SECOND AMENDMENT TO PLEDGE AGREEMENT

Exhibit 10.4

SECOND AMENDMENT TO PLEDGE AGREEMENT

THIS SECOND AMENDMENT TO PLEDGE AGREEMENT (the “Amendment”) dated as of December 18, 2008 is made by Xxxxx Timberland Operating Partnership, L.P., a Delaware limited partnership (“Xxxxx Partnership”), Xxxxx Timberland Acquisition, LLC, a Delaware limited liability company (“Xxxxx Acquisition”; Xxxxx Partnership and Xxxxx Acquisition are collectively referred to as the “Grantors” and individually as a “Grantor”), and Wachovia Bank, National Association, as Administrative Agent (in such capacity, the “Administrative Agent”) for the Lenders under that certain Subordinated Credit Agreement dated as of October 9, 2007 among Timberlands II, LLC, a Delaware limited liability company (“Xxxxx Timberland”), Xxxxx Acquisition, the various lending institutions from time to time parties thereto, and the Administrative Agent, as amended.

WITNESSETH:

WHEREAS, MWV SPE, LLC, a Delaware limited liability company (“Xxxxx Installment Note Issuer”), and the parties to this Amendment other than Xxxxx REF entered into a certain Pledge Agreement dated as of October 9, 2007 (the “Original Pledge Agreement”); and

WHEREAS, the Original Pledge Agreement was amended pursuant to a certain First Amendment to Pledge Agreement dated as of October 15, 2008 (the “First Amendment”) to, among other things, add Xxxxx Acquisition as a Grantor and release Xxxxx Installment Note Issuer as a Grantor; and

WHEREAS, the Original Pledge Agreement, as amended by the First Amendment, is sometimes herein called the “Amended Pledge Agreement”; and

WHEREAS, all capitalized terms used herein shall have the meanings ascribed thereto in the Amended Pledge Agreement unless otherwise provided herein; and

WHEREAS, pursuant to the Amended Pledge Agreement, Xxxxx Acquisition pledged 100% of the membership interests in Xxxxx Timberland (the “Xxxxx Timberland Pledged Interests”) to secure the Secured Obligations, and Xxxxx Partnership pledged 100% of the membership interests in Xxxxx Acquisition (the “Xxxxx Acquisition Pledged Interests”) to secure the Secured Obligations; and

WHEREAS, simultaneously with the effectiveness of this Amendment, Xxxxx Acquisition is transferring the Xxxxx Timberland Pledged Interests to Xxxxx Partnership and Xxxxx Partnership is transferring the Xxxxx Acquisition Pledged Interests to Xxxxx Real Estate Funds, Inc., a Georgia corporation (“Xxxxx REF”); and

WHEREAS, the parties desire to amend the Amended Pledge Agreement to (i) add Xxxxx Partnership as Grantor with respect to the Xxxxx Timberland Pledged Interests; (ii) release Xxxxx Acquisition as a Grantor under the Pledge Agreement; and (iii) release the Xxxxx Acquisition Pledged Interests from the pledge under the Amended Pledge Agreement.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Consent to Transfers. The Administrative Agent hereby consents to the transfer of (i) the Xxxxx Timberland Pledged Interests by Xxxxx Acquisition to Xxxxx Partnership; and (ii) the Xxxxx Acquisition Pledged Interests by Xxxxx Partnership to Xxxxx REF.

Continuous Perfection of Security Interests. The parties acknowledge that the Xxxxx Timberland Pledged Interests are and remain subject to the security interest created under the Amended Pledge Agreement and are transferred to Xxxxx Partnership, subject to such security interest. Xxxxx Timberland hereby agrees to (i) issue Certificate No. 3 in the name of Xxxxx Partnership which shall in the corporate stock ledger of Xxxxx Timberland replace Certificate No. 2 issued by Xxxxx Timberland (“Xxxxx Timberland Certificate No. 2”), as evidencing the Xxxxx Timberland Pledged Interests (“Xxxxx Timberland Certificate No. 3”) and (ii) deliver Xxxxx Timberland Certificate No. 3 with a corresponding stock power executed in blank by Xxxxx Partnership to the Administrative Agent. The Administrative Agent hereby agrees, upon its receipt of Xxxxx Timberland Certificate No. 3, to return to Xxxxx Timberland either (i) Xxxxx Timberland Certificate No. 2 for cancellation, or (ii) a lost certificate affidavit and indemnity relating thereto in form and substance acceptable to Xxxxx Timberland and its counsel.

Release of the Xxxxx Acquisition Pledged Interests. The Administrative Agent agrees that, effective upon the transfer of the Xxxxx Acquisition Pledged Interests to Xxxxx REF, the security interest in the Xxxxx Acquisition Pledged Interests created by the Amended Pledge Agreement is released and of no further force or effect. The Administrative Agent agrees, promptly after such release becomes effective, to return to Xxxxx Acquisition either (i) Certificate No. 1 issued by Xxxxx Acquisition or (ii) a lost certificate affidavit and indemnity relating thereto in form and substance satisfactory to Xxxxx Acquisition and its counsel.

Release of Xxxxx Acquisition. The parties hereby agree that, effective upon the transfer of the Xxxxx Timberland Pledged Interests to Xxxxx Partnership, Xxxxx Acquisition shall be released as a Grantor under the Amended Pledge Agreement and shall have no further liability or obligation thereunder with regard to matters originating after the date hereof.

Amendment to Schedule I to Amended Pledge Agreement. Schedule I to Amended Pledge Agreement is hereby replaced in its entirety by the Schedule I to Pledge Agreement attached hereto as Exhibit A.

No Other Amendments. The amendments set forth herein shall be limited precisely as provided for herein and shall not be deemed to be a waiver of, amendment of, consent to or modification of any other term or provision of the Amended Pledge Agreement or of any term or provision of any other Loan Document or of any

transaction or further or future action on the part of the Grantor or any Loan Party which would require the consent of any of the Lenders under the Credit Agreement or any other Loan Document, and the provisions of the Amended Pledge Agreement shall remain unchanged and in full force and effect. Xxxxx Partnership and Xxxxx REF hereby ratify and confirm their respective representations, warranties and covenants as Grantors under the Amended Pledge Agreement.

Representations and Warranties. Each Grantor hereby represents and warrants that:

(a)

each of the representations and warranties of the Grantor contained in the Amended Pledge Agreement and in the Loan Documents is true and correct in all material respects as of the date hereof as if made on the date hereof (except, if any such representation and warranty relates to an earlier date, such representation and warranty shall be true and correct in all material respects as of such earlier date);

(b)

no Default (as defined in the Credit Agreement) or Event of Default (as defined in the Credit Agreement) has occurred and is continuing; and

(c)

the execution, delivery and performance by each Grantor of this Amendment and the consummation of the transactions contemplated hereby and the fulfillment of the terms hereof do not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under (A) the formation documents of the Grantors, or (B) any material indenture, agreement, mortgage, deed of trust, or other instrument to which any Grantor is a party or by which it is bound or any of its properties are subject; (ii) result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust, or other instrument; or (iii) violate any law, order, rule, or regulation applicable to any Grantor of any court or of any Federal or State regulatory body, administrative agency, or other governmental instrumentality having jurisdiction over any Grantor or its properties.

Further Agreement. Each Grantor hereby agrees that (a) the incorrectness in any material respect of any representation, warranty or agreement contained in this Amendment by any Grantor shall constitute an immediate Event of Default; (b) each Loan Document to which each Grantor is a party is in full force and effect with respect to it; and (c) no event that would reasonably be expected to have a Material Adverse Effect has occurred since the execution of Amendment No. 3 to Subordinated Credit Agreement (as defined in the Credit Agreement).

Effectiveness. This Amendment shall become effective upon the satisfaction of each of the following: (a) its execution and delivery by all parties hereto, and (b) delivery of Xxxxx Timberland Certificate No. 3 with a corresponding stock power executed in blank to the Administrative Agent. This Amendment may be executed by the parties in several counterparts, each of which shall be deemed an original and all of which shall constitute together but one and the same agreement.

10.

Loan Document Pursuant to Subordinated Credit Agreement. This Amendment is a Loan Document executed pursuant to the Subordinated Credit Agreement. Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions contained in the Amended Pledge Agreement shall remain unamended or otherwise unmodified and in full force and effect.

11.

No Waiver; Reservation of Rights. In no way or manner shall this Amendment or any provision herein be construed as a waiver by the Lender Parties of their rights or remedies under the Amended Pledge Agreement and the other Loan Documents. The Lender Parties hereby expressly, fully and completely reserve all of their rights and remedies under the Amended Pledge Agreement and the other Loan Documents.

12.

Release. Each of the Grantors hereby releases the Administrative Agent, the Lenders and their respective officers, directors, equity owners, agents and employees (collectively, the “Specified Parties”) of, from and against any and all claims, liability, losses, costs and expenses directly or indirectly relating to or arising out of the Loan Documents and the execution and delivery thereof or any act or omission of the Specified Parties thereunder or relating thereto which has occurred up through and including the time of the execution and delivery of this Amendment and which is known by, or should have been known by, any of the Grantors.

13.

GOVERNING LAW; WAIVER OF JURY TRIAL; ENTIRE AGREEMENT. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH PERSON A PARTY HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING UNDER OR IN CONNECTION WITH THIS AMENDMENT OR ANY AGREEMENT OR DOCUMENT ENTERED INTO IN CONNECTION HEREWITH. THIS AMENDMENT CONSTITUTES THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ANY PRIOR AGREEMENT, WRITTEN OR ORAL, WITH RESPECT HERETO.

[Signature Pages Follow]

IN WITNESS WHEREOF, each of the parties has caused this Amendment to be duly executed and delivered as of the day and year first above written.


GRANTORS: XXXXX TIMBERLAND OPERATING PARTNERSHIP, L. P., a Delaware limited partnership

BY:	Xxxxx Timberland REIT, Inc., a Maryland corporation, General Partner

	By:
	Name:	Xxxxxxx X. Xxxxx
	Title:	Senior Vice President
XXXXX TIMBERLAND ACQUISITION, LLC, a Delaware limited liability company

BY:	Xxxxx Timberland Management Organization, LLC, a Georgia limited liability company, Manager

	By:
	Name:	Xxxxx Xxxxx
	Title:	Vice President, Finance

Second Amendment to Pledge Agreement

Each of the other Loan Parties hereby confirm and agree that each Loan Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except than on and after the effective date of this Amendment each reference therein to the Amended Pledge Agreement shall refer to the Amended Pledge Agreement after giving effect to this Amendment.


XXXXX TRS HARVESTING OPERATIONS, LLC, a Delaware limited liability company

By:	FOREST RESOURCE CONSULTANTS, INC., a Georgia corporation, as Manager

	By:
	Name:	Xxxxx Foil
	Title:	President


XXXXX TIMBERLAND REIT, INC., a Maryland corporation

By:
		Name: Xxxxxxx X. Xxxxx
		Title: Senior Vice President


XXXXX TIMBERLAND TRS, INC., a Delaware corporation

By:
		Name: Xxxxxxx X. Xxxxx
		Title: Senior Vice President


TIMBERLANDS II, LLC a Delaware limited liability company

By:	XXXXX TIMBERLAND MANAGEMENT ORGANIZATION, LLC a Georgia limited liability company, as Manager

	By:
	Name:	Xxxxx Xxxxx
	Title:	Vice President, Finance

Second Amendment to Pledge Agreement


ADMINISTRATIVE AGENT: WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent

By:
Name:
Title:

Second Amendment to Pledge Agreement

EXHIBIT A

[See Attached]

Second Amendment to Pledge Agreement

SCHEDULE I

Pledge Agreement

Pledged Membership Interests


Grantor	State of Organization of Grantor	Securities Issuer	No. of Membership Interests	Membership Interests % of Interests Pledged		Certificate No.
Xxxxx Timberland Operating Partnership, L.P.	Delaware	Timberlands II, LLC	1,000	100	%	03

Second Amendment to Pledge Agreement

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SECOND AMENDMENT TO PLEDGE AGREEMENT

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