EX 2.4

SECOND AMENDED AND RESTATED INDEMNITY AGREEMENT

SECOND AMENDED AND RESTATED INDEMNITY AGREEMENT (the "Agreement"), dated asof May 1, 2000, between WTM I Company, formerly WISCONSIN TISSUE MILLS INC., a Delawarecorporation and wholly owned subsidiary of Chesapeake Corporation ("WISCO" orthe "Indemnitor"), and GEORGIA-PACIFIC CORPORATION, a Georgia corporation("G-P"). Capitalized terms used but not otherwise defined herein shall have therespective meanings given to such terms in the Joint Venture Agreement or the OperatingAgreement, each referred to below.

WITNESSETH:

WHEREAS, Chesapeake Corporation, WISCO, G-P and Georgia Pacific Tissue, LLC, a Delawarelimited liability company (the "Company"), are parties to a Joint VentureAgreement, dated as of October 4, 1999 (the "Joint Venture Agreement");

WHEREAS, WISCO and G-P are parties to the Operating Agreement of the Company, dated asof October 4, 1999 (the "Operating Agreement"); 

WHEREAS, the Company is a party to a Credit Facility, dated as of October 4, 1999,among the Company and Bank of America, N.A. (the "First Lender") (as amended,supplemented or otherwise modified from time to time in accordance with the OperatingAgreement, the "Credit Agreement"), pursuant to which the First Lender made aloan to the Company in the amount of $755.2 million (the "First Company Debt");

WHEREAS, the Company executed a promissory note, dated as of October 4, 1999,evidencing the First Company Debt;

WHEREAS, G-P provided to the First Lender a full and unconditional guaranty of paymentof the First Company Debt pursuant to a Guaranty Agreement, dated as of October 4, 1999(the "First G-P Guaranty");

WHEREAS, pursuant to an Indemnity Agreement, dated as of October 4, 1999, theIndemnitor agreed to indemnify G-P against amounts that may be actually paid by G-P to theFirst Lender under the First G-P Guaranty for the original principal amount of the FirstCompany Debt, subject to the terms and limitations set forth therein;

WHEREAS, Georgia-Pacific Finance, LLC, a Delaware limited liability company (the"Second Lender" and together with the First Lender, the "Lenders"), isa wholly-owned subsidiary of Georgia-Pacific West, Inc., an Oregon corporation, which inturn is a wholly-owned subsidiary of G-P;

WHEREAS, the Second Lender made a loan to the Company in the amount of $491,415,000(the "Second Company Debt");

WHEREAS, the Company executed a promissory note, dated as of November 12, 1999,evidencing the Second Company Debt; 

WHEREAS, the Company applied all of the proceeds of the Second Company Debt to repay$491,415,000 of the principal amount of the First Company Debt; 

WHEREAS, after the application of the proceeds from the Second Company Debt to theFirst Company Debt, the aggregate principal amount of the First Company Debt and theSecond Company Debt was equal to $755.2 million;

WHEREAS, G-P provided to the Second Lender a full and unconditional guaranty of paymentof the Second Company Debt pursuant to a Guaranty Agreement, dated as of November 12, 1999(the "Second G-P Guaranty"); 

WHEREAS, pursuant to an Amended and Restated Indemnity Agreement, dated as of November12, 1999, the Indemnitor agreed to indemnify G-P against amounts that may be actually paidby G-P to the Lenders under the First G-P Guaranty and the Second G-P Guaranty for theoutstanding principal amounts of the First Company Debt and the Second Company Debt,subject to the terms and limitations set forth therein; 

WHEREAS, Section 3.17 of the Operating Agreement provides for the Company to refinancethe First Company Debt with Permanent Company Debt, and the Company desires to effect arefinancing of the entire remaining outstanding principal amount of the First Company Debtwith the Third Company Debt (as defined below);

WHEREAS, the Second Lender intends to lend to the Company, and the Company intends toborrow from the Second Lender, $263,785,000 (the "Third Company Debt") pursuantto a promissory note in the form attached hereto as Exhibit A (the "Note"), inorder for the Company to refinance the entire remaining outstanding principal amount ofthe First Company Debt;

WHEREAS, G-P has provided to the Second Lender a full and unconditional guaranty ofpayment of the Third Company Debt pursuant to a Guaranty Agreement, dated as of May 1,2000 (the "Third G-P Guaranty"), a copy of which is attached hereto as ExhibitB;

WHEREAS, the Second Company Debt and the Third Company Debt are referred to hereincollectively as the "Company Debt";

WHEREAS, the Second G-P Guaranty and the Third G-P Guaranty are referred to hereincollectively as the "G-P Guaranties"; 

WHEREAS, the Company shall use, and G-P shall cause the Company to use, all of theproceeds of the Third Company Debt to repay the entire remaining outstanding principalamount of the First Company Debt, such repayment to be effected by the wire transfer offunds directly from the Second Lender (on behalf of the Company) to the First Lender;

WHEREAS, after such repayment of the entire remaining outstanding principal amount ofthe First Company Debt, the principal amount of the Company Debt shall be $755.2 million;

WHEREAS, the Indemnitor has agreed to indemnify G-P against amounts that may beactually paid by G-P to the Second Lender under the Third G-P Guaranty for the originalprincipal amount of the Third Company Debt, subject to the terms and limitations set forthherein; 

WHEREAS, pursuant to Sections 3.15(b) and 3.17 of the Operating Agreement, theIndemnitor is to continue to "bear the economic risk of loss" (within themeaning of Section 1.752-2 of the Regulations) for $755.2 million of the Company Debt;

WHEREAS, assuming the validity and enforceability of the G-P Guaranties, the Note, andthe promissory note relating to the Second Company Debt, the Indemnitor has determinedthat, upon the duly authorized execution and delivery of this Agreement and consummationof the refinancing of the entire remaining outstanding principal amount of the FirstCompany Debt as contemplated herein, the Indemnitor will "bear the economic risk ofloss" within the contemplation of Sections 3.15(b) and 3.17 of the OperatingAgreement; and

WHEREAS, the parties hereto desire to amend and restate the Amended and RestatedIndemnity Agreement, dated as of November 12, 1999, in this Agreement, in order to setforth the Indemnitor's agreement to indemnify G-P with respect to the Third G-P Guarantyand the original principal amount of the Third Company Debt and the continuation of theIndemnitor's agreement to indemnify G-P with respect to the Second G-P Guaranty and theoriginal principal amount of the Second Company Debt.

NOW, THEREFORE, the parties hereto agree as follows:

SECTION 1. Indemnity. Subject to Sections 3 and 4 hereof, the Indemnitorunconditionally agrees to indemnify G-P as follows for payments of the original principalamount of the Company Debt that G-P may make under either of the G-P Guaranties: If (i)G-P shall have made a payment of principal (excluding any accrued and unpaid interest thatmay be added to principal) of the Company Debt to the Second Lender under either of theG-P Guaranties, (ii) G-P shall have exhausted all of its rights (whether by subrogation orotherwise) to reimbursement or recovery from the Company or the Company's assets, and(iii) G-P shall have demanded reimbursement from the Indemnitor within 120 days after G-Pexhausts such rights, the Indemnitor shall reimburse G-P upon demand for the amount ofsuch payment in excess of the amount so recovered from or reimbursed by the Company or itsassets. 

SECTION 2. Subrogation/Acquisition of Interest.

(a) Upon such reimbursement by the Indemnitor pursuant to Section 1 hereof, theIndemnitor shall (i) be subrogated to the remaining rights of G-P against the Company tothe extent of such reimbursement and (ii) at the Indemnitor's option, obtain an Interestor (if the Indemnitor is then a Member) an increased Interest in the Company insatisfaction of such rights. To exercise the option to obtain an Interest or increasedInterest, the Indemnitor shall give G-P notice of exercise within 30 days after thepayment of such reimbursement. Such Interest or increase in Interest shall consist of (i)a Capital Account, or increase in Capital Account, equal to the amount of suchreimbursement and (ii) a Percentage Interest, or increase in Percentage Interest, equal tothe ratio of (A) the amount of such reimbursement to (B) the sum of the total of allCapital Accounts immediately before the payment of the reimbursement plus the amount ofsuch reimbursement. For this purpose, the amount of Capital Accounts immediately beforethe payment of the reimbursement shall take into account the revaluation of CapitalAccounts, pursuant to the Regulations under Section 704(b) of the Code, occasioned by theIndemnitor's acquisition of the Interest or increased Interest pursuant to this paragraph.G-P shall, either directly or through any of its Affiliates that is then a Member, causethe Company to issue to the Indemnitor the appropriate number of Units to represent suchInterest or increase in Interest.

(b) Notwithstanding any other provision of this Agreement or of applicable Law to thecontrary, the Indemnitor hereby waives any and all claims and other rights (whether legalor equitable) that it may now have or hereafter acquire against G-P, any other Member, orany other person (other than the Company) by reason of making a payment pursuant toSection 1 hereof, including, without limitation, any right of indemnification,subrogation, reimbursement, exoneration, or contribution or any right to participate inany claim or remedy of the Second Lender or G-P against any person (other than theCompany).

SECTION 3. Limitation on Amount of Indemnity. Notwithstanding any provision ofthis Agreement to the contrary, the aggregate obligation of the Indemnitor hereunder shallin no event exceed the amount of the Special Distribution (that is, $755.2 million). 

SECTION 4. Termination. Except as otherwise provided in this Section 4, thisAgreement shall survive and be in full force and effect so long as any of the originalprincipal amount of the Company Debt is outstanding and has not been paid in full. On thethird anniversary and on each subsequent anniversary of October 4, 1999, the Indemnitormay terminate this Agreement by giving written notice of such termination (the"Termination Notice") to G-P at least 15 days and not more than 30 days beforethe anniversary date on which such termination is to take effect (the "TerminationDate"), provided that (i) no Default (as defined in the promissory note evidencingthe Second Company Debt or the Note) relating to the nonpayment of principal or interestis in existence and continuing on the date of the Termination Notice, and (ii) either (A)neither WISCO nor any Affiliate of WISCO owns any Interest on the Termination Date, or (B)notice of exercise of an Option Right with respect to all Units owned by WISCO and anyAffiliate of WISCO is given under the Operating Agreement on or before the TerminationDate. In addition, this Agreement shall terminate on the first date (the "CessationDate") that both of the following circumstances exist: (x) neither WISCO nor anyAffiliate of WISCO owns any Interest, if WISCO (or such Affiliate) ceases to own itsInterest as a result of the exercise of the G-P Call or G-P's option under Section 8.5(b)of the Operating Agreement; and (y) no Default (as defined in the promissory noteevidencing the Second Company Debt or the Note) relating to the nonpayment of principal orinterest is in existence and continuing. As of the Termination Date or the Cessation Date,as applicable, the Indemnitor shall be released from any and all liabilities hereunder;provided, however, that the Indemnitor shall not be released from any unpaid liability ofthe Indemnitor for which G-P has made or is then entitled to make a demand pursuant toSection 1 hereof, or for which G-P then would be so entitled to make a demand uponexhaustion of its rights to reimbursement or recovery from the Company or the Company'sassets.

SECTION 5. No Third Party Reliance. Nothing in this Agreement, expressed orimplied, is intended to confer upon any person other than the parties hereto and theirrespective permitted successors and assigns any rights or remedies under or by reason ofthis Agreement. Without limiting the foregoing, it is expressly understood that the SecondLender shall have no rights (either jointly or severally) against the Indemnitorhereunder.

SECTION 6. Governing Law. This agreement shall be governed by, and construed inaccordance with, the laws of the State of Virginia.

SECTION 7. No Waiver; Amendment.

(a) No failure on the part of the Indemnitor or G-P to exercise, and no delay inexercising, any right, power or remedy hereunder shall operate as a waiver thereof, norshall any single or partial exercise of any such right, power or remedy by the Indemnitoror G-P preclude any other or further exercise thereof or the exercise of any other right,power or remedy. All remedies hereunder are cumulative and are not exclusive of any otherremedies provided by Law. Neither the Indemnitor nor G-P shall be deemed to have waivedany rights hereunder unless such waiver shall be in writing and signed by such party.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modifiedexcept pursuant to a written agreement entered into between all of the parties hereto.

SECTION 8. Notices. All communications and notices hereunder between and amongthe parties hereto shall be in writing and given as provided in the Operating Agreementand addressed as specified therein.

SECTION 9. Binding Agreement; Assignments. Whenever in this Agreement any of theparties hereto is referred to, such reference shall be deemed to include the permittedsuccessors and assigns of such party; and all covenants, promises and agreements by or onbehalf of the parties that are contained in this Agreement shall bind and inure to thebenefit of their respective permitted successors and assigns. No party hereto may assignor transfer any of its rights or obligations hereunder (and any such attempted assignmentor transfer shall be void) without the prior written consent of the other party hereto.

SECTION 10. Severability. In case any one or more of the provisions contained inthis Agreement should be held invalid, illegal or unenforceable in any respect, no partyhereto shall be required to comply with such provision for so long as such provision isheld to be invalid, illegal or unenforceable, but the validity, legality andenforceability of the remaining provisions contained herein shall not in any way beaffected or impaired thereby. The parties shall endeavor in good-faith negotiations toreplace the invalid, illegal or unenforceable provisions with valid provisions theeconomic effect of which comes as close as possible to that of the invalid, illegal orunenforceable provisions.

SECTION 11. Counterparts; Effectiveness; Execution. This Agreement may beexecuted in counterparts (and by different parties hereto on different counterparts), eachof which shall constitute an original, but all of which when taken together shallconstitute a single contract. Delivery of an executed signature page to this Agreement byfacsimile transmission shall be as effective as delivery of a manually signed counterpartof this Agreement.

SECTION 12. Rules of Interpretation. The rules of interpretation specified inSection 1.2 of the Operating Agreement shall be applicable to this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executedand delivered by their duly authorized officers as of the date first appearing above.

 

  

WTMI COMPANY, formerly

WISCONSIN TISSUE MILLS INC.

By: /s/ William T. Tolley
Name: William T. Tolley
Its: Vice President
 

GEORGIA-PACIFIC CORPORATION

By: /s/ Phillip M. Johnson
Name: Phillip M. Johnson
Its: Vice President and Treasurer