**Exhibit10.1**

 

**TIMBERLANDPURCHASE AND SALE AGREEMENT**

 

**NovaScotia Timberlands**

 

THIS TIMBERLAND PURCHASE ANDSALE AGREEMENT (this “Agreement”) is made and entered into as of this26th day of February, 2010 (the “Effective Date”) by and between NeenahPaper Company of Canada (“Seller”), and Northern Timber Nova ScotiaCorporation (“Purchaser”).

 

# 1.               Timberlands and OtherProperty to be Acquired.

#  

## 1.1.                              Description of Assets.  Inconsideration of the mutual covenants set forth in this Agreement, and othergood and valuable consideration, the receipt and sufficiency of which areacknowledged, and subject to all terms of this Agreement, Seller agrees to selland convey to the Purchaser and the Purchaser agrees to purchase from theSeller all of Seller’s rights, title and interest in and to the following:

##  

### (a)          Real Property.  All real property located in the Province ofNova Scotia currently owned by Seller, consisting of approximately 475,000acres in the aggregate situated in the Province of Nova Scotia, Canada as moreparticularly described in  Exhibits “A”and “B” attached hereto (the “Land”), including withoutlimitation, all of Seller’s right, title and interest in and to (i) alltimber and trees, growing, lying or standing on the Land (collectively, the “Timber”);(ii) any easements, rights of way or other appurtenances benefiting theLand and/or Timber; (iii) any limestone, gypsum, sand, gravel and otherminerals not reserved to the Province of Nova Scotia (the “Province”) on andunder the Land and related rights subject to the rights of the Province and notpreviously reserved, severed or conveyed by Seller or Seller’s predecessors ininterest; (iv) any development rights, air rights (including carboncredits), water and water rights, appurtenant to the Land but subject tothe exceptions and reservations described in this Agreement; and (v) buildings,improvements, fixtures or structures located upon the Land, if any (the Landand the Timber hereinafter collectively referred to as the “Real Property”).

###  

### (b)         Contracts.** **The contractsrelating to the operation of the Real Property, including without limitation operatingcontracts, stumpage contracts, permits, licenses, governmental consentsand agreements, approvals and clearances, agreements for construction of roadsor other improvements****identified onSchedule 1.1(b) (hereinafter, the “Contracts”).

###  

### (c)          Leases and Licenses.       The hunting, recreationaland other leases and licenses affecting the Real Property identified on Schedule1.1 (c) (hereinafter, the “Leases”).

###  

### (d)         Personal Property.  The personal property, including, withoutlimitation, anymaps, property books, plans, drawings, specifications, renderings, engineeringstudies, biological studies, grading or drainage studies, environmental andhazardous waste studies and reports and related data and materials, timber inventory and geographicinformation systems (“GIS”) data (not including proprietary software) and allother personal property in 

 

1

----

 

### Seller’s possession and used by Seller exclusivelyin connection with its operations on the Real Property (the “PersonalProperty”).

###  

## 1.2.                              Assets.  The Real Property, Seller’s right, title andinterest in and to the Contracts and the Leases, and the Personal Property aresometimes collectively referred to as the “Assets”.

##  

# 2.               Purchase Price.  The purchase price for the Assets isEIGHTY-TWO MILLION FIVE HUNDRED THOUSAND Canadian DOLLARS (Cdn$82,500,000) (the“Purchase Price”).  The PurchasePrice is subject to adjustment pursuant to Section 9 hereof, butotherwise will not be calculated on a per acre basis, except for the lands in Exhibit “B”with respect to which a per acre valuation and allocation of $300 per acre ishereby agreed to by the parties.  ThePurchase Price shall be payable in immediately available funds in lawful moneyof Canada on the Closing Date to an account or accounts designated by Seller.

#  

# 3.               Intentionally Deleted

#  

# 4.               Time and Place of Closing.  The closing of the transactions contemplatedhereby (the “Closing”) shall occur on the date which is fifteen (15)days following the expiration of the Inspection Period, or such earlier date asSeller and Purchaser shall mutually agree, with TIME BEING OF THE ESSENCE as toPurchaser’s and Seller’s obligations in respect of the Closing.  The Closing shall take place at the officesof McInnes Cooper, located at Suite 1300, Purdy’s Warf, Tower II, 1969Upper Water Street, Halifax, Nova Scotia, Canada  B3J 2V1. The dateof Closing is hereinafter referred to as the “Closing Date”.

#  

# 5.               Condition ofTitle and Title Due Diligence.

#  

##### (a)          Purchaser shall have until6:00 P.M. EST on the date which is the earlier of (i) fifteen (15)days following the Effective Date or (ii) or ten (10) days followingPurchaser’s receipt of a satisfactory title insurance commitment (the “InspectionPeriod”) to notify Seller in writing of any objections Purchaser has to theLeases, the Contracts, any matters shown or referred to in any title report ortitle insurance commitment obtained by Purchaser (at Purchaser’s sole cost andexpense) that are not Permitted Exceptions (as defined below); provided,however, that Purchaser shall have no right to object to any title mattersunless and until such otherwise objectionable matters have a materially adverseeffect on five percent (5%) or more of the total acreage of the Real Propertyin the aggregate.

#####  

##### (b)         Monetary encumbrances thatare not Permitted Exceptions shall be discharged by Seller from Seller’sproceeds of the Closing.  Purchaser shallnot object to and shall accept the following matters, which shall be deemed tobe Permitted Exceptions:

#####  

###### (i)                                     liens for taxesor assessments, general or special, or other governmental charges which are notyet due and payable as of the Closing;

######  

###### (ii)                                  all land use(including but not limited to forestry, endangered species, environmental andwetlands), building and zoning laws, regulations, codes and ordinancesaffecting the Real Property and other laws, ordinances, regulations, rules,orders, licenses or determinations of any federal, provincial, county,municipal or 

 

2

----

 

###### other governmental authority heretofore (the “LegalRequirements”), now or hereafter enacted, made or issued by any such authorityto the extent such Legal Requirements do not materially and adversely affectthe use or value of the Assets as Timberlands, or any portion thereof, otherthan as is typical in the timber industry in Nova Scotia;

######  

###### (iii)                               any rights ofCanada, the Province or others in the use and continuous flow of any brooks,streams or other natural water courses or water bodies within, crossing orabutting the Real Property, or title to the submerged lands including, withoutlimitation, flowage rights and navigational rights;

######  

###### (iv)                              title to thatportion of the Real Property, if any, lying below the mean high water mark oftidal waters or otherwise lying under a watercourse;

######  

###### (v)                                 all easements,rights-of-way, profits a prendre, licenses, permits, leases and otherrestrictions and encumbrances of record to the extent the same are of a minornature and do not materially and adversely affect the use or value of theAssets as Timberlands;

######  

###### (vi)                              all existingpublic roads and streets and all railroad and utility lines,  pipelines, service lines and facilities andall agreements relating thereto to the extent the same are of a minor natureand do not materially and adversely affect the use or value of the Assets asTimberlands;

######  

###### (vii)                           allencroachments, easements, rights-of-way, overlaps, boundary line disputes,shortages in area, cemeteries and burial grounds and other matters not ofrecord which would be disclosed by an accurate survey or would be apparent froma visible inspection of the Real Property to the extent the same are of a minornature and do not materially and adversely affect the use or value of theAssets as Timberlands;

######  

###### (viii)                        priorreservations or conveyances of gypsum, gravel or other materials not defined asminerals, mineral rights, mineral access agreements or mineral leases of everykind and character to the extent the same are of a minor nature and do notmaterially and adversely affect the use or value of the Assets as Timberlands;and

######  

###### (ix)                                any titleencumbrances or exceptions that are set forth in the title reports or commitmentsobtained by Purchaser to which Purchaser does not object during the InspectionPeriod (together with the items listed above, the “Permitted Exceptions”).

######  

##### (c)          With regard to any matteraffecting title which is not a Permitted Exception and to which Purchaser has aright hereunder to and does object in writing prior to the expiration of theInspection Period, including any Lease or Contract to which the Purchaserobjects prior to the expiration of the Inspection Period (a “Title Defect”),Seller may, but shall have no obligation to, attempt to cure and remove suchTitle Defects.  If Seller is unwilling orfails to cure or remove any Title Defects, then Purchaser’s sole remedy shallbe those remedies available to it in Section 9 of this Agreement.

 

3

----

 

##### (d)         Seller shall make availableto Purchaser as of the Effective Date, and provide copies within five (5) daysof the Effective Date, copies of all Contracts and Leases (collectively, the “TemporaryEncumbrances”) and shall cooperate fully in providing such other documents,information, consents, authorizations or other items as the Purchaser mayreasonably require in connection with its due diligence or the completion ofthe transaction.  Purchaser agrees toaccept the Assets subject to the Temporary Encumbrances, without adjustment orreduction of the Purchase Price.  AtClosing, Seller shall assign and Purchaser shall assume Seller’s rights,duties, obligations and liabilities under the Temporary Encumbrances arising oroccurring on or after the date of Closing, pursuant to a mutually acceptableassignment and assumption agreement (the “Assignment and Assumption ofTemporary Encumbrances”).  Any incomedue under the Temporary Encumbrances shall be pro-rated as of the Closing Date.

#####  

##### (e)          At Closing, the Seller shallexecute and deliver to Purchaser a warranty deed acceptable for registration ineach land registration district in which the Real Property is located,warranting title against the claims of all persons claiming by, through orunder Seller (including Seller’s predecessor in title, Kimberly-Clark, Inc.),but against none other and subject only to specific instruments or documentsaffecting the title which are Permitted Exceptions (each, a “Deed”, andcollectively, the “Deeds”).  TheDeeds and the attached descriptions of the Land shall be in a form suitable forthe conveyance of title to Purchaser, including the attachment of the mapswhere necessary, and for (1) registration under the Registry Act for thoseparcels of the Land not registered under the Land Registration Act and (2) revisioninto the name of Purchaser for those parcels of the Land registered under theLand Registration Act as of the date of Closing.

#####  

##### (f)            At Closing, (i) by theexecution of a mutually acceptable assignment and assumption agreement, Sellershall assign Seller’s right, title and interest in and to and Purchaser shallassume Seller’s duties, obligations and liabilities under that certain LandRegistration Act Conversion Extension and restatement Agreement with theProvince of Nova Scotia dated September 24, 2009, as amended with respectto the Real Property (hereinafter, an “Assignment of Conversion Agreement”).  Seller and Purchaser acknowledge and agreethat the Assignment of the Conversion Agreement will require the conversion andregistration of the Real Property through 2010 and beyond, and (ii) afterthe Closing Date it shall be the sole cost and obligation of Purchaser, subjectto Seller’s obligations under Section 39 below, to register the RealProperty in accordance with the terms and conditions of the Assignment ofConversion Agreement.

#####  

# 6.               Expropriation.  If, prior to Closing, any portion of the RealProperty is  lawfully expropriated inaccordance with any applicable law, or is damaged by such a expropriation(hereinafter a “Taking”), then (a) this Agreement shall remain infull force and effect; (b) at Closing, as Purchaser’s sole remedy for suchTaking, Purchaser shall have the remedies available to it in Section 9of this Agreement; and (c) Seller shall retain all of the right, title andinterest in and to any awards or compensation that have been or that maythereafter be made for any such Taking of the Real Property occurring prior toClosing.

#  

# 7.               Casualty.  In the event of any loss, damage ordestruction to the Real Property prior to Closing and which damages or destroysTimber on the Real Property having a fair market value of at least$2,000,000.00 in the aggregate, as determined in good faith by Seller (andsubject to Purchaser’s reasonable approval) (“Casualty Event”) andPurchaser gives written 

 

4

----

 

# notice to Seller of suchevent within one hundred and twenty (120) days after Closing, then (a) thisAgreement shall remain in full force and effect; (b) at Closing, asPurchaser’s sole remedy for such Casualty Event, Purchaser shall have theremedies available to it in Section 9 of this Agreement; and (c) Sellershall retain all of the right, title and interest in and to any insuranceproceeds that have been or that may thereafter be paid or payable for and anyproceeds received by Seller for the sale of any salvageable Timber harvestedfollowing the Casualty Event.

#  

# 8.               Condition of Property;Subsequent Acts.

#  

##### (a)          Subject only to Seller’srepresentations and warranties expressly set forth herein, Purchaser acceptsthe Assets “as is” and “where is,” with all faults and subject to all defectsand conditions, known or unknown, at Purchaser’s risk and without adjustment orreduction of the Purchase Price (unless expressly provided herein).  Seller has no obligation to repair or makeany improvements to the Real Property. Subject only to Seller’s representations and warranties expressly setforth herein, Purchaser acknowledges that an inspection of the Real Propertyhas been made or will have been made by the Closing Date and that neitherSeller nor its agents, officers, employees or assigns shall be held to havemade any representation, warranty or covenant respecting the condition of, orotherwise with respect to, the Real Property or any improvements thereon or anyof the other Assets, except as otherwise expressly set forth herein.  Subject only to Seller’s representations andwarranties expressly set forth herein, Purchaser acknowledges and agrees thatany documents, cruises, compilations, timber inventories, environmental audits,assessments, surveys, plans, specifications, reports and studies (the “Information”)made available to Purchaser by Seller or on behalf of Seller by Seller’s agentsor representatives, including without limitation all such Information asconstitutes part of the Personal Property, are or have been provided withoutany representation, and Seller makes no representation or warranty whatsoeverwith respect to the accuracy or completeness of, or otherwise with respect to,the Information.  Without limiting thegenerality of the foregoing and subject only to Seller’s representations andwarranties expressly set forth herein, SELLER EXPRESSLY DISCLAIMS ANY IMPLIEDWARRANTY OF MERCHANTABILITY, AS WELL AS ANY WARRANTY WHATSOEVER WITH RESPECT TOTHE MARKETABILITY, HARVESTABILITY, AGE, SPECIES MIX, SITE CLASSIFICATION,TIMBER VOLUMES, TIMBER GRADES, OR QUALITY OF ANY TIMBER ON THE REAL PROPERTY,BOUNDARIES OF THE REAL PROPERTY, ACCESS, UTILITIES, ZONING, ACREAGE OR SOILSSTABILITY OR CONDITION OF THE REAL PROPERTY, AND PURCHASER EXPRESSLY ACCEPTSEACH SUCH DISCLAIMER.  Nothing containedin this Section 8 shall be deemed to negate any warranty or representationcontained in, or limit any remedy available under, the Deeds, the Assignment ofConversion Agreement, or any of the other closing documents delivered atClosing.

#####  

### (b)         Between the Effective Dateand the Closing Date, Seller shall maintain and keep the Real Property insubstantially the same condition as existed on the Effective Date; exceptTimber shall be cut  and silvicultureactivities conducted in accordance with the existing Stumpage Agreement byand between Seller and Northern Pulp Nova Scotia Corporation (“NPNS”), dated June 24,2008, and Seller may harvest any salvageable Timber following a Casualty Event.

###  

### (c)          From and after the EffectiveDate, Seller shall not, without the prior written consent of Purchaser, whichconsent may not be unreasonably withheld by 

 

5

----

 

### Purchaser, convey, contract,or otherwise agree to convey any right, title, or interest in or to the Assetsto any person or entity and shall not enter into any new agreements, leases,contracts, or commitments relating to the Assets, nor make any changes in anyof the existing Contracts and Leases, other than: (a) commitments relatingto the repairs, maintenance, and/or security necessary to preserve the Assets; (b) renewalsor extensions of any of the Contracts and Leases in the ordinary course ofbusiness; provided however, that such renewals or extensions or new agreements,leases, contracts, or commitments shall be made in the ordinary course ofbusiness and have terms of one (1) year or less and or otherwise containthe same terms, and Seller shall immediately provide written notice to thePurchaser of any such renewals or extensions. Seller shall not create, assume, or permit the creation of any lien orencumbrance (though Seller may defend any such liens filed in accordance withlocal law), other than the lien for current taxes, upon any of the Assets.  Prior to Closing, Seller shall fulfill itsobligations under the Contracts and Leases and shall enforce all of itsmaterial rights under the Contracts and Leases. Seller shall not cut, harvest or remove any trees or Timber from theLand except the pro rata amount (plus or minus five percent (5%)) to beharvested prior to Closing pursuant to the Harvest Plan.

###  

# 9.               Purchase Price &Acreage Adjustments.  The valueof any adjustment to the Purchase Price due hereunder as a result of anyuncured Title Defects, Takings or Casualty Events (collectively, “ReductionEvents”) shall equal the fair market value of the parcel, parcel or portionof parcel of the Real Property affected by such Reduction Events (the “ReductionEvent Adjustment”), and the acreage of the Land shall be reducedaccordingly, as determined by an independent third party mutually selected bySeller and Purchaser (the “Appraiser”). If the Reduction Event Adjustment exceeds ten percent (10%) of thePurchase Price prior to adjustment, then either Purchaser or Seller mayterminate this Agreement by written notice to the other party delivered priorto Closing.  Upon such termination, thisAgreement shall become null and void and be of no further force and effectexcept for those provisions hereof that expressly survive termination, andSeller shall pay to  Purchaser the sum of$500,000.00 to cover Purchaser’s expenses, if terminated by Seller.  If neither Seller nor Purchaser exercises theforegoing right to terminate this Agreement,**then the parties shall proceedto Closing in accordance with the terms and provisions hereof, and the PurchasePrice shall be adjusted by the Reduction Event Adjustment as determined by theAppraiser.  Purchaser hereby acknowledgesand agrees that Purchaser’s sole remedy for any Reduction Event shall be theReduction Event Adjustment determined in accordance with this Section 9,and waives any other remedies available to Purchaser at law or in equity forsuch Reduction Event.

#  

# 10.         Representations andWarranties of Seller.  Sellerhereby makes the following representations and warranties to Purchaser, each ofwhich (a) shall survive Closing for a period of twenty four (24) months,except for Section 10.1 which shall survive for the time period specifiedtherein, (b) is true in all material respects as of the Effective Date,and (c) shall be true in all material respects at Closing:

#  

## 10.1.                        Title.  Except for the Permitted Exceptions Sellerowns fee simple title to the Real Property free and clear of any encumbrancesand defects that would materially impair the ownership and operation of theReal Property as  commercial timberlands.  This representation and warranty of Sellershall survive Closing through and until the earlier of (a) the expirationof the Conversion Agreement applicable to Purchaser pursuant to the Assignmentof Conversion Agreement or any modification thereof pursuant to Section 3.4,3.5 or an extension 

 

6

----

 

## under Section 3.6 ofthe Conversion Agreement or (b) date that is five (5) years after thedate of Closing.

##  

## 10.2.                        Authorization; No Violation or Conflicts.  The execution and delivery by Seller of thisAgreement and the due consummation of the transactions contemplated herein havebeen duly and validly authorized by all necessary corporate actions on the partof Seller and this Agreement constitutes a valid, enforceable and legallybinding agreement of Seller except asenforceability may be limited by bankruptcy, insolvency, and other similar lawsaffecting claims and rights generally and general equitable principles.  Neither the execution and delivery of thisAgreement by Seller nor the consummation by Seller of the transactionscontemplated herein alone or with the passage of time do or will conflict withor constitute a violation of Seller’s articles or association or otherorganizational documentation or agreements or result in the breach of, or theimposition of any lien on any of the Assets, or constitute a default under, anyindenture or bank loan or credit agreement, or other agreement or instrument towhich Seller is a party or by which Seller or any of the Assets may be bound oraffected or violate any judgment, order, decree, law, statute or governmentalrestriction.

##  

## 10.3.                        Suits, Actionsor Proceedings.  Except asdisclosed in Schedule 10.3, to Seller’s knowledge, Seller has notreceived notice, including notice from any aboriginal group, Indian Band orFirst nation Authority of any action, suit or proceeding pending, contemplatedor threatened against Seller or the Assets, or any portion thereof, in anycourt or before any federal, provincial, county or municipal department,commission, board, bureau or agency or other governmental instrumentalityhaving proper jurisdiction.  There is nosuit, action, arbitration or other proceeding pending or, to Seller’sknowledge, threatened before any court or governmental agency, which may resultin the restraint or prohibition of the consummation of the transactionscontemplated by this Agreement.

##  

## 10.4.                        Compliance.  Except as disclosed on Schedule 10.4and to Seller’s knowledge, during Seller’s ownership of the Assets, Seller hasnot received notice that either the Real Property or the Seller is (i) inmaterial violation of any applicable federal, provincial, county or municipallaw, statute, ordinance, order, regulation or requirement, or (ii) inmaterial breach of an agreement with a federal, provincial or localgovernmental authority affecting all or any portion of the Real Property.

##  

## 10.5.                        No OtherAgreements.  Except forthe Contracts and Leases and other agreements entered into in the normal courseof Seller’s timber operations, there are no other agreements affecting theAssets or any portion thereof, and Seller has not received notice that it is inmaterial breach of any of the Contracts or Leases.

##  

## 10.6.                        TimberOperations and Stumpage Agreement.  Seller and Purchaser acknowledge and agreethat, upon closing, Seller and NPNS shall terminate the Stumpage Agreementand Seller shall receive payment for all timber harvested pursuant to the Stumpage Agreementthrough the date of termination.  ToSeller’s knowledge, other than the harvesting operations being conducted byNPNS pursuant to the Stumpage Agreement, there are no harvestingoperations currently being conducted on the Real Property.

##  

## 10.7.                        Environmental.  Except as disclosed on Schedule 10.7, Sellerhas (i) no knowledge of any violation on the Real Property of theapplicable federal, provincial, state, 

 

7

----

 

## county, city or municipal laws, rules orregulations pertaining to pollution or protection of the environment, or actualor threatened releases, discharges, or emissions into the environment orprotection of plant or animal species (collectively, the “Environmental Laws”);(ii) not received any written notice regarding a violation of theEnvironmental Laws or suggesting that any portion of the Real Property may betargeted for remediation of any hazardous or toxic substances which areregulated by the Environmental Laws, and any other federal, provincial, county,city or municipal laws or requirements regulating hazardous, toxic, contaminateor polluting materials, substances or wastes, including, without limitation,any “hazardous substances”, “hazardous waste”, “hazardous materials” or “toxicsubstances” under such laws (such regulated substances hereinafter collectivelyreferred to as “Hazardous Substances”); (iii) not released, discharged, oremitted and has no actual knowledge of any Hazardous Substances on, in or underthe Real Property in violation of any Environmental Laws; (iv) noknowledge of any pending or threatened clean-up activity or of any of theabove-ground or underground storage tanks on the Real Property; (v) notmade any applications of pesticides and herbicides to the Real Property orportions thereof which were not done in accordance with applicableEnvironmental Laws or in conformance with the accepted industry standards incentral Nova Scotia; (vi) except as previously disclosed to Purchaser, noknowledge of the presence of any species protected by Environmental Laws on theReal Property.

##  

## 10.8.                        No MiningOperations.  Except asset  forth in schedule 1.1(b) underthe heading “Mining Activity”, there have been no mining operations conductedon the Real Property or any portion thereof during the past ten (10) years,and Seller has no knowledge of any proposed mineral extraction or mining activityon the Real Property.

##  

## 10.9.                        Form FiveOccupation.  To theknowledge of Seller, neither the whole nor a portion of any of the RealProperty is occupied without permission and no such permission has been given,except as contained in the Contracts and Leases.

##  

## 10.10.                  Seller’s Residency.  Seller is not a non-resident of Canada withinthe meaning of the Income Tax Act (Canada).

##  

# 11.         Representationsand Warranties of Purchaser.  Purchaser hereby makes the followingrepresentations and warranties to Seller, each of  which (a) shall survive Closing for aperiod of twelve (12) months, (b) is true in all material respects as ofthe Effective Date, and (c) shall be true in all material respects atClosing:

#  

## 11.1.                        Organization.  Purchaseris a Nova Scotia unlimited company and is duly organized and validly existingand is in good standing under the laws of the Province of Nova Scotia and hasfull power and authority to carry out its business as now conducted, to enterinto this Agreement and to carry out the transactions contemplated herein inaccordance with the terms hereof.

##  

## 11.2.                        Authorization; No Violation or Conflicts.  The execution and delivery of this Agreementby Purchaser and the due consummation of the transactions contemplated hereinhave been duly and validly authorized by all necessary action on the part ofPurchaser, and this Agreement constitutes a valid, enforceable and legallybinding agreement of Purchaser except asenforceability may be limited by bankruptcy, insolvency, and other similar lawsaffecting claims and rights generally and general equitable principles.  Neither the 

 

8

----

 

## execution and delivery ofthis Agreement by Purchaser nor the consummation by Purchaser of thetransactions contemplated herein, alone or with the passage of time do or willconflict with or constitute a violation of Purchaser’s operating agreement orother organizational documentation or agreements or result in the breach of, orthe imposition of any lien on any assets of Purchaser pursuant to, orconstitute a default under, any indenture or bank loan or credit agreement, orother agreement or instrument to which Purchaser is a party or by whichPurchaser or any of its properties may be bound or affected or violate any judgment,order, decree, law, statute or governmental restriction.

##  

## 11.3.                        Suits, Actionsor Proceedings.  There is nosuit, action, arbitration or other proceeding pending or to Purchaser’sknowledge (as hereinafter defined) threatened before any court or governmentalagency, which may result in the restraint or prohibition of the consummation ofthe transactions contemplated by this Agreement.

##  

## 11.4.                        Insolvency.  There are no attachments, executions,assignments for the benefit of creditors, or proceedings in bankruptcy or underany other debtor relief laws pending, or, to Purchaser’s knowledge, threatenedor contemplated against Purchaser or its assets or properties.

##  

## 11.5.                        HSTRegistration . Purchaser is registered for purposes of Part IXof the Excise Tax Act (Canada) or will become registered prior to Closing.

##  

## 11.6.                        FinancialCapability.  Purchaserhas, and at Closing will have, the financial capability to complete thetransactions contemplated under this Agreement.

##  

## 11.7.                        Purchaser’sInvestigations.  Purchaseris relying upon Purchaser’s own investigation of the Assets, and except for therepresentations and warranties expressly set forth in this Agreement, not uponany other  representations, warranties,guaranties, promises, statements or assurances of Seller or any of Seller’semployees or agents, whether written or oral, express or implied, or otherwise.

##  

# 12.         Survival; Knowledge andMateriality.

#  

##### (a)          Survival.  As provided above, the respectiverepresentations and warranties of Seller and Purchaser contained herein, andthe right to commence any claim with respect thereto, shall survive Closing fora period of twenty four (24) months (except as otherwise provided in Section 10.1),and thereafter shall expire and terminate, and each party shall be foreverreleased from liability to the other based upon such representations andwarranties except as to matters for which the other party has duly commenced aproceeding against the defaulting party with regard to the alleged breach ofrepresentation or warranty on or prior to such termination date.

#####  

##### (b)         Knowledge Defined.  As used in this Agreement:

#####  

###### (i)                                     “Seller’sknowledge” shall mean the actual current knowledge (as opposed to constructiveor imputed knowledge) of the fact or matter in question of Sean Erwin, StevenHeinrichs or Noah Benz, without any duty to conduct any investigation orinquiry.

 

9

----

 

###### (ii)                                  “Purchaser’s knowledge” shall mean the actual current knowledge (asopposed to constructive or imputed knowledge) of the fact or matter in questionof the President of Purchaser, without any duty to conduct any investigation orinquiry.

######  

##### (c)          Limitation as to Claims.  In the event of any claim by Purchaseragainst Seller for breach of representation or warranty under this Agreement,no claim shall be payable by Seller until the aggregate amount of loss ordamage under such claims exceeds $500,000.00 (the “Floor”).  Notwithstanding the Floor, Seller shall beobligated only to pay the full aggregate amount of all such claims after theaggregate claims by Purchaser exceed the Floor. The aggregate amount paid by the Seller for breach of warranty shall notexceed $5,000,000.00 (the “Ceiling”). Notwithstanding the foregoing Floor and Ceiling, no such limits shallapply or be effective with respect to any claim arising from the fraud ofSeller, or from any mortgage, security interest, or statutory lien against theAssets.

#####  

# 13.         Contingencies.

#  

##### (a)          Seller’s obligation toconsummate the transactions contemplated hereby is subject to the followingconditions, each of which may be waived in the sole and absolute discretion ofSeller:

#####  

###### (i)                                     Purchaserperforming, in all material respects, its obligations under the Agreement;

######  

###### (ii)                                  Purchaser’s representationsand warranties shall be true and correct in all material respects on and as ofthe Closing Date, and Purchaser shall have delivered to Seller a certificate tothat effect (the “Purchaser’s Closing Certificate”);

######  

###### (iii)                               Purchaser shall haveexecuted and delivered, and the Province of Nova Scotia shall have approved andexecuted the Assignment of Conversion Agreement;

######  

###### (iv)                              No suit, action, arbitrationor other proceeding shall be pending before any court or governmental agencywhich has resulted in the restraint or prohibition of the consummation of thetransactions contemplated by this Agreement or may result in an order to returnto the Purchaser all or any material part of the purchase price;

######  

###### (v)                                 the approval of theRequisite Lenders, as that term is defined in that certain Credit Agreement, asamended, dated November 30, 2004 (the “Credit Agreement”) by and betweenthe Seller and JPMorgan Chase Bank, N.A., as agent for the Lenders (“LenderApproval”).

######  

##### (b)         Purchaser’s obligation toconsummate the transactions contemplated hereby is subject to fulfillment ofthe following conditions, each of which may be waived in the sole and absolutediscretion of Purchaser:

 

10

----

#####  

###### (i)                                     Sellerperforming, in all material respects, its obligations under the Agreement;

######  

###### (ii)                                  Seller’srepresentations and warranties shall be true and correct in all materialrespects on and as of the Closing Date, and Seller shall have delivered toPurchaser a certificate to that effect at Closing (the “Seller’s ClosingCertificate”);

######  

###### (iii)                               No suit, action, arbitrationor other proceeding, shall be pending before any court or governmental agencywhich has resulted in the restraint or prohibition of the consummation of thetransactions contemplated by this Agreement or may result in an order torecover to the Seller all or any material part of the Assets; and

######  

###### (iv)                              Purchaser shall havereceived a title policy insuring that Purchaser holds title to the Real Propertysubject only to the Permitted Exceptions in a form similar to the policy Sellerreceived for the Real Property in November of 2004 and containing suchendorsements reasonably required by Purchaser and in a form (including thewording of any general exception) otherwise reasonably acceptable to Purchaser.

######  

###### (v)                                 Seller shall have obtainedthe consent of the Province of Nova Scotia to the assignment of the ConversionAgreement to the Purchaser and provided the Purchaser with a fully executedassignment document at closing.

######  

# 14.         Closing.

#  

## 14.1.                        Closing Costs.

##  

### (a)          Seller shall pay thefollowing costs and expenses in connection with this transaction:

###  

#### (i)                                     Seller’sattorney, consulting, accounting and other advisory fees, if any;

####  

#### (ii)                                  All propertytaxes and special or general assessment installments against the Real Propertythat are allocable to the period prior to the Closing Date and any improvementtaxes assessed against the Assets prior to the Closing Date; and

 

#### (iii)                               The costs ofcuring any Title Defects as defined in Schedule 8(c) attached hereto, tothe extent that Seller elects to incur such costs.

####  

### (b)         Purchaser shall pay thefollowing costs and expenses in connection with this transaction:

###  

#### (i)                                     Purchaser’sattorney, consulting, accounting and other advisory fees, if any;

####  

#### (ii)                                  To the Sellerall property taxes, and special or general assessment installments against theReal Property that are allocable to any period 

 

11

----

 

#### onand after the Closing Date which have been previously paid by the Seller, andany improvement taxes assessed against the Assets on or after the Closing Date,except for any improvement taxes previously paid by Seller;

####  

#### (iii)                               Any taxes,duties or fees due under the Excise Tax Act or under any statute referred to inthe Taxes, Duties and Fees (GST/HST) Regulations, except that any taxesassessable on income to the Seller shall be paid by Seller;

####  

#### (iv)                              Recording fees,transfer taxes and any other fees due upon the recording of the Deeds orconveyance of the Real Property;

####  

#### (v)                                 All titleinsurance premiums, search fees and related costs in connection with Purchaser’sobtaining title insurance on the Real Property;

####  

#### (vi)                              All costs ofdue diligence performed by Purchaser; and

####  

#### (vii)                           All costs ofmigrating title for the Real Property as required by the Conversion Agreement.

####  

## 14.2.                        ClosingInstruments.  At theClosing, the following deliveries shall be made:

##  

### (a)          Seller shall execute anddeliver to Purchaser the following:

###  

#### (i)                                     the Deeds (asdefined in Section 5(e));

####  

#### (ii)                                  the Assignmentand Assumption of Temporary Encumbrances (as defined in Section 5(d));

####  

#### (iii)                               the Assignmentof the Conversion Agreement executed by the Province;

####  

#### (iv)                              Assignment andAssumption of that certain mutual road access agreement by and between Sellerand Atlantic Star Forestry Ltd. executed as of June 29, 2006 (the “MutualRoad Access Agreement”);

####  

#### (v)                                 Consents orresolutions of the board of directors of Seller authorizing the transactioncontemplated by this Agreement;

####  

#### (vi)                              Seller’sClosing Certificate;

####  

#### (vii)                           Affidavitsreasonably required by Purchaser’s title insurance company or Purchaser’scounsel, but only to the extent the same are consistent with Seller’s limitedwarranty of title;

####  

#### (viii)                        Closing Statement;

 

12

----

 

#### (ix)                                Bill of Sale(for Personal Property); and

####  

#### (x)                                   Forms requiredunder the Land Registration Act and the Assignment of Conversion Agreement.

####  

#### (xi)                                The LenderApproval, including a commitment addressed to Purchaser and Seller to recordsuch partial releases sufficient to remove the Credit Agreement as anencumbrance from Purchaser’s title policy.

####  

#### (xii)                             Clearanceletters in respect of worker’s compensation, HST and employee source deduction.

####  

#### (xiii)                          All otherdocuments which are required and which the Purchaser has reasonably requestedon or before the Closing Date to give effect to this transaction.

####  

### (b)         Purchaser shall execute, ifapplicable, and deliver to Seller the following:

###  

#### (i)                                     The Purchase Priceand Purchaser’s share of closing costs and prorations by wire transfer;

####  

#### (ii)                                  the Assignmentand Assumption of Temporary Encumbrances;

####  

#### (iii)                               the Assignmentof the Conversion Agreement;

####  

#### (iv)                              the Assignmentof the Mutual Road Access Agreement;

####  

#### (v)                                 Consents orresolutions of the board of directors of Purchaser authorizing the transactioncontemplated by this Agreement;

####  

#### (vi)                              Purchaser’sClosing Certificate;

####  

#### (vii)                           Affidavitsrequired by the title insurance company, if any; and

####  

#### (viii)                        ClosingStatement.

####  

#### (ix)                                All otherdocuments which are required and which the Seller has reasonably requested onor before the Closing Date to give effect to this transaction.

####  

## 14.3.                        Pro Rations andPost-Closing Taxes.  Propertytaxes for the current year, assessments, rents, water and other utilitiesconstituting liens and applicable Temporary Encumbrances shall be pro-rated asof the Closing Date.  Seller shall beresponsible for the payment in full of all taxes and assessments against theReal Property for all periods prior to the Closing Date, and Purchaser shall beresponsible for the payment in full of all taxes and 

 

13

----

 

## assessments against the RealProperty for all periods as of and subsequent to the Closing Date.  Purchaser shall be responsible for, and shallindemnify, defend and hold harmless (which covenants shall survive the Closing)Seller from and against all of the “roll-back” or other taxes, if any,(whenever assessed against Purchaser or Seller) imposed as a result of anychange of use by Purchaser or any successor to Purchaser’s in title, includingbut not limited to a change from open space, agricultural, forestland orrecreational status.  Purchaser shall besolely responsible for the payment of all taxes, or fees due under the ExciseTax Act and/or under the statutes referred to in the Taxes, Duties and Fees(GST/HST) Regulations resulting from or arising in connection with thetransaction contemplated hereby.

##  

# 15.         Commission.  Purchaser and Seller each represent andwarrant to the other that no broker, agent or finder, licensed or otherwise hasbeen engaged by it, respectively, in connection with the transactioncontemplated by this Agreement.  In theevent of any such claim for broker’s, agent’s or finder’s fee or commission inconnection with the negotiation, execution or consummation of this transaction,the party upon whose alleged statement, representation or agreement such claimor liability arises shall indemnify, hold harmless and defend the other partyfrom and against such claim and liability, including without limitation,reasonable attorney’s fees and court costs. Purchaser and Seller acknowledge that the representations and warrantiescontained in this Section shall survive the Closing.

#  

# 16.         Possession.  Purchaser, subject to the PermittedExceptions, shall be entitled to possession of the Real Property on the ClosingDate.

#  

# 17.         Default.

#  

# (a)  If Seller defaultsin its contractual performance herein in any material way, and Seller does notcure such default within ten (10) days following Seller’s receipt ofnotice of such default from Purchaser, Purchaser shall have all availableremedies at law or equity, including but not limited to the remedy of specificperformance; provided, however that in no event shall Purchaser be entitled tomonetary damages in excess of One Million Canadian Dollars (C$1,000,000.00)(the “Damages Cap”).

#  

# (b)  Purchaseracknowledges that if Purchaser fails to purchase the Real Property for anyreason other than the breach of Seller or termination of this Agreement bySeller or Purchaser pursuant to Section 9 or non-fulfillment of acontingency pursuant to Section 13(b), Seller shall be entitled tocompensation from Purchaser (as its sole remedy) for the detriment resultingfrom the removal of the Real Property from the market, and entering into thisAgreement rather than selling to other potential purchasers.  Therefore, in the event of Purchaser’sfailure to purchase the Real Property for any reason other than the breach ofSeller or termination of this Agreement by Seller or Purchaser pursuant to Section 9or non-fulfillment of a contingency pursuant to Section 13(b), Sellershall have, as Seller’s exclusive option, the right to receive from PurchaserOne Million Canadian Dollars (C$1,000,000.00) as liquidated damages and not apenalty.  The parties acknowledge andagree that the above reference amount is, as of the Effective Date, areasonable estimate of Seller’s damages, considering all of the circumstancesexisting on the Effective Date and that proof of actual damages would beimpractical or extremely difficult.

 

14

----

 

# 18.         Third Party Consents.  Notwithstanding anything to the contrary inthis Agreement, this Agreement shall not constitute an agreement to assign ortransfer any Contracts, Leases or Personal Property, if an assignment ortransfer or an attempt to make such an assignment or transfer without theconsent or approval of a third party would constitute a breach or violationthereof or affect adversely the rights of Purchaser or Seller thereunder; andany transfer or assignment to Purchaser by Seller of any interest under anysuch Contracts, Leases or Personal Property, that requires the consent orapproval of such third party shall be made subject to such consent or approvalbeing obtained.  In the event any suchconsent or approval is not obtained on or prior to the Closing Date, Sellershall continue to cooperate in all reasonable respects with Purchaser in itsefforts to obtain any such consent or approval after the Closing Date untilsuch time as such consent or approval has been obtained, and Seller willcooperate in all reasonable respects with Purchaser in any lawful andeconomically feasible arrangement to provide that Purchaser shall receive theinterest of the Seller in the benefits under any such Contracts, Leases orPersonal Property and indemnify Purchaser against any liabilities directlyattributable to the failure to secure such consent or approval (except that anysuch arrangement shall not require performance by Seller as an agent ofPurchaser); provided that Purchaser shall undertake to and shall pay or satisfythe corresponding liabilities for the enjoyment of such benefit to the extentPurchaser would have been responsible therefor if such consent or approval hadbeen obtained.  Seller’s indemnificationin this Section 18 shall be subject to the Limitations as to Claimsdetailed in Section 12(c) of this Agreement.

#  

# 19.         Attorneys’ Fees.  In the event of the bringing of any action orsuit by either party against the other party by reason of any breach of any ofthe covenants, conditions, agreements or provisions on the part of the otherparty arising out of this Agreement, the party in whose favor final judgmentshall be entered shall be entitled to have and recover of and from the otherparty all costs and expenses of suit, including reasonable attorneys’ fees on asolicitor and client basis.

#  

# 20.         Governing Law.  This Agreement shall be interpreted,construed and enforced according to the laws of the Province of Nova Scotia,Canada and the federal laws of Canada applicable therein.

#  

# 21.         Notices.  All notices or other communication providedfor under this Agreement shall be in writing, shall be effective upon receiptor refusal to accept delivery, and shall be (i) delivered personally, (ii) sentby registered or certified mail, return receipt requested, postage prepaid, orby private overnight courier service, addressed to the Person to receive suchnotice or communication at the following address, or (iii) sent byfacsimile transmission to the phone number listed below with a copy of suchnotice sent on the same day of transmission by the method set forth in thepreceding clause (ii):

 

If to Seller:

 

Neenah Paper Company of Canada

c/o Neenah Paper, Inc.

3460 Preston Ridge Road, Suite 600

Alpharetta, Georgia 30005Attn:  Legal Department

Facsimile: (678) 518 3283

 

15

----

 

If to Purchaser:

 

Northern Timber Nova Scotia Corporation

260 Granton Abercrombie Branch Road

Pictou County, New Glasgow, NS   B2H 5E6

Attention:  G.Wayne Gosse, Chief Executive Officer

Email: wgosse@northernpulp.com

Fascimile: 902-752-5404

 

witha copy to:

 

McInnes Cooper

644 Main Street, Suite 400, South Tower

P.O. Box 1368

Moncton, New Brunswick

E1C 8T6

Attn:  BernieMiller

 

# 22.         Time of Performance.  Time is of the essence of this Agreement andof all acts required to be done and performed by the parties hereto, including,but not limited to, the proper tender of each of the sums required by the termshereof to be paid.

#  

# 23.         Section Headings.  The word or words appearing at thecommencement of sections and subsections of this Agreement are included only asa guide to the contents thereof and are not to be considered as controlling,enlarging or restricting the language or meaning of those sections orsubsections.

#  

# 24.         Invalidity.  In the event any portion of this Agreementshould be held to be invalid by any court of competent jurisdiction, such holdingshall not affect the remaining provisions hereof unless the court’s rulingincludes a determination that the principal purpose and intent of thisAgreement are thereby defeated.

#  

# 25.         Legal Relationships.  Seller and Purchaser agree that (a) therelationship between them is, is intended to be and shall at all times remain,in connection with the transactions contemplated by this Agreement, that ofseller and purchaser and (b) neither party is, is intended to be or shallbe construed as a partner, joint venture, lender, borrower, debtor, creditor,alter ego, manager, controlling person or other business associate orparticipant of any kind of the other party or any of its affiliates and neitherparty intends to ever assume such status. All terms, covenants and conditions to be observed and performed byeither of the parties hereto shall be joint and several if entered into by morethan one person on behalf of such party, and a default by any one or more ofsuch persons shall be deemed a default on the part of the party with whom saidperson or persons are identified.  Nothird party is intended to be benefited by this Agreement.

#  

# 26.         Assignment; Successors.  Neither Seller nor Purchaser may sell,transfer, assign, pledge or encumber its interest in this Agreement without theprior written consent of the 

 

16

----

 

# other, which consent shallnot be unreasonably withheld.  Subject tothe restrictions contained herein, the rights and obligations of the Seller andPurchaser shall inure to the benefit of and be binding upon their respectivesuccessors and assigns.  Purchaser shallhave the right, without obtaining Seller’s consent, to transfer or assign itsinterest in this Agreement to a third party identified by Purchaser in writingprior to Closing; provided that Purchaser shall remain directly and primarilyliable for Purchaser’s obligations pursuant to the Agreement and in no wayshall such an assignment be deemed a waiver, release or novation.

#  

# 27.         Entire Agreement.  All understandings and agreements previouslyexisting between the parties, if any, are merged into this Agreement, whichalone fully and completely expresses their agreement, and the same is enteredinto after full investigation, neither party relying upon any statement orrepresentation made by the other not embodied herein.  This Agreement may be modified only by awritten amendment executed by all parties.

#  

# 28.         Interpretation.  This Agreement has been reviewed by bothparties and each party has had the opportunity to consult with independentcounsel with respect to the terms hereof and has done so to the extent thatsuch party desired.  No stricterconstruction or interpretation of the terms hereof shall be applied againsteither party as the drafter hereof.

#  

# 29.         Counterparts.  This Agreement may be executed incounterparts, each of which shall be deemed to be an original instrument.  All such counterparts together shallconstitute a fully executed Agreement.

#  

# 30.         Survival.  No provision of this Agreement shall surviveClosing, except that all agreements, covenants, representations and warrantiesset forth in this Agreement, and all provisions of this Agreement, the fullperformance of which is not required prior to Closing, will survive Closing andbe fully enforceable for a period of 18 months after Closing (and suchadditional time necessary for any final resolution of any claim or actioncommenced prior to the end of such period), unless another time period forsurvival is specifically listed herein (including the time period provided in Section 10.1).

#  

# 31.         Confidentiality.

#  

##### (a)          Seller and Purchasercovenant and agree that neither they, nor their respective affiliates, nor theyor their respective directors, officers, employees, agents or representatives,will disclose the terms of this Agreement to any third party without the priorwritten consent of the other party. Except as and to the extent required by law, or as may be reasonablyrequired in order to complete the investigations and transactions contemplatedherein unless and until the purchase and sale contemplated herein shall havebeen completed or the proposed transaction has been announced by the parties,in either case as herein contemplated, the existence and the terms andconditions of this Agreement shall be kept confidential by the parties.

#####  

##### (b)         No press releases or otherpublic statements concerning this Agreement or the transactions contemplatedhereby shall be made by either party without the prior written approval of theother, except as required by applicable law.

 

17

----

 

# 32.         Acreage.  Seller is selling and Purchaser is purchasingthe Real Property  based on a GISestimate of the total acreage.  Theparties hereto understand and agree that the exact acreage of the Real Propertyis not represented, warranted or guaranteed by Seller.

#  

# 33.         Currency.  Unless otherwise specifically referencedherein all dollar amounts listed, referenced or described in this Agreementshall refer to and be interpreted to represent Canadian Dollars.

#  

# 34.         Recording.  Purchaser shall not record this Agreement orany memorandum hereof.

#  

# 35.         Governmental Approvals.  If filings are required under the CompetitionAct or the Investment Canada Act, the parties will cooperate and usecommercially reasonable efforts to make such filings in a timely manner, andthe Closing Date shall be postponed until all applicable approvals have beenobtained and there has been compliance with requisite notice periods.

#  

# 36.         Previous Title Policies andSurveys.  To the extent not previouslyprovided as part of Purchaser’s due diligence, Seller agrees to deliver toPurchaser for Purchaser’s receipt at Closing or within a reasonable timethereafter (i) all previous title policies in Seller’s possession whichinsure the Real Property or portions thereof (ii) abstracts of title,certificate of title and title notes, and (iii) all surveys, GIS data andmapping information in Seller’s possession showing the Real Property orportions thereof.

#  

# 37.         Time Periods.  If the time period by which any right,option, or election provided under this Agreement must be exercised, or bywhich any act required hereunder must be performed, expires or falls on aSaturday, Sunday or legal or bank holiday in either the State of New York orProvince of Nova Scotia, then such time period shall automatically be extendedthrough the close of business on the next regularly scheduled business day.

#  

# 38.         Further Assurances.  The parties hereto will do such acts andthings and execute such documents, both before and after closing, as arereasonably necessary to give effect to the intent of this Agreement.

#  

# 39.         Post Closing Obligations.  In order that Purchaser, Seller, and thistransaction shall be able to timely comply with the Land Registration Act andthe Conversion Agreement after the Closing Date Seller will co-operate withPurchaser with respect to providing information, or providing statutorydeclarations where applicable, regarding the title of the Land or portionsthereof, including, without limitation, and to the extent practical, makingavailable to Purchaser Seller’s employees who may have knowledge regarding theReal Property.

 

18

----

 

IN WITNESS WHEREOF, theparties hereto have executed this instrument in duplicate the day and yearfirst above written.

 

 
| ** ** | SELLER:                             |
|------------|-------------------------------------|
| ** ** |                                |
| ** ** | **NEENAH  PAPER COMPANY OF CANADA** |
|       |                                |
|       |                                |
|       | By:                                 | /s/  Sean T. Erwin |
|       |                                | Name: | Sean  T. Erwin |
|       |                                | Title: | Chief  Executive Officer |

 

19

----

 

IN WITNESS WHEREOF, theparties hereto have executed this instrument in duplicate the day and yearfirst above written.

 
| PURCHASER:                                   |                   |
|----------------------------------------------|------------------------|
|                                         |                   |
| **NORTHERN  TIMBER NOVA SCOTIA CORPORATION** |                   |
|                                         |                   |
|                                         |                   |
| By:                                          | /s/  Adam Blumenthal   |   |
|                                         | Name:  Adam Blumenthal |   |
|                                         | Title:  Director       |   |

 

20

----

 

**EXHIBITS**

 
| A. | Real  Property — Saving and Excepting Exhibit B Lands |
|----|-----------------------------------------------------------------|
| B. | Real  Property - 55,000 acres ± for re-sale                |

 

**SCHEDULES**

 
| 1.1(b) | Contracts                      |
|--------|--------------------------------|
| 1.1(c) | Leases                         |
| 10.3   | Suits,  Actions or Proceedings |
| 10.4   | Governmental  Compliance       |
| 10.7   | Environmental  Compliance      |

 

21

----