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EXHIBIT 2.3
PLAN AND AGREEMENT OF MERGER
WITH RESPECT TO THE MERGER OF
STRATEGIC TIMBER TRUST II, LLC,
STRATEGIC TIMBER TWO OPERATING CO., LLC, AND
STRATEGIC TIMBER PARTNERS II, LP, WITH AND INTO
STRATEGIC TIMBER PARTNERS, LP
THIS IS A PLAN AND AGREEMENT OF MERGER (this "Plan and Agreement of
Merger") by and among Strategic Timber Trust, Inc., a Georgia corporation
("STT"), Strategic Timber Trust II, LLC, a Georgia limited liability company
("STT2"), Strategic Timber Operating Co., a Delaware corporation ("STOC"),
Strategic Timber Two Operating Co., LLC, a Georgia limited liability company
("STOC2"), Strategic Timber Partners, LP, a Delaware limited partnership
("STP"), Strategic Timber Partners II, LP, a Georgia limited partnership
("STP2"), the general and limited partners of each of STP (the "STP Partners")
and STP2 (the "STP2 Partners"), and the sole manager and members of STT2 (the
"STT2 Members"). Each of STT2, STOC2 and STP2 is hereinafter sometimes referred
to individually as a "Merging Entity" and collectively as the "Merging
Entities." STP is hereinafter sometimes referred to as the "Surviving Entity."
The Merging Entities, the Surviving Entity, STT and STOC are referred to herein
collectively as the "Constituent Entities."
BACKGROUND STATEMENT
This Plan and Agreement of Merger is being entered into in
contemplation of STT's initial underwritten offering of its common stock (the
"STT Stock") to the public pursuant to a registration statement to be filed with
the United States Securities and Exchange Commission (the "IPO"), and will amend
in its entirety and supersede the Plan and Agreement of Merger previously
approved by the parties hereto and included as Exhibit H to the First Amended
and Restated Agreement of Limited Partnership of STP2, dated as of October 9,
1998 (the "STP2 LP Agreement") insofar as such prior Plan and Agreement of
Merger relates to the contemplated IPO. The parties hereto, by executing this
Plan and Agreement of Merger, intend that it shall amend the STP2 LP Agreement
and the First Amended and Restated Agreement of Limited Partnership of STP,
dated as of April 23, 1998 and amended as of October 9, 1998 (the "STP LP
Agreement") to the extent inconsistent therewith or otherwise necessary to give
full effect to the terms of this Plan and Agreement of Merger.
STATEMENT OF AGREEMENT
In consideration of the mutual promises and the terms and conditions
set forth below and in the STP LP Agreement and the STP2 LP Agreement, and other
good and valuable consideration (the mutuality, adequacy and sufficiency of
which are hereby acknowledged), the parties hereto hereby agree as follows with
respect to the merger of STT2, STOC2 and STP2 with and into STP (the "Merger")
and the other matters set forth herein:
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1. Background; Approvals. The Merger is to be effected pursuant
to the Georgia Limited Liability Company Act (the "GLLCA"), the Delaware Revised
Uniform Limited Partnership Act (the "DRULPA") and the Georgia Revised Uniform
Limited Partnership Act (the "GRULPA"). The board of directors of STT and STOC,
the management committee and sole member of STOC2, and, by executing this Plan
and Agreement of Merger, the general partner and limited partners of STP and
STP2 and the manager and xxx XXX0 Members, have adopted this Plan and Agreement
of Merger in accordance with applicable law and their constituent documents. As
contemplated by the STP2 LP Agreement, the Merger is to be consummated shortly
before the consummation of the IPO. Prior to the consummation of the Merger, the
outstanding shares of STT Stock are to be split through a stock dividend or
otherwise. Schedule 1 hereto sets forth a list of (a) xxx XXX0 Members and their
respective membership interests in STT2, (b) the limited partners of STP2 and
their respective partnership interests in STP2, (c) the limited partners of STP
and their respective partnership interests in STP, and (d) the shareholders of
STT and the number of shares of STT Stock that each of them now holds. Such
Schedule 1 also reflects the number of shares and units contemplated to be held
by the respective parties hereto, giving effect to the split of the STT Stock
and the Merger (subject to the potential adjustments set forth in subsection
5(i) as of the IPO.
2. The Merger and Surviving Entity. In accordance with the terms
of this Plan and Agreement of Merger: (a) the Constituent Entities shall make
appropriate filings with the Secretary of State of the States of Delaware and
Georgia, and (b) at the Merger Effective Time (as hereinafter defined), the
Merging Entities shall be merged with and into the Surviving Entity as provided
herein.
3. Merger Effective Time. The Merger shall be effective upon the
filing of articles or a certificate of merger with the Secretary of State of the
States of Delaware and Georgia, or such other time as the Constituent Entities
to such Merger may agree, as reflected in the articles or certificate of merger
as filed (the "Merger Effective Time"). In connection with the consummation of
the IPO, the Constituent Entities shall cause the Merger Effective Time to be,
to the extent reasonably practicable, contemporaneous with the consummation of
the IPO. If the IPO does not occur prior to June 30, 1999, then, thereafter,
STT, in its discretion, may either (i) abandon the IPO or (ii) if it intends to
complete the IPO, provide written notice (the "Completion Notice") to each of
the parties hereto, which Completion Notice must be received on or before the
fifteenth (15th) day prior to the Merger Effective Time, that it intends to
complete the IPO. Upon receipt of a Completion Notice, either or both of the
holders of at least seventy-five percent (75%) of the Class B and Class C
Partnership Units of STP2, or the holders of at least seventy-five percent (75%)
of the Class B and Class C Partnership Units of STP, in their respective
individual discretion, may singly terminate the Plan and Agreement of Merger by
providing written notice of such termination to and for receipt by all other
parties within ten (10) days of the date on which all holders providing the
notice of termination received the Completion Notice. In any event, if the IPO
has not been consummated on or before December 31, 1999, this Plan and Agreement
of Merger shall terminate as of 12:01 a.m. on January 1, 2000 and shall then be
of no further force and effect; provided, however, that if the IPO is abandoned
in advance of such date by STT, this Plan and Agreement of Merger shall
terminate as of such abandonment and shall then be of no further force and
effect.
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4. Effect of Mergers. At the Merger Effective Time: (a) XXX0,
XXXX0 and STP2 will merge with and into STP; (b) the separate existence of the
Merging Entities will cease; (c) the ownership interests of the Merging Entities
and of the Surviving Entity will be converted as provided in this Plan and
Agreement of Merger; and (d) the Merger will otherwise have the effect provided
under the applicable laws of the States of Delaware and Georgia.
5. Consideration for Merger; Surviving Entity Partnership
Certificate; Etc. At the Merger Effective Time:
(a) Subject to subsection 5(i) below, as to each member
of STT2, the outstanding membership interests held by such member shall, in the
aggregate, be converted into the number of partnership units (or successor class
of units) of STP, the Surviving Entity, which partnership units shall reflect
the rights of the single class of limited partners of the Surviving Entity (the
"Surviving Partnership Units"), shown next to such member's name on Schedule 1
hereto.
(b) The membership interests of STOC2 will be converted
into the right to receive an aggregate of $100.00 in cash.
(c) Each Class A Partnership Unit of STP2 will be
canceled and no consideration shall be paid in exchange therefor.
(d) Subject to subsection 5(i) below, as to each Class B
Limited Partner of STP2, the outstanding Class B Partnership Units of STP2 held
by such Class B Limited Partner shall, in the aggregate, be converted into the
number of Surviving Partnership Units and the amount of cash shown next to such
Class B Limited Partner's name on Schedule 1 hereto.
(e) Subject to subsection 5(i) below, as to the Class C
Limited Partner of STP2, the outstanding Class C Partnership Units of STP2 held
by the Class C Limited Partner shall, in the aggregate, be converted into the
number of Surviving Partnership Units and the amount of cash shown next to the
Class C Limited Partner's name on Schedule 1 hereto.
(f) As to the Class A General Partner and Class A Limited
Partner of STP, the outstanding Class A Partnership Units of STP held by such
Class A General Partner and Class A Limited Partner shall, in the aggregate, be
converted into the number of Surviving Partnership Units shown next to the name
of the Class A General Partner and the Class A Limited Partner on Schedule 1
hereto.
(g) Subject to subsection 5(i) below, as to the Class B
Limited Partner of STP, the outstanding Class B Partnership Units of STP held by
the Class B Limited Partner shall, in the aggregate, be converted into the
number of Surviving Partnership Units shown next to the Class B Limited
Partner's name on Schedule 1 hereto.
(h) Subject to subsection 5(i) below, as to the Class C
Limited Partner of STP, the outstanding Class C Partnership Units of STP held by
the Class C Limited Partner shall, in the
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aggregate, be converted into the number of Surviving Partnership Units and the
amount of cash shown next to the Class C Limited Partner's name on Schedule 1
hereto.
(i) If in the IPO the initial price to the public per
share of STT Stock (the "IPO Price") is less than $19, then, subject to Section
8 below:
(i) The number of Surviving Partnership Units to
be issued to all of xxx XXX0 Members pursuant to subsection (a) above
and to the Class B Limited Partner of STP pursuant to subsection (g)
above shall, in the aggregate, be reduced by an amount (the "Adjustment
Amount") equal to the quotient obtained by dividing
1) the product obtained by multiplying
[x] the difference between the IPO Price and $19 by [y] the
total number of Surviving Partnership Units which, but for the
application of this subsection 5(i), would be issued pursuant
to subsections 5(d), (e) and (h) above, by
2) the IPO Price,
and rounding the quotient so obtained to the nearest whole
number of Surviving Partnership Units.
The number of Surviving Partnership Units to be issued to each of xxx
XXX0 Members and the Class B Limited Partner of STP shall be reduced by
such person's pro rata portion of the Adjustment Amount, calculated
based on the number of Surviving Partnership Units which, but for the
application of this subsection 5(i), would be issued to such person
pursuant to subsection 5(a) or (g), as the case may be, over the total
number of Surviving Partnership Units which, but for the application of
this subsection 5(i), would be issued to all of such persons pursuant
to subsections 5(a) and (g). The allocation of a pro rata portion of
the Adjustment Amount to each such person shall be rounded to the
nearest tenth of a Surviving Partnership Unit.
(ii) The number of Surviving Partnership Units to
be issued to the Class C Partner of STP and to all Class B and Class C
Partners of STP2 pursuant to subsections 5(d), (e) and (h) above shall
in the aggregate be increased by the Adjustment Amount. The number of
Surviving Partnership Units to be issued to each such person shall be
increased by such person's pro rata portion of the Adjustment Amount,
calculated based on the number of Surviving Partnership Units which,
but for the application of this subsection 5(i), would be issued to
such person pursuant to subsection 5(d), (e) or (h), as the case may
be, over the total number of Surviving Partnership Units which, but for
the application of this subsection 5(i), would be issued to all of such
persons pursuant to subsections 5(d), (e) and (h) above. The allocation
of a pro rata portion of the Adjustment Amount to each such person
shall be rounded to the nearest tenth of a Surviving Partnership Unit.
As an illustration of the foregoing, if the IPO Price of STT Stock is
$18, and STT in its discretion determines to proceed with the IPO, and the total
number of Surviving Partnership Units
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to be issued to the Class C Partner of STP and to all Class B and Class C
Partners of STP2 is (for purposes of this illustration only) 3,800,000, then the
Adjustment Amount would be computed as follows: (i) $19 minus $18 equals $1
difference, multiplied by 3,800,000 equals 3,800,000 adjustment value, divided
by (ii) $18 IPO Price, results in an Adjustment Amount of 211,111.11, which
would be rounded to 211,111. The aggregate number of Surviving Partnership Units
to be issued to all of xxx XXX0 members and the Class B Limited Partner of STP
would be proportionately reduced by this amount, while the aggregate number to
be issued to the Class C Limited Partner of STP and the Class B and Class C
Limited Partners of STP2 would be proportionately increased by the same amount.
(j) The certificate of limited partnership of STP, as in
effect immediately prior to the Merger Effective Time, shall continue to be the
STP's certificate of limited partnership at and after the Merger Effective Time
until amended in accordance with applicable law.
(k) The limited partnership agreement of STP, as in
effect immediately prior to the Merger Effective Time, shall continue to be
STP's limited partnership agreement at and after the Merger Effective Time until
amended in accordance with the DRULPA.
(l) STOC shall continue to be STP's general partner at
and after the Merger Effective Time until changed in accordance with STP's
limited partnership agreement.
6. Merging Entity Interests. As of the Merger Effective Time,
each certificate or other evidence of ownership of an interest (whether common
stock, membership interest or partnership interest) in any Merging Entity shall
be deemed to represent only the consideration into which such interest has been
converted pursuant to this Plan and Agreement of Merger, and may be surrendered
for such consideration immediately following the Merger Effective Time in
accordance with such procedures as established by the Surviving Entity, in its
reasonable discretion. No interest shall be accrued or paid on any portion of
the consideration paid or payable pursuant to this Plan and Agreement of Merger.
7. Lock-up and Registration Rights Agreement. Prior to the Merger
Effective Time, STT and STP will enter into a Lock-up and Registration Rights
Agreement with the parties to this Plan and Agreement of Merger who are to
receive Surviving Partnership Units, which agreement will be in substantially
the form set forth on Schedule 2 hereto, with such further changes as the
parties may agree, consistent with the customary terms of similar Lock-up and
Registration Rights Agreements executed in connection with public offerings of
shares of real estate investment trusts.
8. HSR Filing; Other Consents; Election of STT to Proceed Under
Certain Circumstances. Consummation of the Merger shall be conditioned upon
compliance with the requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, if applicable, and to the obtaining of any other
material consents or approvals of any governmental authority or third party that
are required in connection with the consummation of the Merger. In addition,
consummation of the Merger shall be conditioned upon the determination by STT
that, based on its judgment, the closing of the IPO is imminent. Nothing
contained herein obligates STT
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to consummate the IPO, and STT may in its discretion decide not to do so for any
reason whatsover, including, without limitation, dissatisfaction as to the IPO
Price.
9. Amendment. This Plan and Agreement of Merger may be amended at
any time prior to the Merger Effective time by the Constituent Entities without
the prior authorization of their respective boards of directors, management
committees, stockholders, members or limited partners, provided that any
amendment will be subject to any applicable restrictions imposed by the DRULPA,
the GLLCA, the GRULPA, applicable securities laws or their respective
constituent documents requiring further organizational approval. No amendment of
any provision of this Agreement and Plan of Merger shall be valid unless the
same shall be in writing and signed by all of the Constituent Entities.
10. Further Assurances. Upon the execution of this Plan and
Agreement of Merger and thereafter, each of the parties hereto agrees to do such
things as may be reasonably requested by any other party in order to more
effectively consummate or document the transactions contemplated by this Plan
and Agreement of Merger. If at any time the Surviving Entity shall consider or
be advised that any further assignments or assurances or any things are
necessary or desirable to vest in the Surviving Entity, in accordance with the
terms of this Plan and Agreement of Merger, the title of any property or rights
of any Merging Entity, then the last acting general partner or officer of such
Merging Entity or the corresponding general partner or officer of the Surviving
Entity shall execute and make all such proper assignments and assurances and do
all things necessary or proper to vest title in such property or rights in the
Surviving Entity, or otherwise to carry out the purposes of this Plan and
Agreement of Merger or the Merger.
11. Number; Gender; Captions; Certain Definitions. Whenever the
context so requires, the singular number includes the plural, the plural
includes the singular, and the gender of any pronoun includes the other genders.
Titles and captions of or in this Plan and Agreement of Merger are inserted only
as a matter of convenience and for reference and in no way affect the scope of
this Plan and Agreement of Merger or the intent of its provisions. The parties
agree: (a) that "applicable law" means all provisions of any constitution,
statute, law, rule, regulation, decision, order, decree, judgment, release,
license, permit, stipulation or other official pronouncement enacted,
promulgated or issued by any governmental authority or arbitrator or arbitration
panel; (b) that "governmental authority" means any legislative, executive,
judicial, quasi-judicial or other public authority, agency, department, bureau,
division, unit, court or other public body, person or entity; and (c) that
"including" and other words or phrases of inclusion, if any, shall not be
construed as terms of limitation, so that references to "included" matters shall
be regarded as non-exclusive, non-characterizing illustrations.
12. Copies; Counterparts; Facsimile Signatures. This Plan and
Agreement of Merger may be executed in two or more copies, each of which shall
be deemed an original, and it shall not be necessary in making proof of this
Plan and Agreement of Merger or its terms to produce or account for more than
one of such copies. This Plan and Agreement of Merger may be executed in
counterparts, in which event each counterpart shall reflect the signatures of
all the parties hereto. Execution of this Plan and Agreement of Merger may be by
facsimile signature, which shall have the same force and effect as an original
signature.
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13. Controlling Agreement. To the extent the provisions of this
Plan and Agreement of Merger are inconsistent with the provisions of the STP LP
Agreement or the STP2 LP Agreement, the provisions of this Agreement shall
control, and shall be deemed to amend such inconsistent provisions.
[signatures on following pages]
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DULY EXECUTED and delivered by each of the Constituent Entities, the
STP Partners, the STP2 Partners and xxx XXX0 Members, as of January 25, 1999.
THE CONSTITUENT ENTITIES: STRATEGIC TIMBER TRUST, INC.
------------------------
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title:
---------------------------------------
STRATEGIC TIMBER TRUST II, LLC
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title:
---------------------------------------
STRATEGIC TIMBER OPERATING CO.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title:
---------------------------------------
STRATEGIC TIMBER TWO OPERATING
CO., LLC
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title:
---------------------------------------
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STRATEGIC TIMBER PARTNERS, LP
By: Strategic Timber Operating Co.,
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title:
---------------------------------------
STRATEGIC TIMBER PARTNERS II, LP
By: Strategic Timber Two Operating Co.,
LLC, its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title:
---------------------------------------
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THE STP PARTNERS:
General Partner: STRATEGIC TIMBER OPERATING CO.
---------------
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title:
---------------------------------------
Limited Partners: STRATEGIC TIMBER TRUST, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title:
---------------------------------------
LOUISIANA TIMBER PARTNERS, LLC
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------------
Title: Manager
---------------------------------------
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THE STP2 PARTNERS:
General Partner: STRATEGIC TIMBER TWO OPERATING CO., LLC
---------------
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title:
---------------------------------------
Limited Partners: STRATEGIC TIMBER TWO OPERATING CO., LLC
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
Title:
---------------------------------------
/s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxx
OLD PIONEER, LLC
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------------------------
Title: President
---------------------------------------
/s/ X. Xxxxx Xxxxx
---------------------------------------------
X. Xxxxx Xxxxx
KING INVESTMENT GROUP, INC.
By: /s/ Xx Xxxx
------------------------------------------
Name: Xx Xxxx
----------------------------------------
Title: President
---------------------------------------
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/s/ Xxxxxxx Xxxxxxx
---------------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxx
---------------------------------------------
Xxxxx X. Xxxxx
MACH ONE PARTNERS, LLC
By: /s/ X. X. Xxxxxxx
------------------------------------------
Name: X. X. Xxxxxxx
----------------------------------------
Title:
---------------------------------------
THE STT2 SOLE MANAGER AND
MEMBERS:
Sole Manager: /s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx, Manager
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Members: /s/ C. Xxxxxx Xxxxx
---------------------------------------------
C. Xxxxxx Xxxxx
/s/ Xxxxxxxxxxx X. Xxxxx
---------------------------------------------
Xxxxxxxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
---------------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxxxx X. Xxxxxx
/s/ Xxxxxxxx Xxxxxx
---------------------------------------------
Xxxxxxxx Xxxxxx
/s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxxx
XXXXXXXXXX, XXXXXX & XXXXXXX LLP
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx, Partner
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Schedule 1 to Plan and Agreement of Merger
Part A
STOCKHOLDERS OF STT AND NUMBER OF SHARES OF STT STOCK TO BE HELD FOLLOWING
STOCK SPLIT
Name of Shareholder Number of Shares Now Number of Shares to be
------------------- -------------------- ----------------------
Held Held After Split
---- ----------------
X. Xxxxx 4,590 167,942
X. Xxxxx 4,590 167,942
X. Xxxxx 4,590 167,942
Xxxxxx 1,020 37,321
Rendini 1,020 37,321
Xxxxxxx 255 9,330
Xxxxxx 1,020 37,321
Partners of SAB as a group 1,275 46,651
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Part B
MEMBERS AND PARTNERS OF STT2, STP2 AND STP AND, SUBJECT TO SUBSECTION 5(I),
MERGER CONSIDERATION TO EACH
Name of Member or Type of Interest Interest Pre- Merger Merger
----------------- ---------------- ------------- ------ ------
Partner Held Merger Consideration: No. Consideration:
------- ---- ------ ------------------ --------------
of Surviving Cash
------------ ----
Partnership Units
-----------------
X. Xxxxx XXX0 Member 712.4576 240,387 0
X. Xxxxx XXX0 Member 712.4576 240,387 0
X. Xxxxx XXX0 Member 712.4576 240,387 0
Xxxxxx XXX0 Member 158.3239 53,419 0
00
Xxxxxxx XXX0 Member 158.3239 53,419 0
Xxxxxx XXX0 Member 158.3239 53,419 0
SAB STT2 Member 197.9049 51,617 0
Xxxxxx Class B STP2 726 266,685 $ 2,956,191
Xxxxxxx Class B STP2 573 210,495 $ 2,333,335
Xxxxx Class B STP2 296 108,516 $ 1,202,750
Xxxxx Class B STP2 118 43,398 $ 481,100
Old Pioneer Class B STP2 3,795 1,393,648 $15,448,289
King Investment Class B STP2 401 147,344 $ 1,633,335
Mach One Class C STP2 909 100,110 $10,000,000
STOC Class A STP 255 222,380 0
(General Partner)
STT Class A STP 20,245 449,390 0
(Limited Partner)
Louisiana Timber Class B STP 500 160,224 0
Louisiana Timber Class C STP 4,500 1,602,750 $12,945,00
* * * * *
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Schedule 2 to Plan and Agreement of Merger
Form of Lock-up and Registration Rights Agreement
(see attached)
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[FORM OF STT LOCK-UP AND REGISTRATION RIGHTS AGREEMENT]
STRATEGIC TIMBER TRUST, INC.
LOCK-UP AND REGISTRATION RIGHTS AGREEMENT
This Lock-up and Registration Rights Agreement (this "Agreement") is
entered into as of _______________ __, 1999 by and among Strategic Timber Trust,
Inc., a Georgia corporation (the "Company"), Strategic Timber Partners, LP, a
Delaware limited partnership (the "Partnership") , and the parties identified as
"Holders" on the signature pages hereto (each a "Holder" and collectively, the
"Holders").
WHEREAS, the Holder may receive shares of common stock of the Company,
$.01 par value ("Common Shares"), and has received or will receive units of
limited partnership interest ("Units") in the Partnership, in each case issued
or to be issued without registration under the Securities Act of 1933, as
amended (the "Securities Act") in connection with the consummation of an initial
public offering of the Common Shares (the "IPO");
WHEREAS, the agreements of the parties contained herein are in
contemplation of the IPO, and are conditioned upon the consummation of the IPO;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
and agreements set forth herein, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
14. Certain Definitions.
As used in this Agreement, in addition to the other terms defined
herein, the following capitalized defined terms shall have the following
meanings:
"NASD" means the National Association of Securities Dealers,
Inc.
"Person" means an individual, partnership, corporation,
limited liability company, trust, or unincorporated organization, or a
government or agency or political subdivision thereof.
"Registrable Shares" means the Shares of the Holder, excluding
(i) Shares for which a Registration Statement relating to the sale
thereof shall have become effective under the Securities Act and which
have been issued or disposed of under such Registration Statement, (ii)
Shares sold pursuant to Rule 144 or Rule 144A, or (iii) Shares eligible
for sale pursuant to Rule 144(k) (or any successor provision).
"Registration Expenses" means any and all expenses incident to
performance of or compliance with this Agreement, including, without
limitation: (i) all SEC, stock exchange
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or NASD registration and filing fees; (ii) all fees and expenses
incurred in connection with compliance with state securities or "blue
sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any of the Registrable
Shares and the preparation of a Blue Sky Memorandum) and compliance
with the rules of the NASD; (iii) all expenses of any Person in
preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, certificates
and other documents relating to the performance of and compliance with
this Agreement; (iv) all fees and expenses incurred in connection with
the listing, if any, of any of the Registrable Shares on any securities
exchange or exchanges on which the Common Shares are listed; and (v)
the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company, including the expenses
of any special audit or "cold comfort" letters required by or incident
to such performance and compliance. Registration Expenses shall
specifically exclude underwriting discounts and commissions relating to
the sale or disposition of Registrable Shares by the Holder, the fees
and disbursements of counsel representing the Holder in connection
therewith as provided in Section 5, and transfer taxes, if any,
relating to the sale or disposition of Registrable Shares by the
Holder, all of which shall be borne by the Holder in all cases.
"Registration Statement" means any registration statement of
the Company which covers the issuance or resale of any of the
Registrable Shares on an appropriate form, and all amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all materials incorporated by reference
therein.
"Rule 144" means Rule 144 (or any successor provision) under
the Securities Act.
"Rule 144A" means Rule 144A (or any successor provision) under
the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Shares" means any Common Shares issued or to be issuable to
the Holder upon redemption or in exchange for Units held by the Holder.
15. Lock-up Agreement. [To Be Modeled After SSB Lock-up Letter
Agreement]
16. Registration.
(a) Registration Statement Covering Issuance of Common
Shares. If permitted by applicable law and the rules and policies of the SEC,
the Company shall cause to be filed on the first business day after one year
following consummation of the IPO, or as soon thereafter as practicable, a
registration statement (the "Issuance Registration Statement") under Rule 415
under the Securities Act relating to the issuance to the Holders of Common
Shares upon the redemption of Units or in exchange for Units. Thereupon, the
Company shall use reasonable efforts to cause such Registration Statement to be
declared effective by the SEC for all Common Shares covered thereby. The Company
agrees to use reasonable efforts to keep the Issuance Registration Statement
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20
continuously effective, with respect to the Registrable Shares of the Holders,
until the date on which the Holders have redeemed or exchanged all of their
Units for Common Shares, but in no event later than six months after the
effectiveness of such registration statement. In the event that the Company,
despite its reasonable good faith efforts, is unable to cause such Issuance
Registration Statement to be declared effective by the SEC within 90 days of the
first anniversary of the IPO or (except as otherwise permitted by Sections 8(b)
and 9) is unable to keep such Issuance Registration Statement effective until
the date on which the Holders have redeemed or exchanged the all of their Units
for Common Shares (but in no event later than six months after the effectiveness
of such registration statement) then the rights of the Holders set forth in
Section 3(b) below shall apply.
(b) Demand Registration. Subject to the conditions set
forth in this Agreement, if the Company is unable under applicable law and the
rules and policies of the SEC to file an Issuance Registration Statement, at any
time after one (1) year from the date of the IPO, the Company shall, at the
written request of a Holder who is unable to sell its Registrable Shares
pursuant to Rule 144(k) under the Securities Act, cause to be filed as soon as
practicable after the date of such request by such Holder a Registration
Statement under Rule 415 under the Securities Act relating to the sale by the
Holder of all or any integral multiple of 100,000 shares of the Registrable
Shares held by such Holder in accordance with the terms hereof, and shall use
reasonable efforts to cause such Registration Statement to be declared effective
by the SEC as soon as practicable thereafter; provided, however, that the
Company shall not be required to effect more than two demand registrations
pursuant to this Section 3(b). The Company may, in its sole discretion, elect to
file a Registration Statement with respect to any or all of the Shares before
receipt of notice from any Holder, and to combine sales by more than one Holder
into any single Registration Statement. The Company agrees to use reasonable
efforts to keep each Registration Statement continuously effective until the
earlier of (i) six months thereafter, or (ii) the date on which such Holder no
longer holds any Registrable Shares. Notwithstanding the foregoing provisions of
this Section 3(b), during any period of time which the Company has a
Registration Statement in effect under the provisions of Rule 415 of the
Securities Act relating to the original issuance by the Company of shares of
Common Stock in connection with the redemption of Holders' Units, such Holders
will not have the right to request the registration of Registrable Shares under
the provisions of this Section 3(b).
(c) Notification and Distribution of Materials. The
Company shall notify each Holder of the effectiveness of any Registration
Statement applicable to the Shares of such Holder and shall furnish to such
Holder such number of copies of the Registration Statement (including any
amendments, supplements and exhibits), the Prospectus contained therein
(including each preliminary prospectus and all related amendments and
supplements) and any documents incorporated by reference in the Registration
Statement and such other documents as the Holder may reasonably request in order
to facilitate its sale of the Registrable Shares in the manner described in the
Registration Statement.
(d) Amendments and Supplements. The Company shall prepare
and file with the SEC from time to time such amendments and supplements to the
Registration Statement and Prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of
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21
all the Registrable Shares until the earlier of (a) such time as all of the
Registrable Shares have been issued in accordance with the intended method of
issuance by the Company (in the case of a Registration Statement filed pursuant
to Section 3(a) hereof) or disposed of in accordance with the intended methods
of disposition by the Holder (in the case of a Registration Statement filed
pursuant to Section 3(b) hereof) or (b) the date on which the Registration
Statement ceases to be effective in accordance with the terms of this Section 3.
Upon 20 business days' notice, the Company shall file any supplement or
post-effective amendment to the Registration Statement with respect to the plan
of distribution or a Holder's ownership interests in its Registrable Shares that
is reasonably necessary to permit the sale of a Holder's Registrable Shares
pursuant to the Registration Statement. The Company shall file any necessary
listing applications or amendments to the existing applications to cause the
Shares registered under any Registration Statement to be then listed or quoted
on the primary exchange or quotation system on which the Common Shares are then
listed or quoted.
(e) Notice of Certain Events. The Company shall promptly
notify the Holders of, and confirm in writing, the filing of the Registration
Statement or any Prospectus, amendment or supplement related thereto or any
post-effective amendment to the Registration Statement and the effectiveness of
any post-effective amendment. At any time when a Prospectus relating to the
Registration Statement is required to be delivered under the Securities Act by a
Holder to a transferee, the Company shall immediately notify such Holder of the
happening of any event as a result of which the Prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. In such event, the Company shall promptly
prepare and furnish to such Holder a reasonable number of copies of a supplement
to or an amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of Registrable Shares, sold under the Prospectus,
such Prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Company will, if necessary, promptly amend the Registration
Statement of which such Prospectus is a part to reflect such amendment or
supplement.
17. State Securities Laws. Subject to the conditions set forth in
this Agreement, the Company shall, in connection with the filing of any
Registration Statement hereunder, file such documents as may be necessary to
register or qualify the Registrable Shares under the securities or "Blue Sky"
laws of such states as the Holders may reasonably request, and the Company shall
use all reasonable efforts to cause such filings to become effective in a timely
manner; provided, however, that the Company shall not be obligated to qualify as
a foreign corporation to do business under the laws of any such state in which
it is not then qualified or to file any general consent to service of process in
any such state. Once effective, the Company shall use all reasonable efforts to
keep such filings effective until the earlier of (a) such time as all of the
Registrable Shares have been disposed of in accordance with the intended methods
of disposition by the Holders as set forth in the Registration Statement, (b) in
the case of a particular state, the applicable Holder has notified the Company
that it no longer requires an effective filing in such state in accordance with
its original request for filing or (c) the date on which the Registration
Statement ceases to be effective.
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22
18. Expenses. The Company shall bear all Registration Expenses
incurred in connection with the registration of the Registrable Shares pursuant
to this Agreement, except that each Holder shall be responsible for any
brokerage or underwriting commissions and taxes of any kind (including, without
limitation, transfer taxes) with respect to any disposition, sale or transfer of
Registrable Shares sold by it and for any legal, accounting and other expenses
incurred by it.
19. Indemnification by the Company. The Company agrees to
indemnify each Holder and its officers, directors, employees, agents,
representatives and affiliates, and each person or entity, if any, that controls
the Holder within the meaning of the Securities Act, and each other person or
entity, if any, subject to liability because of his, her or its connection with
the Holder (each, an "Indemnitee"), against any and all losses, claims, damages,
actions, liabilities, costs and expenses (including without limitation
reasonable fees, expenses and disbursements of attorneys and other
professionals), joint or several, arising out of or based upon any violation by
the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the
Company in connection with any Registration Statement or Prospectus, or upon any
untrue or alleged untrue statement of material fact contained in the
Registration Statement or any Prospectus, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, that the Company shall not be liable to such
Indemnitee or any person who participates as an underwriter in the offering or
sale of Registrable Shares or any other person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission made in
such Registration Statement or in any such Prospectus in reliance upon and in
conformity with information regarding such Indemnitee or its plan of
distribution or ownership interests which was furnished in writing to the
Company for use in connection with the Registration Statement or the Prospectus
contained therein by such Indemnitee or (ii) the Holder's failure to send or
give a copy of the final, amended or supplemented prospectus furnished to the
Holder by the Company at or prior to the time such action is required by the
Securities Act to the selling broker for delivery to the person claiming an
untrue statement or alleged untrue statement or omission or alleged omission if
such statement or omission was corrected in such final amended or supplemented
prospectus.
20. Covenants of the Holders. Each Holder hereby agrees (a) to
cooperate with the Company and to furnish to the Company all such information
concerning its plan of distribution and ownership interests with respect to its
Registrable Shares in connection with the preparation of a Registration
Statement with respect to the Holder's Registrable Shares and any filings with
any state securities commissions as the Company may reasonably request, (b) to
deliver to the selling broker or to otherwise cause delivery of the Prospectus
contained in such Registration Statement (other than an Issuance Registration
Statement) to any purchaser of the shares covered by such Registration Statement
from the Holder and (c) to indemnify the Company, its officers, directors,
employees, agents, representatives and affiliates, and each person, if any, who
controls the Company within the meaning of the Securities Act, and each other
person, if any, subject to liability because of his connection with the Company,
against any and all losses, claims, damages, actions, liabilities, costs and
expenses arising out of or based upon (i) any untrue statement or alleged untrue
statement of
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23
material fact contained in either such Registration Statement or the Prospectus
contained therein, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, if and to the extent that such statement or omission occurs from
reliance upon and in conformity with written information regarding the Holder,
its plan of distribution or its ownership interests, which was furnished to the
Company by the Holder for use therein unless such statement or omission was
corrected in writing to the Company not less than three business days prior to
the date of the final prospectus (as supplemented or amended, as the case may
be) or (ii) the failure by the Holder to deliver to the selling broker or to
otherwise cause to be delivered the Prospectus contained in such Registration
Statement (as amended or supplemented, if applicable) furnished by the Company
to the Holder to any purchaser of the shares covered by such Registration
Statement from the Holder through no fault of the Company.
21. Suspension of Registration Requirement; Restriction on Sales.
(a) The Company shall promptly notify each Holder of, and
confirm in writing, the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement with respect to the Holder's
Registrable Shares or the initiation of any proceedings for that purpose. The
Company shall use all reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of such a Registration Statement at the earliest
possible moment.
(b) Notwithstanding anything else to the contrary set
forth in this Agreement, the Company's obligation under this Agreement to cause
a Registration Statement and any filings with any state securities commission to
become effective or to amend or supplement a Registration Statement shall be
suspended in the event and during such period as unforeseen circumstances exist
(including without limitation (i) an underwritten primary offering by the
Company if the Company is advised in writing by the underwriters that the sale
of Registrable Shares under the Registration Statement would impair the pricing
or commercial practicality of the primary offering or (ii) pending negotiations
relating to, or consummation of, a transaction or the occurrence of an event
that would require additional disclosure of material information by the Company
in the Registration Statement or such filing, as to which the Company has a bona
fide business purpose for preserving confidentiality or which renders the
Company unable to comply with SEC requirements) (such unforeseen circumstances
being hereinafter referred to as a "Suspension Event") that would make it
impractical or unadvisable to cause the Registration Statement or such filings
to become effective or to amend or supplement the Registration Statement, but
such suspension shall continue only for so long as such event or its effect is
continuing. The Company shall notify the Holders of the existence and, in the
case of circumstances referred to in clause (i) of this Section 8(b), nature of
any Suspension Event.
(c) Each Holder agrees if requested in writing by the
Company in the case of a Company-initiated nonunderwritten offering or by the
managing underwriter or underwriters in a Company-initiated underwritten
offering, not to effect any public sale or distribution of any of the securities
of the Company, including a sale pursuant to Rule 144 or Rule 144A, during the
15-day period prior to, and during the 60- day period beginning on, the date of
effectiveness of the registration statement relating to such Company-initiated
offering.
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24
22. Black-Out Period. Each Holder agrees that, following the
effectiveness of any Registration Statement relating to the sale of Registrable
Shares of the Holder, the Holder will not effect any sales of the Registrable
Shares pursuant to the Registration Statement or any filings with any state
securities commission at any time after the Holder has received notice from the
Company to temporarily suspend sales as a result of the occurrence or existence
of any Suspension Event so that the Company promptly may correct or update the
Registration Statement or such filing. Each Holder may recommence effecting
sales of the Shares pursuant to the Registration Statement or such filings
following further notice to such effect from the Company, which notice shall be
given by the Company promptly after the conclusion of any such Suspension Event.
23. Additional Shares. The Company, at its option, may register,
under any Registration Statement and any filings with any state securities
commissions filed pursuant to this Agreement, any number of unissued Common
Shares of the Company or any Common Shares of the Company owned by any other
shareholder or shareholders of the Company.
24. Contribution. If the indemnification provided for in Sections
6 and 7 is unavailable to an indemnified party with respect to any losses,
claims, damages, actions, liabilities, costs or expenses referred to therein or
is insufficient to hold the indemnified party harmless as contemplated therein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, actions, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and the Indemnitee, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
actions, liabilities, costs or expenses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the
Indemnitee, on the other hand, shall be determined by reference to, among other
factors, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the Company
or in writing by the Indemnitee and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission; provided, however, that in no event shall the obligation of any
indemnifying party to contribute under this Section 11 exceed the amount that
such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under Sections 6 or 7 hereof
had been available under the circumstances. The Company and the Holders agree
that it would not be just and equitable if contribution pursuant to this Section
11 were determined by pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section
11, no Holder shall be required to contribute any amount in excess of the amount
by which the gross proceeds from the sale of Shares exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission. No indemnified party guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any indemnifying party
who was not guilty of such fraudulent misrepresentation.
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25
25. No Other Obligation to Register. Except as otherwise expressly
provided in this Agreement, the Company shall have no obligation to any Holder
to register the Registrable Shares under the Securities Act.
26. Amendments and Waivers. The provisions of this Agreement may
not be amended, modified, or supplemented or waived without the prior written
consent of the Company and the affected Holder.
27. Notices. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given when and if delivered personally or sent by
telecopier (with respect to notice by telecopier, on a business day between the
hours of 8:00 a.m. and 5:00 p.m., Eastern time), five business days after being
sent if mailed by registered or certified mail (return receipt requested),
postage prepaid, or upon receipt if sent by courier or overnight delivery
service to the respective parties at the following addresses (or at such other
address for any party as shall be specified by like notice, provided that
notices of a change of address shall be effective only upon receipt thereof),
and further provided that in case of directions to amend the Registration
Statement pursuant to Section 3(d) or Section 7, the Holder must confirm such
notice in writing by overnight express delivery with confirmation of receipt:
If to the Company or the Partnership:
Strategic Timber Trust, Inc.
0 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxx, Xxx Xxxxxxxxx 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
If to a Holder:
As listed on the Holder Signature Pages hereto.
28. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns and shall inure
to the benefit of the parties hereto and their respective successors and
assigns. This Agreement may not be assigned by any Holder and any attempted
assignment hereof by a Holder will be void and of no effect and the Holder shall
indemnify the Company and the Partnership against any and all losses, claims,
damages, actions, liabilities, costs and expenses (including without limitation
reasonable fees, expenses and
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26
disbursements of attorneys and other professionals), arising out of or based
upon such attempted assignment.
29. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
30. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia applicable to
contracts made and to be performed wholly within said State.
31. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
32. Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warrants or undertakings, other than those set forth or referred to
herein, with respect to such subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COMPANY: STRATEGIC TIMBER TRUST, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
PARTNERSHIP: STRATEGIC TIMBER PARTNERS, LP
By: Strategic Timber Operating Co.
Its General Partner
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
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HOLDERS:
ADDRESSES FOR NOTICES:
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(Name of Holder)
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By:
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Name:
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Title: Fax No.:
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(Name of Holder)
---------------------------------------------
By:
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Name:
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Title: Fax No.:
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(Name of Holder)
---------------------------------------------
By:
--------------------------- ---------------------------------------------
Name:
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Title: Fax No.:
------------------------ -------------------------------------
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(Name of Holder)
---------------------------------------------
By:
--------------------------- ---------------------------------------------
Name:
------------------------- ---------------------------------------------
Title: Fax No.:
------------------------ -------------------------------------
------------------------------
(Name of Holder)
---------------------------------------------
By:
--------------------------- ---------------------------------------------
Name:
------------------------- ---------------------------------------------
Title: Fax No.:
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(Name of Holder)
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By:
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Name:
------------------------- ---------------------------------------------
Title: Fax No.:
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------------------------------
(Name of Holder)
---------------------------------------------
---------------------------------------------
By:
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Name: Fax No.:
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Title:
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