Exhibit 10.4

Execution Version

LETTER OF CREDIT FACILITY AGREEMENT

LETTER OF CREDIT FACILITY AGREEMENT dated as of February 2, 2018, (as amended,
restated modified and/or supplemented, from time to time, this “Agreement”)
among APPVION, INC., a Delaware corporation (the “Account Party”), and CITIZENS
BANK, N.A. (the “LC Issuer”).

W I T N E S S E T H:

WHEREAS, the Account Party is a debtor in possession in that certain Chapter 11
Bankruptcy Case filed in the United States Bankruptcy Court for the District of
Delaware, Case No. 17-12082 (KJC) (the “Bankruptcy Case”);

WHEREAS, the Account Party has caused certain letters of credit to be issued as
more fully described on Schedule 1 hereto and wishes to replace the same and the
LC Issuer is interested in replacing them;

WHEREAS, the Account Party wishes to cause certain other letters of credit to be
issued and the LC Issuer is interested in issuing them; and

WHEREAS, the parties wish to set forth the terms under which the LC Issuer may
issue such replacement or other letters of credit in its discretion.

NOW, THEREFORE, it is agreed:

SECTION 1 DEFINITIONS.

Section 1.1. Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the meanings specified in Annex I hereto unless the
context otherwise requires.

Section 1.2. Rules of Construction.

(a) Unless otherwise expressly specified, each reference herein to any document,
agreement or contract shall mean such document, agreement or contract as the
same may be or has been amended, restated, supplemented or otherwise modified
from time to time in accordance with this Agreement or other Transaction
Document and shall include all exhibits, schedules and clarification letters
related thereto.

(b) A reference to any law includes any amendment or modification to such law,
and all regulations, case law, rulings, interpretations and other law and
regulations promulgated under such law.

(c) The words “include,” “includes” and “including” are not limiting and shall
mean “include(s), without limitation” or “including, without limitation.”

 

-1-

--------------------------------------------------------------------------------

SECTION 2 LETTER OF CREDIT FACILITY.

Section 2.1. Aggregate Facility Amount. Subject to and upon the terms and
conditions herein set forth, Letters of Credit may be issued for the account of
the Account Party in an aggregate stated amount (including any increases to the
stated amount) not to exceed at any time outstanding $5,000,000 (the “Aggregate
Facility Amount”).

Section 2.2. Discretionary Line. All Letters of Credit shall be issued in the
discretion of the LC Issuer and the LC Issuer is not obligated to issue Letters
of Credit hereunder.

Section 2.3. Maturity Date. No Letter of Credit will permit any Drawing after
the LC Maturity Date and shall expire no later than the LC Maturity Date.

SECTION 3 ISSUANCE OF LETTERS OF CREDIT.

Section 3.1. Governing Law of Letters of Credit. The UCP (or, as to matters not
governed by the UCP, the law of the State of New York) shall be binding on the
Account Party, the LC Issuer and each beneficiary under a Letter of Credit with
respect to Letters of Credit, except to the extent otherwise expressly agreed.

Section 3.2. Request for Issuance. If the Account Party desires to cause the
issuance of Letters of Credit hereunder or to amend any Letter of Credit
previously issued, it shall deliver it to the LC Issuer prior to 10:00 A.M., New
York City time, on or before the third Business Day prior to the requested date
of issuance or amendment (or such other date or time as to which the LC Issuer
may agree), a written request for such proposed issuance or amendment. Each such
request (a “Request for Issuance”) shall be irrevocable, shall be signed by a
Responsible Officer of the Account Party, shall certify that there is no Default
or Event of Default hereunder and that the representations and warranties herein
and in the other Transaction Documents are true and correct in all material
respects and shall be accompanied by such letter of credit application and other
documentation as the LC Issuer may request. If the Issuing Bank shall notify the
Account Party that it is willing to issue the requested Letter of Credit, then
the Account Party shall provide to the Issuing Bank cash collateral in an amount
equal to at least 102.5% of the aggregate amount that may be drawn under the
requested Letter of Credit (the “LC Amount”) no later than one Business Day
prior to the date that such Letter of Credit is issued. All cash collateral
securing obligations in respect of the Letters of Credit shall be held in a
non-interest bearing account at the LC Issuer.

 

-2-

--------------------------------------------------------------------------------

SECTION 4 DRAWDOWNS.

Section 4.1. Reimbursement Payments. In the event that the LC Issuer has honored
or has determined to honor a request for Drawing under any Letter of Credit, the
LC Issuer shall notify the Account Party and the Account Party shall immediately
reimburse the LC Issuer in an amount equal to the amount of such Drawing (each
such reimbursement, a “Reimbursement Payment”). After giving effect to such
Drawing and Reimbursement Payment, the LC Amount shall be adjusted to account
for the reduced face amount of such Letter of Credit, and excess cash collateral
shall be returned in accordance with Section 7.2.

Section 4.2. Obligation of Account Party to LC Issuer Absolute. The obligation
of the Account Party to make Reimbursement Payments shall be absolute,
unconditional and irrevocable and paid strictly in accordance with the terms of
this Agreement under all circumstances including the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit or any other
document; (ii) the existence of any claim, set-off, defense or other right which
the Account Party may have at any time against a beneficiary or any transferee
of any Letter of Credit (or any Persons for whom any such beneficiary or
transferee may be acting), the LC Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction; (iii) any draft, demand, certificate or any other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (iv) failure to give any notice hereunder or under
any related document; (v) the fact that a Default or an Event of Default shall
have occurred and be continuing; (vi) any breach of this Agreement or any other
Transaction Document by the Account Party; and (vii) any claim that any payment
under any Letter of Credit was improperly made or that any condition precedent
to the issuance of any Letter of Credit or the honoring of any drawing
thereunder was not satisfied.

SECTION 5 ACTIONS BY LC ISSUER RELATIVE TO LETTERS OF CREDIT.

Section 5.1. Actions by LC Issuer. The Account Party agrees that (i) the LC
Issuer is authorized to make payments under Letters of Credit upon the
presentation of the documents provided for therein and without regard to whether
the Account Party has failed to fulfill any of its obligations under any of the
Transaction Documents or any other obligation of the Account Party; (ii) the LC
Issuer shall be entitled to rely upon any certificate, notice, demand or other
communication, believed by it in good faith to be genuine or upon advice of
legal counsel selected by the LC Issuer; (iii) any action, inaction or omission
on the part of the LC Issuer under or in connection with the Letters of Credit
or any related instruments or documents, if in good faith shall not place the LC
Issuer under any liability to the Account Party or limit or otherwise affect the
Account Party’s obligations under this Agreement.

Section 5.2. Method and Place of Payment. Except as otherwise specifically
provided herein, all payments and prepayments under this Agreement shall be made
to the LC Issuer in U.S. Dollars in immediately available funds, and any funds
received by the LC Issuer after 11:00 a.m., New York City time, shall be deemed
to have been paid on the next succeeding Business Day. Whenever any payment to
be made hereunder shall be stated to be due on a day which is not a Business
Day, the due date thereof shall be extended to the next succeeding

 

-3-

--------------------------------------------------------------------------------

Business Day and applicable fees shall be payable at the applicable rate during
such extension. All payments made by the Account Party hereunder and under the
other Transaction Documents shall be made irrespective of, and without any
reduction for, any setoff or counterclaims.

SECTION 6 FEES.

Section 6.1. Letter of Credit Fee. The Account Party agrees to pay to LC Issuer
a letter of credit fee in an amount equal to 1.35% of the LC Amount on the date
of issuance of any LC and, if applicable, on any anniversary thereof, if the LC
remains outstanding on such anniversary.

Section 6.2. Issuance and Administrative Fees. The Account Party shall also pay
to the LC Issuer an issuance fee in an amount equal to 0.80% of the LC Amount on
the date of issuance and shall pay the LC Issuer’s customary amendment,
negotiation or document examination and other administrative fees as in effect
from time to time.

Section 6.3. Non-Refundable. All amounts paid hereunder shall be nonrefundable
once paid.

SECTION 7 GRANT OF SECURITY INTEREST.

Section 7.1. Grant of Security Interest. The Account Party hereby grants,
conveys, assigns, pledges, hypothecates, sets over and transfers to the LC
Issuer the LC Collateral Account, all funds and other assets, from time to time,
in the LC Collateral Account and, without duplication, the Account Collateral
and proceeds to secure the Obligations.

Section 7.2. LC Collateral Account Minimum Balance. The Account Party shall at
all times maintain a cash balance in the LC Collateral Account equal to or
greater than 102.5% of the aggregate amount of LC Amount of all outstanding
Letters of Credit. The LC Issuer shall return any excess cash collateral at any
time that a Letter of Credit is terminated or drawn in part in accordance with
Section 4.1.

Section 7.3. Sums in the LC Collateral Account. The Account Party hereby
authorizes the LC Issuer, with notice to the Account Party, to debit the LC
Collateral Account, from time to time, to pay any Obligations.

Section 7.4. Further Assurances Regarding the LC Collateral Account. At any time
and from time to time, upon the LC Issuer’s request, the Account Party shall
promptly execute and deliver any and all such further instruments and documents
as may be reasonably necessary, appropriate or desirable in the LC Issuer’s
reasonable judgment to obtain the full benefits (including perfection and
priority) of the security interest created or intended to be created by this
Section 7 and of the rights and powers herein granted or granted pursuant to any
other Transaction Document.

Section 7.5. No Other Liens. The Account Party shall not create or suffer to
exist any Lien on the LC Collateral Account or any Account Collateral other than
the Lien granted hereunder.

 

-4-

--------------------------------------------------------------------------------

SECTION 8 INCREASED COSTS AND TAXES.

Section 8.1. Increased Capital Costs. If any change in, or the introduction,
adoption, effectiveness, interpretation, reinterpretation or phase-in of, any
law or regulation, directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank, regulator or other
governmental authority affects or would affect the amount of capital required or
expected to be maintained by the LC Issuer, and the LC Issuer determines that
the rate of return on its capital as a consequence of the Letters of Credit or
this facility is reduced to a level below that which the LC Issuer could have
achieved but for the occurrence of any such circumstance, then, upon such LC
Issuer’s delivery to the Account Party of a written demand therefor certifying
the calculation of the amounts, the Account Party shall promptly pay directly to
the LC Issuer additional amounts sufficient to compensate the LC Issuer for such
reduction in rate of return. A statement of the LC Issuer as to any such
additional amount or amounts shall, in the absence of manifest error, be
conclusive and binding on the Account Party.

Section 8.2. Taxes. All amounts payable hereunder shall be made free and clear
of and without deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or other charges of
any nature whatsoever imposed by any taxing authority, but excluding franchise
taxes and taxes imposed on or measured by the LC Issuer’s net income or receipts
(such non-excluded items being called “Taxes”). In the event that any
withholding or deduction from any payment to be made by the Account Party
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then the Account Party: (i) will pay directly to the
relevant authority the full amount required to be so withheld or deducted;
(ii) promptly forward to the LC Issuer documentation evidencing such payment to
such authority; and (iii) pay to the LC Issuer such additional amount as is
necessary to ensure that the net amount actually received by the LC Issuer will
equal the full amount the LC Issuer would have received had no such withholding
or deduction been required. Additionally, the LC Issuer may pay such Taxes and
the Account Party will promptly pay such additional amount (including any
penalties, interest or expenses) as is necessary in order that the net amount
received by the LC Issuer after the payment of such Taxes shall equal the amount
the LC Issuer would have received had not such Taxes been asserted.

SECTION 9 CONDITIONS PRECEDENT.

Section 9.1. Condition Precedent to Effectiveness of this Agreement. This
Agreement shall be effective upon satisfaction of each of the following
conditions:

(a) This Agreement shall have been executed by the Account Party and the LC
Issuer;

(b) The LC Issuer shall have opened the LC Collateral Account with the LC
Issuer;

(c) The Court presiding over the Bankruptcy Case shall have granted its approval
of this Agreement (the “Order”), the Liens granted hereunder as first priority
Liens and the other transactions contemplated hereby, which approval shall be in
form and substance reasonably satisfactory to the LC Issuer;

 

-5-

--------------------------------------------------------------------------------

(d) All “know your customer” requirements of the LC Issuer shall have been
satisfied relative to the Account Party and transactions contemplated hereby;

(e) The Account Party shall have executed and delivered an account control
agreement with respect to the LC Collateral Account in form and substance
reasonably satisfactory to the LC Issuer;

(f) All necessary consents, if any, to this Agreement and other Transaction
Documents shall have been obtained and shall be in full force and effect; and

(g) The Account Party shall have delivered a closing certificate certifying as
to satisfaction of certain conditions hereunder, a good standing certificate,
incumbency certificate, certified board resolutions, certified organizational
documents and such other documentation and information as the LC Issuer shall
require.

Section 9.2. Prior to Issuance of any Letter of Credit. Prior to the issuance by
the LC Issuer of any Letter of Credit or amendment thereto (which issuance or
amendment is in the discretion of the LC Issuer):

(a) The representations and warranties of the Account Party made herein and in
each of the other Transaction Documents shall be true and correct in all
material respects on and as of the date such Letter of Credit is issued or
amended (or if such representation or warranty is expressly stated to be made as
of a specific date, as of such specific date);

(b) No Default or Event of Default shall have occurred and be continuing, either
before or immediately after the issuance or amendment of such Letter of Credit;

(c) The LC Issuer shall have received an executed Request for Issuance in
respect of the Letter of Credit to be issued or amended, together with such
Letter of Credit application and other documentation as the LC Issuer may
reasonably request as set forth in Section 3.2 hereto; and

(d) The Account Party shall have deposited into the LC Collateral Account
sufficient sums to satisfy the minimum collateral requirements set forth in
Section 7.2 above and shall have paid all fees required hereby.

SECTION 10 REPRESENTATIONS AND WARRANTIES.

The Account Party makes the following representations and warranties, which
shall survive the execution and delivery of this Agreement and the issuance of
the Letters of Credit.

Section 10.1. Organization, Power and Status of the Account Party. The Account
Party (a) is a corporation duly formed, validly existing and in good standing
under the laws of the State of Delaware and (b) is duly authorized to do
business in each other jurisdiction where the character of its properties or the
nature of its activities makes such qualification necessary and where the
failure to so qualify would reasonably be expected to result in a Material
Adverse Effect.

 

-6-

--------------------------------------------------------------------------------

Section 10.2. Authorization; Enforceability; Execution and Delivery.

(a) The Account Party has all necessary corporate power and authority to
execute, deliver and perform this Agreement and each other Transaction Document.

(b) All action on the part of the Account Party that is required for the
authorization, execution, delivery and performance of this Agreement and each
other Transaction Document has been duly and effectively taken; and the
execution, delivery and performance by the Account Party of this Agreement and
each other Transaction Document does not require the approval or consent of any
Person including any holder of any indebtedness or other obligations of the
Account Party or any court or tribunal, which has not been obtained.

(c) This Agreement and each other Transaction Document has been duly executed
and delivered by the Account Party. Each of this Agreement and each other
Transaction Document constitutes the legal, valid and binding obligation of the
Account Party.

Section 10.3. No Conflicts; Laws and Contracts; No Default. Neither the
execution, delivery and performance by the Account Party of any Transaction
Document nor the consummation of any of the transactions contemplated hereby or
thereby nor performance of or compliance with the terms and conditions hereof or
thereof (i) contravenes in any material respects any law applicable to the
Account Party or any of the Collateral or (ii) conflicts or constitutes a
default under the terms of any material indenture, mortgage, deed of trust or
agreement or other instrument to which the Account Party is a party.

Section 10.4. Government Approvals. All material Government Approvals including
those of all courts of competent jurisdiction which are required to be obtained
by or on behalf of the Account Party in connection with the Transaction
Documents has been duly obtained or made.

Section 10.5. Litigation. There are no claims, actions, suits, investigations or
proceedings at law or in equity or by or before any arbitrator or governmental
authority now pending against the Account Party or threatened against the
Account Party that challenge the validity of this Agreement or other Transaction
Documents.

Section 10.6. Collateral; Security Interest and Liens.

(a) The Account Party has good, marketable and valid title in and to all of the
Collateral which it purports to own and is the owner, free and clear of all
Liens (other than Liens in favor of the LC Issuer) on the Collateral.

(b) The LC Issuer has a valid, enforceable and perfected first priority Lien in
the Collateral.

Section 10.7. Compliance with Laws.

(a) Neither (1) the Account Party nor (2) to the knowledge of the Account Party,
any Affiliate of the Account Party or any director, officer or employee of the
foregoing is a Person (i) whose property or interest in property is blocked or
subject to blocking pursuant to

 

-7-

--------------------------------------------------------------------------------

Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism (66 Fed. Reg. 49079 (2001)), (ii) who engages in any dealings or
transactions prohibited by Section 2 of such executive order, or is otherwise
associated with any such Person in any manner violative of such Section 2,
(iii) who is on the list of Specially Designated Nationals and Blocked Persons
or subject to the limitations or prohibitions under any other U.S. Department of
Treasury’s Office of Foreign Assets Control regulation or executive order
(“OFAC”), (iv) who is a Sanctioned Person or (v) is in violation of the Act (as
defined in Section 14.15). No Letters of Credit or any other extensions of
credit from the LC Issuer will be used, directly or indirectly, in furtherance
of an offer, payment, promise to pay, or authorization of the payment or giving
money, or anything else of value, to any Person in violation of the United
States Foreign Corrupt Practices Act of 1977, as amended, or any other
applicable anti-corruption law. The Account Party and its Affiliates have
conducted their business in compliance with applicable anti-corruption laws and
have instituted and maintain procedures designed to ensure continued compliance
with such laws and with this Section.

(b) The Account Party is in compliance with all other requirements of applicable
law except for noncompliance of such other requirements, which would not
reasonably be expected to have a Material Adverse Effect.

Section 10.8. Investment Company Act. The Account Party is not an “investment
company” or a company “controlled” by an “investment company”, within the
meaning of the Investment Company Act of 1940, as amended.

Section 10.9. True and Complete Disclosure. All representations, warranties and
other factual statements (taken as a whole) made by or on behalf of the Account
Party in this Agreement, in any other Transaction Document or otherwise pursuant
hereto or thereto are true and correct in all material respects on the date as
of which such representation, warranty or other factual statement is dated,
made, deemed made or furnished and is not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time.

SECTION 11 AFFIRMATIVE COVENANTS.

The Account Party covenants and agrees that on and after the date hereof until
the Facility Termination Date it shall comply with the following:

Section 11.1. Financial Statements. The Account Party will furnish to the LC
Issuer:

(a) as soon as available (but only if Holdings is no longer required to make
such filing with the SEC), but in any event within the earlier of (i) 120 days
after the end of each fiscal year of Holdings and (ii) five days after such
related filing (if any) with the SEC is due, a copy of the audited consolidated
balance sheet of Holdings and its consolidated subsidiaries as at the end of
such year and the related audited consolidated statements of income and of cash
flows for such year, setting forth in each case in comparative form the figures
for the previous year, accompanied by a customary management’s discussion and
analysis, by RSM US LLP or other independent certified public accountants of
nationally recognized standing; and

 

-8-

--------------------------------------------------------------------------------

(b) as soon as available (but only if Holdings is no longer required to make
such filing with the SEC), but in any event within the earlier of (i) forty-five
(45) days after the end of each of the first three quarterly periods of each
fiscal year of Holdings and (ii) five days after such related filing (if any)
with the SEC is due, the unaudited consolidated balance sheet of Holdings and
its consolidated subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such quarter
and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the previous year,
certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments and the absence of
footnotes), accompanied by a customary management’s discussion and analysis.

All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail, and the financial statement
under paragraphs (a) and (b) above shall be prepared in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except for the absence of footnotes in the quarterly statements and as
approved by such accountants or officers, as the case may be, and disclosed
therein). In regard to subsections (a) and (b) above, the filing of Forms 10-Q
and 10-K with the SEC shall constitute delivery for purposes thereof (and shall
satisfy the information requirements of (a) or (b) above, as the case may be,
and satisfy the time requirements thereof if filed within the time period
required thereby); however, electronic copies of such reports must still be
delivered to the LC Issuer.

(c) Officer’s Certificates. At the time of the delivery of the financial
statements under clauses (a) and (b) above, (i) a certificate of a Responsible
Officer of the Account Party or Holdings which certifies that such financial
statements fairly present the financial condition and the consolidated results
of operations of Holdings and its subsidiaries including the Account Party on
the dates and for the periods indicated in accordance with GAAP, subject, in the
case of interim financial statements, to normally recurring year-end adjustments
and (ii) a certificate of a Responsible Officer of the Account Party which
certifies that such officer has reviewed or caused to be reviewed the terms of
the Transaction Documents and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the business and condition of the
Account Party during the accounting period covered by such financial statements,
and that as a result of such review such officer has concluded that no Default
or Event of Default has occurred and is continuing or, if any Default or Event
of Default has occurred and is continuing as at the end of such period,
specifying the nature and extent thereof and the action the Account Party
proposes to take in respect thereof.

(d) Certain Notices. Promptly after the occurrence thereof, notice of (i) the
occurrence of any Default or Event of Default, (ii) any litigation or
governmental proceeding pending or threatened in writing against the Account
Party which would reasonably be expected to result in a Material Adverse Effect
or that challenges the validity of any of the Transaction Documents, (iii) the
rendering of any material order in the Bankruptcy Case, (iv) any event of
default under the DIP Facility and (v) any event, act or condition which could
reasonably be expected to result in a Material Adverse Effect.

 

-9-

--------------------------------------------------------------------------------

(e) Other Information. From time to time, such other information or documents
(financial or otherwise) as the LC Issuer may reasonably request.

Section 11.2. Compliance with Law. The Account Party shall take such
commercially reasonable action so as to ensure that at all times the
representation in Section 10.7 is true and correct.

Section 11.3. Maintenance of Existence. The Account Party shall do, or cause to
be done, all things reasonably necessary to preserve and keep in full force and
effect its corporate existence.

SECTION 12 NEGATIVE COVENANTS.

The Account Party covenants and agrees that on and after the date hereof until
the Facility Termination Date:

Section 12.1. LC Issuer’s Consent Rights to Plan. The Account Debtor shall not
propose or consent to a Chapter 11 plan (a “Plan”) or entry of an order in the
Bankruptcy Case without the prior written approval of the LC Issuer unless
(i) the Plan or order expressly provides for the LC Issuer’s first priority Lien
on the Collateral and otherwise is not adverse to the rights, remedies or
interests of the LC Issuer under the Transaction Documents or (ii) the
Obligations are paid in full and all LCs have been terminated.

Section 12.2. Liens. The Account Party shall not create or permit to exist any
Lien on the Collateral other than in favor of the LC Issuer.

SECTION 13 EVENTS OF DEFAULT.

Section 13.1. Events of Default. Each of the following events, acts, occurrences
or conditions shall constitute an “Event of Default” under this Agreement:

(a) Failure to Make Payments. The Account Party shall default in the payment
when due of any Reimbursement Payments, fees or any other amounts owing
hereunder or under any other Transaction Document and, in the case of fees or
other amounts, such default shall continue unremedied for a period of 3 Business
Days.

(b) Breach of Representation or Warranty. Any representation or warranty made by
the Account Party herein or in any other Transaction Document or in any
certificate or statement delivered pursuant hereto or thereto shall prove to be
false or misleading in any material respect on the date as of which made or
deemed made, confirmed or furnished.

(c) Breach of Covenants. The Account Party shall fail to perform or observe any
agreement, covenant or obligation required to be performed by the Account Party
arising hereunder or under any other Transaction Document and, except in the
case of a default under Section 7.2, such default shall continue unremedied for
a period of 5 Business Days.

 

-10-

--------------------------------------------------------------------------------

(d) Transaction Documents. This Agreement or any other Transaction Document
shall cease to be enforceable and in full force and effect or the Account Party
shall assert that any such document is unenforceable or not in full force and
effect.

(e) DIP Facility. There shall be an event of default and an acceleration of
obligations under the DIP Facility or a payment default under the DIP Facility.

(f) Change of Control. Holdings shall cease to own 100% of the equity interests
in the Account Party.

Section 13.2. Rights and Remedies. Upon the occurrence of any Event of Default,
all Obligations shall, upon notice from the LC Issuer, become immediately due
and payable. The Account Party waives all rights relative to presentation,
demand, or protest or other requirements of any kind (including valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by the
Account Party to the extent permitted by applicable law. In addition to the
foregoing, upon the occurrence of any Event of Default, the LC Issuer may
(x) exercise all of its rights under the Transaction Documents and under
applicable law or otherwise and (y) apply all proceeds of Collateral to the
Obligations.

Section 13.3. Late Charges. If any amounts due and owing hereunder or under any
other Transaction Document are unpaid for three or more Business Days (whether
as a result of acceleration or otherwise), the Account Party shall pay, in
addition to any other sums due hereunder or under any other Transaction Document
(and without limiting the rights and remedies of the LC Issuer on account
thereof), a late charge equal to 5.0% of such unpaid amount.

SECTION 14 MISCELLANEOUS.

Section 14.1. Payment of Expenses. The Account Party shall, whether or not the
transactions hereby contemplated are consummated, pay all reasonable and
documented out-of-pocket costs and expenses of the LC Issuer in connection with
(i) the negotiation, preparation, execution and delivery of the Transaction
Documents and the documents and instruments referred to therein, (ii) the
creation, perfection or protection of the LC Issuer’s Liens in the Collateral,
(iii) the LC Issuer’s due diligence review in connection with the transactions
contemplated hereby and the other Transaction Documents and the administration
of the Transaction Documents, (iv) any amendment, waiver or consent relating to
any of the Transaction Documents, and (v) any rights, remedies or enforcement
actions by the LC Issuer.

Section 14.2. Indemnity. The Account Party shall indemnify the LC Issuer and its
respective officers, directors, employees, representatives and agents (each an
“Indemnitee”) from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for such Indemnitee
in connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may at any time (including at any time following the payment
of the Obligations) be

 

-11-

--------------------------------------------------------------------------------

imposed on, asserted against or incurred by any Indemnitee as a result of, or
arising out of, or in any way related to or by reason of, (i) the execution,
delivery or performance of any Transaction Document or any related agreement or
any transaction contemplated by any Transaction Document or any related
agreement, (ii) the issuance of any Letter of Credit or any matter related to
any Letter of Credit, (iii) the grant to the LC Issuer of any Lien in any
Collateral, and (iv) the exercise by the LC Issuer of its rights and remedies
under, or in respect of any Transaction Documents or matters contemplated
thereby (but excluding, as to any Indemnitee, any such losses, liabilities,
claims, damages, expenses, obligations, penalties, actions, judgments, suits,
costs or disbursements incurred by reason of the gross negligence or willful
misconduct of such Indemnitee or its Affiliates as finally determined by a court
of competent jurisdiction). The Account Party’s obligations under this Section
shall survive the termination of this Agreement and the payment of the
Obligations.

Section 14.3. Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default, the LC Issuer is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to the Account
Party or to any other Person, any such notice being hereby expressly waived, to
set off and to appropriate and apply any and all deposits (general or special,
time or demand, provisional or final) and any other indebtedness at any time
held or owing by such LC Issuer to or for the credit or the account of the
Account Party against and on account of the Obligations.

Section 14.4. Notices. Except as otherwise expressly provided herein, all
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing and delivered by hand delivery, by electronic mail
(email), which may include a document in portable document format (PDF), by a
reputable overnight courier service or by U.S. mail. Such notice shall be deemed
to have been duly given or made when delivered by hand, one Business Day after
deposited with a reputable overnight courier, five Business Days after being
deposited in the United States mail, postage prepaid, or, in the case of a PDF
sent by email, when sent if it is on a Business Day between 9:00 a.m. and 5:00
p.m. (based on the time of the recipient) and if not, then on the next Business
Day, in each case if delivered to the address on the signature pages hereto or
such other address as may be communicated in accordance with this Section 14.4.

Section 14.5. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Account Party, the LC Issuer and their respective
successors and assigns, except that the Account Party may not assign or transfer
any of its rights or obligations under this Agreement without the prior written
consent of the LC Issuer.

Section 14.6. Amendments and Waivers. Neither this Agreement nor any terms
hereof may be amended, restated, supplemented, modified or waived except by
written consent of the parties hereto.

 

-12-

--------------------------------------------------------------------------------

Section 14.7. No Waiver; Remedies Cumulative. No failure or delay on the part of
the LC Issuer in exercising any right, power or privilege hereunder or under any
other Transaction Document and no course of dealing between the Account Party
and the LC Issuer shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Transaction Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the LC Issuer would otherwise have. No notice to
or demand on the Account Party in any case shall entitle the Account Party to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the LC Issuer to any other or further
action in any circumstances without notice or demand.

Section 14.8. Governing Law; Submission to Jurisdiction. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW).

Section 14.9. Exculpation; Limitation on Liability.

(a) The LC Issuer shall not be liable for any action lawfully taken or omitted
to be taken by it or any Person acting on its behalf or at its request under or
in connection with this Agreement or any other Transaction Document (except for
its or such Person’s own gross negligence or willful misconduct).

(b) Without affecting any rights the LC Issuer may have under applicable law
(including under the UCP), the Account Party agrees that the LC Issuer or any of
its officers or directors shall be liable or responsible for, and the
obligations of the Account Party to the LC Issuer hereunder shall not in any
manner be affected by: (i) the use which may be made of any Letter of Credit or
the proceeds thereof by the beneficiary of such Letter of Credit or any other
Person; (ii) the validity, sufficiency or genuineness of documents other than
the Letters of Credit, or of any endorsement(s) thereon, even if such documents
should, in fact, prove to be in any or all respects invalid, insufficient,
fraudulent or forged or any statement therein proves to be untrue or inaccurate
in any respect whatsoever; or (iii) any other circumstances whatsoever in making
or failing to make payment under any Letter of Credit. In furtherance and not in
limitation of the foregoing, the LC Issuer may accept documents that appear on
their face to be in order without responsibility of further investigation. As
between the Account Party and the LC Issuer, the Account Party assumes all risks
of the acts and omissions of, or misuse of any Letter of Credit by, the
respective beneficiaries of the Letters of Credit. In furtherance and not in
limitation of the foregoing, the LC Issuer shall not be responsible for, nor
shall any of the following affect, impair or prevent the vesting of any of the
LC Issuer’s powers or rights hereunder: (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with any Request for Issuance, even if it should in fact prove to be
in any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of
any Letter of Credit to comply fully with conditions required in order to draw
upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable,

 

-13-

--------------------------------------------------------------------------------

telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any Letter
of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any Letter of Credit of the proceeds of any Drawing under such
Letter of Credit; and (viii) any consequences arising from causes beyond the
control of the LC Issuer, including any acts or omissions, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority. The LC Issuer shall have no obligation whatsoever to
make any factual or legal determinations as to the correctness of any demand for
payment under any Letter of Credit or other related agreements or as to any
other matters before the LC Issuer makes any payments under any Letter of
Credit. To the extent permitted by applicable law, the Account Party hereby
irrevocably waives (i) diligence, presentment, demand, protest or notice of any
kind in connection with any demand or payment under any Letter of Credit,
(ii) any requirements that the LC Issuer exhaust any right or remedy against the
Account Party or any other Person in connection with any Letter of Credit, and
(iii) any claim or defense in connection with any Letter of Credit based on any
time or other indulgence granted to the Account Party or any other Person.

(c) No claim may be made by the Account Party or any other Person against the LC
Issuer or the Affiliates, directors, officers, employees, attorneys or agents of
any of them for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement, or
any act, omission or event occurring in connection therewith; and the Account
Party hereby waives, releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.

Section 14.10. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. An electronic signature
and a signature delivered as a PDF or an electronic copy of a signature shall be
deemed to be the functional equivalent of an original “wet ink” signature for
all purposes.

Section 14.11. Marshalling; Recapture. The LC Issuer shall not be under any
obligation to marshal any assets in favor of the Account Party or any other
party. To the extent the LC Issuer receives any payment in respect of the
Obligations, which payment or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
the Account Party or its estate, trustee, receiver, custodian or any other party
under the Bankruptcy Code or any other applicable law, state or federal law,
common law or equitable cause, then to the extent of such payment or repayment,
the obligation or part thereof which has been paid, reduced or satisfied by the
amount so repaid shall be reinstated by the amount so repaid and shall be
included within the liabilities of the Account Party to the LC Issuer, as of the
date such initial payment, reduction or satisfaction occurred.

Section 14.12. Severability. In case any provision in or obligation under this
Agreement or the other Transaction Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

 

-14-

--------------------------------------------------------------------------------

Section 14.13. Survival. The provisions of Section 14 shall survive termination
of this Agreement and the other Transaction Documents.

Section 14.14. Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY MATTER ARISING HEREUNDER.

Section 14.15. USA Patriot Act. The LC Issuer hereby notifies the Account Party
that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the “Act”), it is required to
obtain, verify and record information that identifies the Account Party, which
information includes the name and address of the Account Party and other
information that will allow the LC Issuer to identify the Account Party in
accordance with the Act.

(Signature Pages Follow)

 

-15-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.

 

APPVION, INC.

as Account Party

By: /s/ Luke G. Kelly                                              Name: Luke G.
Kelly Title: Vice President Finance, Chief           Financial Officer and
Treasurer Notice Address:

825 E. Wisconsin Avenue

Appleton, WI 54912-0353

Attention: Luke Kelly

Email: lkelly@appvion.com

Phone: 920-991-8819

With a copy to:

DLA Piper LLP (US)

1251 Avenue of the Americas

27th Floor

New York, NY 10020-1104

Attention: Shmuel Klahr

Email: shmuel.klahr@dlapiper.com

Phone: 212-335-4721

[Signature Page to Letter of Credit Facility Agreement]

--------------------------------------------------------------------------------

CITIZENS BANK, N.A.,

as LC Issuer

By: /s/ John E. Lucas                                               Name: John
E. Lucas Title:   Vice President Notice Address:

Citizens Bank, N.A.

20 Cabot Road

Medford, MA 02155

Attention: International Letter of

                 Credit Department

Attention: Patricia Murphy

                 Assistant Vice President

 

Email:
patricia.n.murphy@citizensbank.com

Phone No.: 781-655-4311

With a copy to:

Jill Bronson

One Logan Square, Suite 2000

Philadelphia, PA 19103

Email: jill.bronson@dbr.com

Phone No.: 215-988-2665

[Signature Page to Letter of Credit Facility Agreement]

--------------------------------------------------------------------------------

ANNEX I

DEFINITIONS

As used in this Agreement, the following terms shall have the following
meanings:

“Account Collateral” shall mean all cash, money, funds, instruments, securities
and other property credited to or held in or maintained at the LC Collateral
Account from time to time, all interest thereon, if any, all rights in and to
the foregoing and all proceeds thereof.

“Account Party” shall have the meaning set forth in the preamble hereof.

“Affiliate” shall mean, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by, or under direct or indirect common control with
such Person.

“Aggregate Facility Amount” shall have the meaning set forth in Section 2.1.

“Agreement” shall mean this Agreement, as the same may from time to time
hereafter be amended, restated, supplemented or otherwise modified.

“Business Day” shall mean any day which is not a Saturday, Sunday or a legal
holiday on which commercial banks are authorized or required to be closed in New
York City.

“Closing Date” shall mean the conditions set forth in Section 9.1 have been
satisfied.

“Collateral” shall mean all property and interests in property now owned or
hereafter acquired in or upon which a Lien has been or is purported or intended
to have been granted to the LC Issuer and expressly including the LC Collateral
Account and Account Collateral.

“Default” shall mean any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default.

“DIP Facility” shall mean that certain Debtor-in-Possession Credit Agreement,
dated as of October 2, 2017, by and among the Account Party, Holdings,
Wilmington Trust, National Association, as Administrative Agent, and the other
parties party thereto, as the same has been and may be further amended,
restated, supplemented or otherwise modified from time to time, and any
replacement thereof.

“Drawing” shall mean a drawing under any Letter of Credit.

“Event of Default” shall have the meaning set forth in Section 13.

“Facility Termination Date” shall mean the date that is one year from the
Closing Date; provided, however, the Account Party’s obligations, including its
obligation to maintain cash collateral, shall remain in place so long as there
are any Letters of Credit outstanding.

--------------------------------------------------------------------------------

“GAAP” shall mean United States generally accepted accounting principles as in
effect from time to time

“Holdings” shall mean Paperweight Development Corp., a Wisconsin corporation.

“Indemnitee” shall have the meaning set forth in Section 14.2.

“LC Collateral Account” shall mean a special account of the Account Party
maintained with the LC Issuer, entitled “Appvion, Inc. (Debtor-in-Possession)”
with account number 1338504751, to be held by or for the benefit of the LC
Issuer as collateral security for the Obligations.

“LC Issuer” shall have the meaning set forth in the preamble hereof.

“LC Maturity Date” shall mean the first anniversary of the Closing Date unless
accelerated sooner pursuant to the terms hereof.

“Letters of Credit” shall mean any and all letters of credit issued under this
Agreement.

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or
other security agreement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement, any financing lease having
substantially the same effect as any of the foregoing and the filing of any
financing statement or similar instrument under the Uniform Commercial Code or
comparable law of any jurisdiction, domestic or foreign.

“Material Adverse Effect” shall mean a material adverse effect upon (i) the
business, operations, properties, assets or condition (financial or otherwise)
of the Account Party, (ii) the ability of the Account Party to perform its
obligations in all material respects under the Transaction Documents, (iii) the
validity or the priority of the LC Issuer’s Liens on the Collateral, or (iv) the
rights of the LC Issuer under the Transaction Documents.

“Obligations” shall mean all obligations, liabilities and Indebtedness of every
nature of the Account Party from time to time owing to the LC Issuer under this
Agreement or any other Transaction Document, whether contingent or fixed,
liquidated or unliquidated or otherwise including all Reimbursement Payments,
fees, indemnities and expenses.

“Patriot Act” shall have the meaning set forth in Section 14.15.

“Person” shall mean and include any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or agency, department or instrumentality thereof.

“Plan” shall have the meaning set forth in Section 12.1.

“Reimbursement Payment” shall have the meaning set forth in Section 4.1.

--------------------------------------------------------------------------------

“Request for Issuance” shall have the meaning set forth in Section 3.2.

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer or controller of the Account
Party (or, with respect to the financial statements of Holdings, of Holdings)
and any other officer of the Account Party (or, with respect to the financial
statements of Holdings, of Holdings) so designated by any of the foregoing
officers in a notice to the LC Issuer.

“Sanctioned Person” means any Person that is, or is owned or controlled by
Persons that are, (a) the subject or target of any Sanctions or (b) located,
organized or resident in a country or territory that is, or whose government is,
the subject of Sanctions.

“Sanctions” means any sanctions administered or enforced by OFAC, the U.S.
Department of State, or other relevant sanctions authority.

“Taxes” shall have the meaning set forth in Section 8.2.

“Transaction Documents” shall mean this Agreement, any deposit account control
agreement, application or other agreement, instrument or document that may be
entered into from time to time hereunder or in connection herewith.

“UCP” shall mean the Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce Publication No. 500, 1993 Revision, as amended
and as in effect from time to time; provided that for any newly issued Letters
of Credit hereunder, “UCP” shall mean the International Standby Practices
(effective January 1, 1999).

--------------------------------------------------------------------------------

SCHEDULE I

LETTERS OF CREDIT

See attached.