Document:

Form of St. Maries Residuals Sales Agreement

 Exhibit 10.6 
 ST. MARIES RESIDUALS SALES AGREEMENT 
 THIS ST. MARIES RESIDUALS SALES AGREEMENT (this
“Agreement”) is entered into by and between Clearwater Paper Corporation, a Delaware corporation (“Buyer”) and Potlatch RetainCo, LLC, a Delaware limited liability company (“Seller”) as of

                     , 2008 (the “Effective
Date”). (Buyer and Seller are sometimes hereinafter in this Agreement referred to collectively as the “parties”, or individually as a “party”). 
 RECITALS 
 A. Seller produces wood chips, sawdust, hog fuel and plytrim
(collectively “Residuals”) at its St. Maries, Idaho mill complex (the “St. Maries Mill”). 
 B. Buyer
operates a pulp and paper facility in Lewiston, Idaho (the “Buyer’s Mill”). 
 C. Buyer desires to purchase Residuals
from Seller for use at Buyer’s Mill, and Seller desires to supply Residuals to Buyer in accordance with terms and conditions set forth in this Agreement. 
 AGREEMENT 
 NOW THEREFORE, in consideration of the foregoing, the terms and conditions set forth
herein, and other good and valuable consideration, the adequacy of which is hereby acknowledged, Seller and Buyer hereby agree as follows: 
 ARTICLE I 
 SPECIFICATIONS; AS IS 
 1.1 The Residuals shall meet the following specifications (the “Specifications”): 
 1.1.1. Wood
Chips. Wood chips (“Chips”) shall be made by Seller its St. Maries Mill. Such Chips must be entirely free of char and substantially free of bark and rot. Seller will use commercially reasonable efforts to maintain and operate
its chip production equipment so as to produce Chips meeting the specifications set forth on attached Exhibit A. 
 1.1.2.
Sawdust. Sawdust shall be made by Seller at the St. Maries Mill and shall contain less than 2% bark or char and shall be entirely free of rock, concrete, asphalt and treated wood. 
 1.1.3. Hog Fuel. Hog fuel shall be made by Seller at the St. Maries Mill, shall meet customary hog fuel standard, and does not include log
yard debris. 
 1.2 Generally. Seller warrants that it will have at the time of delivery merchantable title to Residuals sold hereunder free
and clear of liens and encumbrances. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL RESIDUALS DELIVERED UNDER THIS AGREEMENT ARE WITHOUT ANY WARRANTIES OF ANY KIND WHATSOEVER, 

 
INCLUDING WITHOUT LIMITATION, ANY EXPRESS OR IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR ANY STATUTORY WARRANTY. 
 ARTICLE II 
 QUANTITIES

 During the term of this Agreement, Seller shall sell to Buyer, and Buyer shall purchase from Seller, the following quantities of
Residuals: 
 2.1 Sawdust and Chips. Seller shall sell, and Buyer shall purchase, 100% of the output of sawdust, and 100% of the output of
Chips, produced at the St. Maries Mill. 
 2.2 Hog Fuel and Plytrim. Seller shall sell, and Buyer shall purchase, 100% of the Excess Output of
the hog fuel and plytrim produced at the St. Maries Mill. As used herein, “Excess Output” means the quantity produced in excess of the amount of hog fuel and plytrim utilized in the operation of the three boilers at the St. Maries
Mill or, in the case of plytrim, supplied by Seller to its mill located in Post Falls, Idaho (the “Post Falls Mill”). 
 2.3
Output Contract. The parties understand that this Agreement is an output contract only, and does not obligate Seller to produce any specific amount of Residuals. Seller may suspend or curtail its production of Residuals without liability in
connection with mill outages, changes in operations, shift reduction, downtime, mill closures, changes in market prices or costs, and other similar events within or outside of Seller’s control. 
 ARTICLE III 
 DELIVERY, LOADING AND
MEASUREMENT 
 3.1 Transportation and Measurement. Residuals will be delivered FOB Buyer’s truck at the St. Maries Mill. Buyer shall
be responsible for making arrangements for transporting Residuals from the St. Maries Mill and paying the cost of transportation. Seller will maintain appropriate facilities for loading trucks at the St. Maries Mill in substantially their present
condition to allow truck drivers to load trucks in accordance with standard industry practice. Buyer shall schedule sufficient trucks to take delivery of Residuals on a regular basis, and in any event remove Residuals before the volume in storage at
the St. Maries Mill exceeds customarily available storage capacity. Buyer shall determine the weight of each truckload of Residuals by weighing the truck before and after unloading, utilizing a state certified scale. Buyer shall at all times
maintain the scales in good and accurate working condition. 
 Buyer shall determine the percentage of moisture content of Residuals in each
load by customary laboratory procedures based upon representative samples. The percentage so determined shall be multiplied by the weight, in pounds, of the load and the product shall be deducted from the total pounds in the load. The remainder
shall be divided by 2,000 and the quotient shall constitute the number of bone dry tons or “BDTs” (2,000 pounds of moisture-free fiber) in the load. A summary of the scale tickets and moisture test results shall be made available to
Seller through an internet site or will be supplied to Seller upon its written request. Seller may make test measurements of load weight and moisture content from time to time, at Seller’s expense. If such measurements show that 

  

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payments need adjustment, up or down, the correction shall be applied to the load measured and the five (5) truckloads of Chips, sawdust, hog fuel or
plytrim, as the case may be, received by Buyer immediately prior to the load measured. Buyer shall make any compensation adjustments within five (5) days after such adjustment is mutually agreed to. 
 3.2 Inspection. Buyer shall inspect and sample each load of Residuals after arrival at the Buyer’s Mill and shall promptly notify Seller of any
failure of the Residuals to conform to the Specifications. If Buyer fails to give such notice with respect to any load within twenty-four (24) hours after arrival at the Buyer’s Mill, such load of Residuals will be deemed to conform to the
Specifications and Buyer will be deemed to have accepted and shall be obligated to pay for such load. 
 Whenever Buyer determines as a
result of its reasonable inspection that any load of Residuals delivered fails to conform to the Specifications, Buyer shall immediately notify Seller. If Buyer reasonably rejects any such quantity as failing to meet the specifications, Buyer may
dispose of the rejected Residuals, in any manner it deems appropriate without any payment therefor to Seller. Freight charges on any rejected Residuals, and any costs incurred by Buyer in disposing of the rejected load shall be Seller’s
responsibility, and shall be promptly paid upon billing by Buyer. Title and risk of loss or damage of Residuals shall pass to Buyer when the Residuals are loaded on the truck at the St. Maries Mill for delivery to Buyer. 
 3.3 Records. Buyer shall keep accurate records of deliveries of Residuals, including weight by truck and the results of moisture tests. Such records shall be
retained for at least two years after delivery of Residuals, and shall be available for inspection by Seller at reasonable times after reasonable notice. 
 ARTICLE IV 
 PRICE AND PAYMENT 
 4.1 Prices of Residuals. Prices of Residuals commencing on the Effective Date (the “Initial Price Date”) shall be as follows: 
  

				
	 Chips (Red & White Fir)
	  	$	        /BDT
	 Chips (Cedar)
	  	$	        /BDT
	 Sawdust
	  	$	        /BDT
	 Hog Fuel and Plytrim
	  	$	        /BDT

 On February 1 of each year, commencing February 1, 2010, the price for each of Chips,
sawdust, hog fuel and plytrim shall be adjusted to reflect fair market value of such items in Central Idaho considering any market premium for Forest Stewardship Council (“FSC”) certified residuals (the “Residual Price Reset
Date”). The parties shall endeavor to agree on such fair market values no later than ten (10) days prior to the Residual Price Reset Date. Either party may request that the price for the Residuals as to which the parties have not
reached an agreement (the “Unpriced Residuals”) shall be determined by arbitration in accordance with Section 4.2. 
  

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 If the parties do not agree on a price for Unpriced Residuals by the date the first payment for such
Unpriced Residuals delivered after the Residual Price Reset Date is due, Buyer shall initially pay for such Unpriced Residuals at the last established price for such Unpriced Residuals. After the price for Unpriced Residuals previously delivered is
determined by arbitration or by agreement, (i) the price of such Unpriced Residuals shall be retroactively adjusted back to the relevant Residual Price Reset Date and (ii) within five (5) days after such determination, an adjustment
payment shall be made by Buyer to Seller, or Seller to Buyer, as the case may be, to adjust the price for such Unpriced Residuals to the price as determined by the arbitrator or the agreement of the parties. 
 On each May 1, August 1 and November 1 (the “Residual Adjustment Dates”), the price for each of Chips, sawdust, hog fuel
and plytrim established at the Initial Price Date or most recent Residual Price Reset Date, as applicable, shall be adjusted by the percentage change in the Applicable Index published immediately prior to the Residual Adjustment Date from the
Applicable Index published immediately prior to the Initial Price Date, if during the first year of the Initial Term, or, thereafter, the most recent Residual Price Reset Date. For example, if the price of Chips was established at $75/BDT as of
February 1, 2010, Residual Price Reset Date and the Applicable Index for Chips published immediately prior to July 1, 2010 was $80/BDT and the Applicable Index published immediately prior to February 1, 2010 was $70/BDT, then the
price effective July 1, 2010 would be $85.725/BDT ($80/$70 = 1.143 x $75/BDT = $85.725/BDT). 
 Seller will provide Buyer notice of any
price change at least seven (7) days prior to each Residual Adjustment Date. 
 The Applicable Index for each of the Residuals is
that for the Western U.S. published by Wood Resources International, Ltd. in the “North American Wood Fiber Review” as follows: 
  

			
	 For Cedar Chips:
	  	 Wood Chip Prices – Lower Columbia River
 Cedar
(avg)

		
	 For Red Fir Chips:
	  	 Wood Chip Prices – Inland Empire
 Douglas (avg)

		
	 For White Fir Chips:
	  	 Wood Chip Prices – Inland Empire
 Hemlock (avg)

		
	 For sawdust:
	  	Sawmill Residue Prices – Inland Empire Sawdust (avg)
		
	 For hog fuel and plytrim:
	  	Sawmill Residue Prices – Inland Empire Hog fuel (avg)

 If an Applicable Index is materially changed or discontinued by the publisher, the parties will meet to select a
new index that will accurately reflect the change in the price of the applicable class of Residuals. If a replacement index cannot be agreed upon, the selection of a replacement index will be determined by arbitration pursuant to Section 4.2.

  

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 4.2 Arbitration. If the parties are unable to agree upon the price for Unpriced Residuals on any Residual
Price Reset Date or the selection of a replacement index following a material change or discontinuance of an Applicable Index, the dispute shall be resolved through “baseball arbitration” as follows: 
 4.2.1. Upon the written notice of either party after reasonable efforts to resolve the dispute (the “Arbitration Notice”), the
parties shall jointly name an arbitrator to resolve the dispute. The arbitrator shall be a seasoned wood by-products professional familiar with pricing of Residuals in the Pacific Northwest who has not performed any work as an employee or consultant
for either party during the previous five (5) years. If the parties are unable to agree on a single arbitrator within ten (10) days after receipt of the Arbitration Notice, then within five (5) days thereafter, each party shall select
its own arbitrator with such qualification, and the two selected arbitrators shall jointly select the arbitrator with such qualification who will resolve the dispute. If any party fails to timely select an arbitrator, then the arbitrator selected by
the other party shall resolve the dispute. If the two arbitrators selected by the parties are unable or unwilling to select an arbitrator to resolve the dispute within ten (10) days, then either party may petition the District Court in
Lewiston, Idaho to select the arbitrator. 
 4.2.2. Once an arbitrator has been selected, each of the parties shall provide the
arbitrator with (i) such documents, evidence and other information as may be desirable to inform the arbitrator of the background and relevant facts of the dispute, and (ii) a proposed final decision on the matters in dispute (the
“Proposed Decision”). Upon evaluating all of the documents, evidence and other information provided by the parties, the arbitrator shall render a decision on the dispute by accepting in whole one party’s Proposed Decision. If
the dispute is a pricing dispute, the arbitrator shall accept the Proposed Decision that most closely reflects the then market value of the Residuals in question, considering any premium for FSC certified Residuals. If the dispute relates to the
selection of a replacement index, the arbitrator shall accept the Proposed Decision which most accurately reflects changes in the market for the applicable Residuals. Provided that the arbitrator has made a decision solely by selecting the Proposed
Decision of one of the parties, the arbitrator’s determination shall be conclusive and binding on the parties. 
 4.2.3. The fees
of the arbitrator(s) shall be paid by the party whose Proposed Decision is not selected by the arbitrator. The prevailing party in such arbitration shall be entitled to recover its reasonable attorney fees and costs in connection with the
arbitration from the other party. 
 4.3 Payment. Payment for Residuals delivered
between the 1st and 15th day of the month shall
be made by the 25th day of the month. Payment for Residuals delivered between the 16th
and the end of the month shall be made by the 10th day of the following month. Payments not made
when due shall accrue interest at the rate of 18% per annum (but in no event higher than the maximum rate permitted by applicable law). Each payment shall be accompanied by a detailed statement setting forth the calculation of the payment. In
the event any truck load of Residuals are lost or destroyed after title has passed to Buyer but before Buyer has determined the BDT content of such truck load, payment for same shall be made on the 15th day of the month following such loss or destruction based on Buyer’s reasonable estimate of the amount lost or destroyed. Such estimate shall be based on the average BDT
content of similar truck load previously received. 
  

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 ARTICLE V 
 TERM 
 This Agreement shall have a term of five (5) years commencing on the Effective Date, and
terminating automatically at 11:59:59 p.m. (Pacific Time), on the fifth anniversary of the Effective Date (the “Initial Term”), unless terminated earlier in accordance with its terms, or extended in accordance with the express terms
of this Section 5. The Term of this Agreement may be extended for one five (5) year extension term commencing immediately upon expiration of the Initial Term upon written notice (the “Extension Notice”) by either party
(the “Extending Party”) to the other party (the “Counterparty”) at least six (6) months prior to the termination date of the current Term; provided, however, that the Counterparty may, in its sole
and absolute discretion, decline to extend the Term of this Agreement by providing written notice to the Extending Party within ninety (90) days after the Counterparty receives the Extension Notice, in which event the Term shall automatically
expire at the end of the Initial Term. The Initial Term and the extension term are sometimes referred to in this Agreement as the “Term.” 
 ARTICLE VI 
 ADDITIONAL PROVISIONS 
 6.1 Shavings. During the Term of this Agreement, if Seller ceases selling or otherwise transferring shavings produced at the St. Maries Mill to the Post
Falls, Mill, then Seller shall sell, and Buyer shall purchase, 100% of the output of shavings, produced at the St. Maries Mill. In such case, the shavings will meet specifications mutually agreed upon by the parties, and will be priced initially at
the last price used by Seller for any intercompany sales or transfers between the St. Maries Mill and its Post Falls Mill and thereafter priced pursuant to Section 4.1. The Applicable Index to be used is that published by Wood Resources
International, Ltd. in the “North American Wood Fiber Review” for Sawmill Residue Prices—Western U.S., Inland Empire, Shavings (avg). For the purposes of this Section 6.1, ceasing the sale or transfer of shavings by Seller does
not include by reason of fire, flood, riots, civil commotion, war, labor strikes or work stoppages, embargoes, weather conditions or restrictions under environmental laws, epidemics or acts of sabotage or any other such cause or causes (whether or
not of a similar nature) beyond the reasonable control of Buyer. 
 6.2 Notices. Any notice required or permitted to be issued or given under
this Agreement shall be made by one of the following methods: (a) fax transmittal; (b) personal delivery; or (c) delivery by certified mail, return receipt requested or national overnight courier service (e.g. Federal Express, UPS,
DHL), all at the address or number listed below. 
  

			
	 If to Seller:
	  	 2200 Railroad Avenue
 St. Maries, ID 83861

Fax: 208-245-2585
 Attn: Manufacturing Manager

  

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	 With a copy to:
	  	 Potlatch Corporation
 601 West First Avenue, Suite
1600
 Spokane, WA 99201
 509-835-1561
 Attn: General Counsel

		
	 If to Buyer:
	  	 Clearwater Paper Corporation
 805 Mill Road –
P.O. Box 1388
 Lewiston, ID 83501
 Fax: 208-799-1918

Attn: Fiber Supply Manager

		
	 With a copy to:
	  	 Clearwater Paper Corporation
 601 West Riverside
Avenue, Suite 1100
 Spokane, WA 99201
 Fax:
 Attn: General Counsel

 Notices given by fax transmittal shall be effective upon electronic confirmation of delivery.
Notices given by personal delivery shall be effective upon actual delivery. Notices given by certified mail shall be effective three (3) business days after deposited in the US mails, postage prepaid. Notices given by national overnight
services shall be effective two (2) business days after delivery to such courier service, fees prepaid. 
 A party may change the fax
and/or address for notice by giving notice of the change, in writing, in accordance with this Section. 
 6.3 Assignment. This Agreement may
not be assigned in whole or in part without the prior written consent of the nonassigning party, such consent not to be unreasonably withheld or delayed. Notwithstanding the foregoing: 
 (a) In the event of a sale or transfer of substantially all of the assets comprising the St. Maries Mill, Seller shall assign this Agreement to the
acquirer. Seller will be released from any liability under this Agreement arising after such assignment upon Buyer’s receipt of an assumption agreement, in a form reasonably acceptable to Buyer, executed by the acquirer of the St. Maries Mill.

 (b) In the event of a sale or transfer of substantially all of the assets comprising Buyer’s Mill, Buyer shall assign this Agreement
to the acquirer. Buyer will be released from any liability under this Agreement arising after such assignment upon Seller’s receipt of an assumption agreement, in a form reasonably acceptable to Seller, executed by the acquirer of the
Buyer’s Mill. 
 (c) Either party may assign any or all of its rights and interests hereunder, or delegate any or all of its obligations
hereunder to one or more of its affiliates. 
  

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 Except as provided in Sections 6.3(a) or (b), no assignment shall relieve the assigning party from
its liability under this Agreement. 
 6.4 Default. If either party should fail or neglect to perform or observe any of its covenants or
obligations contained herein, and such default shall continue for thirty (30) days or more after written notice of such failure or neglect shall be given by the other party, or if a bankruptcy or receivership proceeding, voluntary or
involuntary, should be commenced against a party, or if assignment of a party’s property shall be made for the benefit of creditors, then in any of such events the other party may, by written notice, terminate this Agreement. Such termination
shall not relieve the defaulting party from liability for damages (subject to the limitations below). NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE FOR INDIRECT OR CONSEQUENTIAL DAMAGES, LOST PROFITS OR
PUNITIVE DAMAGES. Except as provided in the previous sentence, it is agreed that the remedies given herein are not exclusive and are without prejudice to any other remedy available, and that in addition thereto the parties hereto shall have all
other remedies expressly set forth in this Agreement or that are available at law or in equity. 
 6.5 Integration. This Agreement constitutes
the entire agreement and understanding between the parties concerning the subject matter hereof, and supersedes and replaces all prior negotiations, proposed agreements and agreements, written or oral, relating thereto except as expressly set forth
herein. There are no promises, statements, covenants, representations, or warranties, expressed or implied, oral or written, about the subject matter of this Agreement that are not contained herein. 
 6.6 Choice of Law. The parties agree that this Agreement shall be governed by and construed in accordance with the laws of the State of Idaho without
reference to its rules governing conflict of laws. 
 6.7 Attorney Fees. If a party to this Agreement files an action in any court or other
forum (including in or in connection with any bankruptcy proceeding) to enforce compliance with any term of this Agreement or to allege a breach thereof against the other party, the prevailing party in that action shall be entitled to recover all
reasonable attorneys’ fees, costs and any necessary disbursements incurred therein, including, without limitation, expert witness fees, deposition costs, court clerk fees, service fees, and printing costs, in addition to any other relief to
which the party may be entitled at trial or upon appeal. 
 6.8 No Third Party Beneficiaries. This Agreement creates no rights in favor of any
third party not a party to this Agreement. 
 6.9 Severability. If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not
held invalid or unenforceable. 
 6.10 Amendments; Modifications; Waiver. Neither this Agreement nor any term or provision thereof may be
waived, modified, or amended, except by a written agreement signed by the party against whom the waiver, modification, or amendment is sought, and even then, only to the extent set forth in such written instrument. The failure of either party to
enforce at any time any of the 

  

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provisions of this Agreement shall in no way be construed to be a waiver of any such provision, nor in any way to affect the validity of this Agreement nor
any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of or non-compliance with this Agreement shall be held to be a waiver of any other subsequent breach or non-compliance. No waiver
of any provision of this Agreement shall be effective unless made in writing by the party against which the waiver is to be effective 
 6.11
Construction. The parties to this Agreement have participated fully in its negotiation and preparation, with benefit of legal counsel, and accordingly, the Agreement shall not be more strictly construed against either one of the parties.
Section headings used in this Agreement are for ease of reference only and shall have no bearing on the interpretation or construction of any provisions of this Agreement. 
 6.12 Counterparts. This Agreement may be executed in counterparts, each of which is deemed to be an original, but all of which together shall constitute one and the same instrument. Delivery of an
executed signature page to this Agreement by facsimile or electronic transmission shall be as effective as delivery of a manually signed counterpart thereof. 
 THIS ST. MARIES RESIDUALS SALES AGREEMENT is executed by Buyer and Seller as of the date first hereinabove set forth. 
  

									
	BUYER:	 		 	 Clearwater Paper Corporation,
 a Delaware
corporation

				
		 		 		 	By:                                       
                                         
                                    
		 		 		 	Name:                                      
                                         
                               
		 		 		 	Title:                                      
                                         
                                 
			
	SELLER:	 		 	 Potlatch RetainCo, LLC
 a Delaware limited
liability company

				
		 		 		 	By:                                       
                                         
                                    
		 		 		 	Name:                                      
                                         
                               
		 		 		 	Title:                                      
                                         
                                 

  

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 EXHIBIT A 
 

 
  

			
	Chip Specifications:	  	
		
	Definitions:	  	
		
	Overlong Chips	  	Larger than 45 mm round hole (~1 3/4”)
		
	Over thick Chips	  	More than 10 mm (~ 3/8”)
		
	Accepts	  	Less than 10 mm thick, maximum length  7/8”
		
	Pin Chips	  	Less than 7 mm (~ 1/4”)
		
	Fines	  	Less than 3 mm (~ 3/16”)
		
	Target Chip Specifications	  	
		
	Overlong Chips	  	1.5%
		
	 Over thick chips
	  	3.5%
		
	 Accepts
	  	89%
		
	 Pin Chips
	  	4.5%
		
	 Fines
	  	1%
		
	 Bark
	  	.5%
		
	 Contaminants:
	  	
	
	Chips should be free of contaminants like inorganic dirt, char, decayed wood, foreign matter (rubber, plastic, etc.)

  

 Exhibit AForm of Lease and Option Agreement

 Exhibit 10.7 
 LEASE AND OPTION AGREEMENT 
 THIS LEASE AND OPTION AGREEMENT (this “Lease”) is made as of
the                  day of                 ,
20                , between Potlatch Forest Holdings, Inc., a Delaware corporation, and Clearwater Paper Corporation, a Delaware corporation. 

1. Definitions. The following terms as used in this Lease shall have the meanings hereinafter set forth: 
  

	 	1.1	“Landlord”: Potlatch Forest Holdings, Inc., a Delaware corporation. 

  

	 	1.2	“Tenant”: Clearwater Paper Corporation, a Delaware corporation. 

  

	 	1.3	“Leased Premises”: That certain property together with any improvements thereon located in the County of Desha, State of Arkansas, more particularly described in
Schedule I attached hereto, and as shown on the plot plan attached hereto as Exhibit A. 

  

	 	2.	Term / Permitted Use. 

 2.1 Landlord leases and Tenant rents the Leased Premises for a primary term of twenty
(20) consecutive years commencing on the date of this Lease (“Commencement Date”) and terminating on the twentieth (20th) anniversary of the date of this Lease. 
 2.2 Tenant, by giving Landlord at least sixty (60) days’ written notice
before the expiration of the primary term, may extend the term of this Lease for ten (10) additional years on the same terms and conditions, except length of term, as the primary term. 
 2.3 Tenant may use the Leased Premises only for agricultural purposes using good farming practices and, subject to the provisions of Section 18
below, for land application of permitted biosolids under Arkansas Department of Environmental Quality Permit No. AR0035823 or any permit of a similar nature that may be issued to Tenant in the future (collectively, “Permits”). 

 

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	 	3.	Rent. 

 3.1 Rent shall consist of an annual
rental (“Annual Rent”) of Seventeen Thousand Five Hundred Fifty and No/100 Dollars ($17,550.00), payable in equal monthly installments in advance on the first day of each calendar month during the term. 
 3.2 Rent shall commence on the date of this Lease. Rents for any partial rent period after the date rent payments commence shall be prorated. 

3.3 Rent payments shall be mailed to the address provided in Article 14 (Notices). 
 3.4 Except as provided in Section 3.7 below, beginning on the first anniversary of the date of this Lease, and on the same date every year
thereafter, the Annual Rent shall be increased by an amount equal to two and seventy-five hundredths percent (2.75%) of the amount of Annual Rent immediately prior to such adjustment. 
 3.5 [Reserved] 
 3.6 [Reserved] 

3.7 At any time that is more than ten (10) years after (a) the Commencement Date, or (b) the last rent adjustment made under this
section, whichever is later, any party to this Lease by written notice to the other party (“Readjustment Notice”), may opt to have the Annual Rent readjusted to the fair market rental value of the land comprising the Leased Premises
(excluding any improvements constructed by Tenant) subject to all of the terms, covenants, conditions and agreements set forth in this Lease computed as of the 
  

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date of the Readjustment Notice (“Fair Market Rental Value”). The party giving the Readjustment Notice shall include with the Readjustment Notice
that party’s opinion as to the Fair Market Rental Value. Within fifteen (15) days after receipt of a party’s Readjustment Notice, the other party shall provide written notice to the fist party either accepting the first party’s
valuation or stating the other party’s opinion as to the Fair Market Rental Value. In the event Landlord and Tenant are unable to agree on the Fair Market Rental Value within fifteen (15) days after the first party’s receipt of the
other party’s notice of valuation, the parties shall agree upon the appointment of an appraiser who shall be a member of the Appraisal Institute having the M.A.I. professional designation. The appraiser so appointed shall immediately proceed to
determine the Fair Market Rental Value. In the event Landlord and Tenant are unable to agree upon an appraiser, either party shall have the right, upon ten (10) days prior written notice to the other party, to apply to the Appraisal Institute
or to the presiding judge of the court sitting in the county in which the property is located, or other appropriate tribunal, for appointment of an appraiser. Each party shall pay when due one-half ( 1/2)of the appraiser’s fee. Each party shall also pay all costs and attorney’s fees incurred by it in any judicial proceeding or any proceeding before the Appraisal
Institute which is not attributable to the default of the other party. Until the Fair Market Rental Value is determined, Tenant shall pay rent as if no Readjustment Notice had been given. Upon final determination of the Fair Market Rental Value,
Annual Rent shall be adjusted retroactive to the date of the Readjustment Notice and an appropriate payment shall be immediately made between the parties to effectuate the retroactive readjustment. Following any such readjustment of the Annual Rent
under this section, the annual adjustments shall continue under Section 3.4 above, provided however, that such adjustments shall thereafter occur on each anniversary of the date of the most recent Readjustment Notice. 
  

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 4. Tenant’s Fixtures. Tenant may install on the Leased Premises such fixtures
and equipment as Tenant deems desirable without significant disturbance, and all of said items shall remain Tenant’s personal property whether or not affixed to the Leased Premises. Tenant may remove Tenant’s personal property from the
Leased Premises at any time but shall repair any damage caused by removal. 
 5. Landlord’s Title. Landlord covenants that
Landlord has lawful title to the Leased Premises and full right to make this Lease and that Tenant shall have quiet and peaceful possession of the Leased Premises. Landlord warrants and represents that title to the Leased Premises is free and clear
of all encumbrances, easements, assessments, restrictions, tenancies and other exceptions to title except the lien of current taxes and that certain Farm Lease Agreement (the “Farm Lease”) dated March 2008 between Landlord, as lessor, and
Linn Farms, Inc., as lessee. The Landlord’s interest in the Farm Lease is hereby assigned to Tenant and Tenant hereby assumes all of Landlord’s obligations under the Farm Lease arising in or after the date of this Lease, excluding
Landlord’s obligation to pay taxes pursuant to the Farm Lease, any obligations relating to the condition of Landlord’s title to the Leased Premises, and any obligations that only the owner of the fee simple estate can perform. 

 

	 	6.	Construction and Alteration of Building Improvements. 

 6.1 Subject to the limitations set forth in this Section 6.1, Tenant may, at Tenant’s expense, raze any improvements on the Leased Premises and construct on the Leased Premises any improvements, and make
such repairs, additions, alterations and improvements thereto as Tenant may deem desirable, so long as the value of the Leased Premises is not diminished thereby. Landlord 

  

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shall not be obligated to maintain, replace or rebuild any improvements thereon. Tenant shall not be obligated to maintain, replace or rebuild any
improvements thereon, except to the extent necessary for Tenant to conduct its use of the Leased Premises in accordance with paragraph 2.3 above. Landlord may require Tenant to remove any improvements constructed on the Leased Premises by Tenant
upon the latter of the expiration of the primary term or an extension thereof, provided Landlord notifies Tenant of such requirement prior to such expiration and provides Tenant with access to the Leased Premises for a reasonable period of time
after such expiration to complete such removal. The foregoing notwithstanding, if Tenant is allowed to conduct land application of Tenant’s permitted biosolids pursuant to Section 18.2, such land application shall be allowed regardless of
whether it may diminish the value of the Leased Premises and Landlord shall have no right to require Tenant to remove such biosolids or any other alterations or improvements associated with such land application activity. 
 6.2 Fee title to all improvements constructed on the Leased Premises by Tenant, even though a part of the realty, shall be and remain in Tenant during
the term of this Lease. Upon the termination of this Lease, unless the Leased Premises are simultaneously purchased by Tenant pursuant to Section 18 below, fee title to any such improvements then located on the Leased Premises shall pass to and
vest in Landlord. 
 6.3 Tenant shall not permit any lien to stand against the Leased Premises for work done or materials furnished by or on
behalf of Tenant, provided that Tenant may contest the validity of such lien, but upon a final determination of the validity thereof, Tenant shall cause the lien to be satisfied and released of record. 
  

 5 

	 	7.	Taxes, Utility Charges, Etc. 

 7.1 Except as
otherwise provided in this Section 7.1, Landlord shall pay all taxes and assessments on the Leased Premises on or before the due date. Tenant shall pay any taxes and assessments which may be separately assessed on any improvements installed by
Tenant for the period this Lease is in effect, with such taxes and assessments to be prorated to the first and last days of the term. 
 7.2
Tenant agrees to pay all charges for electricity, gas, heat, water, telephone and other utility services used on the Leased Premises during the term of this Lease. 
 8. Indemnification. Tenant agrees to indemnify Landlord and save Landlord harm-less from any and all liability, damage, expense, causes of action, suits, claims or judgments arising from injury to person
or property on the Leased Premises, except if caused by the willful or negligent act of Landlord or Landlord’s agents or employees. 
  

	 	9.	Condemnation. 

 9.1 In the event of a taking
of the Leased Premises by eminent domain or any transfer in lieu thereof or by any other governmental action which taking or damage deprives Tenant of possession of twenty percent (20%) or more of the acreage of the Leased Premises, Tenant may
cancel this Lease as of the taking by notice to Landlord within three (3) months after the taking or damage deprives Tenant of possession of the Leased Premises or of any other rights of Tenant under this Lease. 
 9.2 If this Lease is so terminated, Tenant shall deliver to Landlord a deed transferring to Landlord title to any remaining Tenant improvements on the
Leased Premises. 
  

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 9.3 In the event this Lease is not terminated pursuant to Section 9.1, the rent under Article 3
(Rent) shall be reduced in the ratio which the remaining land area in the Leased Premises bears to the total Leased Premises. 
 9.4 In the
event of any condemnation and whether or not Tenant elects to terminate this Lease, Tenant shall be entitled to any and all awards or payments made in the condemnation proceedings in respect to any damage to (a) Tenant’s leasehold
interest, and (b) any improvements constructed or fixtures installed on the Leased Premises by Tenant. 
 10. Assignment
and Subletting. Tenant may sublet the whole or any part of the Leased Premises. This Lease may not be assigned in whole or in part by Tenant without the prior written consent of Landlord, such consent not to be unreasonably withheld or
delayed. Notwithstanding the foregoing, in the event of a sale or other transfer of substantially all of the assets comprising the Tenant’s mill adjacent to the Leased Premises (a “Mill Transfer”), Tenant may assign this Lease to the
transferee. In the event of a Mill Transfer, if the transferee assumes all of Tenant’s obligations arising after such Mill Transfer in a form reasonably acceptable to Landlord, the assigning Tenant shall be released from any liability under
this Lease arising after such Mill Transfer. In all other events, if Tenant assigns this Lease, the assigning Tenant shall remain liable to Landlord for full performance of Tenant’s obligations under this Lease. 
  

	 	11.	Default. 

 11.1 Either party shall be deemed
to be in default upon the expiration of thirty (30) days from the receipt of written notice from the other party specifying the particulars in which such party has failed to perform the obligations of this Lease unless that party, prior to the
expiration of said thirty (30) days, has rectified the particulars specified in the notice. However, such party shall not be in default if such failure (except the failure to pay money) cannot be rectified within said thirty (30) day
period and such party is using good faith and commercially reasonable efforts to rectify the particulars. 
  

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 11.2 If the defaulting party is Tenant, Landlord may decree the term ended and enter the Leased Premises;
or Landlord may re-enter the Leased Premises and sublet the whole or any part thereof, for the account of the Tenant, upon as favorable terms and conditions as the market will allow. In the latter event, Landlord shall have the right to collect any
rent which may thereafter become payable under such sublease and to apply the same first, to the payment of any expenses incurred by Landlord in dispossessing Tenant and in subletting the Leased Premises, and second, to the payment of the rent
herein reserved and the fulfillment of Tenant’s covenants hereunder, and Tenant shall be liable for amounts equal to the several installments of rent as they would under the terms of this Lease become due, less any amounts actually received by
Landlord and applied on account of rent as aforesaid. 
 11.3 If the defaulting party is Landlord, Tenant may incur any expenses necessary to
perform the obligation of Landlord as specified in such notice and may deduct such expenses from the rents thereafter to become due. If the default of Landlord is material, Tenant may also cancel this Lease. 
 11.4 The failure of a party to insist upon a strict performance of any of the terms, conditions and covenants herein shall not be deemed a waiver of any
rights or remedies that said party may have, and shall not be deemed a waiver of any subsequent breach or default in the terms, conditions and covenants herein contained. 
  

 8 

 11.5 In addition to the remedies set forth in this Lease, Landlord and Tenant shall have all other
remedies provided by law or statute to the same extent as if fully set forth herein word for word. No remedy herein conferred upon, or reserved to Landlord or Tenant shall exclude any other remedy herein or by law provided, but each shall be
cumulative. 
 12. Compliance with Laws. Tenant agrees not to violate any law, ordinance, rule, regulation or permit of
any governmental authority having jurisdiction over the Leased Premises or Tenant’s use thereof. Tenant may contest the validity of any such law, ordinance, rule, regulation or permit but shall indemnify and hold Landlord harmless against the
consequences of any violation thereof by Tenant. 
 13. Notices. Any notice provided for herein shall be given by
Registered or Certified United States Mail, postage prepaid, addressed, if to Landlord, to Landlord at 601 W. First Avenue, Suite 1600, Spokane, WA 99201, Attn: General Counsel, and, if to Tenant, to Tenant at 601 West Riverside Avenue, Suite 1100,
Spokane, WA 99201, Attn: General Counsel. The person and the place to which notices are to be mailed may be changed by either party by notice to the other. 
 14. Attorneys’ Fees. If either party to this Lease is required to initiate or defend litigation against the other party in any way connected with this Lease, the prevailing party in such
litigation in addition to any other relief which may be granted, whether legal or equitable, shall be entitled to a reasonable attorneys’ fee. If either party to this Lease is required to initiate or defend litigation with a third party because
of the violation of any term or provision of this Lease, or obligation of the other party to this Lease, then the party so litigating shall be entitled to reasonable attorneys’ fees from the other party to this Lease. Attorneys’ fees shall
include attorneys’ 

  

 9 

 
fees on any appeal and in any bankruptcy proceedings. In addition, a party entitled to attorneys’ fees shall be entitled to all other reasonable costs
for investigating such action, taking depositions and conducting other discovery, travel, and all other necessary costs incurred in such litigation. All such fees shall be deemed to have accrued on commencement of such action and shall be
enforceable whether or not such action is prosecuted to judgment. 
 15. Memorandum of Lease. This Lease shall not be
recorded, but upon Tenant’s request, a Memorandum of Lease shall be executed and acknowledged by the parties and recorded in the County where the Leased Premises are located. 
 16. Article Headings. The article headings of the Lease are inserted only for reference and do not affect the terms and provisions
hereof. 
 17. Rights of Successors. All of the rights and obligations under this Lease shall bind and inure to the
benefit of the heirs, personal representatives, successors and assigns of the parties hereto. 
 18. Option to Purchase and
Sell. 
 18.1 Tenant shall have an option to purchase the Leased Premises upon the terms and conditions set forth in Exhibit B
attached hereto (the “Option”), which is incorporated herein. 
 18.2 Tenant shall not use the Leased Premises for land application
of Tenant’s permitted biosolids without giving Landlord at least thirty (30) days’ prior written notice of Tenant’s intention to do so. Within such thirty (30) day notice period, Landlord shall have the right to notify
Tenant that Landlord will require Tenant to purchase the Leased Premises, in which event, Tenant shall have the same obligation to purchase the Leased Premises as if Tenant exercised the Option under Section 18.1 above, and Tenant shall 

  

 10 

 
have no right to use the Leased Premises for land application of Tenant’s permitted biosolids unless and until Tenant completes its purchase of the
Leased Premises, provided Landlord does not default in its obligation to sell the Leased Premises to Tenant, in which case Tenant may land apply its permitted biosolids to the Leased Premises. Any land application of Tenant’s permitted
biosolids pursuant to this Section 18.2 shall be in compliance with the Permits. 
 EXECUTED as of the date first above written.

  

									
	TENANT:	 		 	LANDLORD:
			
	 Clearwater Paper Corporation,
 a Delaware
corporation
	 		 	 Potlatch Forest Holdings, Inc.,
 a Delaware
corporation

					
	By:	 	 	 		 	By:	 	 
		 	                                       
     ,
                                         
       	 		 		 	                                       
     ,
                                         
       

  

 11 

 SCHEDULE I 
 Legal Description 
 TRACT NO. 1: The South Half (S-1/2) of Section 25, 320 acres; the South Half of South Half
of South Half of North Half (S-1/2 
 S-1/2 S-1/2 N-1/2) of Section 25, 40 acres, more particularly described as follows: Begin at an iron pipe marking the
Southwest corner of NW-1/4 of Section 25, Township 11 South, Range 2 West, thence East a distance of 80 chains to the Southeast Corner of NE-1/4 Section 25; thence North a distance of 5 chains along the East line of said Section 25 to a point;
thence West a distance of 80 chains to the point on the west line of said Section 25; thence South on said line a distance of 5 chains to the point of beginning, containing 40 acres, more or less. 
 All of the above in Township 11 South, Range 2 West, and containing in the aggregate 360 acres, more or less. Subject to rights of way for roads, highways, ditches,
utilities and railroads. 
 TRACT NO. 2: A tract of land generally described as the North Half (N-1/2) of Section 36, Township 11 South, Range 2 West,
Desha County, Arkansas, less and except a strip of land 120 feet in width off the west side thereof, and said tract being more particularly described according to plat of survey by Gordon Thurman and Hight & Associates, dated February 25, 1978,
as follows: Beginning at the Southeast Corner of the N-1/2 of said Section 36 which is marked by a steel rod with a brass cap located on the East right of way line of Arkansas State Highway No. 4; thence North 88 degrees 52 minutes 12 seconds West
along the South boundary of the N-1/2 of said Section 36 a distance of 5,002.8 feet to a point; thence North 0 degrees 25 minutes 00 seconds East, parallel to the West boundary of said Section 36 a distance of 2,640 feet to a point on the North line
of said Section 36; thence South 88 degrees 57 minutes East along the North boundary of said Section 36 a distance of 5,119.6 feet to a point marked by an iron pin being the Northeast corner of said Section 36 and being 25.6 feet East of the center
line of Arkansas State Highway No. 4; thence 
 (Continued) 
  

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South 3 degrees 30 minutes West along the East boundary of said Section 36 a distance of 1,487.4 feet to a point; thence South 2 degrees 15 minutes West
continuing along the East boundary of said Section 36 a distance of 1,160.6 feet to the Point of Beginning. Containing in all 307.8 acres, more or less. Subject to rights of way for roads, highways, ditches, utilities and railroad. 
 This lease is subject to the following: 
 Easements for roads, public utilities, drainage canals, and to the prior conveyance by Evelyn Love White to K. M. Phillips of an undivided  1/16th interest in the oil, gas and mineral rights. 
  

 2 

 EXHIBIT A 
 to Lease 
 Depiction of Tracts of Land 
 

 
  

 1 

 EXHIBIT B 
 to Lease 
 OPTION TERMS 
 1. Option: In consideration of the mutual promises set forth in the Lease, to which this exhibit (the “Option”) is attached,
Landlord hereby grants to Tenant the exclusive option to purchase the Leased Premises (as defined in the Lease), together with all easements, rights and appurtenances thereto and any improvements owned by Landlord located thereon (“Subject
Property”), all in accordance with the terms and conditions hereinafter set forth. 
 2. Exercise: Tenant may exercise
this Option by deposit in the United States mail or with an established express delivery service, postage prepaid, of written notice to Landlord at the address specified pursuant to Section 13 (Notices) of the Lease at any time during the term
of the Lease, as the same may be extended, and if not exercised within that time, this Option shall terminate. Pursuant to Section 18.2 of the Lease, Landlord may exercise the right to force Tenant to exercise this Option. 
 3. Purchase Price: The purchase price of the Subject Property shall be determined in the manner set forth below: 
 Upon the exercise of this Option in accordance herewith or in accordance with Section 18.2 of the Lease to which this Option is attached, Tenant,
upon exercise of this Option pursuant to Section 1 of this Option, or Landlord, upon exercise of its right to force Tenant to exercise this Option pursuant to Section 18.2 of the Lease, shall send to the other party the exercising
party’s valuation of a fee simple interest in the Subject Property, subject to all of the terms, covenants, conditions and agreements set forth in this Lease, determined as of the date of the notice exercising this Option (“Fair Market
Value”). The Fair Market Value shall exclude the value of 

  

 1 

 
any improvements constructed by Tenant. Within thirty (30) days after receipt of a party’s notice of exercise of this Option and such party’s
opinion as to Fair Market Value, the other party shall provide written notice to the first party either accepting the first party’s valuation or stating the other party’s opinion as to the Fair Market Value. In the event the parties are
unable to agree on the Fair Market Value within fifteen (15) days after the first party’s receipt of the other party’s notice of valuation, the parties shall agree upon the appointment of an appraiser who shall be a member of the
Appraisal Institute having the M.A.I. professional designation. The appraiser so appointed shall immediately proceed to determine the Fair Market Value. In the event the parties are unable to agree upon an appraiser, either party shall have the
right, upon ten (10) days prior written notice to the other party, to apply to the Appraisal Institute or to the presiding judge of the court sitting in the county in which the property is located, or other appropriate tribunal, for appointment
of an appraiser. Each party shall pay when due one-half ( 1/2) of the appraiser’s fee. Each party shall also pay all
costs and attorney’s fees incurred by it in any judicial proceeding or any proceeding before the Appraisal Institute which is not attributable to the default of the other party. 
 4. Conditions: Notwithstanding the exercise of this Option, Tenant shall not be obligated to purchase the Subject Property unless at or
prior to closing each of the following conditions has been met or Tenant has waived said condition in writing. Landlord agrees to cooperate with Tenant and to execute any documents which may be reasonably necessary or convenient to the performance
of these conditions: 
 a. Title to the Subject Property shall be good and marketable and shall be free and clear of all liens, encumbrances,
easements, assessments, restrictions, tenancies (whether recorded or unrecorded) and other exceptions to title except the lien of taxes not yet due and payable; any exceptions arising by, through or under Tenant; and any other exceptions approved in
writing by Tenant 

  

 2 

 
(collectively, the “Permitted Exceptions”). Between the date of the Lease and the earlier of the close of escrow or the termination of this Option,
Landlord shall not, without Tenant’s prior written approval (i) sign any new lease or occupancy agreement affecting the Subject Property or any portion thereof, or (ii) amend any existing lease (except to the extent required to delete
such existing lease as an objectionable exception to title), or (iii) execute any easement, covenant or restriction (or amendment to any existing easement, covenant or restriction) affecting the Subject Property or any portion thereof (except
to the extent required to delete such easement, covenant or restriction as an objectionable exception to title). Landlord further agrees to remove on or before closing all monetary liens and encumbrances affecting the Subject Property except the
lien of real property taxes not yet due and payable and except any liens or encumbrances arising by, through or under Tenant. 
 b. The
Escrow Holder shall be prepared to obtain from a title insurance company designated by Tenant, upon closing, an extended coverage ALTA Owner’s Policy of Title Insurance in the full amount of the purchase price, insuring that marketable fee
simple title to the Subject Property is vested in Tenant subject only to the Permitted Exceptions. 
 5. Escrow Holder: Prior
to closing, an escrow shall be opened with a title insurance company designated by Tenant or other party mutually agreed upon by the parties (“Escrow Holder”). Landlord shall deposit therein a duly executed and acknowledged Special
Warranty Deed conveying the Subject Property and all of Landlord’s right, title and interest in and to all streets, alleys and rights-of-way adjacent thereto to Tenant subject only to the Permitted Exceptions, together with instructions to
deliver and record the Special Warranty Deed when the Escrow Holder is in a position to pay the purchase price to Landlord. After all of the conditions of 

  

 3 

 
closing as set forth in Section 4 of this Option have been met and Tenant has been so advised, Tenant shall deposit into escrow the purchase price with
instructions to disburse the same to Landlord upon recordation of Landlord’s Special Warranty Deed and issuance of the title insurance policy or binder required by Section 4(b) of this Option. 
 6. Closing: Closing shall be the date on which the Special Warranty Deed to Tenant is recorded which shall be as soon as practicable after
deposit of the balance of the purchase price into escrow but in no event later than fourteen (14) days after the determination of the amount of the purchase price. Possession passes to Tenant on closing. 
 7. Section 1445 Affidavit: At or prior to the time of closing, Landlord shall deliver to Tenant an affidavit in compliance with
Section 1445 of the Internal Revenue Code providing Landlord’s United States taxpayer identification number and business address and stating whether or not Landlord is a “foreign person” as defined in the Internal Revenue Code
and regulations applicable thereto (“Code”). In the event Landlord fails to deliver such affidavit or is a “foreign person” as defined in the Code, Tenant shall be entitled to withhold from the purchase price, and to pay to the
Internal Revenue Service, such amounts as are required to be withheld by the Code, and Landlord agrees to cooperate with Tenant and to furnish Tenant with such tax forms and information as are reasonably required to insure Tenant’s compliance
with the Code. 
 8. Costs: Tenant shall pay the cost of recording the Special Warranty Deed conveying the Subject Property to
Tenant. Any escrow fees shall be paid equally by both parties. Taxes and rentals shall be prorated as of the time of closing. All other closing costs including, without limitation, all other recording fees, state documentary stamps, transfer taxes,
excise taxes, and title insurance premiums shall be allocated between Tenant and Landlord in the manner that is customary for commercial property sales in the County where the Subject Property is located, as determined by the Escrow Holder.

  

 4 

 9. Commissions: Each party represents and warrants to the other that such party has neither
employed nor associated with any broker or agent in connection with this transaction and has not agreed to pay any commissions or finders fees to any other broker or agent. If either party breaches the foregoing warranty, the breaching party agrees
to indemnify, defend and hold harmless the other from and against any and all liabilities, claims, damages, expenses (including reasonable attorney’s fees and reasonable attorney’s fees on any appeal), judgments, proceedings and causes of
action of any kind whatsoever arising out of the claims of any such broker or agent for any such commission. 
 10. Casualty:
Should the improvements, if any, on the Subject Property that are owned by Landlord be damaged or destroyed by fire or other casualty prior to the time of closing, Tenant shall complete the purchase of the Subject Property with the purchase price
being reduced by an amount equal to the fair market value of the improvements (or portion thereof) damaged or destroyed. 
 11.
Condemnation: Should any entity having the power of condemnation decide prior to the time of closing to acquire all or any portion of, or any interest in, the Subject Property, Tenant, at Tenant’s sole option, may elect either (i) to
terminate Tenant’s obligation to purchase the Subject Property by giving written notice to Landlord at any time prior to the time of closing, or (ii) to complete the purchase of the Subject Property with Landlord immediately appointing
Tenant its attorney-in-fact to negotiate with said condemning entity as to its interest in the Subject Property and assigning to Tenant all amounts to be awarded for the Subject Property. Landlord agrees to provide Tenant, within ten (10) days
after Landlord’s receipt of same but in no event later than the time of closing, written notice of any actual or threatened condemnation proceeding. 
  

 5 

	 	12.	Default: 

 a. Neither party shall be deemed to be
in default of this Option except upon the expiration of thirty (30) days (ten (10) days in the event of failure to pay money) from receipt of written notice from the other party specifying the particulars in which such party has failed to
perform its obligations under this Option unless such party, prior to expiration of said thirty (30) day period (ten (10) days in the event of failure to pay money), has rectified the particulars specified in said notice of default.

 b. In the event of a default, the non-defaulting party may: 
 (1) Terminate this Option upon written notice to the defaulting party, recover from the defaulting party all damages incurred by the non-defaulting
party; 
 (2) Seek specific performance of this Option, and, in addition, recover all damages incurred by the non-defaulting party. The
parties declare it to be their intent that this Option may be specifically enforced; 
 (3) Perform or pay any obligation or encumbrance
necessary to cure the default and offset the cost thereof from monies otherwise due the defaulting party or recover said monies from the defaulting party; and 
 (4) Pursue all other remedies available at law, it being the intent of the parties that remedies be cumulative and liberally enforced so as to adequately and completely compensate the non-defaulting party. 

13. Notices: All notices given pursuant to this Option shall be given pursuant to Section 13 (Notices) of the Lease. 
  

 6 

 14. 1031 Exchange: Tenant and Landlord acknowledge that either party may wish to structure this
transaction as a tax deferred exchange of like-kind property within the meaning of Section 1031 of the Code. Each party agrees to reasonably cooperate with the other party to effect such an exchange; provided, however, that (i) the
cooperating party shall not be required to acquire or take title to any exchange property; (ii) the cooperating party shall not be required to incur any expense (excluding attorneys’ fees) or liability whatsoever in connection with the
exchange, including, without limitation, any obligation for the payment of any escrow, title, brokerage or other costs incurred with respect to the exchange; (iii) no substitution of the effectuating party shall release said party from any of
its obligations, warranties, or representations set forth in this Option or from liability for any prior or subsequent default under this Option by the effectuating party, its successors, or assigns, which obligations shall continue as the
obligations of a principal and not of a surety or guarantor; (iv) the effectuating party shall give the cooperating party at least five (5) business days prior notice of the proposed changes required to effect such exchange and the
identity of any party to be substituted in the escrow; (v) the effectuating party shall be responsible for preparing all additional agreements, documents and escrow instructions (collectively, the “Exchange Documents”) required by the
exchange, at its sole cost and expense; and (vi) the effectuating party shall be responsible for making all determinations as to the legal sufficiency, tax considerations and other considerations relating to the proposed exchange, the Exchange
Documents and the transactions contemplated thereby, and the cooperating party shall in no event be responsible for, or in any way be deemed to warrant or represent any tax or other consequences of the exchange transaction arising by reason of the
cooperating party’s performance of the acts required hereby. 
  

 7

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