Item
1.01 — Entry into a Material Definitive Agreement
On May 29, 2022, CatchMark Timber Trust, Inc.,
a Maryland corporation (the “Company”), and CatchMark Timber Operating Partnership, L.P. a Delaware limited partnership (the
“Partnership”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with PotlatchDeltic Corporation
a Delaware corporation (“Parent”), Horizon Merger Sub 2022, LLC, a Delaware limited liability company (“Merger Sub”).
Pursuant to the Merger Agreement, the Company
will be merged with and into Merger Sub (the “Company Merger”), with Merger Sub surviving the Company Merger. Immediately
following the Company Merger, the Partnership will be merged with and into Merger Sub (the “Partnership Merger” and together
with the Company Merger, collectively the “Mergers”), with Merger Sub surviving the Partnership Merger. Capitalized terms
used below but not defined herein have the respective meanings assigned thereto in the Merger Agreement.
The board of directors of the Company (the “Board”)
has unanimously approved the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement.
Merger Consideration
At the effective time of the Company Merger,
each issued and outstanding share of the Company’s Class A common stock (the “Common Stock”), other than those shares
held by the Company, the Partnership, Parent, Merger Sub or any of their respective wholly owned subsidiaries, will be converted into
the right to receive 0.230 shares of common stock of Parent plus the right, if any, to receive cash in lieu of fractional shares of common
stock of Parent (the “Merger Consideration”). Holders of the Common Stock will receive the Merger Consideration on a tax-free basis.
Immediately prior to the effective time of the
Company Merger, any and all outstanding issuance and forfeiture conditions on any Common Stock subject to an award of Common Stock granted
under Company’s equity incentive plans that is unvested or subject to a substantial risk of forfeiture will be deemed satisfied
in full and on a fully vested basis (at maximum performance to the extent applicable), and convert into the Merger Consideration.
Immediately prior to the effective time of the
Partnership Merger (i) each issued and outstanding unvested LTIP Unit of the Partnership will automatically become fully vested at maximum
performance, to the extent applicable and (ii) immediately after such vesting, each vested LTIP Unit of the Partnership that is eligible
for conversion into Partnership OP Units will automatically convert into common units of the Partnership (the “Partnership OP Units”).
At the effective time of the Partnership Merger,
each of the issued and outstanding Partnership OP Units, other than those held by the Company, the Partnership, Parent, Merger Sub or
any of their respective wholly owned subsidiaries, will automatically convert into the Merger Consideration.
Governance; Other Matters
Effective as of immediately after the effective
time of the Company Merger, one member of the board of directors of the Company (the “Company Board”) selected by the Company
will be appointed to the board of directors of Parent (the “Company Designated Director”). From the Closing until immediately
after the first annual meeting of stockholders of Parent occurring after the Closing, Parent must take actions reasonably necessary to
cause the Company Designated Director to be appointed to the board of directors of Parent.
Following the effective time of the Company Merger,
Parent will use commercially reasonable efforts to establish a regional office in Atlanta, Georgia.
Closing Conditions
The consummation of the Mergers is subject to
certain closing conditions, including (i) the approval of the Company Merger by the holders of a majority of the outstanding Common Stock,
(ii) the absence of any temporary restraining order, injunction or other legal order, and law being enacted, which would have the effect
of making illegal or otherwise prohibiting the consummation of the Mergers, (iii) the Form S-4 to be filed by Parent in connection with
common stock of Parent to be issued in the Mergers being declared effective, (iv) the shares of common stock of Parent to be issued in
the Mergers will have been approved for listing on Nasdaq, (v) the receipt of certain legal opinions by Parent and the Company and (vi)
other customary conditions specified in the Merger Agreement.
Representations, Warranties and Covenants
Each of the Company, the Partnership, Parent
and Merger Sub made representations and warranties in the Merger Agreement. Each of the Company and the Partnership has also agreed to
various customary covenants and agreements, including, subject to certain exceptions, (i) to conduct its business in all material respects
in the ordinary course of business and in a manner consistent with past practice, subject to certain exceptions, during the period between
the execution of the Merger Agreement and the consummation of the Mergers and (ii) to call and hold a stockholder meeting and recommend
that the Company’s stockholders approve the Company Merger.
Each of Parent and the Company agreed not to
make, declare or set aside any dividend or other distribution to its respective stockholders or shareholders without the prior written
consent of the other party, except that upon written notice to the other party, (i) the Company may authorize and pay (i) quarterly distributions
at a rate not in excess of $0.075 per share per quarter and (ii) the regular distributions that are required to be made in respect of
the Partnership LTIP Units and the Partnership OP Units in connection with any dividends paid on the Common Stock in accordance with
the terms of the partnership agreement of the Partnership and (ii) Parent may authorize and pay quarterly distributions at a rate not
in excess of $0.44 per share per quarter.
The Company agreed not to (i) solicit proposals
relating to certain alternative transactions, (ii) enter into discussions or negotiations or provide non-public information in connection
with any proposal for an alternative transaction from a third party, (iii) approve or enter into any agreements providing for any such
alternative transaction, subject to certain exceptions to permit members of the Board to comply with their duties as directors under
applicable law, or (iv) propose or agree to do any of the foregoing. Notwithstanding these “no-shop” restrictions, prior
to obtaining the Company stockholder approval, under specified circumstances the Board may change its recommendation of the transaction,
and the Company may also terminate the Merger Agreement to accept a superior proposal upon payment of the termination fee described below.
Termination of the Merger Agreement
The Merger Agreement may be terminated under
certain circumstances, including by either Parent or the Company if the Mergers have not been consummated on or before 5:00 p.m. (New
York time) on November 29, 2022, if a final and non-appealable order is entered enjoining or otherwise prohibiting the Mergers, or if
the Company shareholders shall have voted at the special meeting held to consider the approval of the Company Merger and the Company
Merger is not approved.
The Merger Agreement provides that, in connection
with the termination of the Merger Agreement under specified circumstances, the Company may be required to pay to Parent a termination
fee of $19,384,231. However, the termination fee payable by the Company to Parent will be $9,692,116 if the Merger Agreement is terminated
before the end of the “Window Period End Time” by (i) the Company in order for the Company to accept a superior proposal
from a “Qualified Bidder” or (ii) Parent because the Company Board changed its recommendation that the Company stockholders
approve the Company Merger as the result of a superior proposal from a “Qualified Bidder.” Under the terms of the Merger
Agreement, a “Qualified Bidder” is a bidder that has delivered an acquisition proposal on or prior to 11:59 p.m. (New York
time) on June 28, 2022 with respect to which, on or prior to such date, the Company Board concluded in good faith (after consultation
with its outside legal counsel and its financial advisors) either constituted or would reasonably be expected to lead to a superior proposal
(provided that such bidder will cease to be a “Qualified Bidder” if its acquisition proposal is withdrawn, terminates or
expires after June 28, 2022). In addition, the term “Window Period End Time” in the Merger Agreement means, with respect
to a Qualified Bidder, the later of (i) 11:59 p.m. (New York time) on July 13, 2022 and (ii) one business day after the end of a required
notice period with respect to a superior proposal by such Qualified Bidder provided that such notice period (as may be extended) began
on or prior to 11:59 p.m. (New York time) on July 13, 2022.
The foregoing description of the Merger Agreement
and the transactions contemplated thereby does not purport to be complete and is subject to and qualified in its entirety by reference
to the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
The Merger Agreement has been included in this
Current Report on Form 8-K to provide investors and security holders with information regarding its terms. It is not intended to provide
any other factual information about the Company. The representations, warranties and covenants contained in the Merger Agreement were
made only for purposes of that agreement and as of specific dates, were solely for the benefit of the parties to the Merger Agreement
and may be subject to limitations agreed upon by the contracting parties, including qualification by confidential disclosures exchanged
between the parties in connection with the execution of the Merger Agreement. The representations and warranties may have been made for
the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts,
and may be subject to contractual standards of “materiality” and “material adverse effect” applicable to the
contracting parties that differ from those applicable to investors or under applicable securities laws. Investors are not third party
beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants, or any descriptions thereof,
as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information
concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which
subsequent information may or may not be fully reflected in the Company’s public disclosures.