Exhibit 10.6


 


C#: 13581[ILLEGIBLE]


L#: 13581[ILLEGIBLE]


 


Master Equipment Lease Agreement


 


[LOGO]


 


THIS MASTER EQUIPMENT LEASE AGREEMENT dated
as of June 25, 2003 (“Master Lease”) is made by and between KEY EQUIPMENT
FINANCE, a Division of Key Corporate Capital Inc., having an address at 68
South Pearl Street, Albany, NY 12207 (“Lessor”), and BLUE RIDGE PAPER PRODUCTS
INC. with its chief executive offices located at 41 Main Street, Canton, NC
28718 (“Lessor”).


 


1.             Lease.
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
Equipment, subject to and upon the terms set forth herein and in any Equipment
Schedule executed in connection herewith (each, a “Schedule”).  Each Schedule shall constitute a separate
and enforceable [ILLEGIBLE] incorporating of the terms of this Master Lease
(each Schedule, together with this Master Lease as it relates to such Schedule,
is referred to herein as a “Lease”).  If
any term of a Schedule conflicts or is inconsistent with any term of this
Master Lease, the terms of such Schedule shall govern.


 


2.             Definitions.  Unless the context otherwise requires, as
used in the Lease, the following terms shall have the respective meanings
indicated below and shall be equally applicable to both the singular and the
plural forms thereof:


 


“Equipment” means each
item of property designated on a Schedule that will be leased by Lessee
pursuant to the Lease, together with all replacement parts, additions and
accessories incorporated therein or affixed thereto.  Where rights to receive license fees for Software and charges for
Services supplied or to be supplied to Lessee are included in the amount
financed by Lessor under the Lease, references to leasing, purchases, ownership
and administration of “Equipment” under the Lease shall be broadly interpreted
to include such Financed Fees.


 


“Fair Market Rental Value”
or “Fair Market Sale Value” means the value of Equipment for lease or
sale.  In place and in continued use,
which would be obtained in an arm’s length transaction between an informed and
willing retail lessor or seller (under no compulsion to lease or sell) and an
informed and willing retail [ILLEGIBLE] or buyer (under no compulsion to lease
or purchase), assuming that Equipment is in the condition specified by Sections
10 and 11 hereof, as determined by the parties or, if the parties cannot agree,
by an American Society of Appraisers certified appraiser selected by Lessor and
paid for by Lessee.


 


“Financed Fees” means
the Software license, usage, or other fees and the charges for Services, if
any, specified on a Schedule.


 


“Guarantor” means any
guarantor of Lessor’s obligations hereunder.


 


“Initial Term Expiration
Date” shall have the meaning specified in the applicable Schedule.


 


“Lease Documents” means
this Master Lease, a Schedule and all other documents relating to or provided
in connection with a Lease, prepared by Lessor, and now or hereafter executed
in connection herewith or therewith, as the same may be modified, amended,
extended or replaced.


 


“License Agreement”
means the software license agreement(s) between Lessee and Licensor relating to
Software.


 


“Licensor” means the
Supplier(s) of Software, solely in its (their) capacity as licensor of such
Software.


 


“Purchase Agreement”
means any purchase agreement or other contract between a Supplier and Lessee
for the acquisition of Equipment to be leased or financed under a Lease.


 


“Rent” means the
periodic payments due for the leasing of Equipment as set forth on the related
Schedule and, where the cont??t hereof requires, all such additional amounts as
may, from time to time, be payable under a Lease.  The term “Rent” shall include interim rent, if any, as described
in Section 5 hereof.


 


“Rent Commencement Date”
means, with respect to Equipment, the date on which (a) Lessor receives an
executed Certificate of Acceptance for Equipment from Lessee or (b) Lessor
disburses funds for the purchase of Equipment, as determined by Lessor in its
sole discretion.


 


“Rent Payment Date”
shall have the meaning specified in the applicable Schedule.


 


“Services” means all
training, installation, transportation, handling, maintenance, custom
programming, integration, technical consulting and support services relating to
Equipment and specified on a Schedule.


 


“Software” means the
software and all related documentation, corrections, updates and revisions used
in connection with Equipment financed under a Schedule.


 


“Stipulated Loss Value”
shall have the meaning specified in the applicable Schedule.


 


“Supplier” means the
manufacturer or the vendor of the Equipment.


 


“Term” means the Initial
Term or any Renewal Term, each as defined in Section 6 hereof, and any Extended
Lease Term or interim Term, as defined in the applicable Schedule.


 


3.             Ordering Equipment.  Lessee hereby assigns to Lessor all of Lessee’s
rights, but none of its obligations, under any Purchase Agreement related to a
Lease.  Lessor may (a) accept such
assignment from Lessee of Lessee’s rights, but none of Lessee’s obligations,
under any such Purchase Agreement and/or (b) issue a purchase order for the
Equipment to the Supplier, Lessee shall arrange for delivery of Equipment.  If Equipment is subject to an existing
Purchase Agreement between Lessee and the Supplier, and Equipment has been
delivered to Lessee as of the date of the Schedule applicable thereto, Lessee
warrants that it has advised Lessor of the delivery date(s) of such Equipment
Lessee hereby authorizes Lessor to complete each Schedule with the serial
numbers and other identification data of Equipment associated therewith as such
data is received by Lessor.


 


4.             Delivery and Acceptance.  Upon delivery to and acceptance by Lessee of
any Equipment, Lessee shall execute and deliver to Lessor a Certificate of
Acceptance in form acceptable to Lessor (“Certificate of Acceptance”).  LESSOR SHALL HAVE NO OBLIGATION TO ADVANCE
ANY FUNDS HEREUNDER UNLESS AND UNTIL LESSOR RECEIVES A CERTIFICATE OF
ACCEPTANCE FOR SUCH EQUIPMENT EXECUTED BY LESSEE.


 


5.             Rent Delinquent Payments.
(a) Lessee shall pay Rent commencing on the Rent Commencement Date, and, unless
otherwise set forth on the applicable Schedule, on the same day of each payment
period thereafter for the balance of the Term Rent shall be due whether or not
Lessee has received any notice that it is due, and all Rent shall be paid to
Lessor at its address set forth on the Schedule, or as otherwise directed by
Lessor in writing.


 


(b) 
If Lessee fails to pay any Rent or other sums under the Lease on or
before the date when the same becomes due, Lessee shall pay to Lessor (in
addition to and not in lieu of other rights of Lessor) a late charge equal to
the lessor of five percent of such delinquent amount or the maximum permitted
by law.  Such late charge shall be
payable by Lessee upon demand by Lessor and shall be deemed Rent
hereunder.  Lessee acknowledges and
agrees that the late charge (i) does not constitute interest, (ii) is an
estimate of the costs Lessor will incur as a result of the late payment and
(iii) is reasonable in amount.


 


6.             Term; Survival.  With respect to any Equipment, unless
otherwise specified on a Schedule, the initial term of the Lease (the “Initial
Term”) shall commence on the earlier of (a) the date risk of loss is
transferred from the Supplier to Lessee or Lessor or (b) the date on which such
Equipment is delivered to Lessee and, unless earlier terminated as provided
herein, shall expire on the Initial Term Expiration Date.  Any renewal term of the Lease (individually,
a “Renewal Term”) shall commence immediately upon the expiration of the Initial
Term or any prior Renewal Term, as the case may be, and, unless earlier
terminated as provided herein, shall expire on the last day of the period for
which the final payment of Rent is due. 
All obligations of Lessee hereunder shall survive the expiration,
cancellation or other termination of the Term of each Lease.


 


7.             Location; Inspection; Labels.  Equipment shall be delivered to the location
specified in the Schedule and shall not be removed therefrom without Lessor’s
prior written consent.  Lessor shall
have the right to enter upon the premises where the Equipment is located and
inspect the Equipment at any reasonable time. 
At Lessor’s request, Lessee shall (a) [ILLEGIBLE] permanent labels in a
prominent place on Equipment stating Lessor’s interest in the Equipment, (b)
keep such labels in good repair and condition and (c) provide Lessor with an
inventory listing of all labeled Equipment within thirty days of such request.


 


8.             Non-Cancelable Lease.  THE LEASE IS A NET LEASE.  LESSEE’S OBLIGATION TO PAY RENT AND PERFORM
ITS OBLIGATIONS HEREUNDER ARE ABSOLUTE, IRREVOCABLE AND UNCONDITIONAL AND SHALL
NOT BE SUBJECT TO ANY RIGHT OF SET OFF, COUNTERCLAIM, DEDUCTION, DEFENSE OR
OTHER RIGHT LESSEE MAY HAVE AGAINST THE SUPPLIER, LESSOR OR ANY OTHER PARTY
PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL PRECLUDE LESSEE FROM ASSERTING ANY
SUCH CLAIMS IN A SEPARATE CAUSE OF ACTION. 
LESSEE UNDERSTANDS AND AGREES THAT NEITHER THE SUPPLIER NOR ANY SALES
REPRESENTATIVE OR OTHER AGENT OF THE SUPPLIER IS AN AGENT OF LESSOR OR IS
AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THE LEASE, AND NO SUCH
WAIVER OR ALTERATION SHALL VARY THE TERMS OF THE LEASE, LESSOR IS NEITHER A
SUPPLIER NOR A LICENSOR, AND LESSOR IS NOT RESPONSIBLE FOR REPAIRS, SERVICE OR
DEFECTS IN EQUIPMENT, LESSEE AGREES NOT TO ASSERT AGAINST LESSOR ANY CLAIMS OR


 


Form No.: 94-100MELA.403a


 


1

















 


INDICATIVE TERMS & CONDITIONS


(This is not
a commitment)


 


 


	
  Date:

  	
   

  	
  6/24/2003

  
	
   

  	
   

  	
   

  
	
  Lessee:

  	
   

  	
  Blue Ridge
  Paper Products, Inc.

  
	
   

  	
   

  	
   

  
	
  Lessor:

  	
   

  	
  Key Equipment Finance, a Division of Key Corporate Capital Inc. (Its
  successors or assigns)

  
	
   

  	
   

  	
   

  
	
  Lease Type:

  	
   

  	
  Capital Lease

  
	
   

  	
   

  	
   

  
	
  Equipment Description:

  	
   

  	
  Various
  pieces of manufacturing equipment

  
	
   

  	
   

  	
   

  
	
  Financed Amount:

  	
   

  	
  $1,400,000.00

  
	
   

  	
   

  	
   

  
	
  Lease Commencement Date:

  	
   

  	
  June 30,
  2003

  
	
   

  	
   

  	
   

  
	
  Term:

  	
   

  	
  48-months

  
	
   

  	
   

  	
   

  
	
  Payment Amount/Frequency:

  	
   

  	
  48 equal
  monthly payments equal to 2.324606% of Financed Amount ($32,544.49 based on a
  Financed Amount of $1,400,000.00) payable monthly in advance.

  
	
   

  	
   

  	
   

  
	
  Payment Type:

  	
   

  	
  Fixed rate
  of 5.72%

  
	
   

  	
   

  	
   

  
	
  End of Lease Option:

  	
   

  	
  Lessee may
  purchase the Equipment for $1.00.

  
	
   

  	
   

  	
   

  
	
  Net Lease:

  	
   

  	
  Maintenance,
  Taxes and Insurance are the responsibility of the Lessee

  
	
   

  	
   

  	
   

  
	
  Documentation Fees:

  	
   

  	
  At closing,
  Lessee will pay a Documentation Fee of $500.00.

  
	
   

  	
   

  	
   

  
	
  Comments:

  	
   

  	
  At closing
  Lessor will refund Lessee’s Application Deposit of $25,000.00.

  
	
   

  	
   

  	
   

  
	
  IMPORTANT REMINDER:

  	
   

  	
  This term sheet is subject to formal
  approval of Lessor and execution of documentation acceptable to Lessor and
  Lessee.  It should not be construed as
  a commitment by Lessor to engage in this financing.

  



 


 


Agreed and Accepted this 25 day
of June, 2003


 


Blue Ridge Paper Products, Inc.


 


 


	
  By:

  	
  /s/ John
  Wadsworth

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   John
  Wadsworth

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   CFO

  	
   

  
				



 

















 


DEFENSES LESSEE MAY HAVE WITH
RESPECT TO EQUIPMENT, AND UNDERSTANDS THAT IT MAY ASSERT SUCH CLAIMS AGAINST
SUPPLIE? OR LICENSOR.


 


9.             Use; Alterations.  (a) Lessee shall use Equipment lawfully and
only in the manner for which it was designed and intended and so as to subject
it [ILLEGIBLE] to ordinary wear and tear, Lessee shall comply with all
applicable laws, Lessee shall immediately notify Lessor, in writing, upon
becoming aware of any [ILLEGIBLE] ?? threatened investigation, claim or action
by any governmental authority that could adversely affect Equipment, Lessor or
the Lease.  Lessee, at its own expense?
shall make such alterations, additions or modifications (each, a “Required
Alteration”) to Equipment as may be required from time to time to meet the
requirements of applicable law or a governmental body. All such Required
Alterations shall immediately, and without further act, be deemed to
[ILLEGIBLE] “Equipment” and be fully subject to the Lease as if originally
leased hereunder. Except as otherwise permitted herein, Lessee shall not make any
alterations ?? Equipment without Lessor’s prior written consent.


 


(b) Lessee, at
its own expense, may from time to time add or install upgrades or attachments
(each an “Upgrade”) to Equipment during the Term provided, that such Upgrades
(i) are readily removable without causing material damage to Equipment, (ii) do
not materially adversely affect the Fair Market Sale Value, the Fair Market
Rental Value, residual value, productive capacity, utility or remaining useful
life of Equipment and (iii) do not cause Equipment to become “limited use
property” within the meaning of Revenue Procedure 2001-28, 2001-19 I.R.B. 1158
(or such other successor tax provision), as of the date ?? installation of such
Upgrade. Any such Upgrades shall remain the property of Lessee.  Upon the expiration or earlier cancellation
of the Lease, Lessee may, at its option, remove any such Upgrades and, upon
such removal, shall restore Equipment to the condition required hereunder.


 


(c) If any
Equipment covered under any Lease becomes attached or affixed to, or used in
connection with, Equipment covered under another Le???? hereunder (a “Related
Lease”), Lessee agrees that, if Lessee elects to exercise a purchase or renewal
option under any such Lease, or if Lessee elects to return Equipment under any
such Lease, then Lessor, in its sole discretion, may require that all Equipment
leased under all Related Leases be similarly disposed of.


 


10.          Repairs and Maintenance.
Lessee, at Lessee’s cost and expense, shall (a) keep Equipment in good repair,
good operating condition, appearance and working order in compliance with the
manufacturer’s recommendations and Lessee’s standard practices (but in no event
less than industry practices), (b) take all actions necessary to ensure that
the Equipment will be eligible, at the expiration of the Initial Term and any
Renewal Term, for a standard, full service maintenance contract with the
manufacturer, (c) property service all components of Equipment following the
manufacturer’s written operating and servicing procedures, (d) enter into and
keep in full force and effect during the Term a maintenance agreement covering
the Equipment with the manufacturer, or a manufacturer-approved maintenance
organization, to maintain, service and repair such Equipment, as otherwise
required herein (but an alternate source of maintenance may be used by Lessee
with Lessor’s prior written consent), (e) upon Lessor’s request furnish Lessor
with an executed copy of any such maintenance agreement, and (f) replace any
part of the Equipment that becomes unfit or unavailable for use from any cause
(whether or not such replacement is covered by a maintenance agreement) with a
replacement part that, in Lessor’s sole opinion, is of the same manufacture,
value, remaining useful life and utility as the replaced part immediately
preceding the replacement, assuming that such replaced part was in the
condition required by this Lease. Replacement parts shall be free and clear of
all liens, constitute Equipment and be fully subject to this Lease as if
originally leased hereunder.


 


11.          Return of Equipment.  Except as otherwise provided in a Schedule,
upon the expiration or earlier termination or cancellation of each Lease,
Lessee, at its sole expense, shall de-install, assemble, pack properly and in
accordance with the manufacturer’s instructions (under the supervision of
persons acceptable to Lessor), including labeling of all components and
hardware, and return to Lessor all, but not less than all, Equipment by
delivering the Equipment to and unloading it at such location or with such
carrier as Lessor shall specify, Lessee agrees that (a) Equipment, when
returned, shall be in the condition required by the Lease, and (b) upon
Lessor’s request, Lessee will obtain from the manufacturer (or other maintenance
service provider previously approved by Lessor or manufacturer) a certificate
stating that such Equipment qualifies for full maintenance service at the
standard rules and terms then in effect. 
If, in the opinion of Lessor, any Equipment fails to meet the standards
set forth above.  Lessee agrees to pay,
on demand, all costs and expenses incurred in connection with the repairing and
restoring of such Equipment so as to meet such standards. If Lessee fails to return
any Equipment as required hereunder, then all of Lessee’s obligations under the
Lease (including, without limitation, Lessee’s obligation to pay Rent for the
Equipment at the rental then applicable under the Lease) shall continue in full
force and effect until such Equipment shall have been returned in the condition
required under the Lease.


 


12.          Sublease and Assignment.  (a) LESSEE SHALL NOT, WITHOUT LESSOR’S PRIOR
WRITTEN CONSENT, (i) SELL, ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE OR OTHERWISE
DISPOSE OF THE LEASE, EQUIPMENT OR ANY INTEREST THEREIN, (ii) RENT, SUBLET OR
LEND EQUIPMENT TO ANYONE OTHER THAN LESSEE OR LESSEE’S AFFILIATES OR (iii)
PERMIT EQUIPMENT TO BE USED BY ANYONE OTHER THAN THEIR RESPECTIVE QUALIFIED
EMPLOYEES.


 


(b) Lessor, at
any time with or without notice to Lessee, may sell, transfer, assign and/or
grant a security interest in all or any part of Lessor’s interest in each Lease
or any Equipment (each, a “Lessor Transfer”). Any purchaser, transferee,
assignee or secured party of Lessor (each a “Lessor Assignee”) shall have and
may exercise all of Lessor’s rights hereunder with respect to the items to
which any such Lessor Transfer relates, and Lessee shall not assert against any
Lessor Assignee any claim that Lessee may have against Lessor provided, Lessee
may assert any such claim in a separate action against Lessor.  Upon written notice of a Lessor Transfer,
Lessee shall promptly acknowledge in writing its obligations under the
applicable Lease, shall comply with the written directions or demands of any
Lessor Assignee and shall make all payments due under the applicable Schedule
as directed in writing by the Lessor Assignee. Following such Lessor Transfer,
the term “Lessor” shall be deemed to include or refer to each Lessor Assignee.
Lessee will provide reasonable assistance to Lessor to complete any transaction
contemplated by this subsection (b).


 


(c) Subject to
the restriction on assignment contained in subsection (a), the Lease Documents
shall inure to the benefit of, and are binding upon, the successors and assigns
of the parties thereto including, without limitation, each person who becomes
bound thereto as a “new debtor” as set forth in the Uniform Commercial Code
(“UCC”).


 


13.          Risk of Loss; Damage to Equipment.
(a) Lessee shall bear the entire risk of loss (including without limitation,
theft, destruction, disappearance of or damage to Equipment from any cause
whatsoever), whether or not insured against, during the Term of each Lease and
until Equipment is returned to Lessor in accordance with Section 11 hereof. No
such loss shall relieve Lessee of the obligation to pay Rent or of any other
obligation under the related Lease.


 


(b) If any
Equipment is lost, stolen or damaged beyond repair, or [ILLEGIBLE], seized or
the use and/or title thereof requisitioned to someone other than Lessee (any
such event being a “Total Loss”), Lessee shall immediately notify Lessor of
such event. On the next Rent Payment Date following the occurrence of the Total
Loss, at Lessor’s option, Lessee shall either (i) replace Equipment with equipment
that, in Lessor’s sole opinion, is of the same manufacture, value, remaining
useful life and utility as the replaced Equipment immediately preceding the
replacement, assuming such replaced Equipment was in the condition required by
the Lease or (ii) pay to Lessor the sum of (A) all Rent due and owing under the
Lease with respect to such Equipment (at the time of such payment) plus (B) the
Stipulated Loss Value for the Equipment as of that Rent Payment Date. If Lessor
elects to allow replacement of Equipment as set forth in subsection (i) above,
Lessee shall cause the Supplier of such replacement equipment to deliver to
Lessor a bill of sale for such equipment free and clear of all liens and
encumbrances, and such replacement equipment shall become Equipment subject to
the applicable Lease.  Upon Lessor’s
receipt of the bill of sale or the amounts specified in subsection (?)
above.  Lessee shall be entitled to
Lessor’s interest in the replaced Equipment, in its then condition and
location, “as is” and “where is,” without any warranties, express or implied.


 


14.          Insurance.  (a) Lessee shall, at all times during the
Term of each Lease and at Lessee’s own cost and expense, maintain (i) insurance
against all risks of physical loss or damage to Equipment for the greater of
the full replacement value or the Stipulated Loss Value thereof, and (ii)
commercial general liability insurance (including blanket contractual liability
coverage and products liability coverage) for personal and bodily injury and
property damage per occurrence as stated in each Schedule.


 


(b) All
insurance policies required hereunder shall include terms, and be with
insurance carriers, reasonably satisfactory to Lessor. Without limiting the
generality of the foregoing, each policy shall include the following terms: (i)
all physical damage insurance shall name Lessor and its assigns as loss payee,
(ii) all liability insurance shall name Lessor and its assigns as additional
insureds, (iii) the policy shall not be canceled or altered without at least
thirty days advance notice to Lessor and its assigns and (iv) coverage shall
not be invalidated against Lessor or its assigns because of any violation of
any condition or warranty contained in any policy or application therefor by
Lessee or by reason of any action or inaction of Lessee. On each anniversary of
the Rent Commencement Date during the term hereof, Lessee shall deliver to
Lessor certificates or other proof of insurance satisfactory to Lessor
evidencing the coverage required by this section.


 


15.          Taxes.  Lessee shall pay when due and shall
indemnify and hold harmless Lessor (on an after-tax basis) from and against any
and all taxes, fees, withholdings, levies, imposts, duties, assessments and
charges of every kind and nature whatsoever (including any related penalties
and interest) imposed upon


 


2

















 


or against Lessor, any Lessor
Assignee, Lessee or any Equipment by any [ILLEGIBLE] authority in connection
with, arising out of or otherwise related to Equipment, the Lease Documents or
the Rent and receipts or earnings arising therefrom and excepting only all
Federal, state and local taxes on or measured by Lessor’s net income.  Whenever each Lease expires, terminates or
is canceled as to any Equipment, Lessee, upon written request by Lessor, shall
advance to Lessor the amount estimated by Lessor to be the taxes on said
Equipment that are not yet payable, but for which Lessee is responsible.  At Lessee’s request, Lessor shall provide
Lessee with Lessor’s method of computation of any such estimated taxes.


 


16.          Lessor’s Right to Perform for Lessee.  If Lessee fails to perform any of its
obligations contained herein, Lessor may (but shall not be obligated to) itself
perform such obligations, and the amount of the reasonable costs and expenses
of Lessor incurred in connection with such performance, together with interest
on such amount at the lessor of eighteen percent per annum or the maximum
permitted by law, shall be payable by Lessee to Lessor upon demand.  No such performance by Lessor shall be deemed
a waiver of any rights or remedies of Lessor or be deemed to cure the default
of Lessee hereunder.


 


17.          Personal Property; Liens.  Lessee represents and warrants that the
Equipment is, and shall at all times remain, fully removable personal property
notwithstanding any affixation or attachment to real property or
improvements.  Lessee shall at all times
keep Equipment free and clear from all liens and encumbrances of any kind or
nature other than those created by, through or under Lessor.  If, in violation of the foregoing covenant,
any prohibited lien or encumbrance shall attach to Equipment, Lessee shall (a)
give Lessor immediate written notice thereof and (b) promptly, at Lessee’s sole
cost and expense, take such action as may be necessary to discharge such lien.


 


18.          Default; Remedies.
(a) As used herein, the term “Default” means any of the following events:  (i) Lessee fails to pay any Rent or other
amount due under a Lease within ten days after the same shall have become due;
(ii) Lessee or any Guarantor becomes insolvent or makes an assignment for the
benefit of its creditors; (iii) a receiver, trustee, conservator or liquidator
of Lessee or any Guarantor of all or a substantial part of Lessee’s or such Guarantor’s
assets is appointed with or without the application or consent of Lessee or
such Guarantor, respectively; (iv) a petition is filed by or against Lessee or
any Guarantor under any bankruptcy, insolvency or similar law; (v) Lessee or
any Guarantor violates or fails to perform any provision of either this Lease
or any other loan, lease or credit agreement or any acquisition or purchase
agreement with Lessor or any other party; (vi) any warranty or representation
made by Lessee herein proves to have been false or misleading when made; (vii)
there is a material adverse change in Lessee’s or any Guarantor’s financial
condition since the related Rent Commencement Date; (viii) Lessee or any
Guarantor merges or consolidates with any other corporation or entity, or
sells, leases or disposes of all or substantially all of its assets without the
prior written consent of Lessor; (ix) Lessee or any Guarantor, if an
individual, dies or, if not an individual is dissolved; or (x) any filing by
Lessee of a termination statement for any financing statement filed by Lessor
while any obligations are owed by Lessee under a Lease.  A Default with respect to any Lease shall,
at Lessor’s option, constitute a Default for all Leases and any other
agreements between Lessor and Lessee.


 


(b)  Upon the occurrence of a Default, Lessor may
do one or more of the following as Lessor in its sole discretion shall elect:
(i) proceed by appropriate court action to enforce performance by Lessee of the
related Lease or to recover damages, including incidental and consequential
damages, for the breach thereof; (ii) cause Lessee, at its expense, promptly to
assemble Equipment and return the same to Lessor at such place as Lessor may
designate in writing: (iii) by notice in writing to Lessee, cancel or terminate
the related Lease, without prejudice to any other remedies hereunder; (iv)
enter upon the premises of Lessee or other premises where any Equipment may be
located and, without notice to Lessee and with or without legal process, take
possession of and remove all or any such Equipment without liability to Lessee
by reason of such entry or taking possession, and without such action
constituting a cancellation or termination of the Lease unless Lessor notifies
Lessee in writing to such effect: (v) by written notice to Lessee specifying a
payment date (the “Remedy Date”), demand that Lessee pay to Lessor, and Lessee
shall pay to Lessor, on the Remedy Date, as liquidated damages for loss of a
bargain and not as a penalty, a sum equal to (A) any unpaid Rent due prior to
the Remedy Date (together with interest on such amount of the lesser of
eighteen percent per annum or the maximum permitted by law from the Remedy Date
to the date of actual payment), plus (B) the Stipulated Loss Value; (vi) sell
Equipment at public or private sale or hold, keep idle or lease to others any
Equipment; and (vii) exercise any other right or remedy available to Lessor
under applicable law.  In addition,
Lessee shall be liable for all reasonable costs, expenses, and legal fees
incurred in enforcing Lessor’s rights under the Lease, before or in connection
with litigation or arbitration and for any deficiency in the disposition of the
Equipment.  Lessor’s recovery hereunder
shall in no event exceed the maximum recovery permitted by law.


 


(c)  If a Default occurs, Lessee hereby agrees
that ten days+ prior notice to Lessee of any public sale or of the
terms after which a private sale may be negotiated shall be conclusively deemed
reasonable notice.  None of Lessor’s
rights or remedies hereunder are intended to be exclusive, but each shall be
cumulative and in addition to any other right or remedy referred to hereunder
or otherwise available to Lessor at law or in equity, and no express or implied
waiver by Lessor of any Default shall constitute a waiver of any other Default
or a waiver of any of Lessor’s rights.


 


(d)  With respect to any exercise by Lessor of
its right to recover and/or dispose of any Equipment or any other collateral
securing Lessee’s obligations under any Lease, Lessee acknowledges and agrees
that Lessor may dispose of Equipment on an “AS-IS, WHERE-IS” basis, in
compliance with applicable law and with such preparation (if any) as Lessor
determines to be commercially reasonable; Lessee shall remain liable for any deficiency
in the disposition of the Equipment, and any purchase by Lessor of the
Equipment may be through a credit to some or all of Lessee’s obligations under
any Lease.


 


19.          Notices.  All notices and other communications
hereunder shall be in writing and shall be transmitted by hand, overnight
courier or certified mail (return receipt requested), US postage prepaid.  Such notices and other communications shall
be addressed to the respective party at the address set forth above or at such
other address as any party may, from time to time, designate by notice duly
given in accordance with this section. 
Such notices and other communications shall be effective upon the
earlier of receipt or three days after mailing if mailed in accordance with the
terms of this section.


 


20.          Indemnity.
Lessee shall indemnify and hold harmless Lessor and each Lessor Assignee, on an
after tax basis, from and against any and all liabilities, causes of action,
claims, suits, penalties, damages, losses, costs or expenses (including
attorneys’ fees), obligations, liabilities, demands and judgments
(collectively, ? “Liability”) arising out of or in any way related to: (a)
Lessee’s failure to perform any covenant under the Lease Documents, (b) the
untruth of any representation or warranty made by Lessee under the Lease
Documents, (c) the order, manufacture, purchase, ownership, selection,
acceptance, rejection, possession, rental, sublease, operation, use,
maintenance, control, loss, damage, destruction, removal, storage, surrender, sale,
condition, delivery, return or other disposition of or any other matter
relating to any Equipment or (d) injury to persons, property or the environment
including any Liability based on strict liability in ?ort, negligence, breach
of warranties or Lessee’s failure to comply fully with applicable law or
regulatory requirements; provided,
that the foregoing indemnity shall not extend to any Liability to the extent
resulting [ILLEGIBLE] from the gross negligence or willful misconduct of
Lessor.


 


21.          Fees and Expenses.  Lessee shall pay all reasonable costs and
expenses of Lessor, including, without limitation, attorneys’ and other
professional fees, returned check or non-sufficient funds charges, the fees of
any collection agencies and appraisers and all other costs and expenses related
to any sale or re-lease of Equipment (including storage costs) incurred by
Lessor in enforcing any of the terms, conditions or provisions hereof or in
protecting Lessor’s rights hereunder.


 


22.          Financial and Other Data.  During the Term hereof, Lessee shall furnish
Lessor (a) as soon as available, and in any event within one hundred twenty
days after the last day of each fiscal year, financial statements of Lessee and
each Guarantor and (b) from time to time as Lessor may reasonably request,
other financial reports, information or data (including federal and state
income tax returns) and quarterly or interim financial statements of Lessee and
each Guarantor.  All such information
shall be audited (or if audited information is not available, compiled or
reviewed) by an independent certified public accountant.


 


23.          Representations and Warranties of
Lessee.  Lessee
represents and warrants that (a) the address stated above is the chief place of
business and chief executive office of Lessee, Lessee’s full and accurate legal
name is as stated above and the information describing Lessee set forth under
Lessee’s signature below is accurate in all respects; (b) Lessee is either (i)
an individual and the sole proprietor of its business which is located at the
address set forth above and doing business only under the names disclosed
herein, or (ii) a limited liability company or corporation duly organized and
validly existing in good standing under the laws of the state of its
organization or incorporation, or (iii) a general or limited partnership
organized under the laws of the state of its principal place of business set
forth in the Lease or the Lease Documents and the individual general partner
executing this Master Lease has the full authority to represent, sign for and
bind Lessee in all respects; (c) the execution, delivery and performance of
this Master Lease and all related instruments and documents (i) have been duly
authorized by all necessary action on the part of Lessee, (ii) do not require
the approval of any stockholder, partner, manager, trustee, or holder of any
obligations of Lessee except such as have been duly obtained, and (iii) do not
and will not contravene any law, governmental rule, regulation or order now
binding on Lessee, or contravene the operating agreement, charter or by-laws of
Lessee, or constitute a default under, or result in the creation of any lien or
encumbrance upon the property of Lessee under, any indenture, mortgage,
contract or other agreement to which Lessee is a party or by which it or its
property is bound; (d) the Lease Documents when entered into will constitute
legal, valid and binding obligations of Lessee enforceable against Lessee in
accordance with their terms; (e) there are no actions or proceedings to which
Lessee is a party, and there are no other threatened actions or proceedings of
which Lessee has knowledge, before any governmental authority which, either
individually or in the aggregate, would adversely affect the financial
condition of Lessee or the ability


 


3

















 


[ILLEGIBLE] hereunder; (f)
Lessee is not in default under any obligation for the payment of borrowed
money, for the deferred purcha? price of property or for the payment of any
rent under any lease agreement which, either individually or in the aggregate,
would adversely affect the financi? condition of Lessee or the ability of
Lessee to perform its obligations hereunder and (g) the financial statements of
Lessee (copies of which have been furnished to Lessor) have been prepared in
accordance with generally accepted accounting principles consistently applied
and fairly present Lessee’s financial condition and the results of its
operations as of the date of and for the period covered by such statements, and
since the date of such statements there has been [ILLEGIBLE] material adverse
change in such conditions or operations.


 


24.          Lessee’s Waivers.  TO THE EXTENT PERMITTED BY APPLICABLE LAW,
LESSEE WAIVES (a) ANY AND ALL RIGHTS AND REMEDIES CONFERRED UPON A LESSEE BY
ARTICLE 2A OF THE UCC AND (b) ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE
OR OTHERWISE TO RECOVER INCIDENTAL OR CONSEQUENTIAL DAMAGES FROM LESSOR FOR ANY
BREACH OF WARRANTY OR FOR ANY OTHER REASON OR TO SET OFF OR DEDUCT ALL OR ANY
PART OF ANY CLAIMED DAMAGES RESULTING FROM LESSOR’S DEFAULT, IF ANY UNDER THE
RELATED LEASE.


 


25.          UCC Filings.  LESSEE HEREBY AUTHORIZES LESSOR TO
AUTHENTICATE AND/OR FILE ALL UCC FINANCING STATEMENTS AND AMENDMENTS THAT IN
LESSOR’S SOLE DISCRETION ARE DEEMED NECESSARY OR PROPER TO SECURE OR PROTECT
LESSOR’S INTEREST IN EQUIPMENT IN ALL APPLICABLE JURISDICTIONS.  Lessee hereby ratifies, to the extent
permitted by law, all that Lessor shall lawfully and in good faith [ILLEGIBLE]
or cause to be done by reason of and in compliance with this section.  Lessee shall provide written notice to
Lessor at least thirty days prior to any contemplate change in Lessee’s name,
jurisdiction of organization or chief executive office address.


 


26.          Miscellaneous; Governing Law.  Time is of the essence with respect to each
Lease.  Any failure of Lessor to require
strict performance by Lessee ? any waiver by Lessor of any provision of a Lease
shall not be construed as a consent or waiver of any provision of such
Lease.  The Lease will be binding upon
Lessor only if executed by a duly authorized officer or representative of
Lessor at Lessor’s address set forth above. 
An authorized signer of Lessee shall execute the Lease Documents on
Lessee’s behalf.  Any provision of a Lease
that is prohibited or unenforceable shall be ineffective to the extent of such
prohibition [ILLEGIBLE] unenforceability without invalidating the remaining
provisions thereof.  Captions are
intended for convenience or reference only, and shall not be construed
[ILLEGIBLE] define, limit or describe the scope or intent, of any provisions
hereof, Lessee will promptly execute or otherwise authenticate and deliver to
Lessor such further documents, instruments, assurances and other records and
take such further action as Lessor may reasonably request in order to carry out
the intent and purpose of this agreement and each Lease and to establish and
protect the rights and remedies created or intended to be created in favor of
Lessor hereunder and thereunder.  EACH
LEASE IS BEING DELIVERED IN, AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICT OF LAWS.  LESSOR AND
LESSEE HEREBY EACH WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO EQUIPMENT OR EACH
LEASE.  THIS WAIVER IS MADE KNOWINGLY,
WILLINGLY AND VOLUNTARILY BY LESSOR AND LESSEE WHO EACH ACKNOWLEDGE THAT NO
REPRESENTATIONS HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL
BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO EACH LEASE AND THE LEASE
DOCUMENTS.


 


27.          Quiet Enjoyment.  So long as no Default has occurred and is
continuing, Lessee shall peaceably hold and quietly enjoy Equipment without
interruption by Lessor or any person or entity claiming through Lessor.


 


28.          Entire Agreement.  Each Lease, together with all other Lease
Documents, constitutes the entire understanding or agreement between Lessor and
Lessee with respect to the leasing of Equipment covered thereby, and there is
no understanding or agreement, oral or written, which is not set forth herein
or therein.  No Lease may be amended
except by a writing signed by Lessor and Lessee.  Delivery of an executed Lease Document by facsimile or any other
reliable means shall be deemed as effective for all purposes as delivery of a
manually executed copy.  Lessee shall
provide to Lessor the manually executed original of any Lease Document
delivered by facsimile within five days.


 


29.          More than One Lessee.  If more than one person or entity executes
the Lease Documents as “Lessee”, the obligations of “Lessee” shall be deemed
joint and several and all references to “Lessee” shall apply both individually
and jointly.


 


30.          Disclaimer of Warranties.  LESSOR MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, TITLE TO,
DESIGN, OPERATION, CONDITION, OR QUALITY OF THE MATERIAL OR WORKMANSHIP IN,
EQUIPMENT, ITS MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, THE
ABSENCE OF LATENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), LACK OF
INFRINGEMENT ON ANY PATENT, TRADEMARK OR COPYRIGHT, AND LESSOR HEREBY DISCLAIMS
ALL SUCH WARRANTIES; IT BEING UNDERSTOOD THAT THE EQUIPMENT IS LEASED TO LESSEE
“AS IS, WHERE IS.” LESSEE HAS MADE THE SELECTION OF THE EQUIPMENT FROM THE SUPPLIER
BASED ON ITS OWN JUDGMENT AND EXPRESSLY DISCLAIMS ANY RELIANCE ON ANY
STATEMENTS OR REPRESENTATIONS MADE BY LESSOR. 
IN NO EVENT SHALL LESSOR BE LIABLE FOR ANY INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES, LESSOR HEREBY ASSIGNS TO LESSEE FOR THE TERM OF EACH
LEASE WITHOUT RECOURSE AND FOR SO LONG AS LESSEE IS NOT IN DEFAULT UNDER ANY
LEASE, ANY WARRANTY PROVIDED BY THE SUPPLIER.


 


31.          Execution in Counterparts.  The Master Lease and all other Lease
Documents may be executed in several counterparts and by different parties
hereto or thereto on separate counterparts, each of which when so executed or
otherwise authenticated and delivered shall be an original, but all such
counterparts shall together consist of one and the same instrument; except, to
the extent that any Lease Documents constitute chattel paper under the UCC, no
security interest therein may be created other than through the transfer or
possession of the original counterpart, which shall be identified by Lessor.


 


32.          Software.  To the extent that any Schedule relates to
Software:


 


(a)  Lessee acknowledges that (i) all Software is
furnished to Lessee under one or more separate License Agreements governing
Lessee’s rights thereto, (ii) the Lease does not convey any explicit or
implicit license for the use of Software or other intellectual property
relating to Equipment, and (iii) Lessor does not hold title to any Software and
Lessee is or shall be the licensee of such Software directly from the Licensor.


 


(b)  Lessee shall not amend, modify or otherwise
alter, any term or condition of any License Agreement, including, without
limitation, any such term or condition related to (i) payment of any amounts
due thereunder, (ii) any liabilities or obligations of Lessee as Licensee,
(iii) the payment of late fees on past due amounts, or (iv) the payment of
applicable taxes: provided, however, that this provision shall not apply to
those terms or conditions relating solely to amounts owing to Licensor which
have not been financed under the Lease.


 


IN WITNESS WHEREOF,
Lessor and Lessee have executed this Master Lease as of the day and year first
above written.


 


	
  Lessor:

  	
  Lessee:

  
	
   

  	
   

  
	
  KEY
  EQUIPMENT FINANCE, a Division of

  	
  BLUE RIDGE
  PAPER PRODUCTS INC.

  
	
  Key
  Corporate Capital Inc.

  	
   

  
	
   

  	
  /s/ John
  Wadsworth

  	
   

  
	
  By:

  	
   

  	
   

  	
  Name:

  	
  John
  Wadsworth

  
	
  NAME:

  	
  Title:

  	
  CFO

  
	
  TITLE:

  	
   

  
	
   

  	
  Organization
  Type: Corporation

  
	
   

  	
  Jurisdiction
  of Delaware

  
	
   

  	
  Organizational
  No.: 0493776

  
						



 


4

















 


C#: 135?10


L#: 135?11


Ls#: 8800022974


 


Equipment Schedule No. 01


Standard CSA


 


This EQUIPMENT
SCHEDULE NO. 01 (“Schedule”) between Key Equipment Finance, a Division of Key
Corporate Capital Inc., (“Lessor”), and BLUE RIDGE PAPER PRODUCTS INC. a
Delaware corporation (“Lessee”) is dated as of June 25, 2003 and is issued in
connection with the Master Equipment Lease Agreement dated as of June 25, 2003
Unless otherwise defined, capitalized terms used herein shall have the meanings
specified in the Master Lease.


 


EQUIPMENT
& INVOICING TERMS


 


1.             EQUIPMENT.  Pursuant to the terms and conditions of this
Lease, Lessor leases to Lessee and Lessee leases from Lessor, the equipment
listed on Exhibit A attached hereto (the “Equipment”).  The aggregate cost of such Equipment is
$1,400,000.00 (“Total Cost”).


 


2.             TERM.  The Initial Term of this Lease expires on
the date that is 48 months after the Rent Commencement Date (the “Initial Term
Expiration Date”).


 


3.             RENT PAYMENT DATES; RENT.  Lessee hereby agrees to pay Rent for the
Equipment throughout the Initial Term in forty-eight (48) consecutive monthly
installments payable in advance on the Rent Commencement Date and on the same
day each month thereafter (each, a “Rent Payment Date”).  Each such installment of Rent shall be in an
amount equal to $32,544.4?.  In
addition, Lessee hereby agrees to pay Rent for the period commencing on the
Interim Rent Commencement Date (as hereinafter defined) and ending on the day
before the Rent Commencement Date in an amount equal to $1,084.62 per day, and
agrees that with respect to the Equipment described on this Schedule, the
following modifications are hereby made to the Master Lease: (a) “Rent
Commencement Date” means the 1st day of the first month following the date
on which Lessor disburses funds for the purchase of the Equipment, as
determined by Lessor in its sole discretion, (b) “Interim Rent Commencement
Date” means the date on which Lessor disburses funds for the purchase of
the Equipment, as determined by Lessor in its sole discretion, and (c) the
Section of the Master Lease captioned “Default; Remedies” is hereby amended to
delete the term “Rent Commencement Date” where it appears and to substitute the
phrase “Rent Commencement Date or Interim Rent Commencement Date, as the case
may be,” in its place.


 


4.             EQUIPMENT LOCATION; BILLING
ADDRESS. 
Equipment described on this Schedule shall be located at, and except as
otherwise provided in this Lease, shall not be removed from, the following
address: See Exhibit A, Attached hereto. 
The billing address of Lessee is: BLUE RIDGE PAPER PRODUCTS INC.41 Main
Street, Canton, NC 28716


 


TRANSACTION
TYPE TERMS


 


5.             PURCHASE, RENEWAL AND OPTION TERMS.


 


a)             Dollar Purchase Option.  With respect to Equipment described on this
Schedule, on the Initial Term Expiration Date and so long as no Default shall
have occurred and be continuing, Lessee shall pay to Lessor an amount equal to
$1.00.  Upon payment in full by Lessee
of all Rent (and all other sums) payable to Lessor hereunder, Lessor shall
release its interest in the Equipment.


 


6.             NATURE OF TRANSACTION; SECURITY
AGREEMENT.  (a)
General.  To secure the prompt
payment and performance as and when due of all obligations and Indebtedness of
Lessee, now existing or hereafter created, to Lessor pursuant to this Lease or
otherwise, Lessee hereby grants to Lessor a first priority security interest in
the Equipment and all related accessions, substitutions, replacements and
proceeds.  The parties intend to comply
with an applicable laws, and if it is determined that any payment under the Lease
exceeds any amount allowed by applicable law, then the excess portion shall be
applied to the repayment of principal, and any interest will be charged at the
at the highest rate allowed by law.


 


(b) Property Tax.  Unless otherwise directed in writing by
Lessor or required by applicable law, Lessee will list itself as owner of all
Equipment for property tax purposes and will promptly pay all such taxes when
due.  In those jurisdictions in which
Lessor is required to list itself as owner of Equipment, upon receipt by Lessee
of any property tax bill pertaining to Equipment, Lessee will promptly forward
the property tax bill and related payment to Lessor.  Upon receipt by Lessor of a property tax bill (whether from
Lessee or directly from the taxing authority), Lessor will pay the tax and
invoice Lessee for the expense if Lessee has not submitted its payment with the
bill.


 


(c) Disclaimer.  LESSEE HEREBY ACKNOWLEDGES THAT LESSOR HAS
NOT MADE, AND HEREBY DISCLAIMS ANY ADVICE, REPRESENTATIONS, WARRANTIES AND
COVENANTS, EITHER EXPRESSED OR IMPLIED, WITH RESPECT TO ANY LEGAL, ECONOMIC,
ACCOUNTING, TAX OR OTHER EFFECTS OF THE LEASE AND THE TRANSACTION(S)
CONTEMPLATED HEREBY, AND LESSEE HEREBY DISCLAIMS ANY RELIANCE ON ANY SUCH
WARRANTIES, STATEMENTS OR REPRESENTATIONS MADE BY LESSOR WITH RESPECT THERETO.


 


MISCELLANEOUS
TERMS & CONDITIONS


 


7.             INSURANCE; STIPULATED LOSS VALUE.  (a) Lessee shall arrange and pay for
commercial general liability insurance in an amount not less than $1,000.000.


 


(b) As to any affected Equipment leased
pursuant to this Schedule, “Stipulated Loss Value” means as of the date of its
calculation, the sum of the present value of all future Rent owed discounted to
the date of payment by Lessee at a per annum rate of interest equal to 3%.


 


8.             COUNTERPARTS; DOCUMENT DELIVERY.
(a) This Schedule may be executed in any number of counterparts, each of which
when executed or otherwise authenticated and delivered constituting an
original, but all together one and the same instrument, Notwithstanding the
foregoing, Lessor and Lessee agree that they intend that there shall be only
one manually executed original of this Schedule and, to the extent that this
document constitutes chattel paper under the UCC, no security interest herein
may be created by the transfer or possession of any counterpart other than the
original hereof.


 


(b) Lessee represents and warrants that the
Lease Documents have not been, and shall not be, altered or modified by Lessee
regardless of whether such documentation was transmitted to Lessee via electronic or analog means.


 


9.             RELATIONSHIP TO MASTER LEASE;
FURTHER ASSURANCES. 
The terms of the Master Lease are incorporated herein by reference and
Lessee hereby reaffirms all terms of the Master Lease.  If any of the terms of this Schedule are
contrary to or inconsistent with any terms of the Master Lease, the teems of
this Schedule shall govern.  This
Schedule together with the Master Lease as incorporated herein, shall
constitute a separate lease


 


Form No.: 96-101NOM.403a


 


1

















 


Exhibit A


 


EQUIPMENT DESCRIPTION


 


	
  Lessor:

  	
   

  	
  Key
  Equipment Finance, a Division of Key Corporate Capital Inc.

  
	
   

  	
   

  	
   

  
	
  Lessee:

  	
   

  	
  BLUE RIDGE
  PAPER PRODUCTS INC.

  
	
   

  	
   

  	
   

  
	
  Lease:

  	
   

  	
  Equipment
  Schedule No. 01 dated as of June 25, 2003 to Master Lease Agreement Dated as
  of June 25, 2003

  
	
   

  	
   

  	
   

  
	
  Equipment

  Location:  

  	
   

  	
  1329 Howell
  Mill Road

  Waynesville, NC 287?6

  Haywood County

  



 


	
  Vendor:

  	
   

  	
  Various

  
	
   

  	
   

  	
   

  
	
  Quantity:

  	
   

  	
  Description:

  	
   

  	
  VIN or Serial No.

  	
   

  	
  Invoice No.

  
	
  1

  	
   

  	
  L2 and L3
  Gauging Systems

  	
   

  	
   

  	
   

  	
  n/a

  



 


	
  Equipment

  Location:  

  	
   

  	
  600 Dairypak
  Road

  Athens, GA 30607

  Clarke County

  



 


	
  Vendor:

  	
   

  	
  Various

  
	
   

  	
   

  	
   

  
	
  Quantity:

  	
   

  	
  Description:

  	
   

  	
  VIN or Serial No.

  	
   

  	
  Invoice No.

  
	
  1

  	
   

  	
  Digital
  Plate System

  	
   

  	
   

  	
   

  	
  n/a

  



 


 


This financing statement covers all of Debtor’s right, title and
interest, now owned or hereafter acquired, in and to the one (1) digital plate
system and two (2) L2 and L3 gauging systems, including without limitation all
of the components of such equipment installed, assembled or provided therewith
as more fully described in Equipment Schedule No. 1 dated as of the June 25,
2003 which incorporate? by reference the Master Equipment Lease Agreement dated
as of June 25, 2003 together with any and all (1) substitutions, replacements
or exchanges therefor, (2) replacement parts, additions, attachments and
accessories incorporated therein or affixed thereto, or used in connection
therewith, and (3) proceeds thereof (both cash and non-cash), including
insurance proceeds, (but without power of sale by Debtor), and also including,
without limitation, claims of the Debtor against third parties for loss or
damage to, or destruction of, such Equipment. 
Debtor has no right to dispose of the equipment.


 

















 


[ILLEGIBLE] LESSOR THAT THE
REPRESENTATIONS AND WARRANTIES MADE BY LESSEE IN THE MASTER LEASE ARE TRUE AND
CORRECT IN ALL MATERIAL RESPECTS AS OF THE DATE OF THIS SCHEDULE.  Lessee will promptly execute or otherwise
authenticate and deliver to Lessor such further documents, instruments,
assurances and other records and take such further action [ILLEGIBLE] Lessor
may reasonably request in order to carry out the intent and purpose of this
Lease and to establish and protect the rights and remedies created [ILLEGIBLE]
intended to be created in favor of Lessor under this Lease.


 


IN WITNESS
WHEREOF, Lessor and Lessee have caused this Schedule to be duly authenticated
and delivered on the day and year [ILLEGIBLE] above written.


 


 


	
  Lessor:

  	
   

  	
  Lessee:

  
	
   

  	
   

  	
   

  
	
  Key
  Equipment Finance, a Division of Key Corporate Capital Inc.

  	
   

  	
  BLUE RIDGE
  PAPER PRODUCTS INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  /s/ John
  Wadsworth

  	
   

  
	
  Name:

  	
   

  	
  Name:

  	
  John
  Wadsworth

  
	
  Title:

  	
   

  	
  Title:

  	
  CFO

  
							



 


2