0001341141-14-000040.txt : 20140514 0001341141-14-000040.hdr.sgml : 20140514 20140514161158 ACCESSION NUMBER: 0001341141-14-000040 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20140331 FILED AS OF DATE: 20140514 DATE AS OF CHANGE: 20140514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CatchMark Timber Trust, Inc. CENTRAL INDEX KEY: 0001341141 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 203536671 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36239 FILM NUMBER: 14841643 BUSINESS ADDRESS: STREET 1: 5 CONCOURSE PARKWAY STREET 2: SUITE 2325 CITY: ATLANTA STATE: GA ZIP: 30328 BUSINESS PHONE: 855-858-9794 MAIL ADDRESS: STREET 1: 5 CONCOURSE PARKWAY STREET 2: SUITE 2325 CITY: ATLANTA STATE: GA ZIP: 30328 FORMER COMPANY: FORMER CONFORMED NAME: Wells Timberland REIT, Inc. DATE OF NAME CHANGE: 20061120 FORMER COMPANY: FORMER CONFORMED NAME: Wells Timber Real Estate Investment Trust, Inc. DATE OF NAME CHANGE: 20051011 10-Q 1 cttq1201410-q.htm CTT 10-Q Q1 2014 CTT Q1 2014 10-Q

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
___________________________________________________
FORM 10-Q
___________________________________________________ 
(Mark One)
 
x
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2014
OR
o
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from             to             
Commission file number 001-36239
CATCHMARK TIMBER TRUST, INC.
(Exact name of registrant as specified in its charter)
Maryland
 
20-3536671
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification Number)
5 Concourse Parkway, Suite 2325, Atlanta, GA
Atlanta, GA 30328
(Address of principal executive offices)
(Zip Code)

(855) 858-9794
(Registrant’s telephone number, including area code)
N/A 
___________________________________________________ 
(Former name, former address, and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  x    No   o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files)
Yes  x    No   o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one).
Large accelerated filer
o
 
Accelerated filer 
o
 
 
 
 
 
Non-accelerated filer
x
(Do not check if a smaller reporting company)
Smaller reporting company
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  o    No  x
Number of shares outstanding of the registrant’s classes of common stock, as of April 30, 2014:
Class A Common Stock 15,491,110 shares
Class B-1 Common Stock 3,164,476 shares
Class B-2 Common Stock 3,164,476 shares
Class B-3 Common Stock 3,164,476 shares
 



FORM 10-Q

CATCHMARK TIMBER TRUST, INC.

TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
Page No.
PART I. FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
 
Item 3.
 
 
 
 
 
 
 
Item 4.
 
 
 
 
 
PART II. OTHER INFORMATION
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
Item 1A.
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
 
Item 3.
 
 
 
 
 
 
 
Item 4.
 
 
 
 
 
 
 
Item 5.
 
 
 
 
 
 
 
Item 6.
 




CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q of CatchMark Timber Trust, Inc. and subsidiaries (“CatchMark Timber Trust,” “we,” “our,” or “us”) may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, CatchMark Timber Trust, or the executive officers on CatchMark Timber Trust’s behalf, may from time to time make forward-looking statements in reports and other documents CatchMark Timber Trust files with the Securities and Exchange Commission (the "SEC") or in connection with oral statements made to the press, potential investors, or others. We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in the Securities Act and the Exchange Act. Such statements include, in particular, statements about our plans, strategies, and prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods.
 
Forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date that this report is filed with the SEC. We make no representations or warranties (express or implied) about the accuracy of any such forward-looking statements contained in this Form 10-Q, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
 
Any such forward-looking statements are subject to risks, uncertainties, and other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations, make distributions to stockholders, and maintain the value of our timberland properties, may be significantly hindered. See Item 1A herein, as well as Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2013, for a discussion of some, although not all, of the risks and uncertainties that could cause actual results to differ materially from those presented in our forward-looking statements.






PART I.
FINANCIAL INFORMATION

ITEM 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The information furnished in the accompanying consolidated balance sheets and related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows reflects all normal and recurring adjustments that are, in management’s opinion, necessary for a fair and consistent presentation of the aforementioned financial statements.

The accompanying consolidated financial statements should be read in conjunction with the condensed notes to CatchMark Timber Trust’s consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and with CatchMark Timber Trust’s Annual Report on Form 10-K for the year ended December 31, 2013. CatchMark Timber Trust’s results of operations for the three months ended March 31, 2014 are not necessarily indicative of the operating results expected for the full year.


4


CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
(Unaudited)
 
 
 
March 31, 2014
 
December 31, 2013
Assets:
 
 
 
Cash and cash equivalents
$
3,188,290

 
$
8,613,907

Accounts receivable
1,143,907

 
593,546

Prepaid expenses and other assets
6,102,762

 
2,506,470

Deferred financing costs, less accumulated amortization of $84,292 and $9,633 as of March 31, 2014 and December 31, 2013, respectively
1,423,492

 
1,483,547

Timber assets, at cost (Note 3):

 
 
Timber and timberlands, net
324,417,926

 
325,726,398

Intangible lease assets, less accumulated amortization of $928,331 and $927,451 as of March 31, 2014 and December 31, 2013, respectively
28,754

 
29,634

Total assets
$
336,305,131

 
$
338,953,502

 
 
 
 
Liabilities:
 
 
 
Accounts payable and accrued expenses
$
2,681,181

 
$
3,127,857

Other liabilities
3,103,155

 
3,734,193

Note payable and line of credit (Note 4)
34,000,000

 
52,160,000

Total liabilities
39,784,336

 
59,022,050

 
 
 
 
Commitments and Contingencies (Note 6)

 

 
 
 
 
Stockholders’ Equity:
 
 
 
Class A common stock, $0.01 par value; 889,500,000 shares authorized; 15,491,110 and 13,900,382 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively
154,911

 
139,004

Class B-1 common stock, $0.01 par value; 3,500,000 shares authorized; 3,164,476 and 3,164,483 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively
31,645

 
31,645

Class B-2 common stock, $0.01 par value; 3,500,000 shares authorized; 3,164,476 and 3,164,483 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively
31,645

 
31,645

Class B-3 common stock, $0.01 par value; 3,500,000 shares authorized; 3,164,476 and 3,164,483 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively
31,644

 
31,644

Additional paid-in capital
451,839,466

 
432,117,205

Accumulated deficit and distributions
(155,823,173
)
 
(152,688,059
)
Accumulated other comprehensive income
254,657

 
268,368

Total stockholders’ equity
296,520,795

 
279,931,452

Total liabilities and stockholders’ equity
$
336,305,131

 
$
338,953,502

See accompanying notes.

5


CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(Unaudited)
Three Months Ended
March 31,
 
2014
 
2013
Revenues:
 
 
 
Timber sales
$
8,096,855

 
$
6,151,762

Timberland sales
65,250

 
543,950

Other revenues
707,832

 
692,079

 
8,869,937

 
7,387,791

Expenses:
 
 
 
Contract logging and hauling costs
3,746,904

 
3,263,470

Depletion
1,803,532

 
2,045,353

Cost of timberland sales
49,612

 
378,283

Forestry management expenses
696,438

 
576,704

General and administrative expenses
1,715,958

 
1,350,178

Land rent expense
215,168

 
310,146

Other operating expenses
645,386

 
660,572

 
8,872,998

 
8,584,706

Operating loss
(3,061
)
 
(1,196,915
)
 
 
 
 
Other income (expense):
 
 
 
Interest income
465

 
1,150

Interest expense
(385,463
)
 
(790,495
)
Loss on interest rate swap

 
(474
)
 
(384,998
)
 
(789,819
)
Net loss
(388,059
)
 
(1,986,734
)
Dividends to preferred stockholder

 
(92,134
)
Net loss available to common stockholders
$
(388,059
)
 
$
(2,078,868
)
Per-share information—basic and diluted:
 
 
 
Net loss available to common stockholders
$
(0.02
)
 
$
(0.16
)
Weighted-average common shares outstanding
    —basic and diluted
24,834,373

 
12,713,817


See accompanying notes.

6



CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 
(Unaudited)
Three Months Ended
March 31,
 
2014
 
2013
Net loss
$
(388,059
)
 
$
(1,986,734
)
Other comprehensive income (loss):
 
 
 
     Market value adjustment to interest rate swap
(13,711
)
 
92,473

Comprehensive loss
$
(401,770
)
 
$
(1,894,261
)


See accompanying notes.


7


CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


 
Class A
Common Stock
 
Class B
Common Stock
 
Preferred Stock
 
Additional
Paid-In
Capital
 
Accumulated
Deficit and Distributions
 
Accumulated Other Comprehensive Income (Loss)
 
Total
Stockholders’
Equity
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
 
Balance, December 31, 2013
13,900,382

 
$
139,004

 
9,493,449

 
$
94,934

 

 
$

 
$
432,117,205

 
$
(152,688,059
)
 
$
268,368

 
$
279,931,452

Common stock issued pursuant to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Initial Public Offering
1,578,947

 
15,789

 

 

 
 
 
 
 
21,299,995

 
 
 
 
 
21,315,784

     Long-term incentive plan
11,788

 
118

 

 

 
 
 
 
 
89,129

 
 
 
 
 
89,247

Redemptions of common stock
(7
)
 

 
(21
)
 

 
 
 
 
 
(370
)
 
 
 
 
 
(370
)
Dividends to common stockholders ($0.11 per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2,747,055
)
 
 
 
(2,747,055
)
Stock issuance cost
 
 
 
 
 
 
 
 
 
 
 
 
(1,666,493
)
 
 
 
 
 
(1,666,493
)
Net loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(388,059
)
 


 
(388,059
)
Market value adjustment to interest rate swap
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(13,711
)
 
(13,711
)
Balance, March 31, 2014
15,491,110

 
$
154,911

 
9,493,428

 
$
94,934

 

 
$

 
$
451,839,466

 
$
(155,823,173
)
 
$
254,657

 
$
296,520,795

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Class A
Common Stock
 
Class B
Common Stock
 
Preferred Stock
 
Additional
Paid-In
Capital
 
Accumulated
Deficit and Distributions
 
Accumulated Other Comprehensive Income (Loss)
 
Total
Stockholders’
Equity
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
 
Balance, December 31, 2012
3,180,063

 
$
31,801

 
9,540,188

 
$
95,402

 
37,392

 
$
48,600,055

 
$
301,538,949

 
$
(139,491,344
)
 
$
(687,674
)
 
$
210,087,189

Forfeiture of restricted stock award
(202
)
 
(2
)
 
(606
)
 
(6
)
 
 
 
 
 
(197
)
 
205

 
 
 

Redemptions of common stock
(3,533
)
 
(35
)
 
(10,599
)
 
(106
)
 
 
 
 
 
(219,944
)
 
 
 
 
 
(220,085
)
Dividends on preferred stock
 
 
 
 
 
 
 
 
 
 
92,134

 
(92,134
)
 
 
 
 
 

Net loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,986,734
)
 
 
 
(1,986,734
)
Market value adjustment to interest rate swap
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
92,473

 
92,473

Balance, March 31, 2013
3,176,328

 
$
31,764

 
9,528,983

 
$
95,290

 
37,392

 
$
48,692,189

 
$
301,226,674

 
$
(141,477,873
)
 
$
(595,201
)
 
$
207,972,843



See accompanying notes.

8


CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Unaudited)
Three Months Ended
March 31,
 
2014
 
2013
Cash Flows from Operating Activities:
 
 
 
Net loss
$
(388,059
)
 
$
(1,986,734
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
Depletion
1,803,532

 
2,045,353

Unrealized gain on interest rate swaps

 
(128,934
)
Other amortization
20,415

 
56,745

Stock-based compensation expense
82,997

 

Noncash interest expense
75,341

 
58,161

Basis of timberland sold
37,987

 
337,000

Changes in assets and liabilities:
 
 
 
Increase in accounts receivable
(550,361
)
 
(100,655
)
Decrease in prepaid expenses and other assets
529,036

 
189,234

Decrease in accounts payable and accrued expenses
(446,676
)
 
(195,277
)
Decrease in due to affiliates

 
(581,013
)
Decrease in other liabilities
(631,720
)
 
(617,506
)
Net cash provided by (used in) operating activities
532,492

 
(923,626
)
 
 
 
 
Cash Flows from Investing Activities:
 
 
 
Capital expenditures (excluding timberland acquisitions)
(278,106
)
 
(242,588
)
Timberland acquisitions
(4,347,265
)
 

Furniture and equipment
(60,000
)
 

Funds released from escrow accounts

 
184,225

Net cash used in investing activities
(4,685,371
)
 
(58,363
)
 
 
 
 
Cash Flows from Financing Activities:
 
 
 
Financing costs paid
(14,604
)
 
(524
)
Repayment of note payable
(18,160,000
)
 

Issuance of common stock
21,315,784

 

Redemptions of common stock
(370
)
 
(217,576
)
Dividends paid on common stockholders
(2,747,055
)
 

Stock issuance costs
(1,666,493
)
 

Net cash used in financing activities
(1,272,738
)
 
(218,100
)
Net decrease in cash and cash equivalents
(5,425,617
)
 
(1,200,089
)
Cash and cash equivalents, beginning of period
8,613,907

 
11,221,092

Cash and cash equivalents, end of period
$
3,188,290

 
$
10,021,003


See accompanying notes.

9


CATCHMARK TIMBER TRUST, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2014 (unaudited)

1.
Organization

On September 18, 2013, Wells Timberland REIT, Inc. changed its name to CatchMark Timber Trust, Inc. ("CatchMark Timber Trust"). CatchMark Timber Trust primarily engages in the ownership, management, acquisition, and disposition of timberlands located in the southeastern United States and has elected to be taxed as a real estate investment trust ("REIT") for federal income tax purposes. CatchMark Timber Trust was incorporated in Maryland in 2005 and commenced operations in 2007. CatchMark Timber Trust conducts substantially all of its business through CatchMark Timber Operating Partnership, L.P. (“CatchMark Timber OP”), a Delaware limited partnership formerly known as Wells Timberland Operating Partnership, L.P. CatchMark Timber Trust is the general partner of CatchMark Timber OP, possesses full legal control and authority over its operations, and owns 99.99% of its common partnership units. CatchMark LP Holder, LLC (“CatchMark LP Holder”), a wholly-owned subsidiary of CatchMark Timber Trust, is the sole limited partner of CatchMark Timber OP. In addition, CatchMark Timber TRS, Inc. (“CatchMark TRS”), a Delaware corporation formerly known as Wells Timberland TRS, Inc., was formed as a wholly owned subsidiary of CatchMark Timber OP on January 1, 2006. Unless otherwise noted, references herein to CatchMark Timber Trust shall include CatchMark Timber Trust and all of its subsidiaries, including CatchMark Timber OP, and the subsidiaries of CatchMark Timber OP, including CatchMark TRS.

CatchMark Timber Trust previously operated as an externally advised REIT pursuant to an advisory agreement, as amended and restated (the "Advisory Agreement"), under which Wells Timberland Management Organization, LLC (“Wells TIMO”), a wholly owned subsidiary of Wells Capital, Inc. (“Wells Capital”), performed certain key functions on behalf of CatchMark Timber Trust, including, among others, managing the day-to-day operations, investing capital proceeds and arranging financing. On September 18, 2013, CatchMark Timber Trust and CatchMark Timber OP entered into a Master Self-Management Transition Agreement (the “Master Agreement”), along with a series of other agreements and transactions, with Wells Real Estate Funds, Inc. ("Wells REF") and Wells TIMO (together with their respective affiliates, “Wells”), pursuant to which CatchMark Timber Trust began its transition to a self-managed company. On October 25, 2013, CatchMark Timber Trust completed its transition to self-management. For additional details about the related agreements, please refer to Note 10 - Related Party Transactions and Agreements.

As of March 31, 2014, CatchMark Timber Trust owned approximately 247,400 acres of timberland and held long-term leasehold interests in approximately 30,000 acres of additional timberland, all of which is located on the Lower Piedmont and Upper Coastal Plains of East Central Alabama and West Central Georgia (the "Mahrt Timberland"). CatchMark Timber Trust generates recurring income and cash flow from the harvest and sale of timber, as well as from non-timber related revenue sources, such as recreational leases. CatchMark Timber Trust also periodically generates income and cash flow from the sale of timberland properties that have a higher-value use beyond growing timber, such as properties that can be sold for development, conservation, recreational or other rural purposes at prices in excess of traditional timberland values. CatchMark Timber Trust expects to realize additional long-term returns from the potential appreciation in value of its timberlands as well as from the potential biological growth of its standing timber inventory in excess of its timber harvest.

On October 24, 2013, CatchMark Timber Trust effected a ten-to-one reverse stock split of its then-outstanding common stock. Also on October 24, 2013, CatchMark Timber Trust redesignated all of its common stock as Class A common stock. On October 25, 2013, CatchMark Timber Trust paid a stock dividend pursuant to which each outstanding share of its Class A common stock on October 24, 2013, after effectiveness of the reverse stock split, received one share of Class B-1 common stock; plus one share of Class B-2 common stock; plus one share of Class B-3 common stock. These transactions are referred to as the Recapitalization. All common stock share and per share data included in these consolidated financial statements give retroactive effect to the Recapitalization. See Note 7 - Stockholders' Equity for more information on the Recapitalization.

On September 23, 2013, CatchMark Timber Trust filed a Registration Statement on Form S-11 with the SEC for a public offering of up to $172.5 million of its Class A common stock. On December 12, 2013, CatchMark Timber Trust

10


listed its Class A common stock on the New York Stock Exchange (the "NYSE") under the ticker symbol "CTT". CatchMark Timber Trust completed its listed public offering on December 17, 2013, issuing approximately 10.5 million shares and received gross proceeds of approximately $142.1 million (the "IPO"). After deducting underwriter discounts and commissions of $9.9 million and direct IPO costs of $1.6 million, approximately $80.2 million of the net proceeds were used to repay its outstanding loan balance, $49.0 million were used to redeem the outstanding shares of the Series A and B preferred stock held by Wells REF and the accrued but unpaid dividend.

On January 9, 2014, the underwriters for the IPO exercised their overallotment option to purchase approximately 1.6 million shares of CatchMark Timber Trust's Class A common stock in full. After deducting $1.5 million of underwriter discounts and commissions, CatchMark Timber Trust received net proceeds of $19.8 million, $18.2 million of which was used to pay down the outstanding note payable.

2.    Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation
The consolidated financial statements of CatchMark Timber Trust have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and shall include the accounts of any variable interest entity (“VIE”) in which the Company or its subsidiaries is deemed the primary beneficiary. With respect to entities that are not VIEs, CatchMark Timber Trust’s consolidated financial statements shall also include the accounts of any entity in which CatchMark Timber Trust or its subsidiaries owns a controlling financial interest and any limited partnership in which CatchMark Timber Trust or its subsidiaries owns a controlling general partnership interest. In determining whether a controlling interest exists, CatchMark Timber Trust considers, among other factors, the ownership of voting interests, protective rights, and participatory rights of the investors.

CatchMark Timber Trust owns a controlling financial interest in CatchMark Timber OP, CatchMark LP Holder and CatchMark TRS and, accordingly, includes the accounts of these entities in its consolidated financial statements. The financial statements of CatchMark Timber OP, CatchMark LP Holder and CatchMark TRS are prepared using accounting policies consistent with those used by CatchMark Timber Trust. All intercompany balances and transactions have been eliminated in consolidation.

For further information, refer to the audited financial statements and footnotes included in CatchMark Timber Trust’s Annual Report on Form 10-K for the year ended December 31, 2013.

Fair Value Measurements

CatchMark Timber Trust estimates the fair value of its assets and liabilities (where currently required under GAAP) consistent with the provisions of the accounting standard for fair value measurements and disclosures. Under this guidance, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. While various techniques and assumptions can be used to estimate fair value depending on the nature of the asset or liability, the accounting standard for fair value measurements and disclosures provides the following fair value technique parameters and hierarchy, depending upon availability:

Level 1 — Assets or liabilities for which the identical term is traded on an active exchange, such as publicly-traded instruments or futures contracts.
Level 2 — Assets and liabilities valued based on observable market data for similar instruments.
Level 3 — Assets or liabilities for which significant valuation assumptions are not readily observable in the market. Such assets or liabilities are valued based on the best available data, some of which may be internally developed. Significant assumptions may include risk premiums that a market participant would require.


11


Fair Value of Debt Instruments

CatchMark Timber Trust applied the provisions of the accounting standard for fair value measurements and disclosures in estimations of fair value of its debt instruments based on Level 2 assumptions. The fair value of the outstanding note payable was estimated based on discounted cash flow analysis using the current observable market borrowing rates for similar types of borrowing arrangements as of the measurement date. The discounted cash flow method of assessing fair value results in a general approximation of book value, and such value may never actually be realized.
Interest Rate Swaps

CatchMark Timber Trust has entered into interest rate swap contracts to mitigate its exposure to changing interest rates on variable rate debt instruments. CatchMark Timber Trust does not enter into derivative or interest rate transactions for speculative purposes; however, certain of its derivatives may not qualify for hedge accounting treatment. The fair values of interest rate swaps are recorded as either prepaid expenses and other assets or other liabilities in the accompanying consolidated balance sheets. Changes in the fair value of the effective portion of interest rate swaps that are designated as hedges are recorded as other comprehensive income (loss), while changes in the fair value of the ineffective portion of hedges, if any, are recognized in current earnings. Changes in the fair value of interest rate swaps that do not qualify for hedge accounting treatment are recorded as gain (loss) on interest rate swap in the consolidated statements of operations. Amounts received or paid under interest rate swaps are recorded as interest expense for contracts that qualify for hedge accounting treatment and as gain (loss) on interest rate swaps for contracts that do not qualify for hedge accounting treatment.

CatchMark Timber Trust applied the provisions of the accounting standard for fair value measurements and disclosures in recording its interest rate swaps at fair value. The fair values of interest rate swaps, classified under Level 2, were determined using a third-party proprietary model that is based on prevailing market data for contracts with matching durations, current and anticipated London Interbank Offered Rate ("LIBOR") information, consideration of CatchMark Timber Trust's credit standing, credit risk of counterparties, and reasonable estimates about relevant future market conditions.

The following table presents information about CatchMark Timber Trust’s interest rate swap measured at fair value as of March 31, 2014 and December 31, 2013:
 
 
 
Estimated Fair Value as of
Instrument Type
Balance Sheet Classification
 
March 31, 2014
 
December 31, 2013
Derivatives designated as hedging instruments:
 
 
 
 
 
Interest rate swap contract
Prepaid expenses and other assets
 
$
254,657

 
$
268,368


For additional information about CatchMark Timber Trust's interest rate swaps, see Note 5 –Interest Rate Swap Agreement.

Earnings Per Share
Basic earnings (loss) per share available to common stockholders is calculated as net income (loss) available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Weighted-average number of common shares information presented in the accompanying consolidated statements of operations is retroactively adjusted for all periods presented to reflect the impact of the Recapitalization. Net income (loss) available to common stockholders is calculated as net income (loss) less dividends payable to or accumulated to preferred stockholders. Diluted earnings (loss) per share available to common stockholders equals basic earnings per share available to common stockholders, adjusted to reflect the dilution that would occur if all outstanding securities convertible into common shares or contracts to issue common shares were converted or exercised and the related proceeds are then used to repurchase common shares. Basic and diluted earnings (loss) per share were the same for all periods presented as the dilutive effect of outstanding securities was immaterial.


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Income Taxes

CatchMark Timber Trust has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), and has operated as such beginning with its taxable year ended December 31, 2009. To qualify to be taxed as a REIT, CatchMark Timber Trust must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its ordinary taxable income to its stockholders. As a REIT, CatchMark Timber Trust generally is not subject to federal income tax on taxable income it distributes to stockholders. CatchMark Timber Trust is subject to certain state and local taxes related to the operations of timberland properties in certain locations, which have been provided for in the accompanying consolidated financial statements. CatchMark Timber Trust records interest and penalties related to uncertain tax positions as general and administrative expense in the accompanying consolidated statements of operations.

CatchMark Timber Trust has elected to treat CatchMark Timber Trust TRS as a taxable REIT subsidiary. CatchMark Timber Trust may perform certain non-customary services, including real estate or non-real-estate related services, through CatchMark Timber Trust TRS. Earnings from services performed through CatchMark Timber Trust TRS are subject to federal and state income taxes irrespective of the dividends paid deduction available to REITs for federal income tax purposes. In addition, for CatchMark Timber Trust to continue to qualify to be taxed as a REIT, CatchMark Timber Trust’s investment in CatchMark Timber Trust TRS may not exceed 25% of the value of the total assets of CatchMark Timber Trust.

Deferred tax assets and liabilities represent temporary differences between the financial reporting basis and the tax basis of assets and liabilities based on the enacted rates expected to be in effect when the temporary differences reverse. Deferred tax expense or benefit is recognized in the financial statements according to the changes in deferred tax assets or liabilities between years. Valuation allowances are established to reduce deferred tax assets when it becomes more likely than not that such assets, or portions thereof, will not be realized.

No provision for federal income taxes has been made in the accompanying consolidated financial statements, other than the provision relating to CatchMark Timber Trust TRS, as CatchMark Timber Trust did not generate taxable income for the periods presented.

Reclassification

Certain prior period amounts have been reclassified to conform with the current period's financial statement presentation. The reclassification relates to including advisor fees and expense reimbursements payable to Wells TIMO as presented in the previous period in general and administrative expenses in the accompanying consolidated statement of operations.

Recent Accounting Pronouncements

In July 2013, FASB issued Accounting Standards Update 2013-11, Income Taxes: Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11"). ASU 2013-11 requires an entity to present an unrecognized tax benefit in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date or not intended to be used to settle any additional income taxes that would result in the dis-allowance of a tax position in which case the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 became effective for CatchMark Timber Trust for the period beginning on January 1, 2014. The adoption of ASU 2013-11 did not have a material impact on CatchMark Timber Trust's financial statements or disclosures.

3.
Timber Assets

As of March 31, 2014 and December 31, 2013, timber and timberlands consisted of the following, respectively:

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As of March 31, 2014
 
Gross
 
Accumulated
Depletion or
Amortization
 
Net
Timber
$
141,803,911

 
$
1,803,532

 
$
140,000,379

Timberlands
184,177,425

 

 
184,177,425

Mainline roads
498,237

 
258,115

 
240,122

Timber and timberlands
$
326,479,573

 
$
2,061,647

 
$
324,417,926


 
As of December 31, 2013
 
Gross
 
Accumulated
Depletion or
Amortization
 
Net
Timber
$
149,859,173

 
$
8,505,024

 
$
141,354,149

Timberlands
184,114,333

 

 
184,114,333

Mainline roads
498,237

 
240,321

 
257,916

Timber and timberlands
$
334,471,743

 
$
8,745,345

 
$
325,726,398


During the three months ended March 31, 2014 and 2013, CatchMark Timber Trust acquired a fee simple interest in 203 acres of timberland located in Talbot county, Georgia, for approximately $0.2 million, excluding closing costs. During the three months ended March 31, 2014 and 2013, CatchMark Timber Trust sold approximately 29 acres and 253 acres of timberland, respectively, for approximately $0.07 million and $0.5 million, respectively. CatchMark Timber Trust’s cost basis in the timberland sold was approximately $0.04 million and $0.3 million, respectively.

4.
Note Payable and Line of Credit

On December 19, 2013, CatchMark Timber Trust entered into a third amended and restated credit agreement with a syndicate of banks with CoBank, ACB (“CoBank”) serving as the administrative agent (the "Amended CoBank Loan"). The Amended CoBank Loan amends and restates in its entirety the existing senior credit agreement dated as of September 28, 2012.
The Amended CoBank Loan provides for borrowing under credit facilities consisting of:
a $15.0 million revolving credit facility (the “Revolving Credit Facility”),
a $150.0 million multi-draw term credit facility (the “Multi-Draw Term Facility”), and
the remaining amount outstanding under the original CoBank term loan (the “Term Loan Facility”, and together with the Revolving Credit Facility and the Multi-Draw Term Facility, the “New Credit Facilities”), which was $52.2 million.

The Amended CoBank Loan provides that the New Credit Facilities may be increased, upon the agreement of lenders willing to increase their loans, by up to $75.0 million, consisting of up to a $10.0 million increase in the Revolving Credit Facility and the remainder available for incremental term loans.
Borrowings under the Revolving Credit Facility may be used for working capital, to support letters of credit and other general corporate purposes, but may not be used for timber acquisitions. The Revolving Credit Facility will bear interest at an adjustable rate equal to a base rate plus between 0.50% and 1.75% or one-month LIBOR rate plus between 1.50%

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and 2.75%, in each case depending on CatchMark Timber Trust's loan-to-collateral-value ratio (the "LTV Ratio") and will terminate and all amounts under the facility will be due and payable on December 19, 2018.
The Multi-Draw Credit Facility may be drawn upon up to five times during the period beginning on December 19, 2013 through December 19, 2016 and may be used to finance domestic timber acquisitions and associated expenses. Amounts repaid under the Multi-Draw Credit Facility may be re-borrowed prior to the third anniversary of the closing date. The Multi-Draw Facility will bear interest at an adjustable rate equal to a base rate plus between 0.75% and 2.00% or a LIBOR rate plus between 1.75% and 3.00%, in each case depending on the LTV Ratio, and will terminate and all amounts under the facility will be due and payable on December 19, 2020. The Multi-Draw Credit Facility is interest only until the maturity date; however, if the CatchMark Timber Trust’s LTV Ratio is equal to or in excess of 35%, then principal payments will be required to be made beginning on December 31, 2016 at a per annum rate of 7.50% of the principal amount outstanding under the Multi-Draw Credit Facility.
The Term Loan Facility will bear interest at an adjustable rate equal to a base rate plus between 0.50% and 1.75% or a LIBOR rate plus between 1.50% and 2.75%, in each case depending on the CatchMark Timber Trust’s LTV Ratio, and will terminate and all amounts under the facility will be due and payable on December 19, 2018.
The Amended CoBank Loan is secured by a first mortgage in the CatchMark Timber Trust's timberlands, a first priority security interest in all bank accounts held by CatchMark Timber Trust, and a first priority security interest on all other assets of CatchMark Timber Trust. In addition, CatchMark Timber Trust’ obligations under the Amended CoBank Loan are guaranteed by its subsidiaries.

The Amended CoBank Loan contains, among others, the following financial covenants:
limits the LTV Ratio to 45% at the end of each fiscal quarter and upon the sale or acquisition of any property;
requires a minimum liquidity balance of $10.0 million until the date that CatchMark Timber Trust has achieved a fixed charge coverage ratio of not less than 1.05:1.00; after such date CatchMark Timber Trust must maintain a fixed coverage charge ratio of not less than 1.05:1.00.

CatchMark Timber Trust was in compliance with the financial covenants of the Amended CoBank Loan as of March 31, 2014.

On January 9, 2014, CatchMark Timber Trust paid down the Amended CoBank Loan by $18.2 million using proceeds from the IPO. As of March 31, 2014, the outstanding balance of the Amended CoBank Loan was $34.0 million, all of which was outstanding under the Term Loan Facility.

Interest Paid and Fair Value of Outstanding Debt

During the three months ended March 31, 2014 and 2013, CatchMark Timber Trust made interest payments of approximately $0.2 million and $0.7 million, respectively, on its borrowings:

As of March 31, 2014 and 2013, the weighted-average interest rate on these borrowings, after consideration of an interest rate swap (see Note 5 – Interest Rate Swap Agreement), was 2.39% and 2.63%, respectively. As of March 31, 2014 and 2013, the fair value of CatchMark Timber Trust's outstanding debt approximated its book value. The fair value was estimated based on discounted cash flow analysis using the current market borrowing rates for similar types of borrowing arrangements as of the measurement dates.

5.     Interest Rate Swap Agreement
During the three months ended March 31, 2014, CatchMark Timber Trust used one interest rate swap agreement with a notional amount of $33.0 million to hedge its exposure to changing interest rates on its variable rate debt (the “Rabobank Forward Swap”). The Rabobank Forward Swap became effective on March 28, 2013 and matures on September 30, 2017. Under the terms of the Rabobank Forward Swap, CatchMark Timber Trust pays interest at a fixed

15


rate of 0.9075% per annum to Rabobank and receives one-month LIBOR-based interest payments from Rabobank. The Rabobank Forward Swap qualifies for hedge accounting treatment.

During the three months ended March 31, 2014, CatchMark Timber Trust recognized a change in fair value of the Rabobank Forward Swap of approximately $0.01 million as other comprehensive income. There was no hedge ineffectiveness on the Rabobank Forward Swap required to be recognized in current earnings. Net payments of approximately $0.06 million made under the Rabobank Forward Swap by CatchMark Timber Trust during the three months ended March 31, 2014 was recorded as interest expense.

6.    Commitments and Contingencies

MeadWestvaco Timber Agreements

In connection with the acquisition of its timberlands, CatchMark Timber Trust entered into a fiber supply agreement and a master stumpage agreement (collectively, the “Timber Agreements”) with a wholly owned subsidiary of MeadWestvaco Corporation (“MeadWestvaco”). The fiber supply agreement provides that MeadWestvaco will purchase specified tonnage of timber from CatchMark TRS at specified prices per ton, depending upon the type of timber. The fiber supply agreement is subject to quarterly market pricing adjustments based on an index published by Timber Mart-South, a quarterly trade publication that reports raw forest product prices in 11 southern states. The master stumpage agreement provides that CatchMark Timber Trust will sell specified amounts of timber and make available certain portions of its timberlands to CatchMark TRS for harvesting. The initial term of the Timber Agreements is October 9, 2007 through December 31, 2032, subject to extension and early termination provisions. The Timber Agreements ensure a long-term source of supply of wood fiber products for MeadWestvaco in order to meet its paperboard and lumber production requirements at specified mills and provide CatchMark Timber Trust with a reliable customer for the wood products from its timberlands.

FRC Timberland Operating Agreement

CatchMark Timber Trust is party to a timberland operating agreement with Forest Resource Consultants, Inc. (“FRC”). Pursuant to the terms of the timberland operating agreement, FRC manages and operates CatchMark Timber Trust's timberlands and related timber operations, including ensuring delivery of timber to MeadWestvaco in compliance with the Timber Agreements. In consideration for rendering the services described in the timberland operating agreement, CatchMark Timber Trust pays FRC (i) a monthly management fee based on the actual acreage FRC manages, which is payable monthly in advance, and (ii) an incentive fee based on net revenues generated by the timberlands. The incentive fee is payable annually in arrears. The timberland operating agreement, as amended, is effective through December 31, 2014, with the option to extend for one-year periods and may be terminated by either party with mutual consent or by CatchMark Timber Trust with or without cause upon providing 120 days’ prior written notice.

Litigation

From time to time, CatchMark Timber Trust may be a party to legal proceedings, claims, and administrative proceedings that arise in the ordinary course of its business. Management makes assumptions and estimates concerning the likelihood and amount of any reasonably possible loss relating to these matters using the latest information available. CatchMark Timber Trust records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, CatchMark Timber Trust accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, CatchMark Timber Trust accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, CatchMark Timber Trust discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, CatchMark Timber Trust discloses the nature and estimate of the possible loss of the litigation. CatchMark Timber Trust does not disclose information with respect to litigation where an unfavorable outcome is considered to be remote.


16


CatchMark Timber Trust is not currently involved in any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on the results of operations or financial condition of CatchMark Timber Trust. CatchMark Timber Trust is not aware of any legal proceedings contemplated by governmental authorities.

7.    Stockholders' Equity

Under CatchMark Timber Trust's charter, it has authority to issue a total of 1 billion shares of capital stock. Of the total shares authorized, 900 million shares are designated as common stock with a par value of $0.01 per share, 100 million shares are designated as preferred stock.

Common Stock - Recapitalization and IPO

On October 24, 2013, CatchMark Timber Trust effectuated a ten-to-one reverse stock split of its outstanding common stock (the “Reverse Stock Split”). Immediately following the Reverse Stock Split, CatchMark Timber Trust re-designated all of its then-authorized common stock as "Class A Common Stock". A stock dividend was declared and paid on October 25, 2013 (the “Stock Dividend” and, together with the Reverse Stock Split, the “Recapitalization”) pursuant to which each share of common stock outstanding as of October 24, 2013, following the Reverse Stock Split, received:

one share of Class B-1 common stock; plus
one share of Class B-2 common stock; plus
one share of Class B-3 common stock.

Any fractional shares of Class A common stock outstanding after the reverse stock split also received an equivalent fractional share of Class B-1, Class B-2 and Class B-3 common stock, which was then immediately converted into Class A common stock. The Recapitalization was effective upon filing amendments to CatchMark Timber Trust's charter with State Department of Assessments and Taxation of Maryland on October 24, 2013. CatchMark Timber Trust refers to Class B-1 common stock, Class B-2 common stock, and Class B-3 common stock collectively as “Class B common stock,” and Class A and Class B common stock collectively as “common stock.”

On December 12, 2013, CatchMark Timber Trust listed its Class A common stock on NYSE (the "Listing"). CatchMark Timber Trust completed the IPO on December 17, 2013, issuing approximately 10.5 million shares of its Class A common stock.

CatchMark Timber Trust's Class B common stock is identical to its Class A common stock except that (1) CatchMark Timber Trust does not intend to list its Class B common stock on a national securities exchange and (2) shares of Class B common stock will convert automatically into shares of Class A common stock, pursuant to provisions of CatchMark Timber Trust's charter, on the following schedule:

June 12, 2014, in the case of the Class B-1 common stock;
December 12, 2014, in the case of the Class B-2 common stock; and
June 12, 2015, in the case of the Class B-3 common stock.

The board of directors has the authority to accelerate the conversion of the Class B-2 shares and the Class B-3 shares to dates not earlier than nine months and twelve months, respectively, following the listing with the consent of the underwriter of the IPO. On the eighteen-month anniversary of the listing, all shares of the Class B common stock will have converted into the Class A common stock.

The combined effect of the ten-to-one reverse stock split and the stock dividend is equivalent to a 2.5-to-one reverse stock split. The Recapitalization also had the effect of decreasing the total number of outstanding shares of CatchMark Timber Trust's common stock, but did not change the number of shares of common stock that are authorized for issuance

17


under the charter. After the Recapitalization, of the total shares of common stock authorized, 889.5 million shares are designated as Class A common stock, 3.5 million are designated as Class B-1 common stock, 3.5 million are designated as Class B-2 common stock, and 3.5 million are designated as Class B-3 common stock. All classes of CatchMark Timber Trust's common stock have a par value of $0.01 per share.

On October 23, 2013, immediately prior to the Reverse Stock Split, approximately 31.7 million shares of CatchMark Timber Trust's common stock were outstanding. As of October 25, 2013, in aggregate after the Recapitalization, approximately 12.7 million shares of Class A and Class B common stock were outstanding. Of this amount, approximately 3.2 million shares were Class A common stock (representing 25% of total outstanding common stock) and approximately 9.5 million shares were Class B common stock (representing 75% of our total outstanding common stock).

The Recapitalization was effected on a pro rata basis with respect to all stockholders. Accordingly, it did not affect any stockholder’s proportionate ownership of CatchMark Timber Trust's outstanding shares.

On January 9, 2014, the underwriters for the IPO exercised their overallotment option to purchase approximately 1.6 million shares of CatchMark Timber Trust's Class A common stock in full. After deducting approximately $1.5 million of underwriter discounts and commissions, CatchMark Timber Trust received net proceeds of approximately $19.8 million, $18.2 million of which was used to pay down the outstanding note payable.

Share Redemption Plan

Prior to its termination on October 31, 2013, the SRP allowed stockholders who hold their shares for more than one year to sell their shares back to CatchMark Timber Trust, subject to certain limitations and penalties. Since no proceeds had been received from the sale of shares through DRP, the SRP was funded by a monthly, non-cumulative reserve of $150,000 set aside by the board of directors for redemptions in connection with death, qualifying disability, or qualification for federal assistance for confinement to a long-term care facility (“Qualified Special Redemptions”). CatchMark Timber Trust did not redeem any shares under the SRP other than Qualified Special Redemptions. Qualified Special Redemptions did not require a one-year holding period.

During the three months ended March 31, 2013, 35,327 shares of common stock were redeemed pursuant to the SRP for approximately $0.2 million. The price paid for these shares equaled $6.23 per share, representing 95% of the estimated per-share value of CatchMark Timber Trust's common stock as of September 30, 2012.

The SRP was terminated as of October 31, 2013.

8.    Stock Based Compensation

Amended and Restated Long-Term Incentive Plan

On October 24, 2013, CatchMark Timber Trust’s board of directors approved the Amended and Restated 2005 Long-Term Incentive Plan (the “LTIP”), effective on October 25, 2013, to (i) increase the number of shares of common stock available for issuance thereunder to 1,150,000 shares of Class A common stock and 50,000 shares of each of the Class B-1, Class B-2 and Class B-3 common stock, (ii) extend the term of the LTIP to October 25, 2023, (iii) incorporate into the plan document previously-approved, stand-alone amendments, and (iv) make certain additional ministerial changes.

Equity Compensation for Independent Directors

Below is a summary of independent director's equity compensation arrangements under the LTIP:


18


From November 13, 2009 to January 1, 2014, each independent director received a grant of 1,000 shares of restricted stock upon his initial appointment to the board. Upon each subsequent re-election to the board, each independent director received a subsequent grant of 400 shares of restricted stock.

Effective January 1, 2014, each independent directors receives, on the third business day following the date on which CatchMark Timber Trust files its annual report on Form 10-K with the SEC, a number of restricted shares having a value of $30,000 on the grant date. The number of restricted shares granted to each independent director will be determined by dividing $30,000 by the fair market value per share of CatchMark Timber Trust's common stock on the grant date.

The restricted shares vest in thirds on each of the first three anniversaries of the grant, subject to the independent director’s continued service on the board on each such date, or on the earlier occurrence of a change in control of our company or the independent director’s death, disability or termination with cause.

During the three months ended March 31, 2014, 10,875 shares of restricted stock were granted to the independent directors. As of March 31, 2014, CatchMark Timber Trust had granted 20,475 shares of restricted stock to the independent directors, 3,467 shares of which had vested and 1,467 shares of which were forfeited upon the resignation of two independent directors.

9.    Supplemental Disclosures of Noncash Activities

Outlined below are significant noncash investing and financing transactions for the three months ended March 31, 2014 and 2013, respectively:
 
 
2014
 
2013
Dividends accrued on preferred stock
 
$

 
$
92,134

Forfeiture of restricted stock award
 
$

 
$
205

Market value adjustment to interest rate swap that qualifies for hedge accounting treatment
 
$
(13,711
)
 
$
92,473

Accrued redemption of common stock
 
$

 
$
2,509


10.
Related-Party Transactions and Agreements

Advisory Agreement with Wells TIMO

Prior to its transition to self-management on October 25, 2013, CatchMark Timber Trust was externally advised by Wells TIMO pursuant to an Advisory Agreement, where Wells TIMO performed certain key functions on behalf of CatchMark Timber Trust, including, among others, management of day-to-day operations and investment of capital proceeds. The Advisory Agreement terminated on October 25, 2013.

During the three months ended March 31, 2013, CatchMark Timber Trust incurred approximately $0.7 million of advisor fees and expense reimbursements payable to Wells TIMO, which was included in general and administrative expenses in the accompanying consolidated statement of operations.

Master Self-Management Transition Agreement and Termination of Advisory Agreement

On September 18, 2013, CatchMark Timber Trust, CatchMark Timber OP, Wells REF and Wells TIMO entered into the Master Agreement, which sets forth the framework for CatchMark Timber Trust’s separation from Wells and its transition to self-management. On October 24, 2013, the parties entered into the Master Agreement Amendment and terminated the Advisory Agreement effective October 25, 2013.

Pursuant to the Master Agreement, Wells agreed to facilitate and support CatchMark Timber Trust’s efforts to hire up to eight employees of Wells identified by CatchMark Timber Trust who, as of the date of the Master Agreement,

19


performed substantial services for CatchMark Timber Trust pursuant to the Advisory Agreement (collectively, the “Targeted Personnel”). On October 25, 2013, CatchMark Timber Trust hired the Targeted Personnel selected by CatchMark Timber Trust with such compensation and benefits as determined by CatchMark Timber Trust.

Upon the termination of the Advisory Agreement, the special limited partnership units held by Wells TIMO in CatchMark Timber OP were automatically redeemed by CatchMark Timber OP, and Wells TIMO was not entitled to any consideration in connection with such redemption. On October 25, 2013, CatchMark LP Holder purchased all of Wells TIMO’s common limited partnership units in CatchMark Timber OP for an aggregate purchase price of $1,312. For further information on the special limited partnership units, refer to the consolidated financial statements and accompanying notes included in CatchMark Timber Trust's Annual Report on Form 10-K for the year ended December 31, 2012.

Transition Services Agreement

Pursuant to the Master Agreement, CatchMark Timber Trust and Wells REF entered into a Transition Services Agreement (the “TSA”) on October 25, 2013, pursuant to which Wells REF and its affiliates will provide certain consulting, support, and transitional services to CatchMark Timber Trust at the direction of CatchMark Timber Trust in order to facilitate CatchMark Timber Trust’s successful transition to self-management.

In exchange for the services provided by Wells REF under the TSA, CatchMark Timber Trust or CatchMark Timber OP pays Wells REF a monthly consulting fee of $22,875 (the “Consulting Fee”). In addition to the Consulting Fee, CatchMark Timber Trust or CatchMark Timber OP pays directly or reimburse Wells REF for any third-party expenses paid or incurred by Wells REF and its affiliates on CatchMark Timber Trust’s behalf or CatchMark Timber OP behalf in connection with the services provided pursuant to the TSA; provided, however, that (1) Wells REF will obtain written approval from CatchMark Timber Trust or CatchMark Timber OP prior to incurring any third-party expenses for the account of, or reimbursable by, CatchMark Timber Trust or CatchMark Timber OP and (2) CatchMark Timber Trust is not required to reimburse Wells REF for any administrative service expenses, including Wells REF’s overhead, personnel costs, and costs of goods used in the performance of services under the TSA.

The TSA will remain in effect until June 30, 2014 unless otherwise terminated in accordance with the terms of the TSA. The TSA may be terminated (1) immediately by CatchMark Timber Trust or Wells REF for causes, as defined in the TSA, or (2) by CatchMark Timber Trust or Wells REF upon 60 days’ written notice for any reason. Following the termination of the TSA, Wells REF will not be entitled to continue to receive the Consulting Fee; provided, however, that (1) Wells REF will be entitled to receive from CatchMark Timber Trust within 30 days after the termination date all unpaid reimbursements of expenses and all earned but unpaid Consulting Fees payable to Wells REF prior to the termination date, and (2) if CatchMark Timber Trust terminates the TSA without cause prior to June 30, 2014, Wells REF will be entitled to receive the Consulting Fee through June 30, 2014.

Sublease Agreement

Pursuant to the Master Agreement, Wells REF and CatchMark Timber OP entered into the Sublease Agreement (the "Sublease") on October 25, 2013, pursuant to which CatchMark Timber OP sublet from Wells REF a portion of the office space used and occupied by Wells REF. The term of the Sublease commenced on October 25, 2013 and terminated on March 31, 2014. CatchMark Timber OP paid Wells REF a monthly rent of $5,961 pursuant to the Sublease, while no rent was payable for October, November and December 2013.

Indemnification Agreements

On September 18, 2013, CatchMark Timber Trust entered into indemnification agreements, effective as of September 18, 2013, with each of CatchMark Timber Trust’s then-current directors and executive officers and Jerry Barag and John F. Rasor (collectively, the “Indemnitees”). Pursuant to the indemnification agreements, CatchMark Timber Trust will indemnify each Indemnitee to the maximum extent permitted by Maryland law against any judgments, damages,

20


liabilities, losses or expenses incurred by such Indemnitee by reason of such Indemnitee's status as a present or former director, officer, employee or agent of CatchMark Timber Trust.

Related-Party Costs

Pursuant to the terms of the agreements described above, CatchMark Timber Trust incurred the following related-party costs for the three months ended March 31, 2014 and 2013, respectively:

 
2014
 
2013
Advisor fees and expense reimbursements
$

 
$
745,242

Consulting fees
68,625

 

Office rent
17,883

 

      Total
$
86,508

 
$
745,242


All the related-party costs were included in general and administrative expenses in the accompanying consolidated statements of operations.

11.
Subsequent Events

On April 11, 2014, CatchMark Timber Trust completed its purchase of approximately 36,300 acres of timberland located in Southeast Georgia and East Texas, known as the Waycross-Panola Properties, for approximately $74.0 million, exclusive of closing costs. Including the Waycross-Panola Properties, CatchMark Timber Trust owns interests in approximately 313,700 acres of timberlands in Georgia, Alabama, and Texas; 283,700 acres of which are held in fee-simple interests and 30,000 acres are held in leasehold interests.

Also on April 11, 2014, CatchMark Timber Trust borrowed $76.0 million under its Multi-Draw Term Facility to fund the acquisition of the Waycross-Panola Properties and associated expenses.



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ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our accompanying consolidated financial statements and notes thereto. See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I, as well as our consolidated financial statements and the notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2013.
Overview

We primarily engage in the ownership, management, acquisition, and disposition of timberland properties located in the United States. As of March 31, 2014, we owned interests in approximately 277,400 acres of timberland within an attractive and competitive fiber basket encompassing a numerous and diverse group of pulp, paper and wood products manufacturing facilities. We believe that our timberlands are high-quality industrial forestlands that have been intensively managed for sustainable commercial timber production. As of December 31, 2013, our timberlands contained acreage consisted of approximately 73% pine stands and approximately 27% hardwood stands, and our timber inventory consisted of approximately 10.4 million tons of merchantable timber inventory, including approximately 6.1 million tons of pulpwood, 2.3 million tons of chip-n-saw, and 2.0 million tons of sawtimber.

We generate recurring income and cash flow from the harvest and sale of timber, as well as from non-timber related revenue sources, such as recreational leases. When and where we believe it is appropriate, we also periodically generate income and cash flow from the sale of higher-and-better use ("HBU") timberland. We also expect to realize additional long-term returns from the potential appreciation in value of our timberlands as well as from the potential biological growth of our standing timber inventory in excess of our timber harvest. A substantial portion of our timber sales are derived from the Timber Agreements under which we sell specified amounts of timber to MeadWestvaco subject to market pricing adjustments. For the three months ended March 31, 2014 , approximately 35% of our net timber sales revenue was derived from the Timber Agreements. See Note 6 of our accompanying consolidated financial statements for additional information regarding the material terms of the Timber Agreements.

From our inception through October 24, 2013, we operated as an externally advised REIT pursuant to an advisory agreement under which Wells TIMO, a subsidiary of Wells REF, performed certain key functions on our behalf, including, among others, the investment of capital proceeds and management of our day-to-day operations. On October 25, 2013, we terminated the advisory agreement and became self-managed. Contemporaneous with this transaction, we entered into a transition service agreement with Wells REF through June 30, 2014. For additional details, please refer to Note 10 – Related-Party Transactions and Agreements of our accompanying consolidated financial statements.

Since our inception in 2005, we have completed two continuous non-listed domestic public offerings and one offering to non-U.S. persons. These offerings raised approximately $307.2 million in total offering proceeds. After deducting offering costs and other expenses of approximately $26.1 million and funding common stock redemptions of approximately $2.6 million under the SRP, net offering proceeds of approximately $278.1 million were used to partially fund the acquisition of timberlands, service acquisition-related debt, redeem shares of our preferred stock, and fund accrued dividends on redeemed shares of preferred stock.

On October 24, 2013, we effectuated a ten-to-one reverse stock split of our outstanding common stock (the “Reverse Stock Split”). Immediately following the Reverse Stock Split, we redesignated all of the then-authorized common stock as "Class A Common Stock." A stock dividend was declared and paid on October 25, 2013 (the “Stock Dividend” and, together with the Reverse Stock Split, the “Recapitalization”) pursuant to which each share of common stock outstanding as of October 24, 2013, following the Reverse Stock Split, received:

one share of Class B-1 common stock; plus
one share of Class B-2 common stock; plus
one share of Class B-3 common stock.

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Any fractional shares of Class A common stock outstanding after the reverse stock split also received an equivalent fractional share of Class B-1, Class B-2 and Class B-3 common stock, which was then immediately converted into Class A common stock.

Our Class B common stock is identical to our Class A common stock except that (1) we do not intend to list our Class B common stock on a national securities exchange and (2) shares of our Class B common stock will convert automatically into shares of our Class A common stock, pursuant to provisions of our charter, on the following schedule:

June 12, 2014, in the case of the Class B-1 common stock;
December 12, 2014, in the case of the Class B-2 common stock; and
June 12, 2015, in the case of the Class B-3 common stock.

Our board of directors has the authority to accelerate the conversion of the Class B-2 shares and the Class B-3 shares to dates not earlier than nine months and 12 months, respectively, following the listing with the consent of the underwriter for our first listed public offering. On the 18-month anniversary of the listing, all shares of the Class B common stock will have converted into the Class A common stock.

The combined effect of the ten-to-one reverse stock split and the stock dividend is equivalent to a 2.5-to-one reverse stock split. The Recapitalization also had the effect of decreasing the total number of outstanding shares of our common stock, but did not change the number of shares of common stock that are authorized for issuance under our charter. The Recapitalization was effected on a pro rata basis with respect to all of our stockholders. Accordingly, it did not affect any stockholder’s proportionate ownership of our outstanding shares. We cashed out the fractional shares of Class A common stock for $13.50 per share on December 12, 2013.

On December 12, 2013, we listed our Class A common stock on the NYSE under the symbol "CTT". We completed our first listed public offering on December 17, 2013, issuing approximately 10.5 million shares and received gross proceeds of approximately $142.1 million. After deducting underwriter discounts and commissions of $9.9 million and direct IPO costs of $1.6 million, approximately $80.2 million of the net proceeds were used to repay outstanding balance under our CoBank term loan, and $49.0 million were used to redeem the shares of our preferred stock held by Wells REF and the accrued but unpaid dividends.

On January 9, 2014, the underwriters for our first listed public offering exercised their overallotment option to purchase 1.6 million shares of our Class A common stock in full. After deducting $1.5 million of underwriter discounts and commissions, we received net proceeds of $19.8 million, $18.2 million of which was used to pay down the outstanding CoBank loan.

We have implemented a revised business strategy that includes (1) increasing our annual harvest volume based on a sustainable harvest plan in order to support a distribution to our stockholders and (2) establishing annual HBU sales targets to monetize approximately 1% to 2% of our fee timberland acreage on an annual basis pursuant to our land sales program. We expect that a significant portion of any increased harvest volume will likely be sold to MeadWestvaco pursuant to the timber agreements, although we will also market and sell a portion of any increased volume to other third-party timber purchasers. Given the large number of forest products manufacturing facilities within a serviceable distance of our timberlands, our existing customer relationships and generally improving conditions in our end-markets, we believe that demand for our timber products will be sufficient to support our increased harvest volume. However, MeadWestvaco is not obligated to purchase additional volume under the timber agreements, and there can be no assurance that MeadWestvaco or other customers will purchase additional timber to support our revised business strategy. In addition, our actual harvest volume and product mix may vary from year-to-year significantly from our projected volume and mix levels, as we may revise our harvest plan or we may opt to defer or accelerate harvest based on market conditions. Furthermore, our actual HBU sales may vary from our targets and we may not ultimately be successful in generating attractive land sales at these levels.


23


Our operating strategy entails funding expenditures related to the recurring operations of the Mahrt Timberland, including interest on outstanding indebtedness and certain capital expenditures (excluding timberland acquisitions), with operating cash flows; assessing the amount of operating cash flows that will be required for additional timberland acquisitions; and distributing residual operating cash flows, if any, to our stockholders. Our most significant risks and challenges include our ability to access a sufficient amount of capital that will allow us to repay or refinance our outstanding debt facility and to further grow and diversify our portfolio of timber assets.

Liquidity and Capital Resources

Overview

On December 19, 2013, we entered into the Amended CoBank Loan, which amended and restated the existing CoBank loan agreement in its entirety.
The Amended CoBank Loan provides for borrowing under credit facilities consisting of:

a $15.0 million revolving credit facility (the “Revolving Credit Facility”),
a $150.0 million multi-draw term credit facility (the “Multi-Draw Term Facility”), and
the remaining amount outstanding under the CoBank Term Loan (the “Term Loan Facility”, and together with the Revolving Credit Facility and the Multi-Draw Term Facility, the “New Credit Facilities”), which was $52.2 million.

The Amended CoBank Loan provides that the New Credit Facilities may be increased, upon the agreement of lenders willing to increase their loans, by up to $75.0 million, consisting of up to a $10.0 million increase in the Revolving Credit Facility and the remainder available for incremental term loans.
Borrowings under the Revolving Credit Facility may be used for working capital, to support letters of credit and other general corporate purposes, but may not be used for timber acquisitions. The Revolving Credit Facility will bear interest at an adjustable rate equal to a base rate plus between 0.50% and 1.75% or a LIBOR rate plus between 1.50% and 2.75%, in each case depending on our LTV Ratio, and will terminate and all amounts under the facility will be due and payable on December 19, 2018.
The Multi-Draw Term Facility may be drawn upon up to five times during the period beginning on December 19, 2013 through December 19, 2016 and may be used to finance domestic timber acquisitions and associated expenses. Amounts repaid under the Multi-Draw Term Facility may be re-borrowed prior to the third anniversary of the closing date. The Multi-Draw Term Facility will bear interest at an adjustable rate equal to a base rate plus between 0.75% and 2.00% or a LIBOR rate plus between 1.75% and 3.00%, in each case depending on the LTV Ratio, and will terminate and all amounts under the facility will be due and payable on December 19, 2020. The Multi-Draw Term Facility is interest only until the maturity date; however, if the LTV Ratio is equal to or in excess of 35%, then principal payments will be required to be made beginning on December 31, 2016 at a per annum rate of 7.5% of the principal amount outstanding under the Multi-Draw Term Facility.
The Term Loan Facility bears interest at an adjustable rate equal to a base rate plus between 0.50% and 1.75% or a LIBOR rate plus between 1.50% and 2.75%, in each case depending on the LTV Ratio, and will terminate and all amounts under the facility will be due and payable on December 19, 2018.
The Amended CoBank Loan is secured by a first mortgage in our timberlands, a first priority security interest in all bank accounts held by us and a first priority security interest on all our other assets. In addition, our obligations under the Amended CoBank Loan are guaranteed by its subsidiaries. As of March 31, 2014, the outstanding balance of the Amended CoBank Loan was $34.0 million, all of which was outstanding under the Term Loan Facility.

We expect our primary sources of future capital are (i) cash generated from operations, (ii) borrowings under our existing and future credit facilities, and (iii) proceeds from selective dispositions. The amount of cash available for

24


distribution to stockholders and the level of discretionary distributions declared will depend primarily upon the amount of cash generated from our operating activities, our determination of funding needs for near-term capital and debt service requirements, and our expectations of future cash flows.

Short-Term Liquidity and Capital Resources

Net cash provided by operating activities for the three months ended March 31, 2014 was approximately $0.5 million, which consisted of net cash receipts from timber and timberland sales and recreational leases in excess of payments for operating expenses, general and administrative expenses, forestry management fees, and interest expense. Net cash provided by operating activities increased by approximately $1.5 million compared to the three months ended March 31, 2013, driven by an increase in net cash receipts from timber sales.

For the three months ended March 31, 2014, we used approximately $0.3 million in reforestation and building roads and $4.3 million in timberland acquisitions, which was primarily comprised of a $3.7 million of earnest money deposit associated with the acquisition of the Waycross-Panola Properties.

Net cash used in financing activities for the three months ended March 31, 2014 was approximately $1.3 million and primarily represented inflows from the issuance of common stock and outflows of funds used to pay down the outstanding note payable, fund dividend to common stockholders, and fund stock issuance cost.

We believe that we have access to adequate liquidity and capital resources, including cash flow generated from operations, cash on-hand, and borrowing capacity, necessary to meet our current and future obligations that become due over the next 12 months.

The Amended CoBank Loan contains, among others, the following financial covenants:
limits the LTV Ratio to 45% at the end of each fiscal quarter and upon the sale or acquisition of any property;
requires a minimum liquidity balance of $10.0 million until the date that we have achieved a fixed charge coverage ratio of not less than 1.05:1; after such date we must maintain a fixed coverage charge ratio of not less than 1.05:1.

We were in compliance with the financial covenants of the Amended CoBank Loan as of March 31, 2014.

Long-Term Liquidity and Capital Resources

Over the long-term, we expect our primary sources of capital to include net cash flows from operations, including proceeds from strategic property sales, proceeds from secured or unsecured financings from banks and other lenders, and public offerings of our common stock. Our principal demands for capital include operating expenses, interest expense on any outstanding indebtedness, certain capital expenditures (other than timberland acquisitions), repayment of debt, timberland acquisitions, and stockholder distributions.

In determining how to allocate cash resources in the future, we will initially consider the source of the cash. We anticipate using a portion of cash generated from operations, after payments of periodic operating expenses and interest expense, to fund certain capital expenditures required for our timberlands. Any remaining cash generated from operations may be used to partially fund timberland acquisitions, and pay distributions to stockholders. Therefore, to the extent that cash flows from operations are lower, timberland acquisitions and stockholder distributions are anticipated to be lower as well. Proceeds from future equity offerings and debt financings may be used to acquire timberlands, fund capital expenditures, and pay down existing and future borrowings.

Our bylaws preclude us from incurring debt in excess of 200% of our net assets. As of March 31, 2014, our debt-to-net-assets ratio, defined as our total debt as a percentage of our total gross assets (other than intangibles) less total liabilities, was approximately 9%. Our debt-to-net-assets ratio will vary based on our level of current and future borrowings, which will depend on the level of net cash flows from operations, our acquisition activities, and proceeds

25


raised from public offerings of our common stock. Before additional borrowings and equity issuances, principal payments, and timberland acquisitions or dispositions, we expect our debt-to-net-assets ratio to remain relatively stable in the near future.

Contractual Obligations and Commitments

As of March 31, 2014, our contractual obligations are as follows:

 
 
Payments Due by Period
Contractual Obligations
 
Total
 
2014
 
2015-2016
 
2017-2018
 
Thereafter
Debt obligations
 
$
34,000,000

 
$

 
$

 
$
34,000,000

 
$

Estimated interest on debt obligations (1)
 
3,779,765

 
608,306

 
1,622,150

 
1,549,309

 

Operating lease obligations (2)
 
5,483,381

 
618,868

 
1,341,763

 
1,314,250

 
2,208,500

Other liabilities (3)
 
874,300

 
129,288

 
237,078

 
200,371

 
307,563

Total
 
$
44,137,446

 
$
1,356,462

 
$
3,200,991

 
$
37,063,930

 
$
2,516,063


(1) 
Amounts include impact of an interest rate swap. See Note 5 – Interest Rate Swaps of our accompanying consolidated financial statements for additional information.
(2) 
Includes payment obligation on approximately 7,330 acres that are subleased to a third party.
(3) 
Represents net present value of future payments to satisfy a liability assumed upon a timberland acquisition.

Results of Operations

Overview

Our results of operations are materially impacted by the fluctuating nature of timber prices, changes in the levels and composition of our harvest volumes, the level of timberland sales, changes to associated depletion rates, and varying interest expense based on the amount and cost of outstanding borrowings. Timber prices, harvest volumes, and changes in the levels and composition of each for our timberlands for the three months ended March 31, 2014 and 2013 is shown in the following tables:
 
Three Months Ended March 31,
 
Change
 
2014
 
2013
 
%
Timber sales volume (tons)
 
 
Pulpwood
177,240

 
127,440

 
39
%
Sawtimber (1)
86,311

 
71,720

 
20
%
 
263,551

 
199,160

 
32
%
Net timber sales price (per ton)(2)
 
 
Pulpwood
$
14

 
$
11

 
23
%
Sawtimber
$
22

 
$
21

 
9
%
Timberland sales
 
 
 
 
 
Gross sales
$
65,250

 
$
543,950

 
 
Sales volumes (acres)
29

 
253

 
 
Sales price (per acre)
$
2,250

 
$
2,150

 
 
(1)    Includes sales of chip-n-saw and sawtimber.
(2)  
Prices per ton are rounded to the nearest dollar and shown on a stumpage basis (i.e., net of contract logging and hauling costs) and, as such, the sum of these prices multiplied by the tons sold does not equal timber sales in the accompanying consolidated statements of operations for the three months ended March 31, 2014 and 2013.


26


Upon our transition to self-management, we implemented a revised business strategy and increased our annual harvest volume to approximately 1.1 million tons based on a sustainable harvest plan, over 70% of which is expected to be pulpwood, and established annual HBU sales targets in the range of 1% to 2% of our fee timberland acreage.

Comparison of the three months ended March 31, 2014 versus the three months ended March 31, 2013

Revenues. Revenues increased to $8.9 million for the three months ended March 31, 2014 from $7.4 million for the three months ended March 31, 2013 due to an increase in timber sales revenue of $1.9 million, offset by a decrease in timberland sales revenue of $0.5 million. Gross timber sales increased by 32%, 22% of which was driven by increased harvest volume resulting from our revised business strategy and 10% of which was driven by an increase in realized pricing resulting from wet weather and a modest increase in demand. Timberland sales revenue decreased due to selling fewer acres in 2014. Details of timber sales by product for the three months ended March 31, 2014 and 2013 are shown in the following table:
 
Three Months Ended
March 31, 2013
 
Changes attributable to:
 
Three Months Ended
March 31, 2014
 
 
Price
 
Volume
 
Timber sales(1)
 
 
 
 
 
 
 
Pulpwood
$
3,618,968

 
$
460,787

 
$
728,921

 
$
4,808,675

Sawtimber (2)
2,532,794

 
175,796

 
579,589

 
3,288,180

 
$
6,151,762

 
$
636,583

 
$
1,308,510

 
$
8,096,855

(1) 
Timber sales are presented on a gross basis.
(2) 
Includes sales of chip-n-saw and sawtimber.

Operating expenses. Contract logging and hauling costs increased to approximately $3.7 million for the three months ended March 31, 2014 from approximately $3.3 million for the three months ended March 31, 2013 as a result of an approximately 17% increase in delivered sales volume. Depletion expense decreased by 12% to approximately $1.8 million in the first quarter of 2014 from approximately $2.0 million in the first quarter of 2013 due to a lower blended depletion rate offset by a 32% increase in harvest volumes. Our blended depletion rate was lower in 2014 primarily because 92% of our 2014 harvest came from our fee timberlands as compared to 51% in 2013. Our fee timber is depleted at much lower rates than timber from leased tracts. Cost of timberland sales decreased due to selling fewer acres.

Forestry management fees increased to approximately $0.7 million for the three months ended March 31, 2014 from approximately $0.6 million for the three months ended March 31, 2013. The increase is primarily due to, as a result of our transition to self-management, incurring compensation costs related to our forest management staff. Land rent expense decreased to approximately $0.2 million in the first quarter of 2014 from $0.3 million in the first quarter of 2013 primarily due to expiration of leases.

General and administrative expenses increased approximately $0.4 million in the first quarter of 2014 from the first quarter of 2013. The increase was primarily due to incurring $0.3 million in legal and consulting fees to assist with the SEC's on-going investigation into Wells Investment Securities, Inc. ("WIS"), the dealer-manager of our two completed non-listed public offerings. In February 2014, we filed a claim seeking insurance recovery for costs incurred to date associated with this matter under our director and officer insurance policy and expect a substantial portion of associated costs to be covered by the policy, after any applicable policy deductible. The claim was approved during the second quarter of 2014 and the insurance payment will reduce our general and administrative expenses in future periods. Also, we incurred approximately $0.1 million in shareholder communication expenses in response to a tender offer for our common stock during the first quarter of 2014. Besides the two items mentioned above, the changes in general and administrative expenses as a result of becoming a self-managed company were largely offset by the advisory fees and expense reimbursements we paid to Wells TIMO, our previous external advisor.

Interest expense. Interest expense decreased to $0.4 million for the three months ended March 31, 2014 from $0.8 million for the three months ended March 31, 2013 primarily due to a lower debt balance, offset by incurring commitment

27


fees to the lenders of the Amended CoBank Loan and recognizing net cash payments associated with the effective cash flow hedge as interest expense.

Net loss. Our net loss decreased to approximately $0.4 million for the three months ended March 31, 2014 from approximately $2.0 million for the three months ended March 31, 2013 as a result of a $1.2 million decrease in our operating loss and a $0.4 million decrease in our interest expense. Our operating loss decreased primarily due to a $1.7 million increase in timber sales revenue net of contract logging and hauling costs and depletion expense. We sustained a net loss for the three months ended March 31, 2014 primarily as a result of incurring interest expense of approximately $0.4 million. Our net loss per share available to common stockholders for the three months ended March 31, 2014 and 2013 was $0.02 and $0.16, respectively. We anticipate future net losses to fluctuate with timber prices, harvest volumes, timberland sales, and interest expense based on our level of current and future borrowings.

Adjusted EBITDA

The discussion below is intended to enhance the reader’s understanding of our operating performance, liquidity, ability to generate cash, ability to satisfy rating agency and lender requirements. Earnings from Continuing Operations before Interest, Taxes, Depletion, and Amortization (“EBITDA”) is a non-GAAP measure of operating performance and cash generating capacity. EBITDA is defined by the SEC; however, we have excluded certain other expenses due to their non-cash nature, and we refer to this measure as Adjusted EBITDA. As such, our Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies and should not be viewed as an alternative to net income or cash from operations as measurements of our operating performance. Due to significant amount of timber assets subject to depletion and significant amount of financing subject to interest and amortization expense, management considers Adjusted EBITDA to be an important measure of our financial condition and cash generating ability. We had substantial amount of debt subject to interest and amortization expense from inception until we reduced the debt balance to $52.2 million in December 2013. Our credit agreements contains a minimum debt service coverage ratio based, in part, on Adjusted EBITDA since this measure is representative of adjusted income available for interest payments.

For the quarter ended March 31, 2014, Adjusted EBITDA was $1.9 million, a $0.7 million increase from the quarter ended March 31, 2013, primarily due to a $1.5 million increase in net timber sales, offset by a $0.4 million decrease in revenue from timberland sales and a $0.4 million increase in general and administrative expenses. Our reconciliation of net loss to Adjusted EBITDA for the three months ended March 31, 2014 and 2013 follows:
 
Three Months Ended
March 31,
 
2014
 
2013
Net loss
$
(388,059
)
 
$
(1,986,734
)
Add:
 
 
 
Depletion
1,803,532

 
2,045,353

Basis of timberland sold
37,987

 
337,000

Amortization (1)
95,756

 
114,906

Stock-based compensation expense
82,997

 

Unrealized gain on interest rate swaps that do not qualify for hedge accounting treatment

 
(128,934
)
Interest expense (1)
310,122

 
861,742

Adjusted EBITDA
$
1,942,335

 
$
1,243,333

(1)
For the purpose of the above reconciliation, amortization includes amortization of deferred financing costs, amortization of intangible lease assets, and amortization of mainline road costs, which are included in either interest expense, land rent expense, or other operating expenses in the accompanying consolidated statements of operations.

Election as a REIT


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We have elected to be taxed as a REIT under the Code, and have operated as such beginning with our taxable year ended December 31, 2009. To qualify to be taxed as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our adjusted taxable income, as defined in the Code, to our stockholders, computed without regard to the dividends-paid deduction and by excluding our net capital gain. As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders. If we fail to qualify to be taxed as a REIT in any taxable year, we will then be subject to federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for that year and for the four years following the year during which qualification is lost, unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to our stockholders. However, we believe that we are organized and operate in such a manner as to qualify for treatment as a REIT for federal income tax purposes.

Inflation

In connection with the acquisition of the Mahrt Timberland, we entered into the Timber Agreements with MeadWestvaco. The Timber Agreements provide that we will sell to MeadWestvaco specified amounts of timber subject to quarterly market pricing adjustments and monthly fuel pricing adjustments, which are intended to protect us from, and mitigate the risk of, the impact of inflation. The price of timber has generally increased with increases in inflation; however, we have not noticed a significant impact from inflation on our revenues, net sales, or income from continuing operations.

Application of Critical Accounting Policies
Our accounting policies have been established to conform to GAAP. The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If management’s judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied or different amounts of assets, liabilities, revenues, and expenses would have been recorded, thus resulting in a different presentation of the financial statements or different amounts reported in the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses.
A discussion of the accounting policies that management deems critical because they may require complex judgment in their application or otherwise require estimates about matters that are inherently uncertain, is provided below.
Timber Assets
Timber and timberlands, including logging roads, are stated at cost less accumulated depletion for timber harvested and accumulated amortization. We capitalize timber and timberland purchases. Reforestation costs, including all costs associated with stand establishment, such as site preparation, costs of seeds or seedlings, planting, fertilization and herbicide application, are capitalized. Timber carrying costs, such as real estate taxes, insect control, wildlife control, leases of timberlands and forestry management personnel salaries and fringe benefits, are expensed as incurred. Costs of major roads are capitalized and amortized over their estimated useful lives. Costs of roads built to access multiple logging sites over numerous years are capitalized and amortized over seven years. Costs of roads built to access a single logging site are expensed as incurred.
Depletion
Depletion, or costs attributed to timber harvested, is charged against income as trees are harvested. Fee-simple timber tracts owned longer than one year and similarly managed are pooled together for depletion calculation purposes. Depletion rates are determined at least annually by dividing (a) the sum of (i) net carrying value of the timber, which equals the original cost of the timber less previously recorded depletion, and (ii) capitalized silviculture costs incurred

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and the projected silviculture costs, net of inflation, to be capitalized over the harvest cycle, by (b) the total timber volume estimated to be available over the harvest cycle. The harvest cycle for the Mahrt Timberland is 30 years. See "Overview" above for additional information regarding estimations of both our current timber inventory and the timber inventory that will be available over the harvest cycle. The capitalized silviculture cost is limited to the expenditures that relate to establishing stands of timber. For each fee-simple timber tract owned less than one year, depletion rates are determined by dividing the acquisition cost attributable to its timber by the volume of timber acquired. Depletion rates for lease tracts, which are generally limited to one harvest, are calculated by dividing the acquisition cost attributable to its timber by the volume of timber acquired. Net carrying value of the timber and timberlands is used to compute the gain or loss in connection with timberland sales. No book basis is allocated to the sale of conservation easements.
Evaluating the Recoverability of Timber Assets
We continually monitor events and changes in circumstances that could indicate that the carrying amounts of our timber assets may not be recoverable. When indicators of potential impairment are present that suggest that the carrying amounts of timber assets may not be recoverable, we assess the recoverability of these assets by determining whether the carrying value will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. Impairment losses would be recognized for (i) long-lived assets used in our operations when the carrying value of such assets exceeds the undiscounted cash flows estimated to be generated from the future operations of those assets, and (ii) long-lived assets held for sale when the carrying value of such assets exceeds an amount equal to their fair value less selling costs. Estimated fair values are calculated based on the following information in order of preference, dependent upon availability: (i) recently quoted market prices, (ii) market prices for comparable properties, or (iii) the present value of undiscounted cash flows, including estimated salvage value. We intend to use one harvest cycle for the purpose of evaluating the recoverability of timber and timberlands used in our operations. Future cash flow estimates are based on probability-weighted projections for a range of possible outcomes and are discounted at risk-free rates of interest. We consider assets to be held for sale at the point at which a sale contract is executed and the buyer has made a nonrefundable earnest money deposit against the contracted purchase price. We have determined that there has been no impairment of our long-lived assets to date.
Allocation of Purchase Price of Acquired Assets
Upon the acquisition of timberland properties, we allocate the purchase price to tangible assets, consisting of timberland and timber, and identified intangible assets and liabilities, which may include values associated with in-place leases or supply agreements, based in each case on our estimate of their fair values. The fair values of timberland and timber are determined based on available market information and estimated cash flow projections that utilize appropriate discount factors and capitalization rates. Estimates of future cash flows are based on a number of factors including the historical operating results, known and anticipated trends, and market and economic conditions. The values are then allocated to timberland and timber based on our determination of the relative fair value of these assets.
Intangible Lease Assets
In-place ground leases with us as the lessee have value associated with effective contractual rental rates that are below market rates. Such values are calculated based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place lease and (ii) our estimate of fair market lease rates for the corresponding in-place lease, measured over a period equal to the remaining term of the lease. The capitalized below-market in-place lease values are recorded as intangible lease assets and are amortized as adjustments to land rent expense over the weighted-average remaining term of the respective leases.
Revenue Recognition
Revenue from the sale of timber is recognized when the following criteria are met: (i) persuasive evidence of an agreement exists, (ii) legal ownership and the risk of loss are transferred to the purchaser, (iii) price and quantity are determinable, and (iv) collectability is reasonably assured. Our primary sources of revenue are recognized as follows:

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(1)
For delivered sales contracts, which include amounts sufficient to cover costs of logging and hauling of timber, revenues are recognized upon delivery to the customer.
(2)
For pay-as-cut contracts, the purchaser acquires the right to harvest specified timber on a tract, at an agreed-upon price per unit. Payments and contract advances are recognized as revenue as the timber is harvested based on the contracted sale rate per unit.
(3)
Revenues from the sale of higher-and-better use timberland and nonstrategic timberlands are recognized when title passes and full payment or a minimum down payment is received and full collectability is assured. If a down payment of less than the minimum down payment is received at closing, we will record revenue based on the installment method.
(4)
For recreational leases, rental income collected in advance is recorded as other liabilities in the accompanying consolidated balance sheets until earned over the term of the respective recreational lease and recognized as other revenue.

In addition to the sources of revenue noted above, we also may enter into lump-sum sale contracts, whereby the purchaser generally pays the purchase price upon execution of the contract. Title to the timber and risk of loss transfers to the buyer at the time the contract is consummated. Revenues are recognized upon receipt of the purchase price. When the contract expires, ownership of the remaining standing timber reverts to us; however, adjustments are not made to the revenues previously recognized. Any extensions of time will be negotiated under a new or amended contract.

Related-Party Transactions and Agreements

On October 25, 2013, we became self-managed by terminating our advisory agreement with Wells TIMO, a subsidiary of Wells Capital, a subsidiary of Wells REF and our initial sponsor. We also hired certain individuals to serve as our management team, including individuals who were previously employed by Wells REF, such as Brian M. Davis, our Senior Vice President and Chief Financial Officer. Mr. Davis also served as our Chief Financial Officer prior to our transition to self-management. Until our transition to self-management, Leo F. Wells served as our Chairman of the Board and President and Douglas P. Williams served as our Executive Vice President, Secretary and Treasurer and one of our directors. Messrs. Wells and Williams also resigned as directors of our company on December 11, 2013, the effective date of the registration statement for our listed public offering . They continue to serve as officers and directors of other affiliates of Wells REF, which is owned by Mr. Wells.

We entered into the master self-management transition agreement, or the Master Agreement, with Wells REF and Wells TIMO, which provides the framework for our separation from Wells REF and its affiliates and our transition to self-management. On October 24, 2013, we, our operating partnership, Wells REF and Wells TIMO agreed to amend the master agreement to advance the date of our self-management transition to October 25, 2013. As a result, we and our operating partnership entered into two agreements with these entities to provide services to us on a temporary and non-exclusive basis. These agreements include a transition services agreement that will terminate on June 30, 2014 and a month-to-month office sublease for our corporate headquarters for up to five months. Pursuant to the transition services agreement, we are obligated to pay Wells REF a consulting fee equal to $22,875 per month, and Wells REF will receive a prorated amount equal to $4,428 for the period from October 25, 2013 through October 31, 2013. We also reimburse Wells REF for expenses it incurs in connection with the services provided, excluding its administrative services expenses such as personnel and overhead costs. From October 2013 to March 2014, we subleased approximated 5,723 square feet of office space from Wells REF The office sublease provides for monthly base rent of $5,961, which was not payable for the months of October, November and December 2013, plus additional costs for various space-related services. The sublease expired on March 31, 2014.

Pursuant to the Master Agreement, upon the termination of the advisory agreement, the special partnership units of our operating partnership owned by Wells TIMO were automatically redeemed for no consideration. The 200 common partnership units of our operating partnership previously held by Wells TIMO were purchased by CatchMark LP Holder, LLC, our newly formed subsidiary, on October 25, 2013, for $1,312, based on our estimated per share value as of September 30, 2012.

31



On January 31, 2014, we entered into an agreement with Wells REF related to transfer agency services fees, pursuant to which Wells REF would pay transfer agency fees directly to DST System, Inc. (“DST”), our former transfer agent, from December 2013 to February 2014, when we discontinued use of DST for our transfer agency services.

All related person transactions must be approved or ratified by a majority of the disinterested directors on our board of directors. For more information about our relationship with Wells REF and its affiliates, see Item 13. Certain Relationships and Related Transaction, And Director Independence in our Annual Report on Form 10-K for the year ended December 31, 2013.

Regulatory Matters

In February 2013, the SEC started a non-public, formal, fact finding investigation regarding Wells Investment Securities, Inc., the former dealer-manager for our previous non-listed public offerings, and our company. The investigation relates to whether there have been violations of certain provisions of the federal securities laws regarding valuation, potential distributions, marketing and suitability.

We have not been accused of any wrongdoing by the SEC. We also have been informed by the SEC that the existence of this investigation does not mean that the SEC has concluded that anyone has violated any laws or regulations or that the SEC has a negative opinion of any person, entity or security. We have received a formal subpoena for documents and information and we have been cooperating fully with the SEC. We cannot reasonably estimate the timing of the conclusion of the investigation, nor can we predict whether or not the SEC will take any action against us as a result of the investigation and, if they do, what the ultimate outcome will be.

Commitments and Contingencies

We are subject to certain commitments and contingencies with regard to certain transactions. Refer to Note 6 of our accompanying consolidated financial statements for further explanation. Examples of such commitments and contingencies include:
MeadWestvaco Timber Supply Agreements;
FRC Timberland Operating Agreement;
Obligations under Operating Leases; and
Litigation.

Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial condition or changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Subsequent Events
On April 11, 2014, we purchased approximately 36,300 acres of timberland located in Southeast Georgia and East Texas (the Waycross-Panola Properties), for approximately $74.0 million, exclusive of closing costs.

The Waycross-Panola Properties are comprised of approximately 1.5 million tons of merchandise timber, 84% pine plantations by acreage and 54% sawtimber by tons. The Waycross-Panola Properties are expected to add approximately 180,000 to 200,000 tons to our annual harvest volumes. Situated exclusively in the core U.S. South timber region in highly competitive wood markets, the Waycross-Panola Properties are accessible to some of the best mill markets in the country, which are expected to diversify our customer base. The properties feature above-average productivity characteristics — the Waycross timberlands, in particular, register inventory growth rates approximately 50% higher than the average U.S. South timberlands. As of April 11, 2014, after considering the Waycross-Panola Properties, we

32


owned interests in approximately 313,700 acres of timberlands in Georgia, Alabama, and Texas; 283,700 acre of which were held in fee-simple interests and 30,000 acres held in leasehold interests.

On April 11, 2014, we borrowed $76.0 million under the Multi-Draw Term Facility to fund the acquisition of the Waycross-Panola Properties and associated expenses. For more information regarding the Multi-Draw Term Credit Facility, see the Current Reports on Form 8-K filed on December 26, 2013 and April 11, 2014 and the exhibits thereto, which are incorporated herein by reference.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

As a result of entering into our credit agreements, we are exposed to interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, we have entered into interest rate swap agreements, and may enter into other interest rate swaps, caps, or other arrangements in order to mitigate our interest rate risk on a related financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes; however, certain of our derivatives may not qualify for hedge accounting treatment. All of our debt was entered into for other than trading purposes. We manage our ratio of fixed-to-floating-rate debt with the objective of achieving a mix that we believe is appropriate in light of anticipated changes in interest rates. We closely monitor interest rates and will continue to consider the sources and terms of our borrowing facilities to determine whether we have appropriately guarded ourselves against the risk of increasing interest rates in future periods.

As of March 31, 2014, we had $34.0 million outstanding on the Amended CoBank Loan, which matures on December 19, 2018 and bears interest at an adjustable rate based on one-, two-, or three-month LIBOR Rate plus a margin ranging from 1.50% to 2.75% based upon the then-current LTV Ratio.

Under the Rabobank Forward Swap, we pay interest at a fixed rate of 0.9075% per annum and receive variable LIBOR-based interest payments from Rabobank between March 28, 2013 and September 30, 2017. As of March 31, 2014, the weighted-average interest rate of the CoBank Loan, after consideration of the Rabobank Forward Swap, was 2.39%.

Approximately $33.0 million of our total debt outstanding as of March 31, 2014 is subject to an effectively fixed-interest rate when coupled with Rabobank Forward Swap. As of March 31, 2014, this balance incurred interest expense at an average rate of 2.4075%. A change in the market interest rate impacts the net financial instrument position of our fixed-rate debt portfolio; however, it has no impact on interest incurred or cash flows.

As of March 31, 2014, after consideration of the Rabobank Forward Swap, approximately $1.0 million of our total debt outstanding is subject to an effectively variable-interest rate. This balance incurred interest expense at an average rate of 1.66% as of March 31, 2014. A 1.0% change in interest rates would result in a change in interest expense of approximately $0.02 million per year. The amount of effectively variable-rate debt outstanding in the future will be largely dependent upon the level of cash from operations and the rate at which we are able to employ such proceeds toward repayment of the Amended CoBank Loan and acquisition of timberland properties.

ITEM 4.    CONTROLS AND PROCEDURES
Management’s Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures
Management, with the participation of the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods in SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed by us in such reports is

33


accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

On May 14, 2013, the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") issued an updated version of its Internal Control - Integrated Framework ("2013 Framework"). Originally issued in 1992 ("1992 Framework"), the framework helps organizations design, implement and evaluate the effectiveness of internal control concepts and simplify their use and application. The 1992 Framework remains available during the transition period, which extends to December 15, 2014, after which time COSO will consider it as superseded by the 2013 Framework. As of March 31, 2014, we continue to utilize the 1992 Framework during our transition to the 2013 Framework by the end of 2014. There were no changes in our internal control over financial reporting during the quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II.
OTHER INFORMATION

ITEM 1.
LEGAL PROCEEDINGS

From time to time, we are party to legal proceedings, which arise in the ordinary course of our business. We are not currently involved in any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition. Nor are we aware of any such legal proceedings contemplated by governmental authorities.

ITEM 1A.     RISK FACTORS

There have been no material changes from the risk factors disclosed in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2013.

ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 

(a)
Not applicable.
(b)
Not applicable.
(c)
Not applicable.

ITEM 3.
DEFAULTS UPON SENIOR SECURITIES

(a)
There have been no defaults with respect to any of our indebtedness.
(b)
Not applicable.

ITEM 4.
MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.
OTHER INFORMATION

(a)
During the first quarter of 2014, there was no information that was required to be disclosed in a report on Form 8-K that was not disclosed in a report on Form 8-K.


34


(b)
There are no material changes to the procedures by which stockholders may recommend nominees to our board of directors since the filing of our Schedule 14A.


ITEM 6.
EXHIBITS
The exhibits required to be filed with this report are set forth on the Exhibit Index hereto and incorporated by reference herein.

35


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
CATCHMARK TIMBER TRUST, INC.
(Registrant)
 
 
 
 
Date:
May 13, 2014
By:
 
/s/ BRIAN M. DAVIS
 
 
 
 
Brian M. Davis
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)


36


EXHIBIT INDEX TO FIRST QUARTER 2014 FORM 10-Q
CATCHMARK TIMBER TRUST, INC.
Exhibit
Number
 
Description
 
 
 
3.1
 
Sixth Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed on August 9, 2013)
 
 
 
3.2
 
First Articles of Amendment to the Sixth Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-11 (File No. 333-191322) filed on September 23, 2013
 
 
 
3.3
 
Articles of Amendment (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on October 25, 2013 (the “October 25 Form 8-K”))

 
 
 
3.4
 
Articles of Amendment (incorporated by reference to Exhibit 3.2 to the October 25 Form 8-K)

 
 
 
3.5
 
Articles Supplementary (incorporated by reference to Exhibit 3.3 to the October 25 Form 8-K)
 
 
 
3.6
 
Amended and Restated Bylaws (incorporated by reference to Exhibit 3.6 to Registration Statement on Form S-8 (File No. 333-191916) filed on October 25, 2013
 
 
 
10.1+
 
CatchMark Timber Trust, Inc. Amended and Restated Independent Directors Compensation Plan (Effective January 1, 2014) (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed on February 19, 2014)
 
 
 
10.2*
 
Purchase and Sale Agreement dated March 13, 2014 between Forestree VI LP and Forestree VI Texas LP, as seller, and CatchMark Timber Trust, Inc., as buyer.
 
 
 
31.1*
 
Certification of the Principal Executive Officer of the Company, pursuant to Securities Exchange Act Rule 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
31.2*
 
Certification of the Principal Financial Officer of the Company, pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
32.1*
 
Statement of the Principal Executive Officer and Principal Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
101.INS*
 
XBRL Instance Document
 
 
 
101.SCH*
 
XBRL Taxonomy Extension Schema Document
 
 
 
101.CAL*
 
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
 
101.DEF*
 
XBRL Taxonomy Extension Definition Linkbase Document
 
 
 
101.LAB*
 
XBRL Taxonomy Extension Label Linkbase Document
 
 
 
101.PRE*
 
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
 
 
 
 
*
 
Filed herewith.
+
 
Management contract or compensatory plan or arrangement.

EX-10.2 2 exhibit102purchaseandsalea.htm PURCHSAE SALES AGREEMENT WAYCROSS-PANOLA Exhibit 10.2 Purchase and Sale Agreement -Waycross Panola Properties


EXHIBIT 10.2



PURCHASE AND SALE AGREEMENT
DATED AS OF MARCH 13, 2014
BETWEEN
FORESTREE VI LP and FORESTREE VI TEXAS LP,
AS SELLER

AND
CATCHMARK TIMBER TRUST, INC.,
AS BUYER








PURCHASE AND SALE AGREEMENT

WAYCROSS - PANOLA

THIS PURCHASE AND SALE AGREEMENT (“Agreement”) is made and entered into as of the 13th day of March, 2014 (the “Effective Date”), by and among FORESTREE VI LP, a Delaware limited partnership (“ForesTree”), and FORESTREE VI TEXAS LP, a Delaware limited partnership (“ForesTree Texas”) (ForesTree and ForesTree Texas each may be referred to herein independently as a "Seller”, and collectively, as the “Sellers”) and CATCHMARK TIMBER TRUST, INC., a Maryland corporation (“Buyer”) (Buyer and Seller may each be referred to herein as a “Party” or collectively, as the “Parties”).

RECITALS

A.
ForesTree is the owner of approximately 17,863 acres of timberlands and timber rights located in Appling and Wayne Counties, Georgia, that it wishes to sell, assign, transfer or convey together with certain other assets, rights under certain continuing leases, licenses, contracts and other agreements, to Buyer in accordance with the terms and subject to the conditions set forth in this Agreement.
B.
ForesTree Texas is the owner of approximately 18,477 acres of timberlands and timber rights located in Hardin, Jasper, Newton, Orange, Polk and Tyler Counties, Texas, that it wishes to sell, assign, transfer or convey together with certain other assets, rights under certain continuing leases, licenses, contracts and other agreements, to Buyer in accordance with the terms and subject to the conditions set forth in this Agreement.
C.
Buyer wishes to acquire and accept such timberlands and other assets, rights under certain continuing leases, licenses, contracts and other agreements, being transferred to it in accordance with the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, their respective representations, warranties, covenants and agreements set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I
PROPERTY AND PURCHASE PRICE

Section 1.1    Agreement to Purchase and Sell. Subject to and in accordance with the terms and provisions of this Agreement, for the consideration stated herein, and upon satisfaction of the conditions set forth in Article X, Seller shall at the Closing sell, assign, transfer and convey to Buyer, and Buyer shall acquire, assume and accept from Seller, all right, title and interest to the following assets (collectively, the “Property”), subject to the Permitted Exceptions, as defined below, but free and clear of all Liens, as defined below:
(a)
Timberlands. The real property held by Sellers in fee simple identified in Exhibit A, together with (i) all down and standing trees or timber located thereon, excluding the timber which may be harvested and removed in Georgia in accordance with the supply agreement as described in Schedule 1.1(a)(A) (the “Georgia Supply Agreement”) (ii) all buildings thereon, (iii) all roads, bridges and other improvements and fixtures thereon, (iv) without warranty, all right, title and interest in and to all gas,





oil, minerals, coal, sand, gravel and all other substances or minerals of any kind or character underlying or relating to such land to the extent not retained or conveyed out by Seller’s predecessors in title, (v) all other privileges, appurtenances, easements (including the Buyer Easements in respect thereof) and other rights appertaining thereto ( the “Timberlands”), subject to the Permitted Exceptions. The Georgia Supply Agreement affects only those portions of the Timberlands located in Georgia. Additional terms related to the Georgia Supply Agreement and Seller’s obligation to cause certain amounts of timber to be cut and delivered to the purchaser under the Georgia Supply Agreement are set forth in Section 5.6, Section 6.7, Section 12.1 and Schedule 1.1(a)(A).
(b)
Assumed Contracts. The rights of Seller under the contracts in effect at the Effective Time that (i) exclusively relate to all or any portion of the Timberlands, including, but not limited to, the Georgia Supply Agreement, or are necessary to the forest operations conducted on the Timberlands and (ii) are described in Exhibit B, but excluding the rights of Seller under any Real Property Lease (collectively, the “Assumed Contracts”).
(c)
Real Property Leases. The rights of Seller with respect to the leases in effect at the Effective Time (i) that relate to all or any portion of the Timberlands to which Seller is a lessor and are described in Exhibit C, including any lease under which Seller has granted to a third party hunting or other recreational rights with respect to the Timberlands (or, with respect to any hunting lease in respect of the Timberlands listed on Exhibit C that expires prior to the Closing Date, any new hunting lease entered into with the same person or entity prior to the Closing Date on terms no less favorable to Seller as the applicable prior lease) or (ii) under which a Seller is a lessee of facilities related to the forest operations on the Timberlands and are described on Exhibit C (collectively, the “Real Property Leases”).

Unless expressly identified or described in this Section 1.1, no other assets of Seller are included in the Property.
Section 1.2    Assumed Liabilities. Subject to the terms and provisions of this Agreement and upon satisfaction of the conditions set forth in Article X, each Seller shall at the Closing assign to Buyer, and Buyer shall assume from each Seller, the liabilities and obligations of Sellers under the Assumed Contracts and the Real Property Leases, to the extent such liabilities and obligations accrue or arise, or are related to periods commencing, on or after the Effective Time (collectively, the “Assumed Liabilities”).
Section 1.3    Purchase Price.     The purchase price for the Property is SEVENTY-FOUR MILLION AND NO/100 DOLLARS ($74,000,000.00), subject to adjustment as provided herein (the “Purchase Price”). At Closing (defined below), Buyer shall pay Sellers by wire transfer or otherwise immediately available federal funds (US Dollars) the entire Purchase Price, of which the Earnest Money (defined below) is a part.

ARTICLE II
EARNEST MONEY; ESCROW

Section 2.1    Earnest Money; Escrow. Within three (3) business days after all parties have executed and delivered this Agreement, Buyer will deposit with the First American Title Insurance Company based in Atlanta, Georgia (Attn: Mr. Kevin Wood) (the “Escrow Agent”), the amount of THREE MILLION SEVEN HUNDRED THOUSAND AND NO/100 DOLLARS ($3,700,000.00), in immediately available federal funds (US Dollars), paid or delivered as earnest money (said amount, together with all interest earned thereon, the "Earnest Money"). The Earnest Money shall either (i) be applied to the Purchase Price at Closing (defined below) or returned to Buyer at Closing provided that Buyer delivers the entire Purchase Price to Escrow Agent, or (ii) be disbursed in accordance with the terms of this Agreement if the Closing does not occur. Upon mutual execution of this Agreement, the parties shall execute and deliver the escrow agreement in the form of Exhibit D.






ARTICLE III
CLOSING

Section 3.1    Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place, subject to the satisfaction, or waiver by the Party entitled to the benefit thereof, of the conditions set forth in Article X, at the office of Buyer’s counsel, Smith, Gambrell & Russell, LLP, 1230 Peachtree Street, N.E., Suite 3100, Atlanta, Georgia 30309-3592, or another place mutually agreed upon by Buyer and Sellers (or through escrow established with the Title Company), at 9:00 a.m., on or before April 11, 2014, in accordance with this Agreement or at such other time and date as the Parties shall agree in writing (the date on which the Closing occurs, the “Closing Date”). Upon completion of the Closing, the transactions contemplated by this Agreement shall be deemed effective as of 12:01 a.m. Eastern Time on the Closing Date (the “Effective Time”). Closing shall mean the point at which all documentation and monies required to close the transaction pursuant to the terms of this Agreement have been delivered in escrow to Escrow Agent (with necessary authorizations to release and disburse same), including signed closing statements and escrow instructions. Buyer shall have the right to a one-time extension of the Closing Date for up to fourteen (14) days, which right shall be exercised by notice to Seller delivered on or before April 7, 2014, and if Buyer timely exercises its right to extend the Closing Date as provided in this Section 3.1, (i) Buyer shall be required to deposit with Escrow Agent on or before April 7, 2014, as an additional deposit the amount of One Million and No/100 Dollars ($1,000,000.00), which amount shall be considered upon delivery, a part of the Earnest Money, and (ii) and all references to $250,000.00 in Section 9.1 and Section 9.2 shall be increased to $1,000,000.00. THE PARTIES AGREE THAT TIME IS OF THE ESSENCE WITH RESPECT TO CLOSING AND THIS AGREEMENT.

ARTICLE IV
TITLE

Section 4.1    Condition of Title and Title Insurance.

(a)    As of the Closing Date, title to the Timberlands is to be free of all encumbrances or defects except the “Permitted Exceptions” described on Exhibit X.

(b)        Sellers have provided or made available current title commitments prepared by the Title Company (such commitments together with legible copies of all documentary exceptions referred to in such commitments are hereinafter, collectively referred to as the “Title Commitment”), to Buyer at Sellers' expense. Sellers shall pay the search and exam fees and other costs of preparing and delivering to Buyer the Title Commitment. Buyer shall pay for any title insurance premiums and any premiums, costs and expenses associated with expanded title insurance coverage or title endorsements.

(c)    Buyer shall have until seven (7) days prior to the Closing Date (the “Due Diligence Period”) to deliver to Sellers written notice of any objection to any matters reflected in any Title Commitment, which, in Buyer’s reasonable judgment, would materially adversely affect the use or enjoyment by Buyer of any parcel or portion of the Timberlands for growing, managing, and commercially harvesting timber (each, a “Title Objection” and collectively, the “Title Objections”); provided, however, that Buyer shall be permitted to object to all Title Failures affecting the Timberlands. For the purposes of this Agreement, the term “Title Failure” shall mean any portion of the Timberlands that is not, or immediately prior to the Closing will not be, (i) owned by Seller or (ii) insurable by the Title Company without exception (other than the Permitted Exceptions). Notwithstanding anything to the contrary set forth herein, Buyer shall have no right to object to any Permitted Exceptions and, for the purposes of this Agreement, such items will not be considered Title Objections. Upon receipt of the Title Objections, Seller may elect (but shall not be obligated) to cure or cause to be cured any such Title Objection, and Seller shall notify Buyer in writing within ten (10) days after receipt of the Title Objections whether Seller elects to cure the same. Failure of Seller to respond in writing within such time period shall be deemed an election by Seller not to cure such Title Objections. Any Title Objection shall be deemed to be cured if Seller causes the Title Company, at no additional cost to Buyer, to issue an owner’s title policy for the affected Timberlands affirmatively insuring over such Title Objection





in the owner’s title policy. Notwithstanding the foregoing, Seller shall be obligated to cure, on or before the Closing Date, all Liens against the Timberlands evidencing a debt (other than Liens for non-delinquent real estate Taxes or assessments) (“Monetary Liens”) created as a result of the acts or omissions of Seller or its affiliates. For the purposes of this Agreement, the term “Lien” means any mortgage, lien, charge, pledge, hypothecation, assignment, deposit, arrangement, encumbrance, security interest, assessment, adverse claim, levy, preference or priority or other security agreement of any kind or nature whatsoever (whether voluntary or involuntary, affirmative or negative (but excluding all negative pledges), and whether imposed or created by operation of law or otherwise) in, on or with respect to, or pledge of, any Property, or any other interest in the Property, designed to secure the repayment of debt or any other obligation, whether arising by contract, operation of law or otherwise. If Seller does not receive written notice of the Title Objections for any objection to matters reflected in the Title Commitment on or before the expiration of the Due Diligence Period, Buyer shall be deemed to have waived its right to object to any and all matters reflected in the Title Commitment and Buyer shall be deemed to accept title to the Timberlands encompassed within such Title Commitment subject to such matters; provided, however, that Buyer shall have the right to object to any matters affecting title not appearing in any Title Commitment as of the end of the Due Diligence Period and/or first appearing of record between the effective date of the Title Commitment and the Closing Date, which right may be exercised by delivering to Seller a subsequent notice of Title Objections on or before the Closing Date, and such subsequent Title Objections shall be resolved in the same manner as set forth above for Title Objections raised within the Due Diligence Period. Any Title Objection waived (or deemed waived) by Buyer shall be deemed to constitute a Permitted Exception, and the Closing shall occur as herein provided without any reduction of the Purchase Price therefor.
With regard to Title Objections or Title Failures timely raised by Buyer per the terms of this Section, Seller shall have the right, but not the obligation, to cure and remove such items within thirty (30) days after Seller’s receipt of Buyer’s written notice of Title Objections or Title Failures. For purposes of this Agreement, curing a Title Objection or Title Failure may include obtaining affirmative title coverage insuring against loss or damage arising from such Title Objection or Title Failure. In the event Seller elects not to cure a Title Objection or Title Failure timely made by Buyer, Buyer shall have the right, at its option, to accept the Timberlands subject to the uncured Title Objection or Title Failure or to reduce the Purchase Price by the fair market value of the affected parcel and require Seller to proceed to the Closing with those portions of the Timberlands that are subject to the Title Failure or Title Objection excluded from the Property to be conveyed to Buyer at Closing (a “Title Carveout”). Said fair market value shall be determined by Buyer and Seller by reference to the agreed upon land and timber values for the Timberlands, which values are set forth on Schedule 4.1 attached hereto and hereby made a part hereof (the “Value Table”). If the Parties are unable to agree upon the fair market value of any Title Carveout, said fair market value shall be determined as provided in Section 9.3 below. Notwithstanding the foregoing, if any portion or parcel of the Timberlands is to be excluded from the transaction pursuant to this Section 4.1 or as otherwise provided in this Agreement and such parcel comprises less than all of a discrete parcel of land with an adequate, insurable legal description, Seller shall determine (subject to Buyer’s right of reasonable approval as to shape or configuration and provided that the Title Carveout is a Marketable Parcel) the exact boundaries and dimensions of the portion of the Timberlands to be retained by Seller, and Seller shall make arrangements to have said portion of the Timberlands surveyed by a surveyor licensed to practice in the applicable State in order to produce an insurable legal description for said retained parcel. Seller shall pay all costs of any surveys so obtained. Seller shall also obtain any and all subdivision approvals required for Seller’s retention of the Title Carveouts. Buyer agrees to grant without cost to Seller access easements over and across any portion of the Timberlands acquired by Buyer upon reasonable terms and over reasonable routes as may be necessary for Seller’s access to any Title Carveouts, and Seller agrees to grant to Buyer without cost access easements over and across the Title Carveouts (and any other portion of the Timberlands retained by Seller) upon reasonable terms and over reasonable routes as may be necessary for Buyer’s access to the Timberlands. For purposes of this Agreement, “Marketable Parcel” means a parcel or tract of land containing at least forty (40) acres. The Closing Date shall be extended for any applicable cure periods under this Section.






ARTICLE V
INSPECTION; CONDITION OF PROPERTY

Section 5.1    Inspection. Buyer acknowledges that Buyer has been given the opportunity to inspect the Property and that neither Sellers nor their agents, officers, employees or assigns shall be held to any covenant respecting the condition of the Property or any improvements thereof nor shall Buyer or Sellers 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 and made a part of this Agreement or is contained in the Deeds. Buyer acknowledges and agrees that any documents, cruises, compilations, timber inventories, surveys, plans, specifications, reports and studies (the "Information") made available to Buyer by Seller are or have been provided as information only, and Seller makes no warranty with respect to the accuracy or completeness of the Information except as otherwise expressly provided herein or in the Deeds.

Upon reasonable prior written notice to Seller (which notice can be by email to Sellers’ designated representative), and receipt of authorization from Seller (which shall not be unreasonably withheld), prior to the Closing Date or termination of this Agreement in accordance with the terms of this Agreement, Buyer, through its authorized agents or representatives, may enter upon the Timberlands at all reasonable times for the purposes of making inspections and other studies; provided, however, that neither Buyer nor its agents or representatives shall (i) enter upon the Timberlands, for the purpose of preparing Phase II Environmental Reports or making any soil borings or other invasive or other subsurface environmental investigations relating to all or any portion of the Timberlands, (ii) prepare or instruct its agents or representatives to prepare Phase II Environmental Reports or make any soil borings or other invasive or other subsurface environmental investigations relating to all or any portion of the Timberlands, or (iii) except as may be required by applicable law and except pursuant to the ordinary course of Buyer’s due diligence investigations, contact any official or representative of any governmental authority regarding hazardous substances on or the environmental condition of the Timberlands without Seller’s prior written consent thereto. Upon the completion of such inspections and studies, Buyer, at its expense, shall repair any damage caused to the Timberlands and remove all debris and all other material placed on the Timberlands in connection with Buyer’s inspections and studies. Buyer hereby agrees to assume all liability for and shall indemnify, defend and hold harmless Seller, Hancock Natural Resource Group, Inc., Hancock Forest Management, Inc., John Hancock Timber Resource Corporation and their respective officers, employees, and agents (“HNRG Parties”) against any and all damages, claims, fines, penalties, demands, costs (including, without limitation, reasonable attorneys’ fees and court costs), or causes of action, of every kind, nature and description, arising out of or in any way connected with Buyer’s due diligence process or Buyer’s inspection of the Timberlands, except to the extent the same arise out of the intentional misconduct or negligence of any of the HNRG Parties. Notwithstanding anything to the contrary set forth in this Agreement, the foregoing indemnification shall survive any termination, cancellation or expiration of the Agreement or the Closing. Buyer agrees that from and after the date of this Agreement until Closing, Buyer, and the contractors, representatives and agents of Buyer who enter upon the Timberlands, shall maintain commercial general liability insurance with a reputable insurer naming Seller, Hancock Natural Resource Group, Inc., Hancock Forest Management, Inc., and John Hancock Timber Resource Corporation, as additional insureds in an amount not less than $2,000,000. Upon written request of Seller, Buyer shall provide evidence of such insurance (in form reasonably acceptable to Seller) to Seller.

Section 5.2    Condition of Property. Buyer specifically acknowledges and agrees that except as set forth in Sellers’ limited warranty of title in the Deeds and as set forth in Section 6 below and as set forth in any other instrument delivered by Sellers in connection with the Closing, (1) Sellers do not make any representations or warranties of any kind whatsoever, either express or implied, with respect to and shall have no liability for the Property (or any related matters), and (2) the Property is sold to Buyer in an “AS IS” and “WITH ALL FAULTS” condition as of the Closing, including, without limitation, (i) the existence or non-existence of legal access to or from the Timberlands or any portion thereof; (ii) the number of acres comprising the Timberlands; (iii) the volume, condition or quality of timber on the Timberlands; (iv) logging conditions or feasibility; (v) the stability of soils; (vi) suitability, habitability, merchantability or fitness of the Timberlands





for any construction or development, or for the Buyer’s intended use; (vii) the condition of any other structure or improvements on the Timberlands; (viii) encroachment or boundary questions; (ix) compliance with any laws; (x) drainage, availability or adequacy of water, sewer or other utilities, zoning, access and similar matters; and (xi) any other matters related to the Property.

Section 5.3    Continued Operation. Between the Effective Date and the Closing Date, Sellers shall (i) maintain and keep the Timberlands in substantially the same condition as existed on the Effective Date, (ii) not remove or permit the removal of any timber, harvestable crop, improvements, or other items from the Timberlands, except as may be permitted under the Georgia Supply Agreement, (iii) not encumber or enter into any contract, lease or other agreement (including any amendment to any of the Assumed Contracts, the Real Property Leases or the Georgia Supply Agreement) (other than the proposed amendment to the Georgia Supply Agreement previously provided to Buyer) the Timberlands without the prior written consent of Buyer, which consent may be withheld in Buyer’s sole discretion.

Section 5.4    No Reliance. Buyer acknowledges that any materials provided to it, including any cost or other estimates, projections, acreage, and timber information, the Confidential Information Memorandum for “Project Waycross - Panola” any management presentations and any materials and information provided on data disks or in any on-line data rooms, are not and shall not be deemed representations or warranties by or on behalf of Seller or any other person and are not to be relied upon by Buyer, except as otherwise provided herein.

Section 5.5    Environmental Report. Buyer acknowledges receipt of (i) that certain Phase I environmental site assessment for the Timberlands located in Georgia conducted by SLR, Inc. (the “Environmental Consultant”), dated January, 2014, and (ii) that certain Phase I environmental site assessment for the Timberlands located in Texas conducted by the Environmental Consultant dated December, 2013 (collectively, the “Phase I Assessments”). Buyer has no objections to the matters set forth in the Phase I Assessments. On or before Closing, Sellers shall cause the Environmental Consultant to either issue in favor of Buyer and Buyer’s lender, CoBank, ACB, as Administrative Agent (“CoBank”) a reliance letter for the Phase I Assessments in form reasonably acceptable to Buyer (the “Reliance Letter”) or to revise and amend the Phase I Assessments to name Buyer and CoBank as an additional intended users of the Phase I Assessments. Sellers and Buyer shall share equally the cost of the Phase I Assessments. Seller has advised Buyer that said total cost will not exceed $13,000.00.

Section 5.6    Georgia Supply Agreement. The Timberlands located in Georgia are subject to the Georgia Supply Agreement. FORESTREE VI LP and Georgia Biomass, LLC, purchaser under the Georgia Supply Agreement (“Georgia Biomass”), have agreed upon the Annual Purchase Amount, as defined in the Georgia Supply Agreement, and the stands of Timber, as defined in the Georgia Supply Agreement, to be thinned during the 2014 Harvesting Year, as defined in the Georgia Supply Agreement, to satisfy the Annual Purchase Amount (the “2014 Stands”). The 2014 Stands are also set forth in Schedule 1.1(a)(A). Seller may cause the harvesting and removal of Timber under the Georgia Supply Agreement to resume on March 4, 2014 (the “Adjustment Date”).

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLER

Representations and Warranties of Seller. Sellers represent and warrant to Buyer as of this date and as of the date of the Closing:

Section 6.1    Organization and Good Standing. Each Seller is a limited partnership which is duly organized and validly existing under the laws of the State of Delaware. Each Seller is qualified to conduct business in the State of Georgia and the State of Texas.






Section 6.2    Power and Authority for Transaction. Except as expressly provided in Section 16.21 below, each Seller has the power and authority to execute, deliver and perform this Agreement and the transactions contemplated herein in accordance with the terms hereof.

Section 6.3    Authorization; No Violation or Conflicts. The execution and delivery by each Seller of this Agreement and the due consummation of the transactions contemplated herein have been duly and validly authorized by all necessary corporate actions on the part of each Seller and this Agreement constitutes a valid and legally binding agreement of each Seller. Neither the execution and delivery of this Agreement by each Seller nor the consummation by each Seller of the transactions contemplated herein constitute a violation of applicable law or of each Seller'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 each Seller pursuant to, or constitute a default under, any indenture or bank loan or credit agreement, or other agreement or instrument to which each 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 each Seller is required in connection with the execution and delivery by each Seller of this Agreement or for consummation by each Seller of the transactions contemplated herein.

Section 6.4    Litigation and Condemnation. There is no pending or, to each Seller’s knowledge, threatened action or proceeding (including, but not limited to, any condemnation or eminent domain action or proceeding) before any court, governmental agency or arbitrator which may adversely affect each Seller’s ability to perform this Agreement or which may affect the Property.

Section 6.5    Compliance with Laws. To Sellers’ knowledge, (i) Sellers’ use of the Timberlands is in material compliance with all statutes, ordinances, rules, regulations, orders and requirements of all federal, state and local authorities and any other governmental entity having jurisdiction over the Timberlands (“Laws”), and (ii) Sellers have not received any notice from any such governmental entity of any violation of any Laws.

Section 6.6    Environmental Matters. To Sellers’ knowledge, except as may be otherwise specifically identified in the Phase I Assessments, (x) the Timberlands 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 permitted under applicable laws; provided, however, the Timberlands may contain small, unauthorized household dump sites typical of rural timberlands; (y) there are no underground storage tanks on the Timberlands, and (z) Sellers have received no written notice from any federal, state or local governmental authority, to the effect that any portion of the Timberlands is not in compliance with applicable federal, state or local environmental laws, including, without limitation and as the same may be amended from time to time: (i) the Resource Conservation and Recovery Act of 1976, 42 USC §6901 et. seq. (RCLA); (ii) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 USC §9601 et. seq. (CERCLA); (iii) the Hazardous Materials Transportation Act, 49 USC §1801, et. seq.; (iv) applicable laws of the States of Georgia and Texas, and (v) any federal, state or local regulations, rules or orders issued or promulgated under or pursuant to any of the foregoing or otherwise by any department, agency or other administrative, regulatory or judicial body.

Section 6.7    Harvest Rights. Except for any timber harvest operations conducted under the Georgia Supply Agreement, there are no outstanding contracts or agreements entered into by Sellers pursuant to which any party has the contractual right to cut or remove timber from the Timberlands. To Sellers’ knowledge: (i) there has been no timber harvested or removed from the Timberlands located in Georgia since January 11, 2014 (the “Georgia Inventory Date”); (ii) there has been no timber harvested or removed from the Timberlands located in Texas since January 8, 2014 (the “Texas Inventory Date”); and (iii) Sellers shall not permit any harvesting or removal of timber from the Timberlands under the Georgia Supply Agreement until the Adjustment Date. From and after the Adjustment Date, Timber may be harvested





and removed from the Timberlands located in Georgia pursuant to the terms of the Georgia Supply Agreement.

Section 6.8    ERISA. For purposes of Section 3(14) of the Employee Retirement and Income Security Act of 1974, as amended (hereinafter referred to as “ERISA”), Sellers are not a party in interest with Buyer. The Property does not constitute an asset of an employee benefit plan affiliated with Sellers, as defined in Section 3(3) of ERISA.

Section 6.9    OFAC. Sellers are not, and will not become, a person or entity with whom U.S. persons are restricted from doing business with under the regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of Treasury (including those named on OFAC’s Specially Designed and Blocked Persons list) or under any statute, executive order (including the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), the US Patriot Act, or other governmental action.

Section 6.10    Assumed Contracts and Real Property Leases. With respect to each Assumed Contract and Real Property Lease: (i) such Assumed Contract and Real Property Lease is legal, valid, binding, enforceable and in full force and effect and has not been modified or amended except as indicated on Exhibit B or Exhibit C attached hereto; (ii) the transactions contemplated by this Agreement will not result in a breach or default under any such Assumed Contract or Real Property Lease, or otherwise cause such Assumed Contract or Real Property Lease to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing; (iii) neither Sellers, nor to Sellers’ knowledge, any other party to any such Assumed Contract or Real Property Lease is in breach or default under such Assumed Contract or Real Property Lease; and (iv) to Sellers’ knowledge, no event has occurred or failed to occur or circumstances exist which, with the delivery of notice, the passage of time or both, would constitute a breach or default under any such Assumed Contract or Real Property Lease or permit the termination, modification or acceleration of rent under such Assumed Contract or Real Property Lease.

Section 6.11    Endangered, Threatened or Listed Species. To Sellers’ knowledge, there are no activity centers for species listed as endangered or threatened under the Federal Endangered Species Act located on the Timberlands. Seller has not received any written notice of any threatened or contemplated actions against Seller or the Timberlands based upon the presence of any species listed as endangered or threatened under the Federal Endangered Species Act on the Timberlands.

Section 6.12    No Casualty. To Sellers’ knowledge, no trees or timber having an aggregate value in excess of $100,000.00 have been lost or damaged by fire or other Casualty since the applicable Inventory Date. For purposes of this Agreement, Casualty shall mean any physical damage to or loss of the timber on any portion of the Timberlands by fire, earthquake, flood, insects, disease or other casualty, or as a result of timber trespass or unauthorized harvest.

Section 6.13    Unrecorded Documents. To Sellers’ knowledge, Sellers have not entered into any unrecorded agreements, easements, permits or contracts that will affect the Timberlands after Closing, except for the Georgia Supply Agreement, the Assumed Contracts and the Real Property Leases.

Section 6.14    Title. To Sellers’ knowledge, (i) FORESTREE VI LP owns fee-simple title to the Timberlands, as described in the Title Commitments, located in Georgia, and (ii) FORESTREE VI TEXAS LP owns fee-simple title to the Timberlands, as described in the Title Commitments, located in Texas, free and clear of all monetary liens, but expressly subject to all Permitted Exceptions, the Georgia Supply Agreement, the Real Property Leases and the Assumed Contracts.

Section 6.15    Boundary Disputes. Except as described in Schedule 6.15, to Sellers’ knowledge, there are no boundary disputes and no encroachments affecting the Timberlands or any portion thereof, nor is any person or entity adversely possessing or using any of the Timberlands or any portion thereof.






Section 6.16    Georgia Supply Agreement. No consent is required for the assignment by FORESTREE VI LP of the Georgia Supply Agreement, and all of the property subject to the Georgia Supply Agreement is included in the Georgia Timberlands.

Section 6.17    Mining. Except as described in Schedule 6.17, to Sellers’ knowledge, there have been no active mining operations conducted on the Timberlands during the past five (5) years, and Seller has no knowledge of any proposed mineral activity on the Timberlands.

Section 6.18    Property Taxes. To Sellers’ knowledge, (i) no taxes or assessments relating to the Timberlands are delinquent, and (ii) there are no special taxes, assessments or charges proposed, pending or threatened against the Timberlands. Neither Sellers nor, to Sellers’ knowledge, any other person or entity has applied the Timberlands or any portion thereof to a use other than agricultural or silvicultural.

For the purpose of this Agreement, the phrase “to Sellers’ knowledge” or “to Seller’s knowledge” shall be defined as the present, actual knowledge only, and not any implied, imputed or constructive knowledge, without any independent investigation having been made or any implied duty to investigate, of the following listed officers and employees of Sellers and Hancock Natural Resource Group, Inc.: (a) for the portion of the Timberlands located in Georgia: David Kimbrough, Manager, Dispositions - North America, Tim Jarrell, Area Forester, and Benjamin Addison, Area Manager; and (b) for the portion of the Timberlands located in Texas: David Kimbrough, Lee Wise, Area Forester, and Christy Nichol, Area Manager.

The truth of the representations and warranties set forth above is a condition to Buyer's obligation to purchase, and if any of the representations and warranties are not true at the date of Closing, then Buyer may rescind this Agreement and receive a return of the Earnest Money, and in the event any such false representation or warranty constitutes a default by Sellers hereunder, Buyer may also exercise any available remedy permitted under this Agreement. The representations and warranties set forth above shall survive Closing for a period of twelve (12) months after Closing, however, unless Buyer notifies Sellers in writing of an apparent or claimed breach of representation or warranty within twelve (12) months of Closing, then Sellers shall have no further liability resulting from the breach of said representations or warranties. Buyer shall have no right to bring any action against Sellers as a result of any breach, untruth or inaccuracy of the representations and warranties contained herein unless and until the aggregate amount of all liability and losses, claims, causes of action, damages, costs and expenses, including reasonable attorneys’ fees and expenses (collectively, “Loss”) arising out of any such untruth or inaccuracy or breach, together with the Loss resulting from any other such untruth, inaccuracy or breach exceeds or is reasonably likely to exceed $200,000.00. The maximum amount of Sellers’ aggregate liability resulting from any such untruth, inaccuracy or breach of a representation and warranty hereunder shall in no event exceed an aggregate amount in excess of $14,800,000.00. Sellers shall have no liability with respect to any breach of Seller’s representations and warranties herein if, prior to the Closing, Buyer obtains actual knowledge of any such breach or contradiction of a representation or warranty of Sellers herein, including, without limitation, as a result of Buyer’s due diligence or the inclusion of information in a written disclosure by Sellers to Buyer, and Buyer nevertheless consummates the transaction contemplated by this Agreement. In addition, Sellers shall be liable for actual damages only and shall have no liability hereunder for indirect, special, consequential or punitive damages. For purposes of this paragraph, Buyer’s actual knowledge shall mean the actual knowledge of Jerry Barag, Buyer’s President and Chief Executive Officer, and John D. Capriotti, Buyer’s Director of Acquisitions.

ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER

Representations and Warranties of Buyer. Buyer represents and warrants to Sellers that as of this date and as of the date of the Closing:

Section 7.1    Organization. Buyer is a corporation duly organized and validly existing under the laws of the State of Maryland.






Section 7.2    Power and Authority for Transaction. Buyer has the power and authority to execute, deliver and perform this Agreement and the transactions contemplated herein in accordance with the terms hereof.

Section 7.3    Authorization; No Violation or Conflicts. The execution and delivery of this Agreement by Buyer and the due consummation of the transactions contemplated herein have been duly and validly authorized by all necessary [partnership or corporate] action on the part of Buyer, and this Agreement constitutes a valid and legally binding agreement of Buyer. Neither the execution and delivery of this Agreement by Buyer nor the consummation by Buyer of the transactions contemplated herein constitute a violation of applicable law or of Buyer’s partnership agreement, charter or bylaws or other organizational documentation or agreements or result in the breach of, or the imposition of any lien on any assets of Buyer pursuant to, or constitute a default under, any indenture or bank loan or credit agreement, or other agreement or instrument to which Buyer 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 Buyer is required in connection with the execution and delivery by Buyer of this Agreement or for consummation by Buyer of the transactions contemplated herein.

Section 7.4    Funding. Buyer has available or has binding subscriptions for, and will at the Closing have available, sufficient funds to pay the Purchase Price and to pay all other amounts due and payable by Buyer pursuant to the terms of this Agreement.

Section 7.5    OFAC. Buyer is not, and will not become, a person or entity with whom U.S. persons are restricted from doing business with under the regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of Treasury (including those named on OFAC’s Specially Designed and Blocked Persons list) or under any statute, executive order (including the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), the US Patriot Act, or other governmental action.

The representations and warranties set forth above shall survive Closing for a period of twelve (12) months after Closing, however, unless Seller notifies Buyer in writing of an apparent or claimed breach of warranty within twelve (12) months of Closing, then Buyer shall have no further liability to Seller with respect to the representations or warranties. Buyer shall have no liability with respect to a breach of a representation or warranty herein if, prior to the Closing, Seller obtains knowledge of such breach or contradiction of a representation or warranty of Buyer herein, including, without limitation, as a result the inclusion of information in a written disclosure by Buyer to Seller, and Seller nevertheless consummates the transaction contemplated by this Agreement. In addition, Buyer shall be liable for actual damages only and shall have no liability hereunder to Seller or Seller’s successors and assigns for indirect, special, consequential or punitive damages in favor of Seller.

ARTICLE VIII
ENVIRONMENTAL RELEASE

Section 8.1    Environmental Release. From and after the date which is twelve (12) months after the Closing Date (the “Release Date”), Buyer hereby releases Sellers from all costs, losses, liabilities, obligations and claims, of any nature whatsoever, known and unknown, that Buyer may have against Sellers based in whole or in part upon the presence, release or disposal of any hazardous substance, solid waste, or any other environmental contamination on, within, or from the Timberlands before or as of the Closing Date. Anything to the contrary notwithstanding, Buyer’s waiver and release of Sellers as described above shall not eliminate Sellers’ liability for the warranty and representation set forth in Section 6.6 hereof, or for any claim made by Buyer prior to the Release Date. Buyer or its successors and assigns shall have no obligation at any time or as a result of this release to indemnify, defend or save harmless Sellers from claims





by third parties for any conditions, actions or omissions which occurred prior to the Closing Date regardless of whether claims are brought before or after Closing. As used in this Section, the term “applicable environmental laws” shall mean all state, federal, or local laws, statutes, ordinances, rules, regulations or orders pertaining to health or the environment, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) and the Resource Conservation and Recovery Act of 1976 (“RCRA”), as each may be amended from time to time. As used herein, the terms “hazardous substance” and “release” 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 Section after the effective date of the amendment. Moreover, to the extent that Georgia or Texas 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. In addition, this Section shall survive the date of closing for all purposes and shall not be deemed to have merged into any of the documents executed or delivered at Closing.

ARTICLE IX
CONDEMNATION; CASUALTY

Section 9.1    Buyer’s Risk. Buyer shall bear the risk of loss or damage to the Timberlands from Casualty loss or any other cause whatsoever, or condemnation of any portion of the Timberlands, prior to Closing, if, but only if, such loss, damage or condemnation does not cause a reduction in the value of the Property greater than $250,000.00, it being assumed for purposes of this computation that the value of the land and timber comprising the Timberlands is the value shown on the Value Table. Notwithstanding the occurrence of any such loss, damage or condemnation which is $250,000.00 or less, Buyer and Sellers shall complete the Closing without adjustment of the Purchase Price.

Section 9.2    Sellers’ Risk. Sellers shall bear the risk of loss or damage to the Timberlands and improvements thereon from Casualty loss or any other cause whatsoever, or condemnation of any portion of the Timberlands, prior to Closing if, but only if, such loss, damage or condemnation causes a reduction in the value of the Property greater than $250,000.00. In the event of such loss, damage, or condemnation prior to Closing which causes a reduction in value of the Property greater than $250,000.00 but less than ten percent (10%) of the Purchase Price, Buyer shall proceed with Closing provided that (i) in the case of damage, Buyer shall receive a reduction in the Purchase Price equal to the amount of such damage as determined in accordance with Section 9.3 below, or (ii) in the case of a condemnation, Sellers shall assign all of Sellers’ rights to such condemnation award or proceeds for the Property to Buyer. In the event that such loss, damage or condemnation occurs prior to Closing and causes a reduction in the value of the Property in excess of ten percent (10%), Buyer, at its election, may terminate this Agreement without any further liability of either party to the other, except that Sellers shall direct the Escrow Agent to refund the Earnest Money to Buyer or if Buyer fails to terminate this Agreement as provided herein within five (5) business days after the determination of the reduction in value of the Property, then Buyer shall be deemed to have waived such termination right and Buyer and Sellers shall complete the Closing provided that (i) in the case of damage, Buyer shall receive a reduction in the Purchase Price equal to the amount of such damage as determined in accordance with Section 9.3 below, or (ii) in the case of a condemnation, Sellers shall assign all of Sellers’ rights to such condemnation award or proceeds for the Property to Buyer.

Section 9.3    Adjustment. In the event it shall become necessary, pursuant to Sections 9.1 or 9.2, to determine the amount of any change in the value of the Property, and Sellers and Buyer are unable to agree on the amount of such change within ten (10) days after the occurrence of such loss, damage or condemnation, then such determination shall be made by a majority of a panel of three (3) independent professional forestry consultants each of whom has no less than ten (10) years’ experience in the practice of forestry in the general area of the Timberlands. One such consultant shall be appointed by Sellers, one such consultant shall be appointed by the Buyer, and the third consultant shall be chosen by the first two consultants. The decision of such consultants shall be final and binding on both parties, and the costs of such determination shall be divided equally between Buyer and Sellers. Said consultants shall use the land





and timber values set forth in the Value Table in making their determination. The date of Closing shall be extended to the extent reasonably necessary to permit the determination of the amount of any change in the value of the Property and/or to permit any election made pursuant to the provisions of this Section 9.3.

ARTICLE X
CONDITIONS PRECEDENT

Section 10.1    Conditions to Obligations of Each Party to Close. The obligations of the Parties to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver, on or before the Closing Date, of the following conditions:
(a)
No Injunction. There shall be no injunction, restraining order or decree of any nature of any court or Governmental Authority that is in effect, that does not result from the default of any party to this Agreement and that restrains or prohibits the consummation of the transactions contemplated by this Agreement or imposes conditions on such consummation not otherwise provided for herein.
(b)
No Investigation. No Party shall have been advised by any United States federal government agency (which advisory has not been officially withdrawn on or prior to the Closing Date) that such government agency is investigating the transactions contemplated by this Agreement to determine whether to file or commence any litigation that seeks or would seek to enjoin, restrain or prohibit the consummation of the transactions contemplated by this Agreement.
(c)
Purchase Price Reduction Limit. In the event the aggregate fair market value of (i) Title Carveouts, and (ii) the fair market value of the lost and damaged timber from all losses arising from Casualty or condemnation exceeds an amount equal to twenty percent (20%) of the Purchase Price, prior to any adjustment as contemplated by Section 12.1, either Party may terminate this Agreement by delivering written notice of the same to the other Party, in which event this Agreement shall terminate, the Earnest Money shall be returned immediately to Buyer, and neither Party shall have any further liability hereunder (except for such liabilities as expressly survive termination of this Agreement).

Section 10.2    Conditions to Obligations of Buyer to Close. The obligation of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver, on or before the Closing Date, of the following conditions:
(a)
Representations and Warranties. Each of the representations and warranties of Sellers contained in this Agreement shall be true and correct, in each case as of the date of this Agreement and as of the Closing with the same effect as though made as of the Closing (except to the extent expressly made as of an earlier date, in which case as of such date).
(b)
Agreements and Covenants. Sellers shall have performed or complied with, in all material respects, all agreements and covenants required by this Agreement to be performed or complied with by Seller on or prior to the Closing.
(c)
Seller Deliveries. Sellers shall have tendered for delivery or caused to be tendered for delivery to Buyer the items set forth in Section 12.3 (a).
(d)
Title Policies. Buyer shall have received, in the form of a “marked binder” delivered at Closing, one or more owners policies of title insurance issued by First American Title Insurance Company (or, another national title insurance company acceptable to Buyer) in the amount of the Purchase Price (as adjusted) insuring title to the Timberlands as of the date of Closing subject only to the Permitted Exceptions, and otherwise in form and content (with endorsements reasonably acceptable to Buyer) satisfactory to Buyer.






Section 10.3    Conditions to Obligations of Sellers. The obligation of Sellers to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver, on or before the Closing Date, of the following conditions:
(a)
Representations and Warranties. Each of the representations and warranties of Buyer contained in this Agreement shall be true and correct in each case as of the date of this Agreement and as of the Closing with the same effect as though made as of the Closing (except to the extent expressly made as of an earlier date, in which case as of such date).
(b)
Agreements and Covenants. Buyer shall have performed or complied with, in all material respects, with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing.
(c)
Deliveries. Buyer shall have tendered for delivery or caused to be tendered for delivery to Sellers the items set forth in Section 12.3(b).

ARTICLE XI
ASSIGNMENT

Section 11.1    Assignment. Except as expressly set forth below, this Agreement shall not be assigned or encumbered, or otherwise transferred in any way, by Buyer without the prior written consent of Sellers, and shall not be recorded in any County records or other office where public records are maintained. Buyer may assign this Agreement to any institutional lender or lenders as security for obligations to such lender or lenders in respect of financing arrangements of Buyer or any Affiliates thereof with such lender or lenders. Buyer may assign its rights and obligations under this Agreement to effectuate a like-kind exchange of real property pursuant to Section 1031(a) of the Internal Revenue Code 1986 as amended and the parties agree to cooperate with each other in effecting such an exchange and will execute the necessary documentation for an exchange. Following any such assignment Buyer shall remain liable for the performance of Buyer’s obligations hereunder and any such assignment and activities relating thereto cannot extend Closing. Any expenses incurred by Sellers in connection with such assignment activity will be paid to Sellers by Buyer. In addition, Sellers agree that Buyer may assign its rights and obligations under the Agreement in its sole discretion to one or more entities directly or indirectly controlled by, controlling or under common control with, or whose timber investments are managed by, Buyer (each an “Affiliate”) and cause Sellers to deed such Timberlands directly to such Affiliates as long as Buyer remains obligated for the performance of this Agreement. Sellers shall not incur any additional cost or liability by reason of the this Section 11, and Buyer shall give Sellers at least ten (10) days prior written notice before Closing of the identity of the grantee of the Deed, if other than Buyer.

ARTICLE XII
APPORTIONMENTS; CLOSING COSTS; CLOSING DELIVERIES

Section 12.1    Apportionments. Except as provided in Section 12.2, the following shall be apportioned between Buyer and Sellers as of the Effective Time (on a per diem basis): (i) property and other non-income taxes and assessments in respect of the Property with respect to the tax period in which the Effective Time occurs; (ii) revenue from the Real Property Leases, including hunting and other recreational lease revenue; (iii) revenues or expenses and payments received or made by Sellers in respect of any Assumed Contract ((i) - (iii) collectively, “Apportionments”); provided, however, all revenue received by Seller under the Georgia Supply Agreement for all Timber cut from and after the Adjustment Date shall be credited (dollar for dollar) against the Purchase Price. At Closing, and again thirty (30) days after Closing to the extent such revenues are received by Seller after Closing, Seller shall provide Buyer with an accounting of (1) the volume of Timber harvested, and (2) all revenue received by Seller, from and after the Adjustment Date under the Georgia Supply Agreement. Not later than sixty (60) days after the later of the Closing Date or the date that all the applicable tax rates have been fixed or the value assessments have been made and finally determined with respect to all of the Timberlands for the applicable tax periods in which the Effective





Time occurs, Sellers and Buyer shall determine the Apportionments, and the Purchase Price shall be increased or decreased, as applicable, by the aggregate amount of such Apportionments; provided if the net aggregate amount of such apportionments relating to property Taxes is $1,000.00 or less, no adjustment shall be made. Any adjustment to be made pursuant to this Section 12.1 shall be made no later than five (5) Business Days following the determination of the aggregate amount of the Apportionments. Sellers and Buyer agree to furnish each other with such documents and other records as may be reasonably requested in order to confirm all Apportionment calculations made pursuant to this Section 12.1. Except for the adjustment set forth above, there shall not be any proration of property taxes or other non-income taxes and assessments and, as between Buyer and Sellers, Buyer agrees that Buyer shall be solely responsible for all such property taxes and other non-income taxes and assessments due and payable in respect of the Property after the Closing. In addition, Sellers shall be responsible for payment of any rollback, recapture, or other taxes related to or caused by a change of use of the Timberlands due to actions of Sellers (other than merely the sale of the Timberlands to Buyer). Sellers’ responsibility for such taxes shall survive the Closing.

Section 12.2    Closing Costs. Each Party shall be responsible for its own attorneys’ fees and expenses. Sellers shall be responsible for the preparation of the Deeds at Sellers’ expense. Sellers shall pay the following costs and expenses in connection with the transactions contemplated by this Agreement: (i) search and exam fees to prepare the Title Commitment; (ii) one-half of any escrow fees, if any, charged by the Escrow Agent; (iii) one-half of the costs to prepare and issue the Phase I Assessment; and (iv) one-half of all sales, use, excise, documentary, stamp duty, registration, transfer, conveyance, economic interest transfer and other similar taxes related to the conveyance of the Timberlands from Sellers to Buyer arising in connection with the transactions contemplated by this Agreement (collectively, “Transfer Taxes”). Buyer shall pay the following costs and expenses in connection with the transactions contemplated by this Agreement: (i) one-half of all Transfer Taxes; (ii) one-half of any escrow fees, if any, charged by the Escrow Agent; (iii) one-half of the costs to prepare and issue the Phase I Assessment and all costs incurred for the Reliance Letter; (iv) all recording and filing fees associated with recording or filing any documents, including the Deeds; (v) all title insurance premiums, premiums for expanded title coverage and endorsement fees and premiums; and (vi) any recapture, reassessment, roll-back taxes or changes in tax assessments in respect of the Timberlands that may become due and payable after the Effective Time caused by any action or inaction of Buyer with respect to the continuation or removal of the Timberlands after the Effective Time from the present classification, or changes in use after the Effective Time, except to the extent the same are caused by actions of the Sellers (other than the mere transfer of the Timberlands to Buyer). The Party having primary responsibility under applicable law shall timely prepare and file tax returns in respect of such Transfer Taxes with the applicable taxing authority. All other costs shall be paid by the Party incurring such costs.

Section 12.3.    Closing Deliveries.
(a)
Closing Deliveries by Sellers. Sellers shall deliver the following items to Buyer at the Closing:
(i)
duly executed special or limited warranty deeds (one or more for each county, at Buyer’s election pursuant to Section 11.1 above) warranting only against persons claiming by, though or under each Seller and subject only to the Permitted Exceptions, in each case substantially in the form of Exhibit E (Georgia) and Exhibit E-1 (Texas) attached hereto (collectively, the “Deeds”);
(ii)
duly executed counterparts of assignment and assumption agreements under which each Seller assigns to Buyer all of each Seller’s right, title and interest in and to the Real Property Leases and Buyer assumes all of each Seller’s obligations, covenants and responsibilities under the Real Property Leases in each case substantially in the form of Exhibit F (each, an “Assignment and Assumption of Real Property Leases”);
(iii)
duly executed counterparts of assignment and assumption agreements under which each Seller assigns to Buyer all of each Seller’s right, title and interest in and to the Assumed





Contracts, and Buyer assumes all of each Seller’s obligations, covenants and responsibilities under the Assumed Contracts in each case substantially in the form of Exhibit G -1 (each, an “Assignment and Assumption of Assumed Contracts”);
(iv)
duly executed counterparts of assignment and assumption agreements under which FORESTREE VI LP assigns to Buyer all of FORESTREE VI LP’s right, title and interest in and to the Georgia Supply Agreement, and Buyer assumes all of FORESTREE VI LP’s obligations, covenants and responsibilities under the Georgia Supply Agreement substantially in the form of Exhibit G-2 (the “Assignment and Assumption of Georgia Supply Agreement”);
(v)
duly executed certificate of each Seller certifying that each Seller’s respective representations and warranties set forth in Article VI of this Agreement are true, correct and complete as of the Closing Date;
(vi)
an affidavit stating the taxpayer identification number of each Seller and that each Seller is not a “foreign person” for purposes of Section 1445 of the Code and the Treasury Regulations thereunder;
(vii)
an Owner’s Title Affidavit reasonably requested by the Title Company, substantially in the form of Exhibit H;
(viii)
an Affidavit of Seller’s Residence, substantially in the form of Exhibit I;
(ix)
such assignments, affidavits, certificates of title and other instruments of assignment and conveyance, all in form reasonably satisfactory to Buyer, as are necessary to convey fully and effectively to Buyer Sellers’ interest in the Property in accordance with the terms hereof and in order to permit Buyer to obtain title insurance on the Timberlands, as contemplated herein;
(x)
an executed closing statement with respect to the transactions contemplated hereby; and
(xi)
an estoppel letter in a form provided in the Georgia Supply Agreement from Georgia Biomass under the Georgia Supply Agreement, to the extent requested by Buyer.
(b)
Closing Deliveries by Buyer. At the Closing, Buyer shall deliver the following items to Seller:
(i)
the balance of the Purchase Price, subject to Apportionments and adjustments as set forth herein;
(ii)
duly executed counterparts of the Assignment and Assumption of Assumed Contracts;
(iii)
duly executed counterparts of the Assignment and Assumption of Georgia Supply Agreement;
(iv)
duly executed counterparts of the Assignment and Assumption of Real Property Leases;
(v)
duly executed certificate of Buyer certifying that Buyer’s representations and warranties set forth in Article VII of this Agreement are true, correct and complete as of the Closing Date;
(vi)
intentionally deleted;
(vii)
such assignments, certificates of title and other instruments of assignment and conveyance, all in form reasonably satisfactory to Seller, as are necessary to consummate the transactions contemplated by this Agreement; and
(viii)
an executed closing statement with respect to the transactions contemplated hereby.
(c)
Other Closing Deliveries. The Parties shall each execute and deliver such other and further certificates, assurances and documents as may reasonably be required by the other Parties in connection with the consummation of the transactions contemplated by this Agreement. Seller





acknowledges that Buyer and CoBank may request that Georgia Biomass execute a consent to Buyer’s collateral assignment of the Georgia Supply Agreement, and Sellers covenant and agree to (i) deliver such consent documentation to Georgia Biomass within seven (7) days after receipt of same from Buyer, and (ii) use good faith efforts, at no cost or expense to Sellers, to obtain the execution and delivery of such consent documentation by Georgia Biomass; provided, however, Sellers and Buyer acknowledge and agree that the execution and delivery of such consent documentation by Georgia Biomass is not a condition to closing.

ARTICLE XIII
BROKER’S COMMISSION

Section 13.1    Commission. Buyer and Sellers each represent and warrant to the other that, no broker, agent or finder, licensed or otherwise has been engaged by it, respectively, in connection with the transaction contemplated by this Agreement. In the event of any such claim for broker’s, agent’s or finder’s fee or commission in connection with the negotiation, execution or consummation of this transaction, the party upon whose alleged statement, representation or agreement such claim or liability arises shall indemnify, hold harmless and defend the other party from and against such claim and liability, including without limitation, reasonable attorney’s fees and court costs. Buyer and Sellers acknowledge that the representations and warranties contained in this Section shall survive the Closing.

ARTICLE XIV
CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS

Section 14.1    Confidentiality. Each Party will hold, and will cause its officers, employees, accountants, counsel, financial advisors and other representatives and affiliates to hold, any nonpublic information confidential in accordance with the terms of that certain Confidentiality Agreement dated January 8, 2014, entered into by and between the parties (the “Confidentiality Agreement”).

Section 14.2 Public Announcements. This Agreement (or a memorandum thereof) shall not be recorded by Buyer in any real property records. If this Agreement (or a memorandum thereof) is so recorded by Buyer, each Seller may, at its option, terminate this Agreement. Notwithstanding anything to the contrary set forth in Section 14.1 or the Confidentiality Agreement, except as required by applicable Law (including rules and regulations promulgated by the SEC) or stock exchange rules, (i) any press release or public announcement by Buyer regarding the transactions contemplated by this Agreement shall only be made simultaneously with or after a press release or public announcement by Sellers on or after the Effective Date regarding the transactions contemplated by this Agreement, and (ii) Sellers and Buyer shall consult with each other before issuing, and will provide each other the opportunity to review, comment upon and concur with, and use commercially reasonable efforts to agree on, any press release and other public announcement with respect to the transactions contemplated by this Agreement, including the time, form and content of such press release or public announcement, and shall not issue any such press release or make any such public announcement prior to such consultation; provided, however, that any disclosure required to be made under applicable Law, stock exchange rules or rules and regulations promulgated by the SEC may be made without such mutual agreement if a Party required to make such disclosure has determined in good faith that it is necessary to do so and has used commercially reasonable efforts, prior to the issuance of the disclosure, to provide the other Party with a copy of the proposed disclosure and to discuss the proposed disclosure with the other Party. For the purposes of this Agreement, the term “Law” shall mean any rule, regulation, statute, order, ordinance, guideline, code or other legally enforceable requirement, including common law, state and federal laws and laws of foreign jurisdictions.

ARTICLE XV
DEFAULT

Section 15.1    Buyer Default. If the purchase and sale contemplated hereby is not consummated because of a default by Buyer under this Agreement, then Escrow Agent will deliver the Earnest Money to





Seller as full liquidated damages (the parties hereto acknowledging that Seller’s damages as a result of such default are not capable of exact ascertainment and that said liquidated damages are fair and reasonable), said payment being Sellers’ sole and exclusive remedy hereunder on account of any default by Buyer, whereupon this Agreement will terminate and neither party hereto will have any further rights or obligations hereunder.

Section 15.2    Seller Default If the purchase and sale contemplated hereby is not consummated because of a default by Seller under this Agreement, Buyer may elect, in its sole discretion either (i) to terminate this Agreement whereupon the Escrow Agent will return the Earnest Money to Buyer and to obtain a reimbursement from Seller for Buyer’s actual third party expenses incurred in connection with this Agreement, not to exceed $250,000.00, or (ii) to seek specific performance of this Agreement, in which event Escrow Agent shall continue to hold the Earnest Money until the final disposition of the action for specific performance, whereupon the Earnest Money shall be applied to the Purchase Price, or, if specific performance is not final, after disposition of all appeals which may have been taken, decreed to Buyer, then Escrow Agent shall pay the Earnest Money to Buyer.

ARTICLE XVI
GENERAL PROVISIONS

Section 16.1    Attorneys’ Fees. In the event any legal proceeding should be brought to enforce the terms of this Agreement or for breach of any provision of this Agreement, the non-prevailing Party shall reimburse the prevailing Party for all reasonable costs and expenses of the prevailing Party (including its attorneys’ fees and disbursements). For purposes of the foregoing, (i) “prevailing Party” means (A) in the case of the Party initiating the enforcement of rights or remedies, that it recovered substantially all of its claims, and (B) in the case of the Party defending against such enforcement, that it successfully defended substantially all of the claims made against it, and (ii) if no Party is a “prevailing Party” within the meaning of the foregoing, then no Party will be entitled to recover its costs and expenses (including attorney’s fees and disbursements) from any other Party.

Section 16.2.    Governing Law. This Agreement shall be interpreted, construed and enforced according to the laws of the State of Georgia. Each party irrevocably submits to the jurisdiction of the Courts of the State of Georgia and the Federal Courts of the United States of America in and for the City of Atlanta, Georgia for the purpose of any action or proceeding arising out of this Agreement.

Section 16.3    Notices. All notices, requests, demands, and other communications hereunder shall be in writing, and shall be deemed to have been duly given if delivered in person, sent by facsimile or electronic mail transmission or sent by overnight courier service (with all fees prepaid) as follows:
If to Sellers, to:

ForesTree VI LP and ForesTree VI Texas LP
c/o Hancock Natural Resource Group, Inc.
13950 Ballantyne Corporate Place, Suite 150
Charlotte, NC 28277
Attention: David Kimbrough, Manager, Dispositions - North America
Email: dkimbrough@hnrg.com; Facsimile: 617.210.8672
with a copy to:






ForesTree VI LP and ForesTree VI Texas LP
c/o John Hancock Timber Resource Corporation
99 High Street, 26th Floor
Boston, MA 02110
Attention: Donna Frankel, General Counsel
Email: dfrankel@hnrg.com; Facsimile: 617.747.1536
and

Womble Carlyle Sandridge & Rice, LLP
One West Fourth Street
Winston-Salem, NC 27101
Attention: Trent E. Jernigan
Email: tjernigan@wcsr.com; Facsimile: 336.726.8082

If to Buyer:

CatchMark Timber Trust, Inc.
6200 The Corners Parkway
Norcross, Georgia 30092-3365
Attention: John D. Capriotti
Email: john.capriotti@catchmark.com; Facsimile: 770.243.8172
 
With a copy to:

Smith, Gambrell & Russell, LLP
Promenade, Suite 3100
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309-3592
Attention: Mark G. Pottorff
Email: mpottorff@sgrlaw.com; Facsimile: 404.685.6897


Any such notice, request, demand or other communication shall be deemed to be given and effective if delivered in person, on the date delivered, if sent by overnight courier service, on the date sent as evidenced by the date of the bill of lading, or if sent by facsimile or email transmission, on the date transmitted; and shall be deemed received if delivered in person, on the date of personal delivery, if sent by overnight courier service, on the first business day after the date sent, or if by facsimile or email transmission, on the date sent (provided that such delivery by facsimile or email transmission is followed by delivery on the next business day in person or by overnight courier service). Any notice, request, demand or other communication shall be given to such other representative or at such other address as a Party may furnish to the other Parties in writing pursuant to this Section.
Section 16.4    Time of Performance. Time is of the essence of this Agreement and of all acts required to be done and performed by the parties hereto, including, but not limited to, the proper tender of each of the sums required by the terms hereof to be paid.

Section 16.5    Section Headings. The word or words appearing at the commencement of Sections and sub-Sections of this Agreement are included only as a guide to the contents thereof and are not to be considered as controlling, enlarging or restricting the language or meaning of those Sections or sub-Sections.

Section 16.6    Severability of Provisions. If any provision of this Agreement (including any phrase, sentence, clause, Section or subsection) is inoperative, invalid, illegal or unenforceable for any reason, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal





substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon any such determination, the Parties shall negotiate in good faith to modify this Agreement so as to give effect to the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.

Section 16.7    Legal Relationships. The Parties to this Agreement execute the same solely as a seller and a buyer. No partnership, joint venture or joint undertaking shall be construed from these presents, and except as herein specifically provided, neither party shall have the right to make any representation for, act on behalf of, or be liable for the debts of the other. All terms, covenants and conditions to be observed and performed by either of the parties hereto shall be joint and several if entered into by more than one person on behalf of such party, and a default by any one or more of such persons shall be deemed a default on the part of the party with whom said person or persons are identified. No third party is intended to be benefited by this Agreement.

Section 16.8     Possession. Unless a different date is provided for herein, Buyer shall be entitled to possession of the Timberlands on the Closing Date, subject to the Permitted Exceptions.
    
Section 16.9    Entire Agreement; Waiver. All understandings and agreements previously existing between the parties, if any, are merged into this Agreement, which alone fully and completely expresses their agreement, and the same is entered into after full investigation, neither party relying upon any statement or representation made by the other not embodied herein. This Agreement may not be amended or modified in any manner other than by an agreement in writing signed by all of the Parties or their respective successors or permitted assigns. No waiver under this Agreement shall be valid or binding unless set forth in a writing duly executed and delivered by each Party against whom enforcement of such waiver is sought. Neither the waiver by any of the Parties of a breach of or a default under any provision of this Agreement, nor the failure by any of the Parties, on one or more occasions, to enforce any provision of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder.
Section 16.10    Interpretation. This Agreement has been reviewed by both Parties and each Party has had the opportunity to consult with independent counsel with respect to the terms hereof and has done so to the extent that such party desired. No stricter construction or interpretation of the terms hereof shall be applied against either Party as the drafter hereof.

Section 16.11    Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original instrument. All such counterparts together shall constitute a fully executed Agreement. Electronic signatures shall constitute originals.

Section 16.12     Business Day or Legal Holiday. If any date set forth in this Agreement for the performance of any obligation by any Party, or for the delivery of any instrument or notice as herein provided, should be a Saturday, Sunday or legal holiday, the compliance with such obligation or delivery shall be deemed acceptable on the next day which is not a Saturday, Sunday or legal holiday. As used herein, the term “legal holiday” means any state or federal holiday for which financial institutions or post offices are generally closed in the State of Georgia or the State of Texas for observance thereof. For the purposes of this Agreement, the term “business days” shall mean each day that is not a Saturday, Sunday or legal holiday.

Section 16.13    Survival and Indemnity. Except as expressly provided in this Agreement, all representations and warranties set forth in this Agreement and all provisions of this Agreement, the full performance of which is not required prior to Closing, shall not survive Closing and shall be merged in any Deed.

Section 16.14    Amendment. This Agreement may not be modified or amended except by the written agreement of the Parties.






Section 16.15    Anti-Solicitation. Except as otherwise expressly set forth herein, the provisions of the Confidentiality Agreement governing solicitation for employment, inducing or attempting to induce to leave the employ of Sellers or any affiliate of Sellers, and employing or hiring certain employees of Sellers, shall remain in effect until the termination of such provisions in accordance with their terms under the Confidentiality Agreement.

Section 16.16    No Third Party Beneficiaries. Except as expressly set forth herein, nothing in this Agreement or any of the documents delivered at Closing, whether express or implied, is intended or shall be construed to confer upon or give to any person other than the Parties hereto, any right, remedy or other benefit under or by reason of this Agreement.

Section 16.17    Recitals and Exhibits. The Recitals set forth above and Exhibits attached hereto are incorporated herein as matters of contract.

Section 16.18    Intentionally Deleted.

Section 16.19    No Solicitation. From and after the Effective Date and until the Closing Date or the earlier termination of this Agreement pursuant to the terms of this Agreement, each Seller agrees that it shall not directly or indirectly, through any officer, director, employee, agent or otherwise, (a) solicit, initiate or encourage submission of proposals, offers or expressions of interest from any person or entity relating to any acquisition or purchase of all or a substantial portion of the Timberlands (any of the foregoing proposals, offers or expressions of interest being referred to herein as an “Acquisition Proposal”), or (b) participate in any negotiations or discussions regarding, or furnish to any person any nonpublic information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any Acquisition Proposal.

Section 16.20    Property Information. To the extent not already delivered to Buyer, Sellers shall deliver to Buyer at Closing, without any representation or warranty of any kind whatsoever, including, but not limited to, any representation or warranty as to accuracy or completeness, all maps, surveys, title information, inventory information, planting and harvesting history, GIS information, certification (SFI) documents related to the Timberlands and all other information relating to the Property in the physical possession of Sellers (the “Property Information”). Sellers shall deliver hard copies or electronic versions of the Property Information in the physical possession of Sellers as Buyer may request.

Section 16.21    Seller Board Approval. This Agreement and Sellers’ obligations hereunder shall be subject to Sellers’ obtaining final approval of this Agreement by the Hancock Natural Resource Investment Committee (“Committee”), which approval shall be deemed approved if Sellers do not give written notice of Sellers’ inability to obtain such approval to Buyer on or before March 20, 2014. If Sellers deliver written notice to Buyer on or before March 20, 2014, of Sellers’ inability to obtain the requisite approval of this Agreement by the Committee, this Agreement shall terminate, the Earnest Money shall be returned immediately to Buyer, and neither Party shall have any further liability hereunder (except for such liabilities as expressly survive termination of this Agreement).

THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK


IN WITNESS WHEREOF, the Parties hereto have executed this Purchase and Sale Agreement in duplicate the day and year first above written.


SELLERS:

FORESTREE TEXAS:






FORESTREE VI TEXAS LP

By:    ForesTree VI GP Atlas LLC
its General Partner

By:    Hancock Natural Resource Group, Inc.
its Manager

By:    __/s/ David Kimbrough_________________________
Name:    _David Kimbrough__________________________
Title:    __Vice President_________________________



FORESTREE:

FORESTREE VI LP

By:    John Hancock Timber Resource Corporation
its General Partner

By:    __/s/ David Kimbrough_____________
Name:    __David Kimbrough_ ______________
Title:    __Vice President___ ______________

[Signatures continue on following page]







BUYER:

CATCHMARK TIMBER TRUST, INC.

By    /s/__Jerrold Barag ______________
Name    ___Jerrold Barag______________
Title    ____President_________ __






 








EXHIBIT AND SCHEDULE INDEX


Exhibit A    Timberlands
Exhibit B    Assumed Contracts
Exhibit C    Real Property Leases
Exhibit D    Escrow Agreement
Exhibit E    Georgia Deed
Exhibit E-1    Texas Deed
Exhibit F    Assignment and Assumption of Real Property Leases
Exhibit G-1    Assignment and Assumption of Assumed Contracts
Exhibit G-2    Assignment and Assumption of Georgia Supply Agreement
Exhibit H    Title Affidavit
Exhibit I    Affidavit of Seller’s Residence

Exhibit X    Permitted Exceptions

LIST SCHEDULES

Schedule 1.1(a)(A)    Georgia Supply Agreement
Schedule 4.1            Value Table
Schedule 6.15        Boundary Disputes
Schedule 6.17        Mining Activity






EXHIBIT A

Timberlands
Timberlands Legal Descriptions



The Timberlands shall be those properties as generally identified on Sellers’ GIS maps previously made available to Buyer on Sellers’ data site for Waycross - Panola and referred to in the Compartment List attached hereto as Exhibit A-1. Notwithstanding the foregoing, but subject to Buyer’s rights set forth in Article 4 above, (i) the Timberlands shall be conveyed by Sellers to Buyer by the historical descriptions contained in the Seller’s vesting deeds, and (ii) the Timberlands are not being conveyed by the acre.






EXHIBIT A-1
Georgia - Waycross
Compartment Map List










EXHIBIT B

Assumed Contracts

1.
Pulpwood Supply Agreement (Waycross Property) between FORESTREE VI LP, as Seller, and GEORGIA BIOMASS LLC, as Buyer, dated December 16, 2009, [Note: Pulpwood Supply Agreement to be amended prior to the Closing Date pursuant to Section 5.3 of the Agreement].

2.
Apiary License Agreement between FORESTREE VI LP, as Owner, and H & R APIARIES, LLC, as Licensee, dated March 10, 2014.

3.
Apiary License Agreement between FORESTREE VI LP, as Owner, and SHELL HONEY FARM, as Licensee, dated May 1, 2013 [Note: new Apiary License Agreement between FORESTREE VI LP, as Owner, and SHELL HONEY FARM, as Licensee, has been sent to Licensee for execution and will likely be executed prior to the Closing Date].







EXHIBIT C

Real Property Leases

Panola






Club
EFFECTIVE DATE
TERMINATION DATE
COUNTY
COMPARTMENT
Billiams Creek I
May 1, 2013
April 30, 2014
Tyler
PA6015
Billiams Creek IV
May 1, 2013
April 30, 2014
Tyler
PA6009, PA6015
Buckshot Hunting Club
May 1, 2013
April 30, 2014
Jasper
PA6720
C & I Hunt Club
May 1, 2013
April 30, 2014
Jasper
PA6827
Chris Jones Hunting Club
May 1, 2013
April 30, 2014
Newton
PA6922
Dupuy Family Circle
May 1, 2013
April 30, 2014
Jasper
PA6827
F B S Hunting Club
May 1, 2013
April 30, 2014
Newton
PA6819, PA6825
G & S Hunting Club
May 1, 2013
April 30, 2014
Tyler
PA6009
Artesian Springs Ridge Hunting Club
May 1, 2013
April 30, 2014
Newton
PA6921, PA6922
Hauck Hunting Club
May 1, 2013
April 30, 2014
Jasper
PA7004
N/A
 
 
 
 
Kimble Creek Com. Past. Assn.
May 1, 2013
April 30, 2014
Tyler
PA6245
L & T Hunting Club
May 1, 2013
April 30, 2014
Polk & Tyler
PA6245
Lee's Mill Hunting Club
May 1, 2013
April 30, 2014
Newton
PA6911
Gallier Hunting Club
May 1, 2013
April 30, 2014
Newton
PA6922
M & D #2 Hunting Club
May 1, 2013
April 30, 2014
Jasper
PA7003
Magnolia Hunting Club
May 1, 2013
April 30, 2014
Jasper
PA7026
Morgan Hunting Club
May 1, 2013
April 30, 2014
Newton
PA6825
Murphy's Hunting Club
May 1, 2013
April 30, 2014
Tyler
PA6141
Old Olive Hunting Club
May 1, 2013
April 30, 2014
Hardin
PA6614
Pineywoods Hunting Club
May 1, 2013
April 30, 2014
Hardin
PA6613
Pouncey Hunting Club
May 1, 2013
April 30, 2014
Jasper
PA6701
Raiders Hunting Club
May 1, 2013
April 30, 2014
Tyler
PA6021
Triangle H/C & W/L Conservation
May 1, 2013
April 30, 2014
Tyler
PA6245
Ty-Hard Game Club
May 1, 2013
April 30, 2014
Tyler
PA6004, PA6008, PA6009
W W W Hunting Club
May 1, 2013
April 30, 2014
Orange
PA7348
Zion Hill Hunt Club
May 1, 2013
April 30, 2014
Jasper
PA7003, PA7004, PA7008
Forse Lease
May 1, 2013
April 30, 2014
Newton
PA6921
Dixie Drive Hunting Club
May 1, 2013
April 30, 2014
Orange
PA7350
Not Leased
 
 
Jasper
PA6827
Not Available For Lease
 
 
Newton
PA7353, PA7354, PA7355
Billiams Creek V
May 1, 2013
April 30, 2014
Tyler
PA6008, PA6009
MC2 Hunting Club
May 1, 2013
April 30, 2014
Tyler
PA6004, PA6008