EXHIBIT 10.1
REAL ESTATE PURCHASE AND SALE
AGREEMENT
No.
510-2.05-0070
(WITH EARNEST MONEY
PROVISION)
Soterra Florida
Timberlands
THIS REAL ESTATE PURCHASE AND SALE
AGREEMENT (“Agreement”) is made and entered into this
28th day of March, 2005, by and between Soterra LLC, a Delaware
limited liability company, whose street address is 439A Katherine
Drive, Flowood, Mississippi 39232, and whose mailing address is
Post Office Box 18, Jackson, MS 39205 (hereinafter
“Seller”), and Plum Creek Timberlands, L.P., a Delaware
limited partnership whose address is 999 Third Avenue, Suite 4300,
Seattle, Washington 98104 (“Purchaser”).
The parties agree to the following
terms and conditions:
1. Timberlands and Other Property
to be Acquired .
1.1 Description of Assets. In
consideration of the mutual covenants set forth in this Agreement,
and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, and subject to all terms of
this Agreement, Seller agrees to sell and convey to the Purchaser
and the Purchaser agrees to purchase from the Seller and take title
to the following:
(a) Real Property . That
certain real property situated in Gadsen, Holmes, Jackson, Santa
Rosa, Walton and Washington Counties, State of Florida; Decatur
County, Georgia; and Geneva County, Alabama, shown on the maps
attached hereto as Exhibit “A” and
incorporated herein by this reference as though fully set forth,
being a portion of the Florida Timberlands of Seller (the
“Property”), including Seller’s rights,
privileges, advantages, and appurtenances thereunto belonging or in
any way appertaining thereto, but only to the extent belonging or
appertaining to the Property, including but not limited to all of
Seller’s right, title, and interest (i) in and to the
reproduction, merchantable, pre-merchantable and unmerchantable
timber, growing, lying, standing or felled, timber interests and
timber rights located on or appurtenant to the Property; (ii) in
and to any mineral, sand, oil, gas, hydrocarbon substances and
gravel and other rights on and under the Property which have not
previously been reserved, severed or conveyed by Seller or
Seller’s predecessors in interest; and (iii) all rights of
Seller in and to any development rights, air rights, water, water
rights, ditch and ditch rights appurtenant to the Property but
subject to the exceptions and reservations described in this
Agreement.
(b) Contracts . All contracts
relating to the operation of the Property, including without
limitation operating contracts, stumpage contracts, leases,
permits, licenses, governmental consents and agreements, approvals
and clearances, agreements for construction of
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roads or other improvements, rights
under any payment, performance, or bonds relating to or associated
with the Property, to the extent assignable (hereinafter, the
“Contracts”). A schedule of timber cutting contracts
that were “open contracts” as of July 2, 2004 and
thereafter including deeds conveying real property, other than
easements and rights of way, since July 2, 2004 is attached as
Schedule 1.1(b ) and incorporated herein by this
reference as though fully set forth (the “Timber Cutting
Contracts”).
(c) Access Rights and
Easements . All rights of Seller in and to any access rights,
rights-of-way and easements appurtenant to the Property, to the
extent assignable (hereinafter, “Access Rights and
Easements”).
(d) Personal Property .
Seller’s maps, property books, aerial photos, plans,
drawings, specifications, renderings, engineering studies,
biological studies particular to the Property, grading or drainage
studies, environmental and hazardous waste studies and reports and
related data and materials in Seller’s possession relating to
the Property, and timber inventory, GIS and IFMS data with respect
to the Property (not including proprietary software)
(“Personal Property”). Purchaser agrees to make all
Personal Property available to Seller upon Seller’s request
and to not destroy the same for five (5) years from the date of the
Closing without the prior written permission of Seller.
1.2 Assets . The Property,
Contracts, Access Rights and Easements and Personal Property are
sometimes collectively referred to as the “Assets.”
Before Closing, Seller and Purchaser shall agree upon an allocation
of the Purchase Price among the Assets (land, timber, and personal
property) and shall utilize the agreed upon allocation for all
income tax purposes for this transaction.
2. Purchase Price
.
(a) The purchase price for the
Assets is Fifty One Million Forty-Six Thousand Nine Hundred
Forty-Five Dollars ($51,046,945.00) (“Purchase Price”).
The Purchase Price is subject to adjustment pursuant to Paragraphs
5(b), 5(d), 6(d), 6 (f) and 10. The Purchase Price shall be payable
in immediately available funds in cash for the personal property
and minerals according to paragraph 1.2 with the balance to be paid
by, at Seller’s option, immediately available funds or one or
more installment notes on the Closing Date for the sale and
acquisition of the Assets as follows:
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(i)
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The Closing
(the “Closing”) will consist of Assets valued at Fifty
One Million Forty-Six Thousand Nine Hundred Forty-Five Dollars
($51,046,945.00), as may be adjusted as described in Paragraph
2(a). No later than ten (10) days prior to the Closing, Seller
shall specify whether the portion of the Purchase Price
attributable to the Installment Note Closing shall be paid in the
form of cash and/or one or more installment notes in amounts
mutually agreed.
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(ii)
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C
ASH T RANSACTION . In the event that Seller specifies that part
or all of the Purchase Price shall be payable in cash, Purchaser
shall wire transfer the funds consistent with Seller’s wire
transfer instructions.
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(iii)
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NSTALLMENT N OTE T RANSACTION . In the event that Seller specifies that part
or all of the Purchase Price shall be payable in the form of one or
more installment notes (“Installment Notes”), the
parties shall complete the portion of the transaction involving the
issuance of installment notes (“Installment Note
Transaction”) in a commercially reasonable manner consistent
with similar transactions involving the sale of timberlands of
similar value that are financed with installment notes. Although
the precise terms of the Installment Note Transaction and the
documentation concerning the Installment Note Transaction may vary
according to the bank (“Bank”) selected by Seller to
provide the credit enhancement for the installment notes, Purchaser
and Seller acknowledge that Purchaser will acquire the Assets in
exchange for one or more Installment Notes according to customary
and commercially reasonable terms, including those required by Bank
in connection with its provision of the credit enhancement. Other
obligations arising out of the Installment Note Transaction will be
set forth in a Reimbursement Agreement, Pledge Agreement and other
documents typically included in Installment Note Transactions
according to customary and commercially reasonable terms required
by Bank. At Closing, Purchaser shall deliver to Seller, for the
purpose of securing Purchaser’s obligations under the
Installment Notes, separate irrevocable standby letters of credit
or bank guarantees (the “Letters of Credit”) issued by
Bank. The Letters of Credit, Reimbursement Agreement, and Pledge
Agreement (collectively the “LC Documents”) delivered
at Closing shall be consistent with those typically included in
Installment Note Transactions and incorporate customary and
commercially reasonable terms required by Bank. At the option of
Seller, for the purpose of securing Purchaser’s obligations
under the Installment Notes, there may be substituted and delivered
at Closing in lieu of LC Documents, a guaranty and ancillary
security documents utilizing commercially reasonable terms required
by Bank.
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(iv)
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C OOPERATION R EGARDING T RANSACTION S TRUCTURE .
Purchaser agrees to cooperate in structuring an Installment Note
Transaction in a tax efficient and cost-effective manner. Seller
agrees to cooperate with Purchaser to structure the Installment
Note Transaction to be reasonably acceptable to Purchaser including
the assets of Buyer LLC being sufficient to pay Buyer LLC’s
reasonably scheduled expenses. In the event that Seller uses such
Installment Note Transaction, Purchaser shall bear all expenses and
costs related to structuring and closing the transaction on an
Installment Note basis, but with regard to such costs and expenses
of Purchaser, Seller shall reimburse Purchaser for all of
Purchaser’s
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reasonable out-of-pocket expenses
and costs to accomplish the Closing relating to the structuring and
closing on an Installment Note basis, including, but not limited
to, the costs of outside legal counsel. Seller and Purchaser agree
to obtain firm estimates (where possible) for any costs to be
incurred including, but not limited to, legal fees from firms
reasonably acceptable to Seller and Purchaser based upon proposed
drafts of documents to be provided by Seller to Purchaser and with
the parties to select one or more of such firms based upon the
estimate. Purchaser agrees to use commercially reasonable efforts
to minimize the costs of obtaining required legal
opinions.
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3. Earnest Money Receipt .
Purchaser hereby deposits with the escrow described in Paragraph 4
herein, the amount of One Million Twenty Thousand Nine Hundred
Thirty-Nine Dollars ($1,020,939.00), in cash, paid or delivered as
earnest money (together with any interest earned thereon, the
“Earnest Money”) being 2% of the Purchase
Price.
4. Time and Place of Phased
Closings; Escrow .
(a) Upon mutual execution, the
parties shall deposit a copy of this Agreement, and such other
documents and monies, including Earnest Money, as are required
hereby into escrow established with Stewart Title Guaranty Company,
1000 Second Avenue, Suite 1620, Seattle, Washington 98104 (the
“Escrow Agent”) pursuant to an escrow agreement
(“Escrow Agreement”) attached as Exhibit
B . At the Closing, the Earnest Money shall be returned to
Purchaser.
(b) The Closing shall occur not
later than June 15, 2005. The Closing shall take place at the
offices of the Escrow Agent. Closing shall mean the point at which
all executed documentation and monies required to close the
transaction have been delivered to escrow, including signed escrow
instructions.
5. Condition of Title and Title
Insurance .
(a) As of the Closing Date, title to
the Property is to be free of all encumbrances or defects except
those listed in the preliminary commitments for title insurance
acceptable to Purchaser as described herein.
(b) Seller shall provide one set of
title commitments to the Property to Purchaser at Seller’s
expense issued by Stewart Title Guaranty Company
(“Stewart”). Seller shall pay any fees to update title
from the date of the title commitments if Closing occurs on a date
that is later than ninety (90) days from the date of such
commitments. Seller and Purchaser shall each pay one-half of the
title insurance premiums for a standard owner’s title
insurance policy. Purchaser agrees to acquire an Owner’s or
Lender’s policy of title insurance (i.e., extended coverage)
from Stewart, or if Purchaser desires to decline title insurance or
acquire title insurance from a title company other than Stewart,
Purchaser agrees to reimburse Seller all
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fees and expenses incurred by Seller
in providing the title commitments including but not limited to
search and exam fees, commitment fees and cancellation fees.
Purchaser shall have until close of business on the thirtieth
(30th) day after Purchaser’s receipt of all of the title
commitments and copies of substantially all of the exception
documents referenced therein (the “Title Review
Period”) to notify Seller in writing of any objections
Purchaser has to any matters shown or referred to in the title
commitments; provided, however, that Purchaser shall have until the
close of business on the tenth (10 th ) day after Purchaser’s
receipt of any missing documents to notify Seller in writing of any
objections Purchaser has to those documents. Monetary encumbrances
to be discharged by Seller shall be paid from Seller’s funds
at the Closing, and shall not be subject to the “Floor”
as hereinafter described. Purchaser shall not object to and shall
accept the following matters which shall be deemed to be Permitted
Exceptions (as hereinafter defined):
(i) liens for taxes, assessments and
other governmental charges which are not yet due and payable as of
the Closing;
(ii) all land use (including but not
limited to forestry, environmental and wetlands), building and
zoning laws, regulations, codes and ordinances affecting the
Property;
(iii) any rights of the United
States of America, the State in which the Property is located or
others in the use and continuous flow of any brooks, streams or
other natural water courses or water bodies within, crossing or
abutting the Property, or title to the submerged lands including,
without limitation, riparian rights and navigational
servitudes;
(iv) title to that portion of the
Property, if any, lying below the mean high water mark of abutting
tidal waters;
(v) all easements, rights-of-way,
licenses and other such similar encumbrances apparent or of
record;
(vi) all existing public and private
roads and streets and all railroad and utility lines, pipelines,
service lines and facilities;
(vii) all encroachments, overlaps,
boundary line disputes, shortages in area, persons in possession,
cemeteries and burial grounds and other matters not of record which
would be disclosed by an accurate survey of the
Property;
(viii) prior reservations or
conveyances of mineral rights or mineral leases of every kind and
character; and
(ix) any loss or claim due to lack
of access to any portion of the Property, provided that lack of
access does not affect more than ten percent (10%) of the acres of
the Property with lack of access being limited to tracts or parcels
identified by Purchaser where the Seller has neither legal access
nor permissive access (although unrecorded). Seller shall on or
before the delivery of the title commitments furnish Purchaser
information to Seller’s knowledge on all tracts lacking legal
access identifying the tract, any recorded easements or
rights-of-way, any unrecorded written or verbal consents to access
the tract and whether or not access has been refused attaching a
map for each tract identified by Seller.
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Furthermore, any title encumbrances or
exceptions that are set forth in the title commitment to which
Purchaser does not object during the Title Review Period (as may be
extended with respect to missing documents as described above)
shall be deemed to be permitted exceptions to the status of
Seller’s title (together with the items listed above shall be
the “Permitted Exceptions”). With regard to items to
which Purchaser does object in writing within the period specified,
Seller shall attempt to cure and remove such items. If Seller is
unable or fails to cure or remove such items within ten (10)
business days of Seller’s receipt of Purchaser’s
written objections, Purchaser may either: (i) waive its objection
and proceed with closing of the affected tract or parcel; or, (ii)
give Seller notice to delete the affected tract or parcel and
adjust the Purchase Price as set forth herein. Any notice to Seller
shall be in writing and shall be given no later than five (5)
business days after expiration of Seller’s 10-day cure
period. If Purchaser fails to give such notice to Seller within the
time specified, the objection(s) shall be deemed waived by the
Purchaser. The value of any adjustment to the Purchase Price will
be determined by a computation of the number of acres utilizing the
specific values reflected on the chart attached hereto as
Schedule 5 (b) and incorporated herein by this
reference as though fully set forth. Any such excluded acreage
shall be aggregated with such surrounding acreage not to exceed
forty (40) acres unless the excluded tract exceeds forty (40) acres
or Seller establishes that a larger tract is reasonably necessary
to create an economically marketable parcel, as reasonably
determined by Seller and Purchaser. In the event Seller and
Purchaser are unable to agree upon the specific acreage to be
excluded, the parties agree to resolve the dispute through
arbitration with Larson & McGowan, Inc. making a final
determination as sole arbitrator, to which the parties agree to be
bound. The parties shall close as scheduled on the transaction
contemplated by this Agreement, adjusting the purchase price by the
disputed amount, escrowing the disputed amount and close on the
disputed amount and Property upon the conclusion of arbitration
(the “Arbitration Process”). In the event of any such
carve-outs, Seller shall reserve or Purchaser shall grant such
rights for ingress, egress and utilities as may be required to
access such parcel. For the purposes of all adjustments to Purchase
Price arising out of title claims or defects and environmental
claims or defects, Purchaser shall not be entitled to request and
obtain an adjustment to the Purchase Price until the claims, or
defects, arising from title and environmental claims or defects
individually or collectively could lessen the value of the Assets
by, or cause damage of, at least six/tenths of one percent (0.6%)
of the Purchase Price (the “Floor”). If title or
environmental claims individually or in the aggregate do not exceed
the Floor, there shall be no adjustment to the Purchase Price. If
title or environmental claims exceed the Floor, the Purchase Price
shall be adjusted for title and environmental claims by reducing
the Purchase Price by the amount of the claims above the Floor
subject to the Ceiling for claims of ten percent (10%) of the
Purchase Price (“Title and Environmental Claim
Ceiling”). If the total title and environmental claims exceed
the Claim Ceiling, either Seller or Purchaser may terminate this
Agreement, the Earnest Money shall be returned to Purchaser with
neither Seller nor Purchaser having any further liability to each
other.
(c) Seller has provided Purchaser
with copies of all encumbrances not of record that affect the
Property that Seller anticipates would survive each Closing (the
“Temporary Encumbrances”). Purchaser agrees to accept
the Temporary Encumbrances
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provided the Temporary Encumbrances
are of the type and nature customarily accepted by a purchaser in a
large timberland transaction. At Closing, Seller shall assign and
Purchaser shall assume Seller’s rights, duties, obligations
and liabilities under the Temporary Encumbrances accepted by
Purchaser pursuant to an Assignment and Assumption Agreement
substantially in the form attached hereto as Exhibit
C . Any income from the Temporary Encumbrances shall be
pro-rated to the Date of Closing. Notices of the assignment shall
be executed by Seller and Purchaser at Closing and mailed to the
third party benefiting from the Temporary Encumbrances.
(d) Purchaser and Seller agree to
amend this Agreement with formal legal descriptions as Exhibit
“A” prior to Closing. During the Title Review Period,
Purchaser has the right to verify the maps attached hereto as
Exhibit “A” against the legal descriptions contained in
the title commitments. In the event of discrepancies causing
Purchaser to believe acres depicted as owned by Seller on the maps
are not included within deed acres from the legal descriptions
(“Missing Acres”), then Purchaser shall have the right
to treat the Missing Acres as a title claim pursuant to the
procedures and subject to the limitations set forth in the
immediately preceding paragraph, provided however, Seller
shall have the right to offset any title claim of Missing Acres by
any additional acres Seller believes are included in deed acres
from the legal descriptions that are not depicted on the maps
(“Additional Acres”). In the event the total Additional
Acres exceed six/tenths of one percent (0.6%) of the Purchase Price
(“the Floor”), then the Purchase Price shall be
adjusted upward for amount of the Additional acreage above the
Floor pursuant to the prices set forth on Schedule
5(b) . If Additional Acreage does not exceed the Floor,
there shall be no adjustment to the Purchase Price.
(e) At Closing, the Seller shall
execute and deliver to Purchaser a Special Warranty Deed (the
“Deed”) for each county in which the Property is
located, warranting title against the claims of all persons
claiming by, through or under Seller, but against none other. All
mineral rights shall be conveyed by quitclaim rather than special
warranty. The Deed shall be free of encumbrances or defects except
(i) such encumbrances or defects that may attach after the Closing
Date through any person other than the Seller, and (ii) the
Permitted Exceptions. The Deeds shall be in the form attached
hereto as Composite Exhibit D and incorporated herein
by this reference as though fully set forth and shall be delivered
to Purchaser, or a person or entity designated by
Purchaser.
6. Inspection; Condition of
Property; Subsequent Acts .
(a) Subject to Seller’s
representations and warranties set forth herein and in the Deeds
and Assignment and Assumption Agreement, Purchaser accepts the
Assets “as is” and “where is,” subject to
the risks of all defects and conditions. Seller has no obligation
to repair or make any improvements to the Premises. The Purchaser
acknowledges that full inspection of the Property has been made or
will have been made by the Closing Date and that neither the Seller
nor its agents, officers, employees or assigns shall be held to any
covenant respecting the condition of the Property or any
improvements thereon nor shall the Purchaser or Seller or the
assigns of either be held to any covenant or agreement for
alterations, improvements or repairs unless the covenant or
agreement relied on is contained herein or is in writing and
attached to
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and made a part of this Agreement.
Purchaser acknowledges and agrees that any documents, cruises,
compilations, timber inventories, environmental audits,
assessments, surveys, plans, specifications, reports and studies
(the “Information”) made available to Purchaser by
Seller are or have been provided as information only and Seller
makes no warranty whatsoever with respect to the accuracy or
completeness of the Information. Without limiting the generality of
the foregoing, SELLER EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY OF
MERCHANTABILITY, AS WELL AS ANY WARRANTY WHATSOEVER WITH RESPECT TO
THE MARKETABILITY, HARVESTABILITY, AGE, SPECIES MIX, SITE
CLASSIFICATION, BOUNDARIES OF THE TIMBER OR THE PROPERTY,
QUANTITIES, TIMBER GRDS, OR QUALITY OF ANY TIMBER ON THE PROPERTY
OR SOILS STABILITY OR CONDITIONS.
(b) Between the date of this
Agreement and the Closing Date, the Seller shall maintain and keep
the Property in substantially the same condition as existed on the
date of this Agreement except Seller shall have the right to cut
timber pursuant to the Timber Cutting Contracts and in accordance
with Paragraph 6(f). Seller shall not extend any timber cutting
contracts without the permission of Purchaser. Further, Seller
shall manage and maintain the Property to a commercially reasonable
standard and shall continue to conduct silvicultural activities to
a commercially reasonable standard, subject to the provisions of
this paragraph. The Seller shall not and shall not allow others to
remove or in any way permit the removal of any timber, harvestable
crops, improvements, or other items from the Property other than as
provided in the Timber Cutting Contracts or as specifically agreed
in writing by Purchaser. Further, Seller may not encumber the
Property without the prior written consent of Purchaser, which
consent cannot be unreasonably withheld. Certain costs incurred by
Seller may be reimbursable at Closing as follows:
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(i)
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As site prep,
planting, herbicide treatment, or any other silvicultural activity
is planned to be performed on any portion of the Property prior to
Closing, Seller shall submit any plans for any site prep, planting,
herbicide treatment, or any other silvicultural activity to
Purchaser for prior approval, such approval to not be unreasonably
withheld. Seller must provide Purchaser at least ten (10) business
days’ notice of any such planned activity and its associated
costs to Purchaser. If Purchaser objects to such activity,
Purchaser must notify Seller in writing of the objection within
five (5) business days of receipt of the notice or Purchaser shall
be deemed to have approved the activity and Seller shall have the
right to undertake the planned activity. Seller shall pay for such
silvicultural activity conducted prior to Closing; provided,
however that Seller shall receive a credit at Closing for all costs
actually expended for reforestation and silvicultural activity that
has been approved by Purchaser.
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(c) Seller is not aware of Seller
being in possession of any environmental audits, assessments or
reports pertaining to the Property.
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(d) Purchaser, its agents and
representatives, shall have the right, from the date hereof until
thirty (30) days from the date of this Agreement to go on the
Property and around and in the Buildings at reasonable times to
conduct an environmental audit and other land, soil and engineering
inspections, tests and feasibility studies utilizing current ASTM
standards (“Purchaser’s Environmental
Evaluation”). Seller agrees to cooperate with Purchaser in
the conduct of Purchaser’s Environmental Evaluation. In the
event the Purchaser’s Environmental Evaluation reveals a
commercially reasonable adverse environmental condition (other than
promiscuous dumps containing household refuse and white goods of
one-half acre or less for each dump site) existing upon the
Property, then Purchaser shall notify Seller in writing of any such
adverse environmental condition within ten (10) days after the end
of the foregoing thirty (30) day period. In no event shall
Purchaser report any such adverse environmental condition to any
governmental authority without first affording Seller the right to
review the information on said condition and to make independent
notification to said governmental authority if Seller believes such
notification is required. Purchaser shall have the right to delete
the affected acreage affected by commercially reasonable adverse
environmental condition (other than promiscuous dumps containing
household refuse and white goods of one-half acre or less for each
dump site) from Closing; provided, however, if the affected area is
not large enough to constitute a marketable parcel, Seller shall
have the right to enlarge the area not to exceed forty (40) acres
unless the excluded tract exceeds forty (40) acres or Seller
establishes that a larger tract is reasonably necessary to create
an economically marketable parcel, as reasonably determined by
Seller and Purchaser. In the event Seller and Purchaser are unable
to agree upon the specific acreage to be excluded, the parties
agree to comply with the Arbitration Process described in the above
Section 5(b). In the event a survey is required to create such
parcel, Seller and Purchaser shall share equally in the cost of any
such survey by a licensed professional surveyor meeting minimum
standards or other standards approved by Seller provided that
Seller’s costs shall in no event exceed Twenty-Five Thousand
Dollars ($25,000.00). In addition, Seller shall be entitled to
reserve easements for access and utilities to such affected parcel.
The Purchase Price will be reduced by a computation of the number
of acres utilizing the specific values reflected on the chart
attached as Schedule 5 (b) for any acres deleted
(subject to expansion to a marketable parcel as aforesaid) as a
result of Purchaser’s Environmental Evaluation. For the
purposes of all adjustments to Purchase Price arising out of title
claims or defects and environmental claims or defects, Purchaser
shall not be entitled to request and obtain an adjustment to the
Purchase Price until the claims, or defects, arising from title and
environmental claims or defects individually or collectively could
lessen the value of the Assets by, or cause damage of, at least
six/tenths of one percent (0.6%) of the Purchase Price (the
“Floor”). If title or environmental claims individually
or in the aggregate do not exceed the Floor, there shall be no
adjustment to the Purchase Price. If title or environmental claims
exceed the Floor, the Purchase Price shall be adjusted for title
and environmental claims by reducing the Purchase Price by the
amount of the claims above the Floor subject to the Ceiling for
claims of ten percent (10%) of the Purchase Price (“Title and
Environmental Claim Ceiling”). If the total title and
environmental claims exceed the Claim Ceiling, either Seller or
Purchaser may terminate this Agreement, the Earnest Money shall be
returned to Purchaser with neither Seller nor Purchaser having any
further liability to each other.
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(e) Purchaser’s
Indemnification of Seller Arising From Inspections . Purchaser
agrees to come in, defend, hold harmless and indemnify Seller from
any loss, claim or damage arising out of Purchaser’s or
Purchaser’s agents, employees, or contractors inspections or
operations on the Property prior to Closing. If the Closing does
not occur, Purchaser shall also repair any damage to the Property
arising out of Purchaser’s or Purchaser’s agents,
employees, or contractors inspections or operations on the
Property. The obligation of this paragraph shall survive closing of
this transaction or termination of this Agreement.
(f) Credits at Closing . In
addition to the potential adjustments to the Purchase Price as
contained in Paragraphs 5(b), 5(d), 6(d) and 10, the Purchaser
shall receive a credit at Closing in the amount of $546,945.00 for
contract 346-1085. Further, Purchaser shall receive a credit at
Closing for any funds received by Seller after July 2, 2004 and
prior to Closing under any pay-as-cut contracts affecting the
Property.
7. Representations and Warranties
of Seller . Seller represents and warrants to Purchaser as of
this date and as of the date of the Closing:
7.1 Organization . Seller is
a Delaware limited liability company which is duly organized and
validly existing under the laws of the State of
Delaware.
7.2 Good Standing . Seller is
qualified to conduct business in the States of Florida and
Alabama.
7.3 Power and Authority for
Transaction . Seller has the limited liability company power
and authority to execute, deliver and perform this Agreement and
the transactions contemplated herein in accordance with the terms
hereof.
7.4 Authorization; No Violation
or Conflicts . The execution and delivery by Seller of this
Agreement and the due consummation of the transactions contemplated
herein have been duly and validly authorized by all necessary
limited liability company actions on the part of Seller and this
Agreement constitutes a valid and legally binding agreement of
Seller except as enforceability may be limited by bankruptcy,
insolvency, and other similar laws affecting claims and rights
generally or by general equitable principles. Neither the execution
and delivery of this Agreement by Seller nor the consummation by
Seller of the transactions contemplated herein constitute a
violation of Seller’s certificate of formation, operating
agreement or other organizational documentation or agreements or
result in the breach of, or the imposition of any lien on any
assets of Seller pursuant to, or constitute a default under, any
indenture or bank loan or credit agreement, or other agreement or
instrument to which Seller is a party or by which it or any of its
properties may be bound or affected. Except for consents,
approvals, or authorizations which will have been obtained or
actions which will have been taken on or prior to the Closing Date,
no consent, approval, authorization or action by any governmental
authority or any person or entity having legal rights against or
jurisdiction over Seller is required in connection with the
execution and delivery by Seller of this Agreement or for
consummation by Seller of the transactions contemplated
herein.
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7.5 No Defaults . To
Seller’s knowledge (as hereinafter defined), the Contracts
and Access Rights and Easements are valid and in full force and
effect except as would not materially and adversely affect the
Assets. To Seller’s knowledge, neither Seller nor any other
party thereto has breached any material provision of, or is in
default in any material respect under, the terms of any
Contract.
7.6 Condemnation Proceedings
. Seller has not received notice of any condemnation proceeding. To
Seller’s knowledge, no condemnation proceeding is pending or
threatened which would materially preclude or impair the use of the
Property for the respective purposes for which such properties are
currently used.
7.7 Environmental Matters .
To Seller’s knowledge, except as set forth on Schedule
7.7 :
(a) the Property has not at any time
been used for the generation, transportation, management, handling,
treatment, storage, manufacture, emission disposal, release or
deposit of any hazardous substances or fill or other material
containing hazardous substances in material violation of levels
allowed under applicable laws;
(b) there are no underground storage
tanks on the Property; and
(c) Seller has not received
notification from any third party, including but not limited to
governmental agency alleging that the Property is not materially in
compliance with applicable environmental laws.
Subject to Seller’s warranty
set forth in this Paragraph 7.7, the liability for which Seller
remains responsible pursuant to the terms of this Agreement,
Purchaser releases Seller, its parent company and affiliates (for
the purposes of this paragraph “Seller”) from all
costs, losses, liabilities, obligations and claims, of any nature
whatsoever, known and unknown, that Purchaser may have against
Seller or that may arise after the date of Closing based in whole
or in part upon (i) Seller’s failure to comply with any
environmental laws applicable to the Assets; or (ii) the presence,
release or disposal of any hazardous substance, solid waste, or any
other environmental contamination on, within, or from the Assets
before, as of, or after the Closing Date. The above-referenced
release does not cover or apply to any statutory or common law
claim for contribution or indemnity that may arise to the extent
Purchaser suffers any liabilities or obligations from future claims
of any third party (private or government) arising out of (a) or
(b) above.
As used herein, the term
“environmental laws” shall mean all applicable federal,
state or local laws, rules, regulations, governmental permits or
other binding determinations of any governmental authority relating
to or addressing the environment, including, without limitation,
the Comprehensive Environmental Response, Compensation and
Liability Act, as amended (“CERCLA”), and the Resource
Conservation and Recovery Act, as amended (“RCRA”), the
Toxic Substances Control Act, as amended (“TSCA”), the
Clean Water Act, as amended (“CWA”), the Clean Air Act,
as amended (“CAA”), and the Oil Pollution
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Control Act of 1990, as amended
(“OPA”). As used herein, the terms “hazardous
substance” and “release” (as it relates to the
release of hazardous substances as opposed to the release of
claims) have the meanings specified in CERCLA and the terms
“solid waste” and “disposal” (or
“disposed”) have the meanings specified in RCRA. If
either CERCLA or RCRA is amended to broaden the meaning of any term
defined thereby, the broader meaning shall apply to this paragraph
7.7 after the effective date of the amendment. Moreover, to the
extent that applicable State law establishes a meaning for
“hazardous substance,” “release,”
“solid waste,” or “disposal” that is
broader than that specified in either CERCLA or RCRA, the broader
meaning shall apply.
7.8 Suits, Actions or
Proceedings . Except as disclosed in Schedule 7.8
, to Seller’s knowledge, there is (i) no court or
administrative judgment or order which adversely affects the Assets
or current operations thereof; and (ii) no legal, administrative or
other suit, action, proceeding or arbitration, or governmental
investigation pending or threatened which would reasonably be
expected to materially and adversely affect the Assets or current
operations thereof. To Seller’s knowledge, there is no suit,
action, arbitration or other proceeding threatened or pending
before any court or governmental agency, which may result in the
restraint or prohibition of the consummation of the transactions
contemplated by this Agreement.
7.9 Compliance . Except as
disclosed on Schedule 7.9 , Seller has not received
notification from any governmental agency within five (5) years of
the date of this Agreement alleging that the Property or other
properties comprising the Assets are not in compliance with
applicable laws (other than environmental laws which are covered in
Paragraph 7.7) as would materially and adversely affect the Assets.
To Seller’s knowledge, there are no such violations relating
to the use of the Property.
7.10 Schedules . Seller has
delivered to Purchaser herewith the Schedules referred to in this
Agreement. The Schedules that have been delivered to Purchaser by
Seller and attached hereto are applicable to both this Agreement
and another agreement between Seller and Purchaser pertaining to
the remainder of Seller’s Florida Timberlands. Within two
weeks from the date of this Agreement, Seller and Purchaser shall
revise the Schedules by creating new Schedules containing
information applying only to the applicable contract, and shall
amend this Agreement accordingly.
7.11 Marketable Title .
Subject to the Permitted Exceptions and the Temporary Encumbrances,
to Seller’s knowledge, Seller has good and marketable title
to the Assets and at Closing such Assets will be free and clear of
all liens, security interests, charges and encumbrances.
7.12 Disposition of Assets.
Seller has not harvested, nor has Seller allowed the harvest of,
any portion of the Property, nor has Seller disposed or contracted
for the disposal or sale of any of the Property, other than rights
of way and easements in the ordinary course of business, since July
2, 2004 except under contracts on Schedule 1.1(b)
.
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8. Representations and Warranties
of Purchaser . Purchaser represents and warrants to Seller that
as of this date and as of the date of the Closing:
8.1 Organization . Purchaser
is a limited partnership and is duly organized and validly existing
under the laws of the State of Delaware and has the corporate power
to enter into this Agreement and to carry out the transactions
contemplated herein in accordance with the terms hereof.
8.2 Good Standing . Purchaser
is qualified to conduct business in the States of Delaware,
Alabama, Georgia and Florida.
8.3 Power and Authority for
Transaction . Purchaser has the power and authority to execute,
deliver and perform this Agreement and the transactions
contemplated herein in accordance with the terms hereof.
8.4 Authorization; No Violation
or Conflicts . The execution and delivery of this Agreement by
Purchaser and the due consummation of the transactions contemplated
herein have been duly and validly authorized by all necessary
action on the part of Purchaser, and this Agreement constitutes a
valid and legally binding agreement of Purchaser. Neither the
execution and delivery of this Agreement by Purchaser nor the
consummation by Purchaser of the transactions contemplated herein
constitute a violation of Purchaser’s partnership agreement
or other organizational documentation or agreements or result in
the breach of, or the imposition of any lien on any assets of
Purchaser pursuant to, or constitute a default under, any indenture
or bank loan or credit agreement, or other agreement or instrument
to which Purchaser is a party or by which it or any of its
properties may be bound or affected. Except for consents,
approvals, or authorizations which will have been obtained or
actions which will have been taken on or prior to the Closing Date,
no consent, approval, authorization or action by any governmental
authority or any person or entity having legal rights against or
jurisdiction over Purchaser is required in connection with the
execution and delivery by Purchaser of this Agreement or for
consummation by Purchaser of the transactions contemplated
herein.
8.5 Suits, Actions or
Proceedings . To Purchaser’s knowledge (as hereinafter
defined) there is no suit, action, arbitration or other proceeding
threatened or pending before any court or governmental agency,
which may result in the restraint or prohibition of the
consummation of the transactions contemplated by this
Agreement.
8.6 Insolvency . To
Purchaser’s knowledge, there are no attachments, executions,
assignments for the benefit of creditors, or proceedings in
bankruptcy or under any other debtor relief laws contemplated by,
pending, or threatened by or against Purchaser.
8.7 Financial Capability .
Purchaser has or at Closing will have the financial capability to
complete the transactions contemplated under this
Agreement.
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8.8 Installment Notes . If
applicable because of an Installment Note transaction structure,
the execution, delivery, and performance of this Agreement, the
Reimbursement Agreement, the Pledge Agreement and the Installment
Note will have been duly authorized by all necessary corporate
action on the part of Purchaser, and upon execution and delivery
this Agreement, the Assignment of Purchaser’s Interest, the
Reimbursement Agreement, the Pledge Agreement and the Installment
Note will constitute valid and binding obligations of Purchaser
enforceable against Purchaser in accordance with their terms except
as enforceability may be limited by bankruptcy, insolvency, and
other similar laws affecting claims and rights generally or by
general equitable principles.
8.9 Purchaser’s
Assignment . If applicable because of an Installment Note
transaction structure, and the Purchaser enters into an Assignment
pursuant to such installment note structure, that the execution,
delivery and performance of such Assignment will have been duly
authorized by all necessary action on the part of Purchaser, and
upon execution and delivery the Assignment will constitute valid
and binding obligations of Purchaser enforceable against Purchaser
in accordance with its terms except as enforceability may be
limited by bankruptcy, insolvency, and other similar laws affecting
claims and rights generally or by general equitable
principles.
9. Survival; Knowledge and
Materiality .
(a) Survival . The respective
representations and warranties of Seller, Purchaser and Guarantor
contained herein or in any Schedule, certificate or other
instrument delivered by or on behalf of such party pursuant to this
Agreement excluding the environmental matters set forth in
Paragraph 7.7, shall survive Closing for a period of twelve (12)
months, and shall survive Closing for a period of eighteen (18)
months as to Paragraph 7.7 for environmental matters, and
thereafter shall expire and terminate, and each party shall be
forever released from liability to the other based upon such
representations and warranties except as to matters for which
written notice has been given by a party of the inaccuracy or
breach of any representation or warranty on or prior to such
termination date. Seller and Purchaser shall deliver a certificate
to each other at Closing concerning the accuracy of their
representations and warranties at Closing.
(b) Knowledge Defined .
“Knowledge” as used in this Agreement with respect to
the:
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(i)
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Seller shall
mean actual current knowledge (as opposed to constructive or
imputed knowledge) of the fact or matter in question by Matthew B.
Bonham (Vice President, Timberland Operations), Terry Porter
(Regional Manager), and J. R. Baker (Vice President of Property
Administration), all three of the above being employees of Seller,
without their having any duty to conduct further
investigation.
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(ii)
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Purchaser shall
mean actual current knowledge (as opposed to constructive or
imputed knowledge) of the fact or matter in question by Sheri L.
Ward and David Lambert, both being employees of Purchaser, without
their having any duty to conduct further investigation.
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(c) Limitation as to Warranty
Claims . In the event of any claim by Purchaser against Seller
for breach of warranty under this Agreement (other than with
respect to covenants and agreements to be performed by Seller after
Closing), no claim shall be made by Purchaser or payable by Seller
until the amount of loss or damage of Purchaser exceeds six/tenths
of one percent (0.6%) (the “Cushion”) and Seller shall
be obligated only in respect to the amount of the claims exceeding
the Cushion. The aggregate amount paid by the Seller for breach of
warranty shall not exceed seven percent (7%) of the Purchase Price
(the “Warranty Claims Ceiling”). Notwithstanding the
foregoing Cushion and Warranty Claims Ceiling, no such limits shall
apply or be effective with respect to any claim arising from the
intentional breach or fraud of Seller.
10. Condemnation; Risk of
Loss . Risk of loss or damage to the Property by condemnation,
eminent domain or similar proceedings (or deed in lieu thereof), or
by fire or any other casualty, from the date hereof through the
Closing Date will be on Purchaser for the first one-half of one
percent (0.5%) of the Purchase Price. The remaining risk of loss or
damage prior to Closing shall be on Seller. However, should the
loss or damage exceed ten percent (10%) of the Purchase Price,
either Seller or Purchaser may terminate this Agreement and the
Earnest Money shall be returned with neither party having any
liability to the other. If, prior to Closing, a portion of the
Property has been taken by condemnation or eminent domain
proceedings (or deed in lieu thereof) but the ten percent (10%)
maximum loss has not been realized, Purchaser shall consummate the
transaction and receive an assignment of all proceeds of insurance
or condemnation awards attributable to such damage or taking, less
reimbursement to Seller of the reasonable costs it incurred in
procuring such proceeds or awards. At Closing, the Purchaser
assumes all hazards of damage to or destruction of the Property or
improvements hereafter placed thereon, and of the taking of the
Property or any part thereof for public use; and agrees that no
such damage, destruction or taking shall constitute a failure of
consideration.
11. Contingencies
.
(a) Seller’s obligation to
consummate the transactions contemplated hereby is contingent as
follows:
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(i)
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Any approvals
that may be required under the HSR Act (as defined in Paragraph 31
below);
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(ii)
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Purchaser
performing its obligations under the Agreement; and,
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(iii)
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Purchaser having executed and
delivered a Real Estate Purchase and Sale Agreement for the
purchase and sale by Seller to Purchaser of Seller’s
remaining Florida Timberlands in the price of
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Thirty Nine Million Five Hundred
Thousand Dollars ($39,500,000.00).
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(b) In addition to Purchaser’s
timely due diligence investigations as set forth herein,
Purchaser’s obligation to consummate the transactions
contemplated hereby is contingent as follows:
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(i)
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Any approvals
that may be required under the HSR Act (as defined in Paragraph 31
below);
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(ii)
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Seller
performing its obligations under the Agreement; and,
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(iii)
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Seller having
executed and
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