded.


(b) The Senior Administrative Agent hereby represents and warrants as follows:




     (i) To the knowledge of the Senior Administrative Agent, there currently exists no
default or event which, with the giving of notice or the lapse of time, or both, would
constitute a default under any of the Senior Loan Documents.



     (ii) There are no conditions precedent to the effectiveness of this Agreement that have
not been satisfied or waived by the Senior Administrative Agent.



     (iii) The Senior Administrative Agent is duly organized and is validly existing under
the laws of the jurisdiction under which it was organized with full power to execute,
deliver, and perform this Agreement and consummate the transactions contemplated hereby.



     (iv) All actions necessary to authorize the execution, delivery, and performance of
this Agreement by the Senior Administrative Agent on behalf of the Senior Lenders have been
duly taken, and all such actions continue in full force and effect as of the date hereof.



     (v) The Senior Administrative Agent has duly executed and delivered this Agreement on
behalf of the Senior Lenders, and this Agreement constitutes the legal, valid, and binding
agreement of the Senior Administrative Agent and the Senior Lenders enforceable against them
in accordance with its terms (except, in any case above, as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally and by principles of equity).



     (vi) No consent of any other Person and no consent, license, approval, or authorization
of, or exemption by, or registration or declaration or filing with, any governmental
authority is required in connection with the execution, delivery or performance by the
Senior Administrative Agent of this Agreement or consummation by the Senior Administrative
Agent of the transactions contemplated by this Agreement that has not been obtained.



     (vii) As of the date hereof, the Senior Loans have been fully funded.


(c) Each of the Loan Parties hereby represents and warrants as follows:




     (i) It is duly organized and is validly existing under the laws of the jurisdiction
under which it was organized with full power to execute, deliver, and perform this Agreement
and consummate the transactions contemplated hereby.



14









 






     (ii) All actions necessary to authorize the execution, delivery, and performance of
this Agreement by it have been duly taken, and all such actions continue in full force and
effect as of the date hereof.




     (iii) It has duly executed and delivered this Agreement, and this Agreement constitutes
its legal, valid, and binding agreement, enforceable against it in accordance with its terms
(except, in any case above, as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights generally and by
principles of equity).




     (iv) No consent of any other Person and no consent, license, approval, or authorization
of, or exemption by, or registration or declaration or filing with, any Governmental
Authority is required in connection with the execution, delivery or performance by it of
this Agreement or consummation by it of the transactions contemplated by this Agreement that
has not been obtained.



     Section 4. Transfer of Subordinated Loans or Senior Loans.



     (a) Subject to the terms of the Senior Loan Documents, the Senior Administrative Agent and
each Senior Lender may, from time to time, in its sole and absolute discretion and without any
notice to the Subordinated Administrative Agent or any Subordinated Lender, Transfer all or any of
such Person’s interest in the Senior Loans; provided that prior to taking such action the
transferee thereof shall agree to be bound by the provisions of this Agreement pursuant to an
agreement that is reasonably satisfactory to the Subordinated Administrative Agent.
Notwithstanding the failure of any transferee to agree to be bound by the provisions of this
Agreement, the provisions of this Agreement shall survive any Transfer of all or any portion of the
Senior Loans, and the terms of this Agreement shall be binding upon the successors and assigns of
each Senior Lender. Without limiting the foregoing, in the event that the Senior Administrative
Agent resigns or is replaced pursuant to the provisions of the Senior Credit Agreement, the Senior
Administrative Agent shall give prompt written notice of such resignation or removal to the
Subordinated Administrative Agent, as well as the identity of any successor Senior Administrative
Agent. Until such time as the Subordinated Administrative Agent has been notified of such
resignation or removal and the identity of the successor Senior Administrative Agent, the
Subordinated Administrative Agent and the Subordinated Lenders shall be entitled to rely upon any
decisions or notices made by the Senior Administrative Agent pursuant to this Agreement, and any
such decisions or notices shall be binding on the successor Senior Administrative Agent.



     (b) Subject to the terms of the Subordinated Loan Documents, the Subordinated Administrative
Agent and each Subordinated Lender may, from time to time, in its sole and absolute discretion and
without notice to the Senior Administrative Agent or any Senior Lender, Transfer all or any of such
Person’s interest in the Subordinated Loans, provided that prior to taking such action the
transferee thereof shall agree to be bound by the provisions of this Agreement pursuant to an
agreement that is reasonably satisfactory to the Senior Administrative Agent. Notwithstanding the
failure of any transferee to agree to be bound by the provisions of this Agreement, other
provisions of this Agreement shall survive any Transfer of all or any portion of the Subordinated
Loans, and the terms of this Agreement shall be binding upon the



15









 




successors and assigns of each Subordinated Lender. Without limiting the foregoing, in the
event that the Subordinated Administrative Agent resigns or is replaced pursuant to the provisions
of the Subordinated Credit Agreement, the Subordinated Administrative Agent shall give prompt
written notice of such resignation or removal to the Senior Administrative Agent, as well as the
identity of any successor Subordinated Administrative Agent. Until such time as the Senior
Administrative Agent has been notified of such resignation or removal and the identity of the
successor Subordinated Administrative Agent, the Senior Administrative Agent and the Senior Lenders
shall be entitled to rely upon any decisions or notices made by the Subordinated Administrative
Agent pursuant to this Agreement, and any such decisions or notices shall be binding on the
successor Subordinated Administrative Agent.




     Section 5. Modifications, Amendments, Etc.



     (a) The Senior Loan Documents may be amended, supplemented, restated, modified, replaced,
extended or renewed (including by consent or waiver) in accordance with their terms and the Senior
Loans may be Refinanced, in whole or in part (collectively, a “Senior Loan Modification”),
in each case without notice to, or the consent of, the Subordinated Administrative Agent or the
other Subordinated Secured Parties and without affecting the subordination and other provisions of
this Agreement; provided that (i) the holders of any such Refinancing Indebtedness agree to
be bound by the provisions of this Agreement pursuant to an agreement that is reasonably
satisfactory to the Subordinated Administrative Agent, and (ii) such Senior Loan Modification or
Refinancing shall not: (A) increase the “Applicable Margin” or similar component of the interest
rate or yield provisions applicable to the Senior Loans by more than 2.00% per annum (excluding
increases (x) resulting from application of the pricing grid set forth in the Senior Lien Credit
Agreement as in effect on the date hereof or (y) resulting from the accrual of interest at the
default rate) or re-characterize principal payments as interest, fees or other amounts, (B)
increase the aggregate principal amount of the Senior Loans (when added to the total amount of
Protective Advances made by the Senior Secured Parties) in excess of the lesser of (1) $243,500,000
and (2) an aggregate principal amount of Senior Loans such that the Senior Loan to Value Ratio (as
defined in the Senior Credit Agreement as of the date hereof) does not exceed 62% minus the
aggregate principal amount of repayments and prepayments on the Senior Loans after the date hereof
(excluding any repayment, prepayment, satisfaction or other reduction pursuant to a Refinancing of
the Senior Obligations) (the “Senior Cap Amount”), (C) shorten the scheduled maturity date
of the Senior Loans, (D) require the payment of a prepayment fee or premium or yield maintenance
charge other than those fees and charges provided for in the Senior Credit Agreement as in effect
on the date hereof, (E) amend, modify or waive Article IX of the Senior Credit Agreement, including
any of the provisions of the Senior Credit Agreement relating to the deposits into or the
withdrawals from the Revenue Account, (F) amend or modify Section 8.1.5 of the Senior Credit
Agreement or (G) contravene the provisions of this Agreement. Upon any Refinancing of the Senior
Loans in accordance with the foregoing provisions, (1) the Indebtedness incurred in connection with
such Refinancing shall constitute Senior Obligations, (2) the holders of such Senior Obligations
shall constitute Senior Lenders, (3) the principal documents governing such Indebtedness or
pursuant to which such Indebtedness is issued shall constitute the Senior Credit Agreement and the
documents and instruments executed in connection with such new Indebtedness shall constitute Senior
Loan Documents and (4) the Person to whom Liens on the Common Collateral are granted to secured the
Indebtedness so Refinanced shall constitute the Senior Administrative Agent.



16









 




Notwithstanding clause (B)(2), the Senior Cap Amount shall under no circumstances be
less than the aggregate principal amount of the Senior Loans on the date hereof minus the
aggregate principal amount of repayments and prepayments on the Senior Loans after the date hereof
(excluding any repayment, prepayment, satisfaction or other reduction pursuant to a Refinancing of
the Senior Obligations).




     (b) The Subordinated Loan Documents may be amended, supplemented, restated, modified,
replaced, extended or renewed (including by consent or waiver) in accordance with their terms and
the Subordinated Loans may be Refinanced, in whole or in part (collectively, a “Subordinated
Loan Modification”), in each case without notice to, or the consent of, the Senior
Administrative Agent or the other Senior Secured Parties and without affecting the subordination
and other provisions of this Agreement; provided that (i) the holders of any such
Refinancing Indebtedness agree to be bound by the provisions of this Agreement pursuant to an
agreement that is reasonably satisfactory to the Senior Administrative Agent, and (ii) such
Subordinated Loan Modification or Refinancing shall not: (A) increase the interest rate applicable
to the Subordinated Loans by more than 2.00% per annum (excluding increases or (y) resulting from
the accrual of interest at the default rate) or re-characterize principal payments as interest,
fees or other amounts, (B) increase the aggregate principal amount of the Subordinated Loans (when
added to the total amount of Protective Advances made by the Subordinated Secured Parties) in
excess of $184,000,000 minus the aggregate principal amount of repayments and prepayments
on the Subordinated Loans after the date hereof (excluding any increases in such principal amount
as a result of the capitalization of interest payments pursuant to Section 3.2.1 of the
Subordinated Credit Agreement and any repayment, prepayment, satisfaction or other reduction
pursuant to a Refinancing of the Senior Obligations) (the “Subordinated Cap Amount”), (C)
shorten the scheduled maturity date of the Subordinated Loans, (D) require the payment of a
prepayment fee or premium or yield maintenance charge other than those fees and charges provided
for in the Subordinated Credit Agreement as in effect on the date hereof, (E) make more restrictive
any financial covenant (other than any changes to the financial covenants to mirror any change or
addition made to the Senior Loan Documents following the date hereof), (F) change any default or
Event of Default under the Subordinated Loan Documents (other than (x) to eliminate any such
default or Event of Default, (y) increase any grace period or (z) mirror any change made to the
Senior Loan Documents following the date hereof to the extent that such amendment to the
Subordinated Loan Documents is no more restrictive than the corresponding defaults or Events of
Default in the Senior Loan Documents) or add any additional defaults or Events of Default, (G)
increase materially the obligations of any Loan Party under the Subordinated Loan Documents or
confer any additional material rights to the Subordinated Secured Parties (or a representative on
their behalf) which would be materially adverse to any Loan Party or Senior Secured Party, in each
case after taking into account all such amendments, supplements, restatements, modifications,
extensions, renewals and Refinancings, (H) amend, modify or waive Article IX of the Subordinated
Credit Agreement, including any of the provisions of the Subordinated Credit Agreement relating to
the deposits into or the withdrawals from the Equity Raise Account, or (I) in the case of a
Refinancing only (x) shorten the average life to maturity of the Subordinated Loans from the
average life to maturity of the Subordinated Loans as of the date thereof to the terms of this
Agreement, or (y) result in Refinancing Indebtedness containing terms that are no less favorable in
the aggregate to the Loan Parties and the Senior Lenders than the terms contained in the
Subordinated Loan Documents, or (J) contravene the provisions of this Agreement. Upon any
Refinancing of the Subordinated Loans



17









 




in accordance with the foregoing provisions, (1) the Indebtedness incurred in connection with
such Refinancing shall constitute Subordinated Obligations, (2) the holders of such Subordinated
Obligations shall constitute Subordinated Lenders, (3) the principal documents governing such
Indebtedness or pursuant to which such Indebtedness is issued shall constitute the Subordinated
Credit Agreement and the documents and instruments executed in connection with such new
Indebtedness shall constitute Subordinated Loan Documents and (4) the Person to whom Liens on the
Common Collateral are granted to secured the Indebtedness so Refinanced shall constitute the
Subordinated Administrative Agent.




     (c) In the event the Senior Administrative Agent or any other Senior Secured Party and the
relevant Loan Party enter into any Senior Loan Modification for the purpose of adding to, or
deleting from, or waiving or consenting to any departures from any provisions of, any of the
Security Agreement, the Mortgages, the Recognition Agreements, the Collateral Assignment of
Material Agreements, the Timber Manager Subordination Agreement, the Deposit Account Control
Agreements or the Landlord Estoppel Certificates (as such terms are defined in the Senior Credit
Agreement as in effect on the date hereof), or changing in any manner the rights of the Senior
Administrative Agent, such other Senior Secured Parties, any Borrower or any other Loan Party
thereunder, then such Senior Loan Modification shall apply automatically to any comparable
provision of the comparable Subordinated Loan Document (or, if the Subordinated Administrative
Agent is a party to any such agreement that is a subject of a Senior Loan Modification, such Senior
Loan Modification shall apply to such agreement) without the consent of the Subordinated
Administrative Agent or the other Subordinated Secured Parties and without any action by the
Subordinated Administrative Agent, the other Subordinated Secured Parties, any Borrower or any
other Loan Party, provided that (i) no such Senior Loan Modification shall have the effect
of (A) removing or releasing assets subject to the Lien of the Subordinated Loan Documents, except
to the extent that a release of such Lien is permitted or required by Section 7 and
provided that there is a corresponding release of such Lien securing the Senior Obligations; (B)
imposing duties on the Subordinated Administrative Agent without its consent; (C) permitting other
Liens on the Common Collateral not permitted under the terms of the Subordinated Loan Documents or
Section 6; or (D) being prejudicial to the interests of the Subordinated Secured Parties to
a greater extent than the Senior Secured Parties; and (ii) notice and a copy of such amendment,
waiver or consent shall have been given to the Subordinated Administrative Agent within 10 Business
Days after the effective date of such amendment, waiver or consent (provided that the failure to
give such notice shall not affect the obligations of the Subordinated Administrative Agent and the
other Subordinated Secured Parties under this Agreement).



     (d) The Senior Administrative Agent shall deliver to the Subordinated Administrative Agent
copies of any and all Senior Loan Modifications (including, without limitation, any side letters,
waivers or consents entered into, executed or delivered by the Senior Lenders) within five Business
Days prior to any of such applicable instruments being executed by the Senior Administrative Agent
or the Senior Lenders.



     (e) The Subordinated Administrative Agent shall deliver to the Senior Administrative Agent
copies of any and all Subordinated Loan Modifications (including, without limitation, any side
letters, waivers or consents entered into, executed or delivered by the Subordinated Lenders)




18












 




within five Business Days prior to any of such applicable instruments being executed by the
Subordinated Administrative Agent or Senior Lenders.




     Section 6. Lien Subordination.




(a) (i) Until the Discharge of the Senior Obligations has occurred, whether or not any
Insolvency or Liquidation Proceeding has commenced or is continuing, the Subordinated
Administrative Agent and the other Subordinated Secured Parties:




     (A) will not take any Enforcement Action with respect to the Senior Priority
Collateral until the passage of 180 consecutive days since the date on which the
Senior Administrative Agent receives a written notice from the Subordinated
Administrative Agent that (x) it has declared the existence of any Event of Default
under the Subordinated Credit Agreement and stating its intention to exercise an
Enforcement Action with respect to the Senior Priority Collateral and (y) describes
in reasonable detail such Event of Default (the “Subordinated Standstill
Period”); provided that notwithstanding anything herein to the contrary,
in no event shall the Subordinated Administrative Agent or any other Subordinated
Secured Party send such notice or take or continue to exercise any Enforcement
Action with respect to the Senior Priority Collateral if, notwithstanding the
expiration of the Subordinated Standstill Period, (I) an Insolvency or Liquidation
Proceeding is then pending, (II) an Event of Default under Section 8.1.1 of the
Senior Loan Agreement as in effect on the date hereof has occurred and is
continuing, (III) the Senior Administrative Agent or the other Senior Secured
Parties shall have commenced and be diligently pursuing any Enforcement Action with
respect to all or any part of the Senior Priority Collateral (including seeking
relief from the automatic stay) or (IV) the taking of such Enforcement Action with
respect to the Senior Priority Collateral by the Subordinated Administrative Agent
or any other Subordinated Secured Party would be contrary to the other terms of this
Agreement, including adversely affecting the priority status of the security
interest of the Senior Administrative Agent in the Senior Priority Collateral; and
the Subordinated Standstill Period shall be tolled (1) during any Insolvency or
Liquidation Proceeding and (2) for any period during which there is no Insolvency or
Liquidation Proceeding but due to other circumstances the Senior Administrative
Agent is prevented by applicable law (including pursuant to any judicial ruling or
proceeding) from taking Enforcement Actions against all or any part of the Senior
Priority Collateral, provided that the Senior Administrative Agent is
attempting to obtain relief from such applicable law and is not so prevented by
applicable law because of actions taken by the Senior Administrative Agent or the
other Senior Secured Parties in violation of applicable law;




     (B) subject to the proviso in clause (b) of this Section and except as
permitted by clause (c) of this Section, will not contest, protest, hinder,
delay or object, whether by judicial proceeding or otherwise, to any Enforcement
Action taken by or on behalf of the Senior Administrative Agent or any other Senior



19









 







Secured Party with respect to the Senior Priority Collateral under the Senior
Loan Documents or otherwise;




     (C) will not object to the forbearance by the Senior Administrative Agent or
any other Senior Secured Party from bringing or pursuing any foreclosure proceeding
or action (including any Enforcement Action) or any other exercise of any rights or
remedies relating to the Senior Priority Collateral;




     (D) have no right to direct the Senior Administrative Agent or any other Senior
Secured Party to exercise any right, remedy or power with respect to the Senior
Priority Collateral or pursuant to the Senior Loan Documents, or to consent to any
of the foregoing; and




     (E) will not institute any suit or other proceeding or assert in any suit,
Insolvency or Liquidation Proceeding or other proceeding any claim against either
the Senior Administrative Agent or any other Senior Secured Party seeking damages
from or other relief by way of specific performance, instructions or otherwise, with
respect to, and none of the Senior Administrative Agent nor any other Senior Secured
Party shall be liable for, any action taken or omitted to be taken by the Senior
Administrative Agent or any other Senior Secured Party with respect to the Senior
Priority Collateral or pursuant to the Senior Loan Documents.



          (ii) Until the Discharge of the Subordinated Obligations has occurred, whether or not
any Insolvency or Liquidation Proceeding has commenced or is continuing, the Senior
Administrative Agent and the other Senior Secured Parties:




     (A) will not take any Enforcement Action with respect to the Subordinated
Priority Collateral until the passage of 180 consecutive days since the date on
which the Subordinated Administrative Agent receives a written notice from the
Senior Administrative Agent that (x) it has declared the existence of any Event of
Default under the Senior Credit Agreement and stating its intention to exercise an
Enforcement Action with respect to the Subordinated Priority Collateral and (y)
describes in reasonable detail such Event of Default (the “Senior Standstill
Period”); provided that notwithstanding anything herein to the contrary,
in no event shall the Senior Administrative Agent or any other Senior Secured Party
send such notice or take or continue to exercise any Enforcement Action with respect
to the Subordinated Priority Collateral if, notwithstanding the expiration of the
Senior Standstill Period, (I) an Insolvency or Liquidation Proceeding is then
pending, (II) an Event of Default under Section 8.1.1 of the Subordinated Loan
Agreement has occurred and is continuing, (III) the Subordinated Administrative
Agent or the other Subordinated Secured Parties shall have commenced and be
diligently pursuing any Enforcement Action with respect to all or any part of the
Subordinated Priority Collateral (including seeking relief from the automatic stay)
or (IV) the taking of such Enforcement Action with respect to the Subordinated
Priority Collateral by the Senior Administrative Agent or any other Senior Secured
Party would be contrary to the other terms of



20









 







this Agreement, including adversely affecting the priority status of the
security interest of the Subordinated Administrative Agent in the Subordinated
Priority Collateral; and the Senior Standstill Period shall be tolled (1) during any
Insolvency or Liquidation Proceeding and (2) for any period during which there is no
Insolvency or Liquidation Proceeding but due to other circumstances the Subordinated
Administrative Agent is prevented by applicable law (including pursuant to any
judicial ruling or proceeding) from taking Enforcement Actions against all or any
part of the Subordinated Priority Collateral, provided that the Subordinated
Administrative Agent is attempting to obtain relief from such applicable law and is
not so prevented by applicable law because of actions taken by the Subordinated
Administrative Agent or the other Subordinated Secured Parties in violation of
applicable law;




     (B) subject to the proviso in clause (b) of this Section and except as
permitted by clause (c) of this Section, will not contest, protest, hinder,
delay or object, whether by judicial proceeding or otherwise, to any Enforcement
Action taken by or on behalf of the Subordinated Administrative Agent or any other
Subordinated Secured Party with respect to the Subordinated Priority Collateral
under the Subordinated Loan Documents or otherwise;




     (C) will not object to the forbearance by the Subordinated Administrative Agent
or any other Subordinated Secured Party from bringing or pursuing any foreclosure
proceeding or action (including any Enforcement Action) or any other exercise of any
rights or remedies relating to the Subordinated Priority Collateral;




     (D) have no right to direct the Subordinated Administrative Agent or any other
Subordinated Secured Party to exercise any right, remedy or power with respect to
the Subordinated Priority Collateral or pursuant to the Subordinated Loan Documents,
or to consent to any of the foregoing; and




     (E) will not institute any suit or other proceeding or assert in any suit,
Insolvency or Liquidation Proceeding or other proceeding any claim against either
the Subordinated Administrative Agent or any other Subordinated Secured Party
seeking damages from or other relief by way of specific performance, instructions or
otherwise, with respect to, and none of the Subordinated Administrative Agent nor
any other Subordinated Secured Party shall be liable for, any action taken or
omitted to be taken by the Subordinated Administrative Agent or any other
Subordinated Secured Party with respect to the Subordinated Priority Collateral or
pursuant to the Subordinated Loan Documents.




(b) (i) Until the Discharge of the Senior Obligations has occurred, whether or not any
Insolvency or Liquidation Proceeding has commenced or is continuing, the Senior
Administrative Agent and the other Senior Secured Parties shall have, subject to clause
(a) of this Section, the exclusive right to manage, enforce rights, exercise all rights
and remedies (including any Enforcement Action) and make determinations regarding the
release, disposition, or restrictions with respect to the Senior Priority Collateral without



21









 







any consultation with or the consent of the Subordinated Administrative Agent or any other
Subordinated Secured Party; provided that if the proceeds of the Senior Priority
Collateral released or disposed of are not applied to repay the Senior Obligations or
Subordinated Obligations, the Lien securing the Subordinated Obligations shall remain on the
proceeds of such Senior Priority Collateral subject to the relative priorities described in
Section 2. In exercising rights and remedies with respect to the Senior Priority
Collateral (including Enforcement Actions), the Senior Administrative Agent and the other
Senior Secured Parties may enforce the provisions of the Senior Loan Documents and exercise
remedies thereunder, all in such order and in such manner as they may determine in the
exercise of their sole discretion. Such exercise and enforcement shall include the rights
of an agent appointed by them to sell or otherwise dispose of Senior Priority Collateral
upon foreclosure, to incur expenses in connection with such sale or disposition, and to
exercise all the rights and remedies of a secured creditor under the U.C.C. and of a secured
creditor under Bankruptcy Laws of any applicable jurisdiction.




     (ii) Until the Discharge of the Subordinated Obligations has occurred, whether or not
any Insolvency or Liquidation Proceeding has commenced or is continuing, the Subordinated
Administrative Agent and the other Subordinated Secured Parties shall have, subject to
clause (a) of this Section, the exclusive right to manage, enforce rights, exercise
all rights and remedies (including any Enforcement Action) and make determinations regarding
the release, disposition, or restrictions with respect to the Subordinated Priority
Collateral without any consultation with or the consent of the Senior Administrative Agent
or any other Senior Secured Party; provided that the payments to fund the Interest
Reserve so that an amount equal to approximately six months of interest on the Senior Loans
(as reasonably specified by the Senior Administrative Agent) must be made prior to any
payments from the Subordinated Priority Collateral being made to the Subordinated
Administrative Agent or the other Subordinated Secured Parties, and provided that if
the proceeds of the Subordinated Priority Collateral released or disposed of are not applied
to repay the Subordinated Obligations or Senior Obligations the Lien securing the Senior
Obligations shall remain on the proceeds of such Subordinated Priority Collateral subject to
the relative priorities described in Section 2. In exercising rights and remedies
with respect to the Subordinated Priority Collateral (including Enforcement Actions), the
Subordinated Administrative Agent and the other Subordinated Secured Parties may enforce the
provisions of the Subordinated Loan Documents and exercise remedies thereunder, all in such
order and in such manner as they may determine in the exercise of their sole discretion.
Such exercise and enforcement shall include the rights of an agent appointed by them to sell
or otherwise dispose of Subordinated Priority Collateral upon foreclosure, to incur expenses
in connection with such sale or disposition, and to exercise all the rights and remedies of
a secured creditor under the U.C.C. and of a secured creditor under Bankruptcy Laws of any
applicable jurisdiction.




(c) (i) Notwithstanding the foregoing, but subject to Section 2, clause (d)
of this Section and Section 12, the Subordinated Administrative Agent and any other
Subordinated Secured Party may with respect to the Senior Priority Collateral:



22









 






  (A) take any action (not adverse to the prior Liens on the Senior Priority
Collateral securing the Senior Obligations, or the rights of the Senior
Administrative Agent or the other Senior Secured Parties to exercise remedies in
respect thereof) in order to create, perfect, preserve or protect its second
priority Lien on the Senior Priority Collateral;




  (B) file any necessary responsive or defensive pleadings in opposition to any
motion, claim, adversary proceeding or other pleading made by any Person objecting
to or otherwise seeking the disallowance of the claims of the Subordinated Secured
Parties, including without limitation any claims secured by the Senior Priority
Collateral, if any, in each case in accordance with the terms of this Agreement;




  (C) take any actions permitted by clause (g)(i) of this Section;




  (D) subject to clause (g) of Section 12 in any Insolvency
Liquidation Proceeding, with respect to the Subordinated Obligations and the Senior
Priority Collateral, file any proof of claim or make other filings and make any
arguments and motions that are, in each case, in accordance with the terms of this
Agreement; provided that in the event that the Subordinated Secured Parties
fail to file a proof of claim with respect to all or part of the Subordinated
Obligations within five Business Days of the bar date pertaining thereto, the Senior
Administrative Agent may file such proof of claim, and the Subordinated
Administrative Agent appoints the Senior Administrative Agent its attorney-in-fact
to accomplish the same; and




  (E) exercise any of its rights or remedies (including Enforcement Actions) with
respect to the Senior Priority Collateral after the termination of the Subordinated
Standstill Period to the extent permitted by clause (a)(i) of this Section.




(ii) Notwithstanding the foregoing, but subject to Section 2, clause
(d) of this Section and Section 12, the Senior Administrative Agent and any
other Senior Secured Party may with respect to the Subordinated Priority Collateral:




     (A) take any action (not adverse to the prior Liens on the Subordinated
Priority Collateral securing the Subordinated Obligations, or the rights of the
Subordinated Administrative Agent or the other Subordinated Secured Parties to
exercise remedies in respect thereof) in order to create, perfect, preserve or
protect its second priority Lien on the Subordinated Priority Collateral;




     (B) file any necessary responsive or defensive pleadings in opposition to any
motion, claim, adversary proceeding or other pleading made by any Person objecting
to or otherwise seeking the disallowance of the claims of the Senior Secured
Parties, including without limitation any claims secured by the Subordinated
Priority Collateral, if any, in each case in accordance with the terms of this
Agreement;



23









 






     (C) take any actions permitted by clause (g)(ii) of this Section;




     (D) in any Insolvency Liquidation Proceeding, with respect to the Senior
Obligations and the Subordinated Priority Collateral, file any proof of claim, vote
on any plan of reorganization or make other filings and make any arguments and
motions that are, in each case, in accordance with the terms of this Agreement;
provided that in the event that the Senior Secured Parties fail to file a
proof of claim with respect to all or part of the Senior Obligations within five
Business Days of the bar date pertaining thereto, the Subordinated Administrative
Agent may file such proof of claim, and the Senior Administrative Agent appoints the
Subordinated Administrative Agent its attorney-in-fact to accomplish the same;
provided, further, that Subordinated Administrative Agent shall not
be permitted to vote such claim, all voting rights with respect thereto being hereby
retained by the Senior Secured Parties; and




     (E) exercise any of its rights or remedies (including Enforcement Actions) with
respect to the Subordinated Priority Collateral after the termination of the Senior
Standstill Period to the extent permitted by clause (a)(ii) of this Section.




(d) (i) The Subordinated Administrative Agent, on behalf of itself and the other
Subordinated Secured Parties, agrees that, except as expressly provided in clause
(a)(i) of this Section and subject to clause (i)(i) of this Section, it will not
take or receive any Senior Priority Collateral or any proceeds of Senior Priority Collateral
in connection with the exercise of any right or remedy (including the taking of Enforcement
Actions) with respect to any Senior Priority Collateral, unless and until the Discharge of
the Senior Obligations has occurred. Without limiting the generality of the foregoing,
unless and until the Discharge of the Senior Obligations has occurred, except as expressly
provided in this Section and clause (i)(ii)(I) of Section 12, the sole right
of the Subordinated Administrative Agent and the other Subordinated Secured Parties with
respect to the Senior Priority Collateral is to (x) subject to the terms of Section 9.3 of
the Senior Credit Agreement, receive payments therefrom pursuant to the Revenue Waterfall,
(y) hold a Lien on the Senior Priority Collateral pursuant to the Subordinated Security
Documents for the period and to the extent granted therein and (z) receive a share of the
proceeds thereof, if any, after the Discharge of the Senior Obligations has occurred, in
accordance with the terms of the Subordinated Loan Documents, this Agreement and applicable
law.




     (ii) The Senior Administrative Agent, on behalf of itself and the other Senior Secured
Parties, agrees that, except as expressly provided in clause (a)(ii) of this Section
and subject to clause (i)(ii) of this Section, it will not take or receive any
Subordinated Priority Collateral or any proceeds of Subordinated Priority Collateral in
connection with the exercise of any right or remedy (including the taking of Enforcement
Actions) with respect to any Subordinated Priority Collateral, unless and until the
Discharge of the Subordinated Obligations has occurred. Without limiting the generality of
the foregoing, unless and until the Discharge of the Subordinated Obligations has occurred,
except as expressly provided in this Section and clause (i)(i)(I) of Section
12, the sole right of the Senior Administrative Agent and the other Senior Secured
Parties with respect to the



24









 






Subordinated Priority Collateral is to (x) subject to the terms of Section 9.3 of the
Subordinated Credit Agreement, receive payments therefrom pursuant to the Equity Waterfall,
(y) hold a Lien on the Subordinated Priority Collateral pursuant to the Senior Security
Documents for the period and to the extent granted therein and (z) receive a share of the
proceeds thereof, if any, after the Discharge of the Subordinated Obligations has occurred,
in accordance with the terms of the Senior Loan Documents, this Agreement and applicable
law.




(e) (i) The Subordinated Administrative Agent, for itself and on behalf of the other
Subordinated Secured Parties, agrees that the Subordinated Administrative Agent and the
other Subordinated Secured Parties will not take any action that would hinder any exercise
of remedies under the Senior Loan Documents or is otherwise prohibited hereunder, including
any sale, lease, exchange, transfer or other disposition of the Senior Priority Collateral,
whether by foreclosure or otherwise, and the Subordinated Administrative Agent, for itself
and on behalf of the other Subordinated Secured Parties, hereby waives any and all rights it
or the Subordinated Secured Parties may have as a junior lien creditor or otherwise to
object to the manner in which the Senior Administrative Agent or the other Senior Secured
Parties seek to enforce or collect the Senior Obligations or the Liens securing the Senior
Obligations granted in any of the Senior Priority Collateral undertaken in accordance with
this Agreement, regardless of whether any action or failure to act by or on behalf of the
Senior Administrative Agent or the other Senior Secured Parties is adverse to the interest
of the Subordinated Secured Parties. In addition, (A) the Subordinated Administrative
Agent, for itself and on behalf of the other Subordinated Secured Parties, agrees that the
Subordinated Administrative Agent and the other Subordinated Secured Parties will not take
any action that would hinder any exercise of remedies under the Senior Loan Documents or is
otherwise prohibited hereunder, including any sale, lease, exchange, transfer or other
disposition of the Senior Priority Collateral, whether by foreclosure or otherwise, and (B)
the Subordinated Administrative Agent, for itself and on behalf of the other Subordinated
Secured Parties, hereby waives any and all rights it or the Subordinated Secured Parties may
have as a junior lien creditor or otherwise to object to the manner in which the Senior
Administrative Agent or the other Senior Secured Parties seek to enforce or collect the
Senior Obligations or the Liens securing the Senior Obligations undertaken in accordance
with this Agreement, regardless of whether any action or failure to act by or on behalf of
the Senior Administrative Agent or the other Senior Secured Parties is adverse to the
interest of the Subordinated Secured Parties.




     (ii) The Senior Administrative Agent, for itself and on behalf of the other Senior
Secured Parties, agrees that the Senior Administrative Agent and the other Senior Secured
Parties will not take any action that would hinder any exercise of remedies under the
Subordinated Loan Documents or is otherwise prohibited hereunder, including any sale, lease,
exchange, transfer or other disposition of the Subordinated Priority Collateral, whether by
foreclosure or otherwise, and the Senior Administrative Agent, for itself and on behalf of
the other Senior Secured Parties, hereby waives any and all rights it or the Senior Secured
Parties may have as a junior lien creditor or otherwise to object to the manner in which the
Subordinated Administrative Agent or the other Subordinated Secured Parties seek to enforce
or collect the Subordinated Obligations or the Liens



25









 






securing the Subordinated Obligations granted in any of the Subordinated Priority
Collateral undertaken in accordance with this Agreement, regardless of whether any action or
failure to act by or on behalf of the Subordinated Administrative Agent or the other
Subordinated Secured Parties is adverse to the interest of the Senior Secured Parties. In
addition, (A) the Senior Administrative Agent, for itself and on behalf of the other Senior
Secured Parties, agrees that the Senior Administrative Agent and the other Senior Secured
Parties will not take any action that would hinder any exercise of remedies under the
Subordinated Loan Documents or is otherwise prohibited hereunder, including any sale, lease,
exchange, transfer or other disposition of the Subordinated Priority Collateral, whether by
foreclosure or otherwise, and (B) the Senior Administrative Agent, for itself and on behalf
of the other Senior Secured Parties, hereby waives any and all rights it or the Senior
Secured Parties may have as a junior lien creditor or otherwise to object to the manner in
which the Subordinated Administrative Agent or the other Subordinated Secured Parties seek
to enforce or collect the Subordinated Obligations or the Liens securing the Subordinated
Obligations undertaken in accordance with this Agreement, regardless of whether any action
or failure to act by or on behalf of the Subordinated Administrative Agent or the other
Subordinated Secured Parties is adverse to the interest of the Senior Secured Parties.




(f) (i) The Subordinated Administrative Agent hereby acknowledges and agrees, for itself
and on behalf of the other Subordinated Secured Parties, that no covenant, agreement or
restriction contained in the Subordinated Security Documents or any other Subordinated Loan
Document (other than this Agreement) shall be deemed to restrict in any way the rights and
remedies of the Senior Administrative Agent or the other Senior Secured Parties with respect
to the Senior Priority Collateral as set forth in this Agreement and the Senior Loan
Documents. Nothing in this Agreement impairs or otherwise adversely affects any rights or
remedies the Senior Administrative Agent or the other Senior Secured Parties may have with
respect to the Senior Priority Collateral.




     (ii) The Senior Administrative Agent hereby acknowledges and agrees, for itself and on
behalf of the other Senior Secured Parties, that no covenant, agreement or restriction
contained in the Senior Security Documents or any other Senior Loan Document (other than
this Agreement) shall be deemed to restrict in any way the rights and remedies of the
Subordinated Administrative Agent or the other Subordinated Secured Parties with respect to
the Subordinated Priority Collateral as set forth in this Agreement and the Subordinated
Loan Documents. Nothing in this Agreement impairs or otherwise adversely affects any rights
or remedies the Subordinated Administrative Agent or the other Subordinated Secured Parties
may have with respect to the Subordinated Priority Collateral.




     (g) (i) Except to the extent rights have been expressly waived pursuant to this
Agreement, the Subordinated Administrative Agent and the other Subordinated Secured Parties
may, with respect to the Senior Priority Collateral, exercise rights and remedies as
unsecured creditors against the Borrowers or any other Loan Party that has guaranteed or
granted Liens to secure the Subordinated Obligations in accordance with the terms of the
Subordinated Loan Documents and applicable law; provided that in the event that any
Subordinated Secured Party becomes a judgment Lien creditor in respect of Senior



26









 






Priority Collateral as a result of its enforcement of its rights as an unsecured
creditor with respect to the Subordinated Obligations, such judgment Lien shall form a part
of the Senior Priority Collateral and be subject to all the terms of this Agreement relating
to the Senior Priority Collateral.




     (ii) Except to the extent rights have been expressly waived pursuant to this Agreement,
the Senior Administrative Agent and the other Senior Secured Parties may, with respect to
the Subordinated Priority Collateral, exercise rights and remedies as unsecured creditors
against the Borrowers or any other Loan Party that has guaranteed or granted Liens to secure
the Senior Obligations in accordance with the terms of the Senior Loan Documents and
applicable law; provided that in the event that any Senior Secured Party becomes a
judgment Lien creditor in respect of Subordinated Priority Collateral as a result of its
enforcement of its rights as an unsecured creditor with respect to the Senior Obligations,
such judgment Lien form a part of the Subordinated Priority Collateral and be subject to all
the terms of this Agreement relating to the Subordinated Priority Collateral.



     (h) In addition to the notices required pursuant to clause (a) of this Section, the
Senior Administrative Agent and the Subordinated Administrative Agent agree to deliver to each
other (i) concurrently (or as soon as practicable following) with the giving thereof to any Loan
Party, a copy of any written notice sent by such Person (A) stating that any Default or Event of
Default under the Senior Credit Agreement or the Subordinated Credit Agreement, as the case may be,
has occurred or (B) demanding payment of the Senior Obligations or the Subordinated Obligations, as
the case may be, as a result thereof, and (ii) promptly after the occurrence thereof, notice of the
Discharge of the Senior Obligations and Subordinated Obligations; provided, that the
failure to give any such notice shall not result in any liability or modify in any respect the
terms of this Agreement.




(i) (i) All Senior Priority Collateral and proceeds thereof received by any Senior Secured
Party or Subordinated Secured Party in connection with the sale or other disposition of, or
collection on, the Senior Priority Collateral upon the taking of any Enforcement Action or
the exercise of any remedies, whether or not the Subordinated Administrative Agent is
exercising remedies pursuant to clause (a)(i) of this Section or any Insolvency or
Liquidation Proceeding has commenced and is continuing, shall be applied, first, by
the Senior Administrative Agent, for itself and on behalf of the other Senior Secured
Parties, to the Senior Obligations in the order specified in the relevant Senior Loan
Documents until the Discharge of the Senior Obligations, second, by the Subordinated
Administrative Agent, for itself and on behalf of the other Subordinated Secured Parties, to
the Subordinated Obligations in such order as specified in the Subordinated Loan Documents
until the Discharge of the Subordinated Obligations, and third, to the Loan Parties
or as directed by applicable law or court order. Promptly following the Discharge of the
Senior Obligations, the Senior Administrative Agent shall deliver to the Subordinated
Administrative Agent any Senior Priority Collateral and proceeds of Senior Priority
Collateral held by it in the same form as received, without recourse, representation or
warranty (other than a representation of the Senior Administrative Agent to the Subordinated
Administrative Agent that it has not otherwise



27









 






sold, assigned, transferred or pledged any right, title or interest in and to such Senior
Priority Collateral) but with any necessary endorsements.




     (ii) All Subordinated Priority Collateral and proceeds thereof received by any
Subordinated Secured Party or Senior Secured Party in connection with the sale or other
disposition of, or collection on, the Subordinated Priority Collateral upon the taking of
any Enforcement Action or the exercise of any remedies, whether or not the Senior
Administrative Agent is exercising remedies pursuant to clause (a)(ii) of this
Section or any Insolvency or Liquidation Proceeding has commenced and is continuing, shall
be applied, first, by the Subordinated Administrative Agent, for itself and on
behalf of the other Subordinated Secured Parties, to the Subordinated Obligations in the
order specified in the relevant Subordinated Loan Documents until the Discharge of the
Subordinated Obligations, second, by the Senior Administrative Agent, for itself and
on behalf of the other Senior Secured Parties, to the Senior Obligations in such order as
specified in the Senior Loan Documents until the Discharge of the Senior Obligations, and
third, to the Loan Parties or as directed by applicable law or court order,
provided that, notwithstanding the foregoing, any amounts in the Equity Raise
Account then to be applied to the Interest Reserve shall be paid to the Senior
Administrative Agent to be applied to the Senior Obligations. Promptly following the
Discharge of the Subordinated Obligations, the Subordinated Administrative Agent shall
deliver to the Senior Administrative Agent any Subordinated Priority Collateral and proceeds
of Subordinated Priority Collateral held by it in the same form as received, without
recourse, representation or warranty (other than a representation of the Subordinated
Administrative Agent to the Senior Administrative Agent that it has not otherwise sold,
assigned, transferred or pledged any right, title or interest in and to such Subordinated
Priority Collateral) but with any necessary endorsements.




(j) (i) Until the Discharge of the Senior Obligations has occurred, whether or not the
Subordinated Administrative Agent is taking Enforcement Action or any Insolvency or
Liquidation Proceeding has commenced and is continuing, any Senior Priority Collateral or
proceeds thereof received by the Subordinated Administrative Agent or any other Subordinated
Secured Parties in connection with the exercise of any right or remedy (including the taking
of Enforcement Actions) relating to the Senior Priority Collateral in contravention of this
Agreement shall be segregated and held in trust and promptly paid over to the Senior
Administrative Agent, for the benefit of itself and the other Senior Secured Parties, in the
same form as received, with any necessary endorsements. The Subordinated Administrative
Agent hereby appoints the Senior Administrative Agent as its attorney-in-fact to accomplish
the foregoing, including authorizing the Senior Administrative Agent to make any such
endorsements as agent for the Subordinated Administrative Agent and the other Subordinated
Secured Parties. This authorization is coupled with an interest and is irrevocable until
such time as this Agreement is terminated in accordance with its terms.




     (ii) Until the Discharge of the Subordinated Obligations has occurred, whether or not
the Senior Administrative Agent is taking Enforcement Action or any Insolvency or
Liquidation Proceeding has commenced and is continuing, any Subordinated Priority Collateral
or proceeds thereof received by the Senior Administrative Agent or any other



28









 






Senior Secured Parties in connection with the exercise of any right or remedy
(including the taking of Enforcement Actions) relating to the Subordinated Priority
Collateral in contravention of this Agreement shall be segregated and held in trust and
promptly paid over to the Subordinated Administrative Agent, for the benefit of itself and
the other Subordinated Secured Parties, in the same form as received, with any necessary
endorsements. The Senior Administrative Agent hereby appoints the Subordinated
Administrative Agent as its attorney-in-fact to accomplish the foregoing, including
authorizing the Subordinated Administrative Agent to make any such endorsements as agent for
the Senior Administrative Agent and the other Senior Secured Parties. This authorization is
coupled with an interest and is irrevocable until such time as this Agreement is terminated
in accordance with its terms.



     (k) Except when the Senior Administrative Agent or Subordinated Administrative Agent are
taking Enforcement Action in accordance with the provisions of this Agreement with respect to the
Revenue Account and Revenue Waterfall constituting a part of the Senior Priority Collateral or the
Equity Raise Account or Equity Raise Waterfall constituting a part of the Subordinated Priority
Collateral, all payments from the Revenue Waterfall funds shall be held and applied in accordance
with the Senior Loan Documents and all payments from the Equity Raise Waterfall funds shall be held
and applied in accordance with the Subordinated Loan Documents.



     Section 7. Releases of Subordinated Liens.



     (a) If in connection with:




     (i) the taking of any Enforcement Action by the Senior Administrative Agent in respect
of the Senior Priority Collateral; or




     (ii) the sale, lease, exchange, transfer or other disposition of Senior Priority
Collateral (collectively, a “Disposition”), other than in connection with the
exercise of any Enforcement Action by the Senior Administrative Agent in respect of the
Senior Priority Collateral;


the Senior Administrative Agent, on behalf of itself and the other Senior Secured Parties, releases
any of its Liens on any part of the Senior Priority Collateral, other than in connection with the
Discharge of the Senior Obligations, then (i) the Liens, if any, of the Subordinated Administrative
Agent, for itself or for the benefit of the other Subordinated Secured Parties, on such Senior
Priority Collateral shall be automatically, unconditionally and simultaneously released and (ii)
the Subordinated Administrative Agent, for itself and on behalf of the other Subordinated Secured
Parties, shall promptly execute and deliver to the Senior Administrative Agent or such Loan Party
such termination statements, releases and other documents as the Senior Administrative Agent or
such Loan Party may request to effectively confirm such release; provided, however,
that (x) in the case of clause (i) above, the foregoing shall only occur without the
consent of the Subordinated Administrative Agent if the net proceeds of the applicable disposition
are applied to permanently reduce the Senior Obligations as provided in clause (i)(i) of
Section 6 and (y) in the case of clause (ii) above, the foregoing shall only occur
without the consent of the Subordinated Administrative Agent if the net proceeds of the applicable


29









 






disposition are applied to permanently reduce the Senior Obligations as provided in the Senior
Credit Agreement.




     (b) Until the Discharge of the Senior Obligations occurs, the Subordinated Administrative
Agent, for itself and on behalf of the other Subordinated Secured Parties, hereby irrevocably
constitutes and appoints the Senior Administrative Agent and any officer or agent of the Senior
Administrative Agent, with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the Subordinated Administrative
Agent and the other Subordinated Secured Parties (whether in the name of such Persons or in its own
name), for the purpose of carrying out the terms of this Section, to take any and all appropriate
action and to execute any and all documents and instruments which may be necessary to accomplish
the purposes of this Section, including any endorsements or other instruments of transfer or
release.



     Section 8. Payment Subordination.



     (a) Subject to clause (b) of this Section, the Loan Parties covenant and agree, and
each Subordinated Secured Party by its acceptance of the Subordinated Loan Documents (whether upon
original issue or upon transfer or assignment) likewise covenants and agrees, notwithstanding
anything to the contrary contained in any of the Subordinated Loan Documents, that the payment of
any and all of the Subordinated Debt shall be subordinate and subject in right and time of payment,
to the extent and in the manner hereinafter set forth, to the prior Discharge of the Senior
Obligations.



     (b) Notwithstanding the terms of the Subordinated Loan Documents, each Loan Party hereby
agrees that it will not make, and the Subordinated Administrative Agent, on behalf of itself and
the other Subordinated Secured Parties, hereby agrees that the Subordinated Administrative Agent
and the other Subordinated Secured Parties will not accept, any Distribution with respect to the
Subordinated Obligations until the Discharge of the Senior Obligations other than (i) payments from
the Equity Raise Account pursuant to the Equity Raise Waterfall as provided in clause (k)
of Section 6, payments under the Subordinated Exclusive Guaranty, proceeds of the
Subordinated Priority Collateral as provided in clause (i)(ii) of Section 6 and,
subject to compliance with Section 11, proceeds of the Subordinated Exclusive Collateral,
and (ii) payments from the Revenue Account pursuant to the Revenue Waterfall as provided in
clause (k) of Section 6, so long as at the time of such payment from the Revenue
Account (A) there is no pending Insolvency or Liquidation Proceeding, (B) no Event of Default under
Section 8.1.1 of the Senior Credit Agreement, as in effect on the date hereof, has occurred and is
continuing (and has not been cured as provided in Section 13), (C) the Senior
Administrative Agent or the other Senior Secured Parties shall not have commenced and are not
diligently pursuing any Enforcement Action with respect to all or any material part of the Senior
Priority Collateral (including seeking relief from the automatic stay), and (D) no Senior Default
Blockage Period has occurred and is continuing; provided that as a result of the
commencement of a Senior Default Blockage Period the Subordinated Administrative Agent and
Subordinated Lenders shall not be prohibited from receiving payments pursuant to this clause
(b) (ii) for more than an aggregate of 180 days within any period of 365 consecutive days.
“Senior Default Blockage Period” means the period (i) commencing on the date the Subordinated
Administrative Agent receives a notice from the Senior Administrative Agent stating that an Event
of Default (other



30









 







than an Event of Default under Section 8.1.1 or Section 8.1.8 of the Senior Credit Agreement)
has occurred and is continuing, providing a reasonably detailed description thereof and stating
that such notice is a “Senior Default Blockage Notice” delivered pursuant to this Agreement, and
(ii) concluding on the date that is 180 days following the date the Subordinated Administrative
Agent receives such notice.



     (c) If any Distribution on account of the Subordinated Obligations is paid to or accepted by
any Subordinated Secured Party at a time when it is prohibited by this Agreement, such payment
shall (a) not be commingled with any of the assets of the applicable Subordinated Secured Party,
(b) be held in trust by the applicable Subordinated Secured Party for the benefit of the Senior
Administrative Agent and the other Senior Secured Parties and (c) be promptly paid over to the
Senior Administrative Agent or its designated representative with any necessary endorsement for
application (in accordance with the Senior Loan Documents) to the payment of the Senior Obligations
then remaining unpaid.



     Section 9. Insurance. Until the Discharge of the Senior Obligations has occurred, the Senior
Administrative Agent and the other Senior Secured Parties shall (a) be named as additional insured
and loss payee under any insurance policies maintained from time to time by any Loan Party (except
that the Subordinated Administrative Agent shall have the right to be named as additional insured
and loss payee so long as its second Lien status is identified in a manner satisfactory to the
Senior Administrative Agent) and (b) have the sole and exclusive right, subject to the rights of
the Loan Parties under the Senior Loan Documents, to adjust settlement for any insurance policy
covering the Senior Priority Collateral in the event of any loss thereunder and to approve any
award granted in any condemnation or similar proceeding affecting the Senior Priority Collateral.
All proceeds of any such insurance policy and any such condemnation award (or any payments with
respect to a deed in lieu of condemnation) in respect to the Senior Priority Collateral shall, to
the extent required by the Senior Loan Documents and the Subordinated Loan Documents, be paid
first, to the Senior Administrative Agent, for itself and on behalf of the other Senior
Secured Parties, until the Discharge of the Senior Obligations, second, to the Subordinated
Administrative Agent, for itself and on behalf of the other Subordinated Secured Parties, until the
Discharge of the Subordinated Obligations and, third, to the Loan Parties or as directed by
applicable law or court order. Until the Discharge of the Senior Obligations has occurred, whether
or not the Subordinated Administrative Agent is taking any Enforcement Action or any Insolvency or
Liquidation Proceeding has occurred and is continuing, if the Subordinated Administrative Agent or
any other Subordinated Secured Parties shall, at any time, receive any proceeds of any such
insurance policy or any such award or payment in contravention of this Agreement, it shall
promptly pay such proceeds over to the Senior Administrative Agent in accordance with the terms of
clause (j)(i) of Section 6.



     Section 10. Waivers.



     If the Senior Loan Administrative Agent or any other Senior Lender or Subordinated
Administrative Agent or any other Subordinated Lender enforces its rights or remedies in violation
of the terms of this Agreement, the Loan Parties shall not be entitled to use such violation as a
defense to any action by the Senior Administrative Agent or any other Senior
Lender or Subordinated Administrative Agent or any other Subordinated Lender, nor to assert
such violation as a counterclaim or basis for set off or recoupment against the Senior



31









 







Administrative Agent or any other Senior Lender or Subordinated Administrative Agent or any other
Subordinated Lender.



     Section 11. Enforcement Action Against the Subordinated Exclusive Collateral.



     (a) The Subordinated Administrative Agent shall not undertake any Enforcement Action against
the Subordinated Exclusive Collateral unless the Subordinated Exclusive Collateral Enforcement
Conditions have first been satisfied. The “Subordinated Exclusive Collateral Enforcement
Conditions” shall mean (i) the transferee of title to the Subordinated Exclusive Collateral is a
Qualified Transferee and (ii) the Common Collateral will be managed, on behalf of the Loan Parties,
by a Qualified Manager concurrently with the transfer of title to the Subordinated Exclusive
Collateral to a Qualified Transferee. The Subordinated Administrative Agent shall provide (A) the
Senior Administrative Agent with not less than 30 days prior written notice of any Enforcement
Action against the Subordinated Exclusive Collateral, (B) concurrently with such written notice, a
certificate from an officer of the Subordinated Administrative Agent certifying that the applicable
Subordinated Exclusive Collateral Enforcement Conditions have been satisfied and (C) such other
evidence as the Senior Administrative Agent may reasonably request that the foregoing requirements
have been satisfied.



     (b) Except as expressly set forth in this Section, nothing contained in this Agreement shall
limit or restrict the right of the Subordinated Administrative Agent to exercise its rights and
remedies, in law or in equity, or otherwise, in order to realize on any Subordinated Exclusive
Collateral.



     (c) Prior to taking any Enforcement Action against the Subordinated Exclusive Collateral, the
Subordinated Administrative Agent shall provide the Senior Administrative Agent with copies of any
and all material notices, pleadings, agreements, motions and briefs served upon, delivered to or
with any party to any Enforcement Action against the Subordinated Exclusive Collateral and upon the
Senior Administrative Agent’s request, keep the Senior Administrative Agent reasonably apprised as
to the status of such Enforcement Action.



     (d) In the event that the Subordinated Administrative Agent or any purchaser at a U.C.C. sale
obtains title to the Subordinated Exclusive Collateral (the “Subordinated Exclusive Collateral
Transfer Date”), the Senior Administrative Agent hereby acknowledges and agrees that any such
transfer shall not constitute a breach or default under the Senior Loan Documents.



     (e) Upon the Subordinated Exclusive Collateral Transfer Date, (i) the Liens, if any, of the
Subordinated Administrative Agent, for itself or for the benefit of the other Subordinated Secured
Parties, on the Senior Priority Collateral shall be automatically, unconditionally and
simultaneously released, (ii) all the Senior Priority Collateral shall form a part of and
constitute the Senior Exclusive Collateral and (iii) the Subordinated Administrative Agent, for
itself and on behalf of the other Subordinated Secured Parties, shall promptly execute and deliver
to the Senior Administrative Agent such termination statements, releases and other documents as the
Senior Administrative Agent may request to effectively confirm such release (including
terminating the Security Agreement, the Mortgages, the Recognition Agreements, the Collateral
Assignment of Material Agreements, the Timber Manager Subordination Agreement, the Deposit



32









 







Account Control Agreements and the Landlord Estoppel Certificates (as such terms are defined in the
Subordinated Credit Agreement as in effect on the date hereof) and any insurance endorsements in
favor of the Subordinated Administrative Agent). Notwithstanding the occurrence of the
Subordinated Exclusive Collateral Transfer Date the Subordinated Lenders shall retain until the
Discharge of the Subordinated Obligations occurs a contractual right and interest in payments from
the Revenue Account pursuant to the Revenue Waterfall as set forth in the Senior Credit Agreement
(as in effect on the date hereof) so long as the Senior Administrative Agent is not exercising any
Enforcement Action with respect to the Senior Priority Collateral (it being agreed that, if the
Senior Administrative Agent is exercising any Enforcement Action with respect to the Senior
Priority Collateral, all payments with respect to the Revenue Waterfall shall terminate and all
proceeds from the Senior Priority Collateral shall be applied exclusively to the payments of the
Senior Obligations). Until the Discharge of the Senior Obligations occurs, the Subordinated
Administrative Agent, for itself and on behalf of the other Subordinated Secured Parties, hereby
irrevocably constitutes and appoints the Senior Administrative Agent and any officer or agent of
the Senior Administrative Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and stead of the
Subordinated Administrative Agent and the other Subordinated Secured Parties (whether in the name
of such Persons or in its own name), for the purpose of carrying out the terms of this clause, to
take any and all appropriate action and to execute any and all documents and instruments which may
be necessary to accomplish the purposes of this clause, including any endorsements or other
instruments of transfer or release.



     Section 12. Rights of Subrogation; Bankruptcy.



     (a) Each of the Subordinated Administrative Agent and the Senior Administrative Agent hereby
waives any requirement for marshaling of assets in connection with any foreclosure of any security
interest or any other realization upon the Common Collateral in respect of the Senior Loan
Documents or the Subordinated Loan Documents, as applicable, or any exercise of any rights of
set-off or otherwise. Each of the Subordinated Administrative Agent and the Senior Administrative
Agent assumes all responsibility for keeping itself informed as to the condition (financial or
otherwise) of the Borrowers, the condition of the Common Collateral and other circumstances and,
except for notices expressly required by this Agreement, neither the Senior Administrative Agent
nor the Subordinated Administrative Agent shall have any duty whatsoever to obtain, advise or
deliver information or documents to the other relative to such condition, business, assets and/or
operations.



     (b) The Subordinated Administrative Agent on behalf of the Subordinated Lenders agrees that
neither the Senior Administrative Agent nor any Senior Lender owes any fiduciary duty to the
Subordinated Administrative Agent in connection with the administration of the Senior Loans and the
Senior Loan Documents, and the Subordinated Administrative Agent agrees not to assert any such
claim. The Senior Administrative Agent on behalf of the Senior Lenders agrees that neither the
Subordinated Administrative Agent nor any Subordinated Lender owes any fiduciary duty to the Senior
Administrative Agent in connection with the administration of the Subordinated Loans and the
Subordinated Loan Documents, and the Senior Administrative Agent agrees not to assert any such
claim.



33









 





     (c) With respect to the value of any payments or distributions in cash, property or other
assets that the Subordinated Administrative Agent or any of the other Subordinated Secured Parties
pays over to the Senior Administrative Agent or the other Senior Secured Parties under the terms of
this Agreement, the Subordinated Administrative Agent and the other Subordinated Secured Parties
shall be subrogated to the rights of the Senior Administrative Agent and the other Senior Secured
Parties; provided that the Subordinated Administrative Agent, on behalf of itself and the
other Subordinated Secured Parties, hereby agrees not to assert or enforce all such rights of
subrogation it may acquire as a result of any payment hereunder until the Discharge of the Senior
Obligations has occurred. The Loan Parties each acknowledges and agrees that the value of any
payments or distributions in cash, property or other assets received by the Subordinated
Administrative Agent or the other Subordinated Secured Parties that are paid over to the Senior
Administrative Agent or the other Senior Secured Parties pursuant to this Agreement shall not
reduce any of the Subordinated Obligations.



     (d) With respect to the value of any payments or distributions in cash, property or other
assets that the Senior Administrative Agent or any of the other Senior Secured Parties pays over to
the Subordinated Administrative Agent or the other Subordinated Secured Parties under the terms of
this Agreement, the Senior Administrative Agent and the other Senior Secured Parties shall be
subrogated to the rights of the Subordinated Administrative Agent and the other Subordinated
Secured Parties; provided that the Senior Administrative Agent, on behalf of itself and the
other Senior Secured Parties, hereby agrees not to assert or enforce all such rights of subrogation
it may acquire as a result of any payment hereunder until the Discharge of the Subordinated
Obligations has occurred. The Loan Parties each acknowledges and agrees that the value of any
payments or distributions in cash, property or other assets received by the Senior Administrative
Agent or the other Senior Secured Parties that are paid over to the Subordinated Administrative
Agent or the other Subordinated Secured Parties pursuant to this Agreement shall not reduce any of
the Senior Obligations.



     (e) The provisions of this Agreement shall be applicable both before and after the
commencement of any Insolvency or Liquidation Proceeding. Until a Discharge of the Senior
Obligations, the Subordinated Administrative Agent shall not, and shall not solicit any Person to,
and shall not direct or cause the Borrowers to direct or cause any Loan Party or any entity which
controls any of them to: (i) commence any Insolvency or Liquidation Proceeding; (ii) seek or
consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or
any similar official for any Lender Party or any Common Collateral or the Senior Exclusive
Collateral (or any portion thereof); (iii) seek to consolidate any Common Collateral, Senior
Exclusive Collateral or Subordinated Exclusive Collateral in any proceeding relating to bankruptcy,
insolvency, reorganization or relief of debtors; or (iv) take any action in furtherance of any of
the foregoing; provided, however, the foregoing shall not prohibit or restrict the
rights of the Subordinated Lenders to exercise their rights, remedies and options under the
Subordinated Loan Documents if, as a result of not exercising such rights or remedies, and
Insolvency or Liquidation a Proceeding would be a consequence thereof.




(f) (i) Until the Discharge of the Senior Obligations has occurred, the Subordinated
Administrative Agent, on behalf of itself and the other Subordinated Secured Parties, agrees
that none of them shall (A) seek (or support any Person seeking) relief from the automatic
stay or any other stay in any Insolvency or Liquidation Proceeding in respect



34









 







of the Senior Priority Collateral, without the prior written consent of the Senior
Administrative Agent, or (B) oppose any request by the Senior Administrative Agent or any
other Senior Secured Party for relief from the automatic stay in respect of the Senior
Priority Collateral; provided, however, that if the Senior Administrative Agent, on
behalf of itself and the other Senior Secured Parties, seeks relief from the automatic stay
to exercise its rights against the Senior Priority Collateral, then the Subordinated
Administrative Agent, on behalf of itself and the other Subordinated Secured Parties, may
seek limited relief from the automatic stay in order to preserve its rights in the Senior
Priority Collateral, subject to the subordination and other terms of this Agreement, in
order to receive proceeds of the Senior Priority Collateral that are payable to it and the
other Subordinated Secured Parties in accordance with the terms of this Agreement.




     (ii) Until the Discharge of the Subordinated Obligations has occurred, the Senior
Administrative Agent, on behalf of itself and the other Senior Secured Parties, agrees that
none of them shall (A) seek (or support any Person seeking) relief from the automatic stay
or any other stay in any Insolvency or Liquidation Proceeding in respect of the Subordinated
Priority Collateral, without the prior written consent of the Subordinated Administrative
Agent or (B) oppose any request by the Subordinated Administrative Agent or any other
Subordinated Secured Party for relief from the automatic stay in respect of the Subordinated
Priority Collateral; provided, however, that if the Subordinated Administrative
Agent, on behalf of itself and the other Subordinated Secured Parties, seeks relief from the
automatic stay to exercise its rights against the Subordinated Priority Collateral, then the
Senior Administrative Agent, on behalf of itself and the other Senior Secured Parties, may
seek limited relief from the automatic stay in order to preserve its rights in the
Subordinated Priority Collateral, subject to the subordination and other terms of this
Agreement, in order to receive proceeds of the Subordinated Priority Collateral that are
payable to it and the other Senior Secured Parties in accordance with the terms of this
Agreement.



     (g) In any Insolvency or Liquidation Proceeding (i) the Senior Administrative Agent may vote
in any such Insolvency or Liquidation Proceeding any and all claims of the Subordinated
Administrative Agent or the other Subordinated Secured Parties with respect to the Senior Priority
Collateral, and the Subordinated Administrative Agent, on behalf of itself and the other
Subordinated Secured Parties, hereby appoints the Senior Administrative Agent as its agent, and
grants to the Senior Administrative Agent an irrevocable power of attorney coupled with an
interest, and its proxy, for the purpose of exercising any and all rights and taking any and all
actions available to the Subordinated Administrative Agent in connection with any case by or
against the Loan Parties in any Insolvency or Liquidation Proceeding with respect to the Senior
Priority Collateral, including the right to file and/or prosecute any claims, to vote to accept or
reject a plan, to make any election under Section 1111(b) of the Bankruptcy Code; provided,
however, that with respect to any proposed plan of reorganization in respect of which
creditors are voting, the Senior Administrative Agent may vote on behalf of the Subordinated
Administrative Agent only if the proposed plan would result in the Senior Administrative Agent
being “impaired” (as such term is defined in the Bankruptcy Code) and (ii) the Subordinated
Administrative Agent shall not challenge the validity or amount of any claim submitted in such
Insolvency or Liquidation Proceeding by the Senior Administrative Agent with respect to the Senior
Priority Collateral in good faith, or any valuations of the Senior Priority Collateral



35









 







submitted by the Senior Administrative Agent in good faith, in such Insolvency or Liquidation
Proceeding.



     (h) Until the Discharge of the Senior Obligations has occurred, if any Insolvency or
Liquidation Proceeding has commenced and is continuing and the Senior Administrative Agent shall
desire to permit the use of Cash Collateral on which the Senior Administrative Agent or any other
creditor has a Lien or to permit the Borrowers or any other Loan Party to obtain financing (whether
for any Senior Secured Party or otherwise), whether from the Senior Secured Parties or any other
Person, under Section 363 or 364 of the Bankruptcy Code or any similar Bankruptcy Law (each, a
“DIP Financing”), the Subordinated Administrative Agent, on behalf of itself and the other
Subordinated Secured Parties, agrees that:




     (i) neither the Subordinated Administrative Agent nor any other Subordinated Secured
Party will (i) contest, oppose or object (or support any Person doing the same) to such use
of Cash Collateral or DIP Financing, including by any objection alleging a failure to
provide “adequate protection” for the Liens of the Subordinated Secured Parties or
otherwise, or (ii) request adequate protection or any other relief in connection therewith
(except as provided in the proviso below, by clause (j) of this Section or approved
by the Senior Administrative Agent);




     (ii) notice received two Business Days prior to the entry of an order approving such
usage of Cash Collateral or DIP Financing shall be adequate notice; and




     (iii) in the case of any DIP Financing, to the extent the Liens securing the Senior
Obligations are subordinated or pari passu with such DIP Financing the
Subordinated Administrative Agent, on behalf of itself and the other Subordinated Secured
Parties, will Subordinated its Liens in the Common Collateral to (i) the Liens securing such
DIP Financing (and all Obligations relating thereto); (ii) any Liens given to the Senior
Administrative Agent or the other Senior Secured Parties as adequate protection for such use
of Cash Collateral; and (iii) any “carve-out” agreed by the Senior Administrative Agent or
the other Senior Secured Parties;


provided, however, that:



(x) in the case of any DIP Financing (A) the aggregate principal amount of the DIP Financing
plus the then aggregate outstanding principal amount of the Senior Loans (after giving
effect to prepayments thereof from the proceeds of the DIP Financing) does not exceed the Senior
Cap Amount; and (B) the DIP Financing does not require the Borrowers to seek confirmation of a
specific plan of reorganization as to which all or substantially all of the material terms are set
forth in the DIP Financing documentation or a related document (other than any provisions requiring
that the DIP Financing be paid in full in cash upon confirmation of such plan of reorganization);
and



(y) in the case of any DIP Financing or Cash Collateral order, the foregoing shall not prevent the
Subordinated Administrative Agent, on behalf of itself and the other Subordinated Secured Parties,
from objecting to any DIP Financing or use of Cash Collateral that permits the Senior Secured
Parties to be granted adequate protection in the form of additional collateral or a


36









 






replacement lien on collateral without the Subordinated Administrative Agent, on behalf of itself
and the other Subordinated Secured Parties, receiving adequate protection in the form of a
subordinated Lien as herein provided on such collateral on the same basis as the other Liens
securing the Subordinated Obligations are subordinated to the Senior Obligations under this
Agreement.





(i) (i) The Subordinated Administrative Agent, on behalf of itself and the other
Subordinated Secured Parties, agrees that none of them shall contest, object or oppose (or
support any other Person doing the same) (A) any request by the Senior Administrative Agent
or any other Senior Secured Parties for adequate protection with respect to the Senior
Priority Collateral; (B) any objection by the Senior Administrative Agent or any other
Senior Secured Parties to any motion, relief, action or proceeding based on the Senior
Administrative Agent or the other Senior Secured Parties claiming a lack of adequate
protection with respect to the Senior Priority Collateral; or (C) the payment of interest,
fees, expenses or other amounts to the Senior Administrative Agent or the other Senior
Secured Parties under Sections 506(b) or 506(c) of the Bankruptcy Code or otherwise;
provided, that the foregoing shall not prevent the Subordinated Administrative Agent
or the Subordinated Secured Parties from objecting to any DIP Financing or use of Cash
Collateral to the extent permitted to do so pursuant to the proviso at the end of clause
(h) of this Section. Notwithstanding the foregoing, in any Insolvency or Liquidation
Proceeding if:




     (I) any Senior Secured Party is granted adequate protection with respect to the
Senior Priority Collateral in the form of additional collateral (with replacement
Liens on such additional collateral) in connection with any DIP Financing or use of
Cash Collateral, then the Subordinated Administrative Agent, on behalf of itself and
the other Subordinated Secured Parties, may seek or request adequate protection in
the form of a replacement Lien on such additional collateral, which Lien will be
subordinated to the Liens securing the Senior Obligations and such DIP Financing or
Cash Collateral use (and all Obligations relating thereto) on the same basis as the
other Liens securing the Subordinated Obligations are so subordinated to the Senior
Obligations under this Agreement (it being agreed that the failure of the
Subordinated Secured Parties to obtain such adequate protection shall not impair or
otherwise effect the agreements and undertakings of the Subordinated Administrative
Agent and the other Subordinated Secured Parties pursuant to this Section or
otherwise contained in this Agreement); and




     (II) in the event the Subordinated Administrative Agent, on behalf of itself
and the other Subordinated Secured Parties, seeks or requests adequate protection in
respect of the Senior Priority Collateral in accordance with clause (I)
above in respect of Subordinated Obligations and such adequate protection is granted
in the form of additional collateral, then the Subordinated Administrative Agent, on
behalf of itself and the other Subordinated Secured Parties, agrees that the Senior
Administrative Agent, on behalf of itself and the other Senior Secured Parties,
shall also be granted a senior Lien on such additional collateral as security for
the Senior Obligations and for any DIP Financing or Cash Collateral use



37









 







provided by the Senior Secured Parties, and that any Lien on such additional
collateral securing the Subordinated Obligations shall be subordinated to the Liens
on such collateral securing the Senior Obligations and any such DIP Financing or
Cash Collateral use provided by the Senior Secured Parties (and all obligations)
related thereto and to any other Liens granted to the Senior Secured Parties as
adequate protection on the same basis as the other Liens securing the Subordinated
Obligations are so subordinated to the Senior Obligations under this Agreement.




     (ii) The Senior Administrative Agent, on behalf of itself and the other Senior Secured
Parties, agrees that none of them shall contest, object or oppose (or support any other
Person doing the same) (A) any request by the Subordinated Administrative Agent or any other
Subordinated Secured Parties for adequate protection with respect to the Subordinated
Priority Collateral; (B) any objection by the Subordinated Administrative Agent or any other
Subordinated Secured Parties to any motion, relief, action or proceeding based on the
Subordinated Administrative Agent or the other Subordinated Secured Parties claiming a lack
of adequate protection with respect to the Subordinated Priority Collateral; or (C) the
payment of interest, fees, expenses or other amounts to the Subordinated Administrative
Agent or the other Subordinated Secured Parties under Sections 506(b) or 506(c) of the
Bankruptcy Code or otherwise. Notwithstanding the foregoing, in any Insolvency or
Liquidation Proceeding if:




     (I) any Subordinated Secured Party is granted adequate protection with respect
to the Subordinated Priority Collateral in the form of additional collateral (with
replacement Liens on such additional collateral) in connection with any DIP
Financing or use of Cash Collateral, then the Senior Administrative Agent, on behalf
of itself and the other Senior Secured Parties, may seek or request adequate
protection in the form of a replacement Lien on such additional collateral, which
Lien will be subordinated to the Liens securing the Subordinated Obligations and
such DIP Financing or Cash Collateral use (and all Obligations relating thereto) on
the same basis as the other Liens securing the Senior Obligations are so
subordinated to the Subordinated Obligations under this Agreement (it being agreed
that the failure of the Senior Secured Parties to obtain such adequate protection
shall not impair or otherwise effect the agreements and undertakings of the Senior
Administrative Agent and the other Senior Secured Parties pursuant to this Section
or otherwise contained in this Agreement); and




     (II) in the event the Senior Administrative Agent, on behalf of itself and the
other Senior Secured Parties, seeks or requests adequate protection in respect to
the Subordinated Priority Collateral in accordance with clause (I) above in
respect of Senior Obligations and such adequate protection is granted in the form of
additional collateral, then the Senior Administrative Agent, on behalf of itself and
the other Senior Secured Parties, agrees that the Subordinated Administrative Agent,
on behalf of itself and the other Subordinated Secured Parties, shall also be
granted a senior Lien on such additional collateral as security for the Subordinated
Obligations and for any DIP Financing or Cash Collateral use provided by the
Subordinated Secured Parties, and that any Lien on such



38









 







additional collateral securing the Senior Obligations shall be subordinated to
the Liens on such collateral securing the Subordinated Obligations and any such DIP
Financing or Cash Collateral use provided by the Subordinated Secured Parties (and
all obligations) related thereto and to any other Liens granted to the Subordinated
Secured Parties as adequate protection on the same basis as the other Liens securing
the Senior Obligations are so subordinated to the Subordinated Obligations under
this Agreement.




(j) (i) The Subordinated Administrative Agent, on behalf of itself and the other
Subordinated Secured Parties, agrees that it will raise no objection or oppose any motion to
sell or otherwise dispose of any Senior Priority Collateral in any Insolvency or Liquidation
Proceeding or otherwise free and clear of its Liens or other claims under Section 363 of the
Bankruptcy Code if the Senior Administrative Agent has consented to such sale or
disposition, provided that the net (A) proceeds therefrom are applied to permanently
reduce the Senior Obligations, (B) the respective interests of the Senior Secured Parties
and Subordinated Secured Parties attach to any non-cash proceeds and (C) this Section shall
not prohibit any Subordinated Secured Party from making a credit bid pursuant to Section
363(K) of the Bankruptcy Code.




     (ii) The Senior Administrative Agent, on behalf of itself and the other Senior Secured
Parties, agrees that it will raise no objection or oppose any motion to sell or otherwise
dispose of any Subordinated Priority Collateral in any Insolvency or Liquidation Proceeding
or otherwise free and clear of its Liens or other claims under Section 363 of the Bankruptcy
Code if the Subordinated Administrative Agent has consented to such sale or disposition,
provided that the net (A) proceeds therefrom are applied to permanently reduce the
Subordinated Obligations, (B) the respective interests of the Subordinated Secured Parties
and Senior Secured Parties attach to any non-cash proceeds and (C) this Section shall not
prohibit any Senior Secured Party from making a credit bid pursuant to Section 363(K) of the
Bankruptcy Code.




(k) (i) Nothing contained herein shall prohibit or in any way limit the Senior
Administrative Agent or any other Senior Secured Party from objecting in any Insolvency or
Liquidation Proceeding or otherwise to any action taken by the Subordinated Administrative
Agent or any other Subordinated Secured Party with respect to the Senior Priority
Collateral, including the seeking by the Subordinated Administrative Agent or any other
Subordinated Secured Party of adequate protection (other than as provided in clause
(i)(ii) of this Section) or the asserting by the Subordinated Administrative Agent or
any other Subordinated Secured Party of any of its rights and remedies under the
Subordinated Loan Documents or otherwise.




     (ii) Nothing contained herein shall prohibit or in any way limit the Subordinated
Administrative Agent or any other Subordinated Secured Party from objecting in any
Insolvency or Liquidation Proceeding or otherwise to any action taken by the Senior
Administrative Agent or any other Senior Secured Party with respect to the Subordinated
Priority Collateral, including the seeking by the Senior Administrative Agent or any other
Senior Secured Party of adequate protection (other than as provided in clause (i)(i)
of this Section) or the asserting by the Senior Administrative Agent or any




39












 






other Senior Secured Party of any of its rights and remedies under the Senior Loan Documents
or otherwise.




(l) (i) If any Senior Secured Party is required in any Insolvency or Liquidation Proceeding
or otherwise for any reason (including on grounds of being a fraudulent or preferential
transfer) to turn over or otherwise pay to the estate of the Borrowers or any other Loan
Party any amount, then such Senior Secured Party shall be entitled to a reinstatement of (A)
the Senior Obligations with respect to all such recovered amounts and (B) the Liens securing
the Senior Obligations with the priorities set forth herein, all as if the Discharge of the
Senior Obligations had not occurred. If this Agreement shall have been terminated prior to
the occurrence of the foregoing, this Agreement shall be reinstated in full force and effect
and all Senior Priority Collateral and proceeds therefrom shall be promptly delivered or
paid over to the Senior Administrative Agent, for the benefit of itself and the other Senior
Secured Parties, until the Discharge of the Senior Obligations. This Section shall survive
the termination of this Agreement.




     (ii) If any Subordinated Secured Party is required in any Insolvency or Liquidation
Proceeding or otherwise for any reason (including on grounds of being a fraudulent or
preferential transfer) to turn over or otherwise pay to the estate of the Borrowers or any
other Loan Party any amount, then such Subordinated Secured Party shall be entitled to a
reinstatement of (a) the Subordinated Obligations with respect to all such recovered amounts
and (b) the Liens securing the Subordinated Obligations with the priorities set forth
herein, all as if the Discharge of the Subordinated Obligations had not occurred. If this
Agreement shall have been terminated prior to the occurrence of the foregoing, this
Agreement shall be reinstated in full force and effect and all Subordinated Priority
Collateral and proceeds therefrom shall be promptly delivered or paid over to the Senior
Administrative Agent, for the benefit of itself and the other Subordinated Secured Parties,
until the Discharge of the Subordinated Obligations. This Section shall survive the
termination of this Agreement.



     (m) If, in any Insolvency or Liquidation Proceeding, debt obligations of the reorganized
debtor secured by Liens upon any property of the reorganized debtor are distributed pursuant to a
plan of reorganization or similar dispositive restructuring plan, both on account of Senior
Obligations and Subordinated Obligations, then, to the extent the debt obligations distributed on
account of the Senior Obligations and the Subordinated Obligations are secured by Liens upon the
same property, the provisions of this Agreement will survive the distribution of such debt
obligations pursuant to such plan of reorganization or restructuring plan and will apply with like
effect to the Liens securing such debt obligations.




(n) (i) The Subordinated Administrative Agent, for itself and on behalf of the other
Subordinated Secured Parties, waives any claim it may hereafter have against any Senior
Secured Party arising out of the election of any Senior Secured Party of the application of
Section 1111(b)(2) of the Bankruptcy Code and/or out of any cash collateral or financing
arrangement or out of any grant of a security interest in connection with the Senior
Priority Collateral in any Insolvency or Liquidation Proceeding.



40









 






     (ii) The Senior Administrative Agent, for itself and on behalf of the other Senior
Secured Parties, waives any claim it may hereafter have against any Subordinated Secured
Party arising out of the election of any Subordinated Secured Party of the application of
Section 1111(b)(2) of the Bankruptcy Code and/or out of any cash collateral or financing
arrangement or out of any grant of a security interest in connection with the Subordinated
Priority Collateral in any Insolvency or Liquidation Proceeding.



     (o) The Senior Administrative Agent, for itself and on behalf of the other Senior Secured
Parties, and the Subordinated Administrative Agent for itself and on behalf of the other
Subordinated Secured Parties, acknowledges and agrees that: (i) the grants of Liens pursuant to
the Senior Loan Documents and the Subordinated Loan Documents constitute two separate and distinct
grants of Liens; and (b) as a result of, among other things, their differing rights in the Common
Collateral, the Senior Exclusive Collateral and the Subordinated Exclusive Collateral, the
Subordinated Obligations are fundamentally different from the Senior Obligations and must be
separately classified in any plan of reorganization proposed or adopted in an Insolvency or
Liquidation Proceeding. To further effectuate the intent of the parties as provided in the
immediately preceding sentence, if it is held that the claims of the Senior Secured Parties and the
Subordinated Secured Parties in respect of the Common Collateral constitute only one secured claim
(rather than separate classes of senior and junior secured claims), then each of the parties hereto
hereby acknowledges and agrees that all distributions shall be made as if there were separate
classes of senior and junior secured claims against the Loan Parties in respect of the Common
Collateral (with the effect being that, to the extent of the aggregate value of the Common
Collateral the Senior Obligations shall be paid in full (as provided in the definition of Discharge
of the Senior Obligations) before any distribution is made in respect of the claims held by the
Subordinated Secured Parties with respect to the Common Collateral, with the Subordinated
Administrative Agent, for itself and on behalf of the other Subordinated Secured Parties, hereby
acknowledging and agreeing to turn over to the Senior Administrative Agent, for itself and on
behalf of the other Senior Secured Parties, amounts otherwise received or receivable by them to the
extent necessary to effectuate the intent of this sentence (with respect to the payment of
post-petition interest), even if such turnover has the effect of reducing the claim or recovery of
the Subordinated Secured Parties.



     (p) Notwithstanding the other terms of this Agreement, in any Insolvency or Liquidation
Proceeding the Subordinated Administrative Agent or any other Subordinated Secured Party may,
subject to Section 11, exercise its rights and remedies with respect to the Subordinated
Exclusive Collateral or the Subordinated Exclusive Guaranty without any consent of or action by the
Senior Administrative Agent or any other Senior Secured Party.



     (q) Notwithstanding the other terms of this Agreement, in any Insolvency or Liquidation
Proceeding the Senior Administrative Agent or any other Senior Secured Party may exercise its
rights and remedies with respect to the Senior Exclusive Collateral without any consent of or
action by the Subordinated Administrative Agent or any other Subordinated Secured Party.



     Section
13. Rights of Cure. Prior to the Senior Administrative Agent or any other Senior Secured Party
commencing any Enforcement Action, the Senior Administrative Agent shall provide written notice of
the Event of Default (other than a monetary Event of Default



41









 







resulting from an
Insolvency or Liquidation Proceeding, which the Subordinated Secured Party shall have no right to
cure pursuant to this Section) which would permit the Senior Administrative Agent or any other
Senior Secured Party to commence such Enforcement Action to the Subordinated Administrative Agent
and shall permit the Subordinated Lenders an opportunity to cure such Event of Default until ten
Business Days after the later of (a) the receipt by the Subordinated Administrative Agent of notice
of such Event of Default from the Senior Administrative Agent and (b) the expiration of the
Borrowers’ cure provision under the Senior Credit Agreement, if any (the “Cure Period”) to
cure such Event of Default; provided, however, in the event the Subordinated
Lenders elect to cure any such Event of Default, the Subordinated Lenders shall (i) defend and hold
harmless the Senior Administrative Agent and the other Senior Secured Parties for all costs,
expenses, losses, liabilities, obligations, damages, penalties, costs, and disbursements imposed
on, incurred by or asserted against the Senior Administrative Agent and the other Senior Secured
Parties due to or arising from such Event of Default (other than with respect to acts of the Senior
Administrative Agent and the other Senior Secured Parties giving rise thereto) and (ii) without
duplication of the foregoing, reimburse the Senior Administrative Agent and the other Senior
Secured Parties for any Protective Advances. Notwithstanding the foregoing, the Subordinated
Administrative Agent shall not have the right to cure (x) (A) more than a total of four monetary
Events of Default or (B) monetary Events of Default with respect to the Loans having Interest
Periods (as defined in the Senior Credit Agreement on the date hereof) exceeding six months in
total and (y) more than four non-monetary Events of Default.



     Section 14. Right to Purchase Senior Loans.



     (a) If the Senior Administrative Agent or any other Senior Secured Party intends to commence
an Enforcement Action under clauses (i), (ii) or (iv) of the definition
thereof under the Senior Loan Documents, the Subordinated Lenders shall have 15 Business Days
following delivery of each notice provided for in Section 13 to purchase from the Senior
Lenders, in whole but not in part, the Senior Loans for a price equal to the outstanding principal
balance thereof, together with all accrued interest and other amounts due thereon (including,
without limitation, any breakage costs with respect to LIBOR contracts, late charges, default
interest and post-petition interest), any Protective Advances made by the Senior Lenders, including
all costs and expenses (including reasonable legal fees and expenses) actually incurred and paid by
Senior Lenders in enforcing the terms of the Loan Documents. If the Subordinated Administrative
Agent, on behalf of itself and the other Subordinated Secured Parties, exercises such right, it
shall be exercised pursuant to documentation mutually acceptable to each of the Senior
Administrative Agent and the Subordinated Administrative Agent, and the purchase price shall be
paid, on or prior to 1:00 pm on the specified closing date of such purchase and sale, by the
Subordinated Administrative Agent wire transferring the same in immediately available funds to an
account specified by the Senior Administrative Agent. If the Subordinated Administrative Agent, on
behalf of itself and the other Subordinated Secured Parties, fails to exercise this right in a
timely fashion, the Senior Secured Parties shall have no further obligations pursuant to this
Section and may take any further actions in their sole discretion in accordance with the Senior
Loan Documents and this Agreement. Such sale shall be without recourse, representations or
warranties, except for representations as to the outstanding balance of the Senior Loans and as to
each Senior Lender’s not having assigned or encumbered its rights in the Senior Loans.



42









 





     (b) Prior to the Subordinated Administrative Agent or any other Subordinated Secured Party
commencing any Enforcement Action under clauses (i), (ii) or (iv) of the
definition thereof under the Subordinated Loan Documents with respect to the Common Collateral, the
Subordinated Administrative Agent shall provide written notice thereof to the Senior Administrative
Agent and permit the Senior Lenders, for a period of 15 Business Days thereafter, to purchase from
the Subordinated Lenders, in whole but not in part, the Subordinated Loans for a price equal to the
outstanding principal balance thereof, together with all accrued interest and other amounts due
thereon (including, without limitation, late charges, default interest and post-petition interest),
any Protective Advances made by the Senior Lenders, including all costs and expenses (including
reasonable legal fees and expenses) actually incurred and paid by Subordinated Lenders in enforcing
the terms of the Loan Documents. If the Senior Administrative Agent, on behalf of itself and the
other Senior Secured Parties, exercises such right, it shall be exercised pursuant to documentation
mutually acceptable to each of the Subordinated Administrative Agent and the Senior Administrative
Agent, and the purchase price shall be paid, on or prior to 1:00 pm on the specified closing date
of such purchase and sale, by the Senior Administrative Agent wire transferring the same in
immediately available funds to an account specified by the Subordinated Administrative Agent. If
the Senior Administrative Agent, on behalf of itself and the other Senior Secured Parties, fails to
exercise this right in a timely fashion, the Subordinated Secured Parties shall have no further
obligations pursuant to this Section and may take any further actions in their sole discretion in
accordance with the Subordinated Loan Documents and this Agreement. Such sale shall be without
recourse, representations or warranties, except for representations as to the outstanding balance
of the Subordinated Loans and as to each Subordinated Lender’s not having assigned or encumbered
its rights in the Subordinated Loans.



     (c) Upon the Subordinated Lenders’ purchase of the Senior Loans, the Senior Lenders and the
Senior Administrative Agent shall have no further obligations or liability under this Agreement
other than those that survive the expiration or earlier termination of this Agreement, including
Section 18. Upon the Senior Lenders’ purchase of the Subordinated Loans, the Subordinated
Lenders and the Subordinated Administrative Agent shall have no further obligations or liability
under this Agreement other than those that survive the expiration or earlier termination of this
Agreement, including Section 18



     Section 15. Obligations Hereunder Not Affected.



     (a) All rights, interests, agreements and obligations of the Senior Administrative Agent and
the Subordinated Administrative Agent under this Agreement shall remain in full force and effect
irrespective of:




     (i) any lack of validity or enforceability of the Senior Loan Documents or the

Subordinated Loan Documents or any other agreement or instrument relating thereto;




     (ii) any taking, exchange, release or non-perfection of any Common Collateral, or any
taking, release or amendment, or waiver of, or consent to, or departure from, any Senior
Loan Document or Subordinated Loan Document, for all or any portion of the Senior Loans or
the Subordinated Loans;



43









 






     (iii) any manner of application of the Common Collateral, or proceeds thereof, to all
or any portion of the Senior Loans or the Subordinated Loans, or any manner of sale or other
disposition of its Common Collateral for all or any portion of the Senior Loans or the
Subordinated Loans;




     (iv) any change, restructuring or termination of the corporate structure or existence
of the Loan Parties or any Affiliates of the Borrowers; or




     (v) any other circumstance which might otherwise constitute a defense available to, or
a discharge of, the Loan Parties, or a subordinated creditor or a Senior Lender, subject to
the terms hereof.



     (b) This Agreement shall continue to be effective or be reinstated, as the case may be, if at
any time any payment of all or any portion of the Senior Loans is rescinded or must otherwise be
returned by the Senior Lenders or the Subordinated Lenders upon the insolvency, bankruptcy or
reorganization of the Borrowers or the Subordinated Borrowers or otherwise, all as though such
payment had not been made.



     Section 16. Notices.



     (a) Except in the case of notices and communications expressly permitted to be given by
telephone and as provided in clause (b) of Section, all notices and other communications
provided to any party hereto under this Agreement shall be in writing, shall be delivered by hand
or overnight courier service, mailed by certified or registered mail or sent by telecopier, and
addressed to such party at its address or telecopy number set forth below or at such other address
or telecopy number as may be designated by such party in a notice to the other party given in
accordance with this Section. Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received; notices sent by
telecopier shall be deemed to have been given when sent (except that, if not given during normal
business hours for the recipient, shall be deemed to have been given at the opening of business on
the next business day for the recipient). Notices delivered through electronic communications to
the extent provided in clause (b) of this Section, shall be effective as provided therein.



     (b) Notices and other communications to the parties hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Senior Administrative Agent and the Subordinated Administrative Agent,
provided that the foregoing shall not apply to notices to any party if such party has
notified the other that it is incapable of receiving notices by electronic communication. The
Senior Administrative Agent or the Subordinated Administrative Agent may, in their discretion,
agree to accept notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications. Unless the Senior Administrative Agent or the
Subordinated Administrative Agent otherwise prescribes, (i) notices and other communications sent
to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from
the intended recipient (such as by the “return receipt requested” function, as available, return
e-mail or other written acknowledgement), provided that if such notice or other
communication is not sent during the normal business hours of the



44









 







recipient, such notice or communication shall be deemed to have been sent at the opening of
business on the next Business Day for the recipient, and (ii) notices or communications posted to
an Internet or intranet website shall be deemed received upon the deemed receipt by the intended
recipient at its e-mail address as described in the foregoing clause (i) of notification
that such notice or communication is available and identifying the website address therefor.



     (c) Notices hereunder shall be addressed to the parties as follows:



     To Senior Administrative Agent:


CoBank, ACB

5500 S. Quebec Street

Greenwood Village, CO 80111

Attention: Syndications Coordinator, Corporate Finance Division

Facsimile No.: (303) 694-5830




     To Subordinated Administrative Agent:


Wachovia Bank, National Association

301 South College Street, NC0174

Charlotte, North Carolina 28288-01741

Attention: Roger Shreero, Structured Asset Finance

Facsimile No.: (704) 715-0065




     Section 17. Estoppel.



     (a) The Subordinated Administrative Agent shall, within ten days following a request from the
Senior Administrative Agent, provide the Senior Administrative Agent with a written statement
setting forth the then current outstanding principal balance of the Subordinated Loans, the
aggregate accrued and unpaid interest under the Subordinated Loans, and stating whether to
Subordinated Administrative Agent ‘s knowledge any default or Event of Default exists under the
Subordinated Loans.



     (b) The Senior Administrative Agent shall, within ten days following a request from the
Subordinated Administrative Agent, provide the Subordinated Administrative Agent with a written
statement setting forth the then current outstanding principal balance of the Senior Loans, the
aggregate accrued and unpaid interest under the Senior Loans, and stating whether to the Senior
Administrative Agent’s knowledge any default or Event of Default exists under the Senior Loans.



     Section 18. Further Assurances. So long as all or any portion of the Senior Loans and the Subordinated
Loans remains unpaid and the Senior Loan Documents and the Subordinated Loan Documents encumber the
Common Collateral, the Subordinated Administrative Agent and the Senior Administrative Agent will
each execute, acknowledge and deliver in recordable form and upon demand of the other, any other
instruments or agreements reasonably required in order to carry out the provisions of this
Agreement or to effectuate the intent and purposes hereof.



45









 





     Section 19. No Third Party Beneficiaries; No Modification. The parties hereto do not intend the
benefits of this Agreement to inure to Senior Loan Party, any Subordinated Borrower Party or any
other Person. This Agreement may not be changed or terminated orally, but only by an agreement in
writing signed by the party against whom enforcement of any change is sought.



     Section 20. Successors and Assigns. This Agreement shall bind all successors and assigns of the
Subordinated Lenders, the Subordinated Administrative Agent, the Senior Lenders and the Senior
Administrative Agent and shall inure to the benefit of all successors and assigns of the Senior
Administrative Agent, the Senior Lenders, the Subordinated Administrative Agent and the
Subordinated Lenders.



     Section 21. Counterpart Originals. This Agreement may be executed in counterpart originals, each of
which shall constitute an original, and all of which together shall constitute one and the same
agreement.



     Section 22. Legal Construction. In all respects, including, without limitation, matters of
construction and performance of this Agreement and the obligations arising hereunder, this
Agreement shall be governed by, and construed in accordance with, the internal laws of the State of
New York applicable to agreements intended to be wholly performed within the State of New York
(including for such purpose Sections 5-1401 and 5-1402 of the General Obligations Law of the State
of New York).



     Section 23. No Waiver; Remedies. No failure on the part of the Senior Administrative Agent or the
Subordinated Administrative Agent to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by law.



     Section 24. No Joint Venture. Nothing provided herein is intended to create a joint venture,
partnership, tenancy-in-common or joint tenancy relationship between or among any of the parties
hereto.



     Section 25. Captions. The captions in this Agreement are inserted only as a matter of convenience and
for reference, and are not and shall not be deemed to be a part hereof.



     Section 26. Conflicts. As between the Senior Administrative Agent and the Senior Lenders, on the one
hand, and the Subordinated Administrative Agent and the Subordinated Lenders, on the other hand, in
the event of any conflict, ambiguity or inconsistency between the terms and conditions of this
Agreement and the terms and conditions of any of the Senior Loan Documents or the Subordinated Loan
Documents, the terms and conditions of this Agreement shall control.



     Section 27. No Release. Nothing herein contained shall operate to release any Senior Loan Party or any
Subordinated Borrower Party from (a) its obligation to keep and perform all of the terms,
conditions, obligations, covenants and agreements contained in the Senior Loan Documents or (b) any
liability of any Loan Party under the Senior Loan Documents, or to release any Senior Loan Party
from (x) its obligation to keep and perform all of the terms, conditions,



46









 







obligations, covenants and agreements contained in the Subordinated Loan Documents or (y) any liability of any Loan Party
under the Subordinated Loan Documents.



     Section 28. Continuing Agreement. This Agreement is a continuing agreement and shall remain in full
force and effect until the earliest of (a) payment in full of the Senior Loans, (b) transfer of the
Common Collateral by foreclosure of the Senior Loan Mortgage or the exercise of the power of sale
contained therein or by deed-in-lieu of foreclosure, or (c) payment in full of the Subordinated
Loans; provided, however, that any rights or remedies of either party hereto
arising out of any breach of any provision hereof occurring prior to such date of termination shall
survive such termination.



     Section 29. Severability. In the event that any provision of this Agreement or the application hereof
to any party hereto shall, to any extent, be invalid or unenforceable under any applicable statute,
regulation, or rule of law, then such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform to such statute, regulation or rule
of law, and the remainder of this Agreement and the application of any such invalid or
unenforceable provisions to parties, jurisdictions or circumstances other than to whom or to which
it is held invalid or unenforceable, shall not be affected thereby nor shall same affect the
validity or enforceability of any other provision of this Agreement.



     Section 30. Injunction. The Subordinated Administrative Agent and the Senior Administrative Agent each
acknowledge (and waive any defense based on a claim) that monetary damages are not an adequate
remedy to redress a breach by the Senior Administrative Agent or the Subordinated Administrative
Agent, as applicable, hereunder and that a breach by such Person hereunder would cause irreparable
harm to the other Person. Accordingly, the Senior Administrative Agent and the Subordinated
Administrative Agent each agree that upon a breach to this Agreement, the remedies of injunction,
declaratory judgment and specific performance shall be available to the other Person.



     Section 31. Mutual Disclaimer. Each of the Senior Administrative Agent and the Subordinated
Administrative Agent are sophisticated lenders and/or investors in real estate and their respective
decision to enter into the Senior Loans and the Subordinated Loans is based upon their own
independent expert evaluation of the terms, covenants, conditions and provisions of, respectively,
the Senior Loan Documents and the Subordinated Loan Documents and such other matters, materials and
market conditions and criteria which each of the Senior Administrative Agent and the Subordinated
Administrative Agent deem relevant. Each of the Senior Administrative Agent and the Subordinated
Administrative Agent has not relied in entering into this Agreement, and respectively, the Senior
Loans, the Senior Loan Documents, the Subordinated Loans and the Subordinated Loan Documents, upon
any oral or written information, representation, warranty or covenant from the other, or any of the
other’s representatives, employees, Affiliates or agents other than the representations and
warranties of the other contained herein. Each of the Senior Administrative Agent and the
Subordinated Administrative Agent further acknowledges that no employee, agent or representative of
the other has been authorized to make, and that each of the Senior Administrative Agent and the
Subordinated Administrative Agent have not relied upon, any statements, representations, warranties
or covenants other than those expressly set forth in this Agreement. Without limiting the
foregoing, each of the Senior Administrative Agent and the Subordinated



47









 







Administrative Agent
acknowledges that the other has made no representations or warranties as to the Senior Loans or the
Subordinated Loans or the Common Collateral (including, without limitation, the cash flow of the
Real Property, the value, marketability, condition or future performance thereof,
the existence, status, adequacy or sufficiency of the leases, the tenancies or occupancies of the
Real Property, or the sufficiency of the cash flow of the Real Property to pay all amounts which
may become due from time to time pursuant to the Senior Loans or the Subordinated Loans).



     Section 32. Legend. Each of the Subordinated Credit Agreement, the Security Agreement, the Mortgages,
the Recognition Agreements, the Collateral Assignment of Material Agreements, the Timber Manager
Subordination Agreement and the Deposit Account Control Agreements (as such terms are defined in
the Senior Credit Agreement as in effect on the date hereof) shall include the following language
(or language to similar effect approved by the Senior Administrative Agent and the Subordinated
Administrative Agent):




“NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE TERMS OF THIS AGREEMENT AND
THE EXERCISE OF ANY RIGHT OR REMEDY BY THE ADMINISTRATIVE AGENT OR ANY OTHER LENDER
HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT, DATED AS OF
OCTOBER 9, 2007 (AS AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED FROM TIME
TO TIME, THE “INTERCREDITOR AGREEMENT”), AMONG COBANK, ACB, AS SENIOR
ADMINISTRATIVE AGENT, AND WACHOVIA BANK, NATIONAL ASSOCIATION, AS SUBORDINATED
ADMINISTRATIVE AGENT, AND CERTAIN OTHER PERSONS THAT ARE, OR MAY FROM TIME TO TIME
BECOME, A PARTY THERETO. IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE
INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE TERMS OF THE INTERCREDITOR AGREEMENT
SHALL GOVERN AND CONTROL.”



     Section 33. Bailee for Perfection, etc.



     (a) All Common Collateral in which a security interest therein is perfected under the U.C.C.
by the secured party (or its agents or bailees) having possession, “control” (as defined in the
U.C.C.), including the Revenue Account, the Equity Raise Account, the Wells TRS Subsidiary Account
and other deposit accounts and securities accounts (as defined in the U.C.C.), or in which the
secured party is listed on a certificate of title (such as motor vehicles) (such Common Collateral
being, collectively, the “Pledged Collateral”) shall be held by (i) in the case of Senior
Priority Collateral, by the Senior Administrative Agent, and (ii) in the case of Subordinated
Priority Collateral, by the Subordinated Administrative Agent, as collateral agent for the Senior
Secured Parties or the Subordinated Secured Parties, respectively, and as bailee for the
Subordinated Administrative Agent and the Senior Administrative Agent, respectively, such bailment
being intended to satisfy the requirements of Sections 8-301(a)(2) and 9-313(c) of the U.C.C. in
order to perfect the security interest granted under the Subordinated Loan Documents and the Senior
Loan Documents, respectively, subject to the terms and conditions of this Section.



48









 





     (b) The Senior Administrative Agent and the Subordinated Administrative Agent shall have no
obligation whatsoever to the Subordinated Administrative Agent or any other Subordinated Secured
Party and to the Senior Administrative Agent or any other Senior Secured Party, respectively, to
ensure that the Pledged Collateral is genuine or owned by any of the Loan
Parties or to preserve rights or benefits of any Person except as expressly set forth in this
Section. The duties or responsibilities of the Senior Administrative Agent and the Subordinated
Administrative Agent under this Section shall be limited solely to holding the Pledged Collateral
as bailee in accordance with this Section and delivering the Pledged Collateral upon Discharge of
the Senior Obligations or the Discharge of the Subordinated Obligations, respectively, as provided
in clause (d) of this Section.



     (c) Subject to the terms of this Agreement, until Discharge of the Senior Obligations and the
Discharge of the Subordinated Obligations has occurred, the Senior Administrative Agent and the
Subordinated Administrative Agent, respectively, shall be entitled to deal with the Pledged
Collateral and other Common Collateral within its control as if the Liens of the Subordinated
Administrative Agent and the other Subordinated Secured Parties and of the Senior Administrative
Agent and the other Senior Secured Parties, respectively, did not exist. The Senior Administrative
Agent and the Subordinated Administrative Agent acting pursuant to this Section shall not have by
reason of the Senior Loan Documents, the Subordinated Loan Documents, this Agreement or any other
document a fiduciary relationship with any of the Senior Secured Parties or the Subordinated
Secured Parties.



     (d) Promptly following the Discharge of the Senior Obligations, the Senior Administrative
Agent shall deliver, without recourse, representation or warranty (other than a representation by
the Senior Administrative Agent that it has not otherwise sold, assigned, transferred or pledged
any right, title or interest in the Pledged Collateral) but together with any necessary
endorsements, the remaining Pledged Collateral (if any), first, if prior to the
Subordinated Exclusive Collateral Transfer Date, to the Subordinated Administrative Agent until the
Discharge of the Subordinated Obligations, and second, to the Loan Parties or as directed
by applicable law or court order. In connection with any such transfer of Pledged Collateral, the
Senior Administrative Agent agrees to have removed its name as secured party on any certificate of
title or other writing forming a part of the Pledged Collateral. The Senior Administrative Agent
further agrees to take all other action reasonably requested by such Person in connection with such
Person obtaining a first priority security interest in the Pledged Collateral (subject to the
rights of the Loan Parties under the Subordinated Loan Documents, including permitted Liens) or as
a court of competent jurisdiction may otherwise direct.



     (e) Promptly following the Discharge of the Subordinated Obligations, the Subordinated
Administrative Agent shall deliver, without recourse, representation or warranty (other than a
representation by the Subordinated Administrative Agent that it has not otherwise sold, assigned,
transferred or pledged any right, title or interest in the Pledged Collateral) but together with
any necessary endorsements, the remaining Pledged Collateral (if any), first, to the Senior
Administrative Agent until the Discharge of the Senior Obligations, and second, to the Loan
Parties or as directed by applicable law or court order. In connection with any such transfer of
Pledged Collateral, the Subordinated Administrative Agent agrees to have removed its name as
secured party on any certificate of title or other writing forming a part of the Pledged
Collateral. The Subordinated Administrative Agent further agrees to take all other action



49









 







reasonably requested by such Person in connection with such Person obtaining a first priority
security interest in the Pledged Collateral (subject to the rights of the Loan Parties under the
Subordinated Loan Documents, including permitted Liens) or as a court of competent jurisdiction may
otherwise direct.



     Section 34. When Discharge of Obligations Deemed to Not Have Occurred.




     (i) If substantially contemporaneously with the Discharge of the Senior Obligations the
Borrowers thereafter enter into any Refinancing of any Senior Loan Document evidencing a
Senior Obligation, which Refinancing is permitted by the terms of this Agreement, then such
Discharge of the Senior Obligations shall automatically be deemed not to have occurred for
all purposes of this Agreement (other than with respect to any actions taken prior to the
date of such designation as a result of the occurrence of such first Discharge of the Senior
Obligations), and, from and after the date on which the notice referred to in the next
sentence is delivered to the Subordinated Administrative Agent, the obligations under such
Refinancing of any Senior Loan Document shall automatically be treated as Senior Obligations
for all purposes of this Agreement, including for purposes of the Lien priorities and rights
in respect of Common Collateral set forth herein, and the agent under such Senior Loan
Documents shall be the Senior Administrative Agent for all purposes of this Agreement. Upon
receipt of a notice stating that the Borrowers have entered into a new Senior Loan Document
(which notice shall include the identity of the new first lien administrative agent; such
new first lien agent being the “New Senior Agent”), the Subordinated Administrative
Agent shall promptly (a) enter into such documents and agreements (including amendments or
supplements to this Agreement) as the Borrowers or such New Senior Agent shall reasonably
request in order to provide to the New Senior Agent the rights contemplated hereby, in each
case consistent in all material respects with the terms of this Agreement and (b) deliver to
the New Senior Agent any Pledged Collateral held by it together with any necessary
endorsements (or otherwise allow the New Senior Agent to obtain control of such Pledged
Collateral). The New Senior Agent shall agree in a writing addressed to the Subordinated
Administrative Agent to be bound by the terms of this Agreement. If the new Senior
Obligations under the new Senior Loan Documents are secured by assets of the Loan Parties of
the type constituting Common Collateral that do not also secure the Subordinated
Obligations, then the Loan Parties shall take all actions reasonably requested to cause the
Subordinated Obligations to be secured at such time by a second priority Lien on such assets
to the same extent provided in the Subordinated Security Documents.




     (ii) If substantially contemporaneously with the Discharge of the Subordinated
Obligations the Borrowers thereafter enter into any Refinancing of any Subordinated Loan
Document evidencing a Subordinated Obligation, which Refinancing is permitted by the terms
of this Agreement, then such Discharge of the Subordinated Obligations shall automatically
be deemed not to have occurred for all purposes of this Agreement (other than with respect
to any actions taken prior to the date of such designation as a result of the occurrence of
such first Discharge of the Subordinated Obligations), and, from and after the date on which
the notice referred to in the next sentence is delivered to the Senior Administrative Agent,
the obligations under such Refinancing of any



50









 







Subordinated Loan Document shall automatically
be treated as Subordinated Obligations for all purposes of this Agreement, including for
purposes of the Lien priorities and rights in respect of Common Collateral set forth herein,
and the agent under such Subordinated Loan Documents shall be the Subordinated
Administrative Agent for all purposes of this Agreement. Upon receipt of a notice stating
that the Borrowers have entered into a new
Subordinated Loan Document (which notice shall include the identity of the new first
lien administrative agent; such new first lien agent being the “New Subordinated
Agent”), the Senior Administrative Agent shall promptly (a) enter into such documents
and agreements (including amendments or supplements to this Agreement) as the Borrowers or
such New Subordinated Agent shall reasonably request in order to provide to the New
Subordinated Agent the rights contemplated hereby, in each case consistent in all material
respects with the terms of this Agreement and (b) deliver to the New Subordinated Agent any
Pledged Collateral held by it together with any necessary endorsements (or otherwise allow
the New Subordinated Agent to obtain control of such Pledged Collateral). The New
Subordinated Agent shall agree in a writing addressed to the Senior Administrative Agent to
be bound by the terms of this Agreement. If the new Subordinated Obligations under the new
Subordinated Loan Documents are secured by assets of the Loan Parties of the type
constituting Common Collateral that do not also secure the Senior Obligations, then the Loan
Parties shall take all actions reasonably requested to cause the Senior Obligations to be
secured at such time by a second priority Lien on such assets to the same extent provided in
the Senior Security Documents



[NO FURTHER TEXT ON THIS PAGE]




51









 








     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first set forth above.



	 	 	 	 	 	 	 
	 	 	COBANK, ACB, as Senior Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION, 

as Subordinated Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	LOAN PARTIES	 	 
	 
	 	 	 	 	 	 
	 	 	TIMBERLANDS II, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT ORGANIZATION, LLC, as Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS TIMBERLAND ACQUISITION, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT ORGANIZATION, LLC, as Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt	 	 
	 

	 	 	 	Title: President	 	 






Senior/Mezzanine Intercreditor Agreement

Signature Page




 









 








	 	 	 	 	 	 	 
	 	 	WELLS TIMBERLAND REIT, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Randall D. Fretz	 	 
	 

	 	 	 	Title: Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS TIMBERLAND TRS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Randall D. Fretz	 	 
	 

	 	 	 	Title: Senior Vice President	 	 






	 	 	 	 	 	 	 	 	 
	 	 	WELLS TRS HARVESTING OPERATIONS, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	FOREST RESOURCE CONSULTANTS, INC., 

as Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: David Foil	 	 
	 

	 	 	 	 	 	Title: President	 	 






	 	 	 	 	 	 	 
	 	 	WELLS TIMBERLAND MANAGEMENT ORGANIZATION, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt	 	 
	 

	 	 	 	Title: President	 	 






Senior/Mezzanine Intercreditor Agreement

Signature Page





 









 








	 	 	 	 	 	 	 
	 	 	WELLS REAL ESTATE FUNDS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Randall D. Fretz	 	 
	 

	 	 	 	Title: Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS TIMBERLAND OPERATING 

PARTNERSHIP, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND REIT, INC., 

as General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Randall D. Fretz	 	 
	 

	 	 	 	Title: Senior Vice President	 	 






Senior/Mezzanine Intercreditor Agreement

Signature Page





 












 





EXHIBIT Q-1




[Form – Georgia]




AFTER RECORDING, PLEASE RETURN

THIS INSTRUMENT TO:




Sutherland Asbill & Brennan LLP

999 Peachtree Street NE

Atlanta, Georgia 30309

Attn: Victor P. Haley

(404) 853-8000




RECOGNITION AGREEMENT

(Fiber Supply Agreement)




by and among




WELLS TRS HARVESTING OPERATIONS, LLC,

TIMBERLANDS II, LLC,

MEADWESTVACO COATED BOARD, INC.,

MEADWESTVACO CORPORATION,




COBANK, ACB, as administrative agent




and




WACHOVIA BANK, N.A., as administrative agent




 






Dated as of October 9, 2007

 









 









 








RECOGNITION AGREEMENT

(Fiber Supply Agreement)

(Georgia)




     RECOGNITION AGREEMENT, dated as of October 9, 2007 (as amended, restated, supplemented or
otherwise modified from time to time, the “Agreement”), among WELLS TRS HARVESTING
OPERATIONS, LLC, a Delaware limited liability company (together with such company and with any
assignee or delegate of any of its rights and/or responsibilities under the Fiber Supply Agreement
(as defined below), the “Supplier”), TIMBERLANDS II, LLC, a Delaware limited liability
company (“Wells Timberland”; together with any future owner of the Timberlands (as defined
below), the “Owner”), MEADWESTVACO COATED BOARD, INC., a Delaware corporation
(“MW”), MEADWESTVACO CORPORATION, a Delaware corporation (the “Parent”), COBANK,
ACB, as administrative agent (in such capacity, the “Senior Administrative Agent”) for the
2007 Senior Lenders (as defined below), and WACHOVIA BANK, N.A., as administrative agent (in such
capacity, the “Subordinated Administrative Agent”) for the 2007 Subordinated Lenders (as
defined below).



W I T N E S S E T H:




     WHEREAS, the Supplier, the Parent, and MW have entered into the Fiber Supply Agreement, dated
as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time,
the “Fiber Supply Agreement”), and Wells Timberland, the Supplier, the Parent and MW have
entered into the Master Stumpage Agreement, dated as of the date hereof (as amended, restated,
modified or otherwise supplemented from time to time, the “Master Stumpage Agreement”),
each of which Agreements affects certain land with the timber thereon and appurtenances thereto
more particularly described in Exhibit A attached hereto (collectively, the “Timberlands”);



     WHEREAS, Wells Timberland and Wells Timberland Acquisition, LLC, a Delaware limited liability
company (“Wells Acquisition”; together with Wells Timberland, the “Borrowers”),
various financial institutions (collectively, the “2007 Senior Lenders”) and the Senior
Administrative Agent are parties to the Senior Credit Agreement, dated as of the date hereof (as
amended, restated or otherwise modified from time to time, the “Senior Credit Agreement”),
pursuant to which the 2007 Senior Lenders will make certain loans (the “Senior Loans”) in
favor of the Borrowers;



     WHEREAS, Wells Timberland and Wells Acquisition, various financial institutions (collectively,
the “2007 Subordinated Lenders”) and the Subordinated Administrative Agent are parties to
the Subordinated Credit Agreement, dated as of the date hereof (as amended, restated or otherwise
modified from time to time, the “Subordinated Credit Agreement”), pursuant to which the
2007 Subordinated Lenders will make certain loans (the “Subordinated Loans”) in favor of
the Borrowers;



     WHEREAS, as security for the Senior Loans and all other obligations of the Borrowers and the
other loan parties under the Senior Credit Agreement and the other Loan Documents (as defined in
the Senior Credit Agreement), Wells Timberland has executed first priority perfected



 









 




deeds to secure debt, assignments of leases and rents and security agreements (collectively,
the “2007 Senior Mortgages”) in favor of the Senior Administrative Agent for the benefit of
the 2007 Senior Lenders with respect to all of the Timberlands;




     WHEREAS, as security for the Subordinated Loans and all other obligations of the Borrowers and
the other loan parties under the Subordinated Credit Agreement and the Subordinated Debt Documents
(as defined in the Senior Credit Agreement), Wells Timberland has executed second priority
perfected deeds to secure debt, assignments of leases and rents and security agreements
(collectively, the “2007 Subordinated Mortgages”) in favor of the Subordinated
Administrative Agent for the benefit of the 2007 Subordinated Lenders with respect to all of the
Timberlands;



     WHEREAS, the Supplier has guaranteed the repayment of the Senior Loans, the Subordinated Loans
and of all other obligations of the Borrowers and the other loan parties under the Loan Documents
and the Subordinated Debt Documents;



     WHEREAS, as security for the Senior Loans and all other obligations of the Borrowers and the
other loan parties under the Loan Documents, each of the Supplier and Wells Timberland has
collaterally assigned, and granted a first priority security interest in, among other things, all
of its right, title and interest in, to and under, the Fiber Supply Agreement to the Senior
Administrative Agent for the benefit of the 2007 Senior Lenders;



     WHEREAS, as security for the Subordinated Loans and all other obligations of the Borrowers and
the other loan parties under the Subordinated Debt Documents, each of the Supplier and Wells
Timberland has collaterally assigned, and granted a second priority security interest in, among
other things, all of its right, title and interest in, to and under, the Fiber Supply Agreement to
the Subordinated Administrative Agent for the benefit of the 2007 Subordinated Lenders;



     WHEREAS, the Senior Administrative Agent and the 2007 Senior Lenders require, as a condition
to the 2007 Senior Lenders’ making the Senior Loans pursuant to the Senior Credit Agreement, that
the parties hereto execute and deliver this Agreement;



     WHEREAS, the Subordinated Administrative Agent and the 2007 Subordinated Lenders require, as a
condition to the 2007 Subordinated Lenders’ making the Subordinated Loans pursuant to the
Subordinated Credit Agreement, that the parties hereto execute and deliver this Agreement; and



     WHEREAS, all of the parties hereto wish for any person or party (a “Lender,” and
collectively, the “Lenders”), to which, now or in the future, any fee or leasehold interest
owner of all or any of the Timberlands grants or conveys any mortgage, deed to secure debt or
security agreement or other collateral interest of or in all or any of the Timberlands and/or of
or in the Owner or the Supplier’s rights under the Fiber Supply Agreement (any such mortgage, deed
to secure debt or security agreement is herein called a “Mortgage,” and collectively, and
including the 2007 Senior Mortgages and the 2007 Subordinated Mortgages, the “Mortgages”),
to have the benefits and burdens of this Agreement.



 









 





     NOW, THEREFORE, in consideration of the premises set for the herein and for good and valuable
consideration, the receipt and sufficiency of which is hereby confirmed, the parties hereto hereby
agree as follows:



ARTICLE I

MORTGAGES RESPECTING TIMBERLANDS




     SECTION 1.1 Consents to Current and Future Mortgages. Each of MW and the Parent
consents to the 2007 Senior Mortgages and the 2007 Subordinated Mortgages and to the exercise by
the Senior Administrative Agent, the Subordinated Administrative Agent, the 2007 Senior Lenders and
the 2007 Subordinated Lenders of any and all of their rights under such 2007 Senior Mortgages and
2007 Subordinated Mortgages, respectively. In addition, and notwithstanding any term of the Fiber
Supply Agreement or any other agreement or instrument to which MW and/or the Parent is or may be a
party, at any time and from time to time, the Owner and/or the Supplier, without the consent of, or
review by, MW or the Parent, may grant, convey, or otherwise create Mortgages, so long as (a) each
such Mortgage is effectively subject to the Fiber Supply Agreement, (b) any subsequent Transfer (as
defined in the Fiber Supply Agreement) of Timberlands upon the enforcement by any such Lender of
any rights under such Mortgage or other similar liens is subject to the Fiber Supply Agreement so
that the transferee from such Lender takes the Timberlands subject to the Fiber Supply Agreement
and (c) MW and the Parent are given written notice of any such Mortgage (other than the 2007 Senior
Mortgages and the 2007 Subordinated Mortgages) at least ten days prior to the effective date
thereof.



     SECTION 1.2 Mortgage Protective Provisions. The following shall apply to each
Mortgage:



          (a) Upon (i) the occurrence and during the continuance of any default by the Supplier or the
Owner under the Fiber Supply Agreement, (ii) any event that would allow MW or the Parent to
exercise remedies under the Fiber Supply Agreement or (iii) any event that would allow MW to accept
assignment of the Supplier’s rights under the Master Stumpage Agreement, MW shall provide the
Lenders with immediate written notice (a “Default Notice”) thereof; provided, that the
obligation of MW to provide any Default Notice shall not arise until MW has, or should have had
(with the exercise of reasonable business due diligence), actual notice of any of the items
specified in Section 1.2 (a) (i), (ii), or (iii) above. No Default Notice shall be effective
unless and until a copy of the Default Notice is provided to the Lenders in accordance with the
provisions of Section 2.2.




          (b) After receipt by the Lenders of a Default Notice, the Lenders shall have the right, in
their sole discretion, but not the obligation, for a period (the “Cure Period”) of 180 days
following the Lenders’ receipt of the Default Notice, to cure the default specified in the Default
Notice within such time as the Lenders, through the exercise of reasonable diligence, may
reasonably require to cure or cause to be cured such default, including any time required to obtain
possession of and title to the interest in the Timberlands by foreclosure or otherwise. During the
Cure Period, MW shall not be permitted to terminate the Fiber Supply Agreement, but shall be
permitted to exercise any other right or remedy available to it under the Fiber Supply Agreement,
including the rights and remedies set forth in Section 7.2 of the Fiber Supply Agreement. If
during a Cure Period (i) MW exercises its right under Section 7.2 of the Fiber Supply Agreement to
cause the Supplier’s rights, interests and obligations in and under the



 









 






Master Stumpage Agreement to be assigned to it and (ii) the Lenders cure the default specified
in the applicable Default Notice on or prior to the expiration of the Cure Period, MW shall assign
such Section 7.2 rights, interests and obligations to the Lenders or their designee, which may, at
the sole election of the Lenders, be the Supplier. MW shall accept performance and enforcement of
the Supplier’s obligations and rights under the Fiber Supply Agreement by the Lenders and their
assigns and designees.




          (c) In the event of (i) the institution of any foreclosure, trustee’s sale or other like
proceeding, (ii) the appointment of a receiver for the Supplier or the Timberlands, (iii) the
exercise of rights to collect rents under any Mortgage or assignment of rents, (iv) the recording
by any Lender of a deed in lieu of foreclosure for the Timberlands or (v) any transfer or
abandonment of possession of the Timberlands to a Lender in connection with any case or proceedings
affecting the Supplier under the Bankruptcy Code, 11 U.S.C. § 101 et seq. (any such
action in the preceding clauses is herein called a “Specified Transfer”, and the Lender or
any party taking title to the Timberlands in connection with a Specified Transfer is herein called
the “Transferee”), upon any such Transferee succeeding to the interest of the Supplier
under the Fiber Supply Agreement, MW shall attorn to the Transferee and recognize it as the
applicable party under the Fiber Supply Agreement for its remaining term.




          (d) In no event shall any Lender or any Transferee have any liability with respect to, or be
subject to, any of the following: (i) any amendment, modification, termination or subordination of
the Fiber Supply Agreement to which the Lender has not given its prior written consent; (ii) any
prepayment made by MW under the Fiber Supply Agreement; (iii) any default under the Fiber Supply
Agreement that occurred prior to the Transferee’s obtaining title to an interest in the
Timberlands, except to the extent said default continues thereafter; (iv) any such default that is
impossible or impractical for Lenders or the Transferee to cure; and (v) any offsets or defenses
that MW or the Parent may assert against Wells Timberland or the Supplier as a result of any
events, actions, or omissions that occurred prior to the Transferee’s obtaining title to an
interest in the Timberlands. MW and the Parent hereby jointly and severally agree to execute and
deliver such instruments and agreements as may be reasonably requested by any Lender to confirm the
provisions of this Agreement. Notwithstanding anything to the contrary appearing in this
Agreement, nothing in this Agreement, including, without limitation, the provisions of this Section
1.2(d), shall limit the recourse of MW and Parent against, or the obligations to MW or Parent of,
Supplier, Owner or their respective successors and assigns.




     SECTION 1.3 Limitations on Assignment and Substitution. Notwithstanding any terms of
any agreement, including, without limitation, the assignment and substitution rights provided to MW
under Section 10.2 of the Fiber Supply Agreement, MW and/ or the Parent shall not, without the
prior written consent of the Lenders, which consent may be withheld by the Lenders in their sole
discretion, assign or delegate to, or cause to be assumed by, any other party any of the rights or
responsibilities of MW and/or the Parent under the Fiber Supply Agreement.



ARTICLE II

MISCELLANEOUS




     SECTION 2.1 Senior Administrative Agents Act for All 2007 Lenders. So long as there
are any obligations outstanding or unpaid under the Senior Credit Agreement, the Subordinated
Credit Agreement, the other Loan Documents or the other Subordinated Debt



 









 




Documents, respectively, all references in this Agreement to a “Lender” or the “Lenders” shall
be deemed to refer to the Senior Administrative Agent and the Subordinated Administrative Agent,
respectively, who, individually, on behalf of all Lenders under the Loan Documents and Subordinated
Debt Documents, respectively, shall receive all notices, provide all communications, and take all
other actions taken pursuant to this Agreement. Additionally, in the case of any Mortgage (other
than the 2007 Senior Mortgages and the 2007 Subordinated Mortgages) securing loans and other
obligations under or in connection with a loan agreement or credit agreement having or providing
for multiple Lenders, all references in this Agreement to a “Lender” or the “Lenders” thereunder
shall be deemed to refer to the administrative agent (or the functional equivalent) thereunder,
who, individually and on behalf of all such Lenders under such loan or credit agreement, shall
receive all notices, provide all communications, and take all other action son behalf of such
Lenders pursuant to this Agreement.




     SECTION 2.2 Notices. All notices and other communications provided to any party
hereto under this Agreement shall be in writing, shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopier, and addressed as specified
by the Lenders and the parties hereto, with the current parties to be addressed as follows:



	 	 	 	 	 
	 

	 	 	 	 
	     If to the Supplier:

	 	Wells TRS Harvesting Operations, LLC 


c/o Wells REIT, Inc. 


6200 The Corners Parkway 


Norcross, Georgia 30092-3365


Attention: Don Warden 


Facsimile No.: 770-243-8367	 	 
	 
	 	 	 	 
	     If to Wells Timberland:

	 	Timberlands II, LLC 


c/o Wells REIT, Inc. 


6200 The Corners Parkway 


Norcross, Georgia 30092-3365


Attention: Don Warden 


Facsimile No.: 770-243-8367	 	 
	 
	 	 	 	 
	 

	 	With a copy to:	 	 
	 

	 	Powell Goldstein LLP 


One Atlantic Center, Fourteenth Floor 


1201 West Peachtree Street, N.W. 


Atlanta, Georgia 30309-3488


Attention: Glen Dunaway, Esq. 


Facsimile No.: 404-572-6999	 	 
	 
	 	 	 	 
	     If to MW or the Parent:

	 	Corporate Secretary

MeadWestvaco Corporation

1013 West Broad Street

Glen Allen, Virginia 23060	 	 






 









 






	 	 	 	 	 
	 

	 	With a copy to, if by courier:	 	 
	 
	 	 	 	 
	 

	 	MeadWestvaco Corporation

Plant Manager, Mahrt Mill

Highway 165 South

Cottonton, Alabama 36851	 	 
	 
	 	 	 	 
	 

	 	With a copy to, if by US Post Office:	 	 
	 
	 	 	 	 
	If to the 2007 Senior Lenders,
to the Senior Administrative Agent:

	 	MeadWestvaco Corporation 


Plant Manager, Mahrt Mill 


P.O. Box 520


Phoenix City, Alabama 36868	 	 
	 
	 	 	 	 
	If to the 2007 Subordinated
Lenders, to the Subordinated
Administrative Agent:

	 	CoBank, ACB 


5500 S. Quebec Street

Greenwood Village, Colorado 80111


Attention: Syndications Coordinator, Corporate 


Finance Division 


Facsimile No.: 303-694-5830	 	 
	 
	 	 	 	 
	 

	 	Wachovia Bank, National Association 


301 South College Street, NC0174


Charlotte, North Carolina 28288-01741


Attention: Roger Shreero, Structured

Asset Finance 



Facsimile No.: (704) 715-0065	 	 





The above parties may, by notice given hereunder, designate any further or different addresses to
which subsequent notices or other communications shall be sent. Notices sent by hand or overnight
courier service, or mailed by certified or registered mail, shall be deemed to have been given when
received; notices sent by telecopier shall be deemed to have been given when sent (except that, if
not given during normal business hours for the recipient, shall be deemed to have been given at the
opening of business on the next business day for the recipient).




     SECTION 2.3 Applicable Law; Successors and Assigns. THIS RECOGNITION AGREEMENT SHALL
BE GOVERNED AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF NEW YORK AND SHALL BE BINDING UPON
THE PARTIES AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.



     SECTION 2.4 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS RECOGNITION AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR



 









 




WRITTEN) OR ACTIONS OF THE PARTIES HERETO SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
FEDERAL OR STATE COURTS OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN AND IN THE COUNTY OF NEW
YORK. THE PARTIES HERETO HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF SUCH COURTS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREE TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE PARTIES HERETO FURTHER
IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE PARTIES HERETO HEREBY EXPRESSLY AND
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT ANY PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH PARTY
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS RECOGNITION
AGREEMENT AND THE OTHER LOAN DOCUMENTS.




     SECTION 2.5 Waiver of Jury Trial, etc. EACH PARTY HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS RECOGNITION
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PARTIES HERETO. THE PARTIES HERETO ACKNOWLEDGE AND
AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE SENIOR ADMINISTRATIVE AGENT AND THE SUBORDINATED
ADMINISTRATIVE AGENT TO ENTER INTO THIS AGREEMENT.



     SECTION 2.6 Counterparts. This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of which shall
constitute but one and the same agreement.



     SECTION 2.7 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.



     SECTION 2.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions of



 









 




this Agreement or affecting the validity or enforceability of such provisions in any other
jurisdiction.




     SECTION 2.9 Amendment, Waiver. Neither this Agreement nor any of the terms hereof may
be terminated, amended, supplemented, waived or modified except by an instrument in writing signed
by the Owner, MW, and all Lenders holding a Mortgage on any portion of the Timberlands on the date
of the instrument.



     SECTION 2.10 Survival. All agreements, statements, representations and warranties
made by the parties herein shall be considered to have been relied upon by the Senior
Administrative Agent, the Subordinated Administrative Agent, the 2007 Senior Lenders and the 2007
Subordinated Lenders and shall survive the execution and delivery of this Agreement.



     SECTION 2.11 No Waiver; Remedies Cumulative. No failure or delay on the part of any
Lender in exercising any right, power or privilege hereunder, and no course of dealing between a
Lender and any other party, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other exercise, or the further
exercise, of any other right, power or privilege hereunder. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies which the Lender or
any party would otherwise have.



[Signature Pages to Follow]




 









 





     IN WITNESS WHEREOF, the parties have executed or caused this Agreement to be executed by
persons authorized to sign on their respective behalf, all as of the day and date first above set
out.



	 	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED IN THE 

PRESENCE OF:	 	 	 	WELLS TRS HARVESTING OPERATIONS,

LLC, a Delaware limited liability company
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By: Forest Resource Consultants,
Inc., a Georgia limited liability company, Its Manager
	 	 	 	 	 	 	 
	Unofficial Witness	 	 	 	 	 	 
	Print Name:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name: David Foil
	 

	 	 	 	 	 	 	 	Title: President
	 	 	 	 	 	 	 
	Notary Public	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	(Seal)
	My commission expires:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	[NOTARY SEAL]	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED IN THE 

PRESENCE OF:	 	 	 	TIMBERLANDS II, LLC, a Delaware

limited liability company
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By: Wells Timberland Management Organization,

LLC, a Georgia limited liability company, Its

Manager
	 	 	 	 	 	 	 
	Unofficial Witness	 	 	 	 	 	 
	Print Name:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Notary Public	 	 	 	 	 	Name: Jess E. Jarratt
	 

	 	 	 	 	 	 	 	Title: President
	My commission expires:	 	 	 	(Seal)
	 
	 	 	 	 	 	 	 	 
	[NOTARY SEAL]	 	 	 	 	 	 






[Signatures continue on following page]




Recognition
Agreement (Master Stumpage Agreement) - Georgia 

Signature and Acknowledgement Page 1


 









 








	 	 	 	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED IN 	 	 	 	MEADWESTVACO COATED BOARD, INC.,
	THE PRESENCE OF:	 	 	 	a Delaware corporation
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Unofficial Witness	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	 	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Notary Public	 	 	 	(Seal)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	My commission expires:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[NOTARY SEAL]	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED IN 

THE PRESENCE OF:	 	 	 	MEADWESTVACO
CORPORATION, a Delaware corporation
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Unofficial Witness	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	 	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Notary Public	 	 	 	(Seal)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	My commission expires:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[NOTARY SEAL]	 	 	 	 	 	 	 	 






[Signatures continue on following page]




Recognition
Agreement (Master Stumpage Agreement) - Georgia 

Signature and Acknowledgement Page 2


 









 








	 	 	 	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED IN 	 	 	 	COBANK, ACB, as administrative agent for the
	THE PRESENCE OF:	 	 	 	lenders under the Senior Credit Agreement
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Unofficial Witness	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	 	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Notary Public	 	 	 	(Seal)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	My commission expires:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[NOTARY SEAL]	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED IN 

THE PRESENCE OF:	 	 	 	WACHOVIA BANK,N.A., as administrative
agent for the lenders under the
Subordinated Credit Agreement
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Unofficial Witness	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	 	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Notary Public	 	 	 	(Seal)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	My commission expires:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[NOTARY SEAL]	 	 	 	 	 	 	 	 






Recognition
Agreement (Master Stumpage Agreement) - Georgia 

Signature and Acknowledgement Page 3


 









 





EXHIBIT A

LEGAL DESCRIPTION OF TIMBERLANDS





 












 





EXHIBIT Q-2




[From
– Georgial]




AFTER RECORDING, PLEASE RETURN

THIS INSTRUMENT TO:



Sutherland Asbill & Brennan LLP

999 Peachtree Street NE

Atlanta, Georgia 30309

Attn: Victor P. Haley

(404) 853-8000




RECOGNITION AGREEMENT

(Master Stumpage Agreement)




by and among




TIMBERLANDS II, LLC,

WELLS TRS HARVESTING OPERATIONS, LLC,

MEADWESTVACO COATED BOARD, INC.,

MEADWESTVACO CORPORATION,




COBANK, ACB, as administrative agent




and




WACHOVIA BANK, N.A., as administrative agent




 






Dated as of October 9, 2007




 






 









 






[From
– Georgial]




RECOGNITION AGREEMENT

(Master Stumpage Agreement)

(Georgia)




     RECOGNITION AGREEMENT, dated as of October 9, 2007 (as amended, restated, supplemented or
otherwise modified from time to time, the “Agreement”), made among TIMBERLANDS II, LLC, a
Delaware limited liability company (“Wells Timberland”; together with any future owner of
the Timberlands (as defined below), the “Owner”), WELLS TRS HARVESTING OPERATIONS, LLC, a
Delaware limited liability company (together with such company and with any assignee or delegate of
any of its rights and/or responsibilities under the Fiber Supply Agreement (as defined below), the
“Supplier”), MEADWESTVACO COATED BOARD, INC., a Delaware corporation (“MW”),
MEADWESTVACO CORPORATION, a Delaware corporation (the “Parent”), COBANK, ACB, as
administrative agent (in such capacity, the “Senior Administrative Agent”) for the 2007
Senior Lenders (as defined below), and WACHOVIA BANK, N.A., as administrative agent (in such
capacity, the “Subordinated Administrative Agent”) for the 2007 Subordinated Lenders (as
defined below).



     WHEREAS, Wells Timberland, the Supplier, the Parent and MW have entered into the Master
Stumpage Agreement, dated as of the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the “Master Stumpage Agreement”) and the Supplier, the Parent,
and MW have entered into the Fiber Supply Agreement, dated as of the date hereof (as amended,
restated, modified or otherwise supplemented from time to time, the “Fiber Supply
Agreement”), each of which Agreements affects certain land with the timber thereon and
appurtenances thereto more particularly described in Exhibit A attached hereto (collectively, the
“Timberlands”);



     WHEREAS, Wells Timberland and Wells Timberland Acquisition, LLC, a Delaware limited liability
company (“Wells Acquisition”; together with Wells Timberland, the “Borrowers”),
various financial institutions (collectively, the “2007 Senior Lenders”) and the Senior
Administrative Agent are parties to the Credit Agreement, dated as of the date hereof (as amended,
restated or otherwise modified from time to time, the “Senior Credit Agreement”), pursuant
to which the 2007 Senior Lenders will make certain loans (the “Senior Loans”) in favor of
the Borrowers;



     WHEREAS, Wells Timberland and Wells Acquisition, various financial institutions (collectively,
the “2007 Subordinated Lenders”) and the Subordinated Administrative Agent are parties to
the Subordinated Credit Agreement, dated as of the date hereof (as amended, restated or otherwise
modified from time to time, the “Subordinated Credit Agreement”), pursuant to which the
2007 Subordinated Lenders will make certain loans (the “Subordinated Loans”) in favor of
the Borrowers;



     WHEREAS, as security for the Senior Loans and all other obligations of the Borrowers and the
other loan parties under the Senior Credit Agreement and the Loan Documents (as defined in the
Senior Credit Agreement), Wells Timberland has executed first priority perfected deeds to secure
debt, assignments of leases and rents and security agreements (collectively, the



 









 




“2007 Senior Mortgages”) in favor of the Senior Administrative Agent for the benefit
of the 2007 Senior Lenders with respect to all of the Timberlands;




     WHEREAS, as security for the Subordinated Loans and all other obligations of the Borrowers and
the other loan parties under the Subordinated Credit Agreement and the Subordinated Debt Documents
(as defined in the Senior Credit Agreement), Wells Timberland has executed second priority
perfected deeds to secure debt, assignments of leases and rents and security agreements
(collectively, the “2007 Subordinated Mortgages”) in favor of the Subordinated
Administrative Agent for the benefit of the 2007 Subordinated Lenders with respect to all of the
Timberlands;



     WHEREAS, the Supplier has guaranteed the repayment of the Senior Loans, the Subordinated Loans
and of all other obligations of the Borrowers and the other loan parties under the Loan Documents
and the Subordinated Debt Documents;



     WHEREAS, as security for the Senior Loans and all other obligations of the Borrowers and the
other loan parties under the Loan Documents, each of the Supplier and Wells Timberland has
collaterally assigned, and granted a first priority security interest in, among other things, all
of its right, title and interest in, to and under, the Master Stumpage Agreement to the Senior
Administrative Agent for the benefit of the 2007 Senior Lenders;



     WHEREAS, as security for the Subordinated Loans and all other obligations of the Borrowers and
the other loan parties under the Subordinated Debt Documents, each of the Supplier and Wells
Timberland has collaterally assigned, and granted a second priority security interest in, among
other things, all of its right, title and interest in, to and under, the Master Stumpage Agreement
to the Subordinated Administrative Agent for the benefit of the 2007 Subordinated Lenders;



     WHEREAS, the Senior Administrative Agent and the 2007 Senior Lenders require, as a condition
to the 2007 Senior Lenders’ making the Senior Loans pursuant to the Senior Credit Agreement, that
the parties hereto execute and deliver this Agreement;



     WHEREAS, the Subordinated Administrative Agent and the 2007 Subordinated Lenders require, as a
condition to the 2007 Subordinated Lenders’ making the Subordinated Loans pursuant to the
Subordinated Credit Agreement, that the parties hereto execute and deliver this Agreement; and



     WHEREAS, all of the parties hereto wish for any person or party (a “Lender,” and
collectively, the “Lenders”), to which, now or in the future, any fee or leasehold interest
owner of all or any of the Timberlands grants or conveys any mortgage, deed to secure debt or
security agreement or other collateral interest of or in all or any of the Timberlands and/or of
or in the Owner or the Supplier’s rights under the Fiber Supply Agreement (any such mortgage, deed
to secure debt or security agreement is herein called a “Mortgage,” and collectively, and
including the 2007 Senior Mortgages and the 2007 Subordinated Mortgages, the “Mortgages”),
to have the benefits and burdens of this Agreement.



 - 2 - 









 





     NOW, THEREFORE, in consideration of the premises set for the herein and for good and valuable
consideration, the receipt and sufficiency of which is hereby confirmed, the parties hereto hereby
agree as follows:



ARTICLE I

MORTGAGES RESPECTING TIMBERLANDS




     SECTION 1.1 Consents to Current and Future Mortgages and Security Agreements. Each of
MW, the Parent, and the Supplier consents to the 2007 Senior Mortgages and the 2007 Subordinated
Mortgages and to the exercise by the Senior Administrative Agent, the Subordinated Administrative
Agent, the 2007 Senior Lenders and the 2007 Subordinated Lenders of any and all of their rights
under such 2007 Senior Mortgages and 2007 Subordinated Mortgages, respectively. In addition, and
notwithstanding any term of the Master Stumpage Agreement or any other agreement or instrument to
which MW, the Parent, and/or the Supplier is or may be a party, at any time and from time to time,
the Owner, without the consent of, or review by, MW, the Parent or the Supplier, may grant, convey,
or otherwise create Mortgages, so long as (a) each such Mortgage is subject and subordinate to the
Master Stumpage Agreement, (b) any subsequent Transfer (as defined in the Fiber Supply Agreement)
of Timberlands upon the enforcement by any such Lender of any rights under such Mortgage or other
similar liens is subject and subordinate to the Master Stumpage Agreement so that the transferee
from such Lender takes the Timberlands subject to the Master Stumpage Agreement and (c) MW and the
Parent are given written notice of any such Mortgage (other than the 2007 Senior Mortgages and the
2007 Subordinated Mortgages) at least ten days prior to the effective date thereof.



     SECTION 1.2 Mortgage Protective Provisions. The following shall apply to any
Mortgage:



          (a) Upon (i) the occurrence and during the continuance of any default by the Owner under the
Master Stumpage Agreement, or (ii) any event that would allow MW, the Parent, or the Supplier to
exercise remedies under the Master Stumpage Agreement, both MW and the Supplier shall provide the
Lenders with immediate written notice (a “Default Notice”) thereof; provided, that the
obligation of MW or the Supplier to provide any Default Notice shall not arise until MW or the
Supplier has, or should have had (with the exercise of reasonable business due diligence), actual
notice of any of the items specified in Section 1.2 (a) (i) or (ii) above. No Default Notice shall
be effective unless and until a copy of the Default Notice is provided to the Lenders in accordance
with the provisions of Section 2.2.




          (b) After receipt by the Lenders of a Default Notice, the Lenders shall have the right, in
their sole discretion, but not the obligation, for a period (the “Cure Period”) of 180 days
following the Lenders’ receipt of the Default Notice, to cure the default specified in the Default
Notice within such time as the Lenders, through the exercise of reasonable diligence, may
reasonably require to cure or cause to be cured such default, including any time required to obtain
possession of and title to the interest in the Timberlands by foreclosure or otherwise. During the
Cure Period, neither MW nor the Supplier shall be permitted to terminate the Master Stumpage
Agreement, nor shall MW be permitted to exercise its cure or collateral assignment rights under the
Master Stumpage Agreement. MW and the Supplier shall accept performance




 - 3 - 









 







and enforcement of the Owner’s obligations and rights under the Master Stumpage Agreement by
the Lenders and their assigns and designees.




          (c) In the event of (i) the institution of any foreclosure, trustee’s sale or other like
proceeding, (ii) the appointment of a receiver for the Owner or the Timberlands, (iii) the exercise
of rights to collect rents under any Mortgage or assignment of rents, (iv) the recording by any
Lender of a deed in lieu of foreclosure for the Timberlands, or (v) any transfer or abandonment of
possession of the Timberlands to a Lender in connection with any case or proceedings affecting the
Supplier under the Bankruptcy Code, 11 U.S.C. § 101 et seq. (any such action in the
preceding clauses is herein called a “Specified Transfer”, and the Lender or any party
taking title to the Timberlands in connection with a Specified Transfer is herein called the
“Transferee”), upon any such Transferee succeeding to the interest of the Owner under the
Master Stumpage Agreement, MW and the Supplier shall attorn to the Transferee and recognize it as
the applicable party under the Master Stumpage Agreement for its remaining term.




          (d) In no event shall any Lender or any Transferee have any liability with respect to, or be
subject to, any of the following: (i) any amendment, modification, termination or subordination of
the Master Stumpage Agreement to which the Lender has not given its prior written consent; (ii) any
prepayment made by MW, the Parent, or the Supplier under the Master Stumpage Agreement; (iii) any
default under the Master Stumpage Agreement that occurred prior to the Transferee’s obtaining title
to an interest in the Timberlands, except to the extent said default continues thereafter; (iv) any
such default that is impossible or impractical for Lenders or the Transferee to cure; and (v) any
offsets or defenses that MW, the Parent or the Supplier may assert against the Owner as a result of
any events, actions, or omissions that occurred prior to the Transferee’s obtaining title to an
interest in the Timberlands. MW, the Parent and the Supplier hereby jointly and severally agree to
execute and deliver such instruments and agreements as may be reasonably requested by any Lender to
confirm the provisions of this Agreement. Notwithstanding anything to the contrary appearing in
this Agreement, nothing in this Agreement, including, without limitation, the provisions of this
Section 1.2(d), shall limit the recourse of MW and Parent against, or the obligations to MW or
Parent of, Supplier, Owner or their respective successors and assigns.




     SECTION 1.3 Limitations on Assignment and Substitution. Notwithstanding any terms of
any agreement, including, without limitation, the assignment and substitution rights provided to
the Supplier and MW under Sections 8.2 and 8.3 of the Master Stumpage Agreement, MW, the Parent,
and the Supplier shall not, without the prior written consent of the Lenders, which consent may be
withheld by the Lenders in their sole discretion, assign or delegate to, or cause to be assumed by,
any other party (including any of their affiliates) any of the rights or responsibilities of MW,
the Parent, or the Supplier under the Master Stumpage Agreement.



ARTICLE II

MISCELLANEOUS




     SECTION 2.1 Administrative Agents Act for All 2007 Lenders. So long as there are any
obligations outstanding or unpaid under the Senior Credit Agreement, the Subordinated Credit
Agreement, the other Loan Documents or the other Subordinated Debt Documents, respectively, all
references in this Agreement to a “Lender” or the “Lenders” shall



 - 4 - 









 




be deemed to refer to the Senior Administrative Agent and the Subordinated Administrative
Agent, respectively, who, individually, on behalf of all Lenders under the Loan Documents and
Subordinated Debt Documents, respectively, shall receive all notices, provide all communications,
and take all other actions taken pursuant to this Agreement. Additionally, in the case of any
Mortgage (other than the 2007 Senior Mortgages and the 2007 Subordinated Mortgages) securing loans
and other obligations under or in connection with a loan agreement or credit agreement having or
providing for multiple Lenders, all references in this Agreement to a “Lender” or the “Lenders”
thereunder shall be deemed to refer to the administrative agent (or the functional equivalent)
thereunder, who, individually and on behalf of all such Lenders under such loan or credit
agreement, shall receive all notices, provide all communications, and take all other actions on
behalf of such Lenders pursuant to this Agreement.




     SECTION 2.2 Notices. All notices and other communications provided to any party
hereto under this Agreement shall be in writing, shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopier, and addressed as specified
by the Lenders and the parties hereto, with the current parties to be addressed as follows:



	 	 	 	 	 
	 

	 	If to the Supplier:
	 	Wells TRS Harvesting Operations, LLC
	 

	 	 	 	c/o Wells REIT, Inc.
	 

	 	 	 	6200 The Corners Parkway
	 

	 	 	 	Norcross, Georgia 30092-3365
	 

	 	 	 	Attention: Don Warden
	 

	 	 	 	Facsimile No.: 770-243-8367
	 
	 	 	 	 
	 

	 	If to Wells Timberland:
	 	Timberlands II, LLC
	 

	 	 	 	c/o Wells REIT, Inc.
	 

	 	 	 	6200 The Corners Parkway
	 

	 	 	 	Norcross, Georgia 30092-3365
	 

	 	 	 	Attention: Don Warden
	 

	 	 	 	Facsimile No.: 770-243-8367
	 
	 	 	 	 
	 

	 	 	 	With a copy to:
	 
	 	 	 	 
	 

	 	 	 	Powell Goldstein LLP
	 

	 	 	 	One Atlantic Center, Fourteenth Floor
	 

	 	 	 	1201 West Peachtree Street, N.W.
	 

	 	 	 	Atlanta, Georgia 30309-3488
	 

	 	 	 	Attention: Glen Dunaway, Esq.
	 

	 	 	 	Facsimile No.: 404-572-6999
	 
	 	 	 	 
	 

	 	If to MW or the Parent:
	 	Corporate Secretary
	 

	 	 	 	MeadWestvaco Corporation
	 

	 	 	 	1013 West Broad Street
	 

	 	 	 	Glen Allen, Virginia 23060






 - 5 - 









 






	 	 	 	 	 
	 

	 	 	 	With a copy to, if by courier:
	 
	 	 	 	 
	 

	 	 	 	MeadWestvaco Corporation
	 

	 	 	 	Plant Manager, Mahrt Mill
	 

	 	 	 	Highway 165 South
	 

	 	 	 	Cottonton, Alabama 36851
	 
	 	 	 	 
	 

	 	 	 	With a copy to, if by US Post Office:
	 
	 	 	 	 
	 

	 	 	 	MeadWestvaco Corporation
	 

	 	 	 	Plant Manager, Mahrt Mill
	 

	 	 	 	P.O. Box 520
	 

	 	 	 	Phoenix City, Alabama 36868
	 
	 	 	 	 
	 

	 	If to the 2007 Senior Lenders,	 	 
	 

	 	to the Senior Administrative Agent:
	 	CoBank, ACB
	 

	 	 	 	5500 S. Quebec Street
	 

	 	 	 	Greenwood Village, Colorado 80111
	 

	 	 	 	Attention: Syndications
Coordinator, Corporate Finance Division
	 

	 	 	 	Facsimile No.: 303-694-5830
	 
	 	 	 	 
	 

	 	If to the 2007 Subordinated	 	 
	 

	 	Lenders, to the Subordinated	 	 
	 

	 	Administrative Agent:
	 	Wachovia Bank, National Association
	 

	 	 	 	301 South College Street, NC0174
	 

	 	 	 	Charlotte, North Carolina 28288-01741
	 

	 	 	 	Attention: Roger Shreero, Structured Asset Finance
	 

	 	 	 	Facsimile No.: (704) 715-0065





The above parties may, by notice given hereunder, designate any further or different addresses to
which subsequent notices or other communications shall be sent. Notices sent by hand or overnight
courier service, or mailed by certified or registered mail, shall be deemed to have been given when
received; notices sent by telecopier shall be deemed to have been given when sent (except that, if
not given during normal business hours for the recipient, shall be deemed to have been given at the
opening of business on the next business day for the recipient).




     SECTION 2.3 Applicable Law; Successors and Assigns. THIS RECOGNITION AGREEMENT SHALL
BE GOVERNED AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF NEW YORK AND SHALL BE BINDING UPON
THE PARTIES AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.



     SECTION 2.4 Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS RECOGNITION AGREEMENT, OR ANY COURSE OF



 - 6 - 









 




CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PARTIES
HERETO SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE FEDERAL OR STATE COURTS OF NEW YORK
LOCATED IN THE BOROUGH OF MANHATTAN AND IN THE COUNTY OF NEW YORK. THE PARTIES HERETO HEREBY
EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. THE PARTIES HERETO FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
NEW YORK. THE PARTIES HERETO HEREBY EXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY PARTY HERETO HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH PARTY HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS RECOGNITION AGREEMENT AND THE OTHER LOAN
DOCUMENTS.




     SECTION 2.5 Waiver of Jury Trial, etc. EACH PARTY HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS RECOGNITION
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PARTIES HERETO. THE PARTIES HERETO ACKNOWLEDGE AND
AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE SENIOR ADMINISTRATIVE AGENT AND THE SUBORDINATED
ADMINISTRATIVE AGENT TO ENTER INTO THIS AGREEMENT.



     SECTION 2.6 Counterparts. This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of which shall
constitute but one and the same agreement.



     SECTION 2.7 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.



     SECTION 2.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the



 - 7 - 









 




extent of such prohibition or unenforceability without invalidating the remaining provisions
of this Agreement or affecting the validity or enforceability of such provisions in any other
jurisdiction.




     SECTION 2.9 Amendment, Waiver. Neither this Agreement nor any of the terms hereof may
be terminated, amended, supplemented, waived or modified except by an instrument in writing signed
by the Owner, MW, and all Lenders holding a Mortgage on any portion of the Timberlands on the date
of the instrument.



     SECTION 2.10 Survival. All agreements, statements, representations and warranties
made by the parties herein shall be considered to have been relied upon by the Senior
Administrative Agent, the Subordinated Administrative Agent, the 2007 Senior Lenders and the 2007
Subordinated Lenders and shall survive the execution and delivery of this Agreement.



     SECTION 2.11 No Waiver; Remedies Cumulative. No failure or delay on the part of any
Lender in exercising any right, power or privilege hereunder, and no course of dealing between a
Lender and any other party, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other exercise, or the further
exercise, of any other right, power or privilege hereunder. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies which the Lender or
any party would otherwise have.



[Signature Pages to Follow]




 - 8 - 









 





     IN WITNESS WHEREOF, the parties have executed or caused this Agreement to be executed by
persons authorized to sign on their respective behalf, all as of the day and date first above set
out.



	 	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED IN THE 

PRESENCE OF:	 	 	 	WELLS TRS HARVESTING OPERATIONS,

LLC, a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By: Forest Resource Consultants,
Inc., a Georgia limited liability
company, Its Manager	 	 
	 

Unofficial Witness

	 	 	 	 	 	 	 	 
	Print Name:                                                           
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Notary Public

	 	 	 	 	 	Name: David Foil	 	 
	 

	 	 	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(Seal)	 	 
	 
	 	 	 	 	 	 	 	 
	My commission expires:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	[NOTARY SEAL]
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED IN THE 

PRESENCE OF:	 	 	 	TIMBERLANDS II,
LLC, a Delaware
limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By: Wells Timberland
Management
Organization, LLC, a Georgia
limited liability company, Its
Manager	 	 
	 

Unofficial Witness

	 	 	 	 	 	 	 	 
	Print Name:                                                           
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Notary Public

	 	 	 	 	 	Name: Jess E. Jarratt	 	 
	 

	 	 	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 	 	 
	My commission expires:	 	 	 	(Seal)	 	 
	 
	 	 	 	 	 	 	 	 
	[NOTARY SEAL]
	 	 	 	 	 	 	 	 






[Signatures continue on following page]






Recognition
Agreement (Master Stumpage Agreement) - Georgia 

Signature and Acknowledgement Page 1


 









 





	 	 	 	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND
DELIVERED IN 

THE PRESENCE OF:	 	 	 	MEADWESTVACO COATED BOARD, INC., a
Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Unofficial Witness	 	 	 	 	 	Name:	 	 
	 	 	 	 	 	 	 	 	 	 
	Print Name:                                                           
	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

Notary Public

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(Seal)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	My commission expires:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[NOTARY SEAL]
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED IN 

THE PRESENCE OF:	 	 	 	MEADWESTVACO CORPORATION, a Delaware

corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Unofficial Witness	 	 	 	 	 	Name:	 	 
	 	 	 	 	 	 	 	 	 	 
	Print Name:                                                           
	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

Notary Public

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(Seal)	 	 
	My commission expires:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[NOTARY SEAL]
	 	 	 	 	 	 	 	 	 	 






[Signatures continue on following page]



Recognition
Agreement (Master Stumpage Agreement) - Georgia 

Signature and Acknowledgement Page 2




 









 





	 	 	 	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND
DELIVERED IN 

THE PRESENCE OF:	 	 	 	COBANK, ACB, as administrative agent for

the lenders under the Senior Credit Agreement	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Unofficial Witness	 	 	 	 	 	Name:	 	 
	 	 	 	 	 	 	 	 	 	 
	Print Name:                                                           
	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

Notary Public

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(Seal)	 	 
	My commission expires:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[NOTARY SEAL]
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SIGNED, SEALED AND DELIVERED IN 

THE PRESENCE OF:	 	 	 	WACHOVIA BANK, N.A., as administrative
agent for the lenders under the
Subordinated Credit Agreement	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Unofficial Witness	 	 	 	 	 	Name:	 	 
	 	 	 	 	 	 	 	 	 	 
	Print Name:                                                           
	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

Notary Public

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	(Seal)	 	 
	My commission expires:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[NOTARY SEAL]
	 	 	 	 	 	 	 	 	 	 






Recognition
Agreement (Master Stumpage Agreement) - Georgia 

Signature and Acknowledgement Page 3



 









 





EXHIBIT A

LEGAL DESCRIPTION OF TIMBERLANDS





 











 





EXHIBIT R




COLLATERAL ASSIGNMENT OF PURCHASE AND SALE AGREEMENT1




          COLLATERAL ASSIGNMENT OF PURCHASE AND SALE AGREEMENT, dated as of October 9, 2007 (as amended,
restated or otherwise modified from time to time, this “Agreement”), among (i) WELLS
TIMBERLAND ACQUISITION, LLC, a Delaware limited liability company (the “Assignor”), (ii)
COBANK, ACB, in its capacity as the administrative agent (in such capacity, the “Senior
Administrative Agent”) for the Senior Lenders (as defined below), and (iii) WACHOVIA BANK,
NATIONAL ASSOCIATION, in its capacity as the administrative agent (in such capacity, the
“Subordinated Administrative Agent”) for the Subordinated Lenders (as defined below).




W I T N E S S E T H:




          WHEREAS, the Assignor and MeadWestvaco Coated Board, Inc. (the “Counterparty”) are
parties to a certain Purchase and Sale Agreement, dated as of August 3, 2007 (as amended, restated
or otherwise modified from time to time, the “Subject Agreement”), pursuant to which the
Assignor, through its wholly-owned subsidiary MWV SPE, purchased all the equity interests in
Timberlands II, LLC (“Wells Timberland”) from the Counterparty;




          WHEREAS, pursuant to the Subject Agreement, the Counterparty has made certain representations,
warranties and covenants in favor of the Assignor, and the Counterparty has agreed to indemnify the
Assignor in certain respects (collectively, the “Undertakings”);




          WHEREAS, the Assignor and Wells Timberland (collectively, the “Borrowers”) various
financial institutions (collectively, the “Senior Lenders”) and the Senior Administrative
Agent are parties to that certain Credit Agreement, dated as of the date hereof (as amended,
restated, or otherwise modified from time to time, the “Senior Credit Agreement”), pursuant
to which the Senior Lenders will make certain loans in favor of the Borrowers;




          WHEREAS, the Borrowers, various financial institutions (collectively, the “Subordinated
Lenders”) and the Subordinated Administrative Agent are parties to that certain Credit
Agreement, dated as of the date hereof (as amended, restated, or otherwise modified from time to
time, the “Subordinated Credit Agreement”), pursuant to which the Subordinated Lenders will
make certain loans in favor of the Borrowers;




          WHEREAS, the Senior Administrative Agent, the Subordinated Administrative Agent, the Borrowers
and the other Loan Parties (such capitalized term and all other capitalized terms used herein
without being defined herein have the meanings provided in the Senior Credit Agreement, as in
effect on the date hereof) are






 




			
	1	 	Form to vary depending on the Material Agreement
being assigned.




 









 









parties to a certain Intercreditor Agreement, dated as of the date hereof (as amended,
restated, or otherwise modified from time to time, the “Intercreditor Agreement”); and




          WHEREAS, it is a condition to the occurrence of a Funding Date that the Assignor collaterally
assign to the Senior Administrative Agent, for the benefit of itself and the Senior Lenders on a
first priority perfected basis, and to the Subordinated Administrative Agent, for the benefit of
itself and the Subordinated Lenders, on a second priority perfected basis, all of the Assignor’s
rights, benefits and remedies under the Subject Agreement;




          NOW, THEREFORE, in consideration of the premises set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby confirmed, the Assignor
agrees as follows:




          SECTION 1. Security for Obligations. As security for the payment and performance of all of the
Obligations, the Assignor hereby collaterally assigns, transfers and grants to the Senior
Administrative Agent, for the benefit of itself and the Senior Lenders, a first priority perfected
security interest in all of the Assignor’s respective rights and remedies with respect to the
Subject Agreement, including (a) all right, title and interest in and to any and all sums due to
the Assignor under the Subject Agreement and (b) all rights, benefits and remedies of the Assignor
with respect to (i) any breach by the Counterparty of any of its representations, warranties and
covenants under the Subject Agreement and (ii) any indemnification from the Counterparty arising
under or pursuant to the Subject Agreement. As security for the payment and performance of all of
the Obligations (as defined in the Subordinated Credit Agreement, as in effect on the date hereof),
the Assignor hereby collaterally assigns, transfers and grants to the Subordinated Administrative
Agent, for the benefit of itself and the Subordinated Lenders, a second priority perfected security
interest in all of the Assignor’s respective rights and remedies with respect to the Subject
Agreement, including (a) all right, title and interest in and to any and all sums due to the
Assignor under the Subject Agreement and (b) all rights, benefits and remedies of the Assignor with
respect to (i) any breach by the Counterparty of any of its representations, warranties and
covenants under the Subject Agreement and (ii) any indemnification from the Counterparty arising
under or pursuant to the Subject Agreement.




          SECTION 2. Exercise of Rights. At any time other than during the existence of an
Event of Default (as such term is defined in the Senior Credit Agreement and, following the
Discharge of the Senior Obligations (as such term is defined in the Intercreditor Agreement), as
defined in the Subordinated Credit Agreement), insofar as the Assignor may have any right, benefit,
privilege or claim against the Counterparty under the Subject Agreement (including rights, benefits
and remedies with respect to indemnification), the Assignor will use prudent business judgment
concerning the enforcement of such rights and benefits and, if in the exercise of such judgment,
the Assignor determines to enforce such rights, benefits or remedies, the Assignor will enforce the
same diligently and in good faith. [IN FIBER SUPPLY AND MASTER STUMPAGE AGREEMENTS: The Assignor
agrees to cause the Counterparties to make all payments to be made under the Subject Agreement by
means of electronic




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wire transfer directly to the                      Account (Account No.                      at Wachovia
Bank, National Association, or such other account as the Senior Administrative Agent (and,
following Discharge of the Senior Obligations, the Subordinated Administrative Agent) shall
designate to the Assignor and the Counterparties as the                      Account).]




          SECTION 3. Authorization of Senior Administrative Agent and the Subordinated
Administrative Agent. During the existence of an Event of Default, the Assignor hereby
irrevocably authorizes and empowers the Senior Administrative Agent (and, following Discharge of
the Senior Obligations, the Subordinated Administrative Agent) or its agent, in the Senior
Administrative Agent’s (and, following Discharge of the Senior Obligations, the Subordinated
Administrative Agent’s) sole discretion, to assert, either directly or on behalf of the Assignor
any right, privilege or claim the Assignor may, from time to time have, against the Counterparty
under the Subject Agreement, as the Senior Administrative Agent (and, following Discharge of the
Senior Obligations, the Subordinated Administrative Agent) may deem proper, and to receive and
collect any and all damages, awards and other monies resulting therefrom and all other sums due
from the Counterparty under the Subject Agreement and to apply the same on account of any of the
Obligations as the Senior Administrative Agent (and, following Discharge of the Senior Obligations,
the Subordinated Administrative Agent) may determine. In no event, however, shall either of the
Senior Administrative Agent or the Subordinated Administrative Agent be obligated to assert any
such right, privilege or claim of the Assignor or to collect any sums and the Senior Administrative
Agent’s or the Subordinated Administrative Agent’s failure to do so shall not give rise to any
liability to the Assignor or any other Persons.




          SECTION 4. Attorney-in-Fact. The Assignor hereby irrevocably makes, constitutes and
appoints each of the Senior Administrative Agent and the Subordinated Administrative Agent (and all
officers, employees or agents designated by the Senior Administrative Agent and the Subordinated
Administrative Agent) as its true and lawful attorney (and agent-in-fact) for the purposes of
enabling the Senior Administrative Agent (and, following Discharge of the Senior Obligations, the
Subordinated Administrative Agent) or its agent, upon the occurrence and during the continuance of
any Event of Default, to assert and collect such rights, benefits, privileges, claims and sums
(including (i) seeking, demanding and receiving payments due under the indemnities in the Subject
Agreement and endorsing checks or other instruments or orders in connection therewith, (ii) giving
acquittance for each and every payment due or to become due, under or arising out of any of such
indemnities to which the Assignor is or may become entitled, (iii) enforcing compliance by the
Counterparty and any other party obligated in respect of the Subject Agreement and (iv) filing
claims, taking any action or instituting or appearing in any proceedings which the Senior
Administrative Agent (and, following Discharge of the Senior Obligations, the Subordinated
Administrative Agent) may deem to be necessary or advisable in connection with the Subject
Agreement) and to apply such monies in the manner set forth hereinabove. The power of attorney
granted pursuant to this section is coupled with an interest.




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          SECTION 5. Information; Amendment. The Assignor shall keep each of the Senior
Administrative Agent and the Subordinated Administrative Agent fully informed of all circumstances
bearing upon the rights, benefits and remedies and sums due under the Subject Agreement, and the
Assignor shall not waive, amend, alter or modify any of its rights or remedies under the Subject
Agreement without the prior written consent of the Senior Administrative Agent (and, following
Discharge of the Senior Obligations, the Subordinated Administrative Agent), which consent shall
not be unreasonably withheld or delayed. The Assignor shall, promptly after obtaining knowledge
thereof, advise each of the Senior Administrative Agent and the Subordinated Administrative Agent
in writing of any default by the Counterparty or the Assignor in the observance or performance of
any of the Counterparty’s or the Assignor’s respective obligations under the Subject Agreement.




          SECTION 6. Continued Effectiveness. This Agreement shall continue effective (i) as to
the Senior Administrative Agent, until the Discharge of the Senior Obligations and (ii) as to
Subordination Administrative Agent, until the Discharge of the Subordinated Obligations (as defined
in the Intercreditor Agreement).




          SECTION 7. Applicable Law; Successors and Assigns. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF NEW YORK AND SHALL BE BINDING UPON THE
PARTIES THERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.




          SECTION 8. Continuing Obligations. Notwithstanding the foregoing, the Assignor
expressly acknowledges and agrees that it shall remain liable under the Subject Agreement to
observe and perform all of the conditions and obligations therein contained to be observed and
performed by it, and that neither this Agreement, nor any action taken pursuant hereto, shall cause
either of the Senior Administrative Agent or the Subordinated Administrative Agent to be under any
obligation or liability in any respect whatsoever to any party to the Subject Agreement for the
observance or performance of any of the representations, warranties, conditions, covenants,
agreements or terms therein contained unless expressly assumed by the Senior Administrative Agent
(or, following Discharge of the Senior Obligations, the Subordinated Administrative Agent).




          SECTION 9. Representations and Warranties. As a material inducement to the Senior
Administrative Agent and the Senior Lenders to enter into the Senior Credit Agreement and to the
Senior Lenders to make the Loans, and as a material inducement to the Subordinated Administrative
Agent and the Subordinated Lenders to enter into the Subordinated Credit Agreement and to the
Subordinated Lenders to make the loans thereunder, the Assignor makes the following representations
and warranties:




     (a) Authorization. The execution, delivery and performance by the Assignor of this
Agreement and the Subject Agreement have been duly authorized by all necessary action on the part
of the Assignor and do not require any approval or consent of any other person, except approvals or
consents which have been duly obtained and are in full force and effect;



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     (b) Execution and Delivery; Binding Agreement. This Agreement has been duly executed
and delivered on behalf of the Assignor by the appropriate officer of the Assignor, and constitutes
the valid and binding obligation of the Assignor, enforceable against the Assignor in accordance
with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors generally and subject
to general equitable principles (regardless of whether considered in a proceeding in equity or at
law); and



     (c) Subject Agreement. The Subject Agreement is in full force and effect in
accordance with its terms, there are no defaults thereunder and the Assignor has not otherwise
assigned, mortgaged, pledged, transferred or hypothecated the Assignor’s right, title and interest
in and to the Subject Agreement except as permitted under the Senior Credit Agreement and the
Subordinated Credit Agreement.



          SECTION 10. General.




          (a) Notices. All notices and other communications provided to any party hereto under
this Agreement shall be in writing, shall be delivered by hand or overnight courier service, mailed
by certified or registered mail or sent by telecopier, and addressed to such party as follows:




	 	 	 	 	 
	 
	 	If to the Assignor:	 	Wells Timberland Acquisition, LLC
	 
	 	 	 	c/o Wells Timberland REIT, Inc.
	 
	 	 	 	6200 The Corners Parkway
	 
	 	 	 	Norcross, GA  30092-3365
	 
	 	 	 	Attention: Don Warden
	 
	 	 	 	Facsimile No.: (770) 243-8367
	 
	 	 	 	 
	 
	 	If to the Senior	 	 
	 
	 	Administrative Agent:	 	CoBank, ACB
	 
	 	 	 	as Administrative Agent
	 
	 	 	 	5500 South Quebec St.
	 
	 	 	 	Greenwood Village, Colorado  80111
	 
	 	 	 	Attention: Syndications Coordinator, Corporate
	 
	 	 	 	Finance
	 
	 	 	 	Telecopier No.: 303-694-5830






	 	 	 	 	 
	 
	 	If to the Subordinated	 	 
	 
	 	Administrative Agent:	 	Wachovia Bank,
	 
	 	 	 	as Administrative Agent
	 
	 	 	 	301 S. College Street, NC-0174
	 
	 	 	 	Charlotte, NC  28288
	 
	 	 	 	Attention: Capital Markets Servicing,
	 
	 	 	 	          Brian Rubins
	 
	 	 	 	Telecopier No.: 704-715-0065






-5-









 





The above parties may, by notice given hereunder, designate any further or different addresses to
which subsequent notices or other communications shall be sent. Notices sent by hand or overnight
courier service, or mailed by certified or registered mail, shall be deemed to have been given when
received; notices sent by telecopier shall be deemed to have been given when sent (except that, if
not given during normal business hours for the recipient, shall be deemed to have been given at the
opening of business on the next business day for the recipient).




          (b) Entire Agreement. This Agreement constitutes the entire understanding among the
parties hereto with respect to the subject matter hereof and supersedes any prior agreements,
written or oral, with respect thereto.




          (c) Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PARTIES HERETO SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE FEDERAL OR STATE COURTS OF NEW YORK LOCATED IN THE BOROUGH OF
MANHATTAN AND IN THE COUNTY OF NEW YORK. THE PARTIES HERETO HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH
ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
EACH OF THE PARTIES HERETO HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY PARTY HERETO HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, SUCH PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.




          (d) Waiver of Jury Trial, etc. EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
OR ANY COURSE OF



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CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PARTIES
HERETO. THE PARTIES HERETO ACKNOWLEDGE AND AGREES THAT THEY HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OF THE
SENIOR ADMINISTRATIVE AGENT AND THE SUBORDINATED ADMINISTRATIVE AGENT TO ENTER INTO THIS AGREEMENT.




          (e) Counterparts. This Agreement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and all of which shall constitute but
one and the same agreement.




          (f) Headings Descriptive. The headings of the several sections and subsections of
this Agreement are inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.




          (g) Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provisions in any other jurisdiction.




          (h) Amendment, Waiver. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified except by an instrument in writing signed by
the parties hereto.




          (i) Survival. All agreements, statements, representations and warranties made by the
Assignor herein shall be considered to have been relied upon by the Senior Administrative Agent,
the Senior Lenders, the Subordinated Administrative Agent and the Subordinated Lenders and shall
survive the execution and delivery of this Agreement.




          (j) No Waiver; Remedies Cumulative. No failure or delay on the part of either of the
Senior Administrative Agent or the Subordinated Administrative Agent in exercising any right, power
or privilege hereunder and no course of dealing between the Assignor and either of the Senior
Administrative Agent or the Subordinated Administrative Agent shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege hereunder preclude any
other exercise, or the further exercise, of any other right, power or privilege hereunder. The
rights and remedies herein expressly provided are cumulative and not exclusive of any rights or
remedies which either of the Senior Administrative Agent, the Subordinated Administrative Agent or
the Assignor would otherwise have.




          (k) Intercreditor Agreement. The rights of the Senior Administrative Agent and the
Subordinated Administrative Agent hereunder are subject to the terms and provisions of the
Intercreditor Agreement.







-7-









 








          IN WITNESS WHEREOF, this instrument has been duly executed and delivered, as of the
9th day of October, 2007.




	 	 	 	 	 	 	 
	 	 	WELLS TIMBERLAND ACQUISITION, LLC
	 
	 	 	 	 	 	 
	 

	 	By:
	 	WELLS TIMBERLAND MANAGEMENT ORGANIZATION, LLC, as Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jess E. Jarratt	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	COBANK, ACB, in its capacity as Senior Administrative Agent
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 






	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION,

in its capacity as Subordinated Administrative Agent
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 






Collateral Assignment of Purchase and Sale Agreement

Signature Page




 









 








CONSENT




          The undersigned hereby consents to the terms of the Collateral Assignment of Purchase and Sale
Agreement (the “Agreement”; capitalized terms used in this Consent and not defined herein
shall have the meanings given such terms in the Agreement), and agrees that the Senior
Administrative Agent and the Subordinated Administrative Agent shall have the right to assert and
enforce any or all of the rights of the Assignor assigned thereunder in accordance with the terms
and provisions of the Subject Agreement so collaterally assigned. The undersigned agrees and
acknowledges that none of the Senior Administrative Agent, any Senior Lender, the Subordinated
Administrative Agent or any Subordinated Lender shall be deemed to have assumed any of the
obligations or liabilities of the Assignor under the Subject Agreement by reason of such collateral
assignment. [IN FIBER SUPPLY AND MASTER STUMPAGE AGREEMENTS: Each of the undersigned agrees to
make all payments to be made by it under the Subject Agreement in the manner and to the account
described in Section 2 of the Agreement.]




	 	 	 	 	 	 	 
	 	 	MEADWESTVACO COATED BOARD, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 






Collateral Assignment of Purchase and Sale Agreement

Signature Page





 












 





EXHIBIT S




EQUITY RAISE ACCOUNT SECURITY AGREEMENT




     EQUITY RAISE ACCOUNT SECURITY AGREEMENT, dated as of October 9, 2007 (as amended,
supplemented, restated or otherwise modified from time to time, this “Agreement”), made by
WELLS TIMBERLAND REIT, INC. a Maryland corporation (the “Grantor”), in favor of COBANK,
ACB, as administrative agent (in such capacity, the “Administrative Agent”) for each of the
Lenders (such capitalized term and all other capitalized terms not otherwise defined herein to have
the meanings provided for in Article I).



W I T N E S S E T H:




     WHEREAS, pursuant to the Credit Agreement, dated as of the date hereof (as amended,
supplemented, restated or otherwise modified from time to time, the “Credit Agreement”),
among Timberlands II, LLC, a Delaware limited liability company, Wells Timberland Acquisition, LLC,
a Delaware limited liability company (each a “Borrower” and collectively, the
“Borrowers”), the various lending institutions as are, or may from time to time become,
parties thereto (collectively, the “Lenders”), and the Administrative Agent, the Lenders
have extended Commitments to make Loans to the Borrowers;



     WHEREAS, as a condition precedent to the occurrence of the Funding Date, the Grantor is
required to execute and deliver this Agreement; and



     WHEREAS, the Grantor has duly authorized the execution, delivery and performance of this
Agreement;



     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce the Lenders to make the Loans to the Borrowers pursuant
to the Credit Agreement, the Grantor agrees, with the Administrative Agent for its benefit and the
benefit of the other of the Lenders, as follows:



ARTICLE I

DEFINITIONS




     The following terms (whether or not underscored) when used in this Agreement, including its
preamble and recitals, shall have the following meanings (such definitions to be equally applicable
to the singular and plural forms thereof):



     “Administrative Agent” is defined in the preamble.



     “Agreement” is defined in the preamble.



     “Borrower” and “Borrowers” is defined in the first recital.



     “Collateral” is defined in Section 2.1.



     “Credit Agreement” is defined in the first recital.



 









 





     “Grantor” is defined in the preamble.



     “Lenders” is defined in the first recital.



     “Proceeds” has the meaning provided for in the U.C.C. and includes, without
limitation, (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Grantor from time to time with respect to any of the Collateral, (b) any and all payments (in
any form whatsoever) made or due and payable to the Grantor from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority, (c) any recoveries by the Grantor against third parties
with respect to any litigation or dispute concerning any of the Collateral, and (d) any and all
other amounts, rights to payment or other property acquired upon the sale, lease, license, exchange
or other disposition of Collateral and all rights arising out of the Collateral.



     “Secured Obligations” is defined in Section 2.2.



     “U.C.C.” means the Uniform Commercial Code as in effect from time to time in the State
of New York; provided that if, by reason of applicable Law, the validity or perfection or
the effect of validity or perfection or non-perfection or the priority of any security interest in
any Collateral granted under this Agreement is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than New York, then as to such matters “U.C.C.” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction.



     SECTION 1.1. Credit Agreement Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Agreement, including its preamble and recitals, have
the meanings provided in the Credit Agreement.



     SECTION 1.2. U.C.C. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms for which meanings are provided in the U.C.C. (including the term
Control) are used in this Agreement, including its preamble and recitals, with such meanings.



ARTICLE II

SECURITY INTEREST




     SECTION 2.1. Grant of Security Interest. The Grantor hereby pledges, hypothecates,
collaterally assigns, charges, mortgages and pledges to the Administrative Agent for its benefit
and the ratable benefit of each of the Lender Parties, and hereby grants to the Administrative
Agent, for its benefit and the ratable benefit of each of the Lender Parties, a security interest
in, all of its right, title and interest in and to the following, whether now or hereafter existing
or acquired (collectively, the “Collateral”):



          (a) the Equity Raise Account and all cash, checks, drafts, certificates and instruments, if
any, from time to time deposited or held in the Equity Raise Account, including, without
limitation, all deposits or wire transfers made to the Equity Raise Account;




          (b) any and all amounts on deposit in the Equity Raise Account that are invested in Cash
Equivalent Investments;




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          (c) all interest, dividends, cash, instruments and other property from time to time received,
receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing; and




          (d) all Proceeds of any and all of the foregoing Collateral.




     SECTION 2.2. Security for Obligations. This Agreement secures the prompt payment in
full in cash of all Obligations, including all amounts payable by the Borrowers and each other Loan
Party under or in connection with the Credit Agreement, the Notes and each other Loan Document,
whether for principal, interest, costs, fees, expenses, indemnities or otherwise and whether now or
hereafter existing (all of such obligations being the “Secured Obligations”).



     SECTION 2.3. Continuing Security Interest; Transfer of Notes. This Agreement shall
create a continuing security interest in the Collateral and shall remain in full force and effect
until payment in full in cash of all Secured Obligations (on terms and pursuant to documentation in
form and substance reasonably satisfactory to the Administrative Agent) and the irrevocable
termination of all the Commitments, at which time the security interest granted herein shall
terminate and all rights to the Collateral shall revert to the Grantor.



     SECTION 2.4. Security Interest Absolute. All rights of the Administrative Agent and
the security interests granted to the Administrative Agent hereunder, and all obligations of the
Grantor hereunder, shall be absolute and unconditional, irrespective of:



          (a) any lack of validity, legality or enforceability of any Loan Document;




          (b) the failure of any Lender Party:




               (i) to assert any claim or demand or to enforce any right or remedy against the Grantor, any
other Loan Party or any other Person under the provisions of any Loan Document or otherwise; or



               (ii) to exercise any right or remedy against any other guarantor of, or collateral securing,
any Secured Obligation of the Grantor or of any other Loan Party;



          (c) any change in the time, manner or place of payment of, or in any other term of, all or any
of the Secured Obligations or any other extension, compromise or renewal of any Secured Obligation,
including any increase in the Secured Obligations resulting from the extension of additional credit
to the Grantor or any other Loan Party or otherwise;




          (d) any reduction, limitation, impairment or termination of any Secured Obligation of the
Grantor or of any other Loan Party for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and the Grantor hereby waives any
right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability
of, or any other event or occurrence affecting, any Secured Obligation of the Grantor or of any
other Loan Party or otherwise;




-3-









 








          (e) any amendment to, rescission, waiver, or other modification of, or any consent to
departure from, any of the terms of any Loan Document;




          (f) any addition, exchange, release, surrender or non-perfection of any collateral (including
the Collateral), or any amendment to or waiver or release of or addition to or consent to departure
from any guaranty, for any of the Secured Obligations; or




          (g) any other circumstances which might otherwise constitute a defense available to, or a
legal or equitable discharge of, the Grantor, any other Loan Party, any surety or any guarantor or
otherwise, including as a result of any proceeding of the nature referred to in Section 8.1.8 of
the Credit Agreement.




     SECTION 2.5. Grantor Remains Liable. Anything herein to the contrary notwithstanding:



          (a) the Grantor shall remain liable under the contracts and agreements related to the
Collateral to the extent set forth therein, and shall perform all of its duties and obligations
under such contracts and agreements to the same extent as if this Agreement had not been executed;




          (b) the Grantor will comply in all material respects with all material Laws relating to the
ownership and operation of the Collateral, and shall pay when due all taxes, fees and assessments
imposed on or with respect to the Collateral, except to the extent the validity thereof is (A)
being diligently contested in good faith by appropriate proceedings which (i) suspend the
collection thereof and any Lien therefrom and (ii) for which adequate reserves in accordance with
GAAP have been set aside by the Grantor, and (B) could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect; and




          (c) neither the Administrative Agent nor any other Lender Party shall have any obligation or
liability under any contracts or agreements included in the Collateral by reason of this Agreement,
nor shall the Administrative Agent or any other Lender Party be obligated to perform any of the
obligations or duties of the Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.




     SECTION 2.6. Waiver of Subrogation. The Grantor hereby irrevocably waives to the
extent permitted by applicable Law and until such time as the Secured Obligations shall have been
paid in full in cash (on terms and pursuant to documentation in form and substance reasonably
satisfactory to the Administrative Agent) and all the Commitments have irrevocably terminated, any
claim or other rights which it may now or hereafter acquire against the Borrowers or any other Loan
Party that arises from the existence, payment, performance or enforcement of the Grantor’s
obligations under this Agreement or any other Loan Document, including any right of subrogation,
reimbursement, exoneration or indemnification, and any right to participate in any claim or remedy
of any Lender Party against the Borrowers or any other Loan Party or any collateral which any
Lender Party now has or hereafter acquires, whether or not such claim, remedy or right arises in
equity or under contract or Law. If any amount shall be paid to the Grantor in violation of the
preceding sentence, such amount shall be deemed to have been paid to the Grantor for the benefit
of, and held in trust for, the Lender Parties, and shall



-4-









 




forthwith be paid to the Administrative Agent to be credited and applied against the Secured
Obligations, whether matured or unmatured. The Grantor acknowledges that it will receive direct and
indirect benefits for the financing arrangements contemplated by the Credit Agreement and that the
waiver set forth in this Section is knowingly made in contemplation of such benefits




ARTICLE III

REPRESENTATIONS AND WARRANTIES




     The Grantor represents and warrants unto each Lender Party, as of the date it becomes a party
to this Agreement, as set forth in this Article.



     SECTION 3.1. Location of Grantor. The Grantor is a Maryland corporation and its
organizational identification number is D01954436.



     SECTION 3.2. Ownership, No Liens, etc. The Grantor owns the Collateral free and clear
of any Lien, except for the first priority security interest in favor of the Subordinated
Administrated Agent and the second priority security interest created by this Agreement.



     SECTION 3.3. Valid Security Interest. Upon execution of a control agreement
establishing the Administrative Agent’s Control with respect to the Equity Raise Account, the
security interest granted pursuant to this Agreement creates a valid, second priority perfected
security interest in the Equity Raise Account and other Collateral, subject to no other Liens other
than the first priority security interest in favor of the Subordinated Administrative Agent,
securing the payment of the Secured Obligations.



     SECTION 3.4. Authorization, Approval, etc. No authorization, approval or other action
by, and no notice to or filing with, any Governmental Authority is required either for (a) the
grant by the Grantor of the security interest granted hereby or for the execution, delivery and
performance of this Agreement by the Grantor or (b) the perfection of or the exercise by the
Administrative Agent of its rights and remedies hereunder (other than the taking of those actions
referred to in Section 3.1).



     SECTION 3.5. Due Execution, Validity, Etc. The Grantor has full corporate power and
authority, and holds all requisite licenses, permits and other approvals of Governmental
Authorities, to enter into and perform its obligations under this Agreement. The execution,
delivery and performance by the Grantor of this Agreement does not contravene or result in a
default under the Grantor’s Organizational Documents or contravene or result in a default under any
contractual restriction, Lien or Law binding on the Grantor. This Agreement has been duly
authorized by the Grantor, has been duly executed and delivered on behalf of the Grantor and
constitutes the legal, valid and binding obligation of the Grantor enforceable in accordance with
its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting the rights of creditors generally, and subject to the effect
of general principles of equity (regardless of whether considered in a proceeding in equity or at
law).



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ARTICLE IV

COVENANTS




     The Grantor covenants and agrees that, until all the Secured Obligations have been paid in
full in cash and all the Commitments have been irrevocably terminated, the Grantor will, perform
the obligations set forth in this Section.



     SECTION 4.1. Control. The Grantor will take any and all actions necessary to (a)
cause the Administrative Agent to obtain exclusive Control of the Collateral in a manner acceptable
to the Administrative Agent and (b) obtain from Persons holding any of the Collateral written
confirmation of the Administrative Agent’s Control over the Collateral upon terms and conditions
acceptable to the Administrative Agent (the foregoing Control over the Collateral in favor of the
Administrative Agent being subject to the first priority security interest and exercise of Control
of the Subordinated Administrative Agent therein).



     SECTION 4.2. Transfers and Other Liens. The Grantor shall not (a) sell, assign (by
operation of law or otherwise) or otherwise dispose of any of the Collateral, except as permitted
by the Credit Agreement, or (b) create or suffer to exist any Lien upon or with respect to any of
the Collateral, except for the security interest created by this Agreement and the first priority
security interest in favor of the Subordinated Administrative Agent.



     SECTION 4.3. Further Assurances, etc. The Grantor agrees that, from time to time at
its own expense, it will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that the Administrative Agent may
reasonably request, in order to perfect, preserve and protect any security interest granted or
purported to be granted hereby or to enable the Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, the Grantor will:



          (a) execute and file such financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary, or as the Administrative Agent may
reasonably request, in order to perfect and preserve the security interests and other rights
granted or purported to be granted to the Administrative Agent hereby;




          (b) furnish to the Administrative Agent, from time to time at the Administrative Agent’s
request, statements and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Administrative Agent may reasonably request, all
in reasonable detail;




          (c) if requested by the Administrative Agent, execute and deliver confirmatory written
instruments, and obtain any consents, waivers or agreements, as may be necessary, or as the
Administrative Agent may reasonably request, in order to perfect and preserve the security
interests and other rights granted or purported to be granted to the Administrative Agent hereby,
but the Grantor’s failure to do so shall not affect or limit the security interest granted hereby
or the Administrative Agent’s other rights in and to the Collateral.




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     With respect to the foregoing and the grant of the security interest hereunder, the Grantor
hereby authorizes the Administrative Agent to Authenticate and to file one or more U.C.C. financing
or continuation statements for the purpose of perfecting, confining, continuing, enforcing or
protecting the security interest granted by the Grantor, without the signature of the Grantor, and
naming the Grantor as debtor and the Administrative Agent as secured party. A carbon, photographic,
telecopied or other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement where permitted by Law.



     SECTION 4.4. Additional Covenants. The Grantor agrees that, until all the Secured
Obligations have been paid in full in cash on terms and pursuant to documentation in form and
substance reasonably satisfactory to the Administrative Agent and all Commitments shall have
irrevocably terminated, it will comply with all the terms and provisions of the Credit Agreement
and the other Loan Documents that are applicable to it. In addition, the Grantor agrees to comply
with all the terms contained in Article IX of the Subordinated Credit Agreement and agrees that,
subject to the terms of the Subordinated Intercreditor Agreement, the Administrative Agent may
enforce the same directly against the Grantor.



     SECTION 4.5. Termination of Certain Existing Arrangement. The Grantor agrees that it
will close Account Number 003283068346 at Bank of America as soon as practicable after the date
hereof, and cause all amounts remaining in such account after withdrawals on the date hereof in
connection with the consummation of the Transaction, or any amounts deposited in such account on
and after the date hereof, to be transferred to the Equity Raise Account. On and after the date
hereof, the Grantor will cause all proceeds received from investors in the Grantor with respect to
accepted or cleared investments in the Grantor to be deposited in the Equity Raise Account.



ARTICLE V

THE ADMINISTRATIVE AGENT




     SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. The Grantor hereby
irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Grantor and in the name of the Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take, upon the occurrence
and during the continuance of any Event of Default, any and all actions and execute any and all
documents and instruments that may, in the judgment of the Administrative Agent, be necessary or
desirable to accomplish the purposes of this Agreement. Without limiting the generality of the
foregoing, after the occurrence and during the continuance of any Event of Default the Grantor
hereby gives the Administrative Agent, subject to the terms of the Intercreditor Agreement, the
power and right, on behalf of the Grantor, without notice to or assent by the Grantor, to do any or
all of the following:



          (a) take possession of and indorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under or in respect of any Collateral and file any claim
or take any other action or proceeding in any court of law or equity




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or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any
and all such moneys due under or in respect of any Collateral whenever payable;




          (b) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral,
effect any repairs or any insurance called for by the terms of this Agreement and pay all or any
part of the premiums therefor and the costs thereof;




          (c) execute, in connection with any sale or other disposition provided for in Section
6.1, any endorsements, assignments or other instruments of conveyance or transfer with respect
to the Collateral; and




          (d) (i) direct any Person liable for any payment under any of the Collateral to make payment
of any and all moneys due or to become due thereunder directly to the Administrative Agent or as
the Administrative Agent shall direct; (ii) ask or demand for, collect, and receive payment of and
give receipt for, any and all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (iii) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in respect of any Collateral; (iv) defend any
suit, action or proceeding brought against the Grantor with respect to any Collateral; (v) settle,
compromise or adjust any such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Administrative Agent may deem appropriate; and (iv) generally, sell,
transfer, pledge and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent’s option and the Grantor’s expense,
at any time, or from time to time, all acts and things that the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the Lender Parties’ security
interests therein and to effect the intent of this Agreement, all as fully and effectively as the
Grantor might do.



The Grantor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to
this Section is irrevocable and coupled with an interest.




     SECTION 5.2. Administrative Agent May Perform. If the Grantor fails to perform any
agreement contained herein, the Administrative Agent may itself perform, or cause performance of,
such agreement, and the reasonable expenses of the Administrative Agent incurred in connection
therewith shall be payable by the Grantor.



     SECTION 5.3. Access and Examination. In order to give effect to the intent of this
Agreement the Administrative Agent may at all reasonable times upon reasonable advance notice (if
no Default or an Event of Default has occurred and is continuing) have access to, examine, audit,
make extracts from and inspect the Grantor’s records, files and books of account and the
Collateral, and may discuss the Grantor’s affairs with the Grantor’s officers and management, in
each case to the extent reasonably necessary in order to monitor compliance by the Grantor with its
obligations under this Agreement and the other Loan Documents. The Grantor will deliver to the
Administrative Agent promptly following its request therefor any instrument necessary for the
Administrative Agent to obtain records from any service bureau maintaining records for the Grantor.
The Administrative Agent may, at expense of the Grantor, use the Grantor’s personnel,



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supplies and premises as may be reasonably necessary for maintaining or enforcing the security
interest granted hereunder.




     SECTION 5.4. Administrative Agent Has No Duty. (a) The powers conferred on the
Administrative Agent hereunder are solely to protect its interest (on behalf of the Lender Parties)
in the Collateral and shall not impose any duty on it to exercise any such powers. The
Administrative Agent’s sole duty with respect to the custody, safekeeping and physical preservation
of the Collateral in its possession, under Section 9-207 of the U.C.C. or otherwise, shall be to
deal with it in the same manner as the Administrative Agent deals with similar property for its own
account. Neither the Administrative Agent nor any of its officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so, nor shall any such Person be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof (including the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining to any Collateral).
Neither the Administrative Agent nor any of its officers, directors, employees or agents shall be
responsible to the Grantor for any loss, damages, depreciation or other diminution in the value of
any of the Collateral that may occur as a result of or in connection with or that is in any way
related to any exercise, except in respect of any damages attributable solely to any such Person’s
own gross negligence or willful misconduct as determined by a final non-appealable judgment of a
court of competent jurisdiction.



          (b) The Grantor assumes all responsibility and liability arising from or relating to the use,
sale or other disposition of the Collateral. The Obligations shall not be affected by any failure
of the Administrative Agent to take any steps to perfect the security interest granted hereunder or
to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release
the Grantor from any of its Obligations.




ARTICLE VI

REMEDIES




     SECTION 6.1. Remedies. If any Event of Default shall have occurred and be continuing,
subject to the terms of the Intercreditor Agreement:



          (a) The Administrative Agent may exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to it (including, without
limitation, as provided in Section 5.1), all the rights and remedies of a secured party on
default under the U.C.C. including notifying any or all depository institutions with which any
Collateral is maintained to remit the same to the Administrative Agent, for application to the
Secured Obligations as provided herein.




          (b) Without limiting clause (a), the Administrative Agent may exercise any and all
rights and remedies of the Grantor under or in connection with the Collateral, including the right
to sue upon or otherwise collect, extend the time for payment of, modify or amend the terms of,
compromise or settle for cash, credit, or otherwise upon any terms, grant other indulgences,
extensions, renewals, compositions, or releases, and take or omit to take any other action with
respect to the Collateral, any security therefor, any agreement relating thereto, any




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insurance applicable thereto, or any Person liable directly or indirectly in connection with
any of the foregoing, without discharging or otherwise affecting the liability of the Grantor for
the Obligations or under this Agreement or any other Loan Document and the Assigned Agreements or
otherwise in respect of the Collateral, including any and all rights of the Grantor to demand or
otherwise require payment of any amount under, or performance of any provision of, any Collateral.




     SECTION 6.2. Application of Proceeds. All cash proceeds received by the Administrative
Agent in respect of any sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Administrative Agent, be held, to the extent permitted
under applicable Law, by the Administrative Agent as additional collateral security for all or any
part of the Secured Obligations, and/or then or at any time thereafter shall be applied (after
payment of any amounts payable to the Administrative Agent pursuant to Section 11.3 of the Credit
Agreement and Section 6.3) in whole or in part by the Administrative Agent for the ratable
benefit of the Lender Parties against all or any part of the Secured Obligations in accordance with
Section 8.6 of the Credit Agreement. Any surplus of such cash or cash proceeds held by the
Administrative Agent and remaining after payment in full in cash of all the Secured Obligations (on
terms and pursuant to documentation in form and substance reasonably satisfactory to the
Administrative Agent), and the irrevocable termination of all the Commitments, shall be paid over
to the Grantor or to whomsoever may be lawfully entitled to receive such surplus.



     SECTION 6.3. Indemnity and Expenses. The Grantor agrees to indemnify and hold
harmless the Administrative Agent and its directors, officers, employees, agents, Affiliates and
their Related Parties from and against any and all claims, losses and liabilities arising out of or
resulting from this Agreement (including enforcement of this Agreement), except claims, losses or
liabilities resulting from any such Person’s gross negligence or willful misconduct as determined
by a final non-appealable judgment of a court of competent jurisdiction. The Grantor will promptly
following demand pay to the Administrative Agent the amount of any and all reasonable out-of-pocket
expenses, including the reasonable fees and disbursements of its counsel and of any experts and
agents, which the Administrative Agent actually incurs in connection with (a) the administration of
this Agreement, (b) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (c) the exercise or enforcement of any of
the rights of the Administrative Agent or the other Lender Parties hereunder or (d) the failure by
the Grantor to perform or observe any of the provisions hereof.



ARTICLE VII

MISCELLANEOUS PROVISIONS




     SECTION 7.1. Loan Document. This Agreement is a Loan Document executed pursuant to
the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with the terms and provisions thereof, including Section 1.3
and Article XI thereof.



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     SECTION 7.2. Amendments, etc.; Successors and Assigns.(a) (a) No amendment to or
waiver of any provision of this Agreement nor consent to any departure by the Grantor herefrom,
shall be effective unless the same shall be in writing and signed by the Administrative Agent and
the percentage of the Lenders as required by Section 11.1 of the Credit Agreement, and then such
amendment, waiver or consent shall be effective only in the specific instance and for the specific
purpose for which it is given.



          (b) This Agreement shall be binding upon the Grantor and its successors, transferees and
assignees, and shall inure to the benefit of and be enforceable by the Administrative Agent and
each other Lender Party and their respective successors and assigns; provided,
however, that no Grantor may assign its obligations hereunder without the prior written
consent of the Administrative Agent. Without limiting the generality of the foregoing, any Lender
may assign or otherwise transfer (in whole or in part) any Loans held by it to any other Person,
and such other Person shall thereupon become vested with all the rights and benefits in respect
thereof granted to such Lender under any Loan Document (including this Agreement) or otherwise,
subject, however, to the provisions of Section 10.10 of the Credit Agreement.




     SECTION 7.3. Protection of Collateral. The Administrative Agent may from time to
time, at its option and at the expense of the Grantor, perform any act which the Grantor agrees
hereunder to perform and which the Grantor shall fail to perform after being requested to so
perform (it being understood that no such request need be given after the occurrence and during the
continuance of any Event of Default), and the Administrative Agent may from time to time take any
other action which the Administrative Agent deems necessary or appropriate for the maintenance,
preservation or protection of any of the Collateral or of its security interest therein.



     SECTION 7.4. Addresses for Notices. All notices and other communications provided for
hereunder shall be made as provided in, and subject to the terms of, Section 11.2 of the Credit
Agreement. All notices to the Grantor shall be sent care of the Borrowers at its address set forth
in the Credit Agreement and all notices to the Administrative Agent shall be sent as provided in
the Credit Agreement.



     SECTION 7.5. Section Captions. Section captions used in this Agreement are for
convenience of reference only, and shall not affect the construction of this Agreement.



     SECTION 7.6. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions
of this Agreement or affecting the validity or enforceability of such provision in any other
jurisdiction.



     SECTION 7.7. Counterparts. This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of which shall
constitute together but one and the same agreement.



     SECTION 7.8. Waivers. The Grantor hereby waives any right, to the extent permitted by
applicable Law, to receive prior notice of a judicial or other hearing with respect to



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any action or prejudgment remedy or proceeding by the Administrative Agent to take possession,
exercise control over or dispose of any item of Collateral, where such action is permitted under
the terms of this Agreement or any other Loan Document or by applicable Law, or of the time, place
or terms of sale in connection with the exercise of the Administrative Agent’s rights hereunder.
The Grantor waives, to the extent permitted by applicable Law, any bonds, security or sureties
required by the Administrative Agent with respect to any of the Collateral. Without limiting the
foregoing, the Grantor agrees that it will not invoke, claim or assert any benefit of applicable
Law, or take or attempt to take any action that could reasonably be expected to have the effect of
delaying, impeding or preventing the Administrative Agent from exercising any of its rights or
remedies with respect to the Collateral as herein provided. The Grantor also consents that the
Administrative Agent, in connection with the enforcement of the Administrative Agent’s rights and
remedies under this Agreement, may enter upon any premises owned by or leased to it without
obligations to pay rent or for use and occupancy, through self-help, without judicial process and
without having first obtained an order of any court.




     SECTION 7.9. Governing Law, Entire Agreement, etc. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR
AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.



     SECTION 7.10. Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF, ANY LENDER PARTY OR THE
GRANTOR SHALL BE BROUGHT AND MAINTAINED IN THE FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF
MANHATTAN OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT’S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE
GRANTOR AND LENDER PARTY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE GRANTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER



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MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT THE GRANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR
FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT
IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE GRANTOR, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS AGREEMENT.




     SECTION 7.11. Waiver of Jury Trial. EACH LENDER PARTY AND GRANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY LENDER
PARTY OR THE GRANTOR. THE GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
ADMINISTRATIVE AGENT ENTERING INTO THIS AGREEMENT.



     SECTION 7.12. Waiver of Certain Claims. TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO
GRANTOR SHALL ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST EACH LENDER PARTY ON ANY THEORY OF
LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL
DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT OR ANY INSTRUMENT
CONTEMPLATED HEREBY.



     SECTION 7.13. No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.



     SECTION 7.14. Intercreditor Agreement. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, THE TERMS OF THIS AGREEMENT AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE ADMINISTRATIVE
AGENT OR ANY LENDER HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT, DATED
AS OF OCTOBER 9, 2007 (AS AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME,
THE “INTERCREDITOR AGREEMENT”), AMONG THE ADMINISTRATIVE AGENT, WACHOVIA BANK, NATIONAL
ASSOCIATION, AS SUBORDINATED ADMINISTRATIVE AGENT, AND THE LOAN PARTIES. IN THE EVENT OF ANY
CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENT AND



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THIS AGREEMENT, THE TERMS OF THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.





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     IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly executed and delivered by
its officer thereunto duly authorized as of the date and year first above written.



	 	 	 	 	 
	 	WELLS TIMBERLAND REIT, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Randall D. Fretz 	 
	 	 	Title:  	Senior Vice President 	 
	 



ACKNOWLEDGED AND ACCEPTED:




COBANK, ACB, as Administrative Agent




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 






Wells REIT Security Agreement

Signature Page





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EXHIBIT T




TIMBER MANAGER SUBORDINATION AGREEMENT




     THIS TIMBER MANAGER SUBORDINATION AGREEMENT (this “Agreement”), dated as of October 9,
2007, among (i) COBANK, ACB, in its capacity as the administrative agent (in such capacity, the
“Senior Administrative Agent”) for the Senior Lenders (such capitalized term and all other
capitalized terms used herein shall have the meanings provided in Section 1.1), (ii)
WACHOVIA BANK, NATIONAL ASSOCIATION, in its capacity as the administrative agent (in such capacity,
the “Subordinated Administrative Agent”) for the Subordinated Lenders, (iii) WELLS
TIMBERLAND MANAGEMENT ORGANIZATION, LLC, a Delaware limited liability company (the “Timber
Manager”), (iv) TIMBERLANDS II, LLC, a Delaware limited liability company (“Wells
Timberland”), and WELLS TIMBERLAND ACQUISITION, LLC, a Delaware limited liability company, as
the borrowers (“Wells Acquisition” and, together with Wells Timberland, each a
“Borrower” and collectively, the “Borrowers”), and (v) WELLS TIMBERLAND REIT, INC.,
a Maryland corporation (“Wells REIT”), WELLS TIMBERLAND TRS, INC., a Delaware corporation,
and WELLS TRS HARVESTING OPERATIONS, LLC, a Delaware limited liability company (together with the
Borrowers, each a “Loan Party” and collectively, the “Loan Parties”).



W I T N E S S E T H:




     WHEREAS, pursuant to the Credit Agreement, dated as of the date hereof (together with all
extensions, modifications, consolidations, supplements, amendments, replacements, renewals,
refinancings and restatements thereto and thereof, the “Senior Credit Agreement”), among
the Borrowers, various lenders that are or may become parties thereto (each, a “Senior
Lender” and collectively, the “Senior Lenders”) and the Senior Administrative Agent,
the Senior Lenders have given their several commitments to make senior loans (collectively, the
“Senior Loans”) to the Borrowers;



     WHEREAS, pursuant to the Credit Agreement, dated as of the date hereof (together with all
extensions, modifications, consolidations, supplements, amendments, replacements, renewals,
refinancings and restatements thereto and thereof, the “Subordinated Credit Agreement”),
among the Borrowers, various lenders that are or may become parties thereto (each, a
“Subordinated Lender” and collectively, the “Subordinated Lenders”) and the
Subordinated Administrative Agent, the Subordinated Lenders have given their several commitments to
make subordinated loans (collectively, the “Subordinated Loans”) to the Borrowers;



     WHEREAS, the Timber Manager and Wells REIT are parties to the [Management Services Agreement],
dated as of                     , 2007 (together with all extensions, modifications, consolidations,
supplements, amendments, replacements, renewals and restatements thereto and thereof permitted
hereunder, the “Wells Management Agreement”), under which the Timber Manager manages the
Property; and



     WHEREAS, a condition precedent to the making of the Senior Loans and the Subordinated Loans is
that the Timber Manager and the Loan Parties enter into this Agreement;



 









 





     NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the Senior
Administrative Agent, on behalf of the Senior Secured Parties, the Subordinated Administrative
Agent, on behalf of the Subordinated Secured Parties, the Timber Manager and the Loan Parties agree
as follows:



ARTICLE I

DEFINITIONS




     SECTION 1.1 Definitions. The following terms when used in this Agreement, including
its preamble and recitals, shall, except where the context otherwise requires, have the following
meaning:



     “Agreement” is defined in the preamble.



     “Bankruptcy Code” means Title 11 of the United States Code, as amended, supplemented,
restated or otherwise modified from time to time, together with all rules and regulations
promulgated thereunder.



     “Borrower” and “Borrowers” are defined in the preamble.



     “Discharge of the Senior Obligations” means, except to the extent otherwise provided
in Section 4.3, with respect to the Senior Obligations confirmation by the Senior
Administrative Agent (a) payment in full in cash of the principal of and interest (including
interest accruing on or after the commencement of any Insolvency or Liquidation Proceeding at the
rate set forth in the Senior Credit Agreement, whether or not such interest would be allowed or
allowable in such Insolvency or Liquidation Proceeding) and premium, if any, on all Indebtedness
outstanding under the Senior Loan Documents; (b) payment in full in cash of all other Senior
Obligations (including monetary obligations incurred during the pendency of any Insolvency or
Liquidation Proceeding, regardless of whether such monetary obligations would be allowed or
allowable in such proceeding) other than Unasserted Contingent Obligations; (c) termination or cash
collateralization of all Senior Obligations under interest rate agreements entered into by the
Borrowers with any Senior Lender (or any of its affiliates) in connection with the Senior Credit
Agreement (in an amount satisfactory to the Senior Administrative Agent); and (d) termination of
all other commitments of the Senior Lenders under the Senior Loan Documents.



     “Discharge of the Subordinated Obligations” means, except to the extent otherwise
provided in Section 4.3, with respect to the Subordinated Obligations confirmation by the
Subordinated Administrative Agent (a) payment in full in cash of the principal of and interest
(including interest accruing on or after the commencement of any Insolvency or Liquidation
Proceeding at the rate set forth in the Subordinated Credit Agreement, whether or not such interest
would be allowed or allowable in such Insolvency or Liquidation Proceeding) and premium, if any, on
all Indebtedness outstanding under the Subordinated Loan Documents; (b) payment in full in cash of
all other Subordinated Obligations (including monetary obligations incurred during the pendency of
any Insolvency or Liquidation Proceeding, regardless of whether such monetary obligations would be
allowed or allowable in such proceeding) other



- 2 -









 




than Unasserted Contingent Obligations; and (c) termination of all other commitments of the
Subordinated Lenders under the Subordinated Loan Documents.




     “Insolvency or Liquidation Proceeding” means (a) any voluntary or involuntary case or
proceeding under the Bankruptcy Code with respect to Wells REIT or any other Loan Party; (b) any
other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding with respect to Wells
REIT or any other Loan Party or with respect to any part of their respective assets; (c) any
liquidation, dissolution, reorganization or winding up of Wells REIT or any other Loan Party
whether voluntary or involuntary and whether or not involving insolvency or bankruptcy; or (d) any
assignment for the benefit of creditors or any other marshalling of assets and liabilities of Wells
REIT or any other Loan Party.



     “Loan Party” and “Loan Parties” are defined in the preamble.



     “Person” is defined in the Senior Credit Agreement, as in effect on the date hereof.



     “Revenue Account” is defined in the Senior Credit Agreement, as in effect on the date
hereof.



     “Revenue Waterfall” is defined in the Senior Credit Agreement, as in effect on the
date hereof.



     “Senior Administrative Agent” is defined in the preamble.



     “Senior Credit Agreement” is defined in the first recital.



     “Senior Lender” and “Senior Lenders” are defined in the first
recital.



     “Senior Loan Documents” means the Senior Credit Agreement, the other Loan Documents
(as defined in the Senior Credit Agreement), including interest rate agreements entered into by the
Borrowers with any Senior Lender or their affiliates, and each other agreement, document and
instrument providing for or evidencing any Senior Obligation, and any other agreement, document or
instrument executed or delivered at any time in connection with any Senior Obligation, including
any intercreditor or joinder agreement among holders of, replaced, extended or renewed Senior
Obligations, as each of the foregoing may be amended, supplemented, restated, modified, replaced,
extended or renewed from time to time.



     “Senior Loans” is defined in the first recital.



     “Senior Obligations” means all obligations (monetary or otherwise) of any Senior Loan
Party arising under or in connection with the Senior Loan Documents, including principal, interest
(including post-default interest and interest accruing after the commencement of any Insolvency or
Liquidation Proceeding, whether or not a claim for post-filing or post-petition interest is allowed
in any such proceeding), reimbursement obligations, fees, indemnities, costs and expenses
(including the reasonable fees and disbursements of counsel to the Senior Administrative Agent and
each Senior Lender required to be paid by the Senior Borrowers) that



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are owing under the Senior Loan Documents, in each case whether now existing or hereafter
incurred, direct or indirect, absolute or contingent, and due or to become due.




     “Senior Secured Parties” means, collectively, the Senior Administrative Agent and the
Senior Lenders.



     “Subordinated Administrative Agent” is defined in the preamble.



     “Subordinated Credit Agreement” is defined in the second recital.



     “Subordinated Lender” and “Subordinated Lenders” is defined in the
second recital.



     “Subordinated Loan Documents” means the Subordinated Credit Agreement, the other Loan
Documents (as defined in the Subordinated Credit Agreement) and each other agreement, document and
instrument providing for or evidencing any Subordinated Obligation, and any other agreement,
document or instrument executed or delivered at any time in connection with any Subordinated
Obligation, including any intercreditor or joinder agreement among holders of, replaced, extended
or renewed Subordinated Obligations, as each of the foregoing may be amended, supplemented,
restated, modified, replaced, extended or renewed from time to time.



     “Subordinated Loans” is defined in the second recital.



     “Subordinated Obligations” means all obligations (monetary or otherwise) of any
Subordinated Loan Party arising under or in connection with the Subordinated Loan Documents,
including principal, interest (including post-default interest and interest accruing after the
commencement of any Insolvency or Liquidation Proceeding, whether or not a claim for post-filing or
post-petition interest is allowed in any such proceeding), reimbursement obligations, fees,
indemnities, costs and expenses (including the reasonable fees and disbursements of counsel to the
Subordinated Administrative Agent and each Subordinated Lender required to be paid by the
Borrowers) that are owing under the Subordinated Loan Documents, in each case whether now existing
or hereafter incurred, direct or indirect, absolute or contingent, and due or to become due.



     “Subordinated Secured Parties” means, collectively, the Subordinated Administrative
Agent and the Subordinated Lenders.



     “Timber Manager” is defined in the preamble.



     “Unasserted Contingent Obligations” means obligations for taxes, costs,
indemnifications, reimbursements, damages and other liabilities in respect of which no assertion of
liability (whether oral or written) and no claim or demand for payment (whether oral or written)
has been made (and, in the case of obligations for indemnification, no notice for indemnification
has been issued by the indemnitee) at such time.



     “Wells Acquisition” is defined in the preamble.



     “Wells Management Agreement” is defined in the third recital.



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     “Wells REIT” is defined in the preamble.



     “Wells Timberland” is defined in the preamble.



     SECTION 1.2 Certain Rules of Construction. Unless otherwise specified, references in
this Agreement to any Article or Section are references to such Article or Section of this
Agreement, as the case may be. The words “herein,” “hereof” and “hereunder” and other words of
similar import refer, as the context may require, to the relevant agreement as a whole, including
all annexes, exhibits and schedules, and not to any particular section, subsection or clause
contained in such agreement, annex, exhibit or schedule. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words “including”, “includes” and “include” shall be
deemed to be followed by the words “without limitation”, and where general words are followed by a
specific listing of items, the general words shall be given their widest meaning and shall not be
limited by an enumeration of specific matters; the word “or” is not exclusive; references to
Persons include their respective successors and assigns (to the extent and only to the extent
permitted by this Agreement) or, in the case of any governmental authority, Persons succeeding to
the relevant functions of such governmental authority; all references to any law shall include any
amendments and successors of the same; all references to any agreement, instrument or document
shall refer to each such agreement, instrument or document as amended, restated, supplemented,
modified, refinanced, replaced, extended or renewed from time to time (subject to any restrictions
regarding the foregoing as may be set forth in this Agreement); and the words “asset” and
“property” shall have the same meaning and refer to tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.



ARTICLE II

REPRESENTATIONS AND WARRANTIES




     SECTION 2.1 Wells Management Agreement, etc. The Timber Manager represents and
warrants to the Senior Administrative Agent and the Subordinated Administrative Agent, as of the
date hereof, that the following are true and correct:



     (a) the Timber Manager has agreed to act as Timber Manager of the Property pursuant to the
Wells Management Agreement. The Timber Manager has delivered a true, correct and complete copy of
the Wells Management Agreement to each of the Senior Administrative Agent and the Subordinated
Administrative Agent;



     (b) the entire agreement between Timber Manager and the Loan Parties for the management of the
Property is evidenced by the Wells Management Agreement;



     (c) the Wells Management Agreement constitutes the valid and binding agreement of the Timber
Manager, enforceable in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by equitable principles;



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     (d) the Timber Manager has full authority under all state and local laws and regulations to
perform all of its obligations under the Wells Management Agreement; and



     (e) neither the Timber Manager nor Wells REIT is in default in the performance of any of its
obligations under the Wells Management Agreement and all payments and fees required to be paid by
Wells REIT to the Timber Manager thereunder have been paid to the date hereof.



     SECTION 2.2 Due Authorization, Validity, etc. (a) The Timber Manager is duly formed
and validly existing under the laws of its jurisdiction of formation; (b) the Timber Manager has
the power and authority to enter into, execute, deliver and carry out the terms of this Agreement,
all of which have been duly authorized by all proper and necessary action; (c) the execution of
this Agreement by the Timber Manager will not violate or conflict with the organizational documents
(if any) of the Timber Manager, any material agreement binding upon the Timber Manager or any law,
regulation or order or require any consent or approval which has not been obtained; and (d) this
Agreement is the legal, valid and binding obligation of the Timber Manager, enforceable against the
Timber Manager in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by equitable principles.



ARTICLE III

SUBORDINATION AND COVENANTS




     Notwithstanding the terms of the Wells Management Agreement, the Timber Manager hereby
covenants and agrees as follows:



     SECTION 3.1 Subordination of Wells Management Agreement to Liens of Lenders. The
Wells Management Agreement and all liens, rights and interests (whether choate or inchoate and
including, without limitation, all mechanic’s and materialmen’s liens under applicable law) owed,
claimed or held by the Timber Manager in and to the Property (regardless of the date, time, method,
manner or order of grant, attachment or perfection of the foregoing and notwithstanding any
provisions of the U.C.C. or other applicable law, the terms of the Senior Loan Documents or the
Subordinated Loan Documents or any defect or deficiency in, or failure to perfect, the Liens
securing the Senior Obligations or Subordinated Obligations or any other circumstance whatsoever
(including any liens securing the Senior Obligations or Subordinated Obligations being
subordinated, voided, invalidated or lapsed)) are and shall be in all respects subordinate and
inferior to the liens and security interests created or to be created for the benefit of the Senior
Administrative Agent (on behalf of the Senior Secured Parties) and securing the repayment of the
Senior Obligations and the Subordinated Obligations, respectively. In furtherance of the
foregoing, the Timber Manager hereby irrevocably appoints the Senior Administrative Agent (and,
following the Discharge of the Senior Obligations, the Subordinated Administrative Agent) its
attorney-in-fact, with full authority in the place and stead of the Timber Manager and in the name
of the Timber Manager or otherwise, to execute and deliver any document or instrument which the
Timber Manager may be reasonably required to deliver pursuant to the provisions of this Agreement.



- 6 -









 





     SECTION 3.2 No Modifications of Wells Management Agreement. Notwithstanding anything
to the contrary contained in the Wells Management Agreement, the Timber Manager shall not, without
the prior consent of the Senior Administrative Agent and the Subordinated Administrative Agent
[(such consent to not be unreasonably withheld, conditioned or delayed)], agree to amend, restate,
supplement or otherwise modify (including by consent or waiver) the terms of the Wells Management
Agreement [in any material respect].



     SECTION 3.3 Lenders’ Rights to Confirm or Terminate Timber Management Agreement.



     (a) If an Event of Default under the Senior Credit Agreement shall have occurred and be
continuing, the Senior Administrative Agent (and, following Discharge of the Senior Obligations,
the Subordinated Administrative Agent) shall have the right in its sole discretion to either (i)
terminate the Wells Management Agreement or (ii) assume all of the rights and obligations of Wells
REIT under the Wells Management Agreement.



     (b) Notwithstanding the termination of the Wells Management Agreement, none of the Senior
Secured Parties or the Subordinated Secured Parties shall be liable or responsible for the payment
of any management fees or any other amounts due under the Wells Management Agreement. On the
effective date of termination of the Wells Management Agreement, the Timber Manager shall turn over
to the Senior Administrative Agent (or, following Discharge of the Senior Obligations, the
Subordinated Administrative Agent) all books and records relating to the Property, together with
such authorizations and letters of direction addressed to tenants, suppliers, employees, banks and
other parties as the Senior Administrative Agent (or, following Discharge of the Senior
Obligations, the Subordinated Administrative Agent) may reasonably require; and the Timber Manager
shall cooperate with the Senior Administrative Agent (or, following Discharge of the Senior
Obligations, the Subordinated Administrative Agent) in the transfer of management responsibilities
to the Senior Administrative Agent (or, following Discharge of the Senior Obligations, the
Subordinated Administrative Agent) or its designee.



     (c) If the Senior Administrative Agent (or, following Discharge of the Senior Obligations, the
Subordinated Administrative Agent) elects to assume all of the rights and obligations of Wells REIT
under the Wells Management Agreement, the Timber Manager shall, subject to Section 3.7, at
the request of the Senior Administrative Agent, continue performance on behalf of the Senior
Secured Parties and Subordinated Secured Parties of all of the Timber Manager’s obligations under
the terms of the Wells Management Agreement. None of the Senior Secured Parties or the
Subordinated Secured Parties shall be liable or responsible for the payment of any management fees
or any other amounts due under the Wells Management Agreement for the period prior to the
assumption or the same by the Senior Administrative Agent or the Subordinated Agent, as the case
may be, which fees and other amounts shall be the sole responsibility of Wells REIT to pay.



     SECTION 3.4 Further Assurances. The Timber Manager agrees to (a) execute such
affidavits and certificates as the Senior Administrative Agent or the Subordinated Administrative
Agent shall reasonably require to further evidence the agreements herein contained, (b) on request
from the Senior Administrative Agent or the Subordinated Administrative Agent, furnish to the
Senior Administrative Agent or the Subordinated



- 7 -









 




Administrative Agent, as applicable, with copies of such information as Wells REIT is entitled
to receive under the Wells Management Agreement, (c) cooperate with the each of the Senior
Administrative Agent’s and the Subordinated Administrative Agent’s respective representatives in
any inspection of all or any portion of the Property as provided in the Senior Loan Documents and
the Subordinated Loan Documents, and (d) provide a simultaneous copy to the Senior Administrative
Agent and the Subordinated Administrative Agent of any default or other material notice given or
received by the Timber Manager under the Wells Management Agreement.




     SECTION 3.5 Assignment of Leases, Contracts, Rents and Profits. The Timber Manager
acknowledges that, as further security for the Senior Obligations and for the Subordinated
Obligations, the Borrowers and the other Loan Parties have executed and delivered to the Senior
Administrative Agent, on a first priority perfected security interest, and to the Subordinated
Administrative Agent, a second priority perfected security interest, in the Property, including all
amounts payable with respect thereto pursuant to certain leases, timber cutting agreements,
stumpage agreements, licenses, permits and other agreements or instruments. The Timber Manager
agrees to immediately deposit in the Revenue Account, in the form received upon the receipt
thereof, all income, rents, payments and other amounts relating to the Property held from time to
time by the Timber Manager.



     SECTION 3.6 No Joint Venture. Neither the Senior Secured Parties nor the Subordinated
Secured Parties have any obligation to the Timber Manager with respect to the Senior Loan Documents
or the Subordinated Loan Documents. The relationship of each of the Senior Secured Parties and the
Subordinated Secured Parties, on the one hand, and the Timber Manager, on the other hand, is one of
a creditor to a debtor and none of the Senior Secured Parties or the Subordinated Secured Parties
is a joint venturer or partner of the Timber Manager.



     SECTION 3.7 Lenders Not Obligated Under the Wells Management Agreement. The Timber
Manager agrees that Senior Secured Parties and the Subordinated Secured Parties shall in no event
have any liability or obligation for payment or performance in favor of the Timber Manager under
the Wells Management Agreement unless and to the extent the Senior Administrative Agent (or,
following Discharge of the Senior Obligations, the Subordinated Administrative Agent) assumes the
rights and obligations of Wells REIT under the Wells Management Agreement as provided in clause
(c) of Section 3.3, in which case the Senior Secured Parties and the Subordinated
Secured Parties agree to jointly and severally pay, as and when required by the terms of the Wells
Management Agreement, the amounts owing to the Timber Manager from and after the date of such
assumption; provided that following the Discharge of the Senior Obligations neither the
Senior Administrative Agent nor the other Senior Secured Parties shall have any continuing
obligations under this Section.



     SECTION 3.8 Timber Manager’s Waivers. All of the Senior Obligations and the
Subordinated Obligations shall be deemed to have been made, incurred and continued in material
reliance upon this Agreement, and the Timber Manager expressly waives all notice of the acceptance
by the Senior Secured Parties and the Subordinated Secured Parties. The Timber Manager agrees
that: (a) the Senior Secured Parties and the Subordinated Secured Parties have made no warranties
or representations with respect to the due execution, legality, validity, completeness or
enforceability of the Senior Loan Documents or the Subordinated Loan



- 8 -









 




Documents, or any other documents executed in connection therewith, or the collectibility of
the Senior Obligations or the Subordinated Obligations; (b) the Senior Secured Parties and the
Subordinated Secured Parties shall have no fiduciary duty to the Timber Manager under this
Agreement; (c) the Senior Secured Parties and the Subordinated Secured Parties shall be entitled to
manage and supervise their loans and other credit extensions to the Loan Parties in accordance with
their usual practices, modified from time to time as they deem appropriate under the circumstances,
without regard to the existence of any rights that the Timber Manager may now or hereafter have in
or to any of the assets of the Loan Parties; and (d) the Senior Secured Parties and the
Subordinated Secured Parties shall have no liability to the Timber Manager for, and the Timber
Manager waives any claim which it may now or hereafter have against, the Senior Secured Parties and
the Subordinated Secured Parties arising out of, any and all actions which the Senior Secured
Parties or the Subordinated Secured Parties, in good faith, take or omit to take with respect to
the Senior Obligations or the Subordinated Obligations, as the case may be, or pursuant to this
Agreement.




     SECTION 3.9 Compliance With Loan Documents. [The Timber Manager agrees that,
notwithstanding anything to the contrary contained in the Wells Management Agreement, it will take
all actions necessary or appropriate to cause the Borrowers and the other Loan Parties to comply
with the terms of the Loan Documents.] The Timber Manager confirms that it has received copies of
the Senior Loan Documents and the Subordinated Loan Documents and is fully familiar with the terms
thereof.



     SECTION 3.10 Agreement Not to Contest. The Timber Manager agrees that it will not at
any time contest the validity, perfection, priority or enforceability of the Senior Obligations,
the Senior Loan Documents, the Subordinated Obligations, the Subordinated Loan Documents or the
liens and security interests of the Senior Secured Parties or Subordinated Secured Parties in the
Collateral.



     SECTION 3.11 No Waiver of Subordination Provisions. No right of any present or future
Senior Secured Party or Subordinated Secured Party to enforce the subordination provisions provided
herein shall at any time be prejudiced or impaired in any manner by any act or failure to act on
the part of any Loan Party or the Timber Manager, by any act or failure to act by any Senior
Secured Party or Subordinated Secured Party, or by any noncompliance by any Loan Party or the
Timber Manager with the terms, provisions and covenants of this Agreement, regardless of any
knowledge thereof any Senior Secured Party or Subordinated Secured Party may have or be otherwise
charged with.



ARTICLE IV

MODIFICATION; REFINANCINGS




     SECTION 4.1 No Restrictions Regarding Modifications to Loan Documents. The Senior
Secured Parties and the Subordinated Secured Parties may at any time and from time to time without
the prior consent of the Timber Manager, without incurring liability to the Timber Manager and
without impairing or releasing the obligations of the Timber Manager under this Agreement, change
the manner or place of payment or extend, release, renew, compromise or postpone the time of
payment of or renew or alter any of the terms of the Senior Obligations and the Subordinated
Obligations, or amend, restate, supplement or otherwise



- 9 -









 




modify (including by consent or waiver) in any manner any agreement, note, guaranty or other
instrument evidencing or securing or otherwise relating to the Senior Obligations or the
Subordinated Obligations.




     SECTION 4.2 Refinancings. Upon any refinancing of the Senior Obligations or the
Subordinated Obligations, (a) the refinanced amount shall constitute the Senior Obligations and the
Subordinated Obligations, respectively, (b) the holders of the refinanced amount shall constitute
the Senior Lenders and the Subordinated Lenders, as the case may be, (c) the principal documents
governing the refinanced amount shall constitute the Senior Credit Agreement and Subordinated
Credit Agreement, as the case may be, and the documents and instruments executed in connection
therewith shall constitute the Senior Loan Documents and the Subordinated Loan Documents, as the
case may be, and (d) the Person to whom liens on the Collateral are granted to secure the
refinanced amount shall constitute the Senior Administrative Agent and Subordinated Administrative
Agent, as the case may be.



ARTICLE V

MISCELLANEOUS




     SECTION 5.1 Effectiveness; Continuing Nature of this Agreement.



     (a) This Agreement shall become effective when counterparts hereof have been duly executed and
delivered among the parties thereto. This is a continuing agreement of subordination and the
Senior Secured Parties and the Subordinated Secured Parties may continue, at any time and without
notice to the Timber Manager, to extend credit and other financial accommodations and lend monies
to or for the benefit of the Borrowers or any other Loan Party constituting Senior Obligations and
Subordinated Obligations in reliance hereof.



     (b) The terms of this Agreement, the subordination effected hereby and the rights and the
obligations of Timber Manager, the Senior Secured Parties and the Subordinated Secured Parties
arising hereunder, shall not be affected, modified or impaired in any manner or to any extent by:
(i) any amendment or modification of or supplement to the Senior Loan Documents or Subordinated
Loan Documents, or any refinancing thereof; (ii) the validity or enforceability of any of such
documents; or (iii) any exercise or non-exercise of any right, power or remedy under or in respect
of the Senior Obligations, the Subordinated Obligations or the Junior Obligations. The Timber
Manager hereby acknowledges that the provisions of this Agreement are intended to be enforceable at
all times, whether before the commencement of, after the commencement of, in connection with or
premised on the occurrence of a Insolvency or Liquidation Proceeding.



     SECTION 5.2 Modification. Any modification or waiver of any provision of this
Agreement, or any consent to any departure by any party from the terms hereof, shall not be
effective in any event unless the same is in writing and signed by the Senior Administrative Agent,
the Subordinated Administrative Agent, the Timber Manager and each Loan Party, and then such
modification, waiver or consent shall be effective only in the specific instance and for the
specific purpose given. Any notice to or demand on any party hereto in any event not specifically
required hereunder shall not entitle the party receiving such notice or demand to any other or
further notice or demand in the same, similar or other circumstances unless specifically required
hereunder.



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     SECTION 5.3 Notices. Unless otherwise specifically provided herein, any notice or
other communication delivered under this Agreement shall be in writing addressed to the respective
party as set forth below and may be personally served, telecopied or sent by overnight courier
service or certified or registered United States mail and shall be deemed to have been given (a) if
delivered in person, when delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a business day before 5:00 p.m. (New York City time) or, if not, on the next
succeeding business day; (c) if delivered by overnight courier, one business day after delivery to
such courier properly addressed; or (d) if by United States mail, four business days after deposit
in the United States mail, postage prepaid and properly addressed.



     Notices shall be addressed as follows:


If to the Senior Administrative Agent:



CoBank, ACB, as Administrative Agent

5500 S. Quebec Street

Greenwood Village, Colorado 80111

Attention: Syndications Coordinator, Corporate Finance Division

Telecopier No. 303-694-5830



If to the Subordinated Administrative Agent:



Wachovia Bank, National Association, as Administrative Agent

[                    ]

[                    ]

Attention: [                    ]

Telecopier No. [                    ]



If to the Timber Manager:



Wells Timberland Management Organization, LLC

6200 The Corners Parkway

Norcross, Georgia 30092

Attention: Don Warden, Manager of Timberland Operations

Telecopier No. 770-243-8286



If to Wells REIT or any other Loan Party:



c/o Wells Timberland REIT, Inc.

6200 The Corners Parkway

Norcross, Georgia 30092

Attention: Don Warden, Manager of Timberland Operations

Telecopier No.: 770-243-8286



or in any case, to such other address as the party addressed shall have previously designated by
notice to the serving party, given in accordance with this Section.




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     SECTION 5.4 Information Concerning Financial Condition of the Borrowers and the Other Loan
Parties. The Senior Secured Parties and the Subordinated Secured Parties, on the one hand, and
the Timber Manager, on the other hand, shall each be responsible for keeping themselves informed of
(a) the financial condition of the Borrowers and the other Loan Parties and all endorsers and/or
guarantors of the Senior Obligations or the Subordinated Obligations and (b) all other
circumstances bearing upon the risk of nonpayment of the Senior Obligations or the Subordinated
Obligations. The Senior Secured Parties and the Subordinated Secured Parties shall have no duty to
advise the Timber Manager of information known to them regarding such condition or any such
circumstances or otherwise. In the event the Senior Secured Parties and the Subordinated Secured
Parties, in their sole discretion, undertake at any time or from time to time to provide any such
information to the Timber Manager, they shall be under no obligation (i) to make, and the Senior
Secured Parties and the Subordinated Secured Parties shall not make, any express or implied
representation or warranty, including with respect to the accuracy, completeness, truthfulness or
validity of any such information so provided, (ii) to provide any additional information or to
provide any such information on any subsequent occasion, (iii) to undertake any investigation or
(iv) to disclose any information which, pursuant to accepted or reasonable commercial finance
practices, such party wishes to maintain confidential or is otherwise required to maintain
confidential.



     SECTION 5.5 Successors and Assigns. This Agreement shall inure to the benefit of, and
shall be binding upon, the respective successors and assigns of the Senior Secured Parties, the
Subordinated Secured Parties, the Timber Manager and each Loan Party. The Senior Secured Parties
and the Subordinated Secured Parties may, from time to time, without notice to the Timber Manager,
assign or transfer any or all of the Senior Obligations or Subordinated Obligations, as the case
may be, or any interest therein to any Person and, notwithstanding any such assignment or transfer,
or any subsequent assignment or transfer, the Senior Obligations and Subordinated Obligations, as
the case may be, shall, subject to the terms hereof, be and remain Senior Obligations and
Subordinated Obligations, as the case may be, for purposes of this Agreement, and every permitted
assignee or transferee of any of the Senior Obligations and Subordinated Obligations, as the case
may be, of any interest therein shall, to the extent of the interest of such permitted assignee or
transferee in the Senior Obligations and Subordinated Obligations, as the case may be, be entitled
to rely upon and be the third party beneficiary of the subordination provided under this Agreement
and shall be entitled to enforce the terms and provisions hereof to the same extent as if such
assignee or transferee were initially a party hereto.



     SECTION 5.6 Relative Rights. This Agreement shall define the relative rights of the
Senior Secured Parties and the Subordinated Secured Parties, on the one hand, and the Timber
Manager, on the other hand. Nothing in this Agreement shall (a) impair, as among the Senior
Secured Parties and the Subordinated Secured Parties, on the one hand, and as among the Loan
Parties and the Timber Manager, on the other hand, the obligations of the Loan Parties with respect
to the payment of the Senior Obligations and the Subordinated Obligations in accordance with their
respective terms or (b) affect the relative rights of the Senior Secured Parties or the
Subordinated Secured Parties with respect to any other creditors of the Loan Parties.



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     SECTION 5.7 Conflict. In the event of any conflict between any term, covenant or
condition of this Agreement and any term, covenant or condition of the Wells Management Agreement,
on the one hand, and the terms of this Agreement, on the other hand, the provisions of this
Agreement shall control and govern.



     SECTION 5.8 Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this Agreement or any
provisions hereof.



     SECTION 5.9 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument.



     SECTION 5.10 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions
of this Agreement or affecting the validity or enforceability of such provision in any other
jurisdiction.



     SECTION 5.11 Continuation of Subordination; Termination of Agreement. This Agreement
shall remain in full force and effect until the Discharge of the Senior Obligations and Discharge
of the Subordinated Obligations, at which date this Agreement shall terminate without further
action on the part of the parties hereto.



     SECTION 5.12 Applicable Law; Entire Agreement. THIS AGREEMENT SHALL EACH BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK. This Agreement constitutes the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior agreements,
written or oral, with respect thereto.



     SECTION 5.13 Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PARTIES HERETO SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE FEDERAL OR STATE COURTS OF NEW YORK LOCATED IN THE BOROUGH OF
MANHATTAN. EACH OF THE TIMBER MANAGER AND THE LOAN PARTIES HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT
TO THE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
EACH OF THE TIMBER MANAGER AND THE LOAN PARTIES FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
NEW YORK. EACH OF THE TIMBER MANAGER AND THE LOAN PARTIES HEREBY EXPRESSLY AND IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO
THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT



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IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. TO THE EXTENT THAT EACH OF THE TIMBER MANAGER OR ANY LOAN PARTY HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH OF THE TIMBER MANAGER AND THE LOAN PARTIES
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.




     SECTION 5.14 Waiver of Jury Trial. EACH OR THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF SUCH
PARTY. THE TIMBER MANAGER AND EACH LOAN PARTY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE ADMINISTRATIVE AGENT ENTERING INTO THIS AGREEMENT.



     SECTION 5.15 Action by Parties Hereto. Any consent, approval, waiver, request, notice
or other action permitted or required by this Agreement to be provided by the Senior Secured
Parties or Subordinated Secured Parties shall be deemed so provided if evidenced in a writing
signed by the Senior Administrative Agent or the Subordinated Administrative Agent, and the Timber
Manager shall be entitled to rely upon any such writing as valid, binding and enforceable against
the Senior Secured Parties and Subordinated Secured Parties, as the case may be, without any
requirement for verification of Senior Administrative Agent’s or the Subordinated Administrative
Agent’s authority therefor.



     SECTION 5.16 Cumulative Rights. Each and every right, remedy and power granted to the
Senior Administrative Agent and the Subordinated Administrative Agent hereunder shall be cumulative
and in addition to any other right, remedy or power specifically granted herein, in the Senior Loan
Documents or Subordinated Loan Documents, as the case maybe, or now or hereafter existing in
equity, at law, by virtue of statute or otherwise, and may be exercised by the Senior
Administrative Agent and the Subordinated Administrative Agent, from time to time, concurrently or
independently and as often and in such order as the Senior Administrative Agent or the Subordinated
Administrative Agent in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver thereof or affect the
Senior Administrative Agent’s and the Subordinated Administrative Agent’s right thereafter to
exercise the same, and any single or partial exercise of any such right, remedy or power shall not
preclude any other or further exercise thereof or the exercise of any other right, remedy or power,
and no such failure, delay, abandonment or single or partial exercise of the Senior Administrative
Agent’s and the Subordinated Administrative



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Agent’s rights hereunder shall be deemed to establish a custom or course of dealing or
performance among the parties hereto.




     SECTION 5.17 Specific Enforcement. THIS AGREEMENT IS INTENDED FOR THE BENEFIT OF, AND
SHALL BE ENFORCEABLE DIRECTLY BY, THE SENIOR ADMINISTRATIVE AGENT, ON BEHALF OF THE SENIOR SECURED
PARTIES, AND THE SUBORDINATED ADMINISTRATIVE AGENT, ON BEHALF OF THE SUBORDINATED SECURED PARTIES.
THE TIMBER MANAGER ACKNOWLEDGES AND AGREES THAT THE TERMS OF THIS AGREEMENT IS A MATERIAL
INDUCEMENT TO THE SENIOR SECURED PARTIES AND THE SUBORDINATED SECURED PARTIES TO MAKE THE SENIOR
OBLIGATIONS AND THE SUBORDINATED OBLIGATIONS, AS THE CASE MAY BE, AVAILABLE TO THE LOAN PARTIES,
THAT THE SENIOR SECURED PARTIES AND THE SUBORDINATED SECURED PARTIES WOULD NOT HAVE MADE THE SENIOR
OBLIGATIONS AND THE SUBORDINATED OBLIGATIONS, AS THE CASE MAY BE, AVAILABLE TO THE LOAN PARTIES
WITHOUT THE BENEFIT OF THE PROVISIONS CONTAINED IN THIS AGREEMENT, AND THAT THE TIMBER MANAGER IS
RECEIVING SUBSTANTIAL BENEFITS AS A RESULT OF THE SENIOR SECURED PARTIES AND THE SUBORDINATED
SECURED PARTIES MAKING THE SENIOR OBLIGATIONS AND THE SUBORDINATED OBLIGATIONS, AS THE CASE MAY BE,
AVAILABLE TO THE LOAN PARTIES. ACCORDINGLY, THE SENIOR ADMINISTRATIVE AGENT, ON BEHALF OF THE
SENIOR SECURED PARTIES, AND THE SUBORDINATED ADMINISTRATIVE AGENT, ON BEHALF OF THE SUBORDINATED
SECURED PARTIES, IS HEREBY AUTHORIZED TO DEMAND SPECIFIC PERFORMANCE OF THE PROVISIONS OF THIS
AGREEMENT AT ANY TIME WHEN THE TIMBER MANAGER SHALL HAVE FAILED TO COMPLY WITH ANY OF SUCH
PROVISIONS APPLICABLE TO IT. THE TIMBER MANAGER HEREBY IRREVOCABLY WAIVES ANY DEFENSE BASED ON THE
ADEQUACY OF A REMEDY AT LAW THAT MIGHT BE ASSERTED AS A BAR TO SUCH REMEDY OF SPECIFIC PERFORMANCE,
IT BEING AGREED THAT THE SENIOR SECURED PARTIES AND THE SUBORDINATED SECURED PARTIES WILL SUFFER
IRREPARABLE HARM IF THE TERMS OF THIS AGREEMENT ARE NOT STRICTLY ENFORCED IN ACCORDANCE WITH ITS
TERMS.



     SECTION 5.18 Effectiveness During Insolvency or Liquidation Proceeding. The
provisions of this Agreement shall continue in full force and effect notwithstanding any Insolvency
or Liquidation Proceeding.



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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
duly authorized representatives, as of the day and year first above written.



	 	 	 	 	 
	 	COBANK, ACB, as Senior Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WACHOVIA BANK, NATIONAL ASSOCIATION, 

as Subordinated
Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WELLS TIMBERLAND MANAGEMENT ORGANIZATION, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	LOAN PARTIES




TIMBERLANDS II, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Timber Manager Subordination Agreement

Signature Page




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	 	WELLS TIMBERLAND ACQUISITION, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WELLS TIMBERLAND REIT, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WELLS TIMBERLAND TRS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WELLS TRS HARVESTING OPERATIONS, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Timber Manager Subordination Agreement

Signature Page





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