Document:

Exhibit 10.2

 

THIRD
AMENDED AND RESTATED PROPERTY MANAGEMENT AND LEASING AGREEMENT

 

This THIRD AMENDED AND RESTATED PROPERTY MANAGEMENT AND LEASING AGREEMENT
(this “Management Agreement”) is made and entered into as of the 20th
day of March, 2006, by and among BEHRINGER HARVARD REIT I, INC., a
Maryland corporation (“BH REIT”), BEHRINGER HARVARD OPERATING PARTNERSHIP I LP,
a Texas limited partnership (“BH OP”), and HPT MANAGEMENT SERVICES LP,
Texas limited partnership (the “Manager”).

 

WHEREAS, BH OP was organized
to acquire, own, operate, lease and manage real estate properties on behalf of
BH REIT; and

 

WHEREAS, BH OP and
BH REIT and Manager previously entered into that certain Property
Management and Leasing Agreement dated February 14, 2003 as amended and
restated by the Amended and Restated Property Management and Leasing Agreement
dated June 2, 2003 and the Second Amended and Restated Property Management
and Leasing Agreement dated February 11, 2005 (the “Original Management
Agreement”); and

 

WHEREAS, BH REIT intends to continue to raise money
from the sale of its common stock to be used, net of payment of certain
offering costs and expenses, for investment in the acquisition or construction
of income-producing real estate and other real estate-related investments
(including the making or purchase of mortgage loans), some or all of which are
to be acquired and held by Owner (as hereinafter defined) on behalf of
BH REIT; and

 

WHEREAS, Owner intends to continue to retain Manager
to manage and coordinate the leasing of certain of the real estate properties
acquired by Owner under the terms and conditions set forth in this Management
Agreement; and

 

WHEREAS, the parties desire to amend and restate the
Original Management Agreement in its entirety ion accordance with the terms and
provisions hereof;

 

NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
do hereby agree, as follows:

 

ARTICLE I

 

DEFINITIONS

 

Except as otherwise specified or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Management Agreement, and the definitions of such terms
are equally applicable both to the singular and plural forms thereof:

 

1.1                                 “Affiliate”
means, with respect to any Person, (i) any
Person directly or indirectly owning, controlling or holding, with the power to
vote, 10% or more of the outstanding voting securities of such other Person; (ii) any
Person 10% or more of whose outstanding voting securities are directly or
indirectly owned, controlled or held, with the power to vote, by such other
Person; (iii) any Person directly or indirectly controlling, controlled by
or under common control with such other Person; (iv) any executive
officer, director, trustee or general partner of such other Person; and (v) any
legal entity for which such Person acts as an executive officer, director,
trustee or general partner.

 

 

1.2                                 “Gross Revenues” means all amounts actually
collected as rents or other charges for the use and occupancy of the
Properties, but shall exclude interest and other investment income of Owner and
proceeds received by Owner for a sale, exchange, condemnation, eminent domain
taking, casualty or other disposition of assets of Owner.

 

1.3                                 “Improvements” means buildings, structures,
equipment from time to time located on the Properties and all parking and
common areas located on the Properties.

 

1.4                                 “Intellectual Property Rights” means all
rights, titles and interests, whether foreign or domestic, in and to any and
all trade secrets, confidential information rights, patents, invention rights,
copyrights, service marks, trademarks, know-how, or similar intellectual
property rights and all applications and rights to apply for such rights, as
well as any and all moral rights, rights of privacy, publicity and similar
rights and license rights of any type under the laws or regulations of any
governmental, regulatory, or judicial authority, foreign or domestic and all
renewals and extensions thereof.

 

1.5                                 “Lease” means, unless the context otherwise
requires, any lease or sublease made by Owner as landlord or by its
predecessor.

 

1.6                                 “Management Fees” has the meaning set forth
in Section 5.1 hereof.

 

1.7                                 “Owner” means BH REIT, BH OP and any
joint venture, limited liability company or other Affiliate of BH REIT or
BH OP that owns, in whole or in part, on behalf of BH REIT, any
Properties.

 

1.8                                 “Person” means an individual, corporation,
association, business trust, estate, trust, partnership, limited liability
company or other legal entity.

 

1.9                                 “Properties” means all real estate properties
owned by Owner and all tracts as yet unspecified but to be acquired by Owner
containing income-producing improvements or on which Owner will construct
income-producing improvements.

 

1.10                           “Proprietary Properties” means all modeling algorithms, tools,
computer programs, know-how, methodologies, processes, technologies, ideas,
concepts, skills, routines, subroutines, operating instructions and other
materials and aides used in performing the duties set forth in Article 2
that relate to management advice, services and techniques regarding current and
potential Properties, and all modifications, enhancements and derivative works
of the foregoing.

 

ARTICLE II

 

APPOINTMENT OF MANAGER; SERVICES TO BE PERFORMED

 

2.1                                 Appointment of Manager. Owner hereby engages and retains Manager as
the manager and as tenant coordinating agent of the Properties, and Manager
hereby accepts such appointment on the terms and conditions hereinafter set
forth; it being understood that this Management Agreement shall cause Manager
to be, at law, Owner’s agent upon the terms contained herein.

 

2.2                                 General Duties. Manager shall devote its best efforts to
performing its duties hereunder to manage, operate, maintain and lease the
Properties in a diligent, careful and vigilant manner. The services of Manager
are to be of scope and quality not less than those generally performed by
professional property managers of other similar properties in the area. Manager
shall make available to Owner the full

 

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benefit
of the judgment, experience and advice of the members of Manager’s organization
and staff with respect to the policies to be pursued by Owner relating to the
operation and leasing of the Properties.

 

2.3                                 Specific Duties. Manager’s duties include the following:

 

(a)                                  Lease
Obligations. Manager shall perform all duties of the landlord under
all Leases insofar as such duties relate to operation, maintenance, and
day-to-day management. Manager shall also provide or cause to be provided, at
Owner’s expense, all services normally provided to tenants of like premises,
including where applicable and without limitation, gas, electricity or other
utilities required to be furnished to tenants under Leases, normal repairs and
maintenance, and cleaning, and janitorial service. Manager shall arrange for
and supervise the performance of all installations and improvements in space
leased to any tenant that are either expressly required under the terms of the
lease of such space or that are customarily provided to tenants.

 

(b)                                 Maintenance.
Manager shall cause the Properties to be maintained in the same manner as
similar properties in the area. Manager’s duties and supervision in this
respect shall include, without limitation, cleaning of the interior and the
exterior of the Improvements and the public common areas on the Properties and
the making and supervision of repair, alterations, and decoration of the
Improvements, subject to and in strict compliance with this Management
Agreement and the Leases. Construction activities undertaken by Manager, if
any, will be limited to activities related to the management, operation,
maintenance, and leasing of the Property (e.g., repairs, renovations, and
leasehold improvements).

 

(c)                                  Leasing
Functions. Manager shall coordinate the leasing of the Properties and shall
negotiate and use its best efforts to secure executed Leases from qualified
tenants, and to execute same on behalf of Owner, if requested, for available
space in the Properties, such Leases to be in form and on terms approved
by Owner and Manager, and to bring about complete leasing of the Properties. Manager
shall be responsible for the hiring of all leasing agents, as necessary for the
leasing of the Properties, and to otherwise oversee and manage the leasing
process on behalf of Owner.

 

(d)                                 Notice
of Violations. Manager shall forward to Owner promptly upon receipt all
notices of violation or other notices from any governmental authority, and
board of fire underwriters or any insurance company, and shall make such
recommendations regarding compliance with such notice as shall be appropriate.

 

(e)                                  Personnel.
Any personnel hired by Manager to maintain, operate and lease the Property
shall be the employees or independent contractors of Manager and not of Owner
of such Property, BH OP or BH REIT. Manager shall use due care in the
selection and supervision of such employees or independent contractors. Manager
shall be responsible for the preparation of and shall timely file all payroll
tax reports and timely make payments of all withholding and other payroll taxes
with respect to each employee.

 

(f)                                    Utilities
and Supplies. Manager shall enter into or renew contracts for electricity,
gas, steam, landscaping, fuel, oil, maintenance and other services as are
customarily furnished or rendered in connection with the operation of similar
rental property in the area.

 

(g)                                 Expenses.
Manager shall analyze all bills received for services, work and supplies in
connection with maintaining and operating the Properties, pay all such bills
when due, and, if requested by Owner, pay, when due, utility and water charges,
sewer rent and assessments, and any other amount payable in respect to the
Properties. All bills shall be paid by Manager

 

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within the time required to obtain discounts, if any. Owner may from
time to time request that Manager forward certain bills to Owner promptly after
receipt, and Manager shall comply with any such request. Manager shall pay all
bills, assessments, real property taxes, insurance premiums and any other
amount payable in respect to the Properties out of the Account (as hereinafter
defined). All expenses shall be billed at net cost (i.e., less all rebates,
commissions, discounts and allowances, however designed).

 

(h)                                 Monies
Collected. Manager shall timely collect all rent and other monies, in the form of
a check or money order, from tenants and any sums otherwise due Owner with
respect to the Properties in the ordinary course of business. Owner authorizes
Manager to request, demand, collect and provide receipt for all such rent and
other monies and to institute legal proceedings in the name of Owner for the
collection thereof and for the dispossession of any tenant in default under its
Lease.

 

(i)                                     Banking
Accommodations. Manager shall establish and maintain a separate checking
account (the “Account”) for funds relating to the Properties. All monies
deposited from time to time in the Account shall be deemed to be trust funds
and shall be and remain the property of Owner and shall be withdrawn and
disbursed by Manager for the account of Owner only as expressly permitted by
this Management Agreement for the purposes of performing the obligations of
Manager hereunder. No monies collected by Manager on Owner’s behalf shall be
commingled with funds of Manager. The Account shall be maintained, and monies
shall be deposited therein and withdrawn therefrom, in accordance with the
following:

 

(i)             All sums received from rents
and other income from the Properties shall be promptly deposited by Manager in
the Account. Manager shall have the right to designate two or more persons who
shall be authorized to draw against the Account, but only for purposes
authorized by this Management Agreement.

 

(ii)          All sums due to Manager
hereunder, whether for compensation, reimbursement for expenditures, or
otherwise, as herein provided, shall be a charge against the operating revenues
of the Properties and shall be paid and/or withdrawn by Manager from the
Account prior to the making of any other disbursements therefrom.

 

(iii)       By the 15th day
after the end of each month, Manager shall forward to Owner all monies
contained in the Account other than a reserve of $5,000 and any other amounts
otherwise provided in the budget, which shall remain in the Account.

 

(j)                                     Ownership
Agreements. Manager has received copies of (and will be provided with
copies of future) Articles of Incorporation, Agreements of Limited Partnership,
Joint Venture Partnership Agreements and Operating Agreements, each as may be
amended from time to time, of Owner, as applicable (the “Ownership Agreements”)
and is familiar with the terms thereof. Manager shall use reasonable care to
avoid any act or omission that, in the performance of its duties hereunder,
shall in any way conflict with the terms of Ownership Agreements.

 

(k)                                  Signs.
Manager shall place and remove, or cause to be placed and removed, such signs
upon the Properties as Manager deems appropriate, subject, however, to the
terms and conditions of the Leases and to any applicable ordinances and
regulations.

 

2.4                                 Approval of Leases, Contracts, Etc. In fulfilling its duties to Owner, Manager may and
hereby is authorized to enter into any leases, contracts or agreements on
behalf of Owner in the ordinary course of the management, operation,
maintenance and leasing of the Property.

 

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2.5                                 Accounting, Records and Reports.

 

(a)                                  Records.
Manager shall maintain all office records and books of account and shall record
therein, and keep copies of, each invoice received from services, work and
supplies ordered in connection with the maintenance and operation of the
Properties. Such records shall be maintained on a double entry basis. Owner and
persons designated by Owner shall at all reasonable time have access to and the
right to audit and make independent examinations of such records, books and
accounts and all vouchers, files and all other material pertaining to the
Properties and this Management Agreement, all of which Manager agrees to keep
safe, available and separate from any records not pertaining to the Properties,
at a place recommended by Manager and approved by Owner.

 

(b)                                 Monthly
Reports. On or before the 15th day after the end of each month
during the term of this Management Agreement, Manager shall prepare and submit
to Owner the following reports and statements:

 

(i)             rental collection record;

 

(ii)          monthly operating statement;

 

(iii)       copy of cash disbursements
ledger entries for such period, if requested;

 

(iv)      copy of cash receipts ledger
entries for such period, if requested;

 

(v)         the original copies of all
contracts entered into by Manager on behalf of Owner during such period, if
requested; and

 

(vi)      copy of ledger entries for
such period relating to security deposits maintained by Manager, if requested.

 

(c)                                  Budgets
and Leasing Plans. Not later than November 15 of each calendar year,
Manager shall prepare and submit to Owner for its approval an operating budget
and a marketing and leasing plan on each Property for the calendar year
immediately following such submission. In connection with any acquisition of a
Property by Owner, Manager shall prepare a budget and marketing and leasing
plan for the remainder of the calendar year. The budget and marketing and
leasing plan shall be in the form of the budget and plan approved by Owner
prior to the date thereof. As often as reasonably necessary during the period
covered by any such budget, Manager may submit to Owner for its approval
an updated budget or plan incorporating such changes as shall be necessary to
reflect cost over-runs and the like during such period. If Owner does not
disapprove any such budget within 30 days after receipt thereof by Owner, such
budget shall be deemed approved. If Owner shall disapprove any such budget or
plan, it shall so notify Manager within said 30-day period and explain the
reasons therefor. If Owner disapproves of any budget or plan, Manager shall
submit a revised budget or plan, as applicable, within 10 (ten) days of receipt
of the notice of disapproval, and Owner shall have 10 (ten) days to provide
notice to Manager if it disapproves of any such revised budget or plan. Manager
will not incur any costs other than those estimated in any budget except for:

 

(i)             tenant improvements and real
estate commissions required under a Lease;

 

(ii)          maintenance or repair costs
under $5,000 per Property;

 

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(iii)       costs incurred in emergency
situations in which action is immediately necessary for the preservation or
safety of the Property, or for the safety of occupants or other persons (or to
avoid the suspension of any necessary service of the Property);

 

(iv)      expenditures for real estate
taxes and assessment; and

 

(v)         maintenance supplies calling
for an aggregate purchase price less than $25,000 per annum for all Properties.

 

Budgets prepared by Manager shall be for planning and
informational purposes only, and Manager shall have no liability to Owner for
any failure to meet any such budget. However, Manager will use its best efforts
to operate within the approved budget.

 

(d)                                 Legal
Requirements. Manager shall execute and file when due all forms, reports,
and returns required by law relating to the employment of its personnel. Manager
shall be responsible for notifying Owner in the event it receives notice that
any Improvement on a Property or any equipment therein does not comply with the
requirements of any statute, ordinance, law or regulation of any governmental
body or of any public authority or official thereof having or claiming to have
jurisdiction thereover. Manager shall promptly forward to Owner any complaints,
warnings, notices or summonses received by it relating to such matters. Owner
represents that to the best of its knowledge each of its Properties and any
equipment thereon will upon acquisition by Owner comply with all such
requirements. Owner authorizes Manager to disclose the ownership of the
Property by Owner to any such officials. Owner agrees to indemnify, protect,
defend, save and hold Manager and its stockholders, officers, directors,
employees, managers, successors and assigns (collectively, the “Indemnified
Parties”) harmless of and from any and all Losses (as defined in Section 3.5(a) hereof)
that may be imposed on them or any or all of them by reason of the failure
of Owner to correct any present or future violation or alleged violation of any
and all present or future laws, ordinances, statutes, or regulations of any
public authority or official thereof, having or claiming to have jurisdiction
thereover, of which it has actual notice.

 

2.6                                 Guaranty
of Deposits. Should Owner acquire real property from Behringer Development
Company LP, a Texas limited partnership (“Behringer Development”), Manager
hereby guarantees the full, prompt and unconditional refund of any earnest
money deposit paid by Owner to Behringer Development should Owner be entitled
to such refund as a result of (i) the failure of Behringer Development to
develop the property, (ii) the failure of all or a specified portion of
the pre-leased tenants to take possession under their leases for any reason, or
(iii) the inability of Owner to pay the full purchase price at closing.

 

ARTICLE III

 

AUTHORITY GRANTED TO MANAGER AND CERTAIN OWNER
OBLIGATIONS

 

3.1                                 Authority As To Tenants, Etc. Owner agrees and does hereby give Manager the
following exclusive authority and powers (all of which shall be exercised
either in the name of Manager, as Manager for Owner, or in the name or Owner
entered into by Manager as Owner’s authorized agent, and Owner shall assume all
expenses in connection with such matters):

 

(a)                                  to
advertise each Property or any part thereof and to display signs thereon,
as permitted by law;

 

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(b)                                 to
lease the Properties to tenants;

 

(c)                                  to
pay all expenses of leasing such Property, including but not limited to,
newspaper and other advertising, signage, banners, brochures, referral
commissions, leasing commissions, finder’s fees and salaries, bonuses and other
compensation of leasing personnel responsible for the leasing of the Property;

 

(d)                                 to
cause references of prospective tenants to be investigated, it being understood
and agreed by the parties hereto that Manager does not guarantee the
creditworthiness or collectibility of accounts receivable from tenants, users
or lessees; and to negotiate new Leases and renewals and cancellations of
existing Leases that shall be subject to Manager obtaining Owner’s approval;

 

(e)                                  to
collect from tenants all or any of the following: a late rent administrative
charge, a non-negotiable check charge, credit report fee, a subleasing
administrative charge and/or broker’s commission; and Manager need not account
for such charges and/or commission to Owner;

 

(f)                                    to
terminate tenancies and to sign and serve in the name of Owner of each Property
such notices as are deemed necessary by Manager;

 

(i)             to institute and prosecute
actions to evict tenants and to recover possession of the Property or portions
thereof;

 

(ii)          with Owner’s authorization,
to sue for and in the name of Owner and recover rent and other sums due; and to
settle, compromise, and release such actions or suits, or reinstate such
tenancies. All expenses of litigation including, but not limited to, attorneys’
fees, filing fees, and court costs that Manager shall incur in connection with
the collecting of rent and other sums, or to recover possession of any Property
or any portion thereof, shall be deemed to be an operational expense of the
Property. Manager and Owner shall concur on the selection of the attorneys to
handle such litigation.

 

3.2                                 Operational
Authority. Owner agrees and does hereby give Manager the following
exclusive authority and powers (all of which shall be exercised either in the
name of Manager, as Manager for Owner, or in the name or Owner entered into by
Manager as Owner’s authorized agent, and Owner shall assume all expenses in
connection with such matters):

 

(a)                                  to
hire, supervise, discharge, and pay all labor required for the operation and
maintenance of each Property including but not limited to on-site personnel,
managers, assistant managers, leasing consultants, engineers, janitors,
maintenance supervisors and other employees required for the operation and
maintenance of the Property, including personnel spending a portion of their
working hours (to be charged on a pro rata basis) at the Property. All expenses
of such employment shall be deemed operational expenses of the Property.

 

(b)                                 to
make or cause to be made all ordinary repairs and replacements necessary to
preserve each Property in its present condition and for the operating
efficiency thereof and all alterations required to comply with lease
requirements, and to decorate the Property;

 

(c)                                  to
negotiate and enter into, as Manager of the Property, contracts for all items
on budgets that have been approved by Owner, any emergency services or repairs
for items not exceeding $5,000, appropriate service agreements and labor
agreements for normal operation of

 

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the Property, which have terms not to exceed three years, and agreements
for all budgeted maintenance, minor alterations, and utility services,
including, but not limited to, electricity, gas, fuel, water, telephone, window
washing, scavenger service, landscaping, snow removal, pest exterminating,
decorating and legal services in connection with the Leases and service
agreements relating to the Property, and other services or such of them as
Manager may consider appropriate; and

 

(d)                                 to
purchase supplies and pay all bills.

 

Manager shall use its
best efforts to obtain the foregoing services and utilities for the Property
under terms that are as cost-effective and otherwise favorable to Manager as
possible for the quality of services and utilities required. Owner hereby
appoints Manager as Owner’s authorized Manager for the purpose of executing, as
Manager for said Owner, all such contracts. In addition, Owner agrees to
specifically assume in writing all obligations under all such contracts so
entered into by Manager, on behalf of Owner of the Property, upon the
termination of this Agreement, and Owner shall indemnify, protect, save, defend
and hold Manager and the other Indemnified Parties harmless from and against
any and all Losses resulting from, arising out of or in any way related to such
contracts and that relate to or concern matters occurring after termination of
this Agreement, but excluding matters arising out of Manager’s willful
misconduct, gross negligence and/or unlawful acts. Manager shall secure the
approval of, and execution of appropriate contracts by, Owner for any
non-budgeted and non-emergency/contingency capital items, alterations or other
expenditures in excess of $5,000 for any one item, securing for each item at
least three written bids, if practicable, or providing evidence satisfactory to
Owner that the contract amount is lower than industry standard pricing, from
responsible contractors. Manager shall have the right from time to time during
the term hereof, to contract with and make purchases from Affiliates of
Manager, provided that contract rates and prices are competitive with other
available sources. Manager may at any time and from time to time request
and receive the prior written authorization of Owner of the Property of any one
or more purchases or other expenditures, notwithstanding that Manager may otherwise
be authorized hereunder to make such purchases or expenditures.

 

3.3                                 Rent
and Other Collections. Owner agrees and does hereby give Manager the
exclusive authority and powers (all of which shall be exercised either in the
name of Manager, as Manager for Owner, or in the name or Owner entered into by
Manager as Owner’s authorized agent, and Owner shall assume all expenses in
connection with such matters) to collect rents and/or assessments and other
items, including but not limited to tenant payments for real estate taxes,
property liability and other insurance, damages and repairs, common area
maintenance, tax reduction fees and all other tenant reimbursements,
administrative charges, proceeds of rental interruption insurance, parking
fees, income from coin operated machines and other miscellaneous income, due or
to become due and give receipts therefor and to deposit all such Gross Revenue
collected hereunder in the Account. Manager may endorse any and all checks
received in connection with the operation of any Property and drawn to the
order of Owner, and Owner shall, upon request, furnish Manager’s depository
with an appropriate authorization for Manager to make such endorsement. Manager
shall also have the exclusive authority to collect and handle tenants’ security
deposits, including the right to apply such security deposits to unpaid rent,
and to comply, on behalf of Owner of the Property, with applicable state or
local laws concerning security deposits and interest thereon, if any. Manager shall
not be required to advance any monies for the care or management of any
Property. Owner agrees to advance all monies necessary therefor. If Manager
shall elect to advance any money in connection with a Property, Owner agrees to
reimburse Manager forthwith and hereby authorizes Manager to deduct such
advances from any monies due Owner. In connection with any insured losses or
damages relating to any Property, Manager shall have the exclusive authority to
handle all steps necessary regarding any such claim; provided that Manager will
not make any adjustments or settlements in excess of $10,000 without Owner’s
prior written consent.

 

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3.4                                 Payment of Expenses. Owner agrees and does hereby give Manager
the exclusive authority and power (all of which shall be exercised either in
the name of Manager, as Manager for Owner, or in the name or Owner entered into
by Manager as Owner’s authorized agent, and Owner shall assume all expenses in
connection with such matters) to pay all expenses of the Property from the
Gross Revenue collected in accordance with Section 3.3 above, from the
Account. It is understood that the Gross Revenue will be used first to pay the
compensation to Manager as contained in Article 5 below, then operational
expenses and then any mortgage indebtedness, including real estate tax and
insurance impounds, but only as directed by Owner in writing and only if
sufficient Gross Revenue is available for such payments. Nothing in this
Agreement shall be interpreted in such a manner as to obligate Manager to pay
from Gross Revenue, any expenses incurred by Owner prior to the commencement of
this Agreement, except to the extent Owner advances additional funds to pay
such expenses.

 

3.5                                 Certain Owner Indemnification Obligations.

 

(a)                                  On
Termination. In the event this Agreement is terminated for any reason prior
to the expiration of its original term or any renewal term, Owner shall
indemnify, protect, defend, save and hold Manager and all of the other Indemnified
Parties harmless from and against any and all claims, causes of action,
demands, suits, proceedings, loss, judgments, damage, awards, liens, fines,
costs, attorney’s fees and expenses, of every kind and nature whatsoever
(collectively, “Losses”), that may be imposed on or incurred by Manager by
reason of the willful misconduct, gross negligence and/or unlawful acts (such
unlawfulness having been adjudicated by a court of proper jurisdiction) of
Owner.

 

(b)                                 Property
Damage, Etc. Owner agrees to indemnify, defend, protect, save and hold
Manager and all of the other Indemnified Parties harmless from any and all
Losses in connection with or in any way related to the Property and from
liability for damage to the Property and injuries to or death of any person
whomsoever, and damage to property; provided, however, that such
indemnification shall not extend to any such Losses arising out of the willful
misconduct, gross negligence and/or unlawful acts (such unlawfulness having
been adjudicated by a court of proper jurisdiction) of Manager or any of the
other Indemnified Parties. Manager shall not be liable for any error of
judgment or for any mistake of fact or law, or for any thing that it may do
or refrain from doing, except in cases of willful misconduct, gross negligence
and/or unlawful acts (such unlawfulness having been adjudicated by a court of
proper jurisdiction).

 

3.6                                 Environmental Matters. Owner hereby warrants and represents to
Manager that to the best of Owner’s knowledge, no Property, upon acquisition by
Owner, nor any part thereof, will be used to treat, deposit, store,
dispose of or place any hazardous substance that may subject Manager to
liability or claims under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C.A. Section 9607) or any
constitutional provision, statute, ordinance, law, or regulation of any
governmental body or of any order or ruling of any public authority or official
thereof, having or claiming to have jurisdiction thereover. Furthermore, Owner
agrees to indemnify, protect, defend, save and hold Manager and all of the
other Indemnified Parties from any and all Losses involving, concerning or in
any way related to any past, current or future allegations regarding treatment,
depositing, storage, disposal or placement by any party other than Manager of
hazardous substances on the Property.

 

3.7                                 Legal Status of Properties. Owner represents that to the best of its
knowledge each Property and any equipment thereon, when acquired by Owner, will
comply with all legal requirements and authorizes Manager to disclose the
identity of the Owner of the Property to any such officials and agrees to
indemnify, protect, defend, save and hold Manager and the other Indemnified
Parties harmless of and from any and all Losses that may be imposed on
them or any of them by reason of the failure of Owner to correct any present or
future violation or alleged violation of any and all present or future laws,
ordinances, statutes, or regulations of any public authority or official
thereof, having or claiming to have

 

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 jurisdiction thereover, of which it has actual
notice. In the event it is alleged or charged that any Improvement or any
equipment on a Property or any act or failure to act by Owner with respect to
the Property or the sale, rental, or other disposition thereof fails to comply
with, or is in violation of, any of the requirements of any constitutional
provision, statute, ordinance, law, or regulation of any governmental body or
any order or ruling of any public authority or official thereof having or
claiming to have jurisdiction thereover, and Manager, in its sole and absolute
discretion, considers that the action or position of Owner, with respect
thereto may result in damage or liability to Manager, Manager shall have
the right to cancel this Agreement at any time by written notice to Owner of
its election so to do, which cancellation shall be effective upon the service
of such notice. Such cancellation shall not release the indemnities of Owner
set forth in this Agreement and shall not terminate any liability or obligation
of Owner to Manager for any payment, reimbursement, or other sum of money then
due and payable to Manager hereunder.

 

3.8                                 Extraordinary Payments. Owner agrees to give adequate advance
written notice to Manager if Owner desires that Manager make any extraordinary
payment, out of Gross Revenue, to the extent funds are available after the
payment of Manager’s compensation as provided for herein and all operational
expenses, of mortgage indebtedness, general taxes, special assessments, or
fire, boiler or any other insurance premiums.

 

ARTICLE IV

 

EXPENSES

 

4.1                                 Owner’s Expenses. Except as otherwise specifically provided,
all costs and expenses incurred hereunder by Manager in fulfilling its duties
to Owner shall be for the account of and on behalf of Owner. Such costs and
expenses shall include the wages and salaries and other employee-related
expenses of all on-site and off-site employees of Manager who are engaged in
the operation, management, maintenance and leasing or access control of the
Properties, including taxes, insurance and benefits relating to such employees,
and legal, travel and other out-of-pocket expenses that are directly related to
the management of specific Properties. All costs and expenses for which Owner
is responsible under this Management Agreement shall be paid by Manager out of
the Account. In the event the Account does not contain sufficient funds to pay
all said expenses, Owner shall fund all sums necessary to meet such additional
costs and expenses.

 

4.2                                 Manager’s Expenses. Manager shall, out of its own funds, pay
all of its general overhead and administrative expenses.

 

ARTICLE V

 

MANAGER’S COMPENSATION

 

5.1                                 Management Fees. Commencing on the date hereof, Owner shall
pay Manager property management and leasing fees in an amount equal to three
percent (3.0%) of Gross Revenues (the “Management Fees”) on a monthly basis
from the rental income received from the Properties over the term of this
Management Agreement. In the
event that Owner contracts directly with a non-affiliated third-party property
manager in respect of a Property, Owner shall pay Manager an oversight fee
equal to one percent (1%) of Gross Revenues of such Property to compensate
Manager for transition services to coordinate and align the systems and
policies of the third-party property manager with those of Manager. Manager’s
compensation under this Section 5.1 shall apply to all renewals,
extensions or expansions of Leases that Manager has originally negotiated. In the event Manager assists with planning
and coordinating the construction of any tenant-paid finish-out or
improvements, Manager shall be entitled to

 

10

 

receive
from any such tenant an amount equal to not greater than five percent (5.0%) of
the cost of such tenant improvements.

 

5.2                                 Leasing Fees. In addition to the compensation paid to
Manager under Section 5.1 above, Manager shall be entitled to receive a
separate fee for the Leases of new tenants and renewals of Leases with existing
tenants in an amount not to exceed the fee customarily charged in arm’s length
transactions by others rendering similar services in the same geographic area
for similar properties as determined by a survey of brokers and agents in such
area.

 

5.3                                 Audit Adjustment. If any audit of the records, books or
accounts relating to the Properties discloses an overpayment or underpayment of
Management Fees, Owner or Manager shall promptly pay to the other party the
amount of such overpayment or underpayment, as the case may be. If such
audit discloses an overpayment of Management Fees for any fiscal year of more
than the correct Management Fees for such fiscal year, Manager shall bear the
cost of such audit.

 

ARTICLE VI

 

INSURANCE AND INDEMNIFICATION

 

6.1                                 Insurance to be Carried.

 

(a)                                  Manager
shall obtain and keep in full force and effect insurance on the Properties
against such hazards as Owner and Manager shall deem appropriate, but in any
event insurance sufficient to comply with the Leases and Ownership Agreements
shall be maintained. All liability policies shall provide sufficient insurance
satisfactory to both Owner and Manager and shall contain waivers of subrogation
for the benefit of Manager.

 

(b)                                 Manager
shall obtain and keep in full force and effect, in accordance with the laws of
the state in which each Property is located, employer’s liability insurance
applicable to and covering all employees of Manager at the Properties and all
persons engaged in the performance of any work required hereunder, and Manager
shall furnish Owner certificates of insurers naming Owner as a co-insured and
evidencing that such insurance is in effect. If any work under this Management
Agreement is subcontracted as permitted herein, Manager shall include in each
subcontract a provision that the subcontractor shall also furnish Owner with
such a certificate.

 

6.2                                 Insurance Expenses. Premiums and other expenses of such
insurance, as well as any applicable payments in respect of deductibles shall
be borne by Owner.

 

6.3                                 Cooperation with Insurers. Manager shall cooperate with and provide
reasonable access to the Properties to representatives of insurance companies
and insurance brokers or agents with respect to insurance that is in effect or
for which application has been made. Manager shall use its best efforts to
comply with all requirements of insurers.

 

6.4                                 Accidents and Claims. Manager shall promptly investigate and
shall report in detail to Owner all accidents, claims for damage relating to
Ownership, operation or maintenance of the Properties, and any damage or
destruction to the Properties and the estimated costs of repair thereof, and
shall prepare for approval by Owner all reports required by an insurance
company in connection with any such accident, claim, damage, or destruction. Such
reports shall be given to Owner promptly, and any report not so given within 10
(ten) days after the occurrence of any such accident, claim, damage or
destruction shall be noted in the monthly operating statement delivered to
Owner pursuant to Section 2.5(b). Manager is authorized to settle any
claim against an insurance company arising out of any policy

 

11

 

and,
in connection with such claim, to execute proofs of loss and adjustments of
loss and to collect and receipt for loss proceeds.

 

6.5                                 Indemnification. Manager shall hold Owner harmless from and
indemnify and defend Owner against any and all claims or liability for any
injury or damage to any person or property whatsoever for which Manager is
responsible occurring in, on, or about the Properties, including, without
limitation, the Improvements when such injury or damage shall be caused by the
negligence of Manager, its agents, servants, or employees, except to the extent
that Owner recovers insurance proceeds with respect to such matter. Owner will
indemnify and hold Manager harmless against all liability for injury to persons
and damage to property caused by Owner’s negligence and which did not result
from the negligence of misconduct of Manager, except to the extent Manager
recovers insurance proceeds with respect to such matter.

 

ARTICLE VII

 

TERM AND TERMINATION

 

7.1                                 Term. This Agreement shall commence on the date first above written and
shall continue until the seventh (7th) anniversary of such date and
thereafter for successive seven (7) year renewal periods, unless on or
before 30 days prior to the date last above mentioned or on or before 30 days
prior to the expiration of any such renewal period, Manager shall notify Owner
in writing that it elects to terminate this Agreement, in which case this
Agreement shall be thereby terminated on said last mentioned date. In addition,
and notwithstanding the foregoing, Owner may terminate this Agreement at
any time upon delivery of written notice to Manager not less than thirty (30)
days prior to the effective date of termination, in the event of (and only in
the event of) a showing by Owner of willful misconduct, gross negligence, or
deliberate malfeasance by Manager in the performance of Manager’s duties
hereunder. In addition, either party may terminate this Agreement
immediately upon the occurrence of any of the following:

 

(a)                                  A
decree or order is rendered by a court having jurisdiction (i) adjudging
Manager as bankrupt or insolvent, or (ii) approving as properly filed a
petition seeking reorganization, readjustment, arrangement, composition or
similar relief for Manager under the federal bankruptcy laws or any similar applicable
law or practice, or (iii) appointing a receiver or liquidator or trustee
or assignee in bankruptcy or insolvency of Manager or a substantial part of
the property of Manager, or for the winding up or liquidation of its affairs,
or

 

(b)                                 Manager
(i) institutes proceedings to be adjudicated a voluntary bankrupt or an
insolvent, (ii) consents to the filing of a bankruptcy proceeding against
it, (iii) files a petition or answer or consent seeking reorganization,
readjustment, arrangement, composition or relief under any similar applicable
law or practice, (iv) consents to the filing of any such petition, or to
the appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency for it or for a substantial part of its property,
(v) makes an assignment for the benefit of creditors, (vi) is unable
to or admits in writing its inability to pay its debts generally as they become
due unless such inability shall be the fault of the other party, or (iv) takes
corporate or other action in furtherance of any of the aforesaid purposes.

 

7.2                                 Manager’s Obligations Upon Termination. Upon the termination of this Management
Agreement, Manager shall have the following duties:

 

(a)                                  Manager
shall deliver to Owner or its designee, all books and records with respect to
the Properties.

 

12

 

(b)                                 Manager
shall transfer and assign to Owner, or its designee, all service contracts and
personal property relating to or used in the operation and maintenance of the
Properties, except personal property paid for and owned by Manager. Manager
shall also, for a period of sixty (60) days immediately following the date of
such termination, make itself available to consult with and advise Owner, or
its designee, regarding the operation, maintenance and leasing of the
Properties.

 

(c)                                  Manager
shall render to Owner an accounting of all funds of Owner in its possession and
shall deliver to Owner a statement of all Management Fees claimed to be due to
Manager and shall cause funds of Owner held by Manager relating to the
Properties to be paid to Owner or its designee.

 

7.3                                 Owner’s Obligations Upon Termination. Owner shall pay or reimburse Manager for
any sums of money due it under this Agreement for services and expenses prior to
termination of this Agreement. All provisions of this Agreement that require
Owner to have insured, or to protect, defend, save, hold and indemnify or to
reimburse Manager shall survive any expiration or termination of this Agreement
and, if Manager is or becomes involved in any claim, proceeding or litigation
by reason of having been Manager of Owner, such provisions shall apply as if
this Agreement were still in effect.

 

The parties understand and agree that Manager may withhold
funds for sixty (60) days after the end of the month in which this Agreement is
terminated to pay bills previously incurred but not yet invoiced and to close
accounts. Should the funds withheld be insufficient to meet the obligation of
Manager to pay bills previously incurred, Owner will, upon demand, advance
sufficient funds to Manager to ensure fulfillment of Manager’s obligation to do
so, within ten (10) days of receipt of notice and an itemization of such
unpaid bills.

 

ARTICLE VIII

 

MISCELLANEOUS

 

8.1                                 Notices. All notices, approvals, consents and other communications hereunder
shall be in writing, and, except when receipt is required to start the running
of a period of time, shall be deemed given when delivered in person or on the
fifth day after its mailing by either party by registered or certified United
States mail, postage prepaid and return receipt requested, to the other party,
at the addresses set forth after their respect name below or at such different
addresses as either party shall have theretofore advised the other party in
writing in accordance with this Section 8.1.

 

	
   

  	
  Owner:

  	
  BEHRINGER HARVARD OPERATING
  PARTNERSHIP I LP

  
	
   

  	
   

  	
  c/o Behringer Harvard
  REIT I, Inc.

  
	
   

  	
   

  	
  15601 Dallas Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
  Attention: Chief Legal
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Manager:

  	
  HPT MANAGEMENT SERVICES LP

  
	
   

  	
   

  	
  15601 Dallas Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
  Attention: Chief Legal
  Officer

  

 

8.2                                 Governing Law; Venue. This Management Agreement shall be governed
by and construed in accordance with the laws of the State of Texas, and any
action brought to enforce the

 

13

 

agreements
made hereunder or any action which arises out of the relationship created
hereunder shall be brought exclusively in Dallas County, Texas.

 

8.3                                 Assignment. Manager may delegate partially or in full its duties and rights
under this Management Agreement but only with the prior written consent of
Owner. Owner acknowledges and agrees that any or all of the duties of Manager
as contained herein may be delegated by Manager and performed by a person
or entity (“Submanager”) with whom Manager contracts for the purpose of
performing such duties. Owner specifically grants Manager the authority to
enter into such a contract with a Submanager; provided that, unless Owner
otherwise agrees in writing with such Submanager, Owner shall have no liability
or responsibility to any such Submanager for the payment of the Submanager’s
fee or for reimbursement to the Submanager of its expenses or to indemnify the
Submanager in any manner for any matter; and provided further that Manager
shall require such Submanager to agree, in the written agreement setting forth
the duties and obligations of such Submanager, to indemnify Owner for all
Losses incurred by Owner as a result of the willful misconduct or gross
negligence of the Submanager, except that such indemnity shall not be required
to the extent that Owner recovers issuance proceeds with respect to such matter.
Any contract entered into between Manager and a Submanager pursuant to this Section 8.3
shall be consistent with the provisions of this Agreement, except to the extent
Owner otherwise specifically agrees in writing. This Management Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.

 

8.4                                 Third Party Leasing Services. Manager acknowledges that from time to time
Owner may determine that it is in the best interests of Owner to retain a
third party to provide certain leasing services with respect to certain
Properties and to compensate such third party for such leasing services. Upon
the prior written consent of Manager, Owner shall have the authority to enter
into such a contract for leasing services with a third party (a “Third Party
Leasing Agreement”); provided that Manager shall have no liability or
responsibility to Owner for any of the duties and obligations undertaken by
such party, and Owner agrees to indemnify Manager for all Losses incurred by
Manager as a result of acts of such third party pursuant to the Third Party
Leasing Agreement. To the extent that leasing services are specifically
required to be performed by a third party pursuant to such Third Party Leasing
Agreement, Manager shall have no obligation to perform such leasing services
and Owner shall have no obligation to Manager for leasing fees pursuant to Section 5.2
hereof.

 

8.5                                 Third Party Management Services. Manager acknowledges that from time to time
Owner may acquire interests in Properties in which Owner does not control
the determination of the party that is engaged to provide property management
and other services to be provided by Manager with respect to all Properties
acquired by Owner hereunder. Upon the prior written consent of Manager, Owner
shall have the authority to acquire such non-controlling interests in
Properties for which a third party provides some or all of the services
otherwise required to be performed by Manager hereunder (a “Third Party
Management Agreement”); provided that Manager shall have no liability or
responsibility to Owner for any of the duties and obligations undertaken by
such third party, and Owner agrees to indemnify Manager for all Losses incurred
by Manager as a result of the acts of such third party pursuant to the Third
Party Management Agreement. To the extent that property management and other
services are specifically required to be performed by a third party pursuant to
such Third Party Management Agreement, Manager shall have no obligation to perform such
services and Owner shall have no obligation to Manager for compensation for
such services pursuant to Article V hereof.

 

8.6                                 No Waiver. The failure of Owner to seek redress for violation or to insist upon
the strict performance of any covenant or condition of this Management
Agreement shall not constitute a waiver thereof for the future.

 

14

 

8.7                                 Amendments. This Management Agreement may be amended only by an instrument
in writing signed by the party against whom enforcement of the amendment is
sought.

 

8.8                                 Headings. The headings of the various subdivisions of this Management Agreement
are for reference only and shall not define or limit any of the terms or
provisions hereof.

 

8.9                                 Counterparts. This Management Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Management
Agreement to produce or account for more than one such counterpart.

 

8.10                           Entire Agreement. This
Management Agreement contains the entire understanding and all agreements
between Owner and Manager respecting the management of the Properties. There
are no representations, agreements, arrangements or understandings, oral or
written, between Owner and Manager relating to the management of the Properties
that are not fully expressed herein.

 

8.11                           Disputes. If there
shall be a dispute between Owner and Manager relating to this Management
Agreement resulting in litigation, the prevailing party in such litigation
shall be entitled to recover from the other party to such litigation such
amount as the court shall fix as reasonable attorneys’ fees.

 

8.12                           Activities of Manager.
The obligations of Manager pursuant to the terms and provisions of this
Management Agreement shall not be construed to preclude Manager from engaging
in other activities or business ventures, whether or not such other activities
or ventures are in competition with Owner or the business of Owner.

 

8.13                           Independent Contractor.
Manager and Owner shall not be construed as joint venturers or partners of each
other pursuant to this Management Agreement, and neither shall have the power
to bind or obligate the other except as set forth herein. In all respects, the
status of Manger to Owner under this Agreement is that of an independent
contractor.

 

8.14                           No
Third-Party Rights. Nothing expressed or referred to in this Management
Agreement will be construed to give any Person other than the parties to this
Management Agreement any legal or equitable right, remedy or claim under or
with respect to this Management Agreement or any provision of this Management
Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to Section 8.3.

 

8.15                           Ownership of Proprietary Property. The Manager retains ownership of and reserves all Intellectual
Property Rights in the Proprietary Property. To the extent that Owner
has or obtains any claim to any right, title or interest in the Proprietary
Property, including without limitation in any suggestions, enhancements or
contributions that Owner may provide regarding the Proprietary Property,
Owner hereby assigns and transfers exclusively to the Manager all right, title
and interest, including without limitation all Intellectual Property Rights,
free and clear of any liens, encumbrances or licenses in favor of Owner or any
other party, in and to the Proprietary Property. In addition, at the Manager’s
expense, Owner will perform any acts that may be deemed desirable by
the Manager to evidence more fully the transfer of ownership of right, title
and interest in the Proprietary Property to the Manager, including but not
limited to the execution of any instruments or documents now or hereafter
requested by the Manager to perfect, defend or confirm the assignment described
herein, in a form determined by the Manager.

 

15

 

IN WITNESS WHEREOF, the parties have executed this Property Management and Leasing
Agreement as of the date first above written.

 

	
   

  	
  BEHRINGER HARVARD REIT I, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice President—Corporate

  
	
   

  	
   

  	
  Development &
  Legal

  
	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD OPERATING

  PARTNERSHIP I LP

  
	
   

  	
   

  
	
   

  	
  By: Behringer Harvard REIT I, Inc.

  
	
   

  	
         General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
  Executive Vice President—Corporate

  
	
   

  	
   

  	
   

  	
  Development &
  Legal

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HPT MANAGEMENT SERVICES LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice President—Corporate

  
	
   

  	
   

  	
  Development &
  Legal

  

 

16Exhibit
10.19

 

EXECUTION
VERSION

 

AMENDED AND RESTATED

 

FIBER SUPPLY AGREEMENT

 

by and among

 

PLUM CREEK MARKETING, INC.,

 

 

and

 

ESCANABA PAPER COMPANY

 

 

November 15, 2005

 

 

EXECUTION
VERSION

 

AMENDED AND RESTATED FIBER SUPPLY AGREEMENT

 

THIS AMENDED AND RESTATED FIBER SUPPLY AGREEMENT, (this “Agreement”)
dated as November 15, 2005, by and among PLUM CREEK MARKETING, INC., a
Delaware corporation (“Seller”) and ESCANABA PAPER COMPANY, a Delaware
corporation (“Buyer”), amends and restates the Fiber Supply Agreement, dated as
of May 2, 2005 (the “Original Agreement”), by and between ESCANABA TIMBER
LLC, a Delaware limited liability company, (“Escanaba Timber”) and Buyer.

 

RECITALS

 

WHEREAS, Escanaba Timber and Buyer entered into the Original Agreement,
pursuant to which Escanaba Timber sold and Buyer purchased wood fiber located
on certain timberlands owned by Escanaba Timber;

 

WHEREAS, Escanaba Timber and Plum Creek Timberlands, L.P., a Delaware
limited partnership (“Timberlands Owner”) have entered into a Real Estate
Purchase and Sale Agreement (the “Sale Agreement”), dated as of September 30,
2005, pursuant to which, subject to the terms and conditions thereof, Escanaba
Timber has agreed to sell and Timberlands Owner has agreed to purchase all of
the timberlands presently owned by Escanaba Timber as described in the Sale
Agreement in the Market Region (the “ET Timberlands”);

 

WHEREAS, Timberlands Owner and Seller have entered into as of the date
hereof a Stumpage Agreement pursuant to which Timberland Owner has
committed to make available to Seller from the ET Timberlands all of the wood
fiber necessary for Seller to satisfy its obligations under this Agreement;

 

WHEREAS, one of the conditions to the consummation of the purchase and
sale contemplated by the Sale Agreement is the assignment and assumption of all
of Escanaba Timber’s rights and obligations under the Original Agreement to
Seller and the amendment and restatement of the Original Agreement as provided
herein, in each case effective as of the closing of the transactions
contemplated by the Sale Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants described in
this Agreement and other good and valuable consideration the receipt and
sufficiency of which are acknowledged, Seller and Buyer hereby agree as
follows:

 

ARTICLE I

 

DEFINITIONS

 

Whenever used in this Agreement, the following terms shall have the
respective meanings given to them in the provisions thereof indicated below:

 

 

“AAA” shall have the meaning provided
in Section 10.14(a).

 

“AF&PA” shall have the meaning
provided in the definition of “Sustainable Forest Practice Standards”.

 

“Agreement” shall have the meaning provided in the opening
paragraph of this Agreement.

 

“Annual Plan” shall have the meaning
provided in Section 2.3(a).

 

“Annual Volumes” shall have the
meaning provided in Section 2.3(b).

 

“Assumed Volume” shall have the
meaning provided in Section 10.2(b).

 

“Aspen Pulpwood” means pulpwood from
aspen.

 

“Calendar Year” means a full year beginning on January 1
and continuing through December 31 thereof.

 

“Delivery Distance” means the trucking
distance between a harvest site and a Delivery Location (which delivery
location is within the Market Region), which is based on the zones described in
Article IV hereof.

 

“Delivered Product Price” shall have
the meaning provided in Section 4.1(a).

 

“Delivery Location” means a delivery
point for Products purchased hereunder or Products sold by Seller to an
unrelated third party within the Market Region.

 

“ET Timberlands” means the timberlands
owned by Escanaba Timber LLC on the date hereof and as legally described in the
Real Estate Purchase and Sale Agreement dated September 30, 2005 by and
between Escanaba Timber LLC and Plum Creek Timberlands, L.P.

 

“Force Majeure” shall have the meaning
provided in Section 2.4(a).

 

“Force Majeure Period” shall have the
meaning provided in Section 2.4(c).

 

“Hardwood Pulpwood” means pulpwood
from hardwood species of timber.

 

“Hemlock Pulpwood” means pulpwood from
hemlock.

 

“Liens” shall have the meaning
provided in Section 6.2(b).

 

“Losses” shall have the meaning
provided in Section 6.2(b).

 

“Market Region” shall mean the Upper
Peninsula of Michigan and the eleven air mile area of property commonly known
as the “Reciprocity Zone” in the State of Wisconsin. “Mill” shall mean
Buyer’s pulp and paper mill located in Escanaba, Michigan.

 

Annex A-2

 

 “Mixed
Softwood Pulpwood” means all softwood pulpwood other than Pine Pulpwood and
hemlock.

 

“Most Recent Price by Species” shall
have the meaning provided in Section 4.1(b).

 

“New Owner” shall have the meaning
provided in Section 10.2(b).

 

“Objection Notice” shall have the
meaning provided in Section 10.2(b).

 

“Past Due” shall have the meaning
provided in Section 4.4.

 

“Person” shall have the meaning
provided in Section 10.1(b).

 

“Pine Pulpwood” means the following
species of timber:  Jack Pine Pulpwood,
Red Pine Pulpwood, White Pine Pulpwood and Spruce Pulpwood.

 

“Price Period” shall have the meaning
provided in Section 4.1(b).

 

“Products” means Softwood Pulpwood,
Hardwood Pulpwood,  Aspen Pulpwood and
Hemlock Pulpwood.

 

“Product Category” shall mean any one
of the following:  Hardwood Pulpwood,
Aspen Pulpwood, Mixed Softwood Pulpwood, Pine Pulpwood, or Hemlock Pulpwood.

 

“Product Specifications” shall have
the meaning provided in Section 2.1.

 

“Semi-Annual Period”
shall mean each January 1 through June 30 and July 1 through December 31
of each calendar year throughout the Term.

 

“Semi-Annual Pricing Date”
shall mean each January 7 and July 7 of each year during the Term.

 

“Softwood Pulpwood” shall mean Mixed
Softwood Pulpwood, Hemlock Pulpwood and Pine Pulpwood.

 

“Sustainable Forest Practice Standards”
shall mean practices substantially in compliance with standards substantially
similar to the Sustainable Forestry Initiative of the American Forest and Paper
Association (the “AF&PA”) as those standards may be modified by AF&PA
from time to time.

 

“Transfer” shall mean any sale, lease,
conveyance, exchange, assignment, hypothecation, disposition, foreclosure or
other transfer (excluding the granting of a mortgage or other security
agreement), directly or indirectly (whether by agreement, operation of law or
otherwise), of all or any portion of the ET Timberlands.

 

“Term” shall have the meaning provided
in Section 5.1.

 

Annex A-3

 

“Valuation Consultant” shall mean
either George Banzhaf & Company of Milwaukee, Wisconsin or
Steigerwaldt Land Services of Tomahawk, Wisconsin, or if such firms are no
longer in existence, another reputable, professionally qualified Person meeting
all of the following criteria.  Such
Person (i) is not an Affiliate of either Seller or Buyer, (ii) during
the past two (2) years has not transacted substantial business with either
Seller or Buyer, and (iii) does not have less than five (5) years
experience relating to sales of timber within the Market Region.  If Seller and Buyer are unable to agree on
the Valuation Consultant, an arbitrator selected pursuant to Section 10.14
below shall select such Valuation Consultant. 
Seller and Buyer shall provide to the Valuation Consultant such
information as the Valuation Consultant shall reasonably request to facilitate
the determinations to be made by the Valuation Consultant hereunder.

 

ARTICLE II

 

PURCHASE OF PRODUCTS

 

Section 2.1             Purchase of Softwood Pulpwood, Hardwood Pulpwood and Aspen Pulpwood. 
Seller agrees to sell, and Buyer agrees to purchase, receive and pay
for, in each calendar year (a “Calendar Year”), the Annual Volumes of
Products.  All Products purchased
pursuant to this Agreement shall satisfy, respectively, the specifications for
the Products set forth in Annex A, as may be modified from time to time in
accordance with Section 2.2 (the “Product Specifications”).  For the purposes of this Agreement, a ton
shall weigh two thousand (2,000) pounds.

 

Section 2.2             Modification
of Specifications.  Buyer may, from
time to time, and upon at least two (2) months prior written notice to
Seller, reasonably modify any of the Product Specifications that Buyer applies
to substantially all of its Product suppliers to the Mill.  Buyer shall not modify the Product
Specifications to set higher standards for Seller than for any such other
Products suppliers.  All Products sold by
Seller to Buyer following the date the new specifications become effective
shall satisfy such modified Product Specifications.  If Product Specifications are modified to set
higher standards, the Annual Volumes shall be adjusted downward as deemed
reasonably necessary by Seller, and subject to Buyer’s reasonable approval, as
a result of said higher standards.

 

Section 2.3             Annual
Plan.

 

(a)           Prior
to September 1 of each Calendar Year during the Term, Seller shall
complete and submit to Buyer a written delivery plan with respect to the
Products to be made available for purchase by Buyer during the next Calendar
Year (the “Annual Plan”).  Said Annual
Plan shall include estimates of delivery of the Products by Delivery Distances,
month and accumulated into estimated quarterly deliveries.  The Annual Plan shall set forth the quantity
of Products Seller intends to make available to Buyer during the next Calendar
Year, said quantities to be subject to the terms of Article III.   The parties acknowledge and agree that
Escanaba Timber submitted an Annual Plan 

 

Annex A-4

 

for 2006 that includes the obligation to deliver and
sell 535,000 tons of Products to Buyer (the “Original 2006 Plan”).  Pursuant to Article III hereof, Seller
and Buyer agree that the Original 2006 Plan will be amended to reduce the
volume to be sold and delivered during 2006 to 500,000 tons of Products.

 

(b)           Buyer shall within 30 days of receipt of said Annual
Plan confirm with Seller the volumes of the Products Buyer agrees to purchase
from Seller during the next Calendar Year; provided, however, that unless
Seller agrees otherwise, Buyer must agree to purchase at least ninety percent
(90%) of the volumes set forth in the Annual Plan.  Said agreed upon volumes shall then become in
the aggregate the “Annual Volumes” Buyer agrees to purchase and Seller agrees
to deliver in the next Calendar Year.

 

(c)           Following adoption of each Annual Plan (or as adjusted
according to Section 2.3(b) above), the parties shall act in good
faith and each use their respective reasonable best efforts to implement such
Annual Plan in accordance with its terms. 
Products shall be delivered throughout the Calendar Year in accordance
with the Annual Plan for such year; provided, however, that
during any Calendar Year, Seller may vary its deliveries, and Buyer may vary
its purchases of Products, subject to Section 4.2 herein, as long as
variations in delivery are immaterial and will not impair the operations of the
Mill or the operations of Seller on the ET Timberlands.

 

Section 2.4             Force
Majeure .

 

(a)           For the purposes of this Agreement, the term “Force
Majeure” means any cause, condition or event beyond Buyer’s and/or Seller’s
reasonable control that delays or prevents either party’s performance of its
obligations hereunder, including war, acts of terrorism (which shall not
include civil demonstrations), acts of government, acts of public enemy, riots,
lightning, fires, explosions, storms, floods, infestation, power failures,
other acts of God or nature, labor strikes or lockouts by employees, or other
disputes involving either party, an involuntary ceasing of operations at the
Mill for a minimum of thirty (30) consecutive days, and other similar events or
circumstances; provided, however, that “Force Majeure” shall not include (i) a
party’s financial inability to perform (unless such inability is caused by a
general suspension of payments by banks in the United States),  (ii) an act, omission or circumstance
arising from the negligence or willful misconduct of the party claiming that a
Force Majeure event has occurred, or (iii) adverse financial or market
conditions.  The parties shall use
reasonable best efforts to mitigate the effects of the Force Majeure, and if
the cause of Force Majeure can be minimized or remedied, both parties shall use
reasonable best efforts to do so promptly.

 

(b)           Subject to the provisions of this Section 2.4,
neither party shall be liable hereunder for a delay in or failure of
performance of its obligations hereunder that is caused by Force Majeure.  If Force Majeure results in a reduction, but
not a complete cessation, of Buyer’s operations in connection with this
Agreement, Buyer shall not reduce its purchases of any Product from Seller in
greater proportion than the reduction in Buyer’s purchases of any such Products
from all its suppliers of pulpwood to 

 

Annex A-5

 

the Mill. 
Notwithstanding anything contained in this Agreement to the contrary,
Force Majeure (other than a general suspension of payments by banks in the
United States) shall not excuse Buyer from its obligation to pay, pursuant to
the terms of this Agreement, Seller for any quantity of Product delivered by
Seller.

 

(c)           The quantity of any Product otherwise required to be
purchased or delivered hereunder shall be reduced as a result of Force Majeure
for the period during which such Force Majeure is in effect and continuing
(such period, the “Force Majeure Period”), based on the respective quantity for
each Calendar Year in which such Force Majeure is in effect, prorated (if
applicable) for the portion of such year constituting all or part of such Force
Majeure Period.  If the Force Majeure
Period is less than 15 days, (i) Buyer shall be required to purchase the
volume of Products not purchased during the Force Majeure Period within the
next 180 days following the end of the Force Majeure Period, and (ii) Seller
shall be required to make available the volume of Products not delivered during
the Force Majeure Period within the next 180 days following the end of the
Force Majeure Period.  If the Force
Majeure Period is more than 14 days, Buyer shall not be required to purchase
the volume of Products not purchased during the Force Majeure Period, and
Seller shall not be required to make available the volume of Products not
delivered during the Force Majeure Period. 
Notwithstanding anything contained in this Agreement to the contrary,  Seller shall have the right, but not the
obligation, to sell that quantity of the Product Buyer is unable to purchase
because of Force Majeure to any third party purchaser or purchasers in the
event Force Majeure prevents Buyer from performing hereunder.

 

(d)           Force Majeure shall not relieve a party of its obligations
or liability hereunder unless such party shall give notice (including a
reasonable description of such Force Majeure) to the other party as soon as
reasonably possible and in any event within fifteen (15) days of the occurrence
of such Force Majeure.  Upon request, the
party whose obligations were suspended shall provide the other party with a
plan for remedying the effects of such Force Majeure.  The party prevented from performing by Force
Majeure shall keep the other party advised by written notice of all matters
affecting such Force Majeure, and the extent of the delay by reason
thereof.  Such party shall notify the
other party in writing of the termination of such Force Majeure within three (3) days
after such termination.

 

ARTICLE III

 

MINIMUM VOLUMES

 

Section 3.1             Minimum
Volumes by Calendar Year.  With
respect to the Products to be purchased by Buyer hereunder, Seller shall make
available to Buyer in the applicable Annual Plan the following minimum volumes
of Products for each Calendar Year during the Term of this Agreement:

 

Annex A-6

 

(a)           2005.   From the date hereof through December 31,
2005, 55,000 tons of Hardwood Pulpwood; 7,000 tons of Mixed Softwood Pulpwood;
and 9,000 tons of Aspen Pulpwood.

 

(b)           2006
– 2016.  For the Calendar Years
beginning January 1, 2006 and ending December 31, 2016, 500,000 tons.

 

(c)           2017
– 2019 - To the extent Buyer and Seller mutually agree to extend the Term
pursuant to Section 5.2 below, for Calendar Years beginning January 1,
2017 and ending December 31, 2019, 500,000 tons.

 

ARTICLE IV

 

PRICE AND DELIVERY TERM

 

Section 4.1             Prices.  

 

(a)           The
price to be paid by Buyer to Seller for the Products sold and purchased
hereunder shall be the fair market value thereof as hereinafter determined (the
“Delivered Product Price”).  The parties
agree that the initial Delivered Product Prices for the Products for the period
from the date hereof through December 31, 2005 shall be as set forth in Schedule 4.1.  The Delivered Product Prices for the Products
shall be adjusted as of January 1, 2006 and each subsequent July 1
and January 1 thereafter and shall be effective for deliveries first made
on July 15 and January 15 of each calendar year.  The parties agree that the Products shall be
comprised of five categories:  Hardwood
Pulpwood, Aspen Pulpwood, Mixed Softwood Pulpwood, Pine Pulpwood, and Hemlock
Pulpwood (each, a “Product Category”). 
Each six-month calendar period described in this Section is
hereinafter referred to as a “Semi-Annual Period.”

 

(b)           Not
later than January 7, 2006 and each subsequent July 7 and January 7
of each Calendar Year during the Term (or on such date as the parties may
mutually agree) (each, a “Semi-Annual Pricing Date”), Seller and Buyer will
determine the Delivered Product Price for the ensuing half-year utilizing the
process described in this Section.  On or
before December 15, 2005 and each subsequent June 15 and December 15
of each Calendar Year of the Term, Seller and Buyer will jointly and mutually agree
upon a schedule of standard haul rates by haul zone (the “Standard Haul
Pricing Table”).  The Standard Haul
Pricing Table to be effective on January 1, 2006 is as follows:

 

	
  Zone

  	
   

  	
  Miles

  	
   

  	
  Haul Rate

  	
   

  
	
  1

  	
   

  	
  0-30

  	
   

  	
  $

  	
  5.64

  	
   

  
	
  2

  	
   

  	
  30-60

  	
   

  	
  $

  	
  7.45

  	
   

  
	
  3

  	
   

  	
  60-90

  	
   

  	
  $

  	
  9.07

  	
   

  
	
  4

  	
   

  	
  90-120

  	
   

  	
  $

  	
  11.17

  	
   

  
	
  5

  	
   

  	
  120-150

  	
   

  	
  $

  	
  13.09

  	
   

  
	
  6

  	
   

  	
  150-180

  	
   

  	
  $

  	
  14.79

  	
   

  
	
  7

  	
   

  	
  180-210

  	
   

  	
  $

  	
  16.49

  	
   

  

 

Annex A-7

 

(c)           In
addition, not later than each Semi-Annual Pricing Date during the Term, Seller
and Buyer will each assemble a table of the volume weighted open market
delivered prices and a table of volumes by Delivery Distance for each Product
Category (in the case of Seller, the delivered prices Seller received from
unrelated third parties, excluding the Annual Volumes, in the immediately
preceding Semi-Annual Period for Products produced from the ET Timberlands (or
other timberlands owned by Seller or Seller’s affiliated companies in the
Market Region as of Sepember 30, 2005) 
and delivered in the Market Region for each Product Category and in the
case of Buyer, the prices Buyer paid to unrelated third parties, excluding the
Annual Volumes, for Products produced from within the Market Region and
delivered to any Delivery Location in the immediately preceding Semi-Annual
Period) (the “Delivered Price and Volume Tables”).    Buyer shall include all payments made to
its suppliers of Products for purposes of its calculations hereunder except for
fuel adjustments or snow bonuses, the payments for which are provided for in Section 4.1(h) hereof.  In addition, for purposes of assembling their
respective Delivered Price and Volume Tables, each party must include the
prices and volumes of any Products sold by Seller and purchased by Buyer in any
Semi-Annual Period in excess of the Annual Volumes.  The prices shown in each party’s Delivered
Price and Volume Table shall be the weighted average for all volume sold in
each Product Category and Zone during the preceding Semi-Annual Period.  An example of a Delivered Price and Volume
Table is as follows:

 

Delivered Prices ($/ton):

 

	
  Zone

  	
   

  	
  Hardwood

  	
   

  	
  Aspen

  	
   

  	
  Mixed Sftwd

  	
   

  	
  Pine

  	
   

  	
  Hemlock

  	
   

  
	
  1

  	
   

  	
  $

  	
  30.00

  	
   

  	
  $

  	
  35.00

  	
   

  	
  $

  	
  40.00

  	
   

  	
  $

  	
  45.00

  	
   

  	
  $

  	
  25.00

  	
   

  
	
  2

  	
   

  	
  $

  	
  31.00

  	
   

  	
  $

  	
  36.00

  	
   

  	
  $

  	
  41.00

  	
   

  	
  $

  	
  46.00

  	
   

  	
  $

  	
  26.00

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  37.00

  	
   

  	
  $

  	
  43.00

  	
   

  	
   

  	
   

  	
  $

  	
  27.00

  	
   

  
	
  4

  	
   

  	
  $

  	
  33.00

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  44.00

  	
   

  	
  $

  	
  48.00

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  $

  	
  35.00

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  44.00

  	
   

  	
  $

  	
  50.00

  	
   

  	
  $

  	
  29.00

  	
   

  
	
  6

  	
   

  	
  $

  	
  37.00

  	
   

  	
  $

  	
  41.00

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  50.00

  	
   

  	
  $

  	
  31.00

  	
   

  
	
  7

  	
   

  	
  $

  	
  39.00

  	
   

  	
  $

  	
  45.00

  	
   

  	
  $

  	
  50.00

  	
   

  	
  $

  	
  53.00

  	
   

  	
  $

  	
  33.00

  	
   

  

 

Volume (in tons)

 

	
  Zone

  	
   

  	
  Hardwood

  	
   

  	
  Aspen

  	
   

  	
  Mixed Sftwd

  	
   

  	
  Pine

  	
   

  	
  Hemlock

  	
   

  
	
  1

  	
   

  	
  1,200

  	
   

  	
  100

  	
   

  	
  1,500

  	
   

  	
  450

  	
   

  	
  300

  	
   

  
	
  2

  	
   

  	
  100

  	
   

  	
  600

  	
   

  	
  1,200

  	
   

  	
  650

  	
   

  	
  600

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
  1,500

  	
   

  	
  300

  	
   

  	
   

  	
   

  	
  900

  	
   

  
	
  4

  	
   

  	
  1,500

  	
   

  	
   

  	
   

  	
  500

  	
   

  	
  850

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  600

  	
   

  	
   

  	
   

  	
  800

  	
   

  	
  950

  	
   

  	
  900

  	
   

  
	
  6

  	
   

  	
  200

  	
   

  	
  500

  	
   

  	
   

  	
   

  	
  250

  	
   

  	
  600

  	
   

  
	
  7

  	
   

  	
  800

  	
   

  	
  60

  	
   

  	
  600

  	
   

  	
  650

  	
   

  	
  300

  	
   

  

 

Annex A-8

 

(d)           When
each party has assembled its internal Delivered Price and Volume Table, each
party will deduct the Standard Haul Rate for each Zone from the respective
prices for each Product Category to arrive at a pre-haul price for each Product
Category in each Zone (the “Road Side Price”). 
For each Product Category, each party will then calculate a “Weighted
Average Road Side Price” by taking the sum of the volumes times the road side
price for each haul zone, divided by the total volume delivered for each
product as follows:

 

	
  (Delivered
  Price - Haul Rate) x Volume for each zone

  	
  =

  	
  Weighted
  Average Road Side

  
	
  Total Volume in each Product Category

  	
   

  	
  Price in
  each Product Category

  

 

For illustration purposes, using the Delivered Price and Volume Table
shown above, the calculations would be as follows:

 

Roadside Prices:

 

	
  Zone

  	
   

  	
  Hardwood

  	
   

  	
  Aspen

  	
   

  	
  Mixed Sftwd

  	
   

  	
  Pine

  	
   

  	
  Hemlock

  	
   

  
	
  1

  	
   

  	
  $

  	
  24.36

  	
   

  	
  $

  	
  29.36

  	
   

  	
  $

  	
  34.36

  	
   

  	
  $

  	
  39.36

  	
   

  	
  $

  	
  19.36

  	
   

  
	
  2

  	
   

  	
  $

  	
  23.55

  	
   

  	
  $

  	
  28.55

  	
   

  	
  $

  	
  33.55

  	
   

  	
  $

  	
  38.55

  	
   

  	
  $

  	
  18.55

  	
   

  
	
  3

  	
   

  	
   

  	
   

  	
  $

  	
  27.93

  	
   

  	
  $

  	
  33.93

  	
   

  	
   

  	
   

  	
  $

  	
  17.93

  	
   

  
	
  4

  	
   

  	
  $

  	
  21.83

  	
   

  	
   

  	
   

  	
  $

  	
  32.83

  	
   

  	
  $

  	
  36.83

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  $

  	
  21.91

  	
   

  	
   

  	
   

  	
  $

  	
  30.91

  	
   

  	
  $

  	
  36.91

  	
   

  	
  $

  	
  15.91

  	
   

  
	
  6

  	
   

  	
  $

  	
  22.21

  	
   

  	
  $

  	
  26.21

  	
   

  	
   

  	
   

  	
  $

  	
  35.21

  	
   

  	
  $

  	
  16.21

  	
   

  
	
  7

  	
   

  	
  $

  	
  22.51

  	
   

  	
  $

  	
  28.51

  	
   

  	
  $

  	
  33.51

  	
   

  	
  $

  	
  36.51

  	
   

  	
  $

  	
  16.51

  	
   

  
	
  **

  	
   

  	
  $

  	
  22.71

  	
   

  	
  $

  	
  27.82

  	
   

  	
  $

  	
  33.31

  	
   

  	
  $

  	
  37.28

  	
   

  	
  $

  	
  17.24

  	
   

  
																							

 

**  Weighted Average Roadside
Price by Product

 

(e)           Not
later than each Semi-Annual Pricing Date during the Term, Seller and Buyer will
submit to the other their respective Weighted Average Road Side Price for each
of the Product Categories.  Seller’s and
Buyer’s combined Weighted Average Road Side Price for each Product Category
will be computed using a 1/3 weight for Seller’s prices and 2/3 weight for
Buyer’s prices, the result of which is hereinafter referred to as the “Combined
Road Side Average.”  The Combined Road
Side Average for each Product Category will be added to the Haul Rate in each
Zone to determine the final Delivered Product Price for each Product Category
in each Zone.

 

(f)            The foregoing notwithstanding, in the event Buyer
materially changes the sourcing of Products into its Mill (i.e., purchases five
percent (5%) or more of the total Products used at the Mill in any Semi-Annual
Period (excluding the 

 

Annex A-9

 

annual Volumes) from sources outside the
Market Region, or uses purchased stumpage to source twenty percent (20%)
or more of the total Products Buyer uses at the Mill in any Semi-Annual Period
(excluding the Annual Volumes)), the parties agree to examine the method for
determining the fair market value for the products sold and purchased
hereunder.  If Seller notifies Buyer that
Seller reasonably believes than an adjustment to the pricing mechanism is
appropriate in light of the foregoing circumstances, Seller and Buyer agree to
negotiate in good faith to determine an appropriate adjustment in Buyer’s
Delivered Price and Volume Table for the relevant Price Period in an effort to
accurately reflect market data for Buyer’s purchases of Products used in its
Mill operations.  In the event Seller and
Buyer are unable to agree on such an adjustment within 20 days following any
such request by Seller, Seller and Buyer shall retain the Valuation Consultant
to make any such determination, which determination shall be binding upon the
parties.  Buyer agrees to provide to
Seller its sourcing percentages periodically upon request.

 

(g)               Notwithstanding anything herein to the contrary,
Seller acknowledges and agrees that as a result of differences, by way of
example, in product specifications or pre-sorting requirements imposed by Buyer
under this Agreement and those imposed by other purchasers of the same Products
from Seller, inclusion of sale prices to other purchasers of such Products with
different specifications, pre-sorting requirements or other similar types of
differences (including increased prices paid by other customers that
incorporate fuel adjustments or snow bonuses, whether or not formally
characterized as such) in customer requirements in determining Seller’s
Weighted Average Road Side Price would be inappropriate absent an adjustment to
the calculation of Seller’s Weighted Average Road Side Price. Amount to reflect
the different cost of selling the same Product with different product
specifications, pre-sorting requirements or other comparable differences in
specifications.  In the event Buyer
notifies Seller of any instance where Buyer reasonably believes that such an
adjustment is necessary in light of the foregoing circumstances, Buyer agrees
to negotiate in good faith with Seller an appropriate adjustment in Seller’s
Pricing Amount for the relevant Price Period to reflect such cost
differential.  In the event Seller and
Buyer are unable to agree on such an adjustment within 20 days following any
such request by Buyer, Seller and Buyer shall retain the Valuation Consultant
to make any such determination, which determination shall be binding upon the
parties.

 

(h)               In addition to the other amounts payable hereunder, in
the event Buyer pays any amounts to any pulpwood supplier to any Delivery
Location for fuel adjustments or snow bonuses, Buyer shall make comparable and
contemporaneous payments to Seller.  Any
such payments made to Seller or any payments made to Seller from other pulpwood
customers (whether or not formally characterized as fuel adjustments or snow
bonuses) pursuant to this Section 4.1(g) shall not be used in
calculating the Delivered Price and Volume Table.

 

Section 4.2             Pay
or Take.  

 

(a)           Seller agrees to sell and deliver, subject to Force
Majeure,  and Buyer agrees to purchase,
subject to Force Majeure, the Annual Volumes of Products 

 

Annex A-10

 

to be produced under the direction of Seller
during each Calendar Year as determined in Section 2.3 (c).  If for any Calendar Year, Seller fails for
any reason other than Force Majeure to tender to Buyer at least ninety percent
(90%) of the designated Annual Volumes of Products, Seller will pay Buyer at a
rate of $15.00 per ton multiplied by the difference between (x) ninety percent
(90%) of the Annual Volumes of Products for the applicable Calendar Year minus
(y) the volume of Products actually tendered by Seller during such Calendar
Year, as liquidated damages and not as a penalty, and Buyer shall have no
further claim for damages on account of such shortfall in the delivery of the
Annual Volumes.  Payment shall be made by
Seller to Buyer on demand no later than fifteen (15) days from Buyer’s written
request for such payment. 
Notwithstanding the foregoing, if adverse weather conditions during the
last ninety (90) days of any Calendar Year prevent Seller from delivering the
Annual Volumes for said Calendar Year, the payments provided for in this Section 4.2(a) shall
not apply unless and to the extent said volumes (together with any volumes
required with respect to the first quarter of the following Calendar Year) are
not delivered on or before March 31 of the following Calendar Year.  Seller shall keep Buyer advised of any such
adverse weather conditions and Buyer’s need for additional time to deliver said
volumes.

 

(b)           If for any Calendar Year, Buyer fails for any reason
other than Force Majeure to purchase at least ninety percent (90%) of the
Annual Volumes of Products from Seller, then Buyer shall pay Seller for the
shortage at a rate of $15.00 per ton multiplied by the difference between (x)
ninety percent (90%) of the Annual Volumes of Products for the applicable
Calendar Year minus (y) the volume of Products actually purchased by Buyer
hereunder during such Calendar Year, as liquidated damages and not as a
penalty, and Seller shall have no further claim for damages on account of Buyer’s
failure to purchase the Annual Volumes. 
Payment shall be made by Buyer to Seller on demand no later than fifteen
(15) days from Seller’s written request for such payment.

 

Section 4.3             Delivery
Terms.  All Products covered by this
Agreement shall be delivered to Buyer F.O.B. to the Mill, Buyer’s Bovine or
Trout Lake woodyards or to such other locations in the Market Region as Buyer
and Seller may reasonably agree (any such location, a “Delivery
Location”).  Risk of loss and title shall
pass when the Products are unloaded at the Delivery Location.

 

Section 4.4             Payment.  Buyer shall pay Seller within fifteen (15)
days after the date of delivery for any Products delivered to Buyer, based upon
the volume of the Products delivered, as determined by the weight of such
Products at the time of delivery. 
Payments made after fifteen (15) days from the date of delivery shall be
considered past due (“Past Due”).  For
payments that are Past Due, Buyer shall pay interest at a rate per annum equal
to the daily prime rate as reported in the Wall Street Journal plus four
percent (4%) for each day that the payments are Past Due.  Such interest shall be calculated daily on
the basis of a year of 365 days and the actual number of days for which
interest is due.  If at any time during
the Term there are any payments outstanding to Seller that are Past Due, then,
in addition to any other remedies it may have hereunder, Seller may suspend
deliveries to Buyer until such time as all Past Due payments have been paid in
full.  In such event, Seller shall have
no obligation to supply or make up any portion of the Annual Volumes scheduled
for delivery and not delivered 

 

Annex A-11

 

during such suspension and
shall in no way be liable to Buyer for any Losses (as defined below in Section 6.2(b))
or payments pursuant to Section 4.2(a) related to any shortfall in
delivered volumes of Products arising out of said suspension.

 

Section 4.5             Disputes.  If the personnel designated by Buyer and
Seller with operational responsibility for implementing this Agreement are
unable to agree as to any matter set forth in this Article IV then such
matter shall be addressed by the executives responsible for timberland
management for Seller and wood procurement for Buyer.  If such executives are unable to agree, then
such matter shall be determined by an arbitrator pursuant to Section 10.14.

 

Section 4.6             Compliance with Product
Specifications.  If any
shipment of any Product fails to satisfy the applicable Product
Specifications,   Buyer shall have the
right to reject such shipment. Buyer shall notify Seller of any such rejection
as soon as reasonably possible.

 

Section 4.7             Limitation of Warranties.  EXCEPT FOR THE WARRANTIES EXPRESSLY SET FORTH
IN THIS AGREEMENT, THE PRODUCTS ARE BEING SOLD “AS IS,” AND SELLER IS NOT
MAKING ANY OTHER WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED,
INCLUDING, IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE (AS DEFINED IN THE DELAWARE UNIFORM COMMERCIAL CODE),
ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED, DISCLAIMED AND WAIVED BY BUYER.

 

ARTICLE V

 

TERM

 

Section 5.1             Term.  This Agreement shall expire on December 31,
2016, unless this Agreement is sooner terminated for cause pursuant to Section 9.1
hereof, or unless this Agreement is extended as provided in Section 5.2
(the “Term”). 

 

Section 5.2             Extension of Term.               The
Term of this Agreement may be extended for one (1) additional three (3) year
term upon the mutual written agreement of each of Buyer and Seller, which
extension term shall commence concurrently with the expiration of the initial
term, upon the same terms and conditions as contained in this Agreement or on
such other terms and conditions as may otherwise be agreed upon by Buyer and
Seller.  

 

Annex A-12

 

ARTICLE VI

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 6.1             Warranty of Quality.  Seller warrants and covenants that it will
act in good faith and use its reasonable best efforts to cause all Products to
meet the Product Specifications.

 

Section 6.2             Ownership of Products.  (a)  Seller warrants and covenants that
all Products delivered to Buyer will be free and clear of all Liens (as defined
in Section 6.2(b) below). 
Seller shall protect, indemnify, defend and hold harmless Buyer against
any Losses (as defined in Section 6.2(b) below) incurred or sustained
by Buyer arising out of or resulting from any Liens applicable to any of the
Products at the time delivered by Seller.

 

(b)  The term “Liens” means any and all
liens, charges, mortgages, deeds to secure debt, pledges, security interests, options
of record, adverse claims or other encumbrances of a liquidated amount or which
are otherwise statutorily enforceable, other than liens for ad valorem taxes
not yet due and payable; provided, however, none of the aforementioned shall
constitute a “Lien” in the event the same fails to prevent Seller from
performing any of its obligations hereunder. 
The term “Losses” means any and all claims, liabilities, obligations,
losses, fines, costs, royalties, proceedings, deficiencies or damages (whether
absolute, accrued, conditional or otherwise and whether or not resulting from
third party claims) including, but not limited to, out-of-pocket expenses and
reasonable actual attorneys’ and actual accountants’ fees incurred in the
investigation or defense of any of the same or in enforcing any of their
respective rights hereunder.

 

Section 6.3             Power and Authority;
Enforceability.  Seller
represents and warrants that it is a corporation duly organized and validly
existing under the laws of the State of Delaware, and that it has all requisite
corporate authority to enter into this Agreement and to perform its obligations
hereunder.  Seller represents and
warrants that this Agreement has been duly authorized, executed and delivered
by Seller and constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except as may be
limited by (i) bankruptcy, reorganization, insolvency, moratorium,
receivership or other similar laws affecting or relating to the enforcement of
creditors’ rights or remedies generally, and (ii) general principles of
equity (whether considered at law or in equity).

 

Section 6.4             Compliance with Laws;
Maintenance of Timberlands. 
Seller agrees that its performance of this Agreement shall comply in all
material respects with applicable state and federal laws and regulations,
including, but not limited to, all environmental laws and the Fair Labor
Standards Act of 1938, as amended.

 

Section 6.5             Seller as Independent
Contractor.  No
relationship of employer and employee, or master and servant, is intended to
exist, nor shall any be construed to exist, between Buyer and Seller, or
between Buyer and any servant, agent, 

 

Annex A-13

 

employee, subcontractor or
supplier of or to Seller as a result of the parties entering into or performing
this Agreement.  Each party hereto shall
select and pay its own servants, agents, employees, subcontractors and
suppliers, and neither such party nor any of its servants, agents, employees,
subcontractors and suppliers shall be subject to any orders, supervision or
control of the other party hereto.  The
parties acknowledge that this Agreement does not create a partnership, joint
venture or any relationship other than a contract between independent parties.

 

Section 6.6             Buyer Power and
Authority; Enforceability. 
Buyer represents and warrants that it is a corporation duly organized
and validly existing under the laws of the State of Delaware, and that it has
all requisite corporate authority to enter into this Agreement and to perform
its obligations hereunder. Buyer represents and warrants that this Agreement
has been duly authorized, executed and delivered by Buyer and constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as may be limited by (i) bankruptcy,
reorganization, insolvency, moratorium, receivership or other similar laws
affecting or relating to the enforcement of creditors’ rights or remedies
generally; and (ii) general principles of equity (whether considered at
law or in equity).

 

ARTICLE VII

 

DEFAULT AND INDEMNIFICATION

 

Section 7.1             Indemnity.  

 

(a)           Buyer shall in no way be liable for any personal
injuries (including death), property damage or other Losses caused by,
resulting from, or attributable to, Seller’s performance under this Agreement,
the operation of the business of Seller or the acts of any servant, agent,
employee, subcontractor or supplier of Seller in connection with this Agreement,
except to the extent such Loss is finally judicially determined to have arisen
out of or resulted from the negligence or intentional misconduct of any of
Buyer, its subsidiaries and other affiliates, or any of its or their respective
servants, agents, officers, partners, directors, employees, subcontractors or
suppliers. Seller shall protect, defend, indemnify and hold harmless NewPage Holding
Corporation, NewPage Corporation, Buyer, and their respective subsidiaries
and affiliates, and each of its and their respective agents, officers,
partners, directors, employees, successors and assigns, from and against any
claim, demand, cause of action, lawsuit or other Loss arising out or resulting
from performance of this Agreement by Seller, or of any servant, agent,
employee, subcontractor or supplier of or to Seller, including any Loss based
on the strict liability of Buyer except to the extent such Loss is finally
judicially determined to have arisen out of or resulted from the negligence or
intentional misconduct of any of Buyer, its subsidiaries and other affiliates
(other than Seller), or any of its or their respective servants, agents,
officers, partners, directors, employees, subcontractors or suppliers.

 

(b)           Seller shall in no way be liable for any personal
injuries (including death), property damage or other Losses caused by,
resulting from, or 

 

Annex A-14

 

attributable to, Buyer’s performance under
this Agreement, the operation of the business of Buyer or the acts of any
servant, agent, employee, subcontractor or supplier of Buyer in connection with
this Agreement, except to the extent such Loss is finally judicially determined
to have arisen out of or resulted from the negligence or intentional misconduct
of any of Seller, its subsidiaries and other affiliates, or any of its or their
respective servants, agents, officers, partners, directors, employees,
subcontractors or suppliers.  Buyer shall
protect, defend, indemnify and hold harmless Seller, and its subsidiaries and
other affiliates, including, but not limited to, Timberland Owner, and each of
its and their respective agents, officers, partners, directors, employees,
successors and assigns, from and against any claim, demand, cause of action,
lawsuit or other Loss arising out or resulting from performance of this
Agreement by Buyer, or of any servant, agent, employee, subcontractor or
supplier of or to Buyer, including any Loss based on the strict liability of
Seller, except to the extent such Loss is finally judicially determined to have
arisen out of or resulted from the negligence, or intentional misconduct of any
of Seller, its subsidiaries and other affiliates, or any of its or their
respective servants, agents, officers, partners, directors, employees,
subcontractors or suppliers.

 

Section 7.2             Certain Remedies.  Notwithstanding anything in this Agreement to
the contrary, Buyer’s sole and exclusive remedies against Seller (following the
expiration of any applicable cure period) in the event that Seller breaches its
obligation to provide the Annual Volumes of Products required under this
Agreement shall be (a) to receive the payment provided pursuant to Section 4.2(a) of
this Agreement, and (b) to terminate this Agreement pursuant to Section 9.1
of this Agreement.  

 

ARTICLE VIII

 

CONSENT TO JURISDICTION

 

Section 8.1             Consent to Jurisdiction.  In connection with any proceeding initiated
by any party under or with respect to this Agreement and the transactions
contemplated hereby, each party hereby consents to the jurisdiction of any
United States Federal Court sitting in the state of Michigan having
jurisdiction in the matter.  Each party
acknowledges and agrees that any controversy that may arise under this Agreement
is likely to involve complicated and difficult issues, and therefor it hereby
irrevocably and unconditionally waives any right it may have to a trial by jury
in respect of any litigation directly or indirectly arising out of or relating
to this Agreement, or the breach, termination or validity of this Agreement, or
the transactions contemplated by this Agreement.

 

ARTICLE IX

 

TERMINATION

 

Section 9.1             Termination for Cause.  This Agreement shall immediately terminate if
any one of the following events (each, a “default”) has occurred and is
continuing on the tenth (10th) day after receipt of notice of an intent to
cancel by reason of such default (each, an “Event of Default”):

 

Annex A-15

 

(a)           Breach of any term of this Agreement, which breach is
not cured within sixty (60) days after receipt of written notice thereof;

 

(b)           Insolvency or the filing by or against Seller,
Timberlands Owner or Buyer of a petition in bankruptcy (which, in the event of
an involuntary bankruptcy, is not dismissed within ninety (90) days from the
date of its commencement), or appointment by a court of a temporary or
permanent receiver, trustee or custodian; or

 

(c)           If the Mill for any reason ceases all pulping
operations for a period that exceeds twelve (12) consecutive months at any time
during the Term.

 

Section 9.2             Effect of Termination.  Termination shall not relieve a defaulting
party of any liability to the nondefaulting party for breach of its obligations
hereunder.

 

ARTICLE X

 

MISCELLANEOUS

 

Section 10.1           Definitions.  

 

(a)           The words “hereby,” “herein,” “hereof,” “hereunder”
and words of similar import refer to this Agreement as a whole and not merely
to the specific section, paragraph or clause in which such word appears.  The word “party” or “parties” means a party
or the parties to this Agreement, unless preceded by the word “third” or unless
the context shall otherwise expressly require. 
All references herein to Articles, Sections, Annexes and Exhibits shall
be deemed references to Articles and Sections of, and Annexes and Exhibits to,
this Agreement unless the context shall otherwise require.  The words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without limitation,” unless
already expressly followed by such phrase or the phrase “but not limited to.”  The definitions given for terms in this Section 10.1
and in Article I above shall apply equally to both the singular and plural
forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.

 

(b)           Whenever used in this Agreement, the following terms
shall have the respective meanings given to them below.

 

“Affiliate” of a Person means any
other Person directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with the first Person.  As used in this definition of the term “affiliate,”
and elsewhere herein with respect to any affiliate of any Person, “control”
(including the terms “controlled by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, by voting trust, contract or similar arrangement, as
trustee or executor, or otherwise.

 

Annex A-16

 

“Person”
means any individual, sole proprietorship, trust, estate, executor, legal
representative, unincorporated association, association, institution,
corporation, company, partnership, limited liability company, limited liability
partnership, joint venture, government (whether national, Federal, state,
county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof) or other entity.

 

Section 10.2           Assignment
by Seller.  

 

Except
as provided in this Section 10.2, this Agreement may not be assigned by
Seller in whole or in part. 
Notwithstanding the foregoing, at any time during the Term, Seller may
assign this Agreement (i) to any lender or lenders as security for
obligations to such lender or lenders in respect to financing arrangements of
Seller or any Affiliate thereof with such lender or lenders, or (ii) upon
prior written notice to Buyer, to any Person that is and at all times remains
an Affiliate of Seller or that merges or consolidates with or into Seller or
that acquires all or substantially all of the ET Timberlands.

 

Section 10.3           Assignment
by Buyer.  

 

Except as provided in this Section 10.3,
this Agreement may not be assigned by Buyer in whole or in part.  Notwithstanding the foregoing, at any time
during the Term, Buyer may assign this Agreement (a) to any lender or
lenders as security for obligations to such lender or lenders in respect of
financing arrangements of Buyer or any affiliate thereof with such lender or
lenders, or (b) upon prior written notice to Seller, to any Person that is
and at all times remains an Affiliate of Buyer or that merges or consolidates
with or into Buyer.  Notwithstanding the
foregoing, Buyer shall be obligated, and shall be permitted under this Section 10.3,
to assign this Agreement in whole to any Person that acquires all or
substantially all of the assets or stock of Buyer.

 

Section 10.4           Notices.  All notices, requests, demands and other
communications provided for hereunder shall be in writing and personally
delivered or sent by regular U.S. certified mail, telecopy or Federal Express
(or similar type of overnight delivery) to the applicable party at the address
indicated below:

 

	
  If to Buyer:

  	
  Escanaba Paper Company

  7100 County 426 M.5 Road

  Escanaba, Michigan 49829

  

 

Annex A-17

 

	
  With a copy to:

  	
  James D. Okraszewski

  7100 County 426 M.5 Road

  Escanaba, Michigan 49829

  Telecopier No.  906-789-3276

  Telephone No.  906-233-2150

  
	
   

  	
   

  
	
  and

  	
  Mark Lukacs

  7100 County 426 M.5 Road

  Escanaba, Michigan 49829

  Telecopier No.  906-233-3221

  Telephone No.  906-233-2600

  
	
   

  	
   

  
	
  If to Seller:

  

  	
  Plum Creek Marketing, Inc.

  2831 North Lincoln Road

  Escanaba, Michigan 49829

  Attn: Pete Madden

  Telecopier No.  906-789-9076

  Telephone No.  906-789-9130

  
	
   

  	
   

  
	
  with a copy to:

  	
  Plum Creek Marketing, Inc.

  999 Third Avenue, Suite 4300

  Seattle, Washington 98104

  Telecopier No.  206-467-3799

  Telephone No.  206-467-3690

  

 

or, as to each party, at such other address as shall be designated by
such party in a written notice to the other party complying as to delivery with
the terms of this Section.  Notice shall
be deemed received when (i) hand delivered; (ii) sent, after receipt
of confirmation or answer back if sent by telecopy; (iii) five Business
Days after deposit in the U.S. mails, postage prepaid, for certified mail; and (iv) one
Business Day after delivery to Federal Express (or similar type of overnight
delivery), properly addressed to the applicable party.

 

Section 10.5           Amendment; Waiver.  No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought.  Any such waiver shall constitute a waiver
only with respect to the specific matter described in such writing and shall in
no way impair the rights of the party granting such waiver in any other respect
or at any other time.  The failure of
either party to insist in any one or more instances upon strict performance of
any of the provisions of this Agreement or take advantage of any of its rights
hereunder shall not be construed as a waiver of any such provisions or the
relinquishment of any such rights, but the same shall continue and remain in
full force and effect.

 

Annex A-18

 

Section 10.6           Entire Agreement.  This instrument constitutes the entire
agreement between the parties relating to the subject matter hereof, and there
are no agreements, understandings, conditions, representations, or warranties
not expressly set forth herein.

 

Section 10.7           Sovereign Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan, without
reference to the conflicts of laws or choice of law provisions thereof.

 

Section 10.8           Binding Agreement.  Subject to the provisions of Sections 10.2
and 10.3, this Agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns.

 

Section 10.9           Headings.  The section and other headings in this
Agreement are inserted solely as a matter of convenience and for reference, are
not a part of this Agreement, and shall not be deemed to affect the meaning or
interpretation of this Agreement.

 

Section 10.10         Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

 

Section 10.11         Annexes and Exhibits.  All annexes, attachments, schedules and
exhibits to this Agreement referenced herein are incorporated herein by
reference.

 

Section 10.12         Severability, etc.  Any term or provision of this Agreement that
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability, without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or unenforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.  If any term or provision of this Agreement is
so broad as to be invalid or unenforceable, the provision shall be interpreted
to be only so broad as is valid or enforceable. 
Subject to the foregoing provisions of this Section 10.12, if any
term or provision of this Agreement is invalid or unenforceable for any reason,
such circumstances shall not have the effect of rendering such term or
provision invalid or unenforceable in any other case or circumstance.

 

Section 10.13         No Presumption Against
Drafter.  Each of the
parties hereto has jointly participated in the negotiation and drafting of this
Agreement.  In the event of an ambiguity
or a question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by each of the parties hereto and no
presumptions or burdens of proof shall arise favoring any party by virtue of
the authorship of any of the provisions of this Agreement.

 

Annex A-19

 

Section 10.14         Arbitration.  

 

(a)           All controversies, disputes, or claims arising among
the parties in connection with, or with respect to, any provision of this
Agreement which have not been resolved within twenty (20) days after either
Buyer, on the one hand, or Seller, on the other hand, has notified the other in
writing of such controversy, dispute or claim, shall be settled by arbitration
administered by the American Arbitration Association (“AAA”) under its
Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.  Notwithstanding anything contained in this Section 10.14
or the AAA Commercial Arbitration Rules to the contrary, any arbitrator
appointed hereunder to resolve disputes shall be an attorney licensed to
practice law in the United States with experience in commercial real estate and
the timber and paper industries and shall have expertise appropriate to the
dispute.  In addition to the
aforementioned qualifications, any arbitrator appointed hereunder to resolve
disputes arising out of any Article IV matter shall have a familiarity
with the factors taken into account in pricing wood fiber products and shall
otherwise be qualified to make the pricing determinations required by Article IV.

 

(b)           Nothing herein contained shall bar the right of any of
the parties to seek and obtain temporary injunctive relief from a court of
competent jurisdiction in accordance with applicable law against threatened
conduct that will cause loss or damage, pending completion of the arbitration,
and the prevailing party therein shall be entitled to an award of its
reasonable attorneys’ fees and costs.

 

(c)           Notwithstanding anything contained in this Agreement
to the contrary, in the event that any controversy, dispute, or claim exceeds
$10,000,000, this Section 10.14 shall not apply.

 

Except
as otherwise provided in this Agreement, this Section shall be
interpreted, governed by and enforced in accordance with the United States
Arbitration Act, 9 U.S.C. Section 1-14.

 

Section 10.15         Sustainable Forestry
Initiative.  Seller
shall cause the harvesting activities on the ET Timberlands to be in accordance
with the Sustainable Forestry Initiative during the Term of this
Agreement.  From time to time it may be
necessary to agree upon a recognized successor or alternative standard to the
Sustainable Forestry Initiative, which shall be negotiated in good faith to
reflect changes or developments in the evolution of widely accepted industry
standards.

 

Section 10.16         Publicity.  This Agreement is confidential and no party
shall issue press releases or engage in other types of publicity of any nature
dealing with the commercial and legal details of this Agreement without the
other party’s prior written approval. 
However, approval of such disclosure shall be deemed to be given to the
extent such disclosure is required to comply with applicable laws, governmental
rules, regulations or other governmental requirements, or in connection with
any financing arrangements of such party. 
In such event, the publishing party shall, to the extent 

 

Annex A-20

 

reasonably practicable,
furnish, in advance, a copy of such proposed disclosure, to the other party.

 

Section 10.17         Estoppel Certificates.  Any party shall, at no cost to the requesting
party, from time to time, upon twenty (20) days prior request by the other
party(ies), execute, acknowledge and deliver to the requesting party a
certificate signed by an officer of the certifying party stating that this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that this Agreement is in full force and effect as modified, and
setting forth such modifications) and the dates through which payments have
been made, and either stating that to the knowledge of the signer of such
certificate no default exists under this Agreement or specifying each such
default to which the signer has knowledge.

 

Section 10.18         Prevailing Party.  If any party brings any proceeding for the
judicial or other interpretation, enforcement, termination, cancellation or
rescission of this Agreement, or for damages for the breach thereof, the
prevailing party in any such proceeding or appeal thereon shall be entitled to
its reasonable attorneys’ fees and court and other reasonable costs incurred,
to be paid by the losing party as fixed by the court in the same or a separate
proceeding, and whether or not such proceeding is pursued to decision or
judgment.  

 

Section 10.19         Original Agreement.  The parties agree that upon execution of this
Agreement by the parties hereto, the Original Agreement shall be superseded and
replaced in all respects by this Agreement and Escanaba Timber LLC is hereby
released from any obligation accruing under the Original Agreement arising
after the date hereof, except for the obligation to return the deposit made under
Section 4.4 of the Original Agreement. 

 

[SIGNATURES ON FOLLOWING PAGE]

 

Annex A-21

 

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

 

Annex A-22

 

 

	
   

  	
  PLUM CREEK
  MARKETING INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rick R.
  Holley

  	
   

  
	
   

  	
   

  	
  Name: Rick
  R. Holley

  
	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  ESCANABA
  PAPER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter
  Vogel

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: Peter
  Vogel

  
	
   

  	
  Title: President

  

 

Annex A-23

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