8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 1, 2008

PLUM CREEK TIMBER COMPANY, INC.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE	1-10239	91-1912863
(State of Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

999 Third Avenue, Suite 4300 Seattle, Washington	98104-4096
(Address of Principal Executive Offices)	(Zip Code)

(206) 467-3600

Registrant’s Telephone Number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14.d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1. Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement

(a) On October 1, 2008, Plum Creek Timber Company, Inc. (the “Company”) completed the formation of a timberland joint venture with The Campbell Group, LLC, a timber investment management organization. The joint venture will be carried out through Southern Diversified Timber, LLC (the “Joint Venture”), to which a subsidiary of the Company contributed 454,000 acres of its southern U.S. timberland assets under the terms of a contribution agreement previously entered into by Plum Creek Timber Operations I, LLC (“Plum Creek”), a subsidiary of the Company, and TCG Member, LLC, an affiliate of The Campbell Group, on August 22, 2008. The Campbell Group will conduct the day to day management of the timberlands.

The terms of the Joint Venture are governed by a limited liability company operating agreement entered into by Plum Creek and TCG Member, LLC. Under the terms of this agreement, Plum Creek received a preferred interest representing all of the preferred equity, and a common interest representing approximately nine percent of the common equity, in the Joint Venture in exchange for its contribution of 454,000 acres of timberlands. TCG Member contributed $783 million in cash to the Joint Venture, and received a common interest representing approximately 91% of the common equity. Plum Creek’s preferred interest provides for a par value of approximately $705 million and a cumulative preferred distribution, payable semi-annually, equal to 7.875% per annum of par value.

Also on October 1, 2008, the Company, Plum Creek Ventures I, LLC, a non-operating subsidiary of the Company, and the Joint Venture entered into a Credit Agreement and Guarantee pursuant to which Plum Creek Ventures I borrowed $783 million from the Joint Venture. Interest on the loan will accrue at 7.375% per annum and is payable quarterly. The principal amount of the loan is due on October 1, 2018. Payment of the principal and interest on the loan is guaranteed by the Company.

The Credit Agreement and Guarantee contains covenants that are typical for non-operating subsidiary borrowers, but which do not apply to the Company or any of its other subsidiaries, including its operating subsidiaries. The agreement also contains customary event of default provisions, including an event of default provision that is triggered upon an acceleration of the indebtedness of Plum Creek Timberlands, L.P. (the “Partnership”), a wholly owned operating subsidiary of the Company, under the terms of the Partnership’s revolving credit facility.

Plum Creek Ventures I contributed the loan proceeds to the Partnership in exchange for a preferred limited partnership interest in the Partnership, which is pledged as security for the loan. The Partnership will use the proceeds of the $783 million capital contribution from Plum Creek Ventures I to retire certain existing indebtedness of the Partnership, and the balance will be used for general corporate purposes, including the repurchase from time to time of the Company’s outstanding common stock.

For a complete description of the terms and conditions of these transactions, please refer to the relevant agreements and documents listed below in Item 9.01, each of which is incorporated herein by reference and filed with this Current Report on Form 8-K.

Section 2. Financial Information

Item 2.01 Completion of Acquisition or Disposition of Assets

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Section 9. Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(b) Pro Forma financial information. The pro forma financial information required pursuant to Article 11 of Regulation S-X is filed herewith as, and incorporated herein by reference to, Exhibit 99.1.

(d) Exhibits. The following exhibits are filed with this report:

Exhibit No.
2.1	Contribution Agreement dated as of August 22, 2008 between Plum Creek Timber Operations I, LLC and TCG Member, LLC (incorporated by reference to Exhibit 2.1 to Form 8-K, File No. 1-10239, filed August 27, 2008).
2.2	Limited Liability Company Agreement of Southern Diversified Timber, LLC dated as of October 1, 2008 by and among Plum Creek Timber Operations I, LLC and TCG Member, LLC (filed herewith).
10.1	Credit Agreement and Guarantee dated as of October 1, 2008 by and among Plum Creek Ventures I, LLC, Plum Creek Timber Company, Inc. and Southern Diversified Timber, LLC (filed herewith).
10.2	Pledge Agreement dated as of October 1, 2008 between Plum Creek Ventures I, LLC and Southern Diversified Timber, LLC (filed herewith).
99.1	Pro Forma Condensed Consolidated Financial Statements of Plum Creek Timber Company, Inc. (filed herewith).

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 hereunto duly authorized.

PLUM CREEK TIMBER COMPANY, INC.
By:	/s/ David W. Lambert
	David W. Lambert
	Senior Vice President and Chief Financial Officer

DATED: October 7, 2008

PLUM CREEK TIMBER COMPANY, INC.

Exhibit Index

Exhibit No.
2.1	Contribution Agreement dated as of August 22, 2008 between Plum Creek Timber Operations I, LLC and TCG Member, LLC (incorporated by reference to Exhibit 2.1 to Form 8-K, File No. 1-10239, filed August 27, 2008).
2.2	Limited Liability Company Agreement of Southern Diversified Timber, LLC dated as of October 1, 2008 by and among Plum Creek Timber Operations I, LLC and TCG Member, LLC (filed herewith).
10.1	Credit Agreement and Guarantee dated as of October 1, 2008 by and among Plum Creek Ventures I, LLC, Plum Creek Timber Company, Inc. and Southern Diversified Timber, LLC (filed herewith).
10.2	Pledge Agreement dated as of October 1, 2008 between Plum Creek Ventures I, LLC and Southern Diversified Timber, LLC (filed herewith).
99.1	Pro Forma Condensed Consolidated Financial Statements of Plum Creek Timber Company, Inc. (filed herewith).

EX-2.2

Exhibit 2.2

LIMITED LIABILITY COMPANY AGREEMENT

OF

SOUTHERN DIVERSIFIED TIMBER, LLC

DATED AS OF

OCTOBER 1, 2008

TABLE OF CONTENTS

			Page
Article I Formation			1
	1.1	Formation.	1
	1.2	Filings.	1
Article II Office and Agent			2
	2.1	Principal Office.	2
	2.2	Registered Agent and Registered Office.	2
Article III Key Definitions			2
Article IV Business			10
Article V Members			10
	5.1	Member Meetings.	10
	5.2	Representations and Warranties.	10
Article VI Capital Contributions			11
	6.1	Initial TCG Member Contribution.	11
	6.2	Subsequent Capital Contributions.	11
	6.3	[Reserved]	13
	6.4	No Withdrawal, Interest or Restoration.	13
	6.5	No Rights in Third Parties.	13
Article VII Capital Accounts; Allocation of Net Income and Net Loss			14
	7.1	Capital Accounts.	14
	7.2	Allocation of Net Income and Net Loss.	14
	7.3	Special Allocations.	15
	7.4	Section 704(b) Allocations.	17
	7.5	Section 704(c) Allocations.	17
Article VIII Distributions to Members			17
	8.1	Distributions of Cash Flow and Capital Proceeds.	17
	8.2	Repayment of Deficit Loans; Limitation on Distributions of Capital Proceeds.	18
	8.3	Taxes Paid or Withheld.	18
	8.4	Advances.	19
Article IX Management of the Company			20
	9.1	Rights and Powers.	20
	9.2	Reliance by Third Parties.	22
	9.3	Authority.	22
	9.4	Reimbursements.	23
	9.5	Strategic and Business Plans.	23
	9.6	Commitment of Manager; Member Freedom of Action.	23
	9.7	Sales of Company Assets.	24
	9.8	Redemption Rights.	25

	9.9	Rights and Powers.	25
	9.10	Limitations on Members.	25
	9.11	PC Member Approval Rights.	26
	9.12	Merger of Subsidiary LLC; Plum Creek Loan.	28
	9.13	PC Member Termination Right.	28
	9.14	Employees.	30
	9.15	Compliance.	30
	9.16	Insurance.	30
	9.17	Fair Market Value.	31
Article X Transfer of Interests in the Company; Restrictions on Transfer			33
	10.1	Transfer of Company Interests.	33
	10.2	Invalid Transfers.	33
	10.3	Manager.	33
	10.4	Withdrawal.	34
	10.5	Substituted Members.	34
	10.6	Admission of New Members.	34
	10.7	Corporation Status & Securities or Secondary Markets.	34
	10.8	Permitted Transfers.	35
Article XI Records, Accounting, Bank Accounts and Reports			36
	11.1	Books and Records.	36
	11.2	Reports.	37
	11.3	Bank Accounts.	39
	11.4	Fiscal Year.	39
Article XII Term			40
Article XIII Legal Title to Company Property			40
Article XIV Dissolution and Liquidation			40
	14.1	Dissolution.	40
	14.2	Liquidation.	40
	14.3	Termination.	41
Article XV Liability and Indemnification			41
	15.1	No Liability.	41
	15.2	Liability for Actions or Omissions.	41
	15.3	Indemnification by Company.	41
Article XVI [Reserved]			42
Article XVII Miscellaneous			42
	17.1	Notices.	42
	17.2	Captions.	42
	17.3	Severability.	42
	17.4	Meetings and Means of Voting.	42
	17.5	Governing Law.	43

17.6	Counterpart Execution.	43
17.7	Parties in Interest.	43
17.8	Amendment.	43
17.9	Integrated Agreement.	43
17.10	Terminology.	43
17.11	Members Not Named.	44
17.12	Relationship of Members.	44
17.13	Waivers.	44
17.14	Exculpation of Members.	45
17.15	Further Assurances.	45
17.16	Attorneys Fees.	45
17.17	Confidentiality.	45
17.18	Brokers.	45
17.19	Successors.	46

EXHIBITS:

Exhibit A – Company Interests

Exhibit B – Form of Timber Sale Agreement

Exhibit C – Company Strategic Plan

Exhibit D – Properties Owned by Subsidiary LLC

Exhibit E – Insurance Requirements

Exhibit F – Representations and Warranties

Exhibit G – Form of Property Management Agreement

Exhibit H – Form of Certificate of Merger

Southern Diversified Timber, LLC

Limited Liability Company Agreement

THIS LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of Southern Diversified Timber, LLC, a Delaware limited liability company (the “Company”), is made and entered into as of October 1, 2008 (the “Effective Date”), by and between TCG Member, LLC, a Delaware limited liability company (“TCG Member”), and Plum Creek Timber Operations I, L.L.C., a Delaware limited liability company (“PC Member”) as the members (hereinafter collectively referred to as the “Members” or individually as a “Member”).

WITNESSETH

WHEREAS, the Members are parties to a Contribution Agreement dated as of August 22, 2008, whereby each Member agreed to make capital contributions to the Company (the “Contribution Agreement”); and

WHEREAS, the closing conditions under the Contribution Agreement have been met and the Property and Capital Contribution (as defined below) is occurring as of the date hereof and each of PC Member and TCG Member is being admitted as a Member on the date hereof;

WHEREAS, the Members as of the date hereof wish to set forth, among other things, how the business and affairs of the Company shall be managed.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

FORMATION

1.1 Formation.

The Members formed the Company pursuant to the provisions of the Delaware Limited Liability Company Act (6 Del. C. §§ 18-101 et seq.), as same may be amended from time to time (the “Act”). The name of the Company shall be “Southern Diversified Timber, LLC.”

1.2 Filings.

The Manager (as defined below) shall, from time to time, execute or cause to be executed all certificates (including fictitious name certificates) or other documents and cause to be done all such filing, recording, publishing or other acts as may be necessary to comply with the Act’s requirements for operation of the Company as a limited liability company under the laws of the State of Delaware and all acts necessary to qualify the Company as a foreign limited liability company under the law of, or the right otherwise to do business in, any state in which the Manager determines it is necessary or desirable to have such qualification or right to do business.

1

ARTICLE II

OFFICE AND AGENT

2.1 Principal Office.

The principal executive office of the Company shall be c/o TCG Member, LLC, One S.W. Columbia, Suite 1700, Portland, OR 97258, or at such other place as the Manager may determine from time to time with the approval of PC Member. The records of the Company identified in Section 11.1 shall be maintained at the principal executive office of the Company.

2.2 Registered Agent and Registered Office.

The registered agent for service of process in the State of Delaware shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle. In the event that the Person at any time acting as such agent ceases to act as such for any reason, the Company shall appoint a substitute agent approved by PC Member. Such agent is and shall be the agent of the Company upon which any process, notice or demand required or permitted by law to be served on the Company may be served. The registered office of the Company in the State of Delaware shall be c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle.

ARTICLE III

KEY DEFINITIONS

The following terms used in this Agreement shall (unless otherwise expressly provided herein or unless the context otherwise requires) have the following respective meanings:

“Act” has the meaning set forth in Section 1.1.

“Additional Preferred Return” means, as of any time of determination, an amount equal to (i) the sum of the Base Preferred Return rate in effect at such time plus three percent (3%) per annum multiplied by (ii) the amount of any Base Preferred Return that is not paid by the end of the Semi-Annual Period during which it accrued. The Additional Preferred Return shall continue to accrue until both the Base Preferred Return to which it relates and the Additional Preferred Return is paid in full pursuant to Sections 8.1 and 14.2.

“Advance” has the meaning set forth in Section 8.4(a).

“Advance Notice” has the meaning set forth in Section 8.4(b).

“Advance Requirements” has the meaning set forth in Section 8.4(a).

“Advance Shortfall Amount” has the meaning set forth in Section 8.4(d).

2

“Affiliate” means, with respect to any specified Person, any other Person “controlling”, “controlled by” or “under common control with” such specified Person.

“Applicable Laws” means, with respect to any Person, applicable statutes, regulations, governmental licenses, permits or other similar approvals to which such Person or its Affiliates are subject.

“Bankrupt or Bankruptcy” means, with respect to a Member or Manager, the filing by such Member or Manager of a petition in bankruptcy or for an arrangement, composition, readjustment, liquidation, dissolution, reorganization, or similar relief pursuant to Title 11 of the United States Code entitled “Bankruptcy”, as amended (the “Bankruptcy Code”), and any judicial and administrative interpretation thereof (section references to the Bankruptcy Code are to the Bankruptcy Code as in effect on the date of this Agreement and any subsequent provisions of the Bankruptcy Code, amendatory thereof, supplemental thereto or in substitution thereof or any similar or successor law, federal or state); or a decree by a court of competent jurisdiction, adjudicating such Member or Manager a bankrupt, or declaring such Member or Manager insolvent or the entering of an order for relief against such Member or Manager in any bankruptcy or insolvency proceeding; or the making by such Member or Manager of an assignment for the benefit of creditors, or the admission in writing by such Member or Manager of its inability to pay its debts generally as they become due, or the consenting by such Member or Manager to the appointment of a receiver or receivers of all or any substantial part of its property; or the filing by any of the creditors of such Member or Manager of a petition in bankruptcy against such Member or Manager or for an arrangement, composition, readjustment, liquidation, dissolution, reorganization, or similar relief with respect to such Member or Manager pursuant to the Bankruptcy Code or similar or successor law, federal or state, if such petition shall not be discharged or dismissed within sixty (60) days after the date on which such petition is filed.

“Base Preferred Return” means for any holder of the Preferred Interest an amount equal to 7.875% per annum on the outstanding Priority Amount.

“Book Value” means, with respect to any asset of the Company, the adjusted basis of such asset for federal income tax purposes; provided, however, that (a) if any asset is contributed to the Company, the initial Book Value of such asset to the Company shall equal its Fair Market Value on the date of contribution and (b) if the Capital Accounts of the Members are adjusted pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect the Fair Market Value of any asset of the Company as provided in Section 7.1(b), the Book Value of such asset shall be adjusted to equal its respective Fair Market Value as of the time of such adjustment, in accordance with such Treasury Regulations. The Book Value of all assets of the Company shall be adjusted thereafter by depreciation or amortization as provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(g) and any other adjustment to the basis of such assets other than depreciation or amortization. The Members agree that the initial Book Value of the assets owned by the Subsidiary LLC shall equal the Property Contribution Amount.

“Capital Account” has the meaning set forth in Section 7.1(a).

3

“Capital Proceeds” means the net cash proceeds realized, or the Fair Market Value of any property received, by the Company or any Subsidiary from a Capital Transaction (other than proceeds from sales of allowable acreage as provided for in Section 9.7(a)(2)), after deducting all (i) expenses related to such Capital Transaction and any related repayment of indebtedness from the proceeds thereof and (ii) any reserves which the Company determines are necessary to provide for any contingent or unforeseen liabilities or obligations of the Company or any Subsidiary; provided, however, that at the expiration of such period of time as the Members jointly deem advisable, the balance of such reserve remaining after the payment of such contingencies, if any, shall be distributed as Capital Proceeds. Any property received (directly or indirectly) upon foreclosure of the Plum Creek Loan shall not be considered Capital Proceeds unless and until the Company elects to distribute such property under Section 8.1(b) or Section 14.2, and then shall be treated as Capital Proceeds to the extent of the Fair Market Value of such property on the date of distribution. Contributions of capital to the Company by the Members shall not be treated as Capital Proceeds.

“Capital Transaction” means a financing or refinancing, insurance recovery or condemnation award to the extent not applied to restoration of any Property or any expenses related thereto, easement sale, sale or other disposition of all or any substantial part of any Property of the Company (directly or indirectly), any principal repayments (including any payment by the Guarantor (as defined in the Credit Agreement)) in cash or property received by the Company with respect to the Plum Creek Loan (whether or not such repayments are scheduled or made as a result of default), any sale or exchange of the Plum Creek Loan, any sale, exchange, distribution or other disposition of any property received (directly or indirectly) upon any foreclosure of the Plum Creek Loan, and any other transaction the proceeds of which, in accordance with generally accepted accounting principles, are considered to be capital proceeds.

“Cash Flow” means for any period all cash receipts by Company (including proceeds from sales of allowable acreage as provided for in Section 9.7(a)(2)) for such period, less the following to the extent paid during such period (other than to the extent funded from capital contributions, reserves or Capital Proceeds or otherwise taken into account as deductions in the determination of Capital Proceeds): (a) all operating and capital expenses of Company; (b) any payments or amortization of indebtedness of Company; and (c) amounts, if any, deposited in a reserve or working capital account of Company, the balance of which shall not exceed $3 million without the agreement of the Members.

“Cash Notice” has the meaning set forth in Section 6.2(c).

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Common Interest” means any common Interest in the Company issued to a Member, having the rights and obligations as set forth in this Agreement.

“Company Interest” or “Interest” means the limited liability company interest of a Member in the Company, whether a Common Interest or a Preferred Interest.

“Company Strategic Plan” has the meaning set forth in Section 9.5.

4

“Contributing Member” has the meaning set forth in Section 6.2(d).

“Contribution Agreement” has the meaning set forth in the recitals.

“Contribution Date” means a date on which a capital contribution is required pursuant to a Cash Notice issued under the terms of this Agreement.

“Control” (including the correlative meanings of the terms “controlling”, “controlled by” and “under common control with”) means, with respect to any Person, possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, subject to the customary “major decision” rights, whether through the ownership of voting securities or by contract or otherwise.

“Credit Agreement” means the Credit Agreement and Guarantee by and among Plum Creek Borrower, Plum Creek Timber Company, Inc. and the Company.

“Deficit Loan” has the meaning set forth in Section 6.2(d)(B).

“Deficiency Amount” has the meaning set forth in Section 6.2(d).

“Deficiency Contribution” has the meaning set forth in Section 6.2(d).

“Deficiency Notice” has the meaning set forth in Section 8.4(d).

“Effective Date” has the meaning set forth in the preamble hereto.

“Fair Market Value” shall be determined as set forth in Section 9.17.

“Force Majeure” means any delays due to strikes, acts of God, governmental restrictions, enemy action, civil commotion, fire, unavoidable casualty, unusual delays in transportation, adverse weather conditions, acts of terrorism, or other similar causes beyond the reasonable control of the Company.

“Initial TCG Contribution” means the capital contribution of $39,150,000 representing an amount equal to five percent (5%) of the maximum aggregate amount required to be contributed by TCG Member under the Contribution Agreement, which amount was placed in escrow pursuant to the Contribution Agreement and released to the Company as of the date hereof.

“Institutional Investor” means any one or more of the following entities: a savings bank, a savings and loan association, a commercial bank or trust company, an insurance company subject to regulation by any governmental authority or body, a real estate investment trust, a union, governmental or secular employee’s welfare, benefit, pension or retirement fund, a pension fund property unit trust (whether authorized or unauthorized), an investment company or trust, a merchant or investment bank or any other entity generally viewed as an “institutional investor.”

“Institutional Lender” means a lender that would satisfy the definition of Institutional Investor.

5

“Insured Party” has the meaning set forth in Section 9.16(b).

“Liquidity Representation” has the meaning set forth in Section 8.4(a).

“Manager” means TCG / Southern Diversified Manager, LLC or any other entity serving in the capacity as Manager under this Agreement in accordance with the terms of this Agreement.

“Manager Review Committee” has the meaning set forth in Section 9.13(a).

“Member” and “Members” have the meaning set forth in the Preamble.

“Net Income” or “Net Loss”, as appropriate, means, for any period, the taxable income or tax loss of the Company for such period for federal income tax purposes, determined by taking into account any separately stated tax items and increased by the amount of any tax-exempt income of the Company during such period and decreased by the amount of any Section 705(a)(2)(B) expenditures (within the meaning of Treasury Regulations Section 1.704-1(b)(2)(iv)(i)) of the Company; provided, however, that (i) items of income, gain, loss and deduction attributable to Section 704(c) Property shall be determined in accordance with the principles of Treasury Regulations Section 1.704-1(b)(2)(iv)(f) and (g) and (ii) the Net Income and Net Loss of the Company shall be computed without regard to the amount of any items of income, gain, loss or deduction that are specially allocated pursuant to Section 7.3. In the event that the Book Value of any asset is adjusted pursuant to Section 7.1(b), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income and Net Loss of the Company, and the Net Income and Net Loss of the Company (and the constituent items of income, gain, loss and deduction) realized thereafter shall be computed in accordance with the principles of Treasury Regulations Section 1.704-1(b)(2)(iv)(g).

“Non-Contributing Member” has the meaning set forth in Section 6.2(d).

“PC Borrower” means Plum Creek Ventures I, LLC, a Delaware limited liability company.

“PC Member” has the meaning set forth in the Preamble.

“PC Member Contribution” has the meaning assigned to such term in the Contribution Agreement.

“Percentage Interest” means, with respect to each Member, the percentage set forth respectively on Exhibit A attached hereto, which relates to each Member’s respective Common Interests, subject to adjustment as provided for in this Agreement.

“Permitted Investments” means (i) direct obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America, provided that the full faith and credit of the United States of America must be pledged to any such direct obligation or guarantee; (ii) unsecured certificates of deposit or time deposits (in each case having maturities of not more

6

than 180 days) of any domestic bank, including a branch office of a foreign bank which branch office is located in the United States, provided that legal opinions are received to the effect that full and timely payment of such deposit or similar obligation is enforceable against the principal office or any branch of such bank, which, at the time of purchase, has a short-term “Bank Deposit” rating of P-1 by Moody’s and a “Short-Term CD” rating of A-1 or better by S&P; (iii) deposits in any bank or savings and loan association which has combined capital, surplus and undivided profits of not less than $1 billion, provided such deposits are continuously and fully insured by the Federal Deposit Insurance Corporation; or (iv) any other investment that is consistent with a cash management plan submitted by the Company and approved in writing from time to time by PC Member, which consent shall not be unreasonably withheld.

“Person” means any individual, partnership, corporation, association, joint venture, trust or other legal entity (including any heirs, executors, administrators, legal representatives, successors and assigns), governments or agencies or political subdivisions thereof, multistate compact authorities and other associations and entities where the context requires.

“Plum Creek Loan” means the loan from the Company to PC Borrower to be made as provided in Section 9.12(a)(ii), which will be entered into by and between the Company and PC Borrower subject to the terms of the Credit Agreement.

“Plum Creek Loan Collateral” means the collateral pledged as security for the Plum Creek Loan pursuant to an agreed upon pledge agreement to be entered into by PC Borrower in connection with the Plum Creek Loan.

“Plum Creek Loan Collateral Gain or Loss” means (i) in the case of a sale, transfer, or other disposition of the Plum Creek Loan Collateral, the gain or loss equal to the difference between the Fair Market Value of the Plum Creek Loan Collateral and its Book Value in the hands of the Company on the date of such sale, transfer or other disposition, (ii) in the case of any payment by the Guarantor (as defined in the Credit Agreement) with respect to the Plum Creek Loan, gain equal to the sum of the cash and the Fair Market Value of any property received pursuant to the Guarantee and (iii) in connection with any adjustment of the Capital Accounts of the Members in accordance with Section 7.1(b) the amount of the unrealized gain or loss that would be recognized upon a taxable disposition of the Plum Creek Loan Collateral on such date in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(f). For the avoidance of doubt, Plum Creek Loan Collateral Gain or Loss shall not include (a) any items of net income or loss allocated to the Company as a result of holding the Plum Creek Loan Collateral or (b) that portion of the gain or loss on any disposition of the Plum Creek Loan Collateral attributable to accrued but unpaid preferred returns on the Plum Creek Collateral. For purposes of clause (b) of the preceding sentence, the portion of gain or loss attributable to accrued but unpaid preferred return shall be equal to the total gain or loss on the disposition multiplied by a fraction, the numerator of which is the amount of accrued but unpaid preferred return on the date of the disposition and the denominator of which is the sum of the liquidation preference of the Plum Creek Collateral plus the accrued but unpaid preferred return on the date of the disposition.

7

“Plum Creek Loan Gain or Loss” means (i) in the case of a redemption made pursuant to Section 9.8 or a liquidation pursuant to Section 14.2, the gain or loss equal to the difference between the Fair Market Value of the Plum Creek Loan and its Book Value in the hands of the Company on the date of the redemption or liquidating distribution, (ii) in the case of any repayment of principal of the Plum Creek Loan, whether in cash or property, including pursuant to the foreclosure on the Plum Creek Loan Collateral, the gain or loss equal to the difference between the Book Value in the hands of the Company of the Plum Creek Loan (or, in the case of a partial repayment, the portion repaid) and an amount equal to the sum of the cash and the Fair Market Value of any property received in complete or partial repayment of the Plum Creek Loan, (iii) in the case of a sale of the Plum Creek Loan, the gain or loss equal to the difference between the Book Value of the Plum Creek Loan in the hands of the Company on the date of the sale and the amount realized therefor and (iv) in connection with any adjustment of the Capital Accounts of the Members in accordance with Section 7.1(b) the amount of the unrealized gain or loss that would be recognized upon a taxable disposition of the Plum Creek Loan on such date in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(f). For the avoidance of doubt, Plum Creek Loan Gain or Loss shall not include (a) any income attributable to interest paid or accrued on the Plum Creek Loan or (b) that portion of any loss arising on the sale, foreclosure, repayment, or other disposition of the Plum Creek Loan equal to the amount of accrued interest on the Plum Creek Loan that was included or includible in the Company’s taxable income but not paid as of the time of any such disposition.

“Prime Rate” has the meaning set forth in Section 6.2(d)(B).

“Preferred Interest” means the preferred Interest in the Company to be issued to PC Member upon the occurrence of the Property and Capital Contributions, having an initial Priority Amount of $704,700,000, which is entitled to the Base Preferred Return and any Additional Preferred Return, as applicable, and has the rights and obligations as otherwise set forth in this Agreement.

“Priority Amount” means, with respect to the Preferred Interest, the initial amount of $704,700,000 dollars (a) reduced, but not below zero, by (i) distributions to the holder of the Preferred Interest under Sections 8.1(b)(i) and 14.2, (ii) the amount of any Plum Creek Loan Loss and Plum Creek Loan Collateral Loss allocated to PC Member pursuant to Section 7.3, and (b) increased by the amount of any Plum Creek Loan Gain and Plum Creek Loan Collateral Gain allocated to PC Member pursuant to Section 7.3.

“Properties” means, collectively, the real properties (together with any timber located thereon) owned or ground leased by the Company or otherwise acquired by the Company in accordance with this Agreement. “Property” shall refer to any one of the Properties.

“Property and Capital Contributions” means occurrence of the last to occur of the contributions by PC Member and TCG Member contemplated in Section 6.2(a).

“Property Contribution Amount” has the meaning assigned to that term in the Contribution Agreement.

8

“Property Contribution Conditions” has the meaning assigned to that term in the Contribution Agreement. The Members agree that these conditions shall have been satisfied and/or waived if and when the Property and Capital Contributions occur.

“Property Management Agreement” means the agreement, in the form attached hereto as Exhibit G, between the Company and the Property Manager relating to the operation and management of the Properties.

“Property Manager” means the Manager or an Affiliate of the Manager that enters into the Property Management Agreement.

“Qualified Appraiser” means an appraiser who is not an Affiliate of any Member or the Manager and has not been an employee of any Member or the Manager or any Affiliate of the Member or the Manager at any time, who is qualified to appraise the asset and is a member of the Appraisal Institute (or any successor association or body of comparable standing if such Institute is not then in existence) and who has held his or her certificate as an M.A.I. or its equivalent for a period of not fewer than ten (10) years, and has been actively engaged in the appraisal of timberlands in the jurisdiction of the Property being appraised immediately preceding his or her appointment under this Agreement if the asset being appraised is a Property.

“Quarterly Cap” has the meaning set forth in Section 8.4(a).

“Quarterly Period” means either the first half or the second half of any Semi-Annual Period, as applicable.

“REIT” means a “real estate investment trust” as defined in Section 856 of the Code.

“Requesting Member” has the meaning set forth in Section 8.4(a).

“Semi-Annual Cap” has the meaning set forth in Section 8.4(a).

“Semi-Annual Period” means a period of six months beginning on the day after the close of the preceding Semi-Annual Period and ending on the fifteenth day of each of March and September, or, if such fifteenth day is not a business day, on the next following business day, except that (i) the first Semi-Annual Period shall commence upon the Company’s formation and end on March 16 of the succeeding calendar year, and (ii) the final Semi-Annual Period shall end when the Company is terminated in accordance with this Agreement.

“Subsidiaries” means, collectively, the Subsidiary LLC and any other entity in which the Company may possess an equity ownership interest.

“Subsidiary LLC” means the limited liability company identified on Exhibit D hereto.

“Subsidiary LLC Interests” has the meaning assigned to that term in the Contribution Agreement.

9

“Taxes” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, whether computed on a separated or consolidated, unitary or combined basis or in any other manner, including any interest, penalty, or addition thereto, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the tax liability of any other Person, and any legal, accounting, other fees, or other expenses incurred in contesting or settling any of the foregoing taxes, duties, interest or penalties.

“TCG Member” has the meaning set forth in the Preamble.

“TCG Member Contribution” means the aggregate $783,000,000 capital contribution made by TCG Member to Company.

“Transfer” or “Transferred” means any direct or indirect transfer, sale, assignment, hypothecation, encumbrance, gift or other disposition, whether voluntary or by operation of law, of all or any part of a Company Interest or the profits, losses or distributions on account thereof.

ARTICLE IV

BUSINESS

The business of the Company shall be to engage in any business activities permitted under the Act, including, without limitation, to engage, directly or through Subsidiaries, in the acquisition, ownership, leasing, management and operation of the Properties, and to do all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of such purposes as authorized pursuant to the terms of this Agreement. In furtherance thereof, the Company may acquire, mortgage or otherwise encumber, manage, operate, lease, exchange, sell or otherwise dispose of or transfer any Property, and may engage in any and all activities and transactions related or incidental thereto.

ARTICLE V

MEMBERS

5.1 Member Meetings.

No annual or regular meetings of the Members are required to be held.

5.2 Representations and Warranties.

Each Member represents, warrants, acknowledges and agrees, as to itself, all of the matters listed on Exhibit F hereto.

10

ARTICLE VI

CAPITAL CONTRIBUTIONS

6.1 Initial TCG Member Contribution.

The Members previously entered into the Contribution Agreement. Pursuant to the Contribution Agreement each of the Members has agreed to make a contribution of specified property or funds to the Company upon the satisfaction of the Property Contribution Conditions. In order to induce PC Member to enter into this Agreement and the Contribution Agreement, TCG Member has deposited the Initial TCG Contribution in the Escrow (as defined in the Contribution Agreement) and such amount, including interest thereon has been delivered to the Company out of the Escrow on the date hereof.

6.2 Subsequent Capital Contributions.

(a) Property and Capital Contributions.

(i) Pursuant to the Contribution Agreement, on the date hereof PC Member shall contribute the Subsidiary LLC Interests to the Company on the terms set forth in the Contribution Agreement, with the Subsidiary LLC then being wholly owned by the Company and whereupon PC Member shall receive a credit to its Capital Account for such contribution in an amount equal to the Property Contribution Amount as stated in the Contribution Agreement. Upon the contribution of all of the Subsidiary LLC Interests to the Company as contemplated under the Contribution Agreement, PC Member shall be issued the Preferred Interest and Common Interests in the amounts set forth on Exhibit A hereto.

(ii) Pursuant to the Contribution Agreement, on the date hereof TCG Member shall contribute immediately available funds to the Company on the terms set forth in the Contribution Agreement (with credit given for the Initial TCG Contribution and any interest thereon that has been released to the Company from Escrow), whereupon TCG Member shall receive a credit to its Capital Account for such capital contribution in an amount equal to the TCG Member Contribution. Upon the contribution of all of the funds to the Company as contemplated under the Contribution Agreement, TCG Member shall be issued the Common Interests in the amount set forth on Exhibit A hereto.

(b) Additional Capital Needs. If at any time the Company determines that the Company, operating in accordance with the Company Strategic Plan, requires capital to pay operating or capital costs and expenses incurred by the Company with respect to the Properties or for the Company’s operating needs, the Company shall notify the Members and upon the Members’ mutual agreement to do so, the Members shall contribute such capital to the Company in cash in proportion to their respective Percentage Interests.

(c) Contribution Procedure. In the event the Members mutually determine to make a capital contribution to the Company pursuant to Section 6.2(b), the Company shall issue a notice to all of the Members (the “Cash Notice”) setting forth the amount of cash required from

11

each Member (i.e., such Member’s Percentage Interest of the aggregate funds required by the Company specified in such Cash Notice) (each Member’s “Requested Amount”). Within twenty (20) Business Days following the date of the Cash Notice, each Member shall pay to the Company the Member’s Requested Amount. If the Company fails to issue any Cash Notice authorized by the first sentence of this Section 6.2(c) which is required to meet Company needs, PC Member shall have the right to issue such Cash Notice. Any funds paid by the Members to the Company pursuant to this Section 6.2(c) shall be deemed to be additional capital contributions to the Company and additional Common Interests shall be issued to each Member who makes such a payment.

(d) Failure To Make Capital Contributions. In the event that any Member shall fail to contribute the Member’s Requested Amount under Section 6.2(c) above as of any Contribution Date (a “Non-Contributing Member”), then, as to each such default, the other Member (the “Contributing Member”) shall have the right, but not the obligation, (i) to advance to the Company as a capital contribution (a “Deficiency Contribution”) the portion of the Requested Amount not advanced by the Non-Contributing Member (the “Deficiency Amount”), as provided in subsection (A) below, (ii) to advance directly to the Company the Deficiency Amount as a recourse loan to the Non-Contributing Member, as provided in subsection (B) below or (iii) to withdraw the Contributing Member’s contribution pursuant to the Cash Notice. The remedies set forth in clauses (i), (ii) and (iii) shall be the exclusive remedies of such Contributing Member for a Non-Contributing Member’s failure to advance capital as required by Section 6.2(c), and the Non-Contributing Member’s failure shall not otherwise be treated as a default under this Agreement.

(A) In the event the Contributing Member elects to advance the Deficiency Amount to the Company as a capital contribution, then, effective as of the date of the advance, the Deficiency Amount so advanced together with all Requested Amounts previously advanced by the Contributing Member in connection with the Cash Notice shall be deemed capital contributions to the Company, and the Percentage Interests of each of the Members shall be recalculated as follows: each Member’s Percentage Interest shall be adjusted to a percentage obtained by dividing (i) such Member’s aggregate capital contributions relating to its Common Interests as of such date under this Agreement (taking into account any Deficiency Amount so contributed) by (ii) the total amount of the capital contributions relating to Common Interests as of such date by all Members under this Agreement, provided that for the purposes of such recalculations, the capital contributions of the Contributing Member on account of any Deficiency Amount under this Agreement shall be deemed to be 150% of the actual Deficiency Amount so contributed.

(B) If the Contributing Member elects to make a loan to the Non-Contributing Member as provided above, the Deficiency Amount so advanced shall be directly advanced to the Company on behalf of the Non-Contributing Member by the Contributing Member as a loan (a “Deficit Loan”) to the Non-Contributing Member due and payable upon demand and bearing interest at the rate equal to the lower of (1) ten (10) percentage points above the rate of interest publicly announced by JPMorgan Chase Bank, N.A. from time to time as its “Prime Rate” of interest (the “Prime Rate”) or (2) the highest interest rate allowable with respect to such loan under applicable law. The principal amount of such Deficit Loan shall be treated as a capital contribution to the Company by the Non-

12

Contributing Member pursuant to the Cash Notice. Notwithstanding the provisions of Articles VIII and XIV, until all such Deficit Loans are paid in full, all cash or property distributable to the Non-Contributing Member shall be delivered to the Contributing Member as a reduction of the amount of such Deficit Loans. Any payments on a Deficit Loan shall be credited first to any interest then due on the loan with the balance of such payments to be credited against the outstanding principal balance of such loan.

(C) Each Member does hereby grant a “security interest” (as such term is contemplated under the Uniform Commercial Code as adopted in Delaware) in its interest in Cash Flow and Capital Proceeds, to the other Member and to the Company, to secure prompt payment to the other Member of any Deficit Loans made to such Member by the other Member in accordance herewith. From time to time, each Member shall execute such financing statements and continuation statements as the other Member shall in its reasonable discretion deems necessary to perfect the foregoing “security interests.”

(e) Except as otherwise provided in this Article VI, no additional capital contributions or loans shall be made, nor shall they be required to be made, by any Member to the Company.

(f) All contributions contemplated in this Article VI are intended to be treated as tax-free contributions to the Company in exchange for interests therein for U.S. federal income tax purposes under Section 721 of the Code, the Company shall report the transactions consistently with such treatment, and neither the Company nor the Members shall take any position inconsistent with such treatment in any tax return, press release, any filing with any governmental authority, or otherwise.

6.3 [Reserved]

6.4 No Withdrawal, Interest or Restoration.

Except as otherwise expressly provided in this Agreement, (a) no part of the contributions of any Member to the capital of the Company may be withdrawn by such Member, (b) no Member shall be entitled to receive interest on such Member’s contributions to the capital of the Company, (c) no Member shall have the right to demand or receive property other than cash in return for such Member’s contribution to the Company, (d) no Member shall be entitled to contribute capital to the Company in excess of amounts required or permitted under Sections 6.1 and 6.2, and (e) no Member shall be obligated to restore any negative Capital Account balance.

6.5 No Rights in Third Parties.

The provisions of this Agreement are for the benefit of the Company, the Members and the Manager, and are not intended to be for the benefit of any Person to whom any debts, liabilities or obligations are owed, or who may otherwise have any claim against the Company, any Member or the Manager, and no creditor or other Person shall obtain any rights under such

13

provisions or shall be able to make any claim in respect of any debts, liabilities or obligations against the Company, any of the Members or the Manager solely by reason of such provisions.

ARTICLE VII

CAPITAL ACCOUNTS; ALLOCATION OF NET INCOME AND NET LOSS

7.1 Capital Accounts.

(a) There shall be established for each Member on the books of the Company a “Capital Account”, which shall be maintained and adjusted as provided in this Article VII. The Capital Account of a Member shall be credited with (i) the amount of all cash capital contributions by such Member to the Company, including without limitation any Deficiency Contributions, (ii) the Fair Market Value of any other property contributed by such Member to the Company (net of any liabilities secured by such property that the Company is considered to assume or take subject to under Section 752 of the Code) and (iii) the amount of any Net Income (or items of income and gain not included in Net Income, including items of gross income or gain) allocated to such Member pursuant to this Article VII, and decreased by (i) the amount of any Net Loss (or items of loss or deduction not included in Net Loss) allocated to such Member pursuant to this Article VII, (ii) the amount of any cash distributed to such Member pursuant to Article VIII and (iii) the Fair Market Value of any asset distributed in kind to such Member (net of all liabilities secured by such asset that such Member is considered to assume or take subject to under Section 752 of the Code). Upon contribution of the Subsidiary LLC Interests to the Company pursuant to the Contribution Agreement, PC Member’s Capital Account shall be credited with the Property Contribution Amount.

(b) Upon the occurrence of any event specified in Treasury Regulations Section 1.704-1(b)(2)(iv)(f), the Company may cause the Capital Accounts of the Members to be adjusted to reflect the Fair Market Value of the Company’s assets at such time in accordance with such Treasury Regulations.

(c) In the event that any Interest in the Company is Transferred, the transferee of such Interest shall succeed to the portion of the transferor’s Capital Account attributable to such Interest.

(d) If any Company asset is distributed in kind, whether in connection with the liquidation of the Company or otherwise, the Company shall be deemed to have realized income, gain or loss thereon in the same manner as if the Company had sold such asset for an amount equal to its Fair Market Value on the date of distribution.

7.2 Allocation of Net Income and Net Loss.

(a) For each fiscal year of the Company, after adjusting each Member’s Capital Account for all capital contributions and distributions during such fiscal year and all special allocations pursuant to Section 7.3 with respect to such fiscal year:

14

(i) All Net Income shall be allocated among the Members in the following order of priority:

(A) first, to the Members in proportion to, and to the extent of, any deficit balances in their respective Capital Accounts until all such Capital Accounts have been restored to zero;

(B) second, after giving effect to the allocations made pursuant to Section 7.2(a)(i)(A) and any special allocations pursuant to Section 7.3, to PC Member until its Capital Account balance is equal to the sum of (a) the Priority Amount (determined after any allocations to PC Member under Section 7.3), (b) any unpaid Base Preferred Return and (c) any unpaid Additional Preferred Return; and

(C) third, after giving effect to the allocations made pursuant to Sections 7.2(a)(i)(A) and 7.2(a)(i)(B), to the Members in accordance with their Percentage Interests.

(ii) All Net Loss shall be allocated among the Members in the following order of priority:

(A) first, to the Members in accordance with their Percentage Interests until TCG Member’s Capital Account is reduced to zero;

(B) second, after giving effect to the allocations made pursuant to Section 7.2(a)(ii)(A) and any special allocations pursuant to Section 7.3, to PC Member until its Capital Account balance is reduced to zero; and

(C) third, after giving effect to the allocations made pursuant to Sections 7.2(a)(ii)(A) and 7.2(a)(ii)(B), to the Members in accordance with their Percentage Interests.

(b) Each allocation in this Article VII shall consist of a proportionate amount of the ordinary income and capital gains of the Company for the year, provided, that, in making allocations of depreciation recapture under Section 1245 or 1250 of the Code, unrecaptured Section 1250 gain under Section 1(h) of the Code, or similar items, principles consistent with those of Treasury Regulations Section 1.1245-1(e) shall be followed such that amounts treated as ordinary income shall be allocated first to the Member that was allocated the related ordinary deduction.

7.3 Special Allocations.

(a) Special Allocations For Plum Creek Loan. For each fiscal year of the Company, the Plum Creek Loan Gain or Loss shall be specially allocated as follows:

(i) Eighty-five percent (85%) to PC Member; and

(ii) Fifteen percent (15%) to TCG Member.

15

(b) Special Allocations For Plum Creek Loan Collateral. For each fiscal year of the Company, the Plum Creek Loan Collateral Gain or Loss shall be specially allocated as follows:

(i) first, to the extent of losses previously allocated pursuant to Section 7.3(a), Plum Creek Loan Collateral Gain shall be allocated eighty-five percent (85%) to PC Member and fifteen percent (15%) to TCG Member;

(ii) second, any remaining Plum Creek Loan Collateral Gain shall be allocated to the Members in accordance with their Percentage Interests; and

(iii) third, Plum Creek Loan Collateral Loss shall be allocated eighty-five percent (85%) to PC Member and fifteen percent (15%) to TCG Member.

(c) Regulatory Allocations. Special allocations of specific items of income, gain, loss or deduction may be required for any taxable year as follows:

(i) The Company shall allocate items of Company income and gain among the Members at such times and in such amounts as necessary to satisfy the minimum gain chargeback requirements of Treasury Regulations Sections 1.704-2(f) and 1.704-2(i) (4).

(ii) Any deductions attributable to any “partner non-recourse debt” (as defined in Treasury Regulations Section 1.704-2(b)(4)) shall be allocated among the Members that bear the economic risk of loss for such liability in accordance with the ratios in which such Members share such economic risk of loss and in a manner consistent with the requirements of Treasury Regulations Sections 1.704-2(c), 1.704-2(i) (2) and 1.704-2 (j) (1).

(iii) The Company shall specially allocate items of income and gain when and to the extent required to eliminate any deficit balance caused by any event, including the events described in Treasury Regulations Section 1.704-1(b) (2) (ii) (d), in a manner that satisfies the “qualified income offset” requirement within the meaning of Treasury Regulations Section 1.704-1(b) (2) (ii) (d).

(iv) Notwithstanding anything to the contrary herein, losses shall not be allocated in a manner that would cause any Member to have a Capital Account deficit at the end of any fiscal year. All losses in excess of the foregoing limit shall be allocated to the other Members in proportion to the amounts that can be allocated to them without violating the restriction contained in this Section 7.3(c)(iv).

(d) The allocations set forth in paragraphs 7.3(c)(iii) and (iv) are intended to comply with the requirements of Treasury Regulations Sections 1.704-1(b) and 1.704-2 and shall be interpreted consistently therewith. It is the intent of the Members that, to the extent possible, all allocations made pursuant to Sections 7.3(c)(iii) and (iv), to the extent such allocations are inconsistent with the allocations that would be made under Sections 7.2 and 7.3(a) if Sections 7.3(c)(iii) and (iv) were not contained in this Agreement, be offset with subsequent special

16

allocations of other items of Company income, gain, loss and deduction to the maximum extent possible consistent with the requirements of Sections 7.3(c)(iii) and (iv).

7.4 Section 704(b) Allocations.

The allocation provisions contained in this Article VII are intended to result in allocations that are consistent with Section 704(b) of the Code and the Treasury Regulations promulgated thereunder, and shall be interpreted and applied in a manner consistent therewith. The Members further agree to make such amendments or changes to this Agreement as are reasonably requested by any Member in good faith and consistent with the understanding of the parties, to effectuate such intent.

7.5 Section 704(c) Allocations.

Any item of income, gain (including gain recognized pursuant to Section 631(b) of the Code), loss, and deduction with respect to property other than cash contributed by a Member that is required to be allocated for income tax purposes under Section 704(c) of the Code so as to take into account the variation between the tax basis of such property and its Fair Market Value at the time of its contribution shall be allocated to the Members solely for income tax purposes under the “traditional method” as described in Treasury Regulations Section 1.704-3(b). Similarly, if any property of the Company is reflected in the Capital Accounts of the Members and on the books of the Company at a Book Value that differs from the adjusted tax basis of such property, the Company’s allocations of tax items shall be appropriately made pursuant to the Treasury Regulations using Section 704(c) principles so as to take account of the variation between the adjusted tax basis of the applicable property and its Book Value. The initial Fair Market Value of the assets owned by the Subsidiary LLC, in the aggregate, shall be equal to the Property Contribution Amount.

ARTICLE VIII

DISTRIBUTIONS TO MEMBERS

8.1 Distributions of Cash Flow and Capital Proceeds.

(a) Cash Flow. Cash Flow with respect to each Semi-Annual Period shall be distributed by the Company to the Members (unless otherwise mutually agreed by the Members) on the last day of the applicable Semi-Annual Period except that to the extent the Company receives an Advance Shortfall Amount within five (5) days after the last day of the applicable Semi-Annual Period such amount shall be distributed on the date received, commencing with the Semi-Annual Period starting upon the Company’s formation, in the following order:

(i) first, to the holder of the Preferred Interest, the Base Preferred Return accrued during such Semi-Annual Period and any accrued but unpaid Base Preferred Return from previous Semi-Annual Periods;

17

(ii) second, to the holder of the Preferred Interest, an amount equal to the Additional Preferred Return, if any, calculated as of the last day of such Semi-Annual Period; and

(iii) third, to the Members, in proportion to their respective Percentage Interests, after giving effect to Section 8.4(e).

(b) Capital Proceeds Distributed Other than in Liquidation. Capital Proceeds (other than in connection with the liquidation of the Company or to the extent reinvested by the Company pursuant to transactions qualifying under Section 1031 or 1033 of the Code) shall be distributed by the Company as promptly as reasonably feasible (but in any event within ten (10) business days of receipt thereof by the Company, unless a longer period is reasonably agreed to by the Members) in the following order of priority:

(i) first, to the holder of the Preferred Interest, until the Priority Amount (determined after reduction for any item of loss specially allocated to PC Member under Section 7.3) is reduced to zero;

(ii) second, to the extent such amount has not been paid pursuant to Section 8.1(a)(i), to the holder of the Preferred Interest, the Base Preferred Return accrued during such Semi-Annual Period and any accrued but unpaid Base Preferred Return from previous Semi-Annual Periods;

(iii) third, to the extent such amount has not been paid pursuant to Section 8.1(a)(ii), to the holder of the Preferred Interest, an amount equal to the Additional Preferred Return, if any, calculated as of the last day of such Semi-Annual Period; and

(iv) fourth, to the Members, in accordance with their then respective Percentage Interests.

(c) Liquidating Distributions. In the case of a liquidation of the Company, the Company’s assets shall be distributed as set forth in Section 14.2.

8.2 Repayment of Deficit Loans; Limitation on Distributions of Capital Proceeds.

(a) If any Deficit Loan is outstanding at the time of any distribution of Capital Proceeds, all Capital Proceeds otherwise distributable to the Non-Contributing Member pursuant to the foregoing shall be delivered to the Contributing Member in payment of such Deficit Loan (and applied first to accrued interest and then to principal), and shall be deemed to be a distribution to the Non-Contributing Member for all purposes under this Agreement.

(b) Notwithstanding any provision of this Agreement to the contrary, the Members shall not make any distributions prohibited by the terms of the Act.

8.3 Taxes Paid or Withheld.

Any and all amounts withheld pursuant to the Code or any provision of any state or local tax law with respect to a Member shall be treated as amounts distributed to such Member

18

pursuant to Article VIII for all purposes of this Agreement. If the amount of the tax required to be withheld or paid exceeds the amount otherwise properly distributable to a Member, such Member shall advance to the Company the amount of such excess before the due date for payment of such tax, and such Member shall be responsible for any late payment penalties and interest if it fails to timely advance the amount of such excess tax.

8.4 Advances.

(a) Each Member may from time to time request an advance (each an “Advance”) of a specified amount to be distributed to such Member pursuant to Section 8.1(a)(iii) for the current Semi-Annual Period (a “Requesting Member”). The Company shall make such Advances to a Requesting Member so long as (1) the Company determines that based on the Cash Flow projections for the Company (which shall be consistent with the Company Strategic Plan and the applicable annual budget adopted by the Manager) the making of such Advance is not reasonably expected to prevent the Company from making any distribution required to be made, to the extent of available Cash Flow, pursuant to Section 8.1(a) on the last day of such Semi-Annual Period (the “Liquidity Representation”), (2) after giving effect to such Advance, the aggregate amount of all Advances outstanding during such Quarterly Period does not exceed $5 million (the “Quarterly Cap”), and (3) after giving effect to such Advance, the aggregate amount of all Advances outstanding during such Semi-Annual Period does not exceed $10 million (the “Semi-Annual Cap” and together with the Liquidity Representation and the Quarterly Cap, the “Advance Requirements”). A Requesting Member may seek approval of the other Member(s) to increase the Quarterly Cap or Semi-Annual Cap for a Semi-Annual Period, which consent shall not be unreasonably withheld.

(b) Upon receiving a request for an Advance from a Requesting Member, if the Company determines that each of the Advance Requirements would be satisfied after giving effect to such requested Advance, then the Company shall issue a notice to each other Member (the “Advance Notice”) which shall: (1) include a Liquidity Representation from the Company to such Member, and (2) state the amount of the Advance requested by the Requesting Member and the amount available for Advances under each of the Quarterly Cap and the Semi-Annual Cap. Each Member receiving an Advance Notice shall have 7 days to elect to participate in the Advance covered by the Advance Notice, and upon providing the Company with written notice of such election shall become a Requesting Member. To the extent the aggregate amount of Advances requested would not satisfy the Advance Requirements, the Company shall reduce the Advances made to the Requesting Members pro rata based on their respective Percentage Interests such that the Advance Requirements would be satisfied; provided that if any Member has requested an amount less than its pro rata portion then any excess capacity shall be allocated to the other Member(s).

(c) Notwithstanding 8.4(a) and 8.4(b), if any Base Preferred Return is not distributed when due, then from and thereafter the Company shall be prohibited from making, and no Member shall have the right to receive, any Advances unless (i) the sole reason any Base Preferred Return is not distributed when due is that a Member fails to return to the Company any Advance Shortfall Amount on or before the last day of the Semi-Annual Period, and (ii) such Member returns to the Company all Advance Shortfall Amounts together with interest thereon at the rate of 10.875% per annum within 5 days after the last day of such Semi-Annual Period and has not failed to return any Advance Shortfall Amount to the Company within 5 days after the last day of a Semi-Annual Period more than twice previously.

19

(d) To the extent that any amount of Advances would exceed an amount equal to the related Member’s Percentage Interest of the remainder of (a) the Cash Flow for the Semi-Annual Period minus (b) the Base Preferred Return distributable on that date in respect of the Preferred Interest, then the Company shall notify each Member with an outstanding Advance of such deficiency (a “Deficiency Notice”) at least 10 business days before the last day of such Semi-Annual Period. The Deficiency Notice shall set forth the aggregate amount of such shortfall (the “Advance Shortfall Amount”), which must be returned to the Company on or before the last day of the Semi-Annual Period. Any Member that fails to return such Advance Shortfall Amount to the Company by the last day of the Semi-Annual Period shall not receive further distributions under this Agreement until such time as all such Advance Shortfall Amounts (with interest thereon) have been returned to the Company and future distributions otherwise distributable to such Member shall be applied to reduce such Advance Shortfall Amounts (with interest thereon) owed to the Company in accordance with Section 8.4(e). Advance Shortfall Amounts outstanding pursuant to this clause (d) shall accrue interest at the rate of 10.875% per annum, from the date required to be returned pursuant to the related Deficiency Notice through the date actually returned to the Company or through the date such amounts are deemed returned pursuant to Section 8.4(e).

(e) Notwithstanding anything to the contrary in this Agreement, any distributions to be made to any Member pursuant to this Agreement shall be first applied to return any outstanding Advances (including any accrued and unpaid interest thereon), previously made to such Member to the extent such Advances and any interest thereon have not otherwise been previously returned to the Company pursuant to Section 8.4(d), this Section 8.4(e) or otherwise.

ARTICLE IX

MANAGEMENT OF THE COMPANY

9.1 Rights and Powers.

(a) General. TCG / Southern Diversified Manager, LLC shall serve as the initial Manager. Any action or inaction by the Manager under this Agreement shall constitute the action or inaction of the Company and shall serve to bind the Company. If the Company breaches a provision under this Agreement, the Members shall be entitled to pursue a claim against the Company and seek damages from the Company for such breach.

(i) The Manager’s Rights and Powers. Subject to the terms and provisions of this Agreement, the Manager shall have the power and authority to act in the name of the Company and appoint such officers and agents of the Company as the Manager may deem appropriate and to delegate to such officers and agents such powers, functions, and duties as the Manager may deem desirable or appropriate, including without limitation, the power and authority to act in the name of the Company. Without limiting the foregoing and subject to the foregoing, the Manager shall be entitled to cause the Company to exercise rights with respect to the management and harvesting of any Properties owned, directly or indirectly, by the Company and shall use commercially reasonable efforts to carry out the business of the Company. The Company shall execute the Company Strategic Plan in accordance with commercially reasonable management practices applicable to the Properties. The Manager shall cause the Company, subject to

20

the limitations on the Manager’s authority set forth in this Agreement, to take all actions and do all things required to be done by the Company pursuant to the terms of this Agreement. In connection therewith and subject to Section 9.11 and subject to requirements of the Code for maintaining REIT status for any parent entity of any Member, the Manager may act on behalf of the Company and shall be permitted to cause the Company to take any legal action on behalf of the Company unless otherwise prohibited by this Agreement from doing so.

(b) Tax Matters Member. TCG Member is hereby designated as the “tax matters partner” in accordance with Section 6231(a)(7) of the Code (and shall act in any similar capacity under applicable state or local tax law) and, in connection therewith and in addition to all other powers given thereunder, shall have all other powers needed to fully perform hereunder. All expenses of the tax matters partner shall be borne by the Company or reimbursed to the tax matters partner by the Company. TCG Member shall cause the Company to provide prompt notice to PC Member of, and provide PC Member an opportunity to participate in, any audit or other tax action or determination reasonably expected to have a material effect on PC Member or any of its Affiliates.

(c) REIT Matters.

(i) The Company acknowledges that an Affiliate of PC Member intends to qualify at all times as a REIT, and that its ability to so qualify will depend in part upon the nature of the assets and operations of the Company and any Subsidiary. Accordingly, for so long as PC Member holds an interest in the Company, the Company at all times shall exercise diligent and commercially reasonable efforts to conduct the business of the Company and any Subsidiary in a manner that will enable PC Member and its Affiliates to satisfy all the requirements for REIT status under Sections 856 through 860 of the Code to the extent possible. The parties acknowledge that the Company shall rely on guidance from Morrison & Foerster LLP, acting as tax advisor to TCG Member and the Company. Morrison & Foerster LLP shall cooperate with the tax advisors of PC Member and its Affiliates in fulfilling its duties pursuant to this Section 9.1(c)(i). Without limiting the generality of the foregoing, the Company shall cooperate with PC Member (e.g., by jointly structuring all forms of contracts used to sell timber and sharing advice provided by the Company’s tax advisors) to ensure that the Company’s operations are conducted in accordance with the following limitations:

(1) Neither the Company nor any Subsidiary shall own more than ten percent (10%) of the total voting power or more than ten percent (10%) of the total value of the outstanding securities of any one issuer (as determined for purposes of Section 856(c)(4)(B) of the Code);

(2) At no time may the aggregate value of all securities owned by the Company and all Subsidiaries in entities that have elected to be treated as “taxable REIT subsidiaries” exceed the percentage of the total value of the assets of the Company’s and all Subsidiaries set forth in Section 856(c)(4)(B)(ii);

21

(3) Neither the Company nor any Subsidiary, nor any Member (solely in its capacity as a Member of the Company) shall take any action (or fail to take any action permitted under this Agreement) that would otherwise cause the Company’s gross income to consist of more than five percent (5%) of income not described in Section 856(c)(2) of the Code or more than twenty-five percent (25%) of income not described in Section 856(c)(3) of the Code, or cause more than twenty-five percent (25%) of the Company’s assets to consist of assets other than cash and “real estate assets” within the meaning of Section 856(c)(5)(B) of the Code; and

(4) The Company and each Subsidiary (other than a taxable REIT Subsidiary) shall not engage in any “prohibited transactions” within the meaning of Section 857(b)(6)(B)(iii) of the Code.

(ii) Notwithstanding the foregoing:

(1) The Members acknowledge and agree that no action of the Manager or the Company shall be in violation of Section 9.1(c)(i) if such action is (A) pursuant to an approval from PC Member in accordance with Section 9.11 or (B) otherwise approved in writing by PC Member. Furthermore, neither the Company nor the Manager shall have any liability to PC Member for actions taken in accordance with the guidance and/or instructions provided to the Company or the Manager by PC Member and/or any advisors engaged by the Company with PC Member’s consent to assist in the Company’s compliance with REIT requirements provided that Company (or the Manager on behalf of the Company) timely communicates and consults with PC Member concerning any such guidance and/or instructions provided by any such advisors prior to taking any action in connection with or reliance upon any such guidance and/or instructions; and

(2) In the event of any dispute between the Company, the Manager, TCG Member or advisors engaged by the Company on the one hand and PC Member on the other hand with respect to any of the matters provided for under this Section 9.1(c) or otherwise determined by PC Member as necessary for PC Member or any of its Affiliates to maintain REIT status, the determination of PC Member shall be binding.

9.2 Reliance by Third Parties.

Any contract, instrument or act of the Manager on behalf of the Company shall be conclusive evidence in favor of any third party dealing with the Company that the Manager has the authority, power and right to execute and deliver such contract or instrument and to take such action on behalf of the Company. This Section 9.2 shall not be deemed to limit the liabilities and obligations of the Manager as set forth in this Agreement.

9.3 Authority.

Unless specifically authorized hereunder or by TCG Member and the Manager, no Member, in its capacity as such, shall be an agent of the Company or have any right, power or authority to act for or to bind the Company or to undertake or assume any obligation or responsibility of the Company, the Manager or of any other Member.

22

9.4 Reimbursements.

The Manager shall not be entitled to receive any compensation or reimbursement for the performance of its duties as Manager under this Agreement. The Company shall enter into the Property Management Agreement with the Property Manager, and the Company shall (a) supervise the performance of the Property Manager under the Property Management Agreement, (b) enforce the Company’s rights under the Property Management Agreement and (c) reimburse the Property Manager’s expenses in connection with the performance of the Property Manager’s duties under the Property Management Agreement in accordance with the terms of the Property Management Agreement.

9.5 Strategic and Business Plans.

Attached as Exhibit C hereto is a ten (10) year harvesting plan, which, among other things, will identify harvest levels for the Properties (subject to a permitted variation of twenty-five percent (25%) from total harvest volumes for all harvest types, either higher or lower in any given year, with any variation in excess of 25% being deemed a “material” deviation for purposes of this Agreement), which shall be referred to as the “Company Strategic Plan.” The Company shall be bound by, implement and comply with the Company Strategic Plan, provided that the Company shall be permitted to deviate from the same only to the extent any such action is not materially inconsistent with the Company Strategic Plan. Any material changes to or material deviations from the Company Strategic Plan by the Company shall require PC Member’s consent (which consent will not be unreasonably withheld by PC Member).

9.6 Commitment of Manager; Member Freedom of Action.

(a) Devotion of Time. The Manager shall devote such time and attention to the Company business as shall be appropriate to manage and supervise the Company business properly and efficiently, and shall take all such actions as, in its reasonable judgment, shall be reasonably appropriate for the proper management and supervision of the business of the Company and to carry out its obligations under this Agreement.

(b) Freedom of Action. Either Member may engage in other businesses, including businesses identical or similar to or competitive with the Company’s business and may engage in or possess any interest, directly or indirectly, in any other business venture of any nature or description independently or with others. Membership in the Company and the assumption by each of the Members of any duties hereunder shall be without prejudice to the Members’ rights (or the rights of their Affiliates) to have such other interests and activities and to receive and enjoy profits or compensation therefrom. Neither the Company nor the other Members shall have any right by virtue of this Agreement in and to such venture or the income or profits derived therefrom.

(c) Investment Opportunities. The Members shall not be obligated to present any investment opportunity to the Company, even if the opportunity is of a character consistent with the Company’s other activities and interests. Each Member shall have the right to take for its own account, or to recommend to others, any such investment opportunity.

23

9.7 Sales of Company Assets.

(a) Property and Timber. Except as provided in this Section 9.7 and in Section 9.8, in no event shall the Company sell, transfer or distribute (directly or indirectly) any Property contributed to the Company (directly or indirectly) by PC Member pursuant to the Contribution Agreement at any time during the first ten (10) years after the date of the Property and Capital Contributions; provided, however, that the Company may sell, transfer, or otherwise dispose of Property contributed to the Company pursuant to the Contribution Agreement:

(1) pursuant to transactions qualifying under Section 1031 or 1033 of the Code, upon the completion of which the Company acquires timberlands;

(2) 90,000 acres, in the aggregate, during the period beginning January 1, 2012 and ending ten (10) years after the date of the Property and Capital Contributions, with no more than 45,000 acres sold in any calendar year; or

(3) with the prior consent of PC Member, which consent may be granted or withheld in PC Member’s sole and absolute discretion.

In addition, all dispositions of timber shall be pursuant to transactions qualifying under Section 631(b) of the Code and none of those dispositions shall, before January 1, 2012, be an outright sale pursuant to a timber deed without the prior consent of PC Member, which consent may be granted or withheld in PC Member’s sole and absolute discretion. The contracts for the sale of timber under Section 631(b) of the Code shall be mutually agreed upon by TCG Member and PC Member so that such contracts are treated for purposes of Section 631(b) of the Code as contracts in which the Company retains an economic interest in the timber substantially in accordance with the form of the Timber Sale Agreement, attached hereto as Exhibit B.

(b) Plum Creek Loan and Plum Creek Loan Collateral The Company shall not sell, transfer or distribute (directly or indirectly) the Plum Creek Loan or the Plum Creek Loan Collateral at any time during the first ten (10) years after the date of the Property and Capital Contributions without the prior consent of PC Member, which consent may be granted or withheld in PC Member’s sole and absolute discretion, provided, however, that (i) upon any Event of Default under Section 7.01(a)(ii) of the Credit Agreement, or six (6) months following any other Event of Default under the Credit Agreement, the Company may sell, transfer or otherwise dispose of the Plum Creek Loan, and (ii) upon any Event of Default under the Credit Agreement, the Company may immediately initiate foreclosure proceedings on the Plum Creek Loan Collateral in accordance with the terms of the Credit Agreement and the Pledge Agreement (as defined in the Credit Agreement), and may either sell or acquire the Plum Creek Loan Collateral in such foreclosure proceedings. If the Company becomes the owner of the Plum Creek Loan Collateral by virtue of a foreclosure of the Plum Creek Loan, the Company may distribute the Plum Creek Loan Collateral as Capital Proceeds under Section 8.1(b), but may not otherwise sell or dispose of the Plum Creek Loan Collateral without PC Member’s consent, which consent may be granted or withheld in PC Member’s sole and absolute discretion, until the date that is ten (10) years after the date of the Property and Capital Contributions.

24

9.8 Redemption Rights.

(a) At any time after seven (7) years after the date of the Property and Capital Contributions but before the date that is seven and one-half (7 ¹/2) years after the date of the Property and Capital Contributions, TCG Member shall have the right to cause its Common Interest to be redeemed by the Company in exchange for a distribution with a Fair Market Value equal to TCG Member’s Capital Account as adjusted to reflect the Fair Market Value of the Company’s assets at such time in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(f). Such distribution shall consist of Properties with a Fair Market Value equal to TCG Member’s restated Capital Account. To the extent the Fair Market Value of the Properties exceeds TCG Member’s restated Capital Account, TCG Member shall purchase the excess Properties from the Company at their then Fair Market Value or receive such excess Properties subject to liabilities in an amount equal to the Fair Market Value of such excess Properties; to the extent the Fair Market Value of the Company’s Properties is less than TCG Member’s restated Capital Account, the Company shall distribute cash or other Company assets to TCG Member.

(b) PC Member shall have the right to cause the Company to redeem TCG Member’s Common Interest as described above at any time after nine (9) years after the date of the Property and Capital Contributions but before the date that is nine and one-half (9  ¹/2) years after the date of the Property and Capital Contributions.

(c) Either Member wishing to invoke the redemption provisions in this Section 9.8 shall provide written notice to the Company and the Members of such intent (a “Redemption Notice”). The Redemption Notice shall indicate the proposed closing date for the redemption, which closing date shall be no sooner than thirty (30) days after the date of the Redemption Notice and not more than sixty (60) days after the date of the Redemption Notice; provided that the closing may be extended as necessary to complete the determination of the Fair Market Value. A Redemption Notice shall be valid and binding upon the Members if given during the applicable time as provided in Section 9.8(a) or (b), regardless of whether the closing date for such redemption occurs during such time period.

9.9 Rights and Powers.

The Company, in conducting its business affairs, shall have all of the rights and powers of a limited liability company as provided in the Act and as otherwise provided by law.

9.10 Limitations on Members.

Except as otherwise expressly set forth herein, no Member shall, in its capacity as a Member, have the right (a) to cause a dissolution and winding up of the Company by decree of court or (b) to have its capital contribution returned, other than the rights to require a redemption of TCG Member’s Common Interest set forth in Section 9.8. No Member nor any legal representative, successor, heir or assignee of a Member shall have the right to partition the Company property or any part thereof or interest therein, or to file a complaint or institute any proceeding at law or in equity to partition the Company property or any part thereof or interest therein. Each Member, for such Member and such Member’s legal representatives, heirs, successors and assigns, hereby waives any such rights. The Members intend that, during the term of

25

this Agreement, the rights of the Members and their successors in interest, as among themselves, shall be governed solely by the terms of this Agreement and by the Act.

9.11 PC Member Approval Rights.

Notwithstanding anything contained in this Agreement to the contrary, the following acts by or on behalf of the Company shall require approval of PC Member:

(i) effecting any acquisition of any real property, other than the Properties (including through acquisition of option rights or rights of first refusal/offer, or the exercise of rights of first refusal/offer, or the making of any option payment or deposit under a purchase agreement, or the removal of conditions to closing under a purchase or option agreement) and other than (x) in connection with transactions qualifying under Section 1031 or 1033 of the Code, upon the completion of which the Company acquires timberlands, (y) acquisitions the aggregate amount of which from the date hereof is less than $5,000,000 or (z) in connection with the incurrence of permitted debt by the Company pursuant to Section 9.11(iii)(z);

(ii) the sale, transfer or issuance of any existing or additional Interests in the Company or interests in any Subsidiary, the admission of any member to the Company (other than as permitted pursuant to the terms of this Agreement) or any Subsidiary, or the pledge, hypothecation, or transfer of TCG Member’s Interest in the Company (except as permitted pursuant to the terms of this Agreement);

(iii) incurring any indebtedness of the Company or a Subsidiary or causing the Company or a Subsidiary to become liable as an endorser, guarantor, surety or otherwise for any debt obligation or undertaking of any other Person, except for (x) Company or Subsidiary endorsements for deposit or collection of checks, drafts and similar instruments received by the Company or the Subsidiary in the ordinary course of business or (y) indebtedness incurred by the Company in the ordinary course of business to provide working capital in an aggregate amount not to exceed $20 million or (z) indebtedness of the Company incurred in connection with the acquisition of timberlands so long as, (A) such indebtedness is not incurred within the first two (2) years following the date of this Agreement and (B) after giving effect to the incurrence of such indebtedness, the aggregate indebtedness of the Company and the Subsidiaries (including any indebtedness described in clause (y)) does not exceed 33 1/3% of the Fair Market Value of the Properties owned by the Company and the Subsidiaries (in the aggregate and after giving effect to the proposed acquisition of any Properties by the Company in connection with incurring such indebtedness), provided that any indebtedness incurred under this clause (z) shall be structured in such a way that, upon any default thereon, the lender must pursue remedies against any Properties then owned by the Company before pursuing any remedies against any other assets of the Company;

(iv) causing or permitting the Company or any Subsidiary to grant any lien, mortgage, pledge or hypothecate Company or any Subsidiary assets to secure any indebtedness for borrowed money of the Company or Subsidiary or prepaying any

26

indebtedness of the Company or Subsidiary, except for any lien or mortgage granted to secure any indebtedness permitted by Section 9.11(iii)(z);

(v) lending of money (other than the Plum Creek Loan) or guaranteeing the debt or other obligations of the Company or any other person or entity;

(vi) merger or consolidation with, or acquisition of, any equity interest in, any corporation, limited liability company, partnership, association or other business organization;

(vii) the filing of a petition under the Bankruptcy Code by the Company or consenting to any involuntary filing against the Company under the Bankruptcy Code or taking any other action which would effect a Company Bankruptcy;

(viii) liquidation of the Company or of any Member’s Interest therein (other than in accordance with this Agreement);

(ix) formation or acquisition of Subsidiaries of the Company;

(x) entering into, amending or modifying material agreements (including any material amendment or modification of the Property Management Agreement or the Timber Sale Agreement) or incurring any material liabilities not contemplated in this Agreement and not in the ordinary course of business;

(xi) the commencement of any litigation by the Company or the settlement of any litigation not fully covered by insurance in effect for the Company against the Company or any Person for which the Company is liable for indemnification involving a claim or settlement, as the case may be, of $250,000 or more in the aggregate with respect to all such claims or settlements (excluding any litigation to the extent it constitutes the ordinary course eviction or collection action against any tenant or contractor in connection with any Property);

(xii) engagement of any Affiliates for the provision of services to the Company unless the fees associated with such engagement are on competitive terms and are at competitive rates commensurate with what would be paid to a comparably qualified unaffiliated third party providing comparable services in the geographical area in which the subject Property is located or the services are rendered;

(xiii) the making or revoking of any tax election or decision affecting the tax treatment of any Member in connection with its participation in the Company or any Subsidiary, including, but not limited to, (i) the changing of the Company’s or any Subsidiary’s fiscal year, (ii) changing the “tax matters partner” or the obligations thereof, or (iii) making an election to classify the Company or any Subsidiary as an association taxable as a corporation;

(xiv) use of the “Plum Creek” name on any document or press release to be issued by the Company or TCG Member and disseminated beyond the Members and their counsel and other consultants and advisors;

27

(xv) issuance or approval of any media or public affairs communications, except for communications issued in accordance with Section 17.17, routine communications made in the ordinary course of business at a local or community level and any “no comment” statements issued in response to media inquiries. For clarity, routine communications not requiring consent shall not include (A) any communications made to or by any publication with a national or international distribution, including any internet-based publication, or (B) any communication that in the reasonable judgment of the Company could cause a violation of any disclosure rules to which any Affiliate of PC Member is subject;

(xvi) any amendment or modifications to this Agreement;

(xvii) any act in contravention of this Agreement; and/or

(xviii) entering into any agreement or understanding with respect to any of the foregoing.

9.12 Merger of Subsidiary LLC; Plum Creek Loan.

(a) Immediately upon receipt by the Company of the PC Member Contribution and the TCG Member Contribution, the Company shall:

(i) cause the merger of the Subsidiary LLC with and into the Company, with the Company to be the surviving entity (the Manager shall effectuate such merger by filing a Certificate of Merger in substantially the form attached hereto as Exhibit H); and

(ii) make the Plum Creek Loan.

9.13 PC Member Termination Right.

(a) Termination. PC Member shall appoint one individual and TCG Member shall appoint up to four (4) individuals to a committee, formed as of the date of this Agreement, for the purposes of determining, pursuant to the terms hereof, if an Event of Default (as defined below) by Manager has occurred hereunder (the “Manager Review Committee”). The initial PC Member appointee to the Manager Review Committee shall be Karl Watt and the initial TCG Member appointees to the Manager Review Committee shall be Farouki Majeed and Albert Grijalva. PC Member and TCG Member may each remove their respective appointee(s) from the Manager Review Committee and appoint a replacement member in their discretion upon written notice to the other Member and the other individuals on the Manager Review Committee from time to time. In the case of TCG Member, if, at any time, TCG Member has less than four (4) individuals appointed to the Manager Review Committee, TCG Member may appoint additional members to fill its vacant positions on the Manager Review Committee (up to said four (4) members, the aggregate) in its discretion upon written notice to PC Member; provided, however, that notwithstanding how many members of the Manager Review Committee TCG Member has appointed, all of the TCG Member’s members of the Manager Review Committee shall at all times have an aggregate of two (2) votes on the Manager Review Committee and PC Member’s member of the Manager Review Committee shall at all times have one (1) vote on the

28

Manager Review Committee. If any member of the Manager Review Committee believes an Event of Default shall have occurred then it shall provide written notice (which may be by email) to the other individuals serving on the Manager Review Committee of such Event of Default and call for a meeting (which may be telephonic) to be held not less than five (5) Business Days after delivery of such notice (provided that such period may be shorter in the event of an emergency) to the Manager Review Committee to determine whether an Event of Default has occurred and whether the Manager should be removed and replaced. Two (2) out of the total of three (3) votes of the Manager Review Committee shall be required to declare an Event of Default; provided that any individual serving on the Manager Review Committee that does not attend or designate a proxy to attend the meeting shall be deemed to consent to declaring the Event of Default. Notwithstanding anything in this Agreement to the contrary, in the event of the replacement of the terminated Manager as the Manager hereunder by the Manager Review Committee, the terminated Manager shall no longer possess any of the rights or duties of the Manager (including, without limitation, the rights conferred by Section 9.1) and such rights and duties shall be then deemed transferred to such other party designated as the successor Manager by the Manager Review Committee. If the Manager is terminated and replaced, any agreements entered into by Company and its Subsidiaries and the terminated Manager or its Affiliates for services to the Company or its Subsidiaries shall automatically be terminated.

(b) Event of Default. For the purposes of this Section 9.13, an “Event of Default” shall refer to an event (other than a failure to contribute capital to the Company) which has been determined by the Manager Review Committee to constitute one or more of the following:

(i) any fraud, gross negligence, material misrepresentation, material misstatement of financial information or reporting, misapplication of material funds and/or willful misconduct by Manager;

(ii) Manager intentionally causing or facilitating damage or destruction of any material portion of the Properties (other than usual and customary harvesting activity or reasonable operational activities such as actions taken to suppress fires, floods or erosion or otherwise protect, or obtain access to, portions of the Properties in accordance with accepted industry standards);

(iii) the failure to perform material obligations under this Agreement (including, but not limited to, failure to maintain insurance as required pursuant to the terms of this Agreement and/or failure to own, manage and operate the Properties in accordance with reasonable management practices, but excluding any failure to fund future capital contributions the remedies for which will be as described in Section 6.2(d) above);

(iv) a voluntary Bankruptcy filing or an involuntary Bankruptcy filing with respect to TCG Member or the Company (if caused without obtaining the consent of PC Member) that is not vacated within 60 days;

(v) any Transfer or pledge of any Interests in the Company or any transfer of assets of the Company (including any or all of the Properties) in contravention of the terms of this Agreement; and/or

29

(vi) any intentional breach of the material terms of this Agreement which constitutes or rises to the level of a breach of fiduciary duty to the Company by TCG Member or the Manager.

(c) Notice and Opportunity to Cure. No event or action specified in Section 9.13(b) (other than fraud, gross negligence, material misrepresentation, any intentional and material misstatement of financial information or reporting and/or willful misconduct by Manager) shall constitute an Event of Default unless the Manager Review Committee has provided the Manager with notice of such event or action and Manager has failed to cure such event or action within thirty (30) calendar days after such notice. If any such event or action was taken by, or relates to, an employee or independent contractor of the Manager or any Affiliate thereof, such event or action will be deemed to have been cured if (1) such employee or independent contractor has been removed or has resigned from all positions held with the Manager or its Affiliates that involve or relate to the business of the Company, (2) the financial consequences of such action have been cured to the reasonable satisfaction of the Company, and (3) the employee or independent contractor who has been removed or has resigned shall have been replaced, to the extent necessary to enable the Manager to continue to perform all material functions contemplated by this Agreement.

9.14 Employees.

All persons employed by Manager in connection with the services to be rendered by the Manager shall be employees or independent contractors of Manager or an Affiliate thereof, and shall not be the employees or agents of the Company. Manager shall be solely responsible for the salaries of its employees and any employee benefits, including, without limitation, wages, worker’s compensation benefits, employment and social security taxes and fringe benefits, to which Manager’s employees or agents may claim to be entitled. Manager shall, with respect to all persons employed by Manager, fully comply with all applicable laws and regulations having to do with worker’s compensation, social security, unemployment insurance, hours of labor, wages, working conditions, and other employer-employee related subjects. Manager represents that it is and will continue to be an equal opportunity employer.

9.15 Compliance.

The Company shall at all times exercise commercially reasonable diligent efforts to ensure that all activities with respect to each Property shall be conducted in material compliance with all applicable laws and regulations. The Company shall use commercially reasonable efforts to maintain in good standing during the term of this Agreement any and all material licenses required to perform its obligations under this Agreement and shall exercise commercially reasonable diligent efforts to ensure that any third parties providing services or supplies for Company maintain all such licenses required for the lawful operation of the Properties.

9.16 Insurance.

(a) The Company shall arrange an insurance program for the maintenance of property, liability and other insurance with respect to Company and the Properties, all with coverages and limits equal to the insurance requirements set forth in Exhibit E. With PC

30

Member’s approval, which shall not be unreasonably withheld, any such insurance may be blanketed with other insurance carried by or on behalf of Manager or any Affiliate (provided that such insurance does not cost more than coverage that is otherwise obtainable utilizing an insurance company with the same A.M. Best’s ratings as the carrier that would have been utilized under such blanket program and that is otherwise reasonably acceptable to Company’s risk management advisors), in which case a pro rata share of the premiums, as reasonably determined on a non-discriminatory basis by Company, shall be allocated to the Properties.

(b) It is acknowledged and agreed that the Company shall purchase and maintain a liability insurance policy (at the expense of the Company) in an amount of not less than $10 million with customary limits and deductibles covering the Company, the Members, the Manager and their respective equityholders, directors, officers, employees, and agents acting on behalf of the Company (each an “Insured Party”) against any claims, damages or liability that may be asserted against or expense that may be incurred by such Insured Party in connection with the action or inaction of the Company or activities relating to the Company or the Properties, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement. Any Insured Party entitled to damages or indemnification from the Company hereunder shall first seek recovery under the above-described insurance policy; provided, however that after any available recovery is exhausted under said insurance policy the applicable Insured Party may proceed to seek recovery of the remaining damages or indemnification from the Company. Upon request of any Member, the Company shall provide such Member with an appropriate certificate or other evidence of the above-described insurance.

9.17 Fair Market Value.

(a) The “Fair Market Value” of any asset of the Company or any Subsidiary shall be determined as follows:

(A) The Members shall endeavor to agree upon Fair Market Value. If the Members cannot so agree within thirty (30) days after a request for determination from either Member, within ten (10) days after the expiration of such 30-day period, each Member (A) shall set forth in writing such Member’s determination of Fair Market Value and (B) shall designate, by notice given to the other, a Qualified Appraiser for determination of Fair Market Value. If the Members’ separate valuations vary by five percent (5%) or less of the higher valuation, Fair Market Value shall be the average of the separate Member-determined values. If the values vary by more than five percent (5%) of the higher valuation, within thirty (30) days after the close of the 10-day period, each such Qualified Appraiser shall submit to the Members their respective determined valuation.

(B) If either Member fails to express its determination of Fair Market Value or designate a Qualified Appraiser within the 10-day period described above or in the event that a Qualified Appraiser designated by a Member fails to submit its valuation within the required 30-day period, and if any such failure continues for ten (10) days after notice of such failure from the other

31

Member, such failure shall be deemed for all purposes to constitute acceptance of the valuation expressed by the Member complying with each of such procedural requirements.

(C) If the two Qualified Appraisers are appointed and deliver reports in timely fashion and if the two valuations set forth vary by five percent (5%) or less of the higher valuation, Fair Market Value shall be the average of the two values determined.

(D) If the valuations set forth in the two reports vary by more than five percent (5%) of the greater value, the two Qualified Appraisers shall select a third Qualified Appraiser within seven days after delivery of such two reports to the Members. If the two Qualified Appraisers are unable to agree upon the appointment of a third within the required seven-day period, either Member may, upon written notice to the other, request that such appointment be made by any judge sitting for a federal court of competent jurisdiction in the State of Oregon.

(E) In the event that all three of the Qualified Appraisers cannot agree upon the valuation within 10 days following the selection of the third Qualified Appraiser (which agreed value shall in no event be higher than the higher of the two previously submitted nor lower than the lower of such previous valuations), the third Qualified Appraiser shall, within twenty-five (25) days thereafter, submit a valuation to the other two Qualified Appraisers and to the Members in writing, and the Fair Market Value shall be the average of the two numerically closest values (or, if the values are equidistant, the average of all three values) determined by the three Qualified Appraisers.

(F) In the event that any Qualified Appraiser appointed hereunder resigns, refuses or is unable to perform his or her obligation hereunder for reasons unrelated to the acts or omissions of the appointing Member, then the Member or Members appointing such Qualified Appraiser shall have the right unilaterally to appoint a substitute Qualified Appraiser and the deadline for the production of such Qualified Appraiser’s appraisal shall be subject to an extension of not more than 30 days.

(G) In connection with any valuation process, the Members and the Company will provide the Qualified Appraisers full access during normal business hours to examine all pertinent books, records and files, agreements, leases and other operating agreements. The fees and expenses of the Qualified Appraisers shall be borne by the Company.

32

ARTICLE X

TRANSFER OF INTERESTS IN THE COMPANY; RESTRICTIONS ON TRANSFER

10.1 Transfer of Company Interests.

Subject to Section 10.8, neither Member shall be entitled to Transfer, directly or indirectly, all or any portion of its Company Interest or its equitable right to the profits or capital of the Company, without the prior written consent of the other Member, which consent may be given or withheld in the sole discretion of the other Member. A Transfer by TCG Member not otherwise permitted by this Agreement or consented to by PC Member shall be deemed an Event of Default which is subject to the remedies specified in Section 9.13.

10.2 Invalid Transfers.

No Transfer of a Company Interest or any part thereof made in violation of this Article X shall be valid or effective, and the Company shall not recognize the same for the purposes of making payment of profits, income, return of capital contributions or other distributions with respect to such Company Interest, or part thereof. The Company may enforce the provisions of this Article X either directly or indirectly or through its agents by entering an appropriate stop-transfer order on its books or otherwise refusing to register or transfer or permit the registration or transfer on its books of any proposed Transfers not in accordance with this Article X. In addition to other rights and remedies at law and in equity, the other Member or Members shall be entitled to injunctive relief enjoining the prohibited Transfer. The Members expressly acknowledge that damages at law would be an inadequate remedy for a breach or threatened breach of the provisions concerning Transfer set forth in this Agreement. The giving of consent or approval by the Members required under this Article X shall be a matter within the Members’ discretion and the giving of such consent or approval in any one or more instances shall not limit or waive the need for such consent or approval in any other or subsequent instances. Notwithstanding anything in this Article X or this Agreement to the contrary without the prior approval of the other Members, no Member shall have the right to effect any Transfer of its Interest in the Company if such Transfer would (i) cause the Company to terminate under applicable law, (ii) prevent the Company from being classified as a partnership for federal income tax purposes, (iii) in the opinion of legal counsel for the Company, require the Company to register under any state or federal securities laws or (iv) in the opinion of legal counsel for the Company, constitute a violation of any state or federal securities laws.

10.3 Manager.

In no event shall the Manager resign as the Manager of the Company without the prior written consent of PC Member to the party that will succeed as Manager following such resignation; provided that the consent of PC Member shall not be required if any Affiliate of the Manager will succeed as Manager following such resignation.

33

10.4 Withdrawal.

No Member may resign or withdraw from the Company without the prior written consent of the other Member; provided that nothing in this Section 10.4 shall limit the rights of the Members to require a redemption of TCG Member’s Common Interests in accordance with Section 9.8.

10.5 Substituted Members.

Notwithstanding any other provision of this Article X to the contrary, the transferee of the whole or any portion of a Member’s Company Interest shall not have the right to become a substituted Member in place of his or its transferor unless, in addition to the satisfaction of all other applicable requirements of this Article X, (a) the written consent of the other Member to such substitution has been obtained, which consent, in the Member’s absolute discretion, may be withheld; (b) the transferor and the transferee execute an instrument of assignment in form and substance satisfactory to the other Member; (c) the transferee executes a copy of this Agreement and the transferor and the transferee named therein execute and acknowledge such other instrument or instruments as the other Member deems necessary or desirable to effect such admission; and (d) the transferor and transferee pay all costs and fees incurred by the Company to effect the transfer and substitution. The Company, the Manager, each Member, and any other Person or Persons having business with the Company need deal only with the Members who are admitted as Members or as substituted Members of the Company, and they shall not be required to deal with any other Person by reason of an assignment by a Member or by a holder of an interest in a Member except as otherwise provided in this Agreement. In the absence of the substitution (as provided in this Section 10.5) of a transferee as a Member, any payment to the transferor Member shall acquit the Company and the other Member of all liability to any other Person who may be interested in such payment by reason of an assignment by such Member or by a holder of an interest in such Member.

10.6 Admission of New Members.

Additional Persons may be admitted from time to time on such terms and conditions agreed to by all of the existing Members in their sole discretion; provided, however, that no Person shall be admitted as a Member unless and until he, she or it executes a copy of this Agreement and any other instruments or agreements that either Member deems necessary or desirable to effect such admission. The requirements of this Section 10.6 shall not apply to the admission of a transferee of all or a portion of an existing Member’s Interest in the Company, which shall be governed solely by the provisions of Section 10.5.

10.7 Corporation Status & Securities or Secondary Markets.

Notwithstanding anything to the contrary in this Agreement, no Transfer by a Member of its Interest in the Company (or any economic or other interest, right or attribute therein) may be made to any Person if (a) in the opinion of legal counsel for the Company, it would result in the Company being treated as an association taxable as a corporation, or (b) such transfer is effectuated through an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code. Notwithstanding anything

34

to the contrary in this Agreement, (x) no Interests in the Company shall be issued in a transaction that is (or transactions that are) registered or required to be registered under the Securities Act of 1933, as amended (the “Securities Act”), and to the extent such Interests were not required to be registered under the Securities Act by reason of Regulation S (17 CFR 230.901 through 230.904) or any successor thereto, such issuances would not have been required to be registered under the Securities Act if the Interests so offered or sold had been offered and sold within the United States, (y) any admission (or purported admission) of a member and any Transfer or assignment (or purported transfer or assignment) of all or part of a Member’s Interest (or any interest or right or attribute therein) in the Company, whether to another Member or to a third party, shall not be effective, and any such Transfer or assignment (or purported transfer or assignment) shall be void ab initio, and no Person shall otherwise become a member if (A) at the time of such Transfer or assignment (or purported transfer or assignment) any Interest in the Company (or economic interest therein) is traded on an established securities market or readily tradeable on a secondary market or the substantial equivalent thereof or (B) after such Transfer or assignment (or purported transfer or assignment) the Company would have 100 members or more. For purposes of clause (A) of the preceding sentence and clause (b) above, an established securities market is a national securities exchange that is either registered under Section 6 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or exempt from registration because of the limited volume of transactions, a foreign securities exchange that, under the law of the jurisdiction where it is organized, satisfies regulatory requirements that are analogous to the regulatory requirements of the Exchange Act, a regional or local exchange, or an interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers by electronic means or otherwise. For purposes of such clause (A) and clause (b) above, Interests in the Company (or interests therein) are readily tradeable on a secondary market or the substantial equivalent thereof if (i) Interests in the Company (or interests therein) are regularly quoted by any Person, such as a broker or dealer, making a market in the interests; (ii) any Person regularly makes available to the public (including customers or subscribers) bid or offer quotes with respect to Interests in the Company (or interests therein) and stands ready to effect buy or sell transactions at the quoted prices for itself or on behalf of others; (iii) the holder of an Interest in the Company has a readily available, regular, and ongoing opportunity to sell or exchange such Interest (or interests therein) through a public means of obtaining or providing information of offers to buy, sell, or exchange such Interests; or (iv) prospective buyers and sellers otherwise have the opportunity to buy, sell, or exchange Interests in the Company (or interests therein) in a time frame and with the regularity and continuity that is comparable to that described in clauses (i), (ii) and (iii) of this sentence. For purposes of determining whether the Company will have more than 100 members, each Person indirectly owning an Interest in the Company through a partnership (including any entity treated as a partnership for federal income tax purposes), a grantor trust or an S corporation (each such entity a “flow-through entity”) shall be treated as a member unless the Manager determines that less than substantially all of the value of the beneficial owner’s interest in the flow-through entity is attributable to the flow-through entity’s interest (direct or indirect) in the Company.

10.8 Permitted Transfers.

(a) Subject to the limitation set forth in Section 10.7, the following Transfers of Company Interests by a Member are permitted Transfers and shall not require the consent of the other Member:

35

(i) A Member may Transfer all or any portion of its Company Interests to an Affiliate, in which case the transferee shall be admitted as a substituted Member upon satisfaction of the conditions set forth in Section 10.5. The transferring Member shall promptly notify the other Member of any such Transfer.

(ii) TCG Member may Transfer all or any portion of its Company Interests to an Affiliate or any partnership, disregarded entity or REIT sponsored by such Affiliate or The Campbell Group, LLC (“TCG”); provided that such Affiliate or any partnership, disregarded entity or REIT sponsored by such Affiliate or TCG shall be under common Control with TCG Member, in which case the transferee shall be admitted as a substituted Member upon satisfaction of the conditions set forth in Sections 10.5(c) and 10.5(d). TCG Member shall promptly notify PC Member of any such Transfer.

(iii) A Member may pledge or hypothecate all or any portion of its Company Interest as security for any borrowing or other financing by such Member from an Institutional Lender; provided, that if the creditor holding such security interest enforces it and becomes a substituted member of the Company in accordance with this Agreement and applicable law, such substituted member shall have voting, consent or approval rights under this Agreement only to the extent consistent with its status as a creditor of the Company. The pledging Member shall promptly notify the other Member of any such pledge or hypothecation.

(iv) A Person owning an interest in a Member may transfer all or any portion of its interest in such Member, or a Member may Transfer all or any portion of its Company Interest, to an Institutional Investor. A Person owning an interest in TCG Member may transfer all or any portion of its interest in TCG Member to an Affiliate or any partnership, disregarded entity or REIT sponsored by such Affiliate or TCG. The transferor under this Section 10.8(a)(iv) of any interest in (i) the Company to any transferee or (ii) a Member to any transferee other than an Institutional Investor shall promptly notify the other Member of any such transfer.

ARTICLE XI

RECORDS, ACCOUNTING, BANK ACCOUNTS

AND REPORTS

11.1 Books and Records.

The Company, in consultation with PC Member, shall keep or cause to be kept complete and accurate books of account and records which shall reflect all transactions and other matters and include all documents and other materials with respect to the Company business as are usually entered and maintained by Persons engaged in similar businesses, utilizing standard accounting consistently applied. Such books of account shall be kept on the accrual basis consistent with generally accepted accounting principles consistently applied. The Company, in consultation with PC Member, shall establish commercially reasonable procedures designed to ensure that all deeds, leases, contracts, title matters, surveys and other documentation, records and financial information relating to the ownership, maintenance, harvesting and sale of the

36

Properties are maintained in safekeeping and organized and accessible to the Members. Each Member and its duly authorized representatives shall have the right to examine the Company books, records and documents at all reasonable times, and copies of Company books, records and documents shall be furnished to any Member, at such Member’s costs, upon reasonable request therefor.

11.2 Reports.

(a) The Company, in consultation with PC Member, shall, at the cost of the Company, cause to be prepared and shall deliver to the Members:

(i) after the end of each quarter of each fiscal year, certified by the Company (1) to actual knowledge, as to completeness and (2) as to preparation in accordance with generally accepted accounting principles:

(A) within 30 calendar days after the end of each quarter, unaudited quarterly financial statements, including a balance sheet for the Company as of the end of such quarter, income statement and statement of cash flows for the quarter as of the most recent balance sheet date and statements of operations (including calculations of Cash Flow and Capital Proceeds and fees, reimbursements to Manager and its Affiliates, and actual to budget variances) for the Company for such quarter and for that part of the fiscal year ending at the end of such quarter, each prepared on an accrual basis in accordance with generally accepted accounting principles on the same basis as the annual financial statements are prepared;

(B) within 45 calendar days after the end of each quarter, a report of any significant Company and Property-by-Property activities, including significant harvesting activities, during such quarter; indicating any variances with the harvesting requirements and limitations in the then current approved Company Strategic Plan;

(ii) within 45 calendar days after the end of each fiscal year, certified by the Company:

(A) draft financial statements, without footnotes, reflecting any known audit adjustments;

(iii) within 75 calendar days after the end of each fiscal year, prepared by a “Big Four” accounting firm or another accounting firm approved by PC Member:

(A) complete audited annual financial statements, including footnotes, for the Company, including a balance sheet of the Company as of the end of such year, and an income statement and statement of cash flows for the year then ended;

(B) all such annual financial statements (1) shall set forth in comparative form the figures for the preceding year, (2) shall be in reasonable

37

detail and in a form approved by PC Member, which approval shall not be unreasonably withheld, and (3) as to the Company financial statements, shall be accompanied by an audit opinion thereon of the Company’s accountants to the effect that such financial statements have been prepared in accordance with generally accepted accounting principles consistently applied (except for changes in application specified in such opinion and in which the Company’s accountants concur) and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records, internal controls and such other auditing procedures as were considered necessary in the circumstances; and

(C) to the extent the audited financial statements are required to be included in PC Member’s annual report on Form 10-K filed with the Securities and Exchange Commission, (1) the financial statements shall be prepared in accordance with SEC Regulation S-X and (2) the auditor’s opinion shall not be limited in its distribution and the auditor shall consent to the inclusion of its opinion on the above mentioned financial statements in PC Member’s annual report on Form 10-K;

(iv) within 30 days after the end of every month:

(A) income statements including harvest volumes, product selling prices, log and haul costs, operating expenses and capital expenditures;

(v) promptly after receipt thereof, one copy of each management letter or other report submitted to the Company by the Company’s accountants in connection with any annual, interim or special audit made by them of the books of the Company;

(vi) after the end of each fiscal year, a copy of the Company’s federal and state income tax returns and reports for such year, with Schedule K-1 attached to the federal and state returns, prepared by the Company’s accountants and subject to the consent of PC Member, which approval shall not be unreasonably withheld, conditioned or delayed, such returns to be delivered within 90 days after the end of such year;

(vii) such other reports or information as any Member shall from time to time reasonably request in connection with the Company’s ownership, operation or management of the Properties, including, without limitation, any reports required by PC Member to satisfy federal securities laws, REIT compliance requirements or other tax or accounting reporting requirements applicable to such Member and its Affiliates; and

(viii) within 75 calendar days after the end of each fiscal year statements of operations of the Company for such year indicating variances from the harvesting requirements and limitations in the then current approved Company Strategic Plan for such period, a statement of Cash Flow, Capital Proceeds and fees and reimbursements to Manager or any Affiliate of Manager for the Company for such year

38

and a statement showing distributions to the Members and allocations to the Members of Company taxable income, gains, losses, deductions, credits and items of tax preference;

(ix) in connection with the requirement of PC Member and its Affiliates to include audited summarized financial information of the Company in its annual filing on Form 10-K in accordance with SEC reg. 210.4-08(g), the Company shall provide timely access to its auditors to the extent required by PC Member’s auditors in order for PC Member’s auditors to perform audit procedures on the audited summarized financial information of the Company.

(b) Each quarterly or annual report furnished to the Members hereunder shall also state whether any default exists with respect to any material obligation of the Company or whether any material litigation is pending against the Company or any Property. The Company shall promptly notify PC Member of the occurrence of any event known to the Company (which includes any event known to the Manager) which if not cured or resolved would reasonably likely be required to be described in the next quarterly or annual report to be furnished hereunder.

(c) The Company’s accountants and auditors initially shall be KPMG.

(d) All third party audit and tax preparation costs shall be costs of the Company.

(e) Provided that the Company and TCG Member comply with Section 6.2(f), no Person other than PC Member or its beneficial owners shall be liable for any Taxes imposed on or incurred by the Company, PC Member or its beneficial owners in connection with any contribution to the Company of the Subsidiary LLC Interests.

11.3 Bank Accounts.

All funds of the Company shall be held in time or demand deposit accounts, as reasonably approved by the Members, established at one or more banks or trust companies which are organized and existing under the laws of the United States or of any state thereof and which, with respect to deposit accounts under $100,000 (acknowledging that Company accounts may from time to time exceed such limit), have the benefit of insurance by the Federal Deposit Insurance Corporation. Such accounts shall be interest-bearing to the extent practicable. The Company shall designate individuals to make deposits of Company funds in such accounts and to make withdrawals by signature, facsimile or otherwise, of such funds for Company costs and expenses. Cash management investments by Company shall be made solely with Permitted Investments.

11.4 Fiscal Year.

The fiscal year of the Company for both reporting and federal income tax purposes shall begin with the first day of January and end on the thirty-first day of December in each calendar year, except that the first fiscal year shall instead commence upon the Company’s formation and that the final fiscal year shall end when the Company is terminated in accordance with this Agreement.

39

ARTICLE XII

TERM

The term of the Company shall commence on the date and year first above written and shall continue until terminated in accordance with this Agreement.

ARTICLE XIII

LEGAL TITLE TO COMPANY PROPERTY

A Member’s interest in the Company shall constitute personal property for all purposes. Legal title to all property now owned or acquired by the Company after the date of this Agreement shall be taken and held in the name of the Company and no Member, individually, shall have any ownership interest in such property. Each Member on its own behalf and on behalf of its successors, assigns and legal representatives, hereby expressly waives any rights it might otherwise have for a partition of the Company’s assets, including the Properties.

ARTICLE XIV

DISSOLUTION AND LIQUIDATION

14.1 Dissolution.

The Company shall dissolve upon the expiration of the term of the Company or upon the earlier occurrence of any of the following events:

(a) the sale of all or substantially all of the assets of the Company;

(b) the affirmative vote of all the Members to terminate the Company;

(c) six (6) months following the Bankruptcy of a Member; or

(d) as otherwise required by the terms of this Agreement.

14.2 Liquidation.

Upon the dissolution of the Company, Manager, the Members (excluding any Member causing such dissolution), or the Person otherwise required by law to wind up the Company’s affairs, shall, as soon as practicable, wind up the affairs of the Company and sell and/or distribute the assets of the Company in accordance with this Section 14.2. The Capital Accounts of the Members shall be adjusted to reflect the Fair Market Value of the Company’s assets at the time of the liquidation in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(f) and shall be further adjusted for the Net Income or Net Loss of the Company, any Plum Creek Loan Gain or Loss and any Plum Creek Loan Collateral Gain or Loss for the fiscal year ending on the date of the liquidating distribution of the Company’s assets. After all restatements and adjustments to Capital Accounts have been made, and the payment of any debts and liabilities of

40

the Company have been made, the Company shall distribute the Company’s assets to the Members in accordance with positive Capital Account balances.

14.3 Termination.

The Company shall terminate when all assets of the Company have been sold and/or distributed and all affairs of the Company have been wound up. Upon the occurrence of any event which would occasion a termination of the Company under the Act, but which does not effect a termination pursuant to the express provisions of this Agreement, the remaining Member or Members may elect to continue the business of the Company given within 30 days following such terminating event.

ARTICLE XV

LIABILITY AND INDEMNIFICATION

15.1 No Liability.

No Member shall be personally liable to any other Member for the return of the capital contributions of such Member, or any portion thereof, it being expressly understood that any such return shall be made solely from Company assets. No Member shall be liable for any debts, liabilities, contracts or other obligations of the Company nor shall any Member be required to lend funds to the Company. Except as otherwise specifically required by Section 6.2 or in the Act, no Member shall be required to make any further capital contributions to the Company.

15.2 Liability for Actions or Omissions.

The performance of any act or the omission of any act by any Member or the Manager, in the good faith belief that it was acting within the scope of its authority under this Agreement on behalf of the Company or in furtherance of the Company’s interests, shall not subject such Member or Manager to any liability to the Company or to the other Member (or in the case of the Manager, the Members); provided, however, that the foregoing shall not relieve any Member or the Manager of liability for fraud, gross negligence or willful misconduct.

15.3 Indemnification by Company.

(a) The Company shall and hereby does indemnify and save harmless each Member and the Manager from and against any claim, loss, expense, liability, action or demand incurred by such Member or Manager in respect of any omission to act or of any act performed by such Member or Manager, in the good faith belief that it was acting or refraining from acting within the scope of its authority under this Agreement on behalf of the Company or in furtherance of the Company’s interests, including reasonable fees and expenses of litigation and appeal (including reasonable fees and expenses of attorneys engaged by such Member or Manager in defense of such act or omission); provided, however, that the foregoing indemnity shall be limited to the assets of the Company and shall not be recourse to any of the Members.

41

(b) None of the Members nor the Manager shall be entitled to any indemnity for any loss sustained or fees or expenses incurred by such Member or Manager by reason of the fraud, gross negligence or willful misconduct of such Member or Manager or its respective affiliate.

ARTICLE XVI

[RESERVED]

ARTICLE XVII

MISCELLANEOUS

17.1 Notices.

All notices to be given hereunder to any Member or the Manager shall be in writing and shall be sent to the address of such Member or Manager as set forth in Exhibit A hereto. Any Member or the Manager may change the address to which notices to it shall be sent by giving the Company written notice of the new address. Any notice to be given hereunder shall be effective (a) if given by facsimile, at the time such facsimile is transmitted and the appropriate confirmation is received (or, if such time is not during a business day, at the beginning of the next business day), (b) if given by mail, three business days (or, if to an address outside the United States, seven calendar days) after such communication is deposited in the mails with first-class postage prepaid, (c) if sent by express mail or overnight delivery or courier service, one business day after such communication is sent, postage prepaid or (d) if given by any other means, when delivered at the address specified pursuant to this Section 17.1. Any such notice may at any time be waived by the Person entitled to receive such notice.

17.2 Captions.

Article, Section and other captions contained in this Agreement are for reference purposes only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

17.3 Severability.

Every provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity of the remainder of this Agreement.

17.4 Meetings and Means of Voting.

Meetings of the Members may be called by any Member at any time, and shall be held at the principal place of business of the Company or at such location as the Members may otherwise agree to. The call for a meeting shall state the nature of the business to be transacted. Notice of any such meeting shall be delivered to all Members in the manner prescribed in Section 17.1 not less than five (5) Business Days nor more than fifty (50) days prior to the date of such meeting¸ provided that any Member may waive notice of a meeting. In conducting a meeting, the Members may utilize any form of communication permitted by the Act.

42

17.5 Governing Law.

This Agreement and the rights of the Members shall be governed by and construed or enforced in accordance with the laws of the State of Delaware, and the Act as in effect shall govern and supersede any provision of this Agreement which would otherwise be in violation of such Act.

17.6 Counterpart Execution.

This Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All counterparts shall be construed together and shall constitute one Agreement.

17.7 Parties in Interest.

Each and every covenant, term, provision and agreement herein contained shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, personal and legal representatives, successors and permitted assigns. Except as otherwise expressly set forth in any provision of this Agreement, nothing in this Agreement is intended or shall be construed to give any Person, other than the parties to the Agreement, any legal or equitable right, remedy, claim under or with respect to this Agreement or any provision of this Agreement.

17.8 Amendment.

Except for adjustments made to the Percentage Interest of any Member pursuant to Section 6.2(d)(A), this Agreement may be modified, amended or supplemented only upon the written consent of all Members. Whenever in this Agreement it is provided that it shall be necessary for one Member to have another Member’s consent or approval to any action, such consent or approval must be received in writing.

17.9 Integrated Agreement.

This Agreement constitutes the entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and there are no agreements, understandings, restrictions, representations or warranties among the parties other than those set forth herein or herein provided for.

17.10 Terminology.

As used in this Agreement, the singular number shall include the plural, and vice versa. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. Terms such as “herein”, “hereby”, “hereunder” and “hereof”, unless the context otherwise requires, refer to this Agreement as a whole and not the Articles, Sections or other subdivision where the terms appear.

43

17.11 Members Not Named.

Unless named in this Agreement, or unless admitted to the Company as a substituted member, as provided in this Agreement, no Person shall be considered a member of the Company. The Company and Manager need deal only with Persons so named or admitted as members of the Company; provided, however, that any distribution by the Company to the Person shown on the Company records as a member or his legal representative, shall relieve the Company of all liability to any other Person who may be interested in such distribution by reason of any other assignment by a Member or by reason of his death, bankruptcy, incompetency, or for any other reason.

17.12 Relationship of Members.

Except as provided herein, nothing herein contained shall be construed to constitute any member hereof the agent of any other member hereof or to limit in any manner any member in the carrying on of their own respective businesses or activities.

17.13 Waivers.

(a) No consent or waiver, express or implied, by any party hereto of any breach or default by any other party hereto in the performance of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such party of the same or any other obligations of such party hereunder. Failure on the part of any party to complain of any act or failure to act of another party or to declare another party in default, irrespective of how long such failure continues, shall not constitute a waiver by such party of its rights hereunder.

(b) In the event that any dispute is brought before any court of competent jurisdiction for resolution of any dispute, each of the parties hereto fully and freely waives trial by jury. Any such action shall be tried by a judge as the finder of fact.

(c) Each Member does hereby agree to and does hereby irrevocably waive for the duration of this Agreement any right or power any such Member might have (i) to cause the Company or any of its assets to be partitioned, (ii) to cause the appointment of a receiver for assets of the Company, (iii) to compel any sale of all or any portion of the assets of the Company pursuant to any applicable law, or (iv) to file a complaint or to institute any proceeding at law or in equity to cause the termination or dissolution of the Company, except to enforce, compel, implement or effect any dissolution, termination or liquidation of the Company occurring or required to occur pursuant to Article XIV. Each Member hereby acknowledges and agrees that such member has been induced to enter into this Agreement in reliance upon the mutual waivers set forth in this Section 17.13, and that without such waivers, no member of the Company would have entered into this Agreement. No Member has any interest in specific Company property, and the interest of all Members in the Company are, for all purposes, personal property.

44

17.14 Exculpation of Members.

The Members agree that the obligations of each of them with respect to this Agreement shall not constitute personal obligations of theirs, respectively, and shall not create or involve any claim against, or personal liability on the part of, any Member’s respective members, partners (general or limited) or shareholders, and that the Members will look solely to the assets of such Member for satisfaction of any liability of such Member under or in respect of this Agreement and will not seek recourse against any member, partner (general or limited) or shareholder of such Member, or its or their personal assets, for such satisfaction.

17.15 Further Assurances.

Each Member hereby agrees to execute, acknowledge (if necessary) and deliver such other documents, instruments, agreements or certificates as may be required by law, or which may in the reasonable opinion of the Company be otherwise necessary or advisable to carry out the intents and purposes of this Agreement.

17.16 Attorneys Fees.

If any Member seeks to enforce such Member’s rights under this Agreement by legal proceedings or otherwise, the non-prevailing party shall pay the prevailing party’s costs and expenses, including without limitation, reasonable attorneys’ fees and costs and witness fees.

17.17 Confidentiality.

Each Member agrees that, except as otherwise set forth in this Agreement or provided by law or unless compelled by an order of a court, it shall keep the contents of this Agreement and any information related to the transactions contemplated hereby confidential (other than with respect to the parties’ attorneys, consultants, partners, accountants, lenders, advisors or rating agencies). Notwithstanding any other provision of this Agreement, to comply with Regulations Section 1.6011-4(b)(3)(i), each party (and any employee, representative, or other agent of such party) may disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the transactions contemplated by this Agreement. For purposes of the two preceding sentences, tax treatment and tax structure shall not include (i) the name of, or any other identifying information regarding, the Company, PC Member, TCG Member, the Properties, or any investment or transaction entered into by the Company, and any information regarding the specific economic terms of the transactions contemplated by this Agreement and the Contribution Agreement, (ii) any performance information relating to the Properties or the Company, or (iii) any performance or other information relating to PC Member or TCG Member. Notwithstanding any provision of this Agreement to the contrary, either party may make such filings or disclosures as are required by state or federal law.

17.18 Brokers.

Other than Goldman, Sachs & Co. in the case of PC Member, the Members acknowledge that there are no brokers or financial advisors involved in the transactions contemplated in this Agreement, except as specifically approved by the Members in connection with an acquisitions

45

of a Property in which event any related fees will be capitalized by the Company and allocated across the Properties. The parties will indemnify each other for any loss, cost or damage resulting from a breach by such party of the representation contained in this Section 17.18.

17.19 Successors.

Subject to the provisions of Article X, the rights and obligations of the Members under this Agreement shall inure to the benefit of and bind their respective heirs, successors and assigns.

[Signature page follows]

46

IN WITNESS WHEREOF, the parties hereto have executed this Limited Liability Company Agreement for Southern Diversified Timber, LLC as of the date first written above.

MANAGER:
TCG / Southern Diversified Manager, LLC, a Delaware limited liability company
By: The Campbell Group, LLC a Delaware limited liability company its Managing Member
By:	/s/ John Gilleland
Name:	John Gilleland
Title:	President
MEMBERS:
PLUM CREEK TIMBER OPERATIONS I, L.L.C., a Delaware limited liability company
By:	/s/ Joan K. Fitzmaurice
Name:	Joan K. Fitzmaurice
Title:	Vice President, Corporate Communications,
Audit and Information Technology
TCG MEMBER, LLC, a Delaware limited liability company
By: Campbell Opportunity Timber Fund VI-A, L.P., a Delaware limited partnership
By: Campbell Opportunity Timber Fund VI GP, LLC, a Delaware limited liability company
By: The Campbell Group, LLC, a Delaware limited liability company
By:	/s/ John Gilleland
Name:	John Gilleland
Title:	President

47

EXHIBIT A

COMPANY INTERESTS

	Common Membership Interests (Percentage Interest)		Preferred Membership Interests
MANAGER
TCG / Southern Diversified Manager, LLC One S.W. Columbia, Suite 1700 Portland, OR 97258 Attn: John Gilleland Facsimile: 503-275-9667	—		—
MEMBERS
PC Member c/o Plum Creek Timber Operations I, L.L.C. 999 Third Avenue, Suite 4300 Seattle, WA 98104 Attn: Larry Neilson Senior Vice President, Business Development Facsimile: 206-467-3795	9.09	%	Priority Amount ($704,700,000 as of the date of this Agreement)
TCG Member, LLC One S.W. Columbia, Suite 1700 Portland, OR 97258 Attn: John Gilleland Facsimile: 503-275-9667	90.91	%	—

EXHIBIT F

REPRESENTATIONS AND WARRANTIES

Each Member represents, warrants, acknowledges and agrees, as to itself, that:

(a) For each Member that is a corporation, limited liability company or partnership, it is a corporation, limited liability company or partnership, as applicable, duly organized or formed and validly existing in good standing under the laws of the state of its organization or formation; it has the requisite power and authority to enter into this Agreement, to acquire and hold its Interests and to perform its obligations hereunder; its execution, delivery and performance of this Agreement has been duly authorized; and it has obtained any consent, approval, authorization or order of any court or governmental agency or body required for its execution, delivery and performance of this Agreement.

(b) This Agreement and all agreements, instruments and documents herein provided to be executed or caused to be executed by it are duly authorized, executed and delivered by and are and will be binding and enforceable against it.

(c) Its execution, delivery, and performance of this Agreement will not (i) conflict with, result in a breach of or constitute a default (or any event that, with notice or lapse of time, or both, would constitute a default), or result in the acceleration of any obligation, under any other agreement or instrument to which it is a party or by which it is bound or to which any of its property or assets is subject, (ii) conflict with or violate any of the provisions of its organizational documents, or (iii) violate any statute or any order, rule or regulation of any court or governmental or regulatory agency, body or officials.

(d) There is no action, suit or proceeding pending or, to its knowledge, threatened against it in any court or by or before any other governmental agency or instrumentality that would prohibit its entry into or performance of this Agreement.

(e) It has been advised to and has engaged its own counsel (whether in-house or external) and any other advisers it deems necessary and appropriate. By reason of its business or financial experience, or by reason of the business or financial experience of its own attorneys, accountants and financial advisors (which advisors, attorneys and accountants are not Affiliates of the Company or any other Member), it is capable of evaluating the risks and merits of an investment in the Interests and of protecting its own interests in connection with this investment. Nothing in this Agreement should or may be construed to allow any Member to rely upon the advice of counsel acting for another Member or to create an attorney-client relationship between a Member and counsel for another Member.

(f) Other than Goldman, Sachs & Co., neither it nor any of its Affiliates has employed any broker or finder or incurred any liability therefor in connection with the

transfer of any Property to the Company or the transactions contemplated herein which has not been fully paid.

(g) It has not seen, received, been presented with, or been solicited by any leaflet, public promotional meeting, newspaper or magazine article or advertisement, radio or television advertisement, or any other form of advertising or general solicitation with respect to the purchase or sale of its Interest.

(h) It is financially able to bear the economic risk of its investment in its Interest, including the total loss thereof.

(i) No Person has at any time expressly or impliedly represented, guaranteed, or warranted to it that it may freely transfer its Interest, that a percentage of profit and/or amount or type of consideration will be realized as a result of its investment in its Interest, that past performance or experience on the part of the Members in the Company or their respective Affiliates in any way indicates the future results of the ownership of its Interest or of the overall Company business, that any cash distributions from Company operations or otherwise will be made by any specific date or will be made at all, or that any specific tax benefits will accrue as a result of an investment in the Company.

(j) It acknowledges that its Interests have not been registered under the Securities Act, or qualified under the blue sky laws of any state, in reliance, in part, on its representations, warranties, and agreements herein.

(k) It acknowledges that its investment in its Interest is speculative, involves a substantial risk of loss of its entire investment in the Company, that it understands and takes full cognizance of the risk factors related to purchase of its Interest, including that the Company is newly organized and has no financial or operating history, and that the other Members may (and will be permitted to) advance and seek to protect their own individual interests when making decisions or exercising rights relating to the Company and not necessarily the interests of the Company or another Member.

(l) It is familiar with the definition of “accredited investor” in Rule 501(a) of Regulation D under the Securities Act and it represents that it is an “accredited investor” within the meaning of that Rule.

(m) It acknowledges that there are substantial restrictions on the transferability of its Interest pursuant to this Agreement, that there is no public market for its Interest and none is expected to develop, and that, accordingly, it may not be possible for it to liquidate its investment in the Company. Without limiting the other representations set forth herein, and without limiting Article X of this Agreement, it will not make a Transfer (including to an Affiliate or Institutional Investor) of all or any part of its Interest or any direct or indirect ownership interest in it that will result in the violation by it or the Company of the Securities Act, or any other applicable securities laws.

(n) It has consulted with its own attorneys, accountants and financial advisors regarding all legal, tax and financial matters concerning an investment in the Company and the tax consequences of participating in the Company. It acknowledges that the tax consequences of its investment in the Company will depend on its particular circumstances, and neither the Company, the Members nor the partners, shareholders, members, managers, fiduciaries, agents, officers, directors, employees, Affiliates, or consultants of any of them will be responsible or liable for the legal, tax, or financial consequences to it of an investment in the Company. It will look solely to, and rely upon, its own advisers with respect to the legal and tax consequences of this investment.

(o) It shall defend and indemnify the Company and the other Members against, and shall hold it and them harmless from, any damage, loss, liability, or expense, including reasonable attorneys’ fees, as and when incurred by the Company or the other Members in connection with or resulting from the indemnifying Member’s breach of the representations and warranties contained in this Exhibit F. The obligations of a Member under this subsection (o) will survive the Transfer of its Interest.

(p) To the best of its knowledge, neither it nor any of its direct or indirect members, shareholders, partners or Affiliates currently is (1) identified on the OFAC List (as hereinafter defined) or otherwise qualifies as a Prohibited Person (as hereinafter defined) or (ii) in violation of any legal requirements relating to anti-money laundering or anti-terrorism, including, without limitation, those related to transacting business with Prohibited Persons or the requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law 107-56, and the related regulations issued thereunder, including temporary regulations, all as amended from time to time. For purposes of this subsection (p), the term “OFAC List” means the list of specially designated nationals and blocked persons subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control and accessible through the internet website www.treas.gov/ofac/t11sdn.pdf. and the term “Prohibited Person” means any Person identified on the OFAC List or any other Person or foreign country or agency thereof with whom a U.S. Person may not conduct business or transactions by prohibition of federal law or Executive Order of the President of the United States of America.

(q) It is not a foreign person with respect to which either any other Member or the Company would be required to withhold U.S. federal income tax under Section 1441, 1442, 1445, or 1446 of the Code, and it agrees to execute any and all documents necessary or reasonably required by the Internal Revenue Service, the Company, or any other Member to avoid any such withholding requirement.

INDEX OF OMITTED EXHIBITS AND SCHEDULES

TO LLC AGREEMENT

Exhibit B – Form of Timber Sale Agreement

Exhibit C – Company Strategic Plan

Exhibit D – Properties Owned by Subsidiary LLC

Exhibit E – Insurance Requirements

Exhibit G – Form of Property Management Agreement

Exhibit H – Form of Certificate of Merger

Plum Creek agrees that it will furnish to the Securities and Exchange Commission a copy of any of the preceding omitted exhibits and schedules upon request.

EX-10.1

Exhibit 10.1

$783,000,000

CREDIT AGREEMENT

AND GUARANTEE

by and among

PLUM CREEK VENTURES I, LLC,

as Borrower

PLUM CREEK TIMBER COMPANY, INC.

as Guarantor

and

SOUTHERN DIVERSIFIED TIMBER, LLC

as Lender

Dated as of October 1, 2008

TABLE OF CONTENTS

			Page
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS			1
	1.01	Defined Terms	1
	1.02	Other Interpretive Provisions	4
ARTICLE II. TERMS OF THE LOANS			5
	2.01	Loans	5
	2.02	Repayment of the Loan	5
	2.03	Interest.	5
	2.04	Computation of Interest	5
	2.05	Payments Generally	5
ARTICLE III. CONDITIONS PRECEDENT			6
ARTICLE IV. REPRESENTATIONS AND WARRANTIES			7
	4.01	Existence, Qualification and Power; Compliance with Laws.	7
	4.02	Authorization; No Contravention	8
	4.03	Governmental Authorization; Other Consents	8
	4.04	Binding Effect	8
	4.05	Litigation	8
	4.06	No Default	8
	4.07	ERISA	8
	4.08	Use of Proceeds	8
	4.09	Indebtedness	8
	4.10	Ownership of Property; Liens	8
	4.11	Taxes	9
	4.12	No Business Conducted	9
	4.13	Subsidiaries; Equity Interests	9
	4.14	Guarantorship Interest	9
ARTICLE V. AFFIRMATIVE COVENANTS			9
	5.01	Notices	9
	5.02	Preservation of Existence	9
	5.03	Payment of the Loan and other Obligations	9
	5.04	Compliance with Laws	10
	5.05	Books and Records	10
	5.06	Inspection Rights	10
	5.07	Use of Proceeds	10
	5.08	Reserve Account	10
	5.09	Financial Statements	10
ARTICLE VI. NEGATIVE COVENANTS			11
	6.01	Incurrence of Indebtedness	11
	6.02	Liens	11
	6.03	Fundamental Changes	11
	6.04	Dispositions of Preferred Partnership Interests	12

	6.05	Acquisitions	12
	6.06	Contracts	12
	6.07	Use of Proceeds	12
	6.08	ERISA	12
	6.09	Dividends	12
ARTICLE VII. EVENTS OF DEFAULT AND REMEDIES			12
	7.01	Events of Default	12
	7.02	Remedies Upon Event of Default	14
	7.03	Application of Funds	14
	7.04	Nonrecourse Obligation of the Borrower	14
ARTICLE VIII. GUARANTEE			15
	8.01	The Guarantee	15
	8.02	Obligations Unconditional	15
	8.03	Reinstatement	16
	8.04	Subrogation; Subordination	16
	8.05	Representations and Warranties	16
	8.06	Remedies	17
	8.07	Instrument for the Payment of Money	17
	8.08	Continuing Guarantee	18
	8.09	General Limitation on Guarantee Obligations	18
ARTICLE IX. MISCELLANEOUS			18
	9.01	Amendments, Etc.	18
	9.02	Notices; Effectiveness; Electronic Communication.	18
	9.03	No Waiver; Cumulative Remedies	18
	9.04	Successors and Assigns	18
	9.05	Treatment of Certain Information; Confidentiality	19
	9.06	Counterparts; Integration; Effectiveness	20
	9.07	Severability	20
	9.08	Governing Law; Jurisdiction; Etc.	20
	9.09	Waiver of Jury Trial	21

EXHIBITS
Exhibit A	Form of Note

CREDIT AGREEMENT AND GUARANTEE

This CREDIT AGREEMENT AND GUARANTEE (this “Agreement”) is entered into as of October 1, 2008, by and among PLUM CREEK VENTURES I, LLC, a Delaware limited liability company (the “Borrower”), PLUM CREEK TIMBER COMPANY, INC., a Delaware corporation (the “Guarantor”) and Southern Diversified Timber, LLC (the “Lender”).

The Borrower has requested that the Lender provide a loan, provided that the Borrower’s liability in respect thereof is limited to its interests in certain collateral pledged to the Lender pursuant to the Pledge Agreement (as defined below), and the Lender is willing to do so on the terms and conditions set forth herein.

The Lender has requested that the Guarantor provide a guarantee of Borrower’s obligations under this Agreement and Guarantor is willing to do so on the terms and conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

“Affiliate Credit Agreement” shall mean the Credit Agreement dated as of June 29, 2006, among Plum Creek Timberlands, L.P., each lender from time to time party thereto and Bank of America, N.A., as administrative agent, as amended, amended and restated, extended, supplemented or otherwise modified in writing from time to time, and any revolving credit facility that replaces or refunds such Credit Agreement.

“Agreement” means this Credit Agreement and Guarantee.

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.).

“Borrower” has the meaning specified in the introductory paragraph hereto.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state of New York.

“Closing Date” means the first date all the conditions precedent in Article III are satisfied or waived.

“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or

other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“Event of Default” has the meaning specified in Section 7.01.

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guaranteed Obligations” has the meaning specified in Section 8.01.

“Guarantee” means the guarantee issued pursuant to Article VIII by the Guarantor.

“Guarantor” means Plum Creek Timber Company, Inc., a Delaware corporation, in its capacity as guarantor of the Loan, and/or its capacity as the sole member of the Borrower, as the context requires.

“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a) all obligations for borrowed money and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b) all direct or contingent obligations arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

(c) all obligations to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business);

- 2 -

(d) all capital leases; and

(e) all guarantees in respect of any of the foregoing.

“Information” has the meaning specified in Section 9.05.

“Interest Payment Date” means each November 15, February 15, May 15 or August 15, as applicable, following the last date interest was paid, or, in the case of the first Interest Payment Date, following the Closing Date; provided that if any Interest Payment Date shall occur on a day other than a Business Day then such Interest Payment Date shall be deemed to occur on the next following Business Day; and provided further that the Interest Payment Date scheduled for February 17, 2009 shall instead occur on March 10, 2009.

“Interest Rate” means a rate of interest equal to 7.375% per annum.

“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“Lender” has the meaning specified in the introductory paragraph hereto.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever but not including the interest of a lessor under an operating lease.

“Loan” has the meaning specified in Section 2.01.

“Loan Documents” means this Agreement, the Note, the Pledge Agreement and all other documents delivered to the Lender in connection herewith or therewith.

“Maturity Date” means October 1, 2018, or such later date as may be extended by the Borrower pursuant to Section 2.02; provided, however, that if such date is not a Business Day, the Maturity Date shall be the preceding Business Day.

“Note” means the promissory note made by the Borrower in favor of the Lender evidencing the Loan, substantially in the form of Exhibit A.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA).

- 3 -

“Pledge Agreement” means the Pledge Agreement entered into by Borrower and Lender as of the date hereof.

“Pledged Interest” has the meaning specified in the Pledge Agreement.

“Preferred Partnership Interests” means the preferred partnership interests in Plum Creek Timberlands, L.P., a Delaware limited partnership, held by Borrower and included in the collateral subject to the Pledge Agreement.

“Reserve Account” has the meaning specified in Section 5.08.

“Responsible Officer” means, with respect to the Borrower or the Guarantor, the chief executive officer, the president or any vice president, or any other officer thereof having substantially the same authority and responsibility.

1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any organization document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified, (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time.

(b) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

- 4 -

ARTICLE II.

TERMS OF THE LOANS

2.01 Loans. Subject to the terms and conditions set forth herein, on the Closing Date, the Lender agrees to make a loan (the “Loan”) to the Borrower in a single drawdown in an amount equal to $783,000,000. The Loan shall be evidenced by the Note.

2.02 Repayment of the Loan. The Borrower shall repay to the Lender on the Maturity Date the aggregate principal amount of the Loan outstanding on such date, together with accrued interest; provided that, so long as no Default or Event of Default has occurred and is continuing, the Borrower shall be permitted to extend the initial Maturity Date for a period of two (2) years by providing written notice of such election to extend the Maturity Date to the Lender at any time within one year prior to the initial Maturity Date. The Borrower shall not be entitled to repay, and Lender shall not be required to accept any repayment of, the principal amount of the Loan prior to the Maturity Date.

2.03 Interest.

(a) Subject to clause (b) below, the Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Interest Rate. Interest on the Loan shall be due and payable in arrears on each Interest Payment Date and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

(b) If any amount payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods) (a “Defaulted Payment”), whether at stated maturity, by acceleration or otherwise, then the outstanding principal amount of the Loan shall thereafter, until such Defaulted Payment is paid in full, bear interest at an interest rate equal to the Interest Rate plus two percent (2%) to the fullest extent permitted by applicable Laws.

2.04 Computation of Interest All computations of interest for the Loan shall be made on the basis of a year of 360 days consisting of twelve 30 day months. Interest shall accrue on the Loan for the day on which it is made, and shall not accrue on the Loan, or any portion thereof, for the day on which the Loan or such portion is paid.

2.05 Payments Generally. All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Lender, by wire transfer to the bank account specified by Lender, in immediately available funds not later than 2:00 p.m. Seattle time on the date specified herein. All payments received by the Lender after 2:00 p.m. Seattle time shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall not be reflected in computing interest or fees, as the case may be.

- 5 -

ARTICLE III.

CONDITIONS PRECEDENT

(a) The obligation of the Lender to make the Loan hereunder on the Closing Date is subject to the Lender’s receipt of the following, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Lender:

(i) Loan Documents

(A) Agreement. Executed counterparts of this Agreement;

(B) Note. The Note executed by the Borrower in favor of the Lender;

(ii) Resolutions; Incumbency.

(A) Resolutions. Copies of the written consent of the Guarantor, approving and authorizing the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents to which the Borrower is a party to be delivered hereunder, and evidence of the authority of the Guarantor to enter into, deliver and perform the Guarantee;

(B) Incumbency. A certificate of the Secretary or Assistant Secretary of the Guarantor certifying the names and true signatures of the duly authorized officers of the Guarantor, in its individual capacity and as the sole member of the Borrower, authorized to execute, deliver and perform, as applicable, this Agreement and the other Loan Documents;

(iii) Organizational Documents and Good Standing. Each of the following documents:

(A) The certificate of formation of the Borrower and the certificate of incorporation of the Guarantor, certified by the Secretary of State or similar, applicable Governmental Authority of the state of formation or incorporation, as the case may be, of such Persons, and by the Secretary or Assistant Secretary of the Guarantor, and a certificate of the Secretary or Assistant Secretary of the Guarantor attaching copies of the organization documents of each of the Borrower and the Guarantor and certifying that such organization documents are true, correct, and complete as of the Closing Date; and

(B) A good standing certificate for the Borrower and the Guarantor from the Secretary of State (or similar, applicable Governmental Authority) of its state of incorporation or formation, as the case may be;

(iv) Legal Opinions. A favorable opinion of José Quintana, Assistant General Counsel of the Guarantor, acting as counsel to the Borrower, regarding the matters set forth in Sections 4.01(a)(i), 4.01(a)(ii), 4.01(b), 4.02, 4.03, 4.05 and 4.14;

- 6 -

(v) Certificates. A certificate of a Responsible Officer of the Borrower and the Guarantor certifying that:

(A) The representations and warranties of the Borrower and the Guarantor contained in Article IV and Article VIII, respectively, or any other Loan Document, are true and correct on and as of the Closing Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date;

(B) No Default exists, or would result from the borrowing of the Loan or from the application of the proceeds thereof;

(vi) Pledge Agreement. An executed counterpart of the Pledge Agreement and evidence that all financing statements contemplated thereunder shall have been delivered for filing in the applicable jurisdiction(s).

(vii) Partnership Agreement. A true and correct copy of the partnership agreement of Plum Creek Timberlands, L.P., which shall include terms reasonably satisfactory to the Lender regarding Lender’s eligibility to be a limited partner of Plum Creek Timberlands, L.P.

(viii) Other Documents and Materials. Such other assurances, certificates, documents, approvals, consents, materials or opinions as the Lender reasonably may require.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lender that:

4.01 Existence, Qualification and Power; Compliance with Laws.

(a) The Borrower:

(i) is a limited liability company duly formed, validly existing and in good standing under the Laws of Delaware;

(ii) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership of properties or the conduct of its business requires such qualification or license; and

(iii) is and will engage solely in the business of owning the Preferred Partnership Interests.

(b) The Borrower has full power and authority and the legal right to own the Preferred Partnership Interests, to perform this Agreement and any other Loan Document and to take all actions necessary to complete the transactions contemplated by this Agreement and any such other Loan Document. The Borrower has taken all necessary action to authorize the

- 7 -

transactions contemplated hereby on the terms and conditions of this Agreement and any other Loan Document, and to authorize the execution, delivery and performance of this Agreement and any other Loan Document.

4.02 Authorization; No Contravention. The execution, delivery, and performance of this Agreement and the other Loan Documents will not violate any Law applicable to, or any contractual obligation of, the Borrower. The execution, delivery, and performance of this Agreement and the other Loan Documents will not result in, or require the creation or imposition of any Lien on any of the properties or revenues of the Borrower pursuant to any Law or contractual obligation, except for the Liens created or permitted by the Pledge Agreement.

4.03 Governmental Authorization; Other Consents. No consents or approvals are required to be obtained by the Borrower from any Governmental Authority or other Person in connection with the execution, delivery and performance of this Agreement and the other Loan Documents or the taking of any action by the Borrower contemplated hereby or thereby.

4.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by the Borrower. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditor’s rights generally or by equitable principles relating to enforceability.

4.05 Litigation. No litigation or proceeding of or before any arbitrator or Governmental Authority is pending, and no such litigation or proceeding is, to the knowledge of the Borrower, threatened and no investigation by any Governmental Authority is, to the knowledge of the Borrower, pending or threatened, against or in a manner affecting the Borrower, or against or in a manner affecting any of its properties, rights, revenues or assets.

4.06 No Default. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document or would result from the incurring of the Loan by the Borrower.

4.07 ERISA. The Borrower does not maintain and is not a party to or obligated under any Plan.

4.08 Use of Proceeds. The proceeds of the Loan are intended to be and shall be used solely for the purposes set forth in and permitted by Section 5.07.

4.09 Indebtedness. The Borrower has no Indebtedness and is not subject to any contractual obligations except with respect to its organizational documents, the Preferred Partnership Interests, this Agreement, the Pledge Agreement and the other Loan Documents.

4.10 Ownership of Property; Liens. The Borrower owns no real or personal property except the Preferred Partnership Interests. The Preferred Partnership Interests are not subject to any Liens other than the Lien created pursuant to the Pledge Agreement.

- 8 -

4.11 Taxes. The Borrower has filed all Federal, state and other material tax returns and reports required to be filed, and has paid all Federal, material state and other material taxes, assessments, fees and other governmental charges levied or imposed upon it or its Properties, income or assets otherwise due and payable.

4.12 No Business Conducted. The Borrower has not conducted any business or acquired any property other than the acquisition and ownership of the Preferred Partnership Interests and the rights related thereto.

4.13 Subsidiaries; Equity Interests. The Borrower has no Subsidiaries and has no equity investments in any other corporation or entity other than Plum Creek Timberlands, L.P., which is a disregarded entity for federal income tax purposes.

4.14 Guarantorship Interest. The sole member of the Borrower is the Guarantor, which as of the Closing Date will own 100% of the limited liability company membership interests in the Borrower.

ARTICLE V.

AFFIRMATIVE COVENANTS

So long as the Loan shall remain unpaid or unsatisfied, the Borrower and the Guarantor shall:

5.01 Notices. Promptly notify the Lender:

(a) of the occurrence of any Default, or (ii) of the occurrence or existence of any event or circumstance that foreseeably will become a Default; and

(b) of the commencement of, or any material development in, any material litigation or proceeding affecting the Borrower or Guarantor; provided that the requirements of this subsection (b) shall be satisfied by the filing of any such information with the Securities and Exchange Commission in the Guarantor’s Form 10-Q or 10-K, as the case may be.

5.02 Preservation of Existence Except as permitted by Section 6.03:

(a) preserve and maintain in full force and effect its corporate or limited liability company existence (as the case may be) and good standing under the Laws of its state or jurisdiction of formation, organization or incorporation; and

(b) preserve and maintain in full force and effect all rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business.

5.03 Payment of the Loan and other Obligations. Pay and discharge as the same shall become due and payable, all obligations and liabilities in the case of the Borrower or all material obligations and liabilities in the case of the Guarantor, including:

(a) all tax liabilities, assessments and governmental charges or levies upon it or its assets, unless the same are being contested in good faith by appropriate proceedings diligently

- 9 -

conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower; and

(b) all Indebtedness (or, in the case of Guarantor, material Indebtedness), as and when due and payable.

5.04 Compliance with Laws. Comply in all material respects with all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) any such Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a material adverse effect on the ability of the Borrower or Guarantor to perform its obligations under the Loan Documents or on the value of the Lender’s interest in the Preferred Partnership Interests under the Pledge Agreement.

5.05 Books and Records. Maintain proper books of record and account, in which full, true and correct entries shall be made of all material financial transactions and matters involving the assets and business of the Borrower or the Guarantor (as the case may be).

5.06 Inspection Rights. Permit representatives and independent contractors of the Lender to examine its corporate, financial and operating records, and, subject to Section 9.05, make copies thereof or abstracts therefrom, at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, that when an Event of Default exists the Lender (or any of its representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice.

5.07 Use of Proceeds. In the case of Borrower, use the proceeds of the Loan to make a capital contribution to Plum Creek Timberlands, L.P. in exchange for Preferred Partnership Interests.

5.08 Reserve Account. In the case of Borrower, deposit all cash received by the Borrower and not applied towards payments on the Loan into an account (the “Reserve Account”) until such time as the amounts on deposit in the Reserve Account shall equal the interest payments due on the Loan for the next two Interest Payment Dates; provided that if at any time amounts on deposit in the Reserve Account shall subsequently be less than the interest payments due on the next two Interest Payment Dates, the obligation to deposit amounts to the Reserve Account shall resume until such required amounts in the Reserve Account are again established. Notwithstanding the foregoing in this Section 5.08, the Borrower shall not be required to fund the Reserve Account other than out of and to the extent of excess cash flow received on the Preferred Partnership Interests.

5.09 Financial Statements. Deliver to Lender:

(a) In the case of the Borrower, as soon as available, but not later than 90 days after the end of each fiscal year, a copy of the unaudited consolidated balance sheet of the Borrower as at the end of such year and the related consolidated statements of income or operations and cash

- 10 -

flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP;

(b) In the case of the Guarantor:

(i) as soon as available, but not later than 90 days after the end of each fiscal year, a copy of the audited consolidated balance sheet of the Guarantor as at the end of such year and the related consolidated statements of income or operations and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, and accompanied by the opinion of a nationally-recognized independent public accounting firm, which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable securities laws;

(ii) as soon as available, but not later than 45 days after the end of each of the first three fiscal quarters of each year, a copy of the unaudited consolidated balance sheet of the Guarantor and its consolidated subsidiaries as of the end of such quarter and the related consolidated statements of income and statement of cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by the chief executive officer, chief financial officer, treasurer or controller of the Guarantor as being complete and correct and fairly presenting, in accordance with GAAP (subject only to normal year-end audit adjustments and the absence of footnotes), the financial position and the results of operations of the Guarantor and its subsidiaries;

provided that the requirements of this subsection (b) shall be satisfied by the filing of such information with the Securities and Exchange Commission in the Guarantor’s Form 10-Q or 10-K, as the case may be.

ARTICLE VI.

NEGATIVE COVENANTS

So long as the Loan shall remain unpaid or unsatisfied, the Borrower shall not directly or indirectly:

6.01 Incurrence of Indebtedness. Incur any Indebtedness other than the Loan.

6.02 Liens. Make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its property, whether now owned or hereafter acquired, other than the following:

(a) Liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty; and

(b) the Lien created pursuant to the Pledge Agreement.

6.03 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another Person, except that, so long as no Default exists or would result therefrom, the Borrower may merge or consolidate with the Guarantor; provided that the Guarantor assumes the

- 11 -

obligations of Borrower under this Agreement and confirms that it holds the Preferred Partnership Interests subject to the security interest granted pursuant to the Pledge Agreement.

6.04 Dispositions of Preferred Partnership Interests. Make any Disposition of the Preferred Partnership Interests or enter into any agreement to make any Disposition of the Preferred Partnership Interests, except in connection with a transaction permitted under Section 6.03.

6.05 Acquisitions. Acquire any assets or property, other than additional Preferred Partnership Interests or any property or assets received by the Borrower as a distribution on the Preferred Partnership Interests.

6.06 Contracts. Directly or indirectly enter into any contracts or other agreements, with any Person, other than this Agreement, the acquisition of the Preferred Partnership Interests and as reasonably related to the ownership of the Preferred Partnership Interests, including the exercise of any rights thereunder.

6.07 Use of Proceeds. Use the proceeds of the Loan, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System of the United States) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

6.08 ERISA. Enter into or become a party to any Plan.

6.09 Dividends. Declare or make, directly or indirectly, any dividend or distribution (whether in cash or other property) with respect to any membership interest, purchase, redeem, retire, acquire, cancel or terminate any such membership interest (for cash or other property), or incur any obligation (contingent or otherwise) to do so; provided that the Borrower may make cash distributions with respect to any membership interest so long as at the time of such distribution: (i) no Default or Event of Default shall have occurred and be continuing or would result therefrom and (ii) all amounts required to be deposited in the Reserve Account pursuant to Section 5.08 shall have been funded in full.

ARTICLE VII.

EVENTS OF DEFAULT AND REMEDIES

7.01 Events of Default. Any of the following shall constitute an Event of Default:

(a) Non-Payment. The Borrower fails to pay (i) when and as required to be paid herein, any principal of the Loan, or (ii) interest on the Loan on two consecutive Interest Payment Dates.

(b) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or the Guarantor herein or in any other Loan Document or therewith shall be incorrect or misleading in any material respect when made or deemed made; or

- 12 -

(c) Specific Covenants. The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 5.02 or Article VI; or

(d) Other Defaults. The Borrower or the Guarantor fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (c)) contained in any Loan Document on its part to be performed or observed and such failure continues for 20 days after the earlier of (i) the date upon which a Responsible Officer knew or should have known of such failure or (ii) the date upon which written notice thereof is given to the Borrower by the Lender; or

(e) Insolvency Proceedings, Etc. The Borrower or the Guarantor institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or in connection with any insolvency proceeding applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

(f) Inability to Pay Debts; Attachment. (i) The Borrower or the Guarantor becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

(g) Impairment of Certain Documents. Any of the Loan Documents shall terminate, cease to be in full force and effect, or cease in whole or in part to be the legally valid, binding, and enforceable obligation of the Borrower, or any Person acting for or on behalf of the Borrower contests in any manner the validity, binding effect or enforceability of any of the Loan Documents, or the Borrower denies that it has any or further liability or obligation under any Loan Document, or the Borrower purports to revoke, terminate or rescind any Loan Document; or

(h) Cross Acceleration. An “Event of Default” under and as defined in the Affiliate Credit Agreement shall have occurred and be continuing and the holders of the Indebtedness thereunder shall have declared such Indebtedness to be immediately due and payable.

(i) Cross Default and Foreclosure. An “Event of Default” under and as defined in any document governing indebtedness secured by preferred partnership interests in Plum Creek Timberlands, L.P., a Delaware limited partnership (the “Partnership”), of a series other than that of the Preferred Partnership Interests, shall have occurred and be continuing and the holder of such indebtedness shall have commenced foreclosure proceedings with respect to such other preferred partnership interests in Plum Creek Timberlands, L.P. in accordance with the terms of the documents governing such other indebtedness.

- 13 -

(j) Material Breach of Other Preferred Interests. In the case of any preferred limited partnership interests not described in and subject to the terms of Section 7.01(i), a material breach by the Partnership of its obligations with respect to such preferred limited partnership interest as specified in the documents governing the terms thereof.

(k) Amendment of Partnership Agreement. The partnership agreement of Plum Creek Timberlands, L.P. shall have been amended in violation of Section 3.10 of the Pledge Agreement or shall have been amended such that the representation set forth in Section 3.10 of the Pledge Agreement is no longer true in all material respects.

7.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Lender may take any or all of the following actions:

(a) declare the unpaid principal amount of the Loan, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; and

(b) exercise all rights and remedies available to it under the Loan Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, without further act of the Lender; and provided; further; that notwithstanding the foregoing, other than in the case of an Event of Default under Section 7.01(a)(ii), the Lender shall not complete the foreclosure of any property pledged under the Pledge Agreement prior to the date that is six months from the date the Lender first gave notice of such Event of Default to Borrower.

7.03 Application of Funds. After the exercise of remedies provided for in Section 7.02 (or after the Loan has automatically become immediately due and payable as set forth in the proviso to Section 7.02), any amounts received on account of the Loan shall be applied by the Lender in the following order:

First, to payment of that portion of the Loan constituting unpaid principal of the Loan;

Second, to payment of that portion of the Loan constituting accrued and unpaid interest on the Loan; and

Last, the balance, if any, after all of the amounts under First and Second have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

7.04 Nonrecourse Obligation of the Borrower. Notwithstanding anything in this Agreement or any other Loan Document to the contrary and except as otherwise provided in this Section 7.04, the liability of the Borrower under the Loan Documents is limited to the Pledged Interest (as defined in the Pledge Agreement), provided that the Lender shall have full recourse against the Borrower and the Borrower shall be liable for the full payment of (a) the amount of any income, proceeds or profits of the Pledged Interest and any funds constituting a part of the

- 14 -

Pledged Interest that are, at the time of receipt, required for the payment of amounts that are then due and payable under the Loan Documents and that are not so used, (b) the amount of any loss suffered by the Lender as a result of misrepresentations or fraud by or on behalf of the Borrower in connection with this Agreement or the other Loan Documents, (c) the amount of any loss suffered by the Lender as a result of any transfer of the Pledged Interest or as a result of any attempt by or on behalf of the Borrower to hinder, delay or defeat the Lender’s realization on the Pledge Agreement following an event of default thereunder (including without limitation the filing of any bankruptcy or insolvency proceeding or action to enjoin foreclosure), (d) interest on the amounts described in the foregoing clauses (a) through (c) at the Interest Rate and (e) attorneys’ fees and other costs incurred by the Lender in collecting any of the amounts described in the foregoing clauses (a) through (d).

ARTICLE VIII.

GUARANTEE

8.01 The Guarantee. The Guarantor hereby guarantees, as a primary obligor and not as a surety to the Lender and its respective successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of and interest (including any interest, fees, costs or charges that would accrue but for the provisions of the Bankruptcy Code after any bankruptcy or insolvency petition under the Bankruptcy Code) on the Loan, in each case remaining unpaid and owing following the exercise of all rights and remedies of the Lender against the Borrower under this Agreement and the Pledge Agreement, including completion of realization or foreclosure proceedings against the Pledged Interest (such obligations being herein collectively called the “Guaranteed Obligations”). The Guarantor hereby agrees that if the Borrower shall fail to pay in full when due any of the Guaranteed Obligations, the Guarantor will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due in accordance with the terms of such extension or renewal.

8.02 Obligations Unconditional. The obligations of the Guarantor under Section 8.01, to the fullest extent permitted by applicable Law, are absolute, irrevocable and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations of the Borrower under this Agreement, the Note or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor (except for payment in full). Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantor hereunder which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above:

i. at any time or from time to time, without notice to the Guarantor, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

- 15 -

ii. except as provided in Section 8.01 or Section 8.06, any of the acts mentioned in any of the provisions of this Agreement, the Note or the Pledge Agreement, or any other agreement or instrument referred to herein or therein shall be done or omitted;

iii. the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right under the Loan Documents or any other agreement or instrument referred to herein or therein shall be amended or waived in any respect or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; or

iv. any Lien or security interest granted to, or in favor of, the Lender as security for any of the Guaranteed Obligations shall fail to be perfected.

The Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever. The Guarantor waives any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by the Lender upon this Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between the Borrower and the Lender shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and the successors and assigns thereof, and shall inure to the benefit of the Lender, and its successors and assigns.

8.03 Reinstatement. The obligations of the Guarantor under this Article VIII shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrower in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.

8.04 Subrogation; Subordination. The Guarantor hereby agrees that until the indefeasible payment and satisfaction in full in cash of all Guaranteed Obligations it shall waive any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in Section 8.01, whether by subrogation or otherwise, against the Borrower or any security for any of the Guaranteed Obligations

8.05 Representations and Warranties. The Guarantor represents and warrants to the Lender that:

(a) The Guarantor:

(i) is a corporation duly incorporated, validly existing and in good standing under the Laws of Delaware; and

- 16 -

(ii) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license.

(b) The Guarantor has full power and authority, to conduct its business as now conducted and as proposed to be conducted by it, to perform its obligations under this Article VIII and to take all actions necessary to complete the transactions contemplated by this Article VIII. The Guarantor has taken all necessary action to authorize the transactions contemplated hereby on the terms and conditions of this Agreement, and to authorize the execution, delivery and performance of this Agreement.

(c) This Agreement has been duly executed and delivered by the Guarantor and constitutes the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by limitation upon the availability of equitable remedies.

(d) The execution, delivery, and performance of this Agreement will not violate any Law applicable to, or any contractual obligation of, the Guarantor. The execution, delivery, and performance of this Agreement by the Guarantor will not result in, or require the creation or imposition of any Lien on any of the properties or revenues of the Guarantor pursuant to any applicable Laws or contractual obligation. No approvals or consents of any trustee or any holder of any Indebtedness of the Guarantor are required in connection with the Guarantor’s execution, delivery, and performance of this Agreement, except such approvals or consents as have been duly obtained and are in full force and effect.

(e) No consents or approvals are required to be obtained by the Guarantor from any Governmental Authority or other Person in connection with the performance of the execution, delivery and performance of this Article VIII or the taking of any action by the Guarantor contemplated hereby or thereby.

8.06 Remedies. Notwithstanding anything in this Article VIII or any other provision of the Loan Documents to the contrary, (i) the Lender shall not be entitled to exercise any remedies hereunder unless and until the Lender has fully exhausted all remedies available against the Borrower and the Pledged Interest, including foreclosing its interest in or otherwise realizing upon the Pledged Interest and (ii) in the event the Lender obtains a judgment against the Guarantor to enforce the payment obligations of the Guarantor hereunder, the Lender agrees that it shall only be entitled to satisfy such judgment against the partnership interests in Plum Creek Timberlands, L.P. owned by the Guarantor at such time and the Lender shall not be entitled to enforce such judgment against any other assets of the Guarantor now owned or hereafter acquired.

8.07 Instrument for the Payment of Money. The Guarantor hereby acknowledges that the guarantee in this Article VIII constitutes an instrument for the payment of money, and consents and agrees that the Lender, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213.

- 17 -

8.08 Continuing Guarantee. The guarantee in this Article VIII is a continuing guarantee, and shall apply to all Guaranteed Obligations whenever arising.

8.09 General Limitation on Guarantee Obligations. In any action or proceeding involving any Law, including applicable state, federal or foreign bankruptcy, insolvency, reorganization or other Law affecting the rights of creditors generally, if the obligations of the Guarantor under Section 8.01 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 8.01, then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by the Guarantor, the Lender or any other person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

ARTICLE IX.

MISCELLANEOUS

9.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower therefrom, shall be effective unless in writing signed by the Lender, the Borrower and the Guarantor and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

9.02 Notices; Effectiveness; Electronic Communication.

(a) Notices Generally. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier at the address set forth on Schedule 9.02.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).

(b) Change of Address, Etc. Each of the Borrower, the Guarantor and the Lender may change its address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.

9.03 No Waiver; Cumulative Remedies. No failure by the Lender to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

9.04 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted

- 18 -

hereby. Notwithstanding the foregoing, neither party may assign its rights and obligations under this Agreement other than with the written consent of the other party, except following an Event of Default (as defined herein) as provided in Section 9.7(b)(i) of the limited liability company agreement of the Lender.

9.05 Treatment of Certain Information; Confidentiality. The Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its affiliates and to its and its affiliates’ respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) with the consent of the Borrower and the Guarantor or (g) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Lender or any of its respective affiliates on a nonconfidential basis from a source other than the Borrower or the Guarantor.

Notwithstanding any other provision of this Agreement, to comply with Treasury Regulations Section 1.6011-4(b)(3)(i), each party (and any employee, representative, or other agent of such party) may disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the transactions contemplated by this Agreement and the Pledge Agreement. For purposes of the preceding sentence, tax treatment and tax structure shall not include (i) the name of, or any other identifying information regarding, the Borrower, the Lender, the Guarantor, the Preferred Partnership Interests, or any investment or transaction entered into by the Borrower, and any information regarding the specific economic terms of the transactions contemplated by this Agreement and the Pledge Agreement, (ii) any performance information relating to the Preferred Partnership Interests or the Borrower, or (iii) any performance or other information relating to the Lender or the Guarantor. In addition, either party may make such filings or disclosures as are required by state or federal securities laws.

For purposes of this Section, “Information” means all information received from the Borrower or the Guarantor relating to the Borrower or the Guarantor, other than any such information that is available to the Lender on a nonconfidential basis prior to such disclosure. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

The Lender acknowledges that (a) the Information may include material non-public information concerning the Borrower, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.

- 19 -

9.06 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

9.07 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

9.08 Governing Law; Jurisdiction; Etc.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION. THE BORROWER AND GUARANTOR EACH IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR THE GUARANTOR OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) WAIVER OF VENUE. EACH OF THE BORROWER AND GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR

- 20 -

HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

9.09 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

[Remainder of Page Intentionally Left Blank]

- 21 -

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

BORROWER:
PLUM CREEK VENTURES I, LLC,
a Delaware limited liability company
By: PLUM CREEK TIMBER COMPANY, INC.,
Its sole member
By:	/s/ Joan K. Fitzmaurice
Name:	Joan K. Fitzmaurice
Title:	Vice President, Corporate Communications,
Audit and Information Technology
LENDER:
Southern Diversified Timber, LLC, a Delaware limited liability company
By: TCG / Southern Diversified Manager, LLC
a Delaware limited liability company, its Manager
By: The Campbell Group, LLC
a Delaware limited liability company, its Managing Member
By:	/s/ John Gilleland
Name:	John Gilleland
Title:	President
GUARANTOR
(as to Article VIII only):
PLUM CREEK TIMBER COMPANY, INC., a Delaware corporation
By:	/s/ Joan K. Fitzmaurice
Name:	Joan K. Fitzmaurice
Title:	Vice President, Corporate Communications,
Audit and Information Technology

- 22 -

SCHEDULE 9.02

LENDER’S OFFICE;

CERTAIN ADDRESSES FOR NOTICES

BORROWER AND GUARANTOR:

Plum Creek Timber Company, Inc.

999 Third Avenue, Suite 4300

Seattle, WA 98104

Attention: Laura Smith, Vice President and Treasurer

Telephone: (206) 467-3636

Facsimile: (206) 467-3795

Electronic Mail: laura.smith@plumcreek.com

Website Address: www.plumcreek.com

Taxpayer Identification Number: 91-1920356

LENDER

Southern Diversified Timber, LLC

c/o TCG / Southern Diversified Manager, LLC

One S.W. Columbia, Suite 1700

Portland, OR 97258

Attn: John Gilleland and Stan Renecker

Tel.: 503-275-9675

Fax: 503-275-9667

EXHIBIT A

FORM OF NOTE

Borrower: Plum Creek Ventures I, LLC

Date: [            ], 2008

$783,000,000

FOR VALUE RECEIVED, the undersigned (the “Borrower”) hereby promises to pay to Southern Diversified Timber, LLC or registered assigns (the “Lender “), the principal amount of $783,000,000 (the “Loan”) in accordance with the terms of that certain Credit Agreement, among the Borrower, the Lender and Plum Creek Timber Company, Inc. dated as of [            ], 2008 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement ;” the terms defined therein being used herein as therein defined).

The Borrower promises to pay interest on the unpaid principal amount of the Loan from the date hereof until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to the Lender in immediately available funds by wire transfer to the account directed by the Lender. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

This Note is the Note referred to in the Agreement and is entitled to the benefits thereof. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable as provided in the Agreement.

The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

THE LIABILITY OF THE BORROWER UNDER THIS NOTE AND THE OTHER LOAN DOCUMENTS IS NONRECOURSE TO THE BORROWER AND IS LIMITED TO THE BORROWER’S INTEREST IN THE PLEDGED INTEREST (AS DEFINED IN THE PLEDGE AGREEMENT), EXCEPT AS OTHERWISE PROVIDED IN SECTION 7.04 OF THE AGREEMENT.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

PLUM CREEK VENTURES I, LLC,

a Delaware limited liability company

By: PLUM CREEK TIMBER COMPANY, INC.,

Its sole member

By:

Name:

Title:

EX-10.2

Exhibit 10.2

PLEDGE AGREEMENT

between

PLUM CREEK VENTURES I, LLC

as the Pledgor

and

SOUTHERN DIVERSIFIED TIMBER, LLC

as the Secured Party

Dated as of October 1, 2008

TABLE OF CONTENTS

			Page
ARTICLE I. DEFINITIONS AND INTERPRETATION			1
	SECTION 1.1	Definitions.	1
	SECTION 1.2	Interpretation	3
ARTICLE II. GRANT OF SECURITY AND SECURED OBLIGATIONS			3
	SECTION 2.1	Grant of Security Interest.	3
	SECTION 2.2	Security for Secured Obligations	3
	SECTION 2.3	Delivery of Pledged Interest	3
	SECTION 2.4	Waiver	4
	SECTION 2.5	Further Assurances	4
	SECTION 2.6	Voting Rights; Distributions; Etc.	4
	SECTION 2.7	Filings.	5
ARTICLE III. REPRESENTATIONS AND WARRANTIES			5
	SECTION 3.1	Existence and Business of the Pledgor	6
	SECTION 3.2	Power and Authorization	6
	SECTION 3.3	No Legal Bar	6
	SECTION 3.4	Governmental Approval	6
	SECTION 3.5	Pledged Interest Authorized	6
	SECTION 3.6	Ownership of Pledged Interest	6
	SECTION 3.7	Partnership’s Ownership of Real Property	6
	SECTION 3.8	Lien	6
	SECTION 3.9	Perfection	7
	SECTION 3.10	Partnership Agreement	7
ARTICLE IV. COVENANTS			7
	SECTION 4.1	Restrictions on Sale, Transfer and Encumbrance of Pledged	7
	SECTION 4.2	Defense of Pledged Interest	7
	SECTION 4.3	Compliance with Partnership Agreement	7
	SECTION 4.4	Taxes	7
	SECTION 4.5	Change of Name; Address	7
ARTICLE V. RECOGNITION OF PLEDGE; SUBSTITUTION FOR PLEDGOR			8
	SECTION 5.1	Partnership Acknowledgement	8
	SECTION 5.2	Partners’ Acknowledgement	8
ARTICLE VI. REMEDIES			8
	SECTION 6.1	Remedies	8
	SECTION 6.2	Notice of Sale	10
	SECTION 6.3	Waiver of Notice and Claims	10
	SECTION 6.4	Certain Sales of Pledged Interest.	10
	SECTION 6.5	No Waiver; Cumulative Remedies.	11
	SECTION 6.6	No Instructions.	11

- i -

ARTICLE VII. MISCELLANEOUS			12
	SECTION 7.1	Nonrecourse Obligation of the Pledgor	12
	SECTION 7.2	Concerning the Secured Party.	12
	SECTION 7.3	Continuing Security Interest; Assignment	12
	SECTION 7.4	Termination; Release	13
	SECTION 7.5	Modification in Writing	13
	SECTION 7.6	Notices	13
	SECTION 7.7	Governing Law, Consent to Jurisdiction and Service of Process; Waiver of Jury Trial	13
	SECTION 7.8	Severability of Provisions	14
	SECTION 7.9	Execution in Counterparts	14
	SECTION 7.10	Business Days	14
	SECTION 7.11	No Release	14
EXHIBIT 1	Form of Issuer’s Acknowledgment
EXHIBIT 2	Form of Partner’s Acknowledgment

- ii -

PLEDGE AGREEMENT

This PLEDGE AGREEMENT dated as of October 1, 2008 (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”) is made between Plum Creek Ventures I, LLC, a Delaware limited liability company as the pledgor, assignor and debtor (the “Pledgor”), in favor of Southern Diversified Timber, LLC, in its capacity as Lender pursuant to the Credit Agreement (as defined below), as pledgee, assignee and the secured party (the “Secured Party”).

R E C I T A L S :

A. The Pledgor, the Secured Party, and Plum Creek Timber Company, Inc., as guarantor, have concurrently with the execution and delivery of this Agreement, entered into that certain credit agreement dated as of October 1, 2008 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).

B. The Pledgor will receive substantial benefits under the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement) and is, therefore, willing to enter into this Agreement.

C. This Agreement is given by the Pledgor in favor of the Secured Party to secure the payment and performance of all of the obligations of the Pledgor under the Credit Agreement.

D. It is a condition to the obligation of the Secured Party to make the Loan under the Credit Agreement that the Pledgor execute and deliver this Agreement.

A G R E E M E N T :

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Pledgor and the Secured Party hereby agree as follows:

ARTICLE I.

DEFINITIONS AND INTERPRETATION

SECTION 1.1 Definitions.

Unless otherwise defined herein or in the Credit Agreement, capitalized terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC.

(a) Terms used but not otherwise defined herein that are defined in the Credit Agreement shall have the meanings given to them in the Credit Agreement.

(b) The following terms shall have the following meanings:

“Agreement” has the meaning assigned to such term in the Preamble hereof.

“Credit Agreement” has the meaning assigned to such term in Recital A hereof.

“Distributions” means, collectively, all dividends, cash, options, warrants, rights, instruments, distributions, returns of capital or principal, income, interest, profits and other property, interests (debt or equity) or proceeds, including as a result of a split, revision, reclassification or other like change of the Pledged Interest, from time to time received, receivable or otherwise distributed to the Pledgor in respect of or in exchange for any or all of the Pledged Interest.

“Loan Value” means a “proportionate share” of (i) the fair market value of Real Property owned by the Partnership and attributable to the Pledgor’s interest as a limited partner in the Partnership, determined as of the date on which the commitment by the Lender to make the Loan becomes binding on the Lender, reduced by (ii) any liens encumbering the Real Property owned by the Partnership, as well as by any other liabilities of the Partnership, on such date. The “proportionate share” shall be determined using the principles of Treasury Regulations Section 1.856-3(g).

“Partnership” means Plum Creek Timberlands, L.P.

“Partnership Agreement” means the Agreement of Limited Partnership of Plum Creek Acquisition Partners, L.P., dated as of July 16, 1998 between Plum Creek Timber I, L.L.C., as general partner, and Plum Creek Timber Company, Inc. as the sole limited partner, as amended by Amendment No. 1 to the Agreement of Limited Partnership of Plum Creek Acquisition Partners, L.P., and as further amended, amended and restated, supplemented or otherwise modified from time to time.

“Pledged Interest” has the meaning assigned to such term in Section 2.1.

“Pledgor” has the meaning assigned to such term in the Preamble hereof.

“Real Property” means “real property” within the meaning of Treasury Regulations Section 1.856-3(d).

“Secured Obligations” has the meaning assigned to such term in Section 2.1.

“Secured Party” has the meaning assigned to such term in the Preamble hereof.

“Securities Act” means the Securities Act of 1933, as amended.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Secured Party’s security interest in any item or portion of the Pledged Interest is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.

- 2 -

SECTION 1.2 Interpretation. The rules of interpretation specified in the Credit Agreement (including Section 1.02 thereof) shall be applicable to this Agreement.

ARTICLE II.

GRANT OF SECURITY AND SECURED OBLIGATIONS

SECTION 2.1 Grant of Security Interest.

The Pledgor hereby pledges, assigns, hypothecates, delivers, sets over and grants to the Secured Party, as security for the timely and punctual (i) payment when due of any and all sums from time to time owing by the Pledgor under the Credit Agreement and (ii) performance when due by the Pledgor of all its other obligations under the Loan Documents (collectively, the “Secured Obligations”), a lien on and perfected security interest in, prior to all other Liens, all of the Pledgor’s right, title and interest in, to and under the following, whether now owned or hereafter acquired (collectively, the “Pledged Interest”):

(a) all of the Pledgor’s interest as a limited partner in the Partnership, whether now owned or hereafter acquired, including without limitation all rights, privileges, authority and powers of the Pledgor as a partner, whether now existing or hereafter arising, whether under the terms of the Partnership Agreement or at law, or otherwise and the rights of the Pledgor under such Partnership Agreement to acquire additional interests as a general or limited partner in the Partnership and rights to acquire the partnership interests in the Partnership of other partners in the Partnership, or at law, or otherwise;

(b) the Pledgor’s interest, whether now owned or hereafter acquired, under any other agreement, now or hereafter in effect, with any other partner in the Partnership, providing for the right of the Pledgor to acquire or exercise its rights with respect to the partnership interest in the Partnership now or hereafter owned or held by any such other partner in the Partnership; and

(c) all proceeds of any of the foregoing and all income, cash flow, revenues, issues, profits, losses, distributions, payments, proceeds and other property of every kind and variety due, accruing or owing to, or to be turned over to, or disbursed to the Pledgor by the Partnership in connection with the Pledgor’s partnership interests therein, including, without limitation, all rights of the Pledgor to Distributions and payments as provided in the Partnership Agreement.

SECTION 2.2 Security for Secured Obligations. This Agreement secures the payment and performance of all Secured Obligations.

SECTION 2.3 Delivery of Pledged Interest. If the Pledgor shall become entitled to receive or shall receive any certificate, instrument, option or rights, whether as an addition to, in substitution of, or in exchange for the Pledged Interest or any part thereof, or otherwise, the Pledgor shall accept any such certificate, instrument, option or rights as the Secured Party’s agent, shall hold them in trust for the Secured Party, and shall deliver them forthwith to the Secured Party in the exact form received, with the Pledgor’s endorsement when necessary, or accompanied by duly executed instruments of transfer or assignments in blank or, if requested by the Secured Party, an additional pledge agreement or security agreement executed and delivered by the Pledgor, all in form and substance satisfactory to the Secured Party, to be

- 3 -

held by the Secured Party, subject to the terms hereof, as further collateral security for the Secured Obligations.

SECTION 2.4 Waiver. The Pledgor hereby waives diligence, presentment, demand of any kind, filing of claims with a court in the event of receivership or bankruptcy, protests of any kind, notices of any kind, and all setoffs and counterclaims, to the extent permitted by applicable law.

SECTION 2.5 Further Assurances. The Pledgor agrees that at any time and from time to time, at its expense, to promptly execute and deliver all further instruments and documents (including, without limitation, financing statements or any additional pledge agreement or security agreement), and take all further action that, in the opinion of the Secured Party, may be necessary or reasonably desirable in order to perfect and protect any security interest in the Pledged Interest granted or purported to be granted hereby or to enable the Secured Party to exercise and enforce its rights and remedies hereunder with respect to the Pledged Interest or any part thereof, including, without limitation, the execution and delivery by the Pledgor to the Secured Party of an instrument pursuant to which the Pledgor approves of the identity and admission to the Partnership of any Person or entity who becomes an additional or substituted partner in the Partnership pursuant to the exercise by the Secured Party of the rights and remedies hereunder or under any of the other Loan Documents.

SECTION 2.6 Voting Rights; Distributions; Etc.

(a) So long as no Event of Default shall have occurred and be continuing:

(i) the Pledgor shall be entitled to exercise any and all voting, consent, managerial, election and other rights relating to the Pledged Interest and exercise all rights of conversion, exchange or any other rights, privileges or options pertaining to the Pledged Interest for any purpose not inconsistent with the terms of this Agreement or any other Loan Document; provided, however, that, the Pledgor shall not exercise or shall refrain from exercising any such right if such action or inaction would have an adverse effect on the Pledgor’s ability promptly to perform or pay any of its obligations when due hereunder or in accordance with any other Loan Document;

(ii) the Pledgor shall be entitled to receive any and all Distributions in respect of the Pledged Interest (whether as a Distribution of net cash flow or otherwise), provided such Distributions are applied by the Pledgor first to the payment of any principal of or interest then due or coming due on the Loan as required under the Credit Agreement; and

(iii) the Secured Party shall execute and deliver (or cause to be executed and delivered) to the Pledgor all such instruments and certificates as the Pledgor may reasonably request for the purpose of enabling the Pledgor to exercise the voting and other rights which it is entitled to exercise pursuant and to receive the Distributions and allocations it is authorized to receive pursuant to this Section 2.6(a).

(b) Upon the occurrence and during the continuance of an Event of Default:

- 4 -

(i) the Secured Party may take such action as the Secured Party shall in its sole discretion deem necessary or desirable with respect to the Pledged Interest, and the Secured Party or its nominee may thereafter, in its sole discretion, without notice, exercise all voting, consent, managerial and other rights relating to the Pledged Interest and exercise any and all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to the Pledged Interest as if it were the absolute owner thereof, including, without limitation, the right to exchange, at its sole discretion, any and all of the Pledged Interest upon the merger, consolidation, reorganization, recapitalization or other readjustment of the Partnership, all without liability except to account for property actually received by it, but the Secured Party shall have no duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing; and

(ii) all rights of the Pledgor to receive the Distributions which it would otherwise be authorized to receive pursuant to Section 2.6(a)(ii) shall cease, and all such rights shall thereupon become vested in the Secured Party who shall thereupon have the sole right to such Distributions as additional security hereunder. All Distributions which are received by the Pledgor contrary to the provisions of this Section 2.6(b)(ii) shall be received in trust for the benefit of the Secured Party, shall be segregated from other funds of the Pledgor and shall be promptly paid over to the Secured Party in the same form as so received (with any necessary endorsement).

SECTION 2.7 Filings.

(a) The Pledgor hereby irrevocably authorizes the Secured Party at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Pledged Interest, including (i) whether the Pledgor is an organization, the type of organization and any organizational identification number issued to the Pledgor, and (ii) any financing or continuation statements or other documents, in each case, without the signature of the Pledgor where permitted by law, including the filing of a financing statement describing the Pledged Interest as “all assets now owned or hereafter acquired by the Pledgor or in which the Pledgor otherwise has rights”. The Pledgor agrees to provide all information described in the immediately preceding sentence to the Secured Party promptly upon request by the Secured Party.

(b) The Pledgor hereby ratifies its authorization for the Secured Party to file in any relevant jurisdiction any financing statements relating to the Pledged Interest if filed prior to the date hereof.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

The Pledgor makes the following representations and warranties, each of which shall survive the execution and delivery of this Agreement:

- 5 -

SECTION 3.1 Existence and Business of the Pledgor. The Pledgor is a limited liability company duly organized, validly existing and in good standing under the laws of the Delaware. The Guarantor’s Federal EIN is 91-1912863.

SECTION 3.2 Power and Authorization.

The Pledgor has full power and authority and the legal right to own the limited partnership interest in the Partnership, to perform the Partnership Agreement and this Agreement and any other Loan Document and to take all actions necessary to complete the transactions contemplated by the Partnership Agreement and this Agreement and any such other Loan Document. The Pledgor has taken all necessary action to authorize the transactions contemplated hereby on the terms and conditions of the Partnership Agreement and this Agreement and any other Loan Document, and to authorize the execution, delivery and performance of the Partnership Agreement and this Agreement and any other Loan Document.

SECTION 3.3 No Legal Bar. The performance of the Partnership Agreement will not violate any Law applicable to, or any contractual obligation of, the Pledgor. The performance of the Partnership Agreement will not result in, or require the creation or imposition of any Lien on any of the properties or revenues of the Pledgor pursuant to any Law or contractual obligation. No approvals or consents of any Person are required in connection with the performance by the Pledgor of the Partnership Agreement.

SECTION 3.4 Governmental Approval. No Governmental Approvals or other consents or approvals are required to be obtained by the Pledgor in connection with the performance of the Partnership Agreement by the Pledgor contemplated thereby.

SECTION 3.5 Pledged Interest Authorized. The Pledged Interest has been validly created and all contributions with respect to the Pledged Interest required to have been made as of the date hereof have been paid to the Partnership.

SECTION 3.6 Ownership of Pledged Interest. The Pledgor is the sole, legal, direct and beneficial owner of a limited partnership interest in the Partnership free and clear of any Lien or other encumbrance except for the pledge and security interest granted hereunder to the Secured Party. No financing statement covering the Pledged Interest is on file in any public office other than the financing statements filed pursuant to this Agreement. The Pledged Interest is not subject to any Law or contractual obligation that would prohibit or restrict the grant of the security interest in the Pledged Interest pursuant hereto or the disposition of the Pledged Interest by or to the Secured Party upon the occurrence and continuance of an Event of Default.

SECTION 3.7 Partnership’s Ownership of Real Property. The Partnership owns Real Property. The Loan Value of the Real Property owned by the Partnership exceeds the principal amount of the Loan. The fair market value of the Real Property owned by the Partnership constitutes at least 85% of the fair market value of all of the Partnership’s assets.

SECTION 3.8 Lien. The Pledgor’s pledge of the Pledged Interest hereunder and the filing of appropriate financing statements referred to in Section 3.9 hereof

- 6 -

create a valid perfected security interest in the Pledged Interest and in the proceeds thereof, subject to no other Liens.

SECTION 3.9 Perfection. The Pledgor has executed and filed a financing statement pursuant to the UCC with the Secretary of State of the State of Delaware, which is the only jurisdiction in which a financing statement must be filed to perfect a security interest in the Pledged Interest.

SECTION 3.10 Partnership Agreement. The Partnership Agreement provides that (i) the Secured Party is deemed to satisfy all conditions to being a limited partner of the Partnership (the “Partnership Conditions”), subject to satisfaction of any legal or statutory requirements applicable to Secured Party becoming a limited partner of the Partnership, (ii) the Partnership Conditions are not so restrictive as to prevent Secured Party from being able to hold a commercially reasonable foreclosure sale of the Pledged Interest, (iii) the terms thereof related solely to the Pledged Interest cannot be amended without the consent of the Secured Party and (iv) the Secured Party is a third party beneficiary thereof.

ARTICLE IV.

COVENANTS

So long as the Secured Obligations remain outstanding, the Pledgor covenants and agrees with the Secured Party as follows:

SECTION 4.1 Restrictions on Sale, Transfer and Encumbrance of Pledged Interest. The Pledgor shall not sell, transfer, convey, encumber or otherwise dispose of, grant any option with respect to, or pledge any interest in, the Pledged Interest.

SECTION 4.2 Defense of Pledged Interest. The Pledgor will maintain the Pledged Interest free and clear of any security interest except the security interests granted hereunder and will defend the Secured Party’s right, title and security interest in and to the Pledged Interest against the claims of any Person.

SECTION 4.3 Compliance with Partnership Agreement. The Pledgor will comply with the Partnership Agreement.

SECTION 4.4 Taxes. The Pledgor will pay and discharge all Taxes imposed on it or on its income or profits or on any of its property prior to the date on which interest or penalties attach thereto and all claims, levies or liabilities (including, without limitation, claims for labor, services, materials and supplies) for sums which have become due and payable or, if unpaid, might become a Lien upon any of the Pledged Interest.

SECTION 4.5 Change of Name; Address. The Pledgor shall give the Secured Party 30 days’ prior written notice of any change of its name, its jurisdiction or form of organization or its Unified Business Identifier number. If requested by the Secured Party, the Pledgor shall file additional UCC financing statements to reflect any such change.

- 7 -

ARTICLE V.

RECOGNITION OF PLEDGE; SUBSTITUTION FOR PLEDGOR

SECTION 5.1 Partnership Acknowledgement. The Pledgor shall deliver to the Secured Party an acknowledgment of the Partnership in the form of Exhibit 1, acknowledging the pledge of the Pledged Interest to the Secured Party hereunder and making the undertakings set forth therein.

SECTION 5.2 Partners’ Acknowledgement. The Pledgor shall deliver to the Secured Party an acknowledgement and consent of each of the other partners in the Partnership in the form of Exhibit 2, to the effect that, if an Event of Default shall have occurred and be continuing, then, the Secured Party shall be entitled to become a substitute limited partner in the Partnership or to designate another Person to become such substitute limited partner.

ARTICLE VI.

REMEDIES

SECTION 6.1 Remedies.

(a) Upon the occurrence and during the continuance of any Event of Default, the Secured Party may from time to time exercise in respect of the Pledged Interest, in addition to the other rights and remedies provided for herein or otherwise available to it all the rights and remedies of a secured party on default under the UCC, and the Secured Party may also in its sole discretion, without notice except as specified in Section 6.2 hereof, sell, assign or grant a license to use the Pledged Interest or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at any of the Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Secured Party may deem commercially reasonable. Notwithstanding the foregoing, other than in the case of an Event of Default under Section 7.01(a)(ii) of the Credit Agreement, Secured Party shall not complete the foreclosure or other Disposition (as defined below) of any property pledged under this Agreement prior to the date that is six months from the date Secured Party first gave notice of such Event of Default to Pledgor. The Secured Party or any of its affiliates may be the purchaser, licensee, assignee or recipient of the Pledged Interest or any part thereof at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Pledged Interest sold, assigned or licensed at such sale, to use and apply any of the Secured Obligations owed to the Secured Party as a credit on account of the purchase price of the Pledged Interest or any part thereof payable by the Secured Party at such sale. Each purchaser, assignee, licensee or recipient at any such sale shall acquire the property sold, assigned or licensed absolutely free from any claim or right on the part of the Pledgor, and the Pledgor hereby waives, to the fullest extent permitted by law, all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. The Secured Party shall not be obligated to make any sale of the Pledged Interest or any part thereof regardless of notice of sale having been given. The Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice,

- 8 -

be made at the time and place to which it was so adjourned. The Pledgor hereby waives, to the fullest extent permitted by law, any claims against the Secured Party arising by reason of the fact that the price at which the Pledged Interest or any part thereof may have been sold, assigned or licensed at such a private sale was less than the price which might have been obtained at a public sale, even if the Secured Party accepts the first offer received and does not offer such Pledged Interest to more than one offeree.

(b) Pledgor acknowledges that the Pledged Interest would, if owned by a purchaser at a foreclosure sale, have a lesser value than if the Pledged Interest were owned by the Pledgor. Secured Party shall have no obligation to obtain the consent of any partner to the limited partnership prior to any sale, assignment, grant of a license to use or other disposition of the Pledged Interest at public or private proceedings (a “Disposition”); provided that any purchaser of such interest will be required to satisfy the conditions of the Partnership Agreement applicable to it, including making certain representations, prior to becoming a limited partner of the partnership. Pledgor agrees that it will endeavor to maximize the value of the Pledged Interest, but acknowledges that Secured Party is under no obligation to so maximize the Pledged Interest value, because, among other things, Secured Party has more limited rights under applicable law than does the Pledgor cost-effectively to enforce certain rights associated with the Pledged Interest.

(i) Pledgor acknowledges that the publication of a notice of sale or similar advertisement in national, regional or local publications is disporportionate to the value of the Collateral and any potential benefit and, therefore, should be regarded as cost prohibitive and, moreover, is unlikely to reach the type of third party buyer interested in purchasing the Pledged Interest. Pledgor further acknowledges and agrees that (i) Secured Party shall have no obligation to publish a notice of sale in any national, regional or local publication except as required by statute and, (ii) should Secured Party notify primary known buyers of timberlands (which shall be deemed to include all timber REITs actually known of by Secured Party, The Campbell Group or any of its affiliates and CalPERS), such notification shall be deemed commercially reasonable. Pledgor also agrees at its own expense promptly to assure delivery of such notice of such sale to everyone known or suspected by Pledgor to have any interest in purchasing such assets. Pledgor acknowledges that Secured Party is not a dealer in the timber property underlying the Pledged Interest. Pledgor, by virtue of Pledgor’s experience in the timber industry, has special information about prospective buyers interested in bidding on the Pledged Interest and the best means to reach such buyers (“Buyer Information”). Pledgor agrees to deliver to Secured Party such Buyer Information promptly upon request by Secured Party and, if Pledgor fails to provide such Buyer Information as requested, shall indemnify and hold harmless Secured Party from any later claims by Pledgor of inadequacy of notice of sale or any related loss, cost, liability or expense on account thereof.

(ii) Pledgor acknowledges and agrees that Secured Party is under no obligation, in the event of a Disposition to a third party, to accept any proceeds other than immediately available funds indefeasibly paid free and clear of all liens, claims and encumbrances. In order to complete a Disposition in a timely manner, Pledgor acknowledges and agrees that Secured Party may purchase the Pledged Interest in a

- 9 -

Disposition and Secured Party may bid any price for the Pledged Interest and set off against the Secured Obligations the amount of such credit bid, up to the amount of the Secured Obligations.

SECTION 6.2 Notice of Sale. The Pledgor acknowledges and agrees that, to the extent notice of sale or other disposition of the Pledged Interest or any part thereof shall be required by law, ten (10) days’ prior notice to the Pledgor of the time and place of any public sale or of the time after which any private sale or other intended disposition is to take place shall be commercially reasonable notification of such matters. No notification need be given to the Pledgor if it has signed, after the occurrence of an Event of Default, a statement renouncing or modifying any right to notification of sale or other intended disposition.

SECTION 6.3 Waiver of Notice and Claims. The Pledgor hereby waives, to the fullest extent permitted by applicable law, notice or judicial hearing in connection with the Secured Party’s taking possession or the Secured Party’s disposition of the Pledged Interest or any part thereof, including any and all prior notice and hearing for any prejudgment remedy or remedies and any such right which the Pledgor would otherwise have under law, and the Pledgor hereby further waives, to the fullest extent permitted by applicable law: (i) all damages occasioned by such taking of possession, (ii) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Secured Party’s rights hereunder and (iii) all rights of redemption, appraisal, valuation, stay, extension or moratorium now or hereafter in force under any applicable law. The Secured Party shall not be liable for any incorrect or improper payment made pursuant to this Article VI in the absence of gross negligence or willful misconduct on the part of the Secured Party. Any sale of, or the grant of options to purchase, or any other realization upon, any Pledged Interest shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the Pledgor therein and thereto, and shall be a perpetual bar both at law and in equity against the Pledgor and against any and all persons claiming or attempting to claim the Pledged Interest so sold, optioned or realized upon, or any part thereof, from, through or under the Pledgor.

SECTION 6.4 Certain Sales of Pledged Interest.

(a) The Pledgor recognizes that, by reason of certain prohibitions contained in law, rules, regulations or orders of any Governmental Authority, the Secured Party may be compelled, with respect to any sale of all or any part of the Pledged Interest, to limit purchasers to those who meet the requirements of such Governmental Authority. The Pledgor acknowledges that any such sales may be at prices and on terms less favorable to the Secured Party than those obtainable through a public sale without such restrictions, and, notwithstanding such circumstances, agrees that any such restricted sale shall be deemed to have been made in a commercially reasonable manner and that, except as may be required by applicable law, the Secured Party shall have no obligation to engage in public sales.

(b) The Pledgor recognizes that, by reason of certain prohibitions contained in the Securities Act, and applicable state securities laws, the Secured Party may be compelled, with respect to any sale of all or any part of the Pledged Interest, to limit purchasers to persons who will agree, among other things, to acquire such Pledged Interest for their own account, for investment and not with a view to the distribution or resale thereof. The Pledgor acknowledges

- 10 -

that any such private sales may be at prices and on terms less favorable to the Secured Party than those obtainable through a public sale without such restrictions (including a public offering made pursuant to a registration statement under the Securities Act), and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Secured Party shall have no obligation to engage in public sales and no obligation to delay the sale of any Pledged Interest for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would agree to do so.

SECTION 6.5 No Waiver; Cumulative Remedies.

(a) No failure on the part of the Secured Party to exercise, no course of dealing with respect to, and no delay on the part of the Secured Party in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power, privilege or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power, privilege or remedy; nor shall the Secured Party be required to look first to, enforce or exhaust any other security, collateral or guaranties. All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law or otherwise available.

(b) In the event that the Secured Party shall have instituted any proceeding to enforce any right, power, privilege or remedy under this Agreement or any other Loan Document by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Secured Party, then and in every such case, the Pledgor and the Secured Party shall be restored to their respective former positions and rights hereunder with respect to the Pledged Interest, and all rights, remedies, privileges and powers of the Secured Party and the other Secured Parties shall continue as if no such proceeding had been instituted.

SECTION 6.6 No Instructions. The Secured Party agrees that, unless and until an Event of Default has occurred and is continuing under the Credit Agreement, the Secured Party will not give any instructions to the Partnership with respect to the Pledged Interest.

- 11 -

ARTICLE VII.

MISCELLANEOUS

SECTION 7.1 Nonrecourse Obligation of the Pledgor. Notwithstanding anything in this Agreement or any other Loan Document to the contrary and except as otherwise provided in this Section 7.1, the liability of the Pledgor under the Loan Documents is limited to the Pledged Interest, provided that the Secured Party shall have full recourse against the Pledgor and the Pledgor shall be liable for the full payment of (a) the amount of any income, proceeds or profits of the Pledged Interest and any funds constituting a part of the Pledged Interest that are, at the time of receipt, required for the payment of amounts that are then due and payable under the Loan Documents and that are not so used, (b) the amount of any loss suffered by the Secured Party as a result of misrepresentations or fraud by or on behalf of the Pledgor in connection with this Agreement or the other Loan Documents, (c) the amount of any loss suffered by the Secured Party as a result of any transfer of the Pledged Interest or as a result of any attempt by or on behalf of the Pledgor to hinder, delay or defeat the Secured Party’s realization on this Agreement (including without limitation the filing of any bankruptcy or insolvency proceeding or action to enjoin foreclosure), (d) interest on the amounts described in the foregoing clauses (a) through (c) at the Interest Rate and (e) attorneys’ fees and other costs incurred by the Secured Party in collecting any of the amounts described in the foregoing clauses (a) through (d).

SECTION 7.2 Concerning the Secured Party.

(a) The Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Interest in its possession if such Pledged Interest is accorded treatment substantially equivalent to that which the Secured Party, in its individual capacity, accords its own property consisting of similar instruments or interests, it being understood that the Secured Party shall not have responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Pledged Interest, whether or not the Secured Party has or is deemed to have knowledge of such matters or (ii) taking any necessary steps to preserve rights against any person with respect to any Pledged Interest.

(b) The Secured Party shall be entitled to rely upon any written notice, statement, certificate, order or other document or any telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person, and, with respect to all matters pertaining to this Agreement and its duties hereunder, upon advice of counsel selected by it.

SECTION 7.3 Continuing Security Interest; Assignment. This Agreement shall create a continuing security interest in the Pledged Interest and shall (i) be binding upon the Pledgor, its respective successors and assigns and (ii) inure, together with the rights and remedies of the Secured Party hereunder, to the benefit of the Secured Party and its respective successors, transferees and assigns. No other Persons (including any other creditor of the Pledgor) shall have any interest herein or any right or benefit with respect hereto. Without limiting the generality of the foregoing clause (ii), the Secured Party may assign or otherwise

- 12 -

transfer any indebtedness held by it secured by this Agreement to any other Person, and such other person shall thereupon become vested with all the benefits in respect thereof granted to the Secured Party, herein or otherwise, subject however, to the provisions of the Credit Agreement requiring the consent of the Pledgor to any assignment. The Pledgor agrees that its obligations hereunder and the security interest created hereunder shall continue to be effective or be reinstated, as applicable, if at any time payment, or any part thereof, of all or any part of the Secured Obligations is rescinded or must otherwise be restored by the Secured Party upon the bankruptcy or reorganization of the Pledgor or otherwise.

SECTION 7.4 Termination; Release. When all the Secured Obligations have been paid in full, this Agreement shall terminate. Upon termination of this Agreement the Pledged Interest shall be released from the Lien of this Agreement. Upon such release or any release of Pledged Interest or any part thereof in accordance with the provisions of the Credit Agreement, the Secured Party shall, upon the request and at the sole cost and expense of the Pledgor, assign, transfer and deliver to the Pledgor, against receipt and without recourse to or warranty by the Secured Party except as to the fact that the Secured Party has not encumbered the released assets, such of the Pledged Interest or any part thereof to be released (in the case of a partial release) as may be in possession of the Secured Party and as shall not have been sold or otherwise applied pursuant to the terms hereof, and, with respect to any other Pledged Interest, proper documents and instruments (including UCC 3 termination financing statements or releases) acknowledging the termination hereof or the release of such Pledged Interest, as the case may be.

SECTION 7.5 Modification in Writing. No amendment, modification, supplement, termination or waiver of or to any provision hereof, nor consent to any departure by the Pledgor therefrom, shall be effective unless the same shall be made in accordance with the terms of the Credit Agreement and unless in writing and signed by the Secured Party. Any amendment, modification or supplement of or to any provision hereof, any waiver of any provision hereof and any consent to any departure by the Pledgor from the terms of any provision hereof in each case shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement or any other document evidencing the Secured Obligations, no notice to or demand on the Pledgor in any case shall entitle the Pledgor to any other or further notice or demand in similar or other circumstances.

SECTION 7.6 Notices. Unless otherwise provided herein or in the Credit Agreement, any notice or other communication herein required or permitted to be given shall be given in the manner and become effective as set forth in the Credit Agreement, as to the Pledgor, addressed to it at the address set forth in the Credit Agreement and as to the Secured Party, addressed to it at the address set forth in the Credit Agreement, or in each case at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section 7.6.

SECTION 7.7 Governing Law, Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. Sections 9.09 and 9.10 of the Credit Agreement are incorporated herein, as if a part hereof.

- 13 -

SECTION 7.8 Severability of Provisions. Any provision hereof which is invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without invalidating the remaining provisions hereof or affecting the validity, legality or enforceability of such provision in any other jurisdiction.

SECTION 7.9 Execution in Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all such counterparts together shall constitute one and the same agreement.

SECTION 7.10 Business Days. In the event any time period or any date provided in this Agreement ends or falls on a day other than a Business Day, then such time period shall be deemed to end and such date shall be deemed to fall on the next succeeding Business Day, and performance herein may be made on such Business Day, with the same force and effect as if made on such other day.

SECTION 7.11 No Release. Nothing set forth in this Agreement or any other Loan Document, nor the exercise by the Secured Party of any of the rights or remedies hereunder, shall relieve the Pledgor from the performance of any term, covenant, condition or agreement on the Pledgor’s part to be performed or observed under or in respect of any of the Pledged Interest or from any liability to any person under or in respect of any of the Pledged Interest or shall impose any obligation on the Secured Party to perform or observe any such term, covenant, condition or agreement on the Pledgor’s part to be so performed or observed or shall impose any liability on the Secured Party for any act or omission on the part of the Pledgor relating thereto or for any breach of any representation or warranty on the part of the Pledgor contained in this Agreement or the other Loan Documents, or under or in respect of the Pledged Interest or made in connection herewith or therewith. Anything herein to the contrary notwithstanding, the Secured Party shall not have any obligation or liability under any contracts, agreements and other documents included in the Pledged Interest by reason of this Agreement, nor shall the Secured Party be obligated to perform any of the obligations or duties of the Pledgor thereunder or to take any action to collect or enforce any such contract, agreement or other document included in the Pledged Interest hereunder. The obligations of the Pledgor contained in this Section 7.11 shall survive the termination hereof and the discharge of the Pledgor’s other obligations under this Agreement and the other Loan Documents.

[Remainder of page intentionally left blank; signature page follows.]

- 14 -

IN WITNESS WHEREOF, the Pledgor and the Secured Party have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date first above written.

THE PLEDGOR:
PLUM CREEK VENTURES I, LLC, a Delaware limited liability company
By:	Plum Creek Timber Company, Inc., its Member
By:	/s/ Joan K. Fitzmaurice
Name:	Joan K. Fitzmaurice
Title:	Vice President, Corporate Communications, Audit and Information Technology
THE SECURED PARTY:
Southern Diversified Timber, LLC, a Delaware limited liability company
By:	TCG / Southern Diversified Manager, LLC, a Delaware limited liability company, its Manager
	By:	The Campbell Group, LLC a Delaware limited liability company, its Managing Member
		By:	/s/ John Gilleland
		Name:	John Gilleland
		Title:	President

- 15 -

EXHIBIT 1

[Form of]

PARTNERSHIP ACKNOWLEDGMENT

The undersigned hereby (i) acknowledges receipt of the Pledge Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Pledge Agreement”; capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Pledge Agreement) dated as of October __, 2008, made by Plum Creek Ventures I, LLC, a Delaware limited liability company (the “Pledgor”), in favor of Southern Diversified Timber, LLC, a Delaware limited liability company (the “Secured Party”), (ii) agrees promptly to note on its books the security interests granted to the Secured Party and confirmed under the Pledge Agreement, (iii) agrees that it will comply with instructions of the Secured Party with respect to the Pledged Interest without further consent by the Pledgor, and (iv) agrees to notify the Secured Party upon obtaining knowledge of any interest in favor of any Person in the applicable Pledged Interest that is adverse to the interest of the Secured Party therein.

PLUM CREEK TIMBERLANDS, L.P.
By:	Plum Creek Timber I, L.L.C., its general partner
	By:	Plum Creek Timber Company, Inc., its managing member
By:
	Name:
	Title:

EXHIBIT 2

[Form of]

PARTNERS’ ACKNOWLEDGMENT

Each of the undersigned hereby (i) acknowledges receipt of the Pledge Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Pledge Agreement”; capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Pledge Agreement) dated as of October     , 2008, made by Plum Creek Ventures I, LLC, a Delaware limited liability company (the “Pledgor”), in favor of Southern Diversified Timber, LLC, a Delaware limited liability company (the “Secured Party”), and (ii) consents to the admission as a substitute limited partner in the Partnership of the Secured Party or any other Person acquiring the Pledged Interest, in each case in connection with the default and foreclosure of the pledge under the Pledge Agreement, provided that the Secured Party or such other Person delivers the documents required by Article XI of the Partnership Agreement and otherwise satisfies the conditions of transfer under the Partnership Agreement.

PLUM CREEK TIMBER I, L.L.C., as general partner
	By:	Plum Creek Timber Company, Inc., its managing member
By:
	Name:
	Title:
PLUM CREEK TIMBER COMPANY, INC., as limited partner
By:
	Name:
	Title:

EX-99.1

Exhibit 99.1

PLUM CREEK TIMBER COMPANY, INC.

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The accompanying unaudited pro forma condensed consolidated financial information has been prepared to reflect the October 1, 2008 contribution by Plum Creek (“the company”) of timber and timberlands to Southern Diversified Timber, LLC (“the Joint Venture”). On October 1, 2008, the company contributed 454,000 acres of timberlands located in its Southern Resources Segment (“Timberland Contribution”) to the Joint Venture in exchange for a $705 million preferred interest and a $78 million common interest. Immediately following the Timberland Contribution, the company borrowed $783 million from the Joint Venture (“Note Payable to Unconsolidated Joint Venture”). The Joint Venture’s other member, an affiliate of The Campbell Group, LLC, contributed $783 million of cash in exchange for a common interest. The other member’s common interest represents approximately 91% of the Joint Venture’s common interests.

The transfer of timberlands will be accounted for as a contribution to a joint venture and no gain or loss will be recognized upon formation. The preferred and common interests will be accounted for under the equity method of accounting in accordance with Accounting Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock.

The preferred interest is entitled to a cumulative preferred return equal to 7.875% per annum (approximately $56 million). No distributions can be made on the common interests until all current period and prior period preferred returns have been paid. The preferred interest does not participate in the economic risks and rewards associated with the ownership and management of the timberlands. The preferred interest has a preference in liquidation over the common interests.

The annual interest rate on the Note Payable to Unconsolidated Joint Venture is fixed at 7.375%, resulting in annual interest expense of approximately $58 million.

The unaudited pro forma condensed consolidated balance sheet as of June 30, 2008 gives effect to the Timberland Contribution as if it occurred on June 30, 2008. The unaudited pro forma condensed statements of income for the year ended December 31, 2007 and for the six-month period ended June 30, 2008 gives effect to the Timberland Contribution as if it occurred on January 1, 2007. The unaudited pro forma condensed consolidated financial information is subject to the assumptions and adjustments set forth in the accompanying notes. Management believes the assumptions used and the adjustments made are reasonable based on the information available.

The unaudited pro forma condensed consolidated financial information is for illustrative and informational purposes only and is not intended to represent, or be indicative of, what the company’s results of operations or financial position would have been had the Timberland Contribution occurred on the dates indicated. The unaudited pro forma condensed consolidated financial information should not be considered representative of the company’s future financial position or results of operations.

The unaudited pro forma condensed consolidated financial information should be read in conjunction with:

• the accompanying notes to the unaudited pro forma condensed consolidated financial statements;

• the company’s 2007 Annual Report on Form 10-K;

• the company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2008;

• the company’s Current Report on Form 8-K dated October 7, 2008.

PLUM CREEK TIMBER COMPANY, INC.

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 2008

(UNAUDITED)

(In Millions)	Previously Reported Amounts		Pro Forma Adjustments			Pro Forma Amounts
ASSETS
Current Assets:
Cash and Cash Equivalents	$	125	$	783	(a)	$	894
				(14	) (b)
Accounts Receivable		44					44
Inventories		71					71
Assets Held for Sale		61					61
Other Current Assets		96					96
		397		769			1,166
Timber and Timberlands, net		3,908		(175	) (c)		3,733
Property, Plant and Equipment, net		182					182
Equity Investment in Unconsolidated Joint Venture		—		175	(c)		184
				9	(b)
Other Assets		61		3	(b)		64
Total Assets	$	4,548	$	781		$	5,329
LIABILITIES
Current Liabilities:
Current Portion of Long-Term Debt	$	150	$			$	150
Accounts Payable		42					42
Interest Payable		27					27
Other Current Liabilities		74					74
		293		—			293
Long-Term Debt		2,020					2,020
Note Payable to Unconsolidated Joint Venture		—		783	(a)		783
Line of Credit		369					369
Other Liabilities		88					88
Total Liabilities		2,770		783			3,553
Total Stockholders’ Equity		1,778		(2	) (b)		1,776
Total Liabilities and Stockholders’ Equity	$	4,548	$	781		$	5,329

2

PLUM CREEK TIMBER COMPANY, INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2007

(UNAUDITED)

(In Millions, Except Per Share Amounts)	Previously Reported Amounts			Pro Forma Adjustments			Pro Forma Amounts
Revenues:
Total Revenues	$	1,675		$	(50	) (d)	$	1,625
Costs and Expenses:
Total Cost of Goods Sold		1,124			(26	) (d)		1,098
Selling, General and Administrative		127			(1	) (d)		126
Total Costs and Expenses		1,251			(27	)		1,224
Other Operating Income (Expense), net		—						—
Operating Income		424			(23	)		401
Equity Earnings from Unconsolidated Joint Venture		—			56	(e)		56
Interest Expense, net:
Interest Expense (Debt Obligations to Third Parties)		147						147
Interest Expense (Note Payable to Unconsolidated Joint Venture)		—			58	(f)		58
Total Interest Expense, net		147			58			205
Income before Income Taxes		277			(25	)		252
Benefit for Income Taxes		(3	)					(3	)
Income From Continuing Operations	$	280		$	(25	)	$	255
Per Share Amounts:
Income From Continuing Operations per Share
- Basic	$	1.60		$			$	1.46
- Diluted	$	1.60		$			$	1.46
Weighted Average Number of Shares Outstanding
- Basic		174.5						174.5
- Diluted		175.0						175.0

3

PLUM CREEK TIMBER COMPANY, INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2008

(UNAUDITED)

(In Millions, Except Per Share Amounts)	Previously Reported Amounts			Pro Forma Adjustments			Pro Forma Amounts
Revenues:
Total Revenues	$	739		$	(28	) (d)	$	711
Costs and Expenses:
Total Cost of Goods Sold		553			(16	) (d)		537
Selling, General and Administrative		63			—			63
Total Costs and Expenses		616			(16	)		600
Other Operating Income (Expense), net		3						3
Operating Income		126			(12	)		114
Equity Earnings from Unconsolidated Joint Venture		—			28	(e)		28
Interest Expense, net:
Interest Expense (Debt Obligations to Third Parties)		70						70
Interest Expense (Note Payable to Unconsolidated Joint Venture)		—			29	(f)		29
Total Interest Expense, net		70			29			99
Income before Income Taxes		56			(13	)		43
Benefit for Income Taxes		(13	)					(13	)
Income From Continuing Operations	$	69		$	(13	)	$	56
Per Share Amounts:
Income From Continuing Operations per Share
- Basic	$	0.40		$			$	0.33
- Diluted	$	0.40		$			$	0.33
Weighted Average Number of Shares Outstanding
- Basic		171.4						171.4
- Diluted		171.8						171.8

4

PLUM CREEK TIMBER COMPANY, INC.

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(a) Reflects proceeds of $783 million in connection with the loan from the Joint Venture. The Note Payable to the Unconsolidated Joint Venture accrues interest at an annual fixed rate of 7.375%. During the ten-year term of the note, interest is paid quarterly with the principal due upon maturity.

Under the terms of our existing debt agreements, 50% of the loan proceeds ($392 million) are required to be used to repay outstanding indebtedness, including upcoming fixed rate debt maturities. As a result, management expects to repay the following indebtedness (in millions):

	Interest Rate		Repayment Date	Repayment Amount
Variable Rate Debt
Revolving Line of Credit	LIBOR + 0.425	%*	4th Quarter of 2008	$	92
Fixed Rate Debt
Senior Notes issued 2001	7.25	%	4th Quarter of 2008		75
Senior Notes issued 1996	7.87	%	4th Quarter of 2008		25
Senior Notes issued 1998	7.67	%	1st Quarter of 2009		50
Senior Notes issued 1994	8.73	%	3rd Quarter of 2009		150
				$	392

* - At October 1, 2008, the current rate on the Revolving Line of Credit was 4.22% and the current rate on money market investments was 2.47%.

For debt maturities in 2009, management expects to temporarily make additional payments on the company’s Revolving Line of Credit prior to repayment. The company may also repay other outstanding indebtedness depending on market conditions.

Management expects the remaining balance of $391 million will be used for general corporate purposes, including repurchases of the company’s common stock. No pro forma adjustment has been included for potential stock repurchases. Temporarily, the company may make additional payments on the Revolving Line of Credit and/or invest in money market funds.

(b) Reflects the payment of transaction costs of $14 million in connection with the exchange of timberlands for an equity investment in the Joint Venture, obtaining amendments to our previously existing debt agreements and the formation of the Joint Venture. Approximately $12 million of the transaction costs were capitalized and either related to the investment banking services necessary to exchange the timberlands for an equity investment ($9 million) or related to amendments to our debt agreements ($3 million). Transaction costs that were charged to expense ($2 million) are reflected in the pro forma adjustment to Total Stockholders’ Equity.

(c) Reflects the cost basis of $175 million in the timber and timberlands contributed to the Joint Venture. Under the terms of the contribution agreement, the fair value of the timber and timberlands was $783 million. As a result, the company received a preferred interest valued at $705 million and a common interest valued at $78 million for its ownership interest in the Joint Venture.

(d) Reflects the elimination of the historical results, primarily the revenues and costs associated with the company’s harvesting and selling of timber, directly attributable to the 454,000 acres of timberlands transferred to the Joint Venture. Depreciation and depletion expense of $6 million and $3 million for the year ended December 31, 2007 and the six-months ended June 30, 2008, respectively, is included in the cost of goods sold elimination. No adjustments have been made for indirect or allocated costs.

(e) Reflects the equity earnings associated with our preferred interest in the Joint Venture. The preferred return is cumulative and is based on an annual rate of 7.875%. Distributions are payable on March 15 and September 15 each year. Joint venture earnings are first allocated to the preferred interest to the extent of the preferred return

5

and then allocated pro rata among the common interests. In accordance with the pro forma presentation requirements, no pro forma adjustment has been included associated with the equity earnings for our common interest. Management estimates that the annual equity earnings associated with our common interest will be less than $5 million.

(f) Reflects the increase in interest expense associated with the $783 million loan from the Joint Venture at the fixed rate of 7.375%. In accordance with the pro forma presentation requirements, no pro forma adjustment for reduced interest expense or higher interest income has been included with respect to the $783 million of loan proceeds that will be used to either repay indebtedness or temporarily invested in money market investments. See footnote (a).

6