Exhibit 10.2

 

COVINGTON PLANT

 

SERVICES AGREEMENT

 

between

 

WESTROCK VIRGINIA, LLC

 

and

 

INGEVITY VIRGINIA CORPORATION

 

Effective as of February 1, 2016

 

 

 

 

Table of Contents

 

    Page       ARTICLE 1 DEFINITIONS 1     ARTICLE 2 USE OF CERTAIN JOINT ASSETS
8       Section 2.1 Use of Jointly Used Rail Facilities 8 Section 2.2 Use of
Jointly Used Pipe Bridges 8       ARTICLE 3 SERVICES AND CHARGES 9       Section
3.1 Steam 9 Section 3.2 Water 10 Section 3.3 Electricity 10 Section 3.4
Compressed Air 12 Section 3.5 Fire and Emergency Services; Security Services 12
Section 3.6 Sawdust Procurement Services 13 Section 3.7 Medical Services 14
Section 3.8 Joint Storeroom and Motor Pool Services 14 Section 3.9 Use of
Expansion Warehouse 16 Section 3.10 Other Services 16 Section 3.11 Interim
Supply of Natural Gas 16 Section 3.12 Use of Pinehurst Lot Property 17      
ARTICLE 4 WASTEWATER TREATMENT 17       Section 4.1 Treatment and Monitoring of
the Wastewater Streams 17       ARTICLE 5 MAINTENANCE OF CONTINUOUS AND JOINTLY
USED ASSETS 17       Section 5.1 Ownership of Continuous Assets 17 Section 5.2
Repair and Maintenance of the Continuous Assets 17 Section 5.3 Repair and
Maintenance of Certain Jointly Used and Other Assets 18 Section 5.4 Repair and
Maintenance of Roads and Parking Areas 19       ARTICLE 6 ADDITIONAL PROVISIONS
WITH RESPECT TO CHARGES 19       Section 6.1 General 19 Section 6.2 Adjustments
Based on Extraordinary Changes 19 Section 6.3 Service Level Failures 19 Section
6.4 Payment Terms 21 Section 6.5 Documentation; Books and Records 22 Section 6.6
Availability of Information for Calculations; Monthly Adjustments 22 Section 6.7
Delays or Failures 22 Section 6.8 Calculation of Operating Costs 22      
ARTICLE 7 CAPITAL EXPENDITURES 23       Section 7.1 Capital Expenditures to
Satisfy Regulatory Requirements and in Connection with Expansion 23 Section 7.2
Capital Improvements for Rail Infrastructure 23

 

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Section 7.3 Capital Improvements to Maintain Assets Used to Provide the Services
23 Section 7.4 Other Mutual Capital Projects 24 Section 7.5 Capital Improvements
with Respect to the Continuous Assets 24 Section 7.6 No Capital Improvement
Obligation on the Part of the Mill Owner 24       ARTICLE 8 OPTIONS TO PURCHASE;
USE OF CERTAIN ASSETS 24       Section 8.1 Mill Owner Option to Purchase 24
Section 8.2 Purchase Price of Mill Owner Option Assets 25 Section 8.3 Continued
Operation of Assets Used to Provide Critical Services 26       ARTICLE 9
REPRESENTATIONS AND WARRANTIES 26       Section 9.1 Power and Authority of
Ingevity; Enforceability 26 Section 9.2 Power and Authority of the Mill Owner;
Enforceability 26 Section 9.3 Limitation of Warranties 27       ARTICLE 10
ADDITIONAL COVENANTS 27       Section 10.1 Insurance 27 Section 10.2 Service
Level Failures; Wastewater Remedy Payments; and Optimization of Operations 28
Section 10.3 Applicable Law 28       ARTICLE 11 NOTICES 29       Section 11.1
Required Notices 29 Section 11.2 How Notices are Given 30       ARTICLE 12 TERM
AND TERMINATION 30       Section 12.1 Term 30 Section 12.2 Termination 31      
ARTICLE 13 LIMITATION OF LIABILITY; INDEMNIFICATION 32       Section 13.1
Limitation of Liability and Waiver of Subrogation 32 Section 13.2
Indemnification by Ingevity 33 Section 13.3 Indemnification by the Mill Owner 34
Section 13.4 Notice of Claim 35 Section 13.5 Force Majeure 35 Section 13.6 Duty
to Mitigate 35 Section 13.7 Other 35 Section 13.8 Limitation of Liability 35    
  ARTICLE 14 CONTRACT MANAGERS; GOVERNANCE; DISPUTE RESOLUTION 36       Section
14.1 Contract Managers and Operating Council 36 Section 14.2 Dispute Resolution
37       ARTICLE 15 MISCELLANEOUS 38       Section 15.1 Confidential Information
38

 

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Section 15.2 Independent Contractors 38 Section 15.3 Assignment by Ingevity 38
Section 15.4 Assignment by the Mill Owner 39 Section 15.5 Amendment; Waiver 39
Section 15.6 Entire Agreement 39 Section 15.7 Choice of Law and Venue 39 Section
15.8 Binding Agreement; Successors 39 Section 15.9 Headings and Other
Interpretations 40 Section 15.10 Counterparts 40 Section 15.11 Schedules 40
Section 15.12 Severability, etc. 40 Section 15.13 No Presumption Against Drafter
40

 

 -iii- 

 

 

COVINGTON PLANT SERVICES AGREEMENT

 

THIS AGREEMENT (this “Agreement”) is made effective as of 12:01 a.m. on February
1, 2016 (the “Effective Date”) between WESTROCK VIRGINIA, LLC, a Delaware
limited liability company (the “Mill Owner”), and INGEVITY VIRGINIA CORPORATION,
a Virginia corporation (“Ingevity”), under the following circumstances:

 

A.          Pursuant to a Distribution Agreement of even date herewith between
the Mill Owner and Ingevity, certain of the assets and liabilities of the
specialty chemicals business of WestRock Company, including the Carbon Plant (as
hereinafter defined) operated in conjunction with and within the Mill Owner’s
paperboard and pulp mill in Covington, Virginia, are being distributed from the
Mill Owner to Ingevity. Following such distribution, Ingevity will operate the
Carbon Plant.

 

B.          Concurrently with the execution of this Agreement, the Mill Owner is
leasing the real property underlying the Carbon Plant to Ingevity pursuant to
the Ground Lease (as hereinafter defined). Under the Ground Lease, each party
also has certain specified ancillary rights to access and use the real property
owned or leased by the other party. Under the Ground Lease, Ingevity also has an
option to purchase the real property underlying the Carbon Plant and, if
Ingevity purchases the real property underlying the Carbon Plant pursuant to
this option, the ancillary rights provided by the Ground Lease will be converted
into perpetual reciprocal easements for the benefit of Ingevity and the Mill
Owner.

 

C.          The Carbon Plant is dependent upon the Mill Owner’s paperboard and
pulp mill for certain essential services. The parties are entering into this
Agreement to set forth their agreement with respect to the ongoing provision of
services by the Mill Owner’s paperboard and pulp mill to Ingevity’s Carbon
Plant.

 

NOW, THEREFORE, in consideration of the mutual covenants described in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are acknowledged, and intending to be legally bound hereby, Ingevity
and the Mill Owner agree as follows:

 

ARTICLE 1

DEFINITIONS

 

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

 

“Affiliate” means, as to any Person, (a) any Subsidiary of such Person and (b)
any other Person that, directly or indirectly, controls, is controlled by, or is
under common control with, such Person. For the purposes of this definition,
“control” means the possession of the power to direct or cause the direction of
management and policies of Person, whether through the ownership of voting
securities, by contract or otherwise.

 

“Agent” has the meaning given that term in Section 13.1(a).

 

“Asset Owner” has the meaning given that term in Section 5.2.

 

“Average Fuel Cost” means the average fuel cost incurred by the Mill during the
month to generate one MMBTU of steam, which shall be determined by: (A)
aggregating the cost to the Mill Owner of the Fuel Type used by the Mill to
produce steam during the month, but with the cost of the liquor from the
pulp-making process used as a fuel in the recovery boilers being valued at zero
for this purpose, and (B) dividing the result by the sum of: (x) the aggregate
fuel value of all of the Fuel Types used by the Mill during the month, which
shall be determined by multiplying the number of units of each

 

 

 

  

Fuel Type used by the Mill during the month by the Fuel Value Per Unit for that
Fuel Type and adding together the products so determined, plus (y) the aggregate
Energy Value of the 600 pound steam and the 1,500 pound steam generated by
recovery boiler #1 and recovery boiler #2, respectively, during the month.

 

“Carbon Plant” means the carbon manufacturing facility, the adjacent carbon
warehouse, the carbon research facility and offices, the former chipper house
and board mill, the Sawdust Pile and any ancillary facilities, all of which are
located on the Carbon Plant Real Property.

 

“Carbon Plant Real Property” means the real property on which the Carbon Plant
is located, as more particularly described in the Ground Lease. As of the
Effective Date, the Carbon Plant Real Property is leased by Ingevity from the
Mill Owner pursuant to the Ground Lease; however, during the Term, the Carbon
Plant Real Property may be purchased by Ingevity pursuant to the purchase option
set forth in the Ground Lease.

 

“Claims” means any claims, liabilities, obligations, damages, causes of action,
penalties, fines, judgments, forfeitures, losses, expenses (including but not
limited to, reasonable attorneys’ fees, consultant’s fees, expert’s fees, and
court costs) and costs.

 

“Clinic” has the meaning given that term in Section 3.7.

 

“Closure” means a shutdown of the Mill in which none of the Major Equipment is
being operated on a continuous basis during the applicable time period;
provided, however, that a shutdown in connection with a Major Equipment Shutdown
or a Cold Maintenance Shutdown shall not constitute a Closure.

 

“Co-located Continuous Assets” has the meaning given that term in Section 5.1.

 

“Cold Maintenance Shutdown” means a planned shutdown of the Mill for maintenance
and repairs (other than emergency maintenance or repairs resulting from a Force
Majeure Event) in which steam is not being generated by the Mill.

 

“Conclusion of the Escalation Process” has the meaning given that term in
Section 14.2(c).

 

“Continuous Assets” means those assets, such as pipelines, pipe bridges, wires,
cables, conveyors and other similar assets that are located partially on the
Mill Property and partially on the Carbon Plant Real Property. Those Continuous
Assets that are not Mill Owner Retained Assets are owned in part by the Mill
Owner and in part by Ingevity, while those Continuous Assets that are Mill Owner
Retained Assets are owned solely by the Mill Owner. In the case of Continuous
Assets that are utilities serving the Carbon Plant and the Mill (such as the
Filtered Water system, the Fire Water system, the wastewater system, the
stormwater system and the Mill Electrical Distribution System, but excluding the
natural gas line that will be constructed to directly connect the local natural
gas utility to the Carbon Plant, which will be paid for and owned by Ingevity),
the main distribution lines are owned by the Mill Owner and the dedicated lines
connecting the main distribution line to the Carbon Plant, serving only the
Carbon Plant, are owned by Ingevity. The Continuous Assets as of the Effective
Date and the portions of each owned by each party are listed on Schedule 5.1.
Schedule 5.1 also indicates, as of the Effective Date, the Continuous Assets
that are Mill Owner Retained Assets.

 

“Contract Manager” has the meaning given that term in Section 14.1(a).

 

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“Critical Services Equipment” has the meaning given that term in Section 8.3.

 

“Cutover Date” has the meaning given that term in Section 3.8(e).

 

“Default Rate” means a fixed rate equal to: (i) the three month London interbank
offered rate (LIBOR) as of the date of determination, as reported in the Wall
Street Journal Money Rate column (or, in the event the Wall Street Journal no
longer is published, or no longer publishes such rate, such other similarly
determined rate as the Mill Owner and Ingevity mutually agree), plus (ii) 5% per
annum.

 

“DEQ” means the Virginia Department of Environmental Quality or any successor
thereto.

 

“Direct Electric Purchase Arrangement” has the meaning given that term in
Section 3.3(c).

 

“Disputes” has the meaning given that term in Section 14.2.

 

“Effective Date” has the meaning given that term in the preamble to this
Agreement.

 

“Emergency Response Plan” has the meaning given that term in Section 3.5(a)(vi).

 

“Energy Value” means: (i) for recovery boiler #1, the number of MMBTU’s per
1,000 pounds of 600 pound steam generated in the boiler, which is 1.203, and
(ii) for recovery boiler #2, the number of MMBTU’s per 1,000 pounds of 1,500
pound steam generated in the boiler, which is 1.168.

 

“Environmental Laws” shall mean all Laws relating to public health and safety,
and pollution or protection of the environment, or that classify, regulate, call
for the remediation of, require reporting with respect to, or list or define
air, water, groundwater, solid waste, hazardous or toxic substances, materials,
wastes, pollutants or contaminants; which regulate the presence, use,
manufacture, generation, handling, labeling, testing, transport, treatment,
storage, processing, discharge, disposal, release, threatened release, control,
or cleanup of Hazardous Substances or materials containing Hazardous Substances;
or which are intended to assure the protection, safety and good health of the
public. “Environmental Laws” include all applicable Environmental Permits.

 

“Environmental Permits” means any licenses, permits, quotas, authorizations,
consents, orders, franchises, filings or registrations, variances, exceptions,
security clearances and other approvals from any Governmental Authority under
Environmental Laws including, without limitation, those that are required to
generate, store, handle, transport, discharge, emit or dispose of Hazardous
Substances used or generated by the party.

 

“Escalation Process” has the meaning given that term in Section 14.2(a).

 

“Excess Cost” has the meaning given that term in Section 3.1(c)(iii)(A).

 

“Executive Management” has the meaning given that term in Section 14.2(c).

 

“Expansion Warehouse” means the building located at the corner of North Roanoke
Street and North Allegheny Avenue adjacent to the Mill’s wood office, which is
the third-party managed warehouse owned by the Mill Owner and located on the
Mill Property that is used by both the Mill Owner and Ingevity for receiving and
temporary storage of equipment.

 

“Failure Hours” has the meaning given that term in Section 6.3(a).

 

“Filtered Water” means water pumped from local waterways and filtered by the
Mill.

 

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“Fire/Emergency Services” has the meaning given that term in Section 3.5(a).

 

“Fire Water” is pressurized Filtered Water for use in fighting fires that is
supplied through a fire water system that services the Mill and the Carbon
Plant.

 

“Force Majeure Event” means any cause, condition or event beyond the parties’
reasonable control that delays or prevents either party’s performance of its
obligations hereunder, including war, acts of government, acts of public enemy,
riots, civil strife, lightning, fires, explosions, storms, floods, power
failures (including brown-outs, surges or other situations where the utility
generates less than full power), other acts of God or nature, labor strikes or
lockouts by either party’s employees, and other similar events or circumstances;
provided, however, that adverse financial or market conditions shall not
constitute a Force Majeure Event.

 

“Fuel Type” means coal, natural gas, #6 fuel oil, #2 fuel oil, bark or purchased
biofuel.

 

“Fuel Value Per Unit” means, for each of the following fuel sources, the number
of MMBTU’s per unit indicated:

 

Fuel   Unit   Fuel Value Per Unit Coal   MMBTU per ton   26.000 Natural gas  
MMBTU per million cubic feet   1.070 #6 Fuel oil   MMBTU per gallon   0.151 #2
Fuel oil   MMBTU per gallon   0.138 Bark   MMBTU per 1,000 pounds   4.400
Purchased biofuel   MMBTU per 1,000 pounds   4.400

 

“Governmental Authority” means any government or governmental or regulatory body
thereof, or political subdivision thereof, of any country or subdivision
thereof, whether national, federal, state or local, or any agency or
instrumentality thereof, or any court or arbitrator (public or private).

 

“Ground Lease” means the Ground Lease Agreement of even date herewith between
the Mill Owner, as landlord, and Ingevity, as tenant, as the same may be amended
from time to time in accordance with its terms, with respect to the lease of the
ground underlying the Carbon Plant.

 

“Hazardous Substances” means any hazardous substance within the meaning of
Section 101(14) of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. §9601(14) or any chemical, pollutant,
contaminant, waste or otherwise toxic, hazardous, extremely hazardous or
radioactive waste, including petroleum, petroleum derivatives, petroleum
by-products or other hydrocarbons, asbestos containing materials and
polychlorinated biphenyls that, in each case, is regulated under any applicable
Environmental Law.

 

“Hazmat Team” has the meaning given that term in Section 3.5(a)(iii).

 

“Hourly Charge” has the meaning given that term in Section 6.3(d).

 

“Identified Courts” has the meaning given that term in Section 15.7.

 

“Incipient Fire Brigade” has the meaning given that term in Section 3.5(a)(i).

 

“Ingevity” has the meaning set forth in the preamble to this Agreement and
includes any permitted successors as operator of the Carbon Plant.

 

 -4- 

 

  

“Ingevity Employee Ratio” means, as of a specified date, the number of all
employees of Ingevity and its Affiliates employed at the Carbon Plant as of the
preceding September 30 divided by the aggregate number of all employees of
Ingevity and its Affiliates and the Mill Owner and its Affiliates employed at
the Carbon Plant and at the Mill, respectively, as of the preceding
September 30.

 

“Ingevity Fire/Emergency Services” has the meaning set forth in Section 3.5(a).

 

“Ingevity Indemnified Parties” has the meaning given that term in Section 13.3.

 

“Ingevity Natural Gas Utility Facilities” means any natural gas pipelines and
related equipment owned by Ingevity (whether existing on the Effective Date or
thereafter constructed at the expense of Ingevity pursuant to the Lease) that
are located on the Mill Property.

 

“Interim Operation” has the meaning given that term in Section 8.3.

 

“Interim Natural Gas Period” has the meaning given that term in Section 3.11(a).

 

“Joint Motor Pool Services” has the meaning given that term in Section 3.8(c).

 

“Joint Storeroom Services” has the meaning given that term in Section 3.8(a).

 

“Jointly Used Pipe Bridges” has the meaning given that term in Section 2.2.

 

“Jointly Used Rail Facilities” means the rail system located within the Mill
complex that is owned by the Mill Owner and serves the Mill and the Carbon
Plant, consisting of the track running from the Mill gate to the #13 spur at the
edge of the Carbon Plant Real Property and the designated railcar repair and
cleaning track. The Jointly Used Rail Facilities do not include the portion of
the #13 spur located on the Carbon Plant Real Property. The Jointly Used Rail
Facilities also do not include the Repair Track Access Track.

 

“Law” means any national, federal, state or local law (including common law),
statute, constitutional provision, code, ordinance, rule, regulation, opinion,
interpretive guidance, directive, concession, order or other official
requirement or guideline of any country or subdivision, authority, department or
agency thereof.

 

“Law Change” has the meaning given that term in Section 10.3(c).

 

“Losses” means any and all damages, liabilities, obligations, losses, penalties,
fines, costs, proceedings, deficiencies or damages (whether absolute, accrued,
conditional or otherwise and whether or not resulting from third party claims),
including out-of-pocket expenses and reasonable attorneys’ fees and accountants’
fees incurred in the investigation or defense of any of the same or in enforcing
any rights under this Agreement.

 

“Maintenance Standards” means, with respect to equipment, machinery and other
related components, the applicable maintenance and operating standards listed on
Schedule 1.2 or, if there is no applicable maintenance or operating standard
listed on Schedule 1.2, the applicable maintenance and operating standards being
applied by the Mill or Ingevity, as the case may be, as of the Effective Date.

 

“Major Equipment” means the Wastewater Treatment Plant, the Electrical
Distribution System, the Mill’s steam generation and distribution system serving
the Carbon Plant and the Mill’s Filtered Water and Fire Water distribution
systems serving the Carbon Plant.

 

 -5- 

 

  

“Major Equipment Shutdown” means a planned shutdown of any of the Major
Equipment for maintenance and repairs (other than (i) emergency maintenance or
repairs resulting from a Force Majeure Event, or (ii) as part of a Cold Mill
Shutdown) or for economic reasons which, in either case, affects the Services
provided to the Carbon Plant for more than 24 hours.

 

“Market Quality Sawdust” has the meaning given that term in Section 3.6(b).

 

“Mill” means the Covington, Virginia paperboard mill and pulp owned as of the
date of this Agreement by the Mill Owner. For clarity, the Mill does not include
the Carbon Plant.

 

“Mill Electrical Distribution System” means the Mill’s electrical distribution
system providing electric service to the Carbon Plant and the Mill. The Mill
Electrical Distribution System does not include the dedicated line or lines
serving only the Carbon Plant that connect the Mill Electrical Distribution
System to the Carbon Plant, which are owned by Ingevity, as shown on
Schedule 5.1.

 

“Mill Indemnified Parties” has the meaning given that term in Section 13.2.

 

“Mill Owner” has the meaning given that term in the preamble to this Agreement,
and includes any permitted successors as operator of the Mill.

 

“Mill Owner Option Exercise Notice” has the meaning given that term in Section
8.1.

 

“Mill Owner Option” has the meaning given that term in Section 8.1.

 

“Mill Owner Option Assets” has the meaning given that term in Section 8.1.

 

“Mill Owner Retained Assets” means: (i) any Continuous Assets that pass under,
on or over the Carbon Plant Real Property and serve the Mill but do not also
serve the Carbon Plant (which include, without limitation, certain pipe bridges,
conveyors and pipelines), and (ii) the building used by the Mill Owner as a
truck repair shop as of the Effective Date (sometimes referred to as the Auto
Garage), subject to the right of Ingevity under the Ground Lease to expand the
premises leased under the Ground Lease to include such building. The Mill Owner
Retained Assets as of the Effective Date (other than the truck repair shop
referred to in the preceding sentence) are listed on Schedule 5.1.

 

“Mill Property” means the real property on which the Mill is located, excluding
the Carbon Plant Real Property.

 

“MMBTU’s” means 1,000,000 British Thermal Units.

 

“Notice of Claim” has the meaning given that term in Section 13.4.

 

“Operating Costs” has the meaning given that term in Section 6.8.

 

“Operating Council” has the meaning given that term in Section 14.1(c).

 

“Originating Party” has the meaning given that term in Section 6.7.

 

“Party Wall” means the common, or party, structural wall between the former
board mill building on the Carbon Plant Property and the hydropulper building on
the Mill Property.

 

“Penalty Hours” has the meaning given that term in Section 6.3(b).

 

“Permanent Closure of the Carbon Plant” means a shutdown of the Carbon Plant in
which no products are being manufactured, processed or stored on a routine basis
consistent with normal business practices for the Carbon Plant, if such shutdown
has exceeded, or will exceed, one year in duration

 

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“Permanent Closure of the Mill” means the Closure of the Mill, if such Closure
has exceeded, or will exceed, one year in duration.

 

“Person” means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, representative office, branch, Governmental
Authority or other similar entity, other than Mill Owner or Ingevity.

 

“Pinehurst Lot” has the meaning given that term in Section 3.12(a).

 

“Plant Owner” has the meaning given that term in Section 5.2.

 

“Proceeding” has the meaning given that term in Section 15.7.

 

“Property” has the meaning given that term in Section 13.1(a).

 

“Proportionate Share of Rail Usage” has the meaning given that term in
Section 5.3(c).

 

“Protected Information” has the meaning given that term in Section 15.1.

 

“Recipient Party” has the meaning given that term in Section 6.7.

 

“Repair Track Access Track” means the mainline track within the Mill Property
between the #13 spur and the railcar repair and cleaning track (which Ingevity
has the right to use for the movement of railcars to and from the railcar repair
and cleaning track but is not part of the Jointly Used Rail Facilities).

 

“Rescue Squad” has the meaning given that term in Section 3.5(a)(v).

 

“Review Process” has the meaning given that term in Section 14.1(d).

 

“Sawdust Pile” means the sawdust stored at Ingevity’s sawdust storage and
processing site on the Carbon Plant Real Property.

 

“Sawdust Procurement Services” has the meaning set forth in Section 3.6(a).

 

“Security Services” has the meaning given that term in Section 3.5(b).

 

“Service Level Failure” has the meaning given that term in Section 6.3(a).

 

“Service Level Payments” has the meaning given that term in Section 6.3(c).

 

“Services” means the services to be provided by the Mill Owner to Ingevity
pursuant to Articles 3, 4 and 5 and the services to be provided by Ingevity to
the Mill Owner pursuant to Article 3.

 

“Services Specifications” means, with respect to each Service, the technical
standards and ranges of quantity, if any, applicable to such Service as set
forth on Schedule 1.1 under the heading “Services Specifications.” The Services
Specifications may be revised from time to time by the parties in writing
pursuant to the Review Process so long as such revisions are not otherwise
inconsistent with any provision of this Agreement, and Schedule 1.1 shall be
updated by the parties to include any change to the Services Specifications
agreed upon by the parties in writing pursuant to the Review Process.
Schedule 1.1 as so updated from time to time shall be deemed to be a part of
this Agreement.

 

“Steam Charge/MMBTU has the meaning given that term in Section 3.1(c).

 

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“Stormwater” means rainwater and non-process water collected on site at the Mill
and the Carbon Plant. The Stormwater ultimately mixes with process discharge
water before entering the Wastewater Treatment Plant.

 

“Structural Fire Brigade” has the meaning given that term in Section 3.5(a)(ii).

 

“Supporting Information” has the meaning given that term in Section 6.5.

 

“Surplus Sawdust” has the meaning given that term in Section 3.6(b).

 

“Term” has the meaning given that term in Section 12.1.

 

“Vehicle” means any land vehicle that is subject to any Virginia statutory motor
vehicle insurance Law.

 

“Waiver” has the meaning given that term in Section 3.11(a).

 

“Wastewater Remedy Payment” means a payment Ingevity is required to make
pursuant to Section 6.1.3, Section 6.1.4 or Section 6.1.5 of the Wastewater
Treatment Terms.

 

“Wastewater Treatment Plant” means the wastewater treatment plant at the Mill
and associated equipment and piping (including, without limitation, the
phosphate pre-treatment equipment conveyed by Ingevity to the Mill Owner and
operated by the Mill Owner) used for the treatment of wastewater produced by the
Mill and the Carbon Plant.

 

“Wastewater Treatment Services” means the Services to be provided by the Mill
Owner to Ingevity pursuant to Section 4.1 and the Wastewater Treatment Terms.

 

“Wastewater Treatment Terms” has the meaning given that term in Section 4.1.

 

ARTICLE 2

USE OF CERTAIN JOINT ASSETS

 

Section 2.1          Use of Jointly Used Rail Facilities.  The parties shall
cooperate with respect to their respective use of the Jointly Used Rail
Facilities and the Repair Track Access Track. The Mill Owner shall provide
Ingevity and its contractors with access to, and use of: (i) the Jointly Used
Rail Facilities for purposes of switching, railcar storage and providing railcar
deliveries and shipments to and from the Carbon Plant, and (ii) the Repair Track
Access Track for purposes of delivery of railcars to and retrieval of railcars
from the railcar repair and cleaning track, in each case consistent with the
Ground Lease and the day-to-day manner in which the Jointly Used Rail Facilities
and the Repair Track Access Track were being used prior to the Effective Date.
Each party shall be responsible for entering into its own freight and related
contracts with the railroads servicing the facility and third party contractors
who repair and clean railcars.

 

Section 2.2          Use of Jointly Used Pipe Bridges.  The Mill Owner shall
permit Ingevity to use the pipe bridges and similar structures within the Mill
that carry utilities transmission lines and pipelines through the Mill to the
Carbon Plant (collectively, the “Jointly Used Pipe Bridges”), consistent with
the Ground Lease. The obligations of the parties with respect to the maintenance
and repair of such pipe bridges, which are Mill Owner Retained Assets, shall be
as provided in Article 5.

 

 -8- 

 

  

ARTICLE 3

SERVICES AND CHARGES

 

Section 3.1          Steam.  (a) The Mill Owner shall supply all of Ingevity’s
requirements of steam for the Carbon Plant in accordance with the Services
Specifications; provided, that any increase in Ingevity’s requirements of steam
for the Carbon Plant after the Effective Date does not: (i) exceed, on an annual
basis, 100% of the metered usage of steam by the Carbon Plant during the first
12 full calendar months of the Term, (ii) require any capital expenditure by the
Mill Owner, or (iii) require the Mill Owner to obtain any new Environmental
Permit or any modification of an existing Environmental Permit. Except in the
case of a Major Equipment Shutdown, a Cold Maintenance Shutdown or a Force
Majeure Event, the Mill Owner shall not interrupt or reduce the steam service to
the Carbon Plant. In the event of any interruption or reduction in steam service
from the Mill for any purpose: (i) the Mill Owner shall not reduce the steam
service to the Carbon Plant until after steam service to all users of steam at
the Mill has been terminated, and (ii) the Mill Owner shall cooperate with
Ingevity with respect to the substitution of steam from the Mill’s package steam
plant or from a package steam plant to be obtained and operated by Ingevity.
Following any interruption to its steam service to the Carbon Plant as a result
of a Major Equipment Shutdown, a Cold Maintenance Shutdown or a Force Majeure
Event, the Mill Owner shall have the right to restore service to the Mill before
restoring service to the Carbon Plant, consistent with the practice prior to the
Effective Date; however, the Mill Owner, in cooperation with Ingevity, shall
restore service to the Carbon Plant as soon as is reasonbly practicable (and, in
any event, within 24 hours) after restoration of such service to the Mill.

 

(b)          For steam supplied to the Carbon Plant by the Mill pursuant to
Section 3.1(a), Ingevity shall pay the Mill Owner on a monthly basis an amount
determined by multiplying Ingevity’s actual metered usage of steam generated by
the Mill during the month (expressed in MMBTU’s) multiplied by the Steam
Charge/MMBTU for the month.

 

(c)          The “Steam Charge/MMBTU” for a month shall be the sum of the
following amounts:

 

(i)          the Mill Owner’s aggregate Operating Costs for the month to
generate steam (which, for purposes of clarity, shall not include all fuel
costs), determined by adding the amounts accumulated for the month in the Mill
Owner’s steam generation cost center accounts (Account No. 8010108350 (utility
general), 8010108366 (power boiler #6), 8010108371 (power boiler #11),
8010108352 (scrubber system), 8010108321 (recovery boiler #1), 8010108322
(recovery boiler #2), 8010108353 (bark boiler handling), 8010108369 (power
boiler #9), 8010108730 (power boiler #10) and 8010108361 (power boiler #1) or
the future equivalent accounts) divided by 90% of the total number of MMBTU’s of
steam generated by the Mill during the month (10% of such generated steam being
the estimated distribution loss); plus

 

(ii)         the adjusted average fuel cost incurred by the Mill during the
month to generate one MMBTU of steam, which shall be determined by: (A)
aggregating the cost to the Mill Owner of the Fuel Types used by the Mill to
produce steam during the month, but with the cost of the liquor from the
pulp-making process used as a fuel in the recovery boilers being valued at zero
for this purpose, and (B) dividing the result by 90% of the total number of
MMBTU’s of steam generated by the Mill during the month (10% of such generated
steam being the estimated distribution loss); plus

 

(iii)        a surcharge amount, if any, determined as follows: (A) calculate
the amount, if any, by which the cost of natural gas to generate one MMBTU of
steam for the month (determined by dividing the Mill Owner’s aggregate cost to
purchase natural gas used to generate steam during the month by the aggregate
fuel value of the natural gas, which is calculated by multiplying the Fuel Value
Per Unit for natural gas multiplied by the number of million cubic feet

 

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of natural gas used by the Mill to generate steam during the month) exceeds the
sum of: (x) the Average Fuel Cost for the month, plus (y) $3.00 (the amount of
such excess cost, if any, being referred to as the “Excess Cost”), (B) multiply
the Excess Cost, if any, by the aggregate fuel value of all of the Fuel Types
used by the Mill during the month, which shall be determined by multiplying the
number of units of each Fuel Type used by the Mill during the month by the Fuel
Value Per Unit for that Fuel Type (but with the cost of the liquor from the
pulp-making process used as a fuel in the recovery boilers being valued at zero
for this purpose) and adding together the products so determined, and (C) divide
the result determined in (B) by 90% of the total number of MMBTU’s of steam
generated by the Mill during the month (10% of such generated steam being the
estimated distribution loss).

 

A hypothetical calculation of the Steam Charge/MMBTU for a month is included in
the hypothetical monthly invoice for February, 2016 attached as Schedule 6.4.

 

(d)          In the event that the Mill Owner, acting as permitted by Section
12.2(a)(iii), notifies Ingevity that the Mill Owner is terminating its
obligation to provide steam pursuant to this Section 3.1, the Mill Owner
thereafter shall reasonably cooperate with Ingevity in Ingevity’s efforts to
obtain any necessary Environmental Permits for the operation of a replacement
steam generation and supply system for the Carbon Plant (including, without
limitation, by providing available relevant historical data (such as actual
emissions measurements necessary to develop an emissions baseline),
participating in any required national ambient air quality standards modeling
and attending meetings with Ingevity with the DEQ).

 

Section 3.2          Water.  (a) The Mill Owner shall supply to the Carbon
Plant, in accordance with the Services Specifications, all of Ingevity’s
requirements of: (i) Filtered Water, (ii) Fire Water, and (iii) potable water
from the City of Covington or other local water utility solely to the extent
such potable water is being provided from a line running through a Mill meter as
of the Effective Date and subject to no material increase in Ingevity’s usage
after the Effective Date. Ingevity shall supply to the Mill all of the Mill’s
requirements of potable water from the City of Covington or other local water
utility solely to the extent such potable water is being provided from a line
running through a Carbon Plant meter as of the Effective Date and subject to no
material increase in the Mill Owner’s usage after the Effective Date.

 

(b)          For Ingevity’s usage of Filtered Water supplied by the Mill
pursuant to Section 3.2(a), Ingevity shall pay the Mill Owner on a monthly basis
an amount determined by multiplying the Mill Owner’s aggregate Operating Costs
for maintaining and repairing the Mill’s Filtered Water pumping station and for
pumping and treating Filtered Water accumulated for the month in the Mill
Owner’s water treatment cost center account (Account No. 8010108351 or the
future equivalent account) by a fraction, the numerator of which is the Carbon
Plant’s metered usage of Filtered Water for the month and the denominator of
which is the total usage of Filtered Water by the Mill and the Carbon Plant for
the month. Neither Ingevity nor the Mill Owner shall be required to pay the
other for potable water provided by the other pursuant to Section 3.2(a).
Ingevity shall not be required to pay the Mill Owner for Fire Water supplied by
the Mill Owner; however, for each maintenance or repair activity (specific work
order) undertaken by the Mill Owner with respect to the Fire Water delivery
system serving both the Mill and the Carbon Plant, Ingevity shall pay the Mill
Owner an amount determined by multiplying the Mill Owner’s Operating Costs for
such maintenance or repair activity by a fraction, the numerator of which is the
number of acres in the Carbon Plant Real Property and the denominator of which
is the aggregate number of acres in the Carbon Plant Real Property and the
portion of the Mill Property inside the security fence.

 

Section 3.3          Electricity.  (a) The Mill Owner, as landlord under the
Ground Lease, shall supply all of the requirements of the Carbon Plant for 60 Hz
electricity, in accordance with the Services Specifications and in a manner
consistent with the manner in which the Mill Owner provided electricity to the
Carbon Plant prior to the Effective Date. Such 60 Hz electricity shall be
supplied from electricity

 

 -10- 

 

 

purchased by the Mill from the local electric utility. The Mill Owner shall
maintain appropriate meters in accordance with applicable Law to measure the
electricity provided to Ingevity pursuant to this Agreement. The electricity
provided to Ingevity by the Mill Owner pursuant to this Agreement shall be used
by Ingevity only for the operation of the Carbon Plant and related facilities
and cannot be resold (other than to an Affiliate of Ingevity, but only if such
sale to an Affiliate does not violate applicable Law). The Mill Owner’s
obligation to supply electricity to the Carbon Plant pursuant to this
Section 3.3(a) shall cease in the event: (i)  the Mill Owner no longer is
leasing the Carbon Plant Real Property to Ingevity, (ii) Ingevity breaches its
obligation set forth in the preceding sentence to use electricity supplied by
the Mill only for the operation of the Carbon Plant and related facilities, (ii)
Ingevity sells any of the electricity provided by the Mill Owner (other than to
an Affiliate of Ingevity, but only if such sale to an Affiliate does not violate
applicable Law), or (iii) Ingevity obtains its requirements for electricity from
a source other than the Mill.

 

(b)          For electricity supplied by the Mill Owner to the Carbon Plant
pursuant to Section 3.3(a), Ingevity shall pay the Mill Owner on a monthly basis
an aggregate amount determined by multiplying the Carbon Plant’s actual metered
usage of electricity supplied by the Mill during the month by a rate that is
determined by dividing the Mill Owner’s total purchased electricity cost for the
billing month by the amount of electricity (in kilowatt hours) purchased by the
Mill Owner during the billing month; provided, however, that in the event Mill
Owner’s buy-all/sell-all contract with the electric utility is terminated, the
Mill Owner shall charge Ingevity for the usage of electricity at the same rate
that would be payable by Ingevity pursuant to the tariff with the local utility
if Ingevity received electric service directly from that utility.

 

(c)          If after the Effective Date the local electric utility serving the
Mill and the Carbon Plant approves an arrangement under which each of the Mill
Owner and Ingevity may purchase its own electricity directly, using a jointly
owned electric distribution system to supply the electricity from the lines of
the utility to the Carbon Plant without subjecting the Mill Owner to any
additional regulation under federal or state law (a “Direct Electric Purchase
Arrangement”), Ingevity may elect to convert the Services described under
Section 3.3(a) to a Direct Electric Purchase Arrangement by giving at least six
months prior written notice of such election to the Mill Owner. If Ingevity
elects to convert such Services to a Direct Electric Purchase Arrangement,
Ingevity shall provide to the Mill Owner prior to conversion to the Direct
Electric Purchase Arrangement assurances reasonably acceptable to the Mill Owner
that the Mill Owner will not become subject to any additional regulation under
federal or state Law by reason of converting such Services to a Direct Electric
Purchase Arrangement. If Ingevity has satisfied the requirement set forth in the
preceding sentence and if Ingevity is not then in default under any of its
obligations under this Agreement or the Ground Lease, then effective on the date
that is six months after Ingevity gave notice of the election to convert to a
Direct Electric Purchase Arrangement (or on such other date as Ingevity and the
Mill Owner may agree): (i) the Mill Owner shall expand the property leased to
Ingevity pursuant to the Ground Lease to include or, if Ingevity has purchased
the Carbon Plant Property, shall convey to Ingevity, an undivided fractional
interest in the Mill Electrical Distribution System (with such fraction
determined by dividing the Carbon Plant’s aggregate usage of electricity over
the last 12 full months ending prior to the conversion by the aggregate usage of
electricity by the Carbon Plant and the Mill of electricity supplied through the
Mill Electrical Distribution System during the same 12 month period), (ii) the
obligation of the Mill Owner to supply electricity to Ingevity (but not the
obligation to maintain appropriate meters) pursuant to Section 3.3(a) shall
cease, (iii) Ingevity shall have the right to use the jointly owned Mill
Electrical Distribution System to transport electricity purchased by Ingevity
from the local utility to the Carbon Plant consistent with its ownership
interest in such system, and (iv) the obligation of the Mill Owner to maintain
and repair the Mill Electrical Distribution System as provided in Section 5.3(a)
shall continue notwithstanding the joint ownership of such system; however,
Ingevity shall pay to the Mill Owner on a monthly basis an amount determined by
multiplying the Mill Owner’s Operating Costs for each maintenance or repair
activity (specific work order) undertaken by the Mill Owner during the month
with respect to the Mill Electrical Distribution System by a percentage equal to
Ingevity’s undivided fractional interest in the Mill Electrical Distribution
System.

 

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Section 3.4          Compressed Air.  (a) The Mill Owner shall supply all of
Ingevity’s requirements of compressed air for the Carbon Plant in accordance
with the Services Specifications, as available from the Mill and consistent with
the practice prior to the Effective Date.

 

(b)          For compressed air supplied by the Mill pursuant to Section 3.4(a),
Ingevity shall pay to the Mill Owner on a monthly basis an amount determined by
multiplying Ingevity’s metered usage of compressed air supplied by the Mill
Owner by an industry average cost per 1,000 cubic feet of compressed air, as
determined annually by the Operating Council. As of the Effective Date, the
agreed upon industry average cost of compressed air is $0.25/1,000 cubic feet.
Notwithstanding the foregoing, if in the future the Mill Owner separately tracks
its Operating Costs to generate compressed air for the Mill and the Carbon
Plant, the monthly amount payable by Ingevity for compressed air supplied by the
Mill Owner pursuant to Section 3.4(a) shall be calculated by multiplying such
Operating Costs for the month by a fraction, the numerator of which is the
metered number of cubic feet of compressed air used by the Carbon Plant during
the month and the denominator of which is the total number of cubic feet of
compressed air used by the Carbon Plant and the Mill during the month.

 

Section 3.5          Fire and Emergency Services; Security Services.  (a) The
parties shall cooperate in the provision of fire, hazmat and other emergency
services in the following manner (the Services to be provided to Ingevity by the
Mill Owner pursuant to this Section 3.5(a) are referred to as the
“Fire/Emergency Services,” and the assistance to be provided by Ingevity to the
Mill Owner in providing the Fire/Emergency Services pursuant to this
Section 3.5(a) are referred to as the “Ingevity Fire/Emergency Services”):

 

(i)          The Mill Owner and Ingevity shall jointly maintain an incipient
fire brigade (the “Incipient Fire Brigade”) reasonably sufficient to fight fires
in the Mill and the Carbon Plant in street clothing using fire extinguishers or
1 1/2 inch fire hoses to control or extinguish the fire when heavy smoke is not
threatening employees of the Mill or the Carbon Plant. The Incipient Fire
Brigade shall include all 24-hour shift (tour) maintenance employees of the Mill
and all 24-hour shift (tour) maintenance employees of the Carbon Plant and may
include volunteers from among the other employees of the Mill and the Carbon
Plant.

 

(ii)         The Mill Owner shall maintain a structural fire brigade reasonably
sufficient to fight interior and exterior structural fires at the Mill and the
Carbon Plant (the “Structural Fire Brigade”), which shall consist of employees
who can meet prescribed physical demand assessments (with an annual physical),
wear structural firefighting clothing (bunker gear) and self-contained breathing
apparatus and are trained to fight such fires. Ingevity may, but shall not be
required to, provide qualified employees to serve on the Structural Fire
Brigade.

 

(iii)        The Mill Owner shall maintain a hazardous materials response team
(the “Hazmat Team”), reasonably sufficient to respond to releases of toxic and
hazardous materials at the Mill and the Carbon Plant. The Hazmat Team shall
consist of employees who can meet prescribed physical demand assessments (with
an annual physical), wear structural firefighting clothing (bunker gear), Level
B flash suits and Level A fully encapsulating suits and are trained in hazardous
materials awareness, hazardous materials operations and other appropriate
skills. Ingevity shall provide at least one qualified employee to serve on the
Hazmat Team.

 

(iv)        Except as otherwise provided in Section 3.2 with respect to
maintenance of the Fire Water system and in Section 3.5(b) with respect to the
fire detection monitoring and alarm system, each party shall be responsible for
maintaining the fire and emergency equipment located on its property (including,
without limitation, hoses, hydrants, valves, sprinklers and fire detection
devices). The Mill Owner shall be responsible for purchasing and maintaining all
mobile fire and emergency equipment. The Mill Owner’s security personnel shall
monthly

 

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inspect all fire and emergency equipment located at the Carbon Plant and, in the
case of all such equipment which Ingevity is responsible for maintaining as
provided in the first sentence of this Section 3.5(a)(iv), issue to Ingevity a
list of items that Ingevity shall be required to repair or replace, at
Ingevity’s expense.

 

(v)         As of the Effective Date, the volunteer rescue squad operating in
the Mill and the Carbon Plant (the “Rescue Squad”) is independent of the Mill
Owner and Ingevity and operates both in and outside of the Mill and the Carbon
Plant but is funded by the Mill Owner. At the election of the Mill Owner, the
Mill Owner may contract with another provider for Rescue Squad services for the
Mill and the Carbon Plant.

 

(vi)        Following the Effective Date, the Mill Owner and Ingevity shall
continue to administer the agreed upon joint emergency response plan (the
“Emergency Response Plan”), which shall supplement the provisions of this
Section 3.5(a) with respect to the Fire/Emergency Services and the other matters
set forth in this Section 3.5(a) and each party’s disaster recovery plan. The
Emergency Response Plan shall be subject to revision through the Review Process.
The Mill Owner and Ingevity shall act in accordance with the Emergency Response
Plan.

 

(b)          The Mill Owner shall provide to Ingevity physical security
services, including operation and maintenance of the combined gate and badge
security, perimeter fencing, fire detection monitoring and emergency evacuation
systems covering both the Mill and the Carbon Plant (which may include imposing
reasonable and appropriate restrictions on the Carbon Plant’s personnel and
contractors, to the extent required to meet security obligations imposed on the
Mill by the Department of Homeland Security or other requirements of Law)
(collectively, the “Security Services”) in a manner consistent with the manner
in which the Security Services were being provided prior to the Effective Date.

 

(c)          Except as provided in this Section 3.5(c), Ingevity shall not be
obligated to pay or reimburse the Mill Owner for providing the Fire/Emergency
Services, and the Mill Owner shall not be obligated to pay or reimburse Ingevity
for providing the Ingevity Fire/Emergency Services. For the services of the
Rescue Squad pursuant to Section 3.5(a)(v), Ingevity shall reimburse the Mill
Owner on a monthly basis for a portion of the cost to support the independent
Rescue Squad (or any replacement) determined by multiplying the aggregate
Operating Costs paid by the Mill Owner to support the Rescue Squad (or any
replacement) as accumulated for the month in the Mill Owner’s rescue squad cost
center account (Account No. 8010109112 or the future equivalent account) by the
Ingevity Employee Ratio.

 

(d)          For the Security Services provided by the Mill Owner pursuant to
Section 3.5(b), Ingevity shall pay the Mill Owner on a monthly basis an amount
determined by multiplying the Mill Owner’s aggregate Operating Costs to provide
the Security Services accumulated for the month in the Mill Owner’s security and
fire protection cost center account (Account No. 8010109111 or the equivalent
future account) by the Ingevity Employee Ratio.

 

(e)          Neither Ingevity nor the Mill Owner shall be obligated to pay the
other any employee costs with respect to employees of the other responding to
any incident at the Carbon Plant or the Mill, respectively, as part of or in
connection with the Incipient Fire Brigade, the Structural Fire Brigade or the
Hazmat Team.

 

Section 3.6          Sawdust Procurement Services.  (a) The Mill Owner shall act
as Ingevity’s agent to purchase and pay for sawdust that meets the
specifications identified from time to time by Ingevity and to arrange for
delivery of the purchased sawdust to the Mill (in accordance with a delivery
planning schedule approved by Ingevity) (collectively, the “Sawdust Procurement
Services”).

 

(b)          The Mill Owner shall not remove sawdust from the Sawdust Pile
without Ingevity’s prior written consent; however, the Mill Owner may remove
excess (as determined by Ingevity) sawdust or

 

 -13- 

 

  

sawdust that does not comply with Ingevity’s specifications in reasonable
quantities for use as fuel (“Surplus Sawdust”). The Mill Owner shall pay for any
sawdust removed from the Sawdust Pile with Ingevity’s consent that is not
Surplus Sawdust (“Market Quality Sawdust”) and any Surplus Sawdust removed from
the Sawdust Pile in accordance with Section 6.4(b).

 

(c)          For the Sawdust Procurement Services provided by the Mill Owner
pursuant to Section 3.6(a), Ingevity shall pay the Mill Owner on a monthly basis
the sum of: (i) one-twelfth of the budgeted cost for the year (as set forth in
the annual budget produced by the Mill Owner for its wood procurement group) for
the salary, benefits for a full-time equivalent employee in the wood procurement
group multiplied by the number of full-time equivalent employee(s) of the Mill
Owner engaged in providing the Sawdust Procurement Services during the year, as
determined annually by the Operating Council (as of the Effective Date, the
agreed upon number of full-time equivalent employees of the Mill Owner engaged
in providing the Sawdust Procurement Services in 2015 was 1.625, which was
calculated as set forth in Schedule 3.6), (ii) the budgeted cost for the year
(as set forth in the annual budget produced by the Mill Owner for its wood
procurement group) for direct travel and entertainment expenses to be incurred
by the Mill Owner’s employee(s) in providing the Sawdust Procurement Services,
divided by twelve, and (iii) the amount paid by the Mill Owner during the month
to third party vendors for the purchase and delivery of sawdust for Ingevity.

 

(d)          The Mill Owner shall pay Ingevity for sawdust removed from
Ingevity’s Sawdust Pile as follows: (i) for Market Quality Sawdust, the Mill
Owner shall pay the current average price per ton paid by the Mill Owner during
the month to purchase sawdust and have it delivered to the Sawdust Pile
(including the cost of the Sawdust Procurement Services paid or to be paid by
Ingevity), and (ii) for Surplus Sawdust, the Mill Owner shall pay the price
agreed upon in writing by the Mill Owner and Ingevity from time to time as the
then cost of the Mill’s “own made bark” (which is $5.04 per ton as of the
Effective Date).

 

Section 3.7          Medical Services.  (a) The Mill Owner shall provide access
to and use of the Mill’s medical clinic (the “Clinic”) for the provision of
medical services to the employees of Ingevity by a medical service provider
selected by the Mill Owner to operate the clinic, but separately engaged by
Ingevity. Such access and use shall be consistent with the access and use of the
Clinic by Ingevity’s employees prior to the Effective Date; provided, however,
that the Mill Owner may require Ingevity’s employees to use the main gate of the
Mill to access the Clinic absent a medical emergency.

 

(b)          For access to and use of the Clinic building pursuant to
Section 3.7(a), Ingevity shall pay the Mill Owner on a monthly basis an amount
determined by multiplying the Mill Owner’s aggregate Operating Costs to operate
the Clinic accumulated for the month in the Mill Owner’s medical cost center
account (Account No. 8010109110 or the future equivalent account), less any such
Operating Costs included in such cost center with respect to any payment to the
third party provider of medical services at the Clinic to the Mill Owner’s
employees, by the Ingevity Employee Ratio.

 

Section 3.8          Joint Storeroom and Motor Pool Services.  (a) The Mill
Owner shall continue after the Effective Date to operate the joint storeroom
located at the Mill (including providing pump shop services) and to provide
access to authorized employees of the Carbon Plant in a manner consistent with
the manner in which the joint storeroom was operated prior to the Effective Date
(the “Joint Storeroom Services”). In providing the Joint Storeroom Services, the
Mill Owner’s storeroom personnel shall order (through Ingevity’s enterprise
software system, with payment to be made by Ingevity), receive and store
Ingevity’s stores, keep records of the receipt and disbursement of Ingevity’s
stores and provide security for the joint storeroom.

 

(b)          For the Joint Storeroom Services provided by the Mill Owner
pursuant to Section 3.8(a), Ingevity shall pay the Mill Owner on a monthly basis
an amount determined by multiplying the Mill

 

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Owner’s aggregate Operating Costs accumulated for the month in the Mill Owner’s
storeroom cost center account (Account No. 8010109641 or the future equivalent
account) by a fraction, the numerator of which is the average number of square
feet of the joint storeroom used to warehouse Ingevity’s stores and the
denominator of which is the aggregate number of square feet of the joint
storeroom used to warehouse stores for Ingevity and the Mill Owner,
collectively. If the Mill Owner elects to contract with a third party to provide
the Joint Storeroom Services as provided in Section 3.8(c) and Ingevity elects
to participate, instead of a payment calculated as provided in the preceding
sentence, Ingevity shall pay the Mill Owner on a monthly basis an amount
determined by multiplying one-twelfth of the annual aggregate invoice amount
(excluding any stores purchased) paid by the Mill Owner to the third party
contractor for providing the Joint Storeroom Services by a fraction, the
numerator of which is the average number of square feet of the third party joint
storeroom space used to warehouse Ingevity’s stores and the denominator of which
is the aggregate number of square feet of the third party joint storeroom space
used to warehouse stores for Ingevity and the Mill Owner, collectively. In each
case, each party shall pay for its own stores and other materials stored in the
joint storeroom.

 

(c)          The Mill Owner shall continue after the Effective Date to operate
the joint electric motor pool located at the Mill and to provide access to
authorized employees of the Carbon Plant in a manner consistent with the manner
in which the joint electric motor pool was operated prior to the Effective Date,
including providing access to authorized Ingevity employees after hours through
the Mill Owner’s security staff (the “Joint Motor Pool Services”). In providing
the Joint Motor Pool Services, the Mill Owner shall maintain, repair and
inventory electric motors consistent with current practice as of the Effective
Date. The Mill Owner shall check out motors (electrically) and make them
available to Ingevity as requested.

 

(d)          For the Joint Motor Pool Services provided by the Mill Owner
pursuant to Section 3.8(c), Ingevity shall pay the Mill Owner on a monthly basis
an amount equal to: (i) one-twelfth of the budgeted cost for the year (as set
forth in the annual budget provided by the Mill Owner) for the salary and
benefits for one full-time equivalent employee of the Mill Owner engaged in
providing the Joint Motor Pool Services multiplied by a fraction, the numerator
of which is the number of Ingevity’s motors in the joint motor pool and the
denominator of which is the total number of all motors in the joint motor pool,
all as determined annually by the Operating Council (as of the Effective Date,
the agreed upon amount is $500 per month), plus (ii) for joint use electric
motors withdrawn by Ingevity from the joint motor pool, Mill Owner’s average
cost to repair or, in the sole discretion of the Mill Owner, replace joint use
electric motors which shall be invoiced by the Mill Owner on a line item basis
in the Mill Owner’s monthly invoice delivered pursuant to Section 6.4 for the
month in which the joint use motors are withdrawn by Ingevity. Repairs to and
replacements of motors used exclusively by Ingevity shall be charged directly to
Ingevity by the third party repair service repairing and/or replacing such
motors. If the Mill Owner elects to contract with a third party to provide the
Joint Motor Pool Services as provided in Section 3.8(c) and Ingevity elects to
participate, instead of a payment calculated as provided in the preceding
sentence, Ingevity shall pay the Mill Owner on a monthly basis an amount
determined by multiplying one-twelfth of the annual aggregate invoice amount
paid by the Mill Owner to the third party contractor for providing the Joint
Motor Pool Services (excluding any motors purchased) by a fraction, the
numerator of which is the number of Ingevity’s motors in the Joint Motor Pool
and the denominator of which is the total number of all motors in the Joint
Motor Pool, as determined annually by the Operating Council.

 

(e)          Upon not less than six months prior written notice by the Mill
Owner to Ingevity, the Mill Owner may elect to contract with one or more third
parties to provide the Joint Storeroom Services and/or the Joint Motor Pool
Services (the date specified in such notice by the Mill Owner as the date on
which such a third party contract or contracts will become effective is referred
to as the “Cutover Date”). Ingevity shall have the option, which must be
exercised by giving written notice to the Mill Owner given not less than two
months prior to the Cutover Date, of electing not to participate jointly with
the Mill Owner in such contracted Joint Storeroom Services and/or Joint Motor
Pool Services. Unless Ingevity so elects not to participate, the Mill Owner
shall cause its third party contractor to provide the Joint Storeroom Services
and/or Joint Motor Pool Services jointly on an equal basis to the Mill Owner and
Ingevity, in a manner consistent with Section 3.8(a) and Section 3.8(c),
respectively, and effective as of

 

 -15- 

 

  

the Cutover Date. If Ingevity elects not to participate jointly with the Mill
Owner in such contracted services, the Mill Owner’s obligation to provide the
Joint Storeroom Services and/or the Joint Motor Pool Services, as the case may
be, under Section 3.8(a) and/or Section 3.8(c), respectively, shall terminate
effective as of the Cutover Date.

 

Section 3.9           Use of Expansion Warehouse.  (a) Ingevity shall have
access to and the right to use the Expansion Warehouse (which as of the
Effective Date is operated by a third party under contract with the Mill Owner)
on an approximately equal basis with the Mill Owner. Ingevity and the Mill Owner
shall reasonably cooperate with each other and the operator of the Expansion
Warehouse in the scheduling and use of the Expansion Warehouse. The Mill Owner
shall have the sole right to select the operator of the Expansion Warehouse and
to negotiate from time to time the form of agreement with the third party
operator of the Expansion Warehouse; provided, however, that: (i) Ingevity shall
have the right to approve any material change in the scope of any such
agreement, and (ii) the Mill Owner and Ingevity each shall enter into an
agreement in such form directly with the third party operator.

 

(b)          For use of the Expansion Warehouse, as provided in Section 3.9(a),
Ingevity and the Mill Owner each shall directly pay the third party operator of
the Expansion Warehouse 50% of the aggregate annual invoice amounts payable to
the third party operator of the Expansion Warehouse. In addition, Ingevity shall
reimburse the Mill Owner for 50% of the Mill Owner’s Operating Costs for each
maintenance or repair activity (specific work order) undertaken by the Mill
Owner with respect to the Expansion Warehouse.

 

Section 3.10        Other Services. (a) The Mill Owner shall provide to
Ingevity, without charge, the following additional Services in a manner
consistent with the manner in which such Services were being provided prior to
the Effective Date:

 

(i)          access to and use of the training room in the Mill’s fire house;

 

(ii)         access to and use of the Mill’s truck scales (including the
weighing of purchased sawdust); and

 

(iii)        use of voice and data network transmission lines within the Mill.

 

(b)          Ingevity shall provide to the Mill Owner, without charge, use of
voice and data network transmission lines within the Carbon Plant in a manner
consistent with the manner in which such use was being provided prior to the
Effective Date.

 

Section 3.11        Interim Supply of Natural Gas.  (a) During the period from
the Effective Date until completion of the construction, at Ingevity’s expense,
of a direct pipeline connecting the Carbon Plant to the pipeline of the local
natural gas utility (the “Interim Natural Gas Period”), the Mill Owner shall
supply the Carbon Plant with natural gas for the operation of the Carbon Plant,
in accordance with any limitations or requirements imposed by Virginia Law or as
a condition to the waiver from regulation as a public utility granted by the
Commonwealth of Virginia State Corporation Commission (the “Waiver”) prior to
the Effective Date.

 

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(b)          During the Interim Natural Gas Period, natural gas purchased by the
Mill Owner for Ingevity and pipeline capacity for the transportation of that
natural gas to the Mill for delivery to the Carbon Plant shall be allotted to,
and paid for by, Ingevity in accordance with provisions of Schedule 3.11.

 

(c)          Following the end of the Interim Period, the provisions of Schedule
3.11 shall govern the rights and obligations of Ingevity with respect to its
access to certain natural gas transportation capacity held by the Mill Owner or
an Affiliate.

 

Section 3.12        Use of Pinehurst Lot.  (a) As of the Effective Date, the
Mill Owner was leasing from Pounding Mill Inc. two parcels of real property in
Covington, Virginia known as the Pinehurst Lot (the “Pinehurst Lot”) for use for
storage and as a shuttle yard for trucks serving the Mill and the Carbon Plant.
Following the Effective Date, the Mill Owner shall continue to provide Ingevity
and its contractors with access to and the right to use a portion of the
Pinehurst Lot (space for 20 trucks) as a shuttle yard for trucks serving the
Carbon Plant consistent with the portion of the property that was being used,
and consistent with the manner in which it was being used, by the Carbon Plant
as of the Effective Date. Ingevity shall contract for shuttle services using the
Pinehurst Lot with the same firm used by the Mill Owner for such services. The
Mill Owner shall notify Ingevity in advance if the Mill Owner’s lease of the
Pinehurst Lot will be terminating, and Ingevity’s right to use any portion of
the Pinehurst Lot shall terminate upon the termination of the Mill Owner’s lease
of the Pinehurst Lot.

 

(b)          For use of the Pinehurst Lot, as provided in Section 3.12(a),
Ingevity shall pay the Mill Owner, on a monthly basis, an amount equal to the
monthly rent paid by the Mill Owner under the Mill Owner’s lease of the
Pinehurst Lot multiplied by a fraction, the numerator of which is the amount of
space on the Pinehurst Lot used by Ingevity and the denominator of which is the
total amount of space on the Pinehurst Lot (as of the date of this Agreement,
the fraction is 1/10).

 

ARTICLE 4

WASTEWATER TREATMENT

 

Section 4.1          Treatment and Monitoring of the Wastewater Streams.  The
Mill Owner shall treat the wastewater and Stormwater produced by the Carbon
Plant at the Wastewater Treatment Plant (including phosphate pre-treatment) as
provided in, and subject to the obligations, requirements and restrictions of
Ingevity set forth in, Schedule 4.1 (the “Wastewater Treatment Terms”), which
are incorporated into and made a part of this Agreement.

 

ARTICLE 5

MAINTENANCE OF CONTINUOUS AND JOINTLY USED ASSETS

 

Section 5.1          Ownership of Continuous Assets.  As of the Effective Date,
ownership of the Continuous Assets (other than the Mill Owner Retained Assets,
which are owned solely by the Mill Owner) was divided between the Mill Owner and
Ingevity at the points indicated on Schedule 5.1, with the result that one party
may own a portion of Continuous Assets physically located on real property owned
or leased by the other party (the “Co-located Continuous Assets”). The Ground
Lease governs certain rights of the parties with respect to the location, use
and maintenance of, access to and responsibility for the Co-located Continuous
Assets.

 

Section 5.2          Repair and Maintenance of the Continuous Assets.  Unless
the parties otherwise agree in writing, a party that owns Co-located Continuous
Assets (the “Asset Owner”) shall maintain and repair such Co-located Continuous
Assets in accordance with the Maintenance Standards regardless of whether such
Co-located Continuous Assets are located on real property owned or leased by the
Asset Owner or on real property owned or leased by the other party (the “Plant
Owner”). The Asset Owner shall have the right to access, inspect and maintain
its Co-located Continuous Assets located on the Plant

 

 -17- 

 

  

Owner’s property pursuant to the Ground Lease. Notwithstanding the foregoing,
this Section 5.2 shall not apply to the jointly owned Mill Electric Distribution
System if the Direct Electric Purchase Arrangement becomes effective.

 

Section 5.3          Repair and Maintenance of Certain Jointly Used and Other
Assets.  (a) Notwithstanding Section 5.2, the Mill Owner shall maintain and
repair the Jointly Used Rail Facilities, the Mill Electrical Distribution System
(whether or not the Direct Purchase Arrangement becomes effective), the Mill
Owner Retained Assets (including, without limitation, the Jointly Used Pipe
Bridges), the Repair Track Access Track, the training room in the Mill’s fire
house, the Mill’s truck scales, the Ingevity Natural Gas Utility Facilities, the
gas lines used to supply natural gas to the Carbon Plant on an interim basis
pursuant to Section 3.11, the Party Wall and the phosphate pre-treatment
equipment that is part of the Wastewater Treatment Plant, in each such case in
all material respects in accordance with the Maintenance Standards.

 

(b)          For the repair and maintenance of the Jointly Used Rail Facilities
pursuant to Section 5.3(a), Ingevity shall pay to the Mill Owner on a monthly
basis: (i) an amount determined by multiplying the Mill Owner’s monthly
Operating Costs for each track inspection activity (specific work order)
undertaken by the Mill Owner with respect to the Jointly Used Rail Facilities
during the month by Ingevity’s Proportionate Share of Rail Usage, plus (ii) for
each maintenance or repair activity with respect to the Jointly Used Rail
Facilities (specific work order) undertaken by the Mill Owner during such month
an additional amount determined by multiplying the Mill Owner’s Operating Costs
for such maintenance or repair by a fraction, the numerator of which is the
number of inbound rail cars moved over the Jointly Used Rail Facilities to the
Carbon Plant during the month and the denominator of which is the total number
of inbound rail cars moved over the Jointly Owned Rail Facilities (including
those moved to the Carbon Plant) during the month. There shall be no charge to
Ingevity for use of the Repair Track Access Track.

 

(c)          Ingevity’s “Proportionate Share of Rail Usage” shall be a
percentage determined by dividing the number of feet of track in the Jointly
Used Rail Facilities by the aggregate number of feet of railroad track on the
Mill Property (for clarity, including the Jointly Used Rail Facilities but
excluding the track on the Carbon Plant Property) and multiplying the result by
a fraction, the numerator of which is the number of inbound rail cars moved over
the Joint Owned Rail Facilities to the Carbon Plant during the month and the
denominator of which is the total number of inbound rail cars moved over the
Jointly Owned Rail Facilities (including those moved to the Carbon Plant) during
the month.

 

(d)          For Ingevity’s use of the Jointly Used Pipe Bridges to carry pipes
and conduit owned by Ingevity (individually or in common with the Mill Owner),
Ingevity shall pay to the Mill Owner on a monthly basis an amount determined by
multiplying the Mill Owner’s Operating Costs for each maintenance or repair
activity (specific work order) undertaken by the Mill Owner with respect to the
Jointly Used Pipe Bridges by a fraction, the numerator of which is the number of
square inches of Ingevity’s pipes and conduits carried by the Jointly Used Pipe
Bridges during the month, if any, and the denominator of which is the total
number of square inches of pipes and conduits carried by the Jointly Used Pipe
Bridges.

 

(e)          For the repair and maintenance pursuant to Section 5.3(a) of the
Mill Owner’s natural gas lines used to supply natural gas to the Carbon Plant on
an interim basis pursuant to Section 3.11, Ingevity shall pay the Mill Owner on
a monthly basis an aggregate amount determined by multiplying the Mill Owner’s
Operating Costs for each maintenance or repair activity (specific work order)
with respect to such natural gas lines, if any, during the month by a fraction,
the numerator of which is the quantity of all natural gas used by Ingevity
during the most recent month for which a bill is available and the denominator
of which is the aggregate quantity of natural gas used by the Mill Owner and
Ingevity during the most recent month for which a bill is available. For the
repair and maintenance pursuant to

 

 -18- 

 

  

Section 5.3(a) of the Ingevity Natural Gas Utility Facilities (including any gas
lines constructed at the expense of Ingevity after the Effective Date on the
Mill Property pursuant to the Lease), Ingevity shall pay the Mill Owner on a
monthly basis an aggregate amount equal to the Mill Owner’s Operating Costs for
each maintenance or repair activity (specific work order) with respect to the
Ingevity Natural Gas Utility Facilities.

 

(f)           For the repair and maintenance of the Party Wall, Ingevity shall
pay to the Mill Owner on a monthly basis an amount equal to 50% of the Mill
Owner’s Operating Costs for each maintenance or repair activity (specific work
order) undertaken by the Mill Owner during the month with respect to the Party
Wall.

 

(g)          Except as otherwise expressly provided in this Agreement, there
shall be no other charge to Ingevity for the other maintenance and repair
services provided by the Mill Owner pursuant to Section 5.3.

 

Section 5.4          Repair and Maintenance of Roads and Parking Areas.  (a)
Each Plant Owner shall maintain in good order and repair as necessary those
roadways (including bridges) located on the real property owned or leased by the
Plant Owner which the other party has the right to use under the Ground Lease
and this Agreement, at the Plant Owner’s expense. The Mill Owner shall:
(i) maintain in good order and repair as necessary all parking lots on the
Carbon Plant Real Property and, to the extent Ingevity is entitled to use them
under the Ground Lease, parking lots on the Mill Property, and (ii) provide snow
plowing and snow removal for: (x) the parking lots on the Mill Property which
Ingevity is entitled to use under the Ground Lease, (y) the roadways on the Mill
Property which Ingevity is entitled to use under the Ground Lease, and (z) the
parking lots and roadways on the Carbon Plant Real Property.

 

(b)          For the parking lot maintenance and repair work and snow removal
conducted by the Mill Owner pursuant to Section 5.4(a), Ingevity shall pay to
the Mill Owner on a monthly basis an amount determined by multiplying the Mill
Owner’s Operating Costs for each parking lot maintenance, repair or snow removal
activity (specific work order) undertaken by the Mill Owner pursuant to
Section 5.4(a) during the month, if any, by the Ingevity Employee Ratio.

 

ARTICLE 6

ADDITIONAL PROVISIONS WITH RESPECT TO CHARGES

 

Section 6.1          General.  Except as otherwise expressly provided in this
Agreement, the provisions of this Article 6 shall apply to all charges payable
under this Agreement pursuant to Article 3, Article 5 and the Wastewater
Treatment Terms.

 

Section 6.2          Adjustments Based on Extraordinary
Changes.  Notwithstanding any other provision of this Article 6, if in any
calendar year the Mill Owner or Ingevity can demonstrate that the Mill Owner’s
actual Operating Costs during the calendar year in providing any Service to
Ingevity varied (up or down) from the portion of the Mill Owner’s Operating
Costs associated with such Service that are paid by Ingevity as provided in
Article 3, Article 5 or the Wastewater Treatment Terms for the calendar year by
more than 5% as a result of a change in usage by Ingevity or for another reason
related to Ingevity, Ingevity shall reimburse the Mill Owner for the amount by
which such actual Operating Costs attributable to Ingevity exceeded the
aggregate monthly fee for the calendar year determined as provided in such
Article, or the Mill Owner shall reimburse Ingevity for the amount by which such
actual Operating Costs attributable to Ingevity were less than the aggregate
monthly fee for the calendar year determined as provided in such Article.

 

Section 6.3          Service Level Failures.  (a) “Failure Hours” shall be the
number of hours (rounded, for each incident, up or down to the nearest whole
hour) in a calendar month during which Ingevity’s carbon manufacturing
operations at the Carbon Plant are not operating due to the failure of the

 

 -19- 

 

  

Mill Owner to provide Services, in each case in accordance with the applicable
Service Specifications, but excluding: (i) any hours during which all of the
Mill’s paper machines also are shut down at the same time primarily as a result
of the lack of the same Service or Services, (ii) any hours during which the
only Services not being provided are Wastewater Treatment Services for which the
Mill Owner has exercised a right under the Wastewater Treatment Terms to require
Ingevity to shut down the Carbon Plant, and (iii) any hours after the occurrence
of a Permanent Closure of the Mill. In calculating the Failure Hours for a
calendar month, there shall be included any hours which otherwise would have
been a Failure Hour but for Ingevity maintaining the operation of the Carbon
Plant through mitigation. Each occurrence of a Failure Hour is referred to as a
“Service Level Failure.”

 

(b)          Ingevity shall monitor and record (and provide information to the
Mill Owner with respect to) the number of Failure Hours for each calendar month
determined as provided in Section 6.3(a), noting the cause and duration of each
such Failure Hour. The aggregate Failure Hours, so determined for a calendar
month then shall be reduced as follows (the number of Failure Hours, if any,
remaining after reduction in accordance with this Section 6.3(b) are referred to
as “Penalty Hours”):

 

(i)          the aggregate number of Failure Hours during the calendar month
shall be reduced by 10 hours;

 

(ii)         the number of Failure Hours during such calendar month shall be
reduced by the number of such Failure Hours that resulted from a Major Equipment
Shutdown, a Cold Maintenance Shutdown, an emergency maintenance shutdown of
Critical Services Equipment or a Closure of the Mill;

 

(iii)        the number of Failure Hours during such calendar month shall be
reduced by the number of such Failure Hours that resulted from a Force Majeure
Event (based on documentation such as maintenance records, operator logs and the
like, which the Mill Owner shall be required to maintain and provide to
Ingevity);

 

(iv)        the number of Failure Hours during such calendar month shall be
reduced by the number of such Failure Hours during which the Carbon Plant was
not being operated by Ingevity for reasons unrelated to the Service Level
Failure (based on documentation such as maintenance records, operator logs and
the like, which Ingevity shall be required to maintain and provide to the Mill
Owner);

 

(v)         the number of Failure Hours during such calendar month shall be
reduced by the number of such Failure Hours as to which the Mill Owner’s
performance was excused under Section 6.7; and

 

(vi)        in each three year period during the Term (beginning with the three
year period following the Effective Date, and continuing during each consecutive
three year period following such period), the number of Failure Hours shall be
reduced by up to an aggregate of 75 hours (without a right to carry-forward into
a subsequent three year period, any of such 75 hours that are not used during
the then-current three year period) in connection with one incidence of
equipment or machinery failures at the Mill (for the avoidance of doubt, one
incidence may include the failure of several pieces of equipment or machinery in
the same timeframe that are caused directly or indirectly by the failure of one
piece of equipment or machinery, but only if during such hours the Mill Owner is
using commercially reasonable efforts to effectuate a cure of such failure as
soon as reasonably practicable).

 

(c)          The Mill Owner shall pay to Ingevity Service Level Payments, if
any, for each month calculated based on the respective number of Penalty Hours:
either: (x) if Ingevity was unable to mitigate the effect of the Service Level
Failure during such Penalty Hour, the Hourly Charge, or (y) if

 

 -20- 

 

  

Ingevity was able to mitigate the effect of the Service Level Failure during
such Penalty Hour, the lesser of: (1) the aggregate actual, documented costs and
expenses reasonably incurred and/or accrued by Ingevity to mitigate the effect
of the Service Level Failure during such Penalty Hour, and (2) the Hourly
Charge. Notwithstanding the foregoing, however, in no event shall the Service
Level Payments, together with any Losses for which the Mill Owner is responsible
as described in Section 6.3(g) with respect to the Service Level Failure(s) that
gave rise to such Service Level Payments: (A) for any one incidence or related
incidences of Service Level Failure exceed $100,000 in the aggregate, and (B)
for any period of 12 consecutive calendar months exceed $400,000 in the
aggregate. The amounts calculated as provided in this Section 6.3(c) are
referred to as “Service Level Payments.”

 

(d)          The “Hourly Charge” shall be $4,500 per hour.

 

(e)          The Service Level Payments payable under this Section 6.3 have been
agreed upon as liquidated damages because actual damages from Service Level
Failures may be difficult to determine and are Ingevity’s exclusive remedy for
the failure by the Mill Owner to provide Services, absent the Mill Owner’s
willful misconduct or gross negligence. The limitations set forth in this
Section 6.3(e) do not apply to, and are not intended to preclude: (i) any claim
by either party with respect to personal injury or tangible personal property
damage resulting from any action or inaction of the other party constituting a
Service Level Failure, or (ii) any claim by either party based on a breach by
the other party of any obligation under this Agreement not constituting a
Service Level Failure.

 

(f)           Ingevity expressly acknowledges and agrees that interruptions in
Mill Owner’s ability to provide Services will occur from time to time due to
shutdowns, upsets and other causes, both foreseen and unforeseen, and that such
interruptions shall not constitute a breach of this Agreement. Except as
expressly provided in this Section 6.3 with respect to Service Level Payments
and subject to the exceptions set forth in the second sentence of Section
6.3(e), the Mill Owner shall have no liability to Ingevity or any of its
officers, directors, shareholders, employees, parents, affiliates or assigns for
any Losses incurred by Ingevity as the result of any such interruption in the
Services.

 

(g)          The Mill Owner’s liability for the failure to give Ingevity notice
of a maintenance shutdown or Closure of the Mill pursuant to Section 11.1(a)(i)
shall be limited to the actual Losses, if any, incurred by Ingevity as a result
of such failure, and such Losses shall be subject to the limitations set forth
in the next to last sentence of Section 6.3(c).

 

Section 6.4          Payment Terms.  (a) As promptly as practical after the end
of each calendar month during the Term, the Mill Owner shall prepare and deliver
to Ingevity an invoice showing in reasonable detail each amount payable to the
Mill Owner under this Agreement for Services, calculated as provided in this
Agreement and an invoice for any Wastewater Remedy Payments, in each case with
reasonably detailed supporting documentation. A hypothetical form of invoice for
the month of February, 2016, prepared as if this Agreement had been in effect at
such time, is attached as Schedule 6.4. Ingevity shall pay in full the aggregate
amount shown on each invoice within 19 days after receipt of such invoice,
subject to Ingevity’s right to dispute any amount shown on such invoice in
accordance with Article 14 and to withhold payment of any such amount as
Ingevity believes, in good faith, to be overstated by more than $5,000.

 

(b)          Unless the party entitled to receive a payment determines, based on
the credit risk posed by the other party, that amounts owed by it to the other
party may be offset against amounts that the first party is entitled to receive,
or unless the parties otherwise agree in writing, amounts payable by one party
with respect to a month shall not be netted against amounts payable by the other
party with respect to such month.

 

(c)          During the 30 days following receipt of an invoice, the parties
shall work together to reconcile any volumes and prices on such invoice that are
in dispute or otherwise have not been

 

 -21- 

 

  

determined finally as of the time the invoice is prepared and to make any
adjustment required as a result of such reconciliation (which shall be reflected
on the next subsequent invoice after such reconciliation is completed).

 

(d)          Any amount payable under this Section 6.4 which is not paid when
due (including any amount withheld by a party pursuant to Section 6.4(a) which
subsequently is determined by agreement of the parties or pursuant to Article 14
to be owed by such party) shall bear interest on the unpaid amount from the date
originally due until the date payment is received at the lesser of the highest
amount allowed by applicable Law or the Default Rate.

 

(e)          No party shall include in an invoice given to the other party any
charge or other amount that arose more than one year prior to the date of the
invoice unless such charge or other amount was subject to a dispute submitted
for resolution through the Escalation Process within one year after it arose.
Notwithstanding the foregoing, however, the Mill Owner shall make adjustments
(up or down) in the charge for electricity pursuant to Section 3.3(b) on any
invoice for up to two years after the delivery of such invoice, to the extent
necessary to adjust for an electricity meter that is determined to be inaccurate
by 2% or more.

 

Section 6.5          Documentation; Books and Records.  Each party shall use
commercially reasonable efforts to maintain all meters and measuring devices
used to measure Services provided under this Agreement or to monitor compliance
with the criteria specified in the Wastewater Treatment Terms that are owned or
controlled by that party in good working order and in compliance with the
Maintenance Standards. Each party shall maintain for a period of three years all
records of readings and all other information and records calculations it uses
to determine the amount of any payment a party is required to make under this
Agreement or to monitor compliance with the provisions of this Agreement
(including, without limitation, the Wastewater Treatment Terms) or the Lease
(collectively, the “Supporting Information”). A party with Supporting
Information shall furnish such Supporting Information to the other party upon
request at any time. All books and records of a party with respect to the
Services (including books and records with respect to Failure Hours and Penalty
Hours), the Wastewater Treatment Terms, compliance with this Agreement or the
Lease (including, without limitation, compliance by the party with all insurance
requirements of this Agreement and the Lease and compliance by the party with
Law as required by this Agreement and the Lease) and all Supporting Information
shall be kept open to examination and audit by the other party and/or its
representatives during normal business hours at a location mutually agreeable to
both parties upon reasonable advance notice. If either party is requested by the
other party to provide Supporting Information pursuant to Section 2.2 of the
Wastewater Treatment Terms, the party holding such Supporting Information shall
provide such Supporting Information to the other party promptly following such
request.

 

Section 6.6          Availability of Information for Calculations; Monthly
Adjustments.  To the extent that any measurements or other information required
under this Agreement for calculating amounts payable by the parties for a month
under this Agreement are not reasonably available for the calculation of the
amount payable for that month, the calculation for that month shall be made
using measurements or other information available through the third last day of
the month or using those measurements from the prior month, and an adjustment
shall be made in the amount payable for the following month, based on the actual
measurements.

 

Section 6.7          Delays or Failures.  If either party’s breach of its
obligations under this Agreement (the “Originating Party”) directly causes the
other party’s (“Recipient Party”) failure to perform or delay in performing any
Service, then the Recipient Party shall be deemed not to be in breach of this
Agreement, nor shall such Recipient Party be obligated to make a payment for
such failure or delay, but only if the Recipient Party promptly notifies the
Contract Manager of the Originating Party (with written notice delivered within
three business days after oral notice) of the Originating Party’s act or
omission and of the Recipient Party’s failure or delay in performing under the
circumstances.

 

Section 6.8          Calculation of Operating Costs.  If a provision of this
Agreement requires that a payment be made based on specified “Operating Costs”
of the Mill Owner (“Operating Costs”), such

 

 -22- 

 

  

Operating Costs shall be calculated to include the Mill Owner’s actual,
documented costs in each of the categories listed on Schedule 6.8, to the extent
applicable to the matter for which the Operating Costs are being calculated. To
the extent either party’s Operating Costs include depreciation, such
depreciation shall be determined based on such party’s depreciated actual cost
without write-up for external events such as a sale of the business, merger or
the like and shall be subject to change to reflect capital improvements to that
party’s assets that are properly chargeable to the other party pursuant to
Article 7 (to the extent that the other party has not contributed to the cost of
such capital improvement as provided in Article 7).

 

ARTICLE 7

CAPITAL EXPENDITURES

 

Section 7.1          Capital Expenditures to Satisfy Regulatory Requirements and
in Connection with Expansion.  Except as otherwise provided in Section 10.3(c),
in the event that a capital improvement is necessary to comply with regulatory
or other requirements of Law applicable to both the Mill and the Carbon Plant,
the Mill Owner and Ingevity each shall cooperate with respect to identifying and
installing the capital improvement, and each of them shall contribute towards
the cost of such capital improvement (and any increased operating costs
associated with such improvement) based on that party’s relative responsibility
for the conditions or circumstances that gave rise to the need for such capital
improvement. Notwithstanding the foregoing, however: (i) in the event a capital
improvement is required to comply with a requirement administered by the United
States Department of Homeland Security (or its successor) applicable to a party
and such capital improvement will benefit or be used by both parties for the
benefit of both parties (such as, for example only, protection for the combined
facilities, but not including any capital improvement that is specific to the
protection of one party’s facility), the parties shall work together to identify
a cost effective solution and each party shall share the cost of such capital
improvement in the same proportion as the costs of Security Services are shared
pursuant to Section 3.5(d) (and any increased operating costs associated with
such improvement shall be allocated as agreed upon by the Operating Council),
and (ii) if, subsequent to any such capital improvement for which the parties
share the cost equally, the other party would be required (but for the earlier
capital improvement for which the parties shared the cost equally) to comply
with a requirement administered by such Department (or its successor) requiring
a similar capital improvement, the parties shall re-allocate the cost of the
earlier capital improvement between them to reflect their respective use of, or
benefit from, the earlier capital improvement. The Mill Owner and Ingevity shall
cooperate to identify and select the most cost effective manner of complying
with such regulatory requirements, which may include determining that the
capital improvement be undertaken by the party with the lesser responsibility
(with the costs of such improvement and any increased operating costs associated
with such improvement being allocated and paid for by the parties as provided in
the preceding sentence). In the event of an expansion of capacity or output or
change in product produced or method of production by a party that results in
the need to make any such capital improvement to comply with applicable Law, the
party making such expansion or change shall bear all of the cost thereof.

 

Section 7.2          Capital Improvements for Rail Infrastructure.  In the event
that the Mill Owner and Ingevity determine that a capital improvement with
respect to the railroad infrastructure located within the Mill and jointly used
by the parties is required or desirable, both parties shall contribute towards
the cost of such capital improvement based on that party’s proportionate use of
the jointly used railroad infrastructure within the Mill, which shall be
determined based on the proportion of the total railcar moves on such jointly
used railroad infrastructure that were for the benefit of such party during the
prior 12-month period.

 

Section 7.3          Capital Improvements to Maintain Assets Used to Provide the
Services.  The Mill Owner shall have the right, in its sole discretion, to
determine if capital improvements are necessary and/or appropriate for
maintenance of assets owned by the Mill Owner and used to deliver the Services

 

 -23- 

 

  

under this Agreement. Except to the extent otherwise expressly provided in
Article 6, to the extent that Ingevity directly benefits from such capital
improvement; such capital improvement is not made for the purpose of
accommodating an expansion of the Mill; and Ingevity was being charged for the
asset with respect to which such capital improvement was made prior to the
Effective Date, Ingevity shall be allocated a portion of the cost of the capital
improvement based on Ingevity’s proportionate direct benefit from such capital
improvement or the applicable Service received by Ingevity, and Ingevity shall
pay for such allocated portion either by paying such allocated portion to the
Mill Owner or, if Ingevity so determines, by an increase in the depreciation
component of the Operating Costs paid by Ingevity pursuant to Article 6, as
provided in Section 6.8.

 

Section 7.4          Other Mutual Capital Projects.  The Mill Owner and Ingevity
from time to time jointly may identify, in their respective sole discretion,
other capital improvements that will benefit one or both of the parties, with
each party contributing towards the cost in such manner as they may agree.

 

Section 7.5          Capital Improvements with Respect to the Continuous
Assets.  The Asset Owner of a Co-located Continuous Asset located on the other
party’s Property may carry out capital improvements with respect to such
Co-located Continuous Asset in accordance with the provisions of the Ground
Lease.

 

Section 7.6          No Capital Improvement Obligation on the Part of the Mill
Owner.  Notwithstanding anything to the contrary set forth in this Agreement,
the Mill Owner shall have no obligation to install or make (at its own expense
or at the expense of Ingevity), or contribute to the cost of, any capital
improvement to the Carbon Plant, the Carbon Plant Real Property, the Mill or the
Mill Real Property. Any such capital improvement shall be installed or made, and
any such contribution shall be made, in the Mill Owner’s sole discretion. For
clarity, the capital costs associated with any capital improvement or other
capital project which the Mill Owner agrees to install or make pursuant to this
Article 7 shall include all applicable overhead costs of WestRock personnel
(including, without limitation, management personnel) associated with the design
and installation or construction of such capital improvement or project and all
associated design, engineering and consulting fees, and all such overhead costs
shall be shared by the parties in the same manner as other capital costs for
such capital improvement or capital project as provided in this Article 7.

 

ARTICLE 8

OPTIONS TO PURCHASE; USE OF CERTAIN ASSETS

 

Section 8.1          Mill Owner Option to Purchase.  If the Mill Owner receives
notice of, or otherwise becomes aware of, a Permanent Closure of the Carbon
Plant and if Ingevity then owns the Carbon Plant Real Property, the Mill Owner
shall have the exclusive option and right, exercisable in the Mill Owner’s sole
discretion (the “Mill Owner Option”), to purchase the buildings and fixtures
comprising the Carbon Plant and the Carbon Plant Real Property (collectively,
the “Mill Owner Option Assets”). The Mill Owner may exercise the Mill Owner
Option with respect to any or all of the Mill Owner Option Assets by giving
written notice of such exercise to Ingevity at any time during the period
commencing on the date the Mill Owner first received notice of, or otherwise
became aware of, the Permanent Closure of the Carbon Plant (but not prior to the
date the Carbon Plant is first closed), and ending six months after the later
of: (i) the date the Carbon Plant is closed, or (ii ) the date the Mill Owner
first received notice of, or otherwise became aware of, the Permanent Closure of
the of the Carbon Plant (and “Mill Owner Option Exercise Notice”).
Notwithstanding the foregoing, however, the Mill Owner may, in its sole
discretion, rescind exercise of the Mill Owner Option in whole or part by giving
written notice of such rescission to Ingevity within 30 days after the purchase
price of the Mill Owners Option Assets is finally determined as provided in
Section 8.2. If the Mill Owner rescinds its exercise of the Mill Owner Option,
the Mill Owner: (i) thereafter, shall have no further right to exercise the Mill
Owner Option, and (ii) shall pay the expenses of the appraiser(s) appointed as
provided in Section 8.2. If

 

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the Mill Owner receives notice of, or otherwise becomes aware of, a Permanent
Closure of the Carbon Plant and if Ingevity does not then own the Carbon Plant
and the Lease is in effect, the rights of the Mill Owner with respect to the
buildings, fixtures and real property comprising the Carbon Plant and the Carbon
Plant Real Property shall be governed by the Lease and not this Section 8.1.

 

Section 8.2          Purchase Price of Mill Owner Option Assets.  (a) The
purchase price payable by the Mill Owner for the Mill Owner Option Assets shall
be determined by written agreement of Ingevity and the Mill Owner or, if no such
agreement is reached within 30 days after the Mill Owner gives the Mill Owner
Option Exercise Notice, the purchase price shall be the fair market value of the
Mill Owner Option Assets (excluding any jointly owned assets included in the
Mill Owner Option Assets and excluding any value associated with this Agreement)
in an arms-length sale to a third party as of the date the Mill Owner gave the
Mill Owner Option Exercise Notice (excluding any special value of the Mill Owner
Option Assets to the Mill Owner that would not generally be available to another
potential purchaser), determined as follows:

 

(i)          If Ingevity and the Mill Owner agree to appoint a single
independent appraiser, the determination of the fair market value of the Mill
Owner Option Assets by such appraiser shall be the purchase price; or

 

(ii)         If Ingevity and the Mill Owner fail to appoint a single independent
appraiser within 45 days after the Mill Owner gives the Mill Owner Option
Exercise Notice, then within 20 days thereafter each of Ingevity and the Mill
Owner shall appoint one independent appraiser knowledgeable in the valuation of
industrial assets similar to the Mill Owner Option Assets. The two appraisers so
appointed shall within 10 days after their appointment appoint a third
independent appraiser knowledgeable in the valuation of industrial assets
similar to the Mill Owner Option Assets. Each appraiser so appointed shall
determine such fair market value. If neither the lowest appraised value nor the
highest appraised value differs from the middle appraised value by more than 5%
of such middle appraised value, than the average of the three appraisals shall
be the purchase price. If either the lowest appraised value or the highest
appraised value, differs from the middle appraised value by more than 5%, the
average of the middle appraised value and the other appraised value that is
closest to the middle appraised value shall be the purchase price. If the lowest
and highest appraised values each differ from the middle appraised value by more
than five percent (5%), the middle appraised value shall be the purchase price.

 

Except as otherwise provided in Section 8.2, Ingevity and the Mill Owner shall
share equally the costs of the appraisal(s).

 

(b)          Ingevity shall provide the appraisers appointed as provided in
Section 8.2(a) with full access to its facilities (including, without
limitation, the Mill Owner Option Assets), personnel, books, records and shall
reasonably cooperate with all such appraisers on an equal basis, subject to such
appraisers executing a commercially reasonable confidentiality agreement with
Ingevity. Unless the Mill Owner elects to rescind its exercise of the Mill Owner
Option as provided in Section 8.1, the closing of the sale of the Mill Owner
Option Assets shall occur on a date agreed upon by the parties, but not later
than 90 days after the purchase price is finally determined (subject to
necessary governmental approvals and the like). At such closing, the Mill Owner
shall pay to the Ingevity the purchase price in cash, and Ingevity shall convey
to the Mill Owner all of its right, title and interest in the Mill Owner Option
Assets being so purchased in an “AS-IS, WHERE-IS” condition and otherwise with
all faults and defects as of the date of such closing, free and clear of all
mortgages, security interest, liens, pledges, deeds of trust, charges, options,
rights of first refusal, easement, covenants, restrictions and other
encumbrances.

 

 -25- 

 

  

Section 8.3          Continued Operation of Assets Used to Provide Critical
Services.  (a) Upon any Closure of the Mill, Major Equipment Shutdown or other
occurrence the result of which would be the Mill Owner’s discontinuance of the
maintenance and operation of the Wastewater Treatment Plant, the Jointly Used
Rail Facilities, the Repair Track Access Track, the Mill’s steam generation
facilities and/or any other utility system then serving the Carbon Plant
(collectively, the “Critical Services Equipment”), at Ingevity’s request,
Ingevity shall have the right to assume from the Mill Owner the operation and
mainenance of all or any part of such Critical Services Equipment for the
purpose of providing continued Services to the Carbon Plant (the “Interim
Operation”), and the Mill Owner shall reasonably cooperate with Ingevity in the
Interim Operation of such Critical Services Equipment, including providing
Ingevity’s Agents with all necessary access to the Critical Services Equipment
for such purpose and entering into reasonable arrangements with Ingevity to
faciliate the Interim Operation of the Critical Services Equipment. Ingevity
shall be responsible for and pay all costs and expenses associated with the
Interim Operation of such Critical Services Equipment (including, without
limitation, all property Taxes and license fees associated therewith) and shall
comply with all applicable Laws (including, without limitation, Environmental
Laws) in connection with the Interim Operation of the Critical Services
Equipment.

 

(b)          Ingevity’s rights with respect to the Interim Operation of Critical
Services Equipment under Section 8.3(a) shall continue until the earlier of: (i)
the date the Mill Owner resumes operation and maintenance of such Critical
Services Equipment and resumes providing the Services dependent on such Critical
Services Equipment, (ii) the date of termination specified in a written notice
given by Ingevity to the Mill Owner to be effective when Ingevity is able to
obtain the Services dependent on such Critical Services Equipment from its own
equipment and systems or another source, (iii) the date of termination specified
in a written notice given by the Mill Owner to Ingevity reasonably in advance of
such date if the Mill Owner reasonably demonstrates that the continued Interim
Operation of such Critical Services Equipment by Ingevity will unreasonably
interfere with the Mill Owner’s ability to sell the Mill or the Mill Property,
or (iv) the date of termination specified in a written notice given by the Mill
Owner to Ingevity at least five years prior to the effective date of such
termination.

 

ARTICLE 9

REPRESENTATIONS AND WARRANTIES

 

Section 9.1          Power and Authority of Ingevity; Enforceability.  Ingevity
represents and warrants to the Mill Owner that: (i) Ingevity is a corporation
duly organized and validly existing under the laws of the Commonwealth of
Virginia, with the requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, and (ii) this Agreement has
been duly authorized, executed and delivered by Ingevity and constitutes the
legal, valid and binding obligation of Ingevity, enforceable against Ingevity in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium, receivership or other
similar laws affecting or relating to the enforcement of creditors’ rights or
remedies generally and general principles of equity (whether considered at law
or in equity).

 

Section 9.2          Power and Authority of the Mill Owner; Enforceability.  The
Mill Owner represents and warrants to Ingevity that: (i) the Mill Owner is a
limited liability company duly organized and validly existing under the laws of
the state of Delaware, with the requisite power and authority to enter into this
Agreement and to perform its obligations hereunder, and is duly qualified or
registered to transact business in the Commonwealth of Virginia, and (ii) this
Agreement has been duly authorized, executed and delivered by the Mill Owner and
constitutes the legal, valid and binding obligation of the Mill Owner,
enforceable against the Mill Owner in accordance with its terms, except as such
enforceability may be limited by bankruptcy, reorganization, insolvency,
moratorium, receivership or other similar laws affecting or relating to the
enforcement of creditors’ rights or remedies generally and general principles of
equity (whether considered at law or in equity).

 

 -26- 

 

  

Section 9.3          Limitation of Warranties.  EXCEPT AS EXPRESSLY OTHERWISE
PROVIDED IN THIS AGREEMENT, THE SERVICES ARE BEING PROVIDED, “AS IS” AND WITH
ALL FAULTS, AND NEITHER PARTY IS MAKING ANY WARRANTIES, WRITTEN OR ORAL,
STATUTORY, EXPRESS OR IMPLIED, INCLUDING, IN PARTICULAR, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE (AS DEFINED IN THE VIRGINIA
UNIFORM COMMERCIAL CODE), ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND
DISCLAIMED.

 

ARTICLE 10

ADDITIONAL COVENANTS

 

Section 10.1        Insurance.  (a) The Mill Owner and Ingevity each shall
maintain, during the Term (but subject to revision at the end of the policy term
of the applicable policy through the Review Process), at such party’s sole
expense, insurance of the following types in at least the amounts specified:

 

(i)          Commercial General Liability Occurrence insurance coverage with
limits of liability of $1,000,000 per occurrence and $2,000,000 general
aggregate. Such insurance shall include the other party, its Affiliates and
their respective directors, officers and employees as additional insureds and
shall include a waiver of any rights of subrogation against the other party and
its directors, officers and employees.

 

(ii)         Commercial Automobile Liability insurance coverage for any
automobile used in the performance of such party’s obligations under this
Agreement with limits of liability of $1,000,000 combined single limit. Such
insurance shall include the other party, its Affiliates and their respective
directors, officers and employees as additional insureds and shall include a
waiver of any right of subrogation against the other party and its directors,
officers and employees.

 

(iii)        Workers’ Compensation insurance coverage covering all persons
providing services to the other party under this Agreement. Such insurance
(which may consist of a state-approved program of self-insurance) shall satisfy
all applicable statutory requirements and be in accordance with the laws of the
state or states in which the party is operating under this Agreement, shall
include an Alternate Employer Endorsement naming the other party as the
alternate employer and shall include a waiver of any right of subrogation
against the other party and its directors, officers and employees.

 

(iv)        Employer’s Liability insurance coverage with limits of: (x) bodily
injury by accident — $1,000,000 each accident, (y) bodily injury by disease —
$1,000,000 each employee, and (z) bodily injury by disease — $1,000,000 policy
limit.

 

(v)         Excess Umbrella Liability insurance coverage with limits of
liability of $10,000,000 per occurrence, with excess limits provided for the
Commercial General Liability Occurrence, Automobile Liability and Employer’s
Liability insurance coverages required under this Section 10.1. Such insurance
shall include the other party, its Affiliates and their respective directors,
officers and employees as additional insureds and shall include a waiver of any
right of subrogation against the other party and its directors, officers and
employees.

 

(b)          All insurance companies providing insurance required by this
Section 10.1 must be authorized to do business in each state in which the
operations of the insured party under this Agreement are conducted and must be
rated “A-” or better with a financial rating of “VII” or better in the most
recent edition of the A.M. Best Rating Guide (or, in the event such rating guide
is no longer published, or such ratings no longer are published in such rating
guide, such other published rating of insurance companies as the parties
mutually determine). If a captive entity is used to satisfy these insurance
requirements, the captive entity shall provide a letter of good standing.

 

 -27- 

 

  

(c)          Each party shall use commercially reasonable efforts to require
that all policies of insurance which such party is required to maintain under
this Section 10.1 shall provide for 30 days prior written notice of cancellation
or non-renewal to the other party under this Agreement. Prior to the Effective
Date, each party shall provide to the other certificates evidencing all
insurance coverages it is required to maintain under this Agreement, and shall
deliver renewal certificates within 10 days of renewal of any required insurance
throughout the Term of the Agreement; provided, however, that either the Mill
Owner or Ingevity may, with notice to the other, satisfy such obligation by
making such certificates available on the website of the party providing the
certificate or an Affiliate. Any and all collateral required by an insurance
carrier or a state agency and all deductibles or self-insured retentions on
referenced insurance coverages must be borne by the first named insured party.
The insurance required herein will not be limited by any limitations expressed
in the indemnification language in this Agreement or any limitation placed on
the indemnity therein given as a matter of Law.

 

(d)          Failure of either party to maintain insurance as required by this
Agreement, to provide evidence of such insurance or to notify the other party of
any breach by such other party of the provisions of this Section 10.1 shall not
constitute a waiver of any such requirements to maintain insurance.

 

(e)          Each party shall be responsible for risk of loss of, and damage to,
raw material, equipment or Co-located Continuous Asset of the other party in
such party’s possession, custody or under its control, except to the extent that
such loss or damage was caused by the acts or omissions of the other party or
its agents.

 

Section 10.2        Service Level Failures; Wastewater Remedy Payments; and
Optimization of Operations.  The Mill Owner and Ingevity shall: (i) work
together to determine the factors contributing to Service Level Failures, and
failures or other matters giving rise to Wastewater Remedy Payments and shall
use commercially reasonable efforts to reduce the number and duration of such
Service Level Failures and such other failures or other matters giving rise to
Wastewater Remedy Payments, and (ii) work together in a commercially reasonable
manner, including by giving the notices required with respect to expansions, to
optimize their respective processes that affect the operations of the other.

 

Section 10.3        Applicable Law.  (a) In performing their respective
obligations under this Agreement, each party shall comply, in all material
respects, with all applicable Laws and all permits held by it.

 

(b)          Each party shall provide the other party, at the other party’s
written request, with such information, data and reports that have been prepared
by the party receiving the request in the ordinary course as may be reasonably
necessary for the requesting party to comply with Law applicable to the
requesting party in connection with its obligations under this Agreement.

 

(c)          Each party shall use commercially reasonable efforts to inform the
other party of any change in applicable Law that any representative of such
party on the Operating Council becomes aware of that is reasonably likely to
have a material effect on either party’s rights and obligations under this
Agreement. If the parties become aware of: (x) any change in applicable Law that
is likely to require changes in the Services or the manner in which the Services
are delivered, or (y) any order or other requirement by a Governmental Authority
to conduct ambient air modelling at either the Mill or the Carbon Plant (any of
the foregoing, a “Law Change”), the parties shall use commercially reasonable
efforts: (i) if the Law Change is a proposed regulation or order, to work
together, if the parties so agree, to modify such proposed regulation or order,
with each party contributing towards the cost of such efforts based upon the
relative effect of the Law Change on the parties, respectively, and/or (ii) to
address the problem created by the Law Change through technical, administrative
or legal means. Any associated costs therefor shall be borne by the party whose
ability to conduct its business is affected by the Law Change or jointly if the
ability of both parties to conduct their respective businesses are affected. In
the

 

 -28- 

 

  

event a solution is not possible or commercially reasonable through technical,
administrative or legal means, then the Mill Owner and Ingevity shall work
cooperatively to effect a resolution that would allow both the Mill Owner and
Ingevity to be in compliance with the Law Change.

 

(d)          If the parties disagree in good faith about the interpretation or
the effects of a Law Change, and either party reasonably believes that acting in
accordance with the other’s interpretation: (i) will create risk to such party
of a violation of such Law Change, or (ii) will materially limit or prohibit
such party from performing its material obligations hereunder, then such
disagreement about the interpretation or the effects of a Law Change shall be
submitted for resolution in accordance with the Escalation Process; provided,
however, that if the subject matter of such disagreement is an interpretation of
the Law Change and cannot be resolved by the Escalation Process pursuant to
Section 14.2, then either party may seek resolution of such disagreement in any
court of competent jurisdiction (which may include, without limitation, seeking
an injunction to prevent irreparable harm).

 

ARTICLE 11

NOTICES

 

Section 11.1        Required Notices.  (a) The Mill Owner shall give Ingevity
not less than the specified written notice for each of the following:

 

(i)          for any Major Equipment Shutdown, Cold Maintenance Shutdown or
Closure of the Mill, promptly following a determination by the Mill Owner to
effectuate such Major Equipment Shutdown, Cold Maintenance or Closure in
accordance with the Mill Owner’s operating procedures; and

 

(ii)         180 days prior written notice of: (x) any expansion or alteration
of the Mill that is reasonably likely to have a material adverse effect on
Ingevity, and (y) any action by the Mill Owner that is reasonably likely to
require ambient air modelling with respect to the Mill or the Carbon Plant.

 

Each notice given pursuant to this Section 11.1(a) shall specify the anticipated
duration of the event giving rise to the requirement to give the notice. Each
month during the Term, the Mill Owner shall provide to Ingevity the Mill’s
then-current “twelve month rolling maintenance schedule” for informational
purposes. Disclosure of a matter in the current “twelve month rolling
maintenance schedule” shall constitute adequate notice under Sections 11.1(a)(i)
of such matter. The Mill Owner shall provide Ingevity with a copy of the
relevant notice provisions of the Mill Owner’s operating procedures referred to
in Section 11.1(a)(i) and shall promptly notify Ingevity of any material changes
to such notice provisions. All other notices pursuant to this Section 11.1(a)
shall be given in accordance with Section 11.2. In the event that the
commencement and/or duration of a Major Equipment Shutdown, a Cold Maintenance
Shutdown or a Closure must be changed, the Mill Owner shall so notify Ingevity
as soon as the Mill Owner becomes aware of the need for the change and shall
reasonably work with Ingevity to minimize the impact on Ingevity of any such
change.

 

(b)          Ingevity shall give the Mill Owner not less than the specified
written notice for each of the following:

 

(i)          120 days prior written notice of any closure of the Carbon Plant
that will continue for more than 30 days (including, without limitation, any
Permanent Closure of the Carbon Plant); and

 

(ii)         180 days prior written notice of: (i) any expansion or alteration
of the Carbon Plant that is reasonably likely to have a material adverse effect
on the Mill, and (y) any action by

 

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Ingevity that is reasonably likely to require ambient air modelling with respect
to the Mill or the Carbon Plant.

 

Section 11.2        How Notices are Given.  All notices and other communications
under this Agreement shall be in writing and shall be deemed given when
delivered personally or by overnight mail or, to the extent receipt is
confirmed, by facsimile, or five calendar days after being mailed by registered
mail, return receipt requested, to a party at the following address (or to such
other address as such party may have specified by notice given to the other
party pursuant to this Section 11.2):

 

If to Mill Owner:               WestRock Virginia, LLC

504 Thrasher Street

Norcross, GA 30071

Attention: Chief Financial Officer

Facsimile: 770-263-3582

 

With a copy to:                  WestRock Company

504 Thrasher Street

Norcross, GA 30071

Attention: General Counsel

Facsimile: 770-263-3582

 

And to:                               WestRock Virginia, LLC

104 West Riverside Street

Covington, VA 24426

Attention: Production Manager

Facsimile: 540-969-5707

 

If to Ingevity:                     Ingevity Virginia Corporation

958 E. Riverside Street

Covington, Virginia 24426

Attention: Plant Manager

Facsimile: 540-969-3504

 

With a copy to:                  Ingevity Corporation

5255 Virginia Avenue

North Charleston, South Carolina 29406

Attention: Law Department

Facsimile: 843-746-8278

 

ARTICLE 12

TERM AND TERMINATION

 

Section 12.1        Term.  The term of this Agreement (the “Term”) shall
commence on the Effective Date and, unless earlier terminated in whole or part
pursuant to this Section 12.1, shall continue until the 50th anniversary of the
Effective Date; provided, that if Ingevity is not then in material default in
the performance of any of its obligations under this Agreement, Ingevity may
extend the Term of this Agreement with respect to all (but not less than all) of
such provisions for additional renewal terms of five years each, effective as of
the end of the initial 50 year period, or as of the end of any such five year
renewal term, by giving the Mill Owner written notice of such extension at least
five years prior the end of such initial 50 year period or such five year
renewal term as of the end of which the extension is to be effective; provided,
however, that the Mill Owner may reject any such extension by so notifying
Ingevity in writing within six months after receipt of Ingevity’s notice of
extension, and the Term shall then

 

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terminate as of the end of the initial 50 year period (if the notice of
extension was given during such period) or at the end of the then current
renewal term.

 

Section 12.2        Termination.  (a) This Agreement may be terminated prior to
the end of the Term in the following manner:

 

(i)          at any time by the mutual written agreement of the parties;

 

(ii)         as to any individual Service only (other than the provision of
steam pursuant to Section 3.1, the provision by either party of potable water
pursuant to Section 3.2, the provision of electricity pursuant to Section 3.3,
the provision of Security Services pursuant to Section 3.5(b), access to and use
of the truck scales pursuant to Section 3.10(a)(ii), the use of voice and data
network transmission lines by either party pursuant to Section 3.10(a) or
Section 3.10(b), the use of the Expansion Warehouse pursuant to Section 3.9, the
provision of natural gas pursuant to Section 3.11 or the provision of the
Wastewater Treatment Services), by either party giving written notice of such
termination to the other party at least two years prior to the date as of which
such termination is to be effective;

 

(iii)        with respect to the provision by the Mill Owner of steam pursuant
to Section 3.1 only, by either party giving written notice of such termination
to the other party at least three years prior to the date as of which such
termination is to be effective; provided, however, that any such termination by
the Mill Owner shall not become effective unless and until either: (A) Ingevity,
using commercially reasonable efforts, is able to obtain and have currently
available for use sufficient firm gas transportation on commercially reasonable
terms (which may include the requirement to pay “aid in construction” payments)
to allow the operation of a gas-fired package boiler to supply Ingevity’s then
current steam requirements, or (B) the Mill Owner releases to Ingevity firm gas
transportation capacity at the receipt and delivery locations listed in Section
II.2 of Schedule 3.11 that is owned by the Mill Owner and/or re-releases to
Ingevity firm gas transportation capacity that is owned by Columbia Gas of
Virginia, or a combination of both (A) and (B), to allow the operation of a
gas-fired package boiler until such time as Ingevity obtains its own contracts
for such capacity in accordance with the preceding clause (A); provided,
however, Mill Owner shall post the capacity as non-biddable to the extent
allowed by TCO’s FERC approved tariffs; however, Ingevity acknowledges that: (x)
if the capacity becomes biddable under TCO’s tariff then there is a possibility
that Ingevity may have to match an above-maximum rate offer for releases that
are shorter than one year in order to obtain the capacity, (y) releases that are
longer than one year may be bid up in length of term and Ingevity would be
required to match the term that was offered in order to obtain the capacity and
(z) once the Mill Owner posts the capacity as provided herein, the Mill Owner
shall have no further obligation to provide or release firm gas transportation
to Ingevity in accordance with this Subsection (B) (the amount of natural gas
capacity released by the Mill Owner to supply Ingevity’s gas-fired package
boiler will be based on the sum of the average monthly steam takes of 150 pound
steam and 30 pound steam by Ingevity, as measured in MMBTU's per month over the
12 months prior to the notice of termination pursuant to this Section
12.2(a)(iii), adjusted for a 83% efficiency for a new 150 pound low-NOx boiler,
but not to exceed 2,970 MMBTU’s per day); and further provided, however, that if
the Mill Owner terminates this Agreement pursuant to this Section 12.2(a)(iii),
Ingevity may delay the effective date of such termination by up to 12 months if
Ingevity reasonably demonstrates that such additional period is reasonably
necessary to enable Ingevity to obtain any necessary Environmental Permits for
the operation of a replacement steam generation and supply system;

 

(iv)        with respect to the provision by the Mill Owner of natural gas
pursuant to Section 3.11 only, by either party giving written notice of such
termination to the other party at least two years prior to the date as of which
such termination is to be effective; provided, however, that Ingevity may delay
the effective date of such termination by up to 12 months if Ingevity reasonably
demonstrates that such additional period is reasonably necessary to complete the
installation of the direct pipeline connecting the Carbon Plant to the pipeline
of the local natural gas utility;

 

(v)         with respect to the provision by the Mill Owner of Wastewater
Treatment Services pursuant to the Wastewater Treatment Terms only, by either
party giving written notice of such termination to the other party at least five
years prior to the date as of which such termination is to be effective (which
effective date shall not be prior to the 10th anniversary of the Effective
Date); provided, however, that the Mill Owner may not exercise the right to
terminate the Wastewater Treatment Services pursuant to this Section 12.2(v)
unless the Mill Owner has reasonably demonstrated to Ingevity that Ingevity can
reasonably design, permit and construct prior to the date of termination of the
Wastewater Treatment Services and reasonably operate, in compliance with all
applicable Laws, using reasonably available commercialized technology, in space
then reasonably available to Ingevity, a facility for treating all discharges
originating from the Carbon Plant that must be treated under applicable Law;

 

(vi)        by either party giving written notice to the other party following a
material breach by the other party (other than a Payment Breach) of any of its
obligations under this Agreement, if the other party has failed to fully cure
such breach within 60 days after written notice of such breach; provided
however, that if there is a bona fide dispute between the parties as to whether
a material breach has occurred, termination of this Agreement shall not occur
until the date on which it is determined, through the Escalation Process or
otherwise, that a material breach

 

 -31- 

 

  

has occurred and, if the breach is capable of being cured, an additional period
of 60 days has passed following such determination during which the breach has
not been cured;

 

(vii)       by either party giving written notice to the other party, if the
other party fails to pay any amount when due under this Agreement and such
failure is not cured within 30 days following receipt of written notice by the
non-breaching party; provided that if there is a bona fide dispute between the
parties as to whether a payment was due, the party responsible for payment shall
not be deemed to have failed to make such payment (so long as such party is in
compliance with Section 14.2) until it is determined, through the Escalation
Process or otherwise, that the payment is due and owing and an additional 30
days have passed following such determination;

 

(viii)      by the Mill Owner giving written notice to Ingevity, if Ingevity
defaults in the performance of a material obligation under the Lease and such
default continues beyond any cure period provided in the Lease and is not waived
by the Mill Owner, thereby giving the Mill Owner the right to terminate the
Lease;

 

(ix)         by Ingevity giving written notice to the Mill Owner, if the Mill
Owner defaults in the performance of a material obligation under the Lease and
such default continues beyond any cure period provided in the Lease and is not
waived by Ingevity, thereby giving Ingevity the right to terminate the Lease;

 

(x)          by either party giving written notice to the other party: (1) if
the terminating party receives notice of, or otherwise becomes aware of, a
Permanent Closure of the Mill or a Permanent Closure of the Carbon Plant
(provided that such termination shall not become effective prior to the date the
Mill or the Carbon Plant, as the case may be, is closed), or (2) upon a
termination of the Ground Lease, if the Carbon Plant Real Property is not being
conveyed upon such termination to Ingevity or its designee; or

 

(xi)         upon the termination, pursuant to one or more other provisions of
this Section 12.2(a), of all of the Services.

 

(b)          Expiration or termination of this Agreement for any reason shall
not relieve a party from the obligation to pay any amounts accruing under this
Agreement prior to the effective date of such termination. Termination of this
Agreement pursuant to Section 12.2(a)(vi) or (vii) shall not relieve the
breaching party of any liability to the non-defaulting party for breach of its
obligations under this Agreement. The provisions of Sections 15.1, 6.4, 6.5,
9.3, 11.2, 15.7 and Article 13 shall survive expiration or any termination of
this Agreement.

 

ARTICLE 13

LIMITATION OF LIABILITY; INDEMNIFICATION

 

Section 13.1        Limitation of Liability and Waiver of Subrogation.  (a)
Except as otherwise expressly provided in Section 13.3(ii), Section 13.3(iii),
Section 13.3(iv) and Section 13.4, the Mill Owner shall not be liable to
Ingevity for:

 

(i)          Losses to any buildings, improvements, fixtures, furnishings,
equipment or other personal property (“Property”) located or found on the Carbon
Plant Real Property (except for Losses to Property owned by third parties, which
shall be subject to Section 13.3(v)), notwithstanding that such Losses are
caused by, result from or are attributable to any act or omission of the Mill
Owner or any servant, agent, employee, director, officer, subcontractor or
supplier (“Agent”) of the Mill Owner (including, without limitation, in
connection with the provision by the Mill Owner of the Fire/Emergency Services);

 

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(ii)         any Losses arising from bodily injury or death to any employee of
Ingevity occurring on the Mill Property (including in connection with the
provision by Ingevity of the Ingevity Fire/Emergency Services), notwithstanding
that such Losses are caused by, result from or are attributable to any action or
omission of the Mill Owner or any Agent of the Mill Owner;

 

(iii)        any Loss caused by Ingevity to Property owned by third parties; and

 

(iv)        any Losses arising from bodily injury or death to any employee of
Mill Owner in connection with the provision by Mill Owner of the Fire/Emergency
Services, notwithstanding that such Losses are caused by, result from or are
attributable to any action or omission of the Mill Owner or any Agent, and
except to the extent such Losses are covered by workers compensation insurance.

 

Ingevity hereby waives all rights of subrogation against the Mill Owner with
respect to the matters described in this Section 13.1(a).

 

(b)          Except as otherwise expressly provided in Section 13.2(ii),
Section 13.2(iv), Section 13.2(v) and Section 13.4, Ingevity shall not be liable
to the Mill Owner for:

 

(i)          any Losses to any Property located or found on the Mill Property
(except for Losses to Property owned by third parties, which shall be subject to
Section 13.2(vi)), notwithstanding that such Losses are caused by, result from
or are attributable to any act or omission of Ingevity or any Agent of Ingevity
(including, without limitation, in connection with the provision by Ingevity of
the Ingevity Fire/Emergency Services);

 

(ii)         any Losses arising from bodily injury or death to any employee of
Mill Owner occurring on the Carbon Plant Real Property, notwithstanding that
such Losses are caused by, result from or are attributable to any action or
omission of Ingevity or any Agent of Ingevity; and

 

(iii)        any Loss caused by the Mill Owner to Property owned by third
parties.

 

The Mill Owner hereby waives all rights of subrogation against Ingevity with
respect to the matters described in this Section 13.1(b).

 

Section 13.2        Indemnification by Ingevity.  Ingevity shall indemnify,
defend and hold the Mill Owner and its Affiliates, and each of its and their
respective officers, directors, employees, successors and assigns (collectively,
the “Mill Indemnified Parties”) harmless, from and against all Losses
(including, without limitation, any claim, demand, cause of action, or lawsuit
in connection therewith) resulting from, in connection with or arising out of:

 

(i)          with respect to third party claims (other than third party claims
of a type covered by another provision of this Article 13), the performance of
this Agreement by Ingevity, but only to the extent that the Mill Owner was not
responsible for the subject matter of such Losses;

 

(ii)         except with respect to bodily injury or death to any employee of
Mill Owner in connection with the Fire/Emergency Services (which shall be
subject to subsection (vii) of this Section 13.2), or bodily injury or death to
any employee of Mill Owner caused by a Vehicle owned by Ingevity or a Vehicle
driven by a Ingevity employee (which shall be subject to subsection (v) of this
Section 13.2), any bodily injury or death to any employee of the Mill Owner
occurring on the Carbon Plant Real Property and resulting from or arising out of
the gross negligence or intentional misconduct of Ingevity;

 

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(iii)        any bodily injury or death to any employee of Ingevity resulting
from or arising out of the provision of Ingevity Fire/Emergency Services;

 

(iv)        any damage to any Property located or found on the Carbon Plant Real
Property caused by a Vehicle owned by Ingevity or a Vehicle driven by an
employee of Ingevity;

 

(v)         bodily injury or death to any employee of Mill Owner or to a third
party (who is not an employee of Ingevity or Mill Owner) caused by a Vehicle
owned by Ingevity or a Vehicle driven by a Ingevity employee;

 

(vi)        any damage to any Property of a third party caused by Ingevity;

 

(vii)       any bodily injury or death to any employee of the Mill Owner
resulting from or arising out of the provision of Fire/Emergency Services except
to the extent covered by the Mill Owner’s workers compensation insurance
coverage; and

 

(viii)      Claims which may be brought by any Person, including, without
limitation, Claims brought by Governmental Authorities, for death, bodily or
personal injuries to any Person; damage to any property, including loss of use
thereof and business interruption damages; contamination of or adverse effects
on natural resources or the environment, including without limitation, the costs
for investigation and remediation of such contamination under Environmental Laws
and other Laws; natural resource damages; or any violation of Laws, to the
extent resulting from or arising out of: (A) Ingevity’s breach of the Wastewater
Treatment Terms, (B) Ingevity’s discharge of wastewater to the Mill or the
Wastewater Treatment Plant, including, without limitation, any Non-Conforming
Discharge (as defined in the Wastewater Treatment Terms); (C) any activities of
Ingevity and/or its Agents relating to or impacting the Wastewater Treatment
Terms; (D) any violation by Ingevity and/or its Agents of any applicable Laws,
or (E) pollution or contamination of, or petroleum or hazardous substances
releases to, the Mill or the Wastewater Treatment Plant by Ingevity or any of
its employees, consultants, contractors, subcontractors, representatives and/or
agents,

 

except, with respect to clauses (iv), (v), and (vii), to the extent that any
such Loss is finally determined (in accordance with the Escalation Process or
otherwise) to have arisen out of or resulted from the gross negligence or
intentional misconduct of the Mill Owner or any such Affiliate, Agent, successor
or assign and except with respect to clauses (iii) and (vii), to the extent that
any such Loss is finally determined (in accordance with the Escalation Process
or otherwise) to have arisen out of or resulted from the intentional misconduct
of any employee, officer or agent of the Mill Owner having managerial authority
with respect to the subject matter of the misconduct. For purposes of this
Section 13.2 and Section 13.3: (x) “intentional misconduct” means the
intentional doing of something with knowledge that it is likely to result in
serious injury or property damage or with reckless disregard of its probable
consequences, and (y) “gross negligence” means the failure to use such care as a
reasonably prudent and careful Person would use under similar circumstances when
such Person has knowledge of the results of such Person’s acts or omissions and
is recklessly or wantonly indifferent to the results. Nothing in clause (viii)
of this Section 13.2 shall limit the Mill Owner’s rights of action and defenses,
if any, which may exist under applicable Law relating to the subject matter of
this Agreement, including the Wastewater Treatment Terms.

 

Section 13.3        Indemnification by the Mill Owner.  The Mill Owner shall
indemnify, defend and hold Ingevity and its Affiliates, and each of their
respective officers, directors, employees, successors and assigns (collectively,
the “Ingevity Indemnified Parties”), harmless from and against all Losses
(including, without limitation, any claim, demand, cause of action, or lawsuit
in connection therewith) arising out of or resulting from:

 

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(i)          with respect to third party claims (other than third party claims
of a type covered by another provision of this Article 13), the performance of
this Agreement by the Mill Owner, but only to the extent that Ingevity was not
responsible for the subject matter of such Losses;

 

(ii)         except with respect to bodily injury or death to any employee of
Ingevity caused by a Vehicle owned by Mill Owner or a Vehicle driven by a Mill
Owner employee (which shall be subject to subsection (iv) of this Section 13.3),
any bodily injury or death to any employee of Ingevity occurring on the Mill
Property and resulting from or arising out of the gross negligence or
intentional misconduct of the Mill Owner or any Agent of the Mill Owner;

 

(iii)        any damage to any Property located or found on the Carbon Plant
Real Property caused by a Vehicle owned by the Mill Owner or a Vehicle driven by
an employee of the Mill Owner;

 

(iv)        bodily injury or death to any employee of Ingevity or to a third
party (who is not an employee of Ingevity or the Mill Owner) caused by a Vehicle
owned by the Mill Owner or a Vehicle driven by any employee of the Mill Owner;
and

 

(v)         any damage to any Property of a third party caused by the Mill
Owner,

 

except, with respect to clauses (iii), (iv) and (v), to the extent that any such
Loss is finally determined (in accordance with the Escalation Process or
otherwise) to have arisen out of or resulted from the gross negligence or
intentional misconduct of Ingevity or any such Affiliate, Agent, successor or
assign.

 

Section 13.4        Notice of Claim.  Each party promptly shall notify the other
party in writing of any Losses covered by the indemnification obligations of the
other party under Section 13.1 or Section 13.2 (a “Notice of Claim”). Without
limiting any other obligation of the party receiving a Notice of Claim
hereunder, such party shall promptly respond to the Notice of Claim and shall
indemnify, defend and hold the party giving such Notice of Claim harmless from
and against any cost, expense or other damage arising from or relating to the
occurrence or damage that is the subject of the Notice of Claim in accordance
with Section 13.1 or Section 13.2, as the case may be.

 

Section 13.5        Force Majeure.  Neither party shall be liable to the other
party under this Agreement for any delay in or failure of performance by the
party of its obligations hereunder resulting from a Force Majeure Event if the
party has used commercially reasonable efforts to perform notwithstanding the
occurrence of the Force Majeure Event. If either party should become aware of a
Force Majeure Event, it shall give the other party’s Contract Manager prompt
notice. Each party shall use commercially reasonable efforts to mitigate or
remedy the effects of a Force Majeure Event, and if the cause of the Force
Majeure Event can be minimized or remedied, the parties shall use their
respective commercially reasonable efforts to do so promptly.

 

Section 13.6        Duty to Mitigate.  Each party shall use commercially
reasonable efforts to mitigate damages for which the other party would be liable
under this Agreement.

 

Section 13.7        Other.  Each party shall use commercially reasonable efforts
to require all contractors and third party invitees to the Mill Property and/or
the Carbon Plant Real Property to execute releases of liability for the benefit
of both the Mill Owner and Ingevity prior to entering such property.

 

Section 13.8        Limitation of Liability.  EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT WITH RESPECT TO THE SERVICE LEVEL PAYMENTS (ALL OF WHICH ARE
INTENDED TO BE LIQUIDATED DAMAGES BECAUSE ACTUAL DAMAGES MAY BE DIFFICULT TO
DETERMINE), AND EXCEPT FOR THE INDEMNIFICATION OBLIGATIONS OF THE PARTIES UNDER
THIS ARTICLE 13 (OTHER THAN SECTION 13.2(viii)), IN NO EVENT

 

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SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY UNDER THIS AGREEMENT FOR ANY
INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL, LIQUIDATED, PUNITIVE OR EXEMPLARY
DAMAGES.

 

ARTICLE 14

CONTRACT MANAGERS; GOVERNANCE; DISPUTE RESOLUTION

 

Section 14.1        Contract Managers and Operating Council.  (a) Each of the
parties from time to time shall designate an individual who shall be responsible
for managing such party’s relationship with the other party and will serve as
such party’s primary representative with respect to operational matters under
this Agreement (a “Contract Manager”). The initial Contract Manager shall be the
Production Manager of the Mill for the Mill Owner and the Plant Manager of the
Carbon Plant for Ingevity. Each Contract Manager shall be authorized to act for
and on behalf of the party such Contract Manager is representing with respect to
all day to day matters relating to this Agreement. A party shall provide as much
notice as is practicable to the other party of any change in the individual who
is designated by the party as its Contract Manager. Each party may rely on
direction from and decisions regarding day-to-day administration of this
Agreement by the Contract Manager of the other party as being the directions and
decisions of the party represented by such Contract Manager, subject to any
direction from a party or that party’s representatives on the Operating Council
to the contrary.

 

(b)          The Contract Managers shall meet at least quarterly during the
initial year of the Term and shall meet as frequently as they or the Operating
Council determine necessary thereafter to review the performance by the parties
under this Agreement and to consider other matters with respect to the
administration of this Agreement.

 

(c)          An operating council (the “Operating Council”) consisting of the
Contract Manager and two other representatives designated by each party shall
have overall responsibility for assisting the parties to this Agreement in the
administration of this Agreement. The initial members of the Operating Council
shall be the Production Manager of the Mill, the Mill Manager and the Mill
Owner’s Vice President of Operations for the Mill Owner and the Plant Manager of
the Carbon Plant, the Services and Support Manager of the Carbon Plant and
Ingevity’s Vice President of Operations for Ingevity, or in each case a
reasonably equivalent position designated by the Mill Owner or Ingevity, as the
case may be. In addition, each party from time to time may designate alternate
representatives, who shall be authorized to participate on the Operating Council
on behalf of such party in the absence of one or more of its primary
representatives. Each party shall provide as much notice as is practicable to
the other party of any change in its designees on the Operating Council. The
Operating Council shall meet on such a schedule, and for such purposes (within
the authority of the Operating Council established by this Agreement), as the
Operating Council shall approve. The presence of at least two representatives
and/or alternates of each party at a meeting of the Operating Council shall be
required for a quorum. The Operating Council shall act only at a meeting at
which a quorum is present. Each party’s representatives on the Operating Council
shall have, collectively, one vote, and any action shall be taken only with the
affirmative vote of both parties’ representatives.

 

(d)          The Operating Council shall meet at least once each calendar year:
(i) to review and discuss the processes, measurement methodologies and methods
for calculating the amounts payable by the parties under Article 6 and other
matters which this Agreement provides are subject to the Review Process and/or
are to be reviewed by the Operating Council, to consider whether any adjustment
to the manner in which measurements are made or the amounts payable under
Article 6 are calculated should be made for the following year or whether any
changes to other matters are to be made. In addition, at such other time or
times as they may determine, the Mill Owner and Ingevity may agree to modify any
such processes, measurement methodologies and methods for calculating the
amounts payable under Article 6 or any other matters which this Agreement
provides are subject to the Review Process and/or are to be

 

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reviewed by the Operating Council. Any such adjustments pursuant to this
Section 14.1(d) shall be made only by written agreement of the parties (without
the need for a formal amendment to the Agreement as provided in Section 15.5).
The process set forth in this Section 14.1(d) is referred to as the “Review
Process.”

 

(e)          Except as expressly provided in Section 14.1(d), nothing in this
Agreement shall be construed as permitting any amendment to, or waiver of, any
provision of this Agreement (including, without limitation, any notice
requirements) except in the manner expressly provided in Section 15.5.

 

Section 14.2        Dispute Resolution.  (a)  Consideration by Contract
Managers. All disputes, issues, controversies or claims between the parties
hereunder (“Disputes”) shall first be referred to the Contract Managers for
resolution. If the Contract Managers are unable to resolve, or do not anticipate
resolving, a Dispute within 10 business days (or such other period as reasonably
may be approved by them) after referral of the matter to them, then the parties
shall submit the Dispute to the Operating Council for resolution. The Dispute
escalation process described in this Section 14.2 is referred to as the
“Escalation Process.”

 

(b)          Escalation to Operating Council. If a Dispute has been submitted to
the Operating Council for resolution, the Operating Council shall negotiate in
good faith to resolve such Dispute within 10 business days (or such other period
of time as may be approved by the Operating Council).

 

(c)          Escalation to Executive Management. If the Operating Council does
not resolve a Dispute within 10 business days (or such other period of time as
may be approved by the Operating Council) after referral of the matter to it,
then either party may notify the other in writing that it desires to elevate
such Dispute to the respective executive management of the Mill Owner, who shall
be the President, Paper Solutions of the Mill Owner’s ultimate parent (as of the
Effective Date, WestRock Company), or reasonably equivalent officer designated
by the Mill Owner, and of Ingevity, who shall be Ingevity’s Chief Executive
Officer (as of the Effective Date, D. Michael Wilson) (collectively, the
“Executive Management”) for resolution. Upon receipt by the other party of such
written notice, the Dispute shall be so elevated and the Executive Management
shall negotiate in good faith to resolve such Dispute within 10 business days
(or such other period as may be approved by the Executive Management) after
referral of the matter to the Executive Management (the last day of such period
is referred to as the “Conclusion of the Escalation Process”).

 

(d)          Negotiation of Disputes. During the Escalation Process, each
party’s representatives shall negotiate in good faith. The location, format,
frequency, duration and conclusion of the discussions between the Contract
Managers, the Operating Council and the Executive Management, respectively,
shall be left to the discretion of the representatives involved. Discussions and
correspondence among such representatives for purposes of these negotiations
shall be treated as Confidential Information and information developed for
purposes of settlement, exempt from discovery and production, which shall not be
admissible in subsequent proceedings between the parties. Documents identified
in or provided with such communications, which are not prepared for purposes of
the negotiations, are not so exempted and may, if otherwise admissible, be
admitted in evidence in such subsequent proceeding.

 

(e)          Participation in Escalation Process. Notwithstanding anything else
in this Agreement to the contrary, and except as provided below in this
Section 14.2(e), the parties shall participate in the Escalation Process to
until the Conclusion of the Escalation Process, and shall not terminate
negotiations concerning resolution of the matters in Dispute until the earlier
of the Conclusion of the Escalation Process or expiration or termination of this
Agreement (so long as termination of this Agreement is not the subject of the
Dispute). No party shall commence a lawsuit or seek other remedies with respect
to the Dispute (including termination of this Agreement) prior to the Conclusion
of the Escalation Process, provided that either party is authorized to institute
formal legal proceedings at any time: (i) to avoid the

 

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expiration of any applicable statute of limitations period, (ii) to preserve a
superior position with respect to other creditors, or (iii) to seek an
injunction to prevent irreparable harm, including in situations where the party
reasonably believes that the matter involved in the Dispute may result in such
party’s operations being significantly curtailed or shut down.

 

ARTICLE 15

MISCELLANEOUS

 

Section 15.1        Confidential Information.  Each party recognizes that the
other party’s business interests require the fullest reasonably practical
protection and confidential treatment of all information related to the other
party’s business and this Agreement that is not generally known by the public,
including, without limitation, documents, writings, memoranda, business plans,
illustrations, designs, plans, know-how, technology, financial information,
personnel data, processes, formulas, programs, inventions, reports, sources of
supply, customer lists, supplier lists, pricing policies, operational methods,
marketing plans or strategies, product development techniques, business
acquisition plans, methods of manufacture, trade secrets and all other valuable
or unique information and techniques acquired, developed or used by the other
party that the party provided, or to which the party otherwise gains access,
through the transactions contemplated by this Agreement (hereinafter
collectively termed “Protected Information”). Protected Information shall not
include: (i) information which is or becomes part of the public domain through
no breach of this Agreement by any party, or (ii) information that becomes
available to a party or any of its Affiliates on a non-confidential basis from a
source other than the other party. Each party shall, and shall cause Affiliates
controlled by it to, hold all such Protected Information in confidence and not,
directly or indirectly, to appropriate, divulge, disclose or otherwise
disseminate to any other Person nor use in any manner any Protected Information.
Notwithstanding the foregoing, nothing in this Section 15.1 shall prohibit any
party or any of its Affiliates from disclosing any Protected Information to
comply with any Law or any subpoena or other legal process (provided that the
party shall provide the other party with notice as far in advance of any such
disclosure as is practicable in order for the other party to seek a protective
order or other assurance of the protection of any Protected Information the
party or any such Affiliate is required to disclose).

 

Section 15.2        Independent Contractors.  No relationship of employer and
employee, or master and servant, is intended to exist, nor shall any be
construed to exist, between the Mill Owner and Ingevity, or between either party
and any servant, agent, employee, subcontractor or supplier of or to the other
party. Each party shall select and pay its own servants, agents, employees,
subcontractors and suppliers, and neither party nor any of its servants, agents,
employees, subcontractors and suppliers shall be subject to any orders,
supervision or control of the other party. The parties acknowledge that this
Agreement does not create a partnership, joint venture or any relationship other
than a contract between independent parties.

 

Section 15.3        Assignment by Ingevity.  Except as otherwise provided in
this Section 15.3, this Agreement may not be assigned by Ingevity in whole or in
part. Notwithstanding the foregoing, Ingevity may assign this Agreement, with
prior written notice to the Mill Owner, to: (i) any Affiliate of Ingevity who is
and at all times during the Term remains controlled by Ingevity (provided,
however, that no such assignment shall relieve Ingevity of any obligations under
this Agreement), or (ii) any Person who acquires all or substantially all of the
assets of the Carbon Plant and who assumes all of the liabilities and
obligations of Ingevity under this Agreement, or any party into which Ingevity
is merged, subject to such Person reasonably demonstrating to the Mill Owner
that such Person’s creditworthiness is equal to or better than the
creditworthiness of Ingevity at the time of such assumption or merger. In the
event of any permitted assignment of this Agreement by either party, the
assignor shall be released from its obligations hereunder and the designated
assignee shall assume, in writing, all of the rights and obligations of the
assigning party under this Agreement. Any purported assignment or transfer of
this Agreement in

 

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violation of this Section 15.3 shall be void and of no force or effect. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.

 

Section 15.4        Assignment by the Mill Owner.  Except as otherwise provided
in this Section 15.4, this Agreement may not be assigned by the Mill Owner in
whole or in part. Notwithstanding the foregoing, the Mill Owner may assign this
Agreement, with prior written notice to Ingevity, to: (i) any Affiliate of the
Mill Owner who is and at all times during the Term remains controlled by the
Mill Owner (provided, however, that no such assignment shall relieve the Mill
Owner of any obligations under this Agreement), or (ii) any Person who acquires
all or substantially all of the assets of the Mill and, who assumes all of the
liabilities and obligations of the Mill Owner under this Agreement, or any party
into which Mill Owner is merged. In the event of any permitted assignment of
this Agreement by either party, the assignor shall be released from its
obligations hereunder and the designated assignee shall assume, in writing, all
of the rights and obligations of the assigning party under this Agreement. Any
purported assignment or transfer of this Agreement in violation of this
Section 15.4 shall be void and of no force or effect. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns.

 

Section 15.5        Amendment; Waiver.  No amendment, modification or discharge
of this Agreement, and no waiver under this Agreement, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought. Any
such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. The failure of
either party to insist in any one or more instances upon strict performance of
any of the provisions of this Agreement or take advantage of any of its rights
hereunder shall not be construed as a waiver of any such provisions or the
relinquishment of any such rights, but the same shall continue and remain in
full force and effect.

 

Section 15.6        Entire Agreement.  This instrument constitutes the entire
agreement between the parties relating to the subject matter hereof and there
are no agreements, understandings, conditions, representations, or warranties
not expressly set forth herein.

 

Section 15.7        Choice of Law and Venue.  The rights and obligations of the
parties under the Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Virginia and of the United States, without
giving effect to the principles of Virginia law relating to the conflict or
choice of laws. Any legal action, suit or proceeding brought by a party that in
any way arises out of this Agreement (“Proceeding”) must be litigated
exclusively in the United States District Court for the Eastern District of
Virginia (Richmond Division) or the Circuit Court of the County of Henrico,
Virginia (the “Identified Courts”). Each party hereby irrevocably and
unconditionally: (i) submits to the jurisdiction of the Identified Courts for
any Proceeding; (ii) shall not commence any Proceeding, except in the Identified
Courts; (iii) waives, and shall not plead or make, any objection to the venue of
any Proceeding in the Identified Courts; (iv) waives, and shall not plead or
make, any claim that any Proceeding brought in the Identified Courts has been
brought in an improper or otherwise inconvenient forum; and (v) waives, and
shall not plead or make, any claim that the Identified Courts lack personal
jurisdiction over it.

 

Section 15.8        Binding Agreement; Successors.  This Agreement shall bind
the parties to this Agreement and their respective successors (including,
without limitation, any successor to the Mill Owner as owner of the Mill and any
successor to Ingevity as owner of the Carbon Plant) and shall bind, and inure to
the benefit of, their permitted assigns under Sections 15.3 and 15.4. Nothing in
this Agreement is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement as a
third party beneficiary; provided that this Agreement shall inure to the benefit
of each Person entitled to indemnification under Article 13.

 

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Section 15.9        Headings and Other Interpretations.  The section and other
headings in this Agreement are inserted solely as a matter of convenience and
for reference, are not a part of this Agreement, and shall not be deemed to
affect the meaning or interpretation of this Agreement. As used in this
Agreement, unless otherwise provided to the contrary, (a) all references to days
will be deemed references to calendar days unless expressly stated otherwise and
(b) any reference to a “Section” or Schedule shall be deemed to refer to a
section or schedule of this Agreement. The Recitals and Exhibits to the
Agreement are part of the Agreement and are hereby incorporated herein by
reference. Unless the context otherwise requires, as used in this Agreement, all
terms used in the singular will be deemed to refer to the plural as well, and
vice versa. The words “hereof,” “herein” and “hereunder” and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Whenever the words “include,”
“includes” or “including” are used in this Agreement, they will be deemed to be
followed by the words “without limitation.” References in this Agreement to “$”
will be deemed a reference to United States dollars.

 

Section 15.10      Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

 

Section 15.11      Schedules.  All schedules to this Agreement referenced herein
are incorporated herein by reference.

 

Section 15.12      Severability, etc. Any term or provision of this Agreement
that is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability, without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or unenforceability
of any of the terms or provisions of this Agreement in any other jurisdiction.
If any term or provision of this Agreement is so broad as to be invalid or
unenforceable, the provision shall be interpreted to be only so broad as is
valid or enforceable. Subject to the foregoing provisions of this Section 15.12,
if any term or provision of this Agreement is invalid or unenforceable for any
reason, such circumstances shall not have the effect of rendering such term or
provision invalid or unenforceable in any other case or circumstance.

 

Section 15.13      No Presumption Against Drafter.  Each of the parties hereto
has jointly participated in the negotiation and drafting of this Agreement. In
the event of any ambiguity or question of intent or interpretation, this
Agreement shall be construed as if drafted jointly by each of the parties hereto
and no presumptions or burdens of proof shall arise favoring any party by virtue
of the authorship of any of the provisions of this Agreement.

 

[Remainder of page intentionally left blank.] 

 

 -40- 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first written above.

 

  “Mill Owner”       WESTROCK VIRGINIA, LLC         By: /s/ Robert B. McIntosh  
  Name: Robert B. McIntosh     Title: Executive Vice President, General Counsel
and Secretary     Executed: May 11, 2016         “Ingevity”       INGEVITY
VIRGINIA CORPORATION         By: /s/ Edward A. Rose     Name: Edward A. Rose    
Title: President – Speciality Chemicals Group     Executed: May 11, 2016

 

[Signature page to Covington Plant Services Agreement]