Asset Purchase Agreement




 Exhibit 10.22 
 Explanatory Note: The body of this document was previously filed with the SEC, as indicated in the Exhibit Index. What follows are additional schedules and/or exhibits to that document that were
not included in the original filing. 








 APPENDIX B 
 To 
 Asset Purchase Agreement 
 Certain Defined Terms 
 Dated July 2, 2008 
 “Hauppauge Leases” means (i) the lease to be
entered into between Atlantic Paper & Foil, Corp. of N.Y. and the Buyer with respect to the real property located at 325 Kennedy Drive, Hauppauge, New York 11788 in the form of Exhibit I-2, (ii) the lease to be entered into between
Atlantic Long Island Properties, Inc. and the Buyer with respect to the real property located at 50 Gilpin Avenue, Hauppauge, New York 11788 in the form of Exhibit I-3, and (iii) a notice of lease with respect to each such lease in a form
reasonably acceptable to the parties to be recorded in the applicable public real estate records. 
 “Sellers’
Knowledge” means (a) the actual knowledge, after reasonable investigation of each of Dan Gabbay, Egal Gabbay, Shaun Gabbay and Yahya Gabbay and (b) the actual knowledge, after reasonable investigation by the Sellers of Linda Blackwell, Neal
Watson, Tom Dillon, Carol Chasan Mankuta, Bahram Roozrokh, Shahram Roozrokh, Howard Silverman and Valarie Levy, provided that, for purposes of this clause (b), it shall constitute the reasonable investigation of the Sellers if each of the persons
specified in this clause (b) is required by the Sellers to have read the representations and warranties of the Sellers in this Agreement (and related definitions and schedules) and advised the Sellers as to any representation or warranty of the
Sellers which is untrue or inaccurate in any respect. 
 “Settlement Agreement” means that certain Stipulation
of Settlement dated October 3, 2005 by and between Samuel Mehdizadeh, Shervin Mehdizadeh, U.S. Nonwovens Corp., Yahya Gabayzadeh, Helen Gabayzadeh, Shahram Gabayzadeh, Egal Gabayzadeh, Dan Gabayzadeh, Atlantic Paper & Foil Corp., Atlantic Paper
Corp., Marvin Kagan and Rody Mehdizadeh. 
 “Working Capital Target” means $11,184,415.00. 
  

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 APPENDIX C 
 To 
 Asset Purchase Agreement 
 Certain Retained Assets 
 Dated July 2, 2008 
 The following shall constitute Retained Assets: 

(1) All assets reflected on the Most Recent Balance Sheet which are identified as “Retained Asset” in Schedule I-B-1;

 (2) All rights of the Sellers under this Agreement and any Ancillary Agreement; 
 (3) All rights and interests of the Sellers to the Real Property, together with all improvements, fixtures and fittings thereon, easements,
rights-of-way and other appurtenant rights thereto (including any overhead crane but excluding any storage racks or shelving), except for the leasehold interests granted pursuant to the Hauppauge Leases or the Thomaston Lease; 
 (4) The automobiles set forth on Schedule I-B-2; 
 (5) The Embraer Legacy jet; 
 (6) All personal belongings contained in the offices
of each of Yahya and Shaun Gabbay located at 325 Kennedy Drive, Hauppauge, New York; 
 (7) All membership interests in Atlantic
Paper & Foil of Georgia, LLC and Atlantic Paper & Foil, LLC which are owned by Atlantic Paper & Foil Corp. of N.Y. and all capital stock or other equity securities of Consumer Licensing Corporation and of Atlantic Lakeside Properties,
LLC; and 
 (8) All personal belongings of the Gabbay family listed on Exhibit I-8 hereto. 
  

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 Exhibit 2.2 
 Form of Note 








 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT. 
 THIS INSTRUMENT AND THE RIGHTS AND
OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED TO THE PRIOR PAYMENT OF CERTAIN OBLIGATIONS OF THE OBLIGOR TO THE HOLDERS OF SENIOR INDEBTEDNESS (AS DEFINED HEREIN). 
 THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBJECT TO RIGHTS OF CANCELLATION AND SETOFF AS SET FORTH IN SECTION 3.6 HEREOF AND AMENDMENT, WAIVER OR CONSENT BY THE SELLERS’
REPRESENTATIVE AS SET FORTH IN SECTION 8.1 HEREOF. 
 THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS PERMITTED IN SECTION 5.1 HEREOF. 

 NO: S-1 
 CELLU TISSUE HOLDINGS, INC. 
 Subordinated Note Due July     , 2011 
  

			
	$6,300,000.00	  	July     , 2008

 Original Holder: ATLANTIC PAPER & FOIL CORP. OF NY. 
 FOR VALUE RECEIVED, the undersigned, Cellu Tissue Holdings, Inc., a Delaware corporation (the “Company”), hereby promises to pay
to the order of Atlantic Paper & Foil Corp. of N.Y. or its registered and permitted assigns (such original payee or any successor or permitted assignee from time to time, each a “Noteholder”), on July     ,
2011 (the “Maturity Date”), at the address specified in the Noteholder Register for such Noteholder (as may be updated pursuant to Section 9.10 hereof), $6,300,000.00 (subject to adjustment as provided herein) and to pay interest on
the unpaid principal amount of this Note as provided in Section 2 hereof. 
  

	1.	THE NOTE 

 This Note (this
“Note”) is issued pursuant to and in accordance with the Asset Purchase Agreement, dated as of July     , 2008 among the Company, Atlantic Paper & Foil Corp of N.Y., Atlantic Lakeside Properties, LLC, Atlantic
Paper & Foil LLC, Atlantic Paper & Foil of Georgia LLC and Consumer Licensing Corporation (as from time to time in effect, the “Asset Purchase Agreement”). This Note, together with all other subordinated notes which may
be issued hereunder as a result of any transfer or assignment permitted hereunder (and any notes issued in exchange therefor), are collectively referred to herein as the “Notes”, and the holders of Notes









 
are collectively referred to herein as the “Noteholders.” Capitalized terms used in this Note have the meanings ascribed thereto herein or in Schedule A attached hereto. 
  

	2.	INTEREST PROVISIONS 

 Any
remaining unpaid principal amount owed under this Note bears interest at an annual rate equal to 12.0% of such principal amount outstanding from time to time, and is payable quarterly in arrears on each
March 31, June 30, September 30 and December 31 (each an “Interest Payment Date”) and on the Maturity Date, with the first such payment due on September 30, 2008. Notwithstanding the foregoing, the
interest rate shall increase to the “Default Rate” (as defined below) on the following dates and the Default Rate shall continue in effect until such time as no Event of Default is then continuing or all Events of Default have been waived
in writing by the Sellers’ Representative: (a) on any Interest Payment Date on which any interest then due on this Note shall not be paid in full unless all such interest not so paid when due is paid within 10 days following such Interest
Payment Date; (b) on the Maturity Date or any Refinancing Repayment Event if any portion of the remaining principal shall not be then repaid; and (c) upon the occurrence of any other Event of Default. For purposes of this Note, the
“Default Rate” shall be 15% per annum. On each Interest Payment Date, subject to the provisions of Section 7 (including Schedule B), the Company shall pay the accrued and unpaid interest on this Note in cash. Notwithstanding any
provisions of this Note, in no event will the amount of interest paid or agreed to be paid by the Company exceed an amount computed at the highest rate of interest permissible under applicable law. 
  

	3.	PAYMENT PROVISIONS 

 The
Company covenants that so long as this Note is outstanding: 
 3.1. Payment at Maturity or Refinancing Repayment Event. On the
Maturity Date, on any accelerated maturity of this Note pursuant to the terms hereof or upon any Refinancing Repayment Event, the Company will pay the principal amount of this Note then owing, together with all accrued and unpaid interest thereon.

 3.2. Optional Redemption. At any time and from time to time, the Company may prepay or redeem any or all Notes, in whole or
in part, at any time without premium or penalty at a price equal to 100% of the principal amount of the Note so prepaid or redeemed, together with all accrued and unpaid interest thereon. Any partial redemption shall be allocated as among the
various Notes on a pro rata basis based on their then outstanding principal amount at the time of such partial redemption. 
 3.3. Notice of Optional Redemption. Notice of each optional repayment or redemption of this Note pursuant to Section 3.2 hereof must be given in accordance with Section 9.1 hereof not fewer than three Business Days before the
repayment or redemption date, in each case by mailing to the Noteholder a notice of intention to repay or redeem, which such notice must specify the date of repayment or redemption, the principal amount of this Note to be repaid or redeemed on such
date, and the accrued and unpaid interest applicable to the portion of the Note subject to such repayment or redemption. 
  

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 3.4. Payment and Interest Cut-Off. Upon each voluntary prepayment or redemption of any of
the Notes, in whole or in part, the Company will pay to the Noteholder the amount of the Note to be prepaid or redeemed, as set forth in the notice delivered pursuant to Section 3.3 hereof, together with unpaid interest in respect thereof
accrued to and including the repayment or redemption date (the “Redemption Price”). On the prepayment or redemption date, if requested by the Company, the Noteholder will deliver this Note to the Company for notation thereon of the amount
of principal so prepaid or redeemed, and in consideration therefor, the Company shall promptly deliver (x) the Redemption Price to such Noteholder, which will be payable by wire transfer of immediately available funds to an account designated
with reasonable advance notice by such Noteholder or by check if requested by the Noteholder and (y) in the case of a partial redemption, a replacement Note reflecting the remaining outstanding principal amount after giving effect to the
prepayment or redemption. 
 3.5. Application of Payments. All payments made by the Company hereunder must be applied:
(i) first, to the payment in full of accrued and unpaid interest and (ii) second, to the reduction of unpaid principal. 
 3.6. Cancellation; Offset. For so long as this Note is outstanding, notwithstanding anything to the contrary in this Note, the Company may cancel all or a portion of this Note to satisfy amounts due to the Company or any Buyer Indemnified
Person under Sections 2.5 or Section 8 of the Asset Purchase Agreement. The Company, in its sole discretion, may elect by written notice to the Noteholder to cause any such cancellation to be applied on a dollar-for-dollar basis to (i) the
payment of accrued and unpaid interest, (ii) the payment of interest which will accrue in the future and (iii) to the reduction of outstanding principal, or any combination of the foregoing (provided that the Company makes the same
election as to all Notes and that any such offset shall be made against all Notes pro rata based on their respective outstanding principal amounts at the time of such offset). To the extent the Company cancels all or a portion of this Note,
(x) the Noteholder shall be obligated to repay to the Company the amount of any and all interest that has accrued (at the rate of interest set forth in Section 2) and been paid on an amount of principal equal in the aggregate to the amount
of such cancellation from the original date of issuance of this Note to the date of such cancellation and, in order to satisfy such repayment obligation of the Noteholder, the Company may, in its sole discretion, elect by written notice to the
Noteholder either to increase the amount of such cancellation by the amount of such interest or require the Noteholder to pay back to the Company all such interest in cash (whether or not the Noteholder was the holder of the Note at the time such
interest was paid) in which event the Noteholder shall repay such cash amount to the Company within five (5) Business Days of such notice and (y) the Company shall be relieved of the obligation to pay any and all interest that has accrued
but not yet been paid on an amount of principal of the Note equal in the aggregate to such amount from the date of issuance of the Note until the date of satisfaction of such amount. If this Note is transferred in accordance with the terms hereof,
it will continue to be subject to the provisions of this Section 3.6 (whether or not the transferee is a Seller under the Asset Purchase Agreement). In no event shall the sum of (a) the aggregate amount of principal and interest with
respect to this Note cancelled by the Company by operation of this Section 3.6 and (b) the aggregate amount of principal and interest with respect to all other Notes cancelled by the Company by operation of Section 3.6 thereof exceed
$2,500,000.00. 
  

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 3.7. Payments Subject to Subordination. Notwithstanding the foregoing provisions of this
Section 3, no cash payment of interest or principal or any other amounts payable under this Section 3 shall be made at any time when the payment thereof is prohibited by the provisions of Section 7 (including Schedule B) hereof.

  

	4.	DEFAULTS 

 4.1. An
“Event of Default” will exist if any of the following conditions or events occurs and is continuing: 
 4.1.1. The
Company (i) defaults in the payment, when due, of any principal amount, when due, or (ii) defaults in the payment of any portion of the interest obligations under Section 2 when due and such default is not remedied within 10 days
after the same becomes due and payable; or 
 4.1.2. The Company (i) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or Reorganization, (ii) makes an assignment for the benefit of its creditors, (iii) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (iv) is adjudicated as insolvent or to be liquidated or (v) takes corporate action for the purpose of approving a Reorganization with respect to the Company or any of the
foregoing; or 
 4.1.3. A governmental authority enters an order appointing, without consent by the Company, a custodian,
receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for Reorganization, or any such petition is filed against
the Company and such petition is not dismissed within 60 days; or 
 4.1.4. The Company increases the aggregate principal amount
outstanding under the Credit Agreements to in excess of $305 million; or 
 4.1.5. Any Credit Agreement at any time contains a
provision that prohibits or limits cash payments under Section 2 or 3.1 hereof of interest or principal on this Note when such payments become due (it being acknowledged and agreed that the Credit Agreements may contain provisions which require
subordination of such payments to the extent set forth in Section 3.7, Section 7 and Schedule B of this Note, and, in each case, the existence of such provisions and their application to such payments shall not constitute an Event of
Default under this Section 4.1.5); or 
 4.1.6. The Company or any of its subsidiary parties thereto (a) shall default
in the timely payment of rent when due on more than seven occasions in aggregate for all Leases over any period of twelve consecutive months, (b) shall fail to make any payment of overdue rent under any of the Leases within ten calendar days
after receiving notice thereof from the lessor as provided in the applicable Lease or (c) shall default in the payment of purchase price payable under any of the Leases. 
 4.2. Acceleration. Upon the occurrence and during the continuance of any Event of Default specified in Section 4.1.2 or
Section 4.1.3, this Note will automatically become

  

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immediately due and payable. Upon the occurrence and during the continuance of any Event of Default of the type specified in Section 4.1.1, 4.1.4, 4.1.5 or 4.1.6, subject to Section 7
of this Note (including Schedule B), the Sellers’ Representative may declare this Note immediately due and payable by providing written notice thereof to the Company. Interest on the outstanding principal amount will continue to accrue at the
Default Rate during any period in which an Event of Default exists pursuant to Section 2 hereof. 
  

	5.	TRANSFER AND REPLACEMENTS OF NOTES 

 5.1. Transfer of Notes. No Noteholder may transfer all or any portion of the Notes held by such Noteholder, except as set forth in this Section 5. 
 5.2. Permitted Transfers. 
 5.2.1. Any Noteholder to whom any Notes are issued in connection with the closing under the Asset Purchase Agreement may transfer any of the Notes held by such Noteholder, as a gift, to an Individual Owner or a Member of the Immediate
Family of an Individual Owner for no consideration. 
 5.2.2. This Note may not be transferred in denominations of less than
$50,000; provided that if necessary to enable the registration of a permitted transfer by a Noteholder of its entire holding of Notes, one Note may be in a denomination of less than $50,000. 
 5.2.3. The Company agrees to promptly register the transfer of this Note made in accordance with this Section 5 in the Noteholder
Register upon written request of the Noteholder. No transfer or attempted transfer is effective until entered on the books and records maintained by the Company. Any transfer in contravention of any of the provisions of this Note is void and of no
effect and will not bind nor be recognized by the Company. 
 5.2.4. In no event may all or any part of this Note be transferred
to a minor or an incompetent except in trust or pursuant to the Uniform Gifts to Minors Act or by will or the laws of descent and distribution (in which event all reasonable efforts will be made by the executor of the estate of such Noteholder to
have such Note placed in a trust for the benefit of the transferee). 
 5.2.5. Upon surrender of any Note at the principal
executive office of the Company for registration of a permissible transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered Noteholder and accompanied by the address for notices of each transferee of
such Note or part thereof, the Company shall execute and deliver, at the expense of the Company (except as provided below), one or more new Notes (as requested by the Noteholder thereof) in exchange therefor, in an aggregate principal amount equal
to the unpaid principal amount of the surrendered Note. Each such new Note will be dated and bear interest from the date to which interest has been paid on the surrendered Note or dated the date of the surrendered Note if no interest has have been
paid thereon. The Company may require payment (or reasonably satisfactory evidence of payment) of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. 
  

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 5.3. Replacement of Notes. Upon receipt by the Company of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of any Note, and, in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it, or, in the case of mutilation, upon surrender and cancellation thereof,
the Company shall, at its own expense, execute and deliver, in lieu thereof, a new Note, dated and bearing interest from the date to which interest has been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest has been paid thereon. 
  

	6.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

 The Company represents and warrants as of the date of this Note that: 
 6.1.
Organization; Power and Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite power and authority to transact the business it transacts
and proposes to transact, and to execute and deliver this Note. 
 6.2. Authorization, etc. This Note has been duly authorized
by all necessary corporate action on the part of the Company, and this Note constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. 
 6.3. Non-Contravention. The execution, delivery and performance by the Company of this Note will not (i) contravene, result in any
breach of, or constitute a default under its certificate of incorporation or bylaws or (ii) violate any provision of any material statute or other rule or regulation of any governmental authority applicable to the Company or any material debt
agreement or other material agreement of the Company, including without limitation any of the Credit Agreements as in effect at the date of this Note, complete and accurate copies of which have been provided to the Seller’s Representative.

 6.4. Governmental Authorizations, etc. No consent, approval or authorization of, or registration, filing or declaration with,
any governmental authority is required in connection with the execution, delivery or performance by the Company of this Note. 
  

	7.	SUBORDINATION 

 Notwithstanding any provision of this Note to the contrary, this Note and the rights and obligations evidenced hereby are subordinate and junior to the prior payment in full of all other Senior Indebtedness of the Company, and are subject
to the subordination provisions set forth in Schedule B hereto. Each of the Company and the Noteholder, by its acceptance hereof, covenants that each of them will comply with the provisions of Schedule B hereto. 
  

	8.	AMENDMENT AND WAIVER 

 8.1. Requirements. This Note may be amended, and the observance of this Note may be waived (either retroactively or prospectively) only as follows: 
  

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 (a) in the case of a waiver or consent affecting only this Note, by a
written waiver or consent signed by the party against whom the waiver is to be enforced; 
 (b) in the case of a
waiver or consent affecting all Notes, by a written waiver or consent signed, in the case of a waiver or consent to be enforced against the Company, by the Company, and in the case of a waiver or consent to be enforced against the Noteholders, by
the Sellers’ Representative; 
 (c) in the case of an amendment affecting only this Note, by a written
instrument signed by the Company and the Noteholder; and 
 (d) in the case of an amendment affecting all Notes,
by a written amendment signed by the Company and the Sellers’ Representative. 
 8.2. Delivery of Amendments. The Company
will deliver true and correct copies of each executed amendment, waiver or consent effected pursuant to the provisions of this Section 8 that has been consented to by the Sellers’ Representative and not been signed by the Noteholder to the
Noteholder promptly (but in no event later than 15 Business Days) following the date on which it is executed and delivered. 
 8.3. Binding Effect, etc. This Note shall have no effect until it has been countersigned by the Noteholder and a countersigned copy of the Note has been delivered to the Company. Any amendment, waiver or consent consented to as provided in
this Section 8 that is specified to apply equally to all Noteholders will apply equally to all Noteholders and be binding upon each of them and upon each future Noteholder and upon the Company without regard to whether such Note has been marked
to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing
between the Company and the Noteholders nor any delay in exercising any rights hereunder or under any Note will operate as a waiver of any rights of any Noteholder. 
  

	9.	MISCELLANEOUS 

 9.1.
Notices. All notices, requests, demands, claims and other communications required or permitted to be delivered, given or otherwise provided hereunder must be in writing and must be delivered, given or otherwise provided: 
 (a) by hand (in which case, it will be effective upon delivery); or 
 (b) by overnight delivery by a nationally recognized courier service (in which case, it will be effective on the Business Day
after being deposited with such courier service); 
 in each case, to the address listed below: 
 If to the Noteholder: 
  

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 c/o Shaun Gabbay 
 PO Box 222144 
 Great Neck, NY 11022 
 Telephone: (516) 317-7776 
 with a copy to: 
 Skadden, Arps, Slate, Meagher & Flom LLP 
 Four Times Square 
 New York, NY 10036 
 Telephone number: (212) 735-2524 
 Attention: Randall H. Doud 
 and 
 Steve Cohn, PC

 One Old Country Road 
 Carle Place, NY 11514 
 Telephone: (516) 294-6410 
 If to the Company, to it at: 
 Cellu Tissue Holdings, Inc. 
 1855 Lockeway Drive 
 Suite 501 
 Alpharetta, GA 30004 
 Telephone number: (678) 393-2651 
 Attention: Russell Taylor 
 with a copy to: 
 Ropes & Gray LLP 
 1211 Avenue of the Americas 
 New York, NY 10036-8704 
 Telephone number: (212) 841-0697 
 Attention: Christopher C. Henry 
 and 
 Weston Presidio 
 Pier 1, Bay 2 
 San
Francisco, CA 94111 
 Telephone number: (415) 398-0770 
 Attention: R. Sean Honey, Therese Mrozek and Jim Morrone 
 Each of the Noteholder and the Company may specify a different address for itself by giving notice in accordance with this Section 9.1 to each of the other parties hereto. 
  

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 Written notices to the holders of Senior Indebtedness shall be made as specified in Schedule
C attached hereto. 
 9.2. Jurisdiction; Venue; Service of Process. 
 9.2.1. Jurisdiction. The Noteholder and the Company (a) hereby irrevocably submits to the exclusive jurisdiction of the
state courts of the State of New York or the United States District Court located in the Southern District of the State of New York for the purpose of any Action between the parties arising in whole or in part under or in connection with this Note,
(b) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that any such Action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred or removed to any court
other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Note or the subject matter hereof may not be enforced in or by
such court and (c) hereby agrees not to commence any such Action other than before one of the above-named courts. Notwithstanding the previous sentence a party may commence any Action in a court other than the above-named courts solely for the
purpose of enforcing an order or judgment issued by one of the above-named courts. 
 9.2.2. Venue. The
Noteholder and the Company agree that for any Action between the parties arising in whole or in part under or in connection with this Note, such party bring Actions only in the Borough of Manhattan. Each party further waives any claim and will not
assert that venue should properly lie in any other location within the selected jurisdiction. 
 9.3. Service of Process. Each
of the Noteholder and the Company hereby (a) consents to service of process in any Action between the parties arising in whole or in part under or in connection with this Note in any manner permitted by New York law, (b) agrees that
service of process made in accordance with clause (a) or made by registered or certified mail, return receipt requested, at its address specified pursuant to Section 9.1 (with copy to its counsel specified in Section 9.1 at the
address for such counsel specified in such section), will constitute good and valid service of process in any such Action and (c) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such Action any claim that
service of process made in accordance with clause (a) or (b) does not constitute good and valid service of process. 
 9.4. Governing Law. This Note, the rights of the parties and all Actions arising in whole or in part under or in connection herewith, will be governed by and construed in accordance with the domestic substantive laws of the State of New
York, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction. 
 9.5. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH OF THE COMPANY AND

  

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THE NOTEHOLDER HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER
OR IN CONNECTION WITH THIS NOTE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE COMPANY AND THE NOTEHOLDER AGREE THAT EACH OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS NOTE OR ANY OF THE CONTEMPLATED TRANSACTIONS WILL INSTEAD BE
TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY. 
 9.6. Successors and Assigns. All covenants
and other agreements contained in this Note by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and permitted assigns (including, without limitation, any subsequent Noteholder) whether so
expressed or not; provided, that the Noteholder may not assign its rights and obligations hereunder except pursuant to a transfer permitted by Section 5 hereof. 
 9.7. Payments Due on Non-Business Days. Anything in this Note to the contrary notwithstanding, any payment of principal of, or interest on, any Note that is due on a date other than a Business Day may be
made on the next succeeding Business Day, including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day. 
 9.8. Severability. Any term or provision of this Note that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any
respect, each party hereto intends that such provision will be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law. 
 9.9. No Third Party Beneficiaries. Except as set forth in Schedule B hereto, nothing in this Note may be deemed or construed to give any
Person, other than the Company and the Noteholder and his, her or its respective permitted successors and assigns, any legal or equitable rights hereunder. 
 9.10. Noteholder Register. For purposes of determining the Noteholders at any time, the Company and any holder of Senior Indebtedness is entitled to rely on the records of the Company and, for such
purpose, the Company hereby agrees to maintain a register of Noteholders (the “Noteholder Register”) at its principal office in which the Company shall provide for registration and transfer of Notes. Absent demonstrable error, the
Noteholder Register will be conclusive evidence of the ownership of the Noteholders at any point in time. 
  

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 IN WITNESS WHEREOF, the undersigned has caused this Note to be executed by a duly authorized
officer as of the date first written above. 
  

					
	CELLU TISSUE HOLDINGS, INC.
		
	 By
	 	  

		 	 Name:
	 	
		 	 Title:
	 	


 Accepted and Agreed: 
  

			
	Atlantic Paper & Foil Corp. of N.Y.
		
	 By:
	 	  

	 Name:

	 Title:










 SCHEDULE A 
 DEFINED TERMS 
 As used herein, the following terms have the respective
meanings set forth below: 
 “Action” means any claim, action, cause of action or suit (whether in contract or tort or
otherwise), litigation (whether at law or in equity, whether civil or criminal), controversy, assessment, arbitration, investigation, hearing, charge, complaint, demand, notice or proceeding to, from, by or before any Governmental Authority.

 “Affiliate” means, with respect to any specified Person at any time means, (a) each Person directly or
indirectly controlling, controlled by or under direct or indirect common control with such specified Person at such time, (b) each Person who is at such time an officer or director of, or direct or indirect beneficial holder of at least 20% of
any class of the Equity Interests of, such specified Person, (c) each Person that is managed by a common group of executive officers and/or directors as such specified Person, (d) the Members of the Immediate Family (i) of each
officer, director or holder described in clause (b) and (ii) if such specified Person is an individual, of such specified Person and (e) each Person of which such specified Person or an Affiliate (as defined in clauses
(a) through (d)) thereof will, directly or indirectly, beneficially own at least 20% of any class of Equity Interests at such time. 
 “Associated Bank Agreement” means the Amended and Restated Reimbursement Agreement dated as of March 21, 2007 between Cellu Tissue-CityForest LLC (formerly known as CityForest Corporation)
and Associated Bank, National Association, as the same may be amended, supplemented or otherwise modified from time to time 
 “Business Day” means any weekday other than a weekday on which banks in New York, New York are authorized or required to be closed. 
 “Buyer Indemnified Person” shall have the meaning ascribed to such term in the Asset Purchase Agreement. 
 “Contractual Obligation” means, with respect to any Person, any contract, agreement, deed, mortgage, lease, license, commitment, promise, undertaking, arrangement or understanding, whether
written or oral and whether express or implied, or other document or instrument (including any document or instrument evidencing or otherwise relating to any Indebtedness,) to which or by which such Person is a party or otherwise subject or bound or
to which or by which any property, business, operation or right of such Person is subject or bound. 
 “Credit Agent”
means (i) the “Agent” (if any) as defined in the Senior Credit Agreement and (ii) in the absence of any such Agent, a “Lender” or the “Lenders” as defined in the Senior Credit Agreement. 
 “Credit Agreement(s)” means the Senior Credit Agreement, the Indenture, Associated Bank Agreement, any notes or other instruments
issued pursuant to any of the foregoing, any agreement providing for the replacement or refinancing thereof (whether or not with the same

  

 A- 1 









 
agent or lenders), in each case as the same may be amended, modified, extended or renewed, and any document evidending Senior Indebtedness or entered into or issued in connection with or issued
in connection with the issuance of Senior Indebtedness. 
 “Equity Interests” means (a) any capital stock, share,
partnership or membership interest, unit of participation or other similar interest (however designated) in any Person and (b) any option, warrant, purchase right, conversion right, exchange rights or other Contractual Obligation which would
entitle any Person to acquire any such interest in such Person or otherwise entitle any Person to share in the equity, profit, earnings, losses or gains of such Person (including stock appreciation, phantom stock, profit participation or other
similar rights). 
 “Excluded Default” means a default or event of default existing only with respect to Senior
Indebtedness that (a) has an outstanding principal balance of less than $1,000,000 and is not owing under the Senior Credit Agreement, the Indenture or the Associated Bank Agreement or any replacement or refinancing of any thereof or
(b) is owing to an Affiliate of the Company. 
 “GAAP” means generally accepted accounting principles as in
effect from time to time in the United States of America and consistently applied across the periods involved. 
 “Governmental Authority” means any United States federal, state or local or any foreign government, or political subdivision thereof, or any multinational organization or authority or any authority, agency or commission entitled
to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, any court or tribunal (or any department, bureau or division thereof), or any arbitrator or arbitral body. 
 “Indebtedness” means, with respect to any Person, without duplication, all obligations (including in respect of principal, accrued
interest, penalties, fees and premiums) of such Person (i) for borrowed money (including overdraft facilities to the extent drawn on), (ii) evidenced by notes, bonds, debentures or other similar instruments (other than performance, surety
and appeal bonds arising in the ordinary course of business in respect of which such Person’s Liability remains contingent), (iii) for the deferred purchase price of property, goods or services (other than trade payables or accruals and
deferred compensation items incurred in the ordinary course of business), (iv) under leases that have been, or should have been, in accordance with GAAP, recorded as capital leases, to the extent required to be so recorded, (v) in respect
of letters of credit and bankers’ acceptances, (vi) relating to interest rate protection, swap agreements and collar agreements and (vii) in the nature of guarantees of the obligations described in clauses (i) through
(vi) above of any other Person. 
 “Indenture” means the Indenture dated as of March 12, 2004, among Cellu
Tissue Holdings, Inc., the Subsidiary Guarantors party thereto and The Bank of New York, as Trustee, as the same may be amended, supplemented or otherwise modified from time to time. 
 “Individual Owner” shall have the meaning ascribed to such term in the Asset Purchase Agreement. 
 “Leases” mean collectively (i) the lease between Atlantic Paper & Foil, Corp. of N.Y. and Cellu Tissue –
Hauppauge, LLC with respect to the real property located at 325 Kennedy Drive, Hauppauge, New York 11788, (ii) the lease between Atlantic Long Island Properties, Inc. and

  

 A- 2 









 
Cellu Tissue – Hauppauge, LLC with respect to the real property located at 50 Gilpin Avenue, Hauppauge, New York 11788, and (iii) the lease between Atlantic Lakeside Properties, LLC and
Cellu Tissue – Thomaston, LLC with respect to the property located at 1201 Barnesville Street, Thomaston, Georgia 30286. 
 “Lenders” means the Credit Agent (if applicable) and each lender or noteholder under each Credit Agreement. 
 “Liability” means, with respect to any Person, any liability or obligation of such Person whether known or unknown, whether asserted or unasserted, whether determined, determinable or otherwise, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, whether incurred or consequential, whether due or to become due and whether or not required under GAAP to be accrued on the financial statements of such Person. 
 “Members of the Immediate Family” means, with respect to any individual, (a) such Person’s spouse, (b) each parent,
brother, sister or child of such Person or such Person’s spouse, (c) the spouse of any Person described in clause (b) above, (d) each child of any Person described in clauses (a), (b) or (c) above, (e) each trust
created solely for the benefit of one or more of the Persons described in clauses (a) through (d) above and (f) each custodian or guardian of any property of one or more of the Persons described in clauses (a) through
(e) above in his capacity as such custodian or guardian. 
 “Non-payment Default” means any event or condition,
other than a Payment Default, that causes, or permits the holder of any Senior Indebtedness to cause, any Senior Indebtedness to become due and payable prior to its stated maturity; provided, that “Non-payment Default” shall not include an
Excluded Default. 
 “Payment Default” means any default in the payment when due (whether at maturity or upon
acceleration, mandatory prepayment or otherwise) of any Senior Indebtedness, including any payment of principal, interest, premium, letter of credit reimbursement obligations, fees, costs, expenses or other amounts; provided, that “Payment
Default” shall not include an Excluded Default. 
 “Permitted Junior Securities” means securities of the Company
or any subsidiary or any other Person that are subordinated in right of payment to all Senior Indebtedness to substantially the same or greater extent as the Notes are so subordinated as provided in Schedule B hereto. 
 “Person” means any individual or corporation, association, partnership, limited liability company, joint venture, joint stock or
other company, business trust, trust, organization, Governmental Authority or other entity of any kind. 
 “Refinancing
Repayment Event” means any refinancing of the Indebtedness outstanding under the Indenture which, after giving effect thereto, results in the aggregate principal amount of Senior Indebtedness outstanding immediately following such refinancing
exceeding $305 million. 
 “Reorganization” means (i) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in connection

  

 A- 3 









 
therewith, relative to the Company or its assets or (ii) any liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy. 
 “Reorganization Securities” means shares of stock of the Company or any Affiliate, or
their successors, as reorganized, or other securities of the Company or any Affiliate or any other Person provided for by a plan of reorganization, the payment of which is subordinated in right of payment to the payment in full of all Senior
Indebtedness, where such plan of reorganization is either authorized by a court decree or order that states that effect has been given to the subordination of the Notes to the Senior Indebtedness or approved by holders of Senior Indebtedness as a
class. 
 “Sellers’ Representative” shall mean the person appointed as such under the Asset Purchase Agreement.

 “Senior Credit Agreement” means the Credit Agreement, dated as of June 12, 2006, by and among Cellu Paper
Holdings, Inc., Cellu Tissue Holdings, Inc., Interlake Acquisition Corporation Limited, the Loan Guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as US Administrative Agent, and JPMorgan Chase Bank, N.A., Toronto
Branch, as Canadian Administrative Agent, as previously amended and as may be further amended, supplemented or otherwise modified from time to time. 
 “Senior Indebtedness” means (i) all Indebtedness under the Senior Credit Agreement, the Indenture, any notes or other instruments issued pursuant to either of the foregoing, any agreement
providing for the replacement or refinancing thereof (whether or not with the same agent or lenders), in each case as the same may be amended, modified, extended or renewed, (ii) all Indebtedness under or in respect of the Associated Bank
Agreement, and (iii) any other Indebtedness that is permitted to be incurred under the Senior Credit Agreement or the Indenture and is specifically designated in the instrument evidencing such Indebtedness as “Senior Indebtedness” for
the purpose of this Note. 
  

 A- 4 









 SCHEDULE B 
 SUBORDINATION PROVISIONS 
 1.1 Notes Subordinated to Senior Indebtedness.
The Company covenants and agrees and the Noteholder by his, her or its acceptance of this Note covenants and agrees for the benefit of the holders of the Senior Indebtedness that the Notes are subordinated in right of payment as provided in this
Schedule B to the prior payment in full of all Senior Indebtedness. Until all amounts outstanding under all Credit Agreements have been paid in full and all obligations thereunder have been discharged, the Noteholder is not entitled to any payment
from the Company on account of this Note, other than payments of principal and interest pursuant to Sections 2 and 3.1 of this Note, subject in all cases to the payment blockage provisions set forth below in this Schedule B. 
 1.2 Payment Over of Proceeds Upon Bankruptcy. 
 (a) In the event of (i) any Reorganization or (ii) any general assignment for the benefit of creditors or any other marshaling of assets or liabilities of the Company (the events described in
the foregoing clauses (i), and (ii) are referred to collectively as “Proceedings”), then and in any such event the holders of Senior Indebtedness shall be entitled to receive payment in full of all Senior Indebtedness, before any
Noteholder is entitled to receive any payment or distribution of any kind or character (excluding Reorganization Securities and Permitted Junior Securities) on account of the Notes and to that end the holders of Senior Indebtedness shall be entitled
to receive, for application to the payment of such Senior Indebtedness, any payment or distribution of assets of the Company of any kind or character (excluding Reorganization Securities and Permitted Junior Securities) that may be payable or
deliverable in respect of the Notes in connection with any such Proceeding. 
 (b) If, notwithstanding Section 1.2(a) of
this Schedule B, any Noteholder shall have received, after the commencement of any Proceeding, any payment or distribution of assets of the Company of any kind or character in respect of the Notes before all Senior Indebtedness is paid in full or
payment thereof provided for, then such payment or distribution (excluding Reorganization Securities and Permitted Junior Securities) shall be paid over or delivered forthwith upon demand therefor to the holders of Senior Indebtedness for
application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness.

 (c) Each of the Noteholders irrevocably authorizes and directs the Lenders and the Credit Agent and its successors and
assigns and any trustee in bankruptcy, receiver or assignee for the benefit of creditors of the Company, whether in voluntary or involuntary liquidation, dissolution or reorganization, on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination provisions and other rights granted to the Credit Agent and the Lenders in Schedule B (including without limitation to file a proof of claim and to vote upon matters with respect to which any Noteholder
may be able to vote in connection with any Proceedings relating to the Company) and irrevocably appoints the Lenders and the Credit Agent and their successors and assigns, acting severally, or any such trustee, receiver or assignee, each

  

 B - 1 









 
such Noteholder’s attorney- or attorneys-in-fact for such purposes with full powers of substitution and resubstitution. 
 1.3 Suspension of Payments When Senior Indebtedness in Default. 
 (a) After the occurrence and during the continuation of any Payment Default, the Company shall not make any payment or distribute any assets
of the Company or its Subsidiaries of any kind or character (other than (x) Reorganization Securities, (y) Permitted Junior Securities and (z) payment of interest by capitalizing it and adding it to the principal amount of the Notes)
on account of the Notes unless and until the earliest to occur of (i) such Payment Default is cured or waived to the satisfaction of the holders of the Senior Indebtedness as required under the terms of the Senior Indebtedness under which such
Payment Default occurred, (ii) all Senior Indebtedness with respect to which such Payment Default occurred is discharged in full or (iii) the benefit of this provision has been waived by the holders of the Senior Indebtedness as required
under the terms of the Senior Indebtedness under which such Payment Default occurred, after which event under clause (i), (ii) or (iii) the Company shall resume making any and all required payments in respect of the Notes, including any
payment in arrears at the Default Rate (provided that, for the avoidance of doubt, the Default Rate shall not apply during any period when there is no continuing Event of Default). 
 (b) After the occurrence and during the continuation of any Non-payment Default and the receipt by the Company and the Noteholders of a
written notice from the holders of Senior Indebtedness which notice makes reference to the Notes, the subordination provisions of this Schedule B and states that a Non-payment Default has occurred, the Company shall not make any payment or
distribute any assets of the Company or its Subsidiaries of any kind or character (other than (x) Reorganization Securities, (y) Permitted Junior Securities and (z) payment of interest by capitalizing it and adding it to the principal
amount of the Notes) on account of the Notes unless and until the earliest to occur of (i) such Non-payment Default is cured or waived to the satisfaction of the required holders of the Senior Indebtedness under which such Non-payment Default
occurred, (ii) all Senior Indebtedness is discharged in full, (iii) the required holders of Senior Indebtedness under which such Non-payment Default occurred waive the benefit of this provision, after which event under clause (i),
(ii) or (iii) the Company shall resume making any and all required payments in respect of the Notes, including any payments in arrears at the Default Rate (provided that, for the avoidance of doubt, the Default Rate shall not apply during
any period when there is no continuing Event of Default), or (iv) 180 days from the date of receipt by the Noteholders of such notice of the occurrence of a Non-payment Default. 
 (c) If, notwithstanding the foregoing, the Company makes any payment to any holder of a Note prohibited by the foregoing provisions of this
Section 1.3 of this Schedule B, then such payment shall be paid over and delivered forthwith by such holder to the holders of Senior Indebtedness entitled thereto. 
 (d) Notwithstanding any provision of this Section 1.3 to the contrary, the holders of Senior Indebtedness shall not be permitted to declare a payment blockage with respect to a Non-payment Default
under Section 1.3(b) more than one time in any 360 day period. 
  

 B - 2 









 1.4 Standstill. If any Event of Default occurs and continues, the Noteholders shall not,
without the prior written consent of the holders of all Senior Indebtedness, accelerate the maturity of, or institute proceedings to enforce or collect, any Note or commence or join with any other creditor of the Company in commencing any Proceeding
against the Company until the Senior Indebtedness has been discharged in full or 180 days from the date of receipt by the holders of Senior Indebtedness of written notice by the Noteholders that an Event of Default has occurred, whichever first
occurs. If any Noteholder, contrary to this Schedule B, commences or participates in any action or Proceeding against the Company, the holders of the Senior Indebtedness may intervene and interpose as a defense or dilatory plea the making of this
Note. Should the Noteholders, contrary to this Schedule B, in any way attempt to enforce the payment of this Note or any part thereof, the holders of the Senior Indebtedness may restrain the Noteholder from so doing, it being understood and agreed
that (i) the damages suffered by the holders of the Senior Indebtedness from the Noteholder’s actions may at that time be difficult to ascertain and may be irreparable, and (ii) the Noteholder waives any defense that the holders of
the Senior Indebtedness cannot demonstrate damage and/or can be made whole by the awarding of damages. 
 1.5 Provisions Solely
to Define Relative Rights. The provisions of this Schedule B are and are intended solely for the purpose of defining the relative rights of the Noteholders, on the one hand, and the holders of Senior Indebtedness, on the other hand. Nothing
contained in this Schedule B or in the Notes is intended to or shall: (a) impair, as among the Company and the Noteholders, the obligation of the Company to pay to the Noteholders all amounts payable under the Notes as and when the same shall
become due and payable, all in accordance with the terms hereof and of the Notes and subject to the terms and conditions of this Schedule B; (b) prevent the Noteholders from exercising all remedies otherwise permitted by applicable law upon
default under this Note, subject to the terms and conditions of this Schedule B; or (c) limit the rights of Noteholders to pursue any rights or remedies hereunder or under applicable law, subject to the terms and conditions of this Schedule B.

 1.6 Payments Held in Trust. Should any distribution or the proceeds thereof, in respect of the Notes, be collected or
received by the Noteholders at a time when the Noteholders are not permitted to receive any such distribution or proceeds thereof, including, if the same is collected or received when there is or would be after giving effect to such payment, a
Payment Default or Non-payment Default, then the Noteholders shall forthwith deliver, or cause to be delivered, the same to the holders of Senior Indebtedness in precisely the form received by the Noteholders (except for any necessary endorsement)
and until so delivered the same shall be held in trust by the Noteholders for the benefit of the Lenders and the Credit Agent and shall not be commingled with other property of the Noteholders. 
 1.7 No Waiver of Subordination Provisions; Indemnification by Noteholders. No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company, or by any act or failure to act by any such holder, or by any noncompliance by
the Company with the terms, provisions and covenants of this Note, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. The Noteholder agrees to indemnify the holders of the Senior Indebtedness and to hold
the holders of the Senior Indebtedness harmless from and against any and all costs and expenses

  

 B - 3 









 
(including, without limitation, reasonable attorney’s fees and expenses) as they arise, relating to (i) any actions of the Noteholder taken contrary to this Schedule B and (ii) the
enforcement of this Schedule B by the holders of the Senior Indebtedness against the Noteholder. 
 1.8 Notices. The Noteholders
hereby agree, and by accepting delivery of any Note their assigns hereby agree, to provide to the Company notice in accordance with Section 9.1 of the Note of any change of address of such holder and the address of any assignee of any Note and
the Company agrees to update the Noteholder Register promptly upon receipt of such Notice. In so relying on the Noteholder Register, and otherwise delivering notice to the Noteholders as required by any section of this Schedule B, any holder of
Senior Indebtedness shall not be prejudiced and no holder of a Note shall benefit as the result of a failure of any Noteholder to receive the notice so given due to the holder of Senior Indebtedness having relied upon any incorrect notice
information provided to such holder by the Company or any failure by the Company to maintain an accurate Noteholder Register and provide it to any holder of Senior Indebtedness. 
 1.9 Benefits of Subordination. Each holder of Senior Indebtedness is entitled to rely on this Schedule B and is a beneficiary hereof, and
the holders of Senior Indebtedness are entitled to directly enforce the provisions of this Schedule B against the Noteholders and the Company (including having the right to bring an action for specific performance or other equitable relief, and
without requiring that all holders of Senior Indebtedness or the Notes be named as parties in such action). 
  

 B - 4 









 SCHEDULE C 
 NOTICE ADDRESSES FOR HOLDINGS OF SENIOR INDEBTEDNESS 
 (as of July
    , 2008) 
 JP Morgan Chase Bank, N.A. 
 120 S. LaSalle St., 8th Floor 
 Chicago, Illinois 60603 
 Attention: Michael Culbertson 
 Telecopy: (312) 661-9604 
 with a copy to: 
 JP Morgan Chase Bank, N.A. 
 One Chase Square,
Tower 25 
 Rochester, New York 14643 
 Attention: John Hariaczyi 
 Telecopy: (585) 258-7440 
 JP Morgan Chase Bank, N.A., 
   Toronto Branch 
 200 Bay Street, Suite 1800 
 Toronto, Ontario M5J
2J2 
 Attention: Funding Office 
 Telecopy: (416) 981-9174 
 The Bank of New York 
 101 Barclay Street, Floor 8W 
 New York, New York 10286 
 Attention: Corporate Trust Administration 
 Telecopy: (212) 815-5707 
 Associated Bank, National Association 
 200 North Adams Street 
 Green Bay, Wisconsin 54301 
 Attention: Mr. Stephen E. Pasowicz 
 Telecopy: (920) 433-3290 
  

 C - 1 









 EXHIBIT 2.5.1 
  

			
	ATLANTIC PAPER & FOIL CORP & AFFILIATES	 	
	COMBINING BALANCE SHEET AND WORKING CAPITAL
	DECEMBER 31, 2007	 	


																										
	 	 	APF	 	 	CLC	 	 	APF
GA	 	 	LAKESIDE	 	APF
LLC	 	 	BLUE
SKIES	 	 	260G
	 CASH & CASH EQUIVALENTS
	 	$	988,598	  	 			 	$	143,741	  	 	$	—  	 	$	754,805	  	 	$	303,473	  	 	$	20,228
	 INVESTMENT IN AFFILIATE
	 	 	2,229,764	  	 			 				 			 	 	—  	  	 				 		
	 INVESTMENTS AVAILABLE FOR SALE
	 				 			 				 			 				 				 	 	5,882,253
								
	 GROSS ACCOUNTS RECEIVABLE
	 	 	7,636,739	  	 			 	 	7,407,753	  	 			 	 	8,411,897	  	 				 		
	 ALLOWANCE FOR DOUBTFUL ACCOUNTS
	 	 	—  	  	 			 	 	—  	  	 			 	 	(28,215	) 	 				 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 ACCOUNTS RECEIVABLE, NET
	 	 	7,638,739	  	 			 	 	7,407,753	  	 			 	 	8,383,682	  	 				 		
								
	 INVENTORY, MATERIAL
	 	 	3,640,999	  	 			 	 	3,918,330	  	 			 	 	—  	  	 				 		
	 INVENTORY, OVERHEAD/PPV
	 	 	65,990	  	 			 	 	122,010	  	 			 				 				 		
	 INVENTORY RESERVE
	 	 	(219,286	) 	 			 	 	(108,343	) 	 			 				 				 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 INVENTORY, NET
	 	 	3,487,703	  	 			 	 	3,931,997	  	 			 				 				 		
								
	 EQUIPMENT SPARE PARTS INVENTORY
	 	 	100,000	  	 			 	 	150,000	  	 			 				 				 		
								
	 LOANS AND EXCHANGES
	 	 	4,063	  	 			 	 	7,025	  	 			 	 	168,460	  	 	 	—  	  	 	 	—  
	 PREPAID INSURANCE
	 	 	15,312	  	 			 	 	16,448	  	 			 	 	19,998	  	 	 	34,374	  	 	 	—  
	 PREPAID RENT
	 	 	22,164	  	 			 	 	—  	  	 			 	 	—  	  	 	 	—  	  	 	 	—  
	 OTHER RECEIVABLES, GA TAX CREDITS, ST
	 	 	—  	  	 			 	 	85,000	  	 			 	 	—  	  	 	 	—  	  	 	 	—  
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 PREPAID EXP & OTHER
	 	 	41,539	  	 			 	 	108,473	  	 			 	 	188,458	  	 	 	34,374	  	 	 	—  
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 TOTAL
   CURRENT
   ASSETS
	 	 	14,486,343	  	 	—  	  	 	 	11,741,964	  	 	 	—  	 	 	9,326,945	  	 	 	337,847	  	 	 	5,902,481
								
	 OTHER RECEIVABLES, GA TAX CREDITS, LT
	 				 			 	 	559,000	  	 			 				 				 		
	 MACHINERY & EQUIPMENT, NET
	 	 	6,848,314	  	 			 	 	2,227,056	  	 	 	8,044,438	 	 	221,741	  	 	 	23,151,771	  	 		
	 LAND & BUILDING-CAPITALIZED LEASE
	 	 	3,847,320	  	 			 				 			 				 				 		
	 INVESTMENTS-LT
	 				 			 				 			 				 				 	 	185,376
	 DEPOSITS
	 	 	72,024	  	 			 	 	25,450	  	 			 	 	100,000	  	 				 		
	 OTHER ASSETS
	 	 	83,488	  	 			 				 	 	31,994	 				 	 	35,592	  	 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 TOTAL
   ASSETS
	 	 	25,337,489	  	 	—  	  	 	 	14,553,470	  	 	 	8,076,432	 	 	9,648,686	  	 	 	23,525,210	  	 	 	6,087,857
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
								
	 CURRENT:
	 				 			 				 			 				 				 		
	 CURRENT MATURITIES OF BANK N/P & CAP LEASE
	 	$	272,405	  	 			 	$	171,741	  	 	$	693,049	 	$	68,637	  	 				 		
	 ACCOUNTS PAYABLE
	 	 	2,175,566	  	 	50,031	  	 	 	2,627,061	  	 	 	3,415,124	 	 	15,176,348	  	 				 		
								
	 ACCRUED PAYROLL
	 	 	141,650	  	 	—  	  	 	 	89,100	  	 	 	—  	 	 	45,500	  	 	 	—  	  	 		
	 ACCRUED COMMISSIONS
	 	 	—  	  	 	—  	  	 	 	—  	  	 	 	—  	 	 	366,000	  	 	 	—  	  	 		
	 ACCRUED AIRPLANE
	 	 	—  	  	 	—  	  	 	 	—  	  	 	 	—  	 	 	322,000	  	 	 	—  	  	 		
	 UNRECORDED INVOICES
	 	 	—  	  	 	—  	  	 	 	157,000	  	 	 	—  	 	 	—  	  	 	 	—  	  	 		
	 ACCRUED AUDIT/REVIEWS
	 	 	100,000	  	 	—  	  	 	 	—  	  	 	 	—  	 	 	—  	  	 	 	—  	  	 		
	 ACCRUED REBATES
	 	 	—  	  	 	—  	  	 	 	—  	  	 	 	—  	 	 	66,000	  	 	 	—  	  	 		
	 ACCRUED OTHER
	 	 	69,273	  	 	152,924	  	 	 	8,087	  	 	 	6,566	 	 	47,165	  	 	 	205,158	  	 		
	 401(K), FLEX SPENDING, DEPENDENT CARE
	 	 	—  	  	 	—  	  	 	 	(499	) 	 	 	—  	 	 	562	  	 	 	—  	  	 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 OTHER ACCRUED EXPENSES & TAXES PAYABLE
	 	 	310,923	  	 	152,924	  	 	 	253,688	  	 	 	6,566	 	 	847,227	  	 	 	205,158	  	 		
								
	 CURRENT MATURITY OF CAPIT GILPIN LEASE
	 	 	118,301	  	 			 				 			 				 				 		
	 CURRENT MATURITIES OF LT DEBT
	 	 	100,716	  	 			 				 			 	 	—  	  	 				 		
	 DUE FROM (TO) AFFILIATES
	 	 	(4,653,648	) 	 			 	 	906,160	  	 	 	1,452,734	 	 	(3,138,517	) 	 	 	1,068,271	  	 	 	5,305,626
	 SHAREHOLDERS’ LOAN PAYABLE
	 				 			 				 			 				 				 	 	250,000
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 TOTAL
   CURRENT
   LIABILITIES
	 	 	(1,676,737	) 	 	202,955	  	 	 	3,958,650	  	 	 	5,567,473	 	 	12,953,695	  	 	 	1,273,429	  	 	 	5,555,626
								
	 BANK NOTE PAYABLE & CAPITALIZED LEASE-LT
	 	 	364,732	  	 			 				 	 	715,369	 	 	156,736	  	 				 		
	 LONG TERM CAPITALIZED GILPIN LEASE
	 	 	3,900,915	  	 			 				 			 				 				 		
	 LONG TERM DEBT
	 	 	9,114,109	  	 			 				 	 	1,700,000	 				 	 	22,622,129	  	 		
	 SHAREHOLDERS’ LOAN PAYABLE
	 	 	1,875,000	  	 			 				 			 				 				 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 TOTAL
   LIABILITIES
	 	 	13,579,019	  	 	202,955	  	 	 	3,958,650	  	 	 	7,982,842	 	 	13,110,431	  	 	 	23,895,558	  	 	 	5,555,626
	 TOTAL
   SHAREHOLDERS’
   EQUITY
	 	 	11,758,470	  	 	(202,956	) 	 	 	10,594,820	  	 	 	93,590	 	 	(3,461,744	) 	 	 	(370,348	) 	 	 	532,231
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 TOTAL
   LIABILITIES
   AND
   SHAREHOLDERS’
   EQUITY
	 	 	25,337,489	  	 	—  	  	 	 	14,553,470	  	 	 	8,076,432	 	 	9,648,687	  	 	 	23,525,210	  	 	 	6,087,857
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
		 				 			 				 			 				 				 		


																											
	 	 	ELIMINATIONS
OF
INTERCOMPANY
ITEMS	 	 	GAAP
COMBINED	 	 	EXCLUDED
ITEMS	 	 	ADJUSTED
BS	 	 	NONWC
ACCOUNTS	 	 	ADJUSTED
WC	 	 	 	 
	 CASH & CASH EQUIVALENTS
	 				 	$	2,210,845	  	 	$	(2,210,845	) 	 	$	—  	  	 			 	$	—  	  	 		
	 INVESTMENT IN AFFILIATE
	 	($	2,229,764	) 	 	 	—  	  	 				 				 			 				 	(L	) 
	 INVESTMENTS AVAILABLE FOR SALE
	 				 	 	5,882,253	  	 	 	(5,882,253	) 	 	 	—  	  	 			 	 	—  	  	 	(H	) 
								
	 GROSS ACCOUNTS RECEIVABLE
	 	 	(15,027,242	) 	 	 	8,431,147	  	 				 	 	8,431,147	  	 			 	 	8,431,147	  	 	(M	) 
	 ALLOWANCE FOR DOUBTFUL ACCOUNTS
	 	 	—  	  	 	 	(28,215	) 	 	 	(69,424	) 	 	 	(97,639	) 	 	(8,333,506	) 	 	 	(97,639	) 	 	(C	) 
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
	 ACCOUNTS RECEIVABLE, NET
	 	 	(15,027,242	) 	 	 	8,402,932	  	 				 	 	(8,333,506	) 	 			 	 	8,333,508	  	 		
								
	 INVENTORY, MATERIAL
	 				 	 	7,559,329	  	 				 	 	7,559,329	  	 			 	 	7,559,329	  	 		
	 INVENTORY, OVERHEAD/PPV
	 				 	 	188,000	  	 				 	 	188,000	  	 			 	 	188,000	  	 		
	 INVENTORY RESERVE
	 				 	 	(327,629	) 	 				 	 	(327,629	) 	 			 	 	(327,629	)  	 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
	 INVENTORY, NET
	 				 	 	7,419,700	  	 				 	 	7,419,700	  	 			 	 	7,419,700	  	 		
								
	 EQUIPMENT SPARE PARTS INVENTORY
	 				 	 	250,000	  	 				 	 	250,000	  	 			 	 	250,000	  	 		
								
	 LOANS AND EXCHANGES
	 				 	 	179,548	  	 	 	(179,548	) 	 	 	—  	  	 			 	 	—  	  	 	(A	) 
	 PREPAID INSURANCE
	 				 	 	86,132	  	 	 	(51,572	) 	 	 	34,560	  	 			 	 	34,560	  	 	(B	) 
	 PREPAID RENT
	 				 	 	22,164	  	 				 	 	22,164	  	 			 	 	22,164	  	 		
	 OTHER RECEIVABLES, GA TAX CREDITS, ST
	 				 	 	85,000	  	 				 	 	85,000	  	 			 	 	85,000	  	 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
	 PREPAID EXP & OTHER
	 				 	 	372,844	  	 	 	(231,120	) 	 	 	141,724	  	 			 	 	141,724	  	 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
	 TOTAL
   CURRENT
   ASSETS
	 	 	(17,257,006	) 	 	 	24,538,574	  	 	 	(8,393,642	) 	 	 	16,144,932	  	 	—  	  	 	 	16,144,932	  	 		
								
	 OTHER RECEIVABLES, GA TAX CREDITS, LT
	 				 	 	559,000	  	 				 	 	559,000	  	 	(559,000	) 	 	 	—  	  	 		
	 MACHINERY & EQUIPMENT, NET
	 				 	 	40,493,320	  	 	 	(31,067,680	) 	 	 	9,425,640	  	 	(9,425,640	) 	 	 	—  	  	 	(G	) 
	 LAND & BUILDING-CAPITALIZED LEASE
	 				 	 	3,847,320	  	 	 	(3,847,320	) 	 	 	—  	  	 			 	 	—  	  	 	(G	) 
	 INVESTMENTS-LT
	 				 	 	185,376	  	 	 	(185,376	) 	 	 	—  	  	 			 	 	—  	  	 	(H	) 
	 DEPOSITS
	 				 	 	197,474	  	 	 	(100,000	) 	 	 	97,474	  	 	(97,474	) 	 	 	—  	  	 		
	 OTHER ASSETS
	 				 	 	151,074	  	 	 	(151,074	) 	 	 	—  	  	 			 	 	—  	  	 	(I	) 
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
	 TOTAL
   ASSETS
	 	 	(17,257,006	) 	 	 	69,972,138	  	 	 	(43,745,092	) 	 	 	26,227,046	  	 	(10,082,114	) 	 	 	16,144,932	  	 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
								
	 CURRENT:
	 				 				 				 				 			 				 		
	 CURRENT MATURITIES OF BANK N/P & CAP LEASE
	 	$	—  	  	 	$	1,205,832	  	 	$	(1,205,832	) 	 	$	—  	  	 			 	$	—  	  	 	(J	) 
	 ACCOUNTS PAYABLE
	 	 	(15,027,242	) 	 	 	8,416,888	  	 	 	(4,552,775	) 	 	 	3,864,113	  	 			 	 	3,864,113	  	 	(D	) 
								
	 ACCRUED PAYROLL
	 				 	 	276,250	  	 				 	 	276,250	  	 			 	 	276,250	  	 		
	 ACCRUED COMMISSIONS
	 				 	 	366,000	  	 				 	 	366,000	  	 			 	 	366,000	  	 		
	 ACCRUED AIRPLANE
	 				 	 	322,000	  	 	 	(322,000	) 	 	 	0	  	 			 	 	0	  	 	(E	) 
	 UNRECORDED INVOICES
	 				 	 	157,000	  	 				 	 	157,000	  	 			 	 	157,000	  	 		
	 ACCRUED AUDIT/REVIEWS
	 				 	 	100,000	  	 				 	 	100,000	  	 			 	 	100,000	  	 		
	 ACCRUED REBATES
	 				 	 	66,000	  	 				 	 	66,000	  	 			 	 	66,000	  	 		
	 ACCRUED OTHER
	 				 	 	489,173	  	 	 	(358,082	) 	 	 	131,091	  	 			 	 	131,091	  	 	(F	) 
	 401(K), FLEX SPENDING, DEPENDENT CARE
	 				 	 	63	  	 				 	 	63	  	 			 	 	63	  	 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
	 OTHER ACCRUED EXPENSES & TAXES PAYABLE
	 				 	 	1,776,486	  	 	 	(680,082	) 	 	 	1,096,404	  	 	—  	  	 	 	1,096,404	  	 		
								
	 CURRENT MATURITY OF CAPIT GILPIN LEASE
	 				 	 	118,301	  	 	 	(118,301	) 	 	 	—  	  	 			 	 	—  	  	 	(J	) 
	 CURRENT MATURITIES OF LT DEBT
	 				 	 	100,716	  	 	 	(100,716	) 	 	 	—  	  	 			 	 	—  	  	 	(J	) 
	 DUE FROM (TO) AFFILIATES
	 				 	 	940,626	  	 	 	(940,626	) 	 	 	—  	  	 			 	 	—  	  	 	(K	) 
	 SHAREHOLDERS’ LOAN PAYABLE
	 				 	 	250,000	  	 	 	(250,000	) 	 	 	—  	  	 			 	 	—  	  	 	(J	) 
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
	 TOTAL
   CURRENT
   LIABILITIES
	 	 	(15,027,242	) 	 	 	I2,808,549	  	 	 	(7,848,332	) 	 	 	4,960,517	  	 	—  	  	 	 	4,960,517	  	 		
								
	 BANK NOTE PAYABLE & CAPITALIZED LEASE-LT
	 				 	 	1,236,837	  	 	 	(1,236,837	) 	 	 	—  	  	 			 	 	—  	  	 	(J	) 
	 LONG TERM CAPITALIZED GILPIN LEASE
	 				 	 	3,900,915	  	 	 	(3,900,915	) 	 	 	—  	  	 			 	 	—  	  	 	(J	) 
	 LONG TERM DEBT
	 				 	 	33,436,238	  	 	 	(33,436,238	) 	 	 	—  	  	 			 	 	—  	  	 	(J	) 
	 SHAREHOLDERS’ LOAN PAYABLE
	 				 	 	1,875,000	  	 	 	(1,875,000	) 	 	 	—  	  	 			 	 	—  	  	 	(J	) 
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
	 TOTAL
   LIABILITIES
	 	 	(15,027,242	) 	 	 	53,257,839	  	 	 	(48,297,322	) 	 	 	4,960,517	  	 	—  	  	 	 	4,960,517	  	 		
	 TOTAL
   SHAREHOLDERS’
   EQUITY
	 	 	(2,229,754	) 	 	 	16,714,300	  	 	 	4,552,230	  	 	 	21,266,530	  	 	(21,266,530	) 	 	 	0	  	 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
	 TOTAL
   LIABILITIES
   AND
   SHAREHOLDERS’
   EQUITY
	 	 	(17,287,006	) 	 	 	69,972,139	  	 	 	(43,745,092	) 	 	 	26,227,047	  	 	(21,266,530	) 	 	 	4,960,517	  	 		
		 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
		 	 	Reported WC	  	 	 	11,729,725	  	 	 	ADJUSTED WC	  	 				 			 	 	11,184,415	  	 		










	(A)	Represents family members’ credit card balances, which amounts, determined as of the closing, shall be excluded from current assets for purposes of determining WC
under the APA. 


	(B)	Represents prepaid insurance for aircraft recorded in LLC ($17,198) and Blue Skies ($34,374), which amounts, determined as of the closing, shall be excluded from
current assets for purposes of determining WC under the APA. 


	(C)	Represents adjustment to increase bad debt, sales returns and discounts reserves to appropriate level to cover estimated potential losses based on actual uncollectibles
and deductions. The amount of the reserves, estimated as of closing, shall reduce the gross accounts receivable balance to be included in WC and will be recalculated as part of the working capital settlement using actual uncollectible accounts and
deductions consistent with the calculation of the $97,639 or where actual information is not available, reasonable estimates. 


	(D)	Excluded amount relates to balances owed to Ocean Associates (NY-$180K; GA-$775K; Lakeside-$3,413K, OSHA settlement of $88K related to closed NH facility (originally
$150K) and CLC accounts payable as well as $44,520 of LLC accounts payable excluded from assumed liabilities per disclosure schedules as well as $2,134 of AP on Lakeside for current debt payment, all of which items, determined as of the closing, are
excluded liabilities under the APA and shall be excluded from current liabilities for purposes of determining WC under the APA. 


	(E)	Represents airplane expense related accruals which liability, determined as of the closing, is an excluded liability under the APA and shall be excluded from current
liabilities for purposes of determining WC under the APA. 


	(F)	Represents CLC and Blue Skies accrued other balances, all of which items, determined as of the closing, are excluded liabilities under the APA and shall be excluded
from current liabilities for purposes of determining WC under the APA. 


	(G)	Represents excluded fixed assets in accordance with the APA (airplane owned by Blue Skies, personal automobiles, buildings and building improvements and personal
computers). 


	(H)	Represents investments held by 260G, an excluded entity in accordance with the APA. 


	(I)	Represents security deposits, closing costs (plane/buildings), and other deposits that are excluded assets in accordance with the APA. 


	(J)	Represents debt and debt like items in accordance with APA. 


	(K)	Represents excluded liabilities under the APA, which shall be excluded from current liabilities for purposes of determining WC under the APA. 


	(L)	Represents APF investments in affiliates, which are not included in the transaction under the APA. 


	(M)	Eliminations represent billings between the sales entity and the manufacturing locations as all external sales, except scrap sales are made through the sales entity,
which purchases the product from the manufacturing locations. All of the foregoing are intercompany items and therefore eliminated and the amount thereof, determined as of the closing, shall be eliminated for purposes of determining WC under the
APA. 









 Exhibit 3.5 
 Purchased Business Financial Statements 








 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of
Georgia, LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 

  
  
 Combined Financial Statements 
 Year Ended December 31, 2007

  

 1 









 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of
Georgia, LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 

 Contents 
  
  

			
	 Independent Auditors’ Report
	  	3
		
	 Combined financial statements:
	  	
	 Balance sheet
	  	4
	 Statement of income and comprehensive income
	  	5
	 Statement of shareholders’ equity and members’ capital
	  	6
	 Statement of cash flows
	  	7
	 Summary of significant accounting policies
	  	8-12
	 Notes to combined financial statements
	  	13-23

  

 2 









 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of
Georgia, LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 

 Combined Balance Sheet 
  
  
  

				
	 December 31,
	  	2007
	 Assets
	  		
	 Current:
	  		
	 Cash and cash equivalents
	  	$	2,210,845
	 Marketable securities
	  	 	5,882,253
	 Accounts receivable – trade (Note 10(a)) net of allowance for doubtful accounts of $28,215
	  	 	8,402,933
	 Inventories – net (Note 1)
	  	 	7,419,700
	 Equipment spare parts inventory
	  	 	250,000
	 Prepaid expenses and other current assets
	  	 	372,844
		  	 	 
	 Total current assets
	  	 	24,538,575
	 Property, plant and equipment, less accumulated depreciation and amortization (Notes 3, 4(a), 5 and 6)
	  	 	40,493,320
	 Property and building under capitalized lease – Gilpin (Note 4(b))
	  	 	3,847,320
	 Deposits
	  	 	197,474
	 Other assets
	  	 	895,450
		  	 	 
		  	$	69,972,139
		  	 	 
	 Liabilities and Shareholders’ Equity and Members’ Capital
	  		
	 Current:
	  		
	 Current maturities of bank notes and loans payable (Note 5)
	  	$	1,205,832
	 Current maturity of capitalized Gilpin lease (Note 7)
	  	 	118,301
	 Current maturities of long-term debt (Note 6)
	  	 	100,716
	 Accounts payable
	  	 	8,416,888
	 Accrued expenses and taxes payable
	  	 	1,776,486
	 Due to related parties (Note 2(c))
	  	 	940,626
	 Due to shareholders, unsubordinated
	  	 	250,000
		  	 	 
	 Total current liabilities
	  	 	12,808,849
	 Bank notes and loans payable, less current maturities (Note 5)
	  	 	1,236,837
	 Long-term capitalized Gilpin lease (Note 7)
	  	 	3,900,915
	 Long-term debt, less current maturities (Note 6)
	  	 	33,436,238
	 Shareholders’ loans payable, subordinated (Note 8)
	  	 	1,875,000
		  	 	 
	 Total liabilities
	  	 	53,257,839
		  	 	 
	 Commitments and contingencies (Notes 5, 6 and 9)
	  		
	 Shareholders’ equity and members’ capital
	  		
	 Common stock (Note 11)
	  	 	5,500
	 Additional paid-in capital (Note 11)
	  	 	178,703
	 Accumulated other comprehensive income
	  	 	445,235
	 Retained earnings and members’ capital (Notes 12 and 14)
	  	 	16,084,862
		  	 	 
	 Total shareholders’ equity and members’ capital
	  	 	16,714,300
		  	 	 
		  	$	69,972,139
		  	 	 

 See accompanying notes to combined financial statements. 
  

 4 









 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of
Georgia, LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 

 Combined Statement of Income and Comprehensive Income 
  
  
  

					
	 Year ended December 31,
	  	2007	 
	 Net sales (Note 10(a))
	  	$	79,443,648	  
	 Cost of sales (Note 10(b))
	  	 	59,290,285	  
		  	 	 	 
	 Gross profit
	  	 	20,153,363	  
		  	 	 	 
	 Operating expenses (income):
	  			
	 Selling and delivery (Note 2)
	  	 	5,138,618	  
	 General and administrative
	  	 	6,167,377	  
	 Gain on sale of aircraft
	  	 	(1,235,820	) 
		  	 	 	 
	 Total operating expenses – net
	  	 	10,070,175	  
		  	 	 	 
	 Operating income
	  	 	10,083,188	  
		  	 	 	 
	 Other income (expenses):
	  			
	 Interest and other income
	  	 	145,869	  
	 Interest expense
	  	 	(1,609,621	) 
	 Interest on capitalized lease obligation
	  	 	(273,344	) 
	 Other expense
	  	 	(3,419	) 
		  	 	 	 
	 Total other expenses – net
	  	 	(1,740,515	) 
		  	 	 	 
	 Income before tax expense
	  	 	8,342,673	  
	 Tax expense (Note 12)
	  	 	3,596	  
		  	 	 	 
	 Net income
	  	 	8,339,077	  
		  	 	 	 
	 Other comprehensive income:
	  			
	 Unrealized gain in marketable securities (net of zero tax)
	  	 	445,235	  
		  	 	 	 
	 Comprehensive income:
	  	$	8,784,312	  
		  	 	 	 

 See accompanying notes to combined financial statements. 
  

 5 









 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of
Georgia, LLC 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC, 
 and 260 G Ventures LLC 

 Combined Statement of Shareholders’ Equity and Members’ Capital 
  
  
  

																		
	 	  	Common stock
(Note 10)	  	Additional
Paid-in Capital	  	Retained Earnings
and Members’
Capital	 	 	Accumulated other
Comprehensive
Income	  	Total
Shareholders’
Equity and
Members’ Capital	 
	 Balance, December 31, 2006, as previously reported
	  	$	5,500	  	$	178,703	  	$	13,299,038	  	 	 	—  	  	$	13,483,241	  
		  	 	 	  	 	 	  	 	 	 	 	 	 	  	 	 	 
	 Prior period adjustments (Note 14)
	  	 	—  	  	 	—  	  	 	550,747	  	 	 	—  	  	 	550,747	  
		  	 	 	  	 	 	  	 	 	 	 	 	 	  	 	 	 
	 Balance, January 1, 2007, as restated
	  	$	5,500	  	$	178,703	  	$	13,849,785	  	 	 	—  	  	$	14,033,988	  
		  	 	 	  	 	 	  	 	 	 	 	 	 	  	 	 	 
	 Net income
	  	 	—  	  	 	—  	  	 	8,339,077	  	 	 	—  	  	 	8,339,077	  
	 Increase in equity related to 260 G Ventures (Not e 2(b))
	  	 	—  	  	 	—  	  	 	76,000	  	 	 	—  	  	 	76,000	  
	 S corporation distributions
	  	 	—  	  	 	—  	  	 	(6,180,000	) 	 	 	—  	  	 	(6,180,000	) 
	 Unrealized gain on marketable securities, net
	  	 	—  	  	 	—  	  	 	—  	  	 	 	445,235	  	 	445,235	  
		  	 	 	  	 	 	  	 	 	 	 	 	 	  	 	 	 
	 Balance, December 31, 2007
	  	$	5,500	  	$	178,703	  	$	16,084,862	  	 	$	445,235	  	$	16,714,300	  
		  	 	 	  	 	 	  	 	 	 	 	 	 	  	 	 	 

  
  
 See accompanying notes to combined financial statements. 
  


 6 









 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of
Georgia, LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC, 
 and 260 G Ventures LLC 

 Combined Statement of Cash Flows (Note 13) 
  
  
  

					
	 Year ended December 31,
	  	2007	 
	 Cash flows from operating activities:
	  			
	 Net income
	  	$	8,339,077	  
	 Adjustments to reconcile net income to net cash provided by operating activities:
	  			
	 Depreciation and amortization
	  	 	3,507,346	  
	 Depreciation of capitalized building
	  	 	189,299	  
	 Gain on sale of aircraft
	  	 	(1,235,820	) 
	 Changes in assets and liabilities:
	  			
	 Accounts receivable – trade
	  	 	(433,586	) 
	 Inventories
	  	 	(1,696,207	) 
	 Equipment spare parts inventory
	  	 	(250,000	) 
	 Prepaid expenses and other current assets
	  	 	(179,319	) 
	 Other assets
	  	 	32,517	  
	 Accounts payable
	  	 	136,076	  
	 Accrued expenses and taxes payable
	  	 	50,741	  
	 Due to related parties
	  	 	1,113,210	  
		  	 	 	 
	 Net cash provided by operating activities
	  	 	9,573,334	  
		  	 	 	 
	 Cash flows from investing activities:
	  			
	 Capital expenditures
	  	 	(3,145,886	) 
	 Equity investment in 260 G Ventures, LLC
	  	 	76,000	  
	 Investment in marketable securities
	  	 	(5,437,018	) 
	 Proceeds from sale of property and equipment
	  	 	13,513,500	  
		  	 	 	 
	 Net cash provided by investing activities
	  	 	5,006,596	  
		  	 	 	 
	 Cash flows from financing activities:
	  			
	 Distribution to stockholders’
	  	 	(6,180,000	) 
	 Repayments of bank notes payable
	  	 	(1,312,256	) 
	 Proceeds from bank notes payable
	  	 	53,066	  
	 Loans from shareholders
	  	 	250,000	  
	 Repayments of long-term debt
	  	 	(12,826,206	) 
	 Repayments of capitalized lease
	  	 	(110,656	) 
		  	 	 	 
	 Net cash used in financing activities
	  	 	(20,126,052	) 
		  	 	 	 
	 Net decrease in cash and cash equivalents
	  	 	(5,546,122	) 
	 Cash and cash equivalents, beginning of year
	  	 	7,756,967	  
		  	 	 	 
	 Cash and cash equivalents, end of year
	  	$	2,210,845	  
		  	 	 	 

 See accompanying notes to combined financial statements. 
  

 7 









 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of
Georgia, LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC, 
 and 260 G Ventures LLC 

 Summary of Significant Accounting Policies 
  
  
  

			
	Basis of Financial Statement Presentation	  	The combined financial statements include the accounts of Atlantic Paper & Foil Corp. of NY, (“AP&F”), Consumer Licensing Corporation, (“CLC”),
Atlantic Paper and Foil, LLC, Atlantic Paper and Foil of Georgia, LLC (“APFG”) and Atlantic Lakeside Properties, LLC (“ALP”), Blue Skies EL 600, LLC (Blue) and 260 G Ventures LLC (260 G). APFG and ALP were formed in December 2002
as part of a real property purchase and sale agreement between APFG, ALP and AP&F and an unrelated third party (See Note 3). The financial statements of these entities (collectively referred to as the “Company” or
“Companies”) are being presented on a combined basis due to common ownership and control. All significant intercompany balances and transactions have been eliminated.
		
	Description of Business	  	AP&F, APFG, are engaged in the manufacture, conversion and sale of paper products and packaging material. ALP owns and manages the Thomaston Georgia facility. CLC was formed
for the purpose of obtaining design licenses for tissue boxes and reselling them. CLC has had no activity since 2001 other than the settlement of certain liabilities. Blue is engaged in the charter of an airplane both for the companies benefit as
well as for outside charters. 260 G is an investment company that currently has invested funds in a brokerage account with an investment bank (See Note 2(b)).
		
	Revenue Recognition	  	Sales are recognized upon the shipment of finished goods to customers. Allowances for cash discounts and returns are recorded in the period in which the related sale is
recognized. Revenue is recognized for airplane charters when the service is provided and investment income is recognized when earned. There were no airplane charters to outside third parties in 2007.

  

 8 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC, 
 and 260 G Ventures LLC 
 Summary of Significant Accounting Policies 
  
  
  


			
	Use of Estimates	  	The financial statements are prepared in accordance with accounting principles generally accepted in the United States. The accounting principles used require the Companies to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the
reporting periods presented. The Company believes in the quality and reasonableness of its critical accounting policies; however, it is likely that materially different amounts would be reported under different conditions or using assumptions
different from those that the Company has consistently applied.
		
	Cash and Cash Equivalents	  	The Company considers all highly liquid cash instruments purchased with a maturity of three months or less to be cash equivalents.
		
	Accounts Receivable	  	Accounts receivable are uncollateralized customer obligations due for products sold. The accounts receivable are due under normal trade terms requiring payment within 30 days
from the invoice date. Management reviews accounts receivable on a monthly basis to determine if any receivables will potentially be uncollectible and any balances determined to be uncollectible are written off. Although no assurance can be given as
to the collectibility of the accounts receivable, based on the information available, management believes all balances are collectible.
		
	Inventories	  	Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method.

  

 9 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC, 
 and 260 G Ventures LLC 
 Summary of Significant Accounting Policies 
  
  
  


			
	Investments	  	Investments in marketable securities, which consist of debt and equity securities, are classified as available for sale under the provisions of Statement of Financial Accounting
Standards (“SFAS”) No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, and are stated at fair market value. At December 31, 2007 the cost of marketable securities and short-term investments was
approximately $5,437,000. Unrealized gains and losses are presented as a separate component of stockholder’s equity and member capital and in other comprehensive income.
		
	Advertising Costs	  	Advertising costs are charged to expense in the year incurred and amounted to approximately $653 for the year ended December 31, 2007.
		
	Property, Plant, Equipment and Depreciation	  	Property, plant and equipment is stated at cost. Depreciation is computed using both straight-line and accelerated methods over the estimated useful lives of the assets for both
financial reporting and income tax purposes.
		
	Long Lived Assets	  	Long lived assets are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the
estimated undiscounted future cash flows from the use of these assets. When any such impairment exists, the related assets will be written down to fair value. There were no impairment losses incurred through December 31, 2007.

  

 10 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC, 
 and 260 G Ventures LLC 
 Summary of Significant Accounting Policies 
  
  
  


			
	Taxes on Income	  	The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. Under this standard, deferred taxes on income are provided for those
items for which the reporting period and methods for income tax purposes differ from those used for financial statement purposes using the asset and liability method. Deferred income taxes are recognized for the tax consequences of “temporary
differences” by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. For the year ended December 31, 2007, any
deferred income tax liability (asset) resulting from temporary differences was immaterial.
		
		  	The Company has elected to be taxed as an S Corporation or Partnership for federal tax purposes; therefore, federal taxes on the Company’s income are the responsibility of
the individual stockholders or partners. The Company is liable for certain state taxes.
		
	Concentrations of Credit Risk	  	Financial instruments which potentially subject the Company to a concentration of credit risk consist principally of temporary cash investments and accounts
receivable.
		
		  	The Company places its temporary cash investments with financial institutions insured by the FDIC. At times, such investments were in excess of the FDIC insurance
limit.
		
		  	Concentrations of credit risk with respect to trade receivables are limited due to the diverse group of manufacturers, wholesalers and retailers to whom the Companies sell (see
Note 10). The Companies review a customer’s credit history and other public information where available before extending credit. The Companies have not established an allowance for doubtful accounts as none is considered necessary, based upon
factors such as the credit risk of specific customers, historical trends, other information and past bad debt history which has been immaterial and within the Companies expectations.

  

 11 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC, 
 and 260 G Ventures LLC 
 Summary of Significant Accounting Policies 
  
  
  


			
	Shipping and Handling Costs	  	 The Company follows Emerging Issues Task Force Statement No. 00-10, “Shipping and Handling Fees and Costs”, which requires
that freight costs charged to customers be classified as revenues.
  
 The
Company has included freight out as a component of selling and delivery expenses which amounted to approximately $3,271,000 for the year ended December 31, 2007.

		
	Fair Value of Financial Instruments	  	The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value because of the current
nature of these instruments. The carrying amounts of debt instruments approximate fair value based upon the terms of the instruments. The fair value of the loans due to and from affiliates and shareholders are difficult to estimate due to their
related party nature.
		
	Deferred Financing Costs	  	Eligible costs associated with obtaining debt financing are capitalized and amortized over the related term of the applicable debt instruments, which approximates the effective
interest method. Amortization expense amounted to $39,075 for the year ended December 31, 2007.
		
	Government Grants	  	The Company treats grants subject to repayment provisions as a liability and amortizes such liability against the value of the assets purchased with the grant funds as the
Company reaches the defined thresholds which no longer require repayment.

  

 12 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 
 Notes to Combined Financial Statements 
  
  
  


						
	 1.      Inventories
	 	Inventories are summarized as follows:
	 	  
 December 31,
	  	2007
	 	 Raw materials
	  	$	5,175,306
	 	 Finished goods
	  	 	2,572,023
	 		  	 	 
	 		  	 	7,747,329
	 		  	 	 
	 	 Less: Inventory Reserves
	  	 	327,629
	 		  	 	 
	 		  	$	7,419,700
	 		  	 	 
		
	 2.      Related Party Transactions
	 	 a)      Terrapin Express Corp.
  
 Terrapin Express Corp., a corporation related through common
ownership, provides shipping and handling services to the Company. The Company purchased approximately $557,300 in shipping and handling services from this related party in 2007.

		
		 	 b)      260 G Ventures LLC
  
 The members of 260 G effective October 31, 2007 assigned their
membership interests to Atlantic Paper and Foil Corp. of N.Y. The operations of 260 G have been included in the combined financial statements effective as of that date.

		
		 	 c)      Atlantic Long Island Properties
Inc.
  
 AP&F and CLC on December 9, 2005 entered into
a capital lease with Atlantic Long Island Properties, Inc. (“ALIP”) ending on January 31, 2026 (see Note 4(b)). Amounts due to ALIP at December 31, 2007 amounted to $940,626 and are expected to be paid in 2008.

		
	 3.      Acquisition and Financing of Thomaston Facility
	 	In December 2002, AP&F entered into an Agreement of Sale, as amended, with an unaffiliated third party to purchase a 330,000 square foot manufacturing and
distribution facility in Thomaston, Georgia. In conjunction with this Agreement, ALP was established as a real estate holding company to manage the facility and concurrently, APFG was created to operate the facility in accordance with a sublease
agreement by and among ALP and APFG. AP&F, ALP and APFG are all under common ownership and control.

  
  
 See accompanying independent accountants’ review report. 
  

 13 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 
 Notes to Combined Financial Statements 
  
  
  


								
		  	The purchase price paid, net of acquisition expenses of approximately $300,000, amounted to approximately $3.7 million. The financing of this transaction ($2.3 million)
was achieved partially through $4 million of Industrial Development Authority (“IDA”) Series 2002A bonds issued by Thomaston-Upson County, through a certain lease agreement between ALP and the IDA (the remainder of the bond proceeds were
used for equipment financing and closing costs) and a $1.7 million Edge Grant issued by the Thomaston Development Authority to AP&F (See Note 6(b)).
	  
 4.      Property, Plant and Equipment
	  	  
 (a)    Property, plant and equipment consists of the following:

	  	 December 31,
	  	2007	  	  
 Useful Life
Years

	  	 Land
	  	$	1,940,000	  	—  
	  	 Land improvements
	  	 	260,865	  	15
	  	 Buildings and building improvements
	  	 	7,268,122	  	7-39
	  	 Machinery, equipment and related production fixtures
	  	 	25,128,965	  	3-7
	  	 Office furniture and equipment
	  	 	392,259	  	3-7
	  	 Automobiles
	  	 	571,698	  	5
	  	 Airplane
	  	 	23,684,677	  	20
	  		  	 	 	  	 
	  		  	 	59,246,586	  	
	  	 Less: accumulated depreciation and amortization
	  	 	18,753,266	  	
	  		  	 	 	  	 
	  	 Net property and equipment
	  	$	40,493,320	  	
		  		  	 	 	  	 
		
	 Property and Building under Capitalized Lease-Gilpin
	  	 (b)    Property and building under capitalized lease - Gilpin (see Note 7 and 14) consists of
the following:

	  	  	 December 31,
	  	2007	  	  
 Useful
Life
Years

	  	 Land
	  	$	424,169	  	—  
	  	 Building
	  	 	3,817,524	  	39
	  		  	 	 	  	 
	  		  	 	4,241,693	  	
	  	 Less: accumulated depreciation
	  	 	394,373	  	
	  		  	 	 	  	 
	  	 Net property and equipment
	  	$	3,847,320	  	
		  		  	 	 	  	 

 See accompanying independent accountants’ review report. 
  

 14 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 
 Notes to Combined Financial Statements 
  
  
  


						
		 	Depreciation expense for the year ended December 31, 2007 amounted to $3,657,570.
		
	 5.      Bank Notes Payable; Lines of Credit and Term Loans
	 	Bank notes, lines of credit and loans payable consists of the following:
	 	  
 December 31,
	  	2007
	 	 Term note maturing November 2007 (A)
	  	$	171,741
	 	 Term note maturing August 2009 (B)
	  	 	1,342,667
	 	 Term note maturing November 2009 (C)
	  	 	345,593
	 	 Term note maturing January 2010 (D)
	  	 	118,963
	 	 Term notes maturing through July 2012 (E)
	  	 	463,705
	 		  	 	 
	 		  	 	2,442,669
	 	 Less: current portion
	  	 	1,205,832
	 		  	 	 
	 		  	$	1,236,837
	 		  	 	 
		
		 	 (A)   In May 2003, AP&F signed three term notes for $1,990,000, the proceeds of which
were used to pay for equipment. The notes provides for 60 monthly payments of $38,361 each, including interest at the rate of 5.88% per annum.

		
		 	 (B)   In August 2004, ALP entered into a term note in the amount of $3,100,000 for the purchase
of equipment. The note provides for 60 monthly payments of $60,402 each commencing December 2004, including interest at the rate of 5.98% per annum. The note is collateralized by the equipment.

		
		 	 (C)   In September 2004, AP&F entered into a term note in the amount of $820,000 for the
purchase of equipment. The note provides for 60 monthly payments of $16,006 each commencing December 2004, including interest at the rate of 6.40% per annum. The note is collateralized by the equipment.

		
		 	 (D)   In January 2005, AP&F entered into a term note in the amount of $260,000 for the
purchase of equipment. The note provides for 60 monthly payments of $5,112 each, commencing February 2005, including interest at the rate of 6.55% per annum. The note is collateralized by the equipment.

		
		 	 (E)   Various notes with maturity dates ranging from October 2007 through July 2012 were used
to purchase automobiles and other equipment. The notes provide for monthly payments ranging from $380 to $1,604, with interest rates ranging from zero to 7.99% per annum.


  
  
 See accompanying independent accountants’ review report. 
  

 15 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 
 Notes to Combined Financial Statements 
  
  
  


						
		 	Annual principal maturities of the Company’s bank notes payable are as follows:
	  	 	  
 Year ending
December 31,
	  	 
	 	 2008
	  	$	1,205,832
	 	 2009
	  	 	1,035,853
	 	 2010
	  	 	97,184
	 	 2011
	  	 	79,322
	 	 2012
	  	 	18,392
	 	 Thereafter
	  	 	6,086
	 		  	 	 
	 		  	$	52,442,669
	 		  	 	 
		
		 	Covenants
		
		 	Certain of the debt agreement require, among other things, the maintenance of minimum tangible net worth amounts for the Company on a combined basis, as defined. The
Company is in compliance with all its bank covenants as of December 31, 2007.
		
	 6.      Long-Term Debt
	 	Long-term debt consists of the following:
	  	 	  
 December 31,
	  	2007
	 	 Second mortgage (A)
	  	$	4,750,000
	 	 GE Capital Loan – Airplane (C)
	  	 	22,622,129
	 	 Thomaston Development Authority Edge Grant (B)
	  	 	1,700,000
	 	 Mortgage payable – bank maturing December 2030 (D)
	  	 	4,464,825
	 		  	 	 
	 		  	 	33,536,954
	 	 Less: current portion
	  	 	100,716
	 		  	 	 
	 		  	$	33,436,238
	 		  	 	 

  
  
 See accompanying independent accountants’ review report. 
  

 16 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 
 Notes to Combined Financial Statements 
  
  
  


			
		  	 (A)   Second Mortgage

		
		  	 In September 2006, APFC NY entered into a second mortgage agreement in the amount of $4,750,000. The loan provides for interest only payments for the
first twenty-four months, at the interest rate of 7.05%. After that, the agreement calls for monthly payments of principal and interest of $34,000 through September 2025 and a balloon payment in October 2025 for the remaining balance
due.

		
		  	 (B)   Edge Grant

		
		  	 Borrowings issued by the Thomaston Development Authority in connection with the Thomaston facility purchase are non-interest bearing and contain
repayment features subject to minimum annual levels of capital investment and employee workforce through 2010. Repayment of the Edge grant is predicated on a pro-rata portion of the above thresholds not being met through 2010. If the threshold
criteria is met throughout the term of the grant, no repayment is warranted. At December 31, 2007, the entire grant has been classified as a long term debt. Although the Companies have achieved some investment and workforce levels through 2007,
there is uncertainty as to whether they will achieve the investment and workforce thresholds as outlined in the agreement through 2010 and the impact that will have on the required repayment.


  
  
 See accompanying independent accountants’ review report. 
  

 17 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 
 Notes to Combined Financial Statements 
  
  
  


						
		  	 (C)   GE Capital Loan - Airplane

		
		  	 In November 2007, Blue Skies entered into a loan agreement for $22,622,129 in connection with an airplane purchase.

		
		  	 The loan provides for interest only payments for the first twelve months, at the interest rate of 6.16%. After that, the agreement calls
for monthly payments of principal and interest of $200,910 through November 2016 and a balloon payment in December 2016 for the remaining balance due.

		
		  	 (D)   Mortgage Payable - Bank Maturing December 2030

		
		  	 In December 2005, AP&F NY entered into a mortgage agreement in the amount of $4,624,027 to be used to refinance and consolidate
previously existing debt. The loan provides for interest and principal payments in the amount of approximately $30,900. The loan bears interest of 6.4% per annum and the repayment term is through December 2030.

		
		  	 Annual principal maturities of long-term debt are as follows:

	  	  	  
 Year ending
December 31,
	  	 
	  	 2008
	  	$	100,716
	  	 2009
	  	 	1,130,211
	  	 2010
	  	 	1,292,517
	  	 2011
	  	 	1,375,483
	  	 2012
	  	 	1,463,782
	  	 Thereafter
	  	 	28,174,245
	  		  	 	 
	  		  	$	33,536,954
		  		  	 	 

  
  
 See accompanying independent accountants’ review report. 
  

 18 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 
 Notes to Combined Financial Statements 
  
  
  


						
	 7.      Capitalized Lease - Gilpin
	 	The Company leases property and a building from ALIP under a capital lease. The obligation under a capital lease at December 31, 2007 consist of the following:

	  	 	  
 December 31,
	  	2007
	 	 Property and building lease expiring through January 2026, payable in monthly installments of $32,000 including imputed interest
at a rate of 6.7%
	  	$	4,019,216
	 		  	 	 
	 	 Less: Current maturities of capital lease obligation
	  	 	118,301
	 		  	 	 
	 	 Obligation under capitalized lease, net of current maturities
	  	$	3,900,915
		 		  	 	 
			
		 	Future minimum payments under the obligation are as follows:	  		
	  	 	  
 Year ending
December 31,
	  	 
	 	 2008
	  	$	384,000
	 	 2009
	  	 	384,000
	 	 2010
	  	 	384,000
	 	 2011
	  	 	384,000
	 	 2012
	  	 	384,000
	 	 Thereafter
	  	$	5,024,000
	 		  	 	 
	 	 Total minimum lease payments
	  	$	6,944,000
	 		  	 	 
	 	 Less: Amount representing interest
	  	 	2,924,784
	 		  	 	 
	 	 Present value of net minimum lease payment
	  	$	4,019,216
		 		  	 	 
		
	 8.      Shareholders’ Loans Payable
	 	Shareholders’ loans are subordinated to the banks, due on demand and are non-interest bearing (See Notes 5 and 6).

  
  
 See accompanying independent accountants’ review report. 
  

 19 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 
 Notes to Combined Financial Statements 
  
  
  


			
	 9.      Commitments and Contingencies
	  	 (a)    Operating leases

	  	  
 In April 2007, AP&F entered into a six
month operating lease for the use of a building in Hauppauge, New York for warehousing. In October 2007, the lease was extended through April 16, 2008. Minimum annual rentals under this lease amount to approximately $266,000 per
annum.

		
		  	 Rental expense charged to operations was approximately $201,000 for the year ended December 31, 2007.

		
		  	 (b)    Litigation

		
		  	 The Company is a party to various litigation matters arising in the ordinary course of business. In the opinion of management, the outcome of these
litigation matters will not have a material adverse effect on the Company’s financial position.

		
	 10.    Significant Concentrations
	  	 (a)    Major customers

		
		  	 During the year ended December 31, 2007, sales to three major customers accounted for approximately 51% of revenues and 58% of accounts receivable.


		
		  	 (b)    Major vendors

		
		  	 During the year ended December 31, 2007, the Company purchased approximately 66% of its merchandise from four major suppliers. If the
Company’s relationship with these suppliers were disrupted, the Company believes it could purchase from other suppliers without negative impact on its business.


  
  
 See accompanying independent accountants’ review report. 
  

 20 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 
 Notes to Combined Financial Statements 
  
  
  


						
	11.    Common Stock and         Additional Paid-in Capital
	  	 December 31,
	  	2007
	  	 Common stock:
	  		
	  	 Atlantic Paper & Foil Corp. of NY – no par value, 200 shares authorized, 100 shares issued and
Outstanding
	  	$	500
	  	 Consumer Licensing Corporation – no par value, 200 shares, authorized, 100 shares issued and outstanding
	  	 	5,000
	  		  	 	 
	  		  	$	5,500
	  	 Additional paid-in capital:
	  		
	  	 Atlantic Paper & Foil Corp. of NY
	  	$	178,703
		  		  	 	 
		
	 12.    Tax Expense and Retained Earnings
	  	AP&F and CLC, accrual basis taxpayers, have elected to be treated as “S” Corporations and the shareholders have consented to include their respective
shares of AP&F and CLC’s taxable income in their individual tax returns. In addition, Atlantic Paper & Foil, LLC, ALP, APFG, Blue and 260G have been organized as limited liability companies and accordingly, the members will include
their respective membership interests of Atlantic Paper & Foil, LLC, ALP and APFG taxable income in their individual tax returns. The Company provides for certain New York State corporate-level income taxes.
		
		  	Retained earnings at December 31, 2007 includes approximately $9,372,000 of previously taxed income which may be distributed tax-free to shareholders.

  
  
 See accompanying independent accountants' review report. 
  


 21 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 
 Notes to Combined Financial Statements 
  
  
  


								
	 13.    Statement of Cash Flows
	  	 (a)    
	  	Supplemental disclosures of cash flow information are as follows:	  		
				
		  		  	Cash paid during the year for:	  		
	 	  	  	  	  
 Year ended December 31,
	  	2007
	  		  	 Interest
	  	$	1,683,598
	  		  		  	 	 
	  		  	 Taxes
	  	$	3,596
	  		  		  	 	 
			
		  		  	Non cash financing and investing activities:
			
		  	 (b)
	  	During the year ended December 31, 2007, the Company purchased fixed assets with a total cost of $25,768,015, of which $22,622,129 was in exchange for debt
instruments. (See Note 6).
			
		  	(c)	  	Unrealized gain on marketable securities of $445,235 for December 31, 2007.

  
  
 See accompanying independent accountants’ review report. 
  

 22 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 Atlantic Lakeside Properties, LLC, 
 Blue Skies EL 600, LLC 
 and 260 G Ventures LLC 
 Notes to Combined Financial Statements 
  
  
  


					
	 14.    Prior Period Adjustments
	  	The December 31, 2006 financial statements have been corrected to properly reflect a building and land lease with a related party as a capital lease in the
amount of $4,241,693 in accordance with SFAS No. 13, “Accounting for Leases”.
		
		  	  
 The December 31, 2006 financial statements also
have been corrected to properly reflect Georgia job tax credits in the amount of $364,000 and $280,000 for fiscal 2006 and 2005, respectively. The tax credits were granted for meeting certain employment levels for 2002 through 2006. Of the $364,000
restated for 2006, $85,000 has been classified as a short term asset. The remaining $279,000 has been classified as long-term. For the 2005 tax credit, the entire amount of $280,000 was classified as long-term. The restatement of retained earnings
as of January 1, 2007 was as follows:



					
		
	 Retained earnings – December 31, 2006 (as previously reported)
	  	$	13,299,038	  
		  	 	 	 
	 Rent, interest depreciation adjustments
	  	 	(93,253	) 
		  	 	 	 
	 2006 Georgia job tax credit
	  	 	364,000	  
		  	 	 	 
	 2005 Georgia job tax credit
	  	 	280,000	  
		  	 	 	 
	 Retained earnings, beginning of year, (as restated)
	  	$	13,849,785	  
		  	 	 	 

  
  
 See accompanying independent accountants’ review report. 
  

 23 









 Audited Combined Financial Statements 
 Atlantic Paper & Foil Corp. of NY, Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, Atlantic Paper & Foil of Georgia, LLC, 
 and Atlantic Lakeside Properties, LLC 
 As of December 31, 2006 and 2005 and for the Years Ended
December 31, 2006, 2005 and 2004 with Report of Independent Auditors 








 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 and Atlantic Lakeside Properties, LLC 
 Audited Combined Financial Statements 
 As of December 31, 2006 and 2005 and
for the Years Ended 
 December 31, 2006, 2005 and 2004 
 Contents 
  

			
	 Report of Independent Auditors
	  	1
		
	 Audited Combined Financial Statements
	  	
		
	 Combined Balance Sheets
	  	2
	 Combined Statements of Operations
	  	4
	 Combined Statements of Changes in Shareholders’ Equity and Members’ Capital
	  	5
	 Combined Statements of Cash Flows
	  	6
	 Notes to Combined Financial Statements
	  	7









 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 and Atlantic Lakeside Properties, LLC 
 Combined Balance Sheets 
  

							
	 	  	December 31
	 	  	2006	  	2005
		  	 	 	  	 	 
	 Assets
	  			  		
	 Current assets:
	  			  		
	 Cash and cash equivalents
	  	$	7,756,967	  	$	2,774,423
	 Accounts receivable – trade, net of allowance for uncollectible amounts of $28,715 and $0, at December 31, 2006 and
2005, respectively
	  	 	7,969,347	  	 	6,876,060
	 Inventories, net
	  	 	5,723,493	  	 	6,033,000
	 Prepaid expenses and other current assets
	  	 	108,525	  	 	280,316
	 Due from related parties
	  	 	172,584	  		
		  	 	 	  	 	 
	 Total current assets
	  	 	21,730,916	  	 	15,963,799
			
	 Property, plant and equipment, net
	  	 	30,471,259	  	 	19,703,621
			
	 Other assets:
	  			  		
	 Deposits
	  	 	452,598	  	 	58,167
	 Other assets
	  	 	152,915	  	 	94,535
		  	 	 	  	 	 
		  	 	605,513	  	 	152,702
		  	 	 	  	 	 
			
	 Total assets
	  	$	52,807,688	  	$	35,820,122
		  	 	 	  	 	 

  

 2 










							
	 	  	December 31
	 	  	2006	  	2005
		  	 	 	  	 	 
	 Liabilities and shareholders’ equity
	  			  		
	 Current liabilities:
	  			  		
	 Current maturities of bank notes and loans payable
	  	$	1,394,110	  	$	1,431,402
	 Current maturities of long-term debt
	  	 	527,567	  	 	365,511
	 Accounts payable
	  	 	8,280,812	  	 	8,409,554
	 Accrued expenses
	  	 	1,725,745	  	 	1,904,747
		  	 	 	  	 	 
	 Total current liabilities
	  	 	11,928,234	  	 	12,111,214
			
	 Other liabilities:
	  			  		
	 Bank notes and loans payable, less current maturities
	  	 	2,307,749	  	 	3,537,524
	 Long-term debt, less current maturities
	  	 	23,213,464	  	 	9,967,979
	 Shareholders’ loans payable
	  	 	1,875,000	  	 	1,875,000
		  	 	 	  	 	 
	 Total other liabilities
	  	 	27,396,213	  	 	15,380,503
		  	 	 	  	 	 
	 Total liabilities
	  	 	39,324,447	  	 	27,491,717
			
	 Commitments and contingencies (Note 14)
	  			  		
			
	 Shareholders’ equity:
	  			  		
	 Common stock, no par value, 400 shares authorized, 110 shares issued and outstanding, at December 31, 2006 and
2005
	  	 	5,500	  	 	5,500
	 Additional paid-in capital
	  	 	178,703	  	 	178,703
	 Retained earnings
	  	 	13,299,038	  	 	8,144,202
		  	 	 	  	 	 
	 Total shareholders’ equity
	  	 	13,483,241	  	 	8,328,405
		  	 	 	  	 	 
	 Total liabilities and shareholders’ equity
	  	$	52,807,688	  	$	35,820,122
		  	 	 	  	 	 

 See accompanying notes to combined financial statements. 
  

 3 









 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 and Atlantic Lakeside Properties, LLC 
 Combined Statements of Operations 
  

													
	 	  	Years Ended December 31	 
	 	  	2006	 	 	2005	 	 	2004	 
				
	 Net sales
	  	$	71,348,191	  	 	$	66,332,185	  	 	$	50,534,404	  
	 Cost of sales
	  	 	51,542,393	  	 	 	49,786,828	  	 	 	42,000,777	  
		  	 	 	 	 	 	 	 	 	 	 	 
	 Gross profit
	  	 	19,805,798	  	 	 	16,545,357	  	 	 	8,533,627	  
				
	 Operating expenses:
	  				 				 			
	 Selling and delivery
	  	 	4,849,973	  	 	 	4,498,612	  	 	 	4,182,278	  
	 General and administrative
	  	 	5,247,050	  	 	 	3,850,186	  	 	 	3,657,945	  
		  	 	 	 	 	 	 	 	 	 	 	 
	 Total operating expenses
	  	 	10,097,023	  	 	 	8,348,798	  	 	 	7,840,223	  
		  	 	 	 	 	 	 	 	 	 	 	 
	 Operating income
	  	 	9,708,775	  	 	 	8,196,559	  	 	 	693,404	  
				
	 Other income (expenses):
	  				 				 			
	 Interest income
	  	 	110,666	  	 	 	16,210	  	 	 	1,220	  
	 Interest expense
	  	 	(860,655	) 	 	 	(845,469	) 	 	 	(795,357	) 
	 Other income (expense), net
	  	 	(110,000	) 	 	 	13,315	  	 			
	 Gain on sale of equipment
	  				 				 	 	8,420	  
		  	 	 	 	 	 	 	 	 	 	 	 
	 Total other expenses - net
	  	 	(859,989	) 	 	 	(815,944	) 	 	 	(785,717	) 
		  	 	 	 	 	 	 	 	 	 	 	 
	 Income before tax (benefit)
	  	 	8,848,786	  	 	 	7,380,615	  	 	 	(92,313	) 
				
	 Tax expense (benefit)
	  	 	425	  	 	 	200	  	 	 	(11,659	) 
		  	 	 	 	 	 	 	 	 	 	 	 
	 Net income (loss)
	  	$	8,848,361	  	 	$	7,380,415	  	 	$	(80,654	) 
		  	 	 	 	 	 	 	 	 	 	 	 

 See accompanying notes to combined financial statements. 
  

 4 









 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 and Atlantic Lakeside Properties, LLC 
 Combined Statements of Shareholders’ Equity and Members’ Capital 
 For
the Years Ended December 31, 2006 , 2005 and 2004 
  

															
	 	  	Common
Stock	  	Additional
Paid-in
Capital	  	Retained
Earnings and
Members’
Capital	 	 	Total
Shareholders’
Equity and
Members’
Capital	 
					
	 Balance, December 31, 2003
	  	$	5,500	  	$	178,703	  	$	6,933,441	  	 	$	7,117,644	  
	 Net loss
	  			  			  	 	(80,654	) 	 	 	(80,654	) 
	 Distributions to stockholders
	  			  			  	 	(1,422,000	) 	 	 	(1,422,000	) 
		  	 	 	  	 	 	  	 	 	 	 	 	 	 
	 Balance, December 31, 2004
	  	 	5,500	  	 	178,703	  	 	5,430,787	  	 	 	5,614,990	  
	 Net income
	  			  			  	 	7,380,415	  	 	 	7,380,415	  
	 Distributions to stockholders
	  			  			  	 	(4,667,000	) 	 	 	(4,667,000	) 
		  	 	 	  	 	 	  	 	 	 	 	 	 	 
	 Balance, December 31, 2005
	  	 	5,500	  	 	178,703	  	 	8,144,202	  	 	 	8,328,405	  
	 Net income
	  			  			  	 	8,848,361	  	 	 	8,848,361	  
	 Distributions to stockholders
	  			  			  	 	(3,693,525	) 	 	 	(3,693,525	) 
		  	 	 	  	 	 	  	 	 	 	 	 	 	 
	 Balance, December 31, 2006
	  	$	5,500	  	$	178,703	  	$	13,299,038	  	 	$	13,483,241	  
		  	 	 	  	 	 	  	 	 	 	 	 	 	 

 See accompanying notes to combined financial statements. 
  

 5 









 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 and Atlantic Lakeside Properties, LLC 
 Combined Statements of Cash Flows 
  

													
	 	  	Years Ended December	 
	 	  	2006	 	 	2005	 	 	2004	 
	 Cash flows from operating activities
	  				 				 			
	 Net income (loss)
	  	$	8,848,361	  	 	$	7,380,415	  	 	$	(80,654	) 
	 Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	  				 				 			
	 Depreciation and amortization
	  	 	2,812,614	  	 	 	2,470,594	  	 	 	2,114,109	  
	 Gain on sale of equipment
	  				 				 	 	(8,420	) 
	 Changes in assets and liabilities:
	  				 				 			
	 Accounts receivable - trade
	  	 	(1,093,287	) 	 	 	(1,134,931	) 	 	 	(1,419,281	) 
	 Inventories
	  	 	309,507	  	 	 	(1,088,351	) 	 	 	(517,149	) 
	 Prepaid expenses and other current assets
	  	 	171,791	  	 	 	(229,196	) 	 	 	96,028	  
	 Deposits and other assets
	  	 	(480,387	) 	 	 	154,456	  	 	 	322,573	  
	 Accounts payable
	  	 	(128,742	) 	 	 	(2,715,373	) 	 	 	7,728,225	  
	 Accrued expenses and taxes payable
	  	 	(179,002	) 	 	 	811,917	  	 	 	(505,306	) 
	 Due from related parties
	  	 	(172,584	) 	 	 	4,071,055	  	 	 	(4,065,761	) 
		  	 	 	 	 	 	 	 	 	 	 	 
	 Total adjustments
	  	 	1,239,910	  	 	 	2,340,171	  	 	 	3,745,018	  
		  	 	 	 	 	 	 	 	 	 	 	 
	 Net cash provided by operating activities
	  	 	10,088,271	  	 	 	9,720,586	  	 	 	3,664,364	  
				
	 Cash flows from investing activities
	  				 				 			
	 Capital expenditures
	  	 	(13,620,015	) 	 	 	(1,405,003	) 	 	 	(7,126,487	) 
	 Proceeds from sale of property and equipment
	  	 	67,339	  	 	 	60,000	  	 	 	8,420	  
		  	 	 	 	 	 	 	 	 	 	 	 
	 Net cash used in investing activities
	  	 	(13,552,676	) 	 	 	(1,345,003	) 	 	 	(7,118,067	) 
				
	 Cash flows from financing activities
	  				 				 			
	 Costs in connection with bank refinancing
	  				 				 	 	(145,666	) 
	 Distributions to stockholders
	  	 	(3,693,525	) 	 	 	(4,667,000	) 	 	 	(1,422,000	) 
	 Repayment of bank notes payable
	  	 	(1,560,084	) 	 	 	(1,789,601	) 	 	 	(3,132,828	) 
	 Proceeds from bank notes payable
	  	 	293,017	  	 	 	338,414	  	 	 	5,324,174	  
	 Proceeds from long-term debt
	  	 	17,602,058	  	 				 	 	9,320,000	  
	 Repayment of long-term debt
	  	 	(4,194,517	) 	 	 	(533,836	) 	 	 	(7,200,874	) 
		  	 	 	 	 	 	 	 	 	 	 	 
	 Net cash (used in) provided by financing activities
	  	 	8,446,949	  	 	 	(6,652,023	) 	 	 	2,742,806	  
		  	 	 	 	 	 	 	 	 	 	 	 
	 Net increase (decrease) in cash and cash equivalents
	  	 	4,982,544	  	 	 	1,723,560	  	 	 	(710,897	) 
				
	 Cash and cash equivalents, beginning of year
	  	 	2,774,423	  	 	 	1,050,863	  	 	 	1,761,760	  
		  	 	 	 	 	 	 	 	 	 	 	 
	 Cash and cash equivalents, end of year
	  	$	7,756,967	  	 	$	2,774,423	  	 	$	1,050,863	  
		  	 	 	 	 	 	 	 	 	 	 	 

 See accompanying notes to combined financial statements. 
  

 6 









 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia,
LLC, 
 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements 
 December 31, 2006 
 1. Basis of Financial Statement Presentation 
 The combined financial statements include the accounts of Atlantic Paper & Foil Corp. of NY, (“AP&F NY”), Consumer Licensing Corporation, (“CLC”), Atlantic Paper & Foil, LLC (“AP&F
LLC”), Atlantic Paper & Foil of Georgia, LLC (“APFG”) and Atlantic Lakeside Properties, LLC (“ALP”). APFG and ALP were formed in December 2002 as part of a real property purchase and sale agreement between APFG, ALP
and AP&F and an unrelated third party (Note 5). The financial statements of these entities (collectively referred to as the “Company” or “Companies”) are being presented on a combined basis due to common ownership and
control. All significant intercompany balances and transactions have been eliminated. 
 2. Summary of Significant Accounting Policies 

 Description of Business 
 The
Companies, except ALP, are engaged in the manufacture, conversion and sale of paper products and packaging material. ALP owns and manages the Thomaston Georgia facility. 
 Revenue Recognition 
 Sales are recognized upon the shipment of finished goods to customers.
Allowances for cash discounts and returns are recorded in the period in which the related sale is recognized. 
 Use of Estimates

 The financial statements are prepared in accordance with accounting principles generally accepted in the United States. The accounting
principles used require the Companies to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting periods presented. The Company believes in the quality and reasonableness of its critical accounting policies and estimates; however, actual results could differ materially form the estimates made.

  

 7 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia, LLC,

 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements (continued) 
  


 2. Summary of Significant Accounting Policies (continued) 
  

 Cash and Cash Equivalents 
 The Company considers all highly liquid cash instruments purchased with a maturity of three months or less to be cash equivalents. 
 Accounts Receivable 
 Accounts receivable are uncollateralized customer obligations due for
products sold. The accounts receivable are due under normal trade terms requiring payment within 30 days from the invoice date. Management reviews accounts receivable on a monthly basis to determine if any receivables will potentially be
uncollectible and any balances determined to be uncollectible are written off. Although no assurance can be given as to the collectibility of the accounts receivable, based on the information available, management believes all balances and reserves
are fairly stated and reasonable. 
 Inventories 
 Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method. 
 Advertising Costs 
 Advertising costs are charged to expense in the year incurred and
amounted to approximately $2,240, $3,400 and $39,400 for the years ended December 31, 2006, 2005 and 2004, respectively. 
 Property,
Plant, Equipment and Depreciation 
 Property, plant and equipment is stated at cost. Depreciation is computed using both straight-line and
accelerated methods over the estimated useful lives of the assets as follows: land improvements, buildings and improvements 39 years; machinery and equipment 5 - 7 years; office furniture and fixtures 5 - 7 years; automobiles 5 years and aircraft 20
years. 
  

 8 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia, LLC,

 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements (continued) 
  


 2. Summary of Significant Accounting Policies (continued) 
  

 Long-Lived Assets 
 Long-lived assets are evaluated annually for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted
future cash flows from the use of these assets. When any such impairment exists, the related assets will be written-down to fair value. No such impairment existed in 2006, 2005 or 2004. 
 Taxes on Income 
 The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes. Under this standard, deferred taxes on income are provided for those items for which the reporting period and methods for income tax purposes differ from those used for financial statement purposes using the asset
and liability method. Deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts
and the tax bases of existing assets and liabilities. 
 The Company has elected to be taxed as an S Corporation or Partnership for federal tax
purposes; therefore, federal taxes on the Company’s income are the responsibility of the individual stockholders or partners. The Company is liable for certain state taxes. 
 Concentrations of Credit Risk 
 Financial instruments which potentially subject the Company
to a concentration of credit risk consist principally of temporary cash investments and accounts receivable. 
 The Company places its temporary
cash investments with financial institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, such investments were in excess of the FDIC insurance limit. 
  

 9 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia, LLC,

 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements (continued) 
  


 2. Summary of Significant Accounting Policies (continued) 
  

 Concentrations of Credit Risk (continued) 
 Concentrations of credit risk with respect to trade receivables are limited due to the diverse group of manufacturers, wholesalers and retailers to whom the
Companies sell (Note 11). The Companies review a customer’s credit history and other public information where available before extending credit. The Companies establish an allowance for doubtful accounts based upon factors such as the credit
risk of specific customers, historical trends, other information and past bad debt history. Actual bad debt write-offs have historically been within the Companies’ expectations. 
 Shipping and Handling Costs 
 The Company includes freight out as a component of selling and
delivery expenses which amounted to approximately $2,941,000, $2,529,000 and $2,651,000 for the years ended December 31, 2006, 2005 and 2004, respectively. Freight in costs are included in costs of sales. 
 Fair Value of Financial Instruments 
 The
carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and bank debt approximate fair value; given the current nature of these instruments. 
 Deferred Financing Costs 
 Eligible costs
associated with obtaining debt financing are capitalized and amortized over the related term of the applicable debt instruments, approximating the effective interest method. 
 Government Grants 
 The Company treats a grant received for the purchase of machinery and
equipment and employment incentives, which is subject to defined repayment conditions, as a liability. The Company will reduce the liability against the depreciation recognized associated with the assets purchased with the grant funds and the
compensation expense recognized, as the Company reaches the defined capital expenditure and employment thresholds and therefore, satisfies the conditions for which repayment is no longer required. 
  

 10 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia, LLC,

 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements (continued) 
  

 3. Inventories 
 Inventories are summarized as follows: 
  

									
	 	  	December 31	 
	 	  	2006	 	 	2005	 
			
	 Raw materials
	  	$	2,923,555	  	 	$	3,461,310	  
	 Finished goods
	  	 	3,059,938	  	 	 	3,342,690	  
		  	 	 	 	 	 	 	 
		  	 	5,983,493	  	 	 	6,804,000	  
			
	 Less: Inventory reserves
	  	 	(260,000	) 	 	 	(771,000	) 
		  	 	 	 	 	 	 	 
		  	$	5,723,493	  	 	$	6,033,000	  
		  	 	 	 	 	 	 	 

 4. Related Party Transactions 
 A corporation related through common ownership provides shipping and handling services to the Company. The Company purchased approximately $575,000, $439,000 and $237,000 in shipping and handling services
from this related party in 2006, 2005 and 2004, respectively. 
 Prior to 2006, the Company purchased and sold paper products to an affiliate,
in which the Company’s shareholders have a 100% equity interest. During 2005, the Company purchased and sold approximately $1,733,000 and $8,000, respectively. During 2004, the Company purchased and sold approximately $7,087,000 and $56,000,
respectively. 
  

 11 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia, LLC,

 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements (continued) 
  

 5. Property, Plant and Equipment 
 Property, plant and equipment consists of the following: 
  

							
	 	  	December 31
	 	  	2006	  	2005
			
	 Land and land improvements
	  	$	2,193,365	  	$	2,157,515
	 Buildings and building improvements
	  	 	7,268,122	  	 	7,257,934
	 Machinery, equipment and production fixtures
	  	 	23,186,640	  	 	22,704,179
	 Office furniture and equipment
	  	 	320,888	  	 	319,828
	 Automobiles
	  	 	556,913	  	 	535,839
	 Airplane
	  	 	12,852,058	  		
		  	 	 	  	 	 
		  	 	46,377,986	  	 	32,975,295
			
	 Less: accumulated depreciation and amortization
	  	 	15,906,727	  	 	13,271,674
		  	 	 	  	 	 
	 Net property and equipment
	  	$	30,471,259	  	$	19,703,621
		  	 	 	  	 	 

 Depreciation and amortization expense totaled $2,812,614, $2,470,594 and $2,114,109 for the years
ended December 31, 2006, 2005 and 2004, respectively. 
 6. Bank Notes Payable and Term Loans 
 Bank notes payable and term loans consists of the following: 
  

							
	 	  	December 31
	 	  	2006	  	2005
			
	 Term note maturing November 2007 (A)
	  	$	607,961	  	$	1,019,943
	 Term notes maturing through December 2009 (B)
	  			  	 	326,689
	 Term note maturing August 2009 (C)
	  	 	1,969,712	  	 	2,521,206
	 Term note maturing November 2009 (D)
	  	 	953,742	  	 	663,847
	 Term note maturing December 2007 (E)
	  			  	 	218,644
	 Term note maturing January 2010 (F)
	  	 	170,444	  	 	218,597
		  	 	 	  	 	 
		  	 	3,701,859	  	 	4,968,926
			
	 Less: current portion
	  	 	1,394,110	  	 	1,431,402
		  	 	 	  	 	 
		  	$	2,307,749	  	$	3,537,524
		  	 	 	  	 	 

  

 12 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia, LLC,

 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements (continued) 
  

 6. Bank Notes Payable and Term Loans (continued) 
  

	 	(A)	In May 2003, APFG signed three term notes for $1,990,000, the proceeds of which were used to pay for equipment. The notes provides for 60 monthly payments of $38,361
each, including interest at the rate of 5.88% per annum. 

  

	 	(B)	Various notes with maturity dates ranging from October 2007 through December 2011 were used to purchase automobiles and other equipment. The notes provide for monthly
payments ranging from $380 to $1,604, with interest rates ranging from zero to 7.99% per annum. 

  

	 	(C)	In August 2004, ALP entered into a term note in the amount of $3,100,000 for the purchase of equipment. The note provides for 60 monthly payments of $60,402 each
commencing December 2004, including interest at the rate of 5.98% per annum. The note is collateralized by the equipment. 

  

	 	(D)	In September 2004, AP&F NY entered into a term note in the amount of $820,000 for the purchase of equipment. The note provides for 60 monthly payments of $16,006
each commencing December 2004, including interest at the rate of 6.40% per annum. The note is collateralized by the equipment. 

  

	 	(E)	In December 2004, ALP entered into a term note in the amount of $330,000 for the purchase of equipment. The note provides for 36 monthly payments of $9,167 each,
commencing January 2005, including interest at 2.15%, plus the one month LIBOR rate (6.53% at December 31, 2005). The loan is collateralized by the equipment and was paid-off in 2006. 

  

	 	(F)	In January 2005, AP&F LLC entered into a term note in the amount of $260,000 for the purchase of equipment. The note provides for 60 monthly payments of $5,112
each, commencing February 2005, including interest at the rate of 6.70% per annum. The note is collateralized by the equipment. 

 Annual principal maturities of the Company’s bank notes payable and term loans are as follows: 
  

				
	 Year ending December 31:
	  		
	 2007
	  	$	1,394,110
	 2008
	  	 	1,159,418
	 2009
	  	 	1,021,844
	 2010
	  	 	71,734
	 2011
	  	 	54,753
		  	 	 
		  	$	3,701,859
		  	 	 

  

 13 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia, LLC,

 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements (continued) 
  

 7. Long-Term Debt 
 Long-term debt consist of the following: 
  

							
	 	  	December 31
	 	  	2006	  	2005
			
	 Loan payable - bank maturing December 2019 (A)
	  	$	—  	  	$	4,009,464
	 Second Mortgage (B)
	  	 	4,750,000	  		
	 GE Capital Loan - Airplane (C)
	  	 	12,743,643	  		
	 Thomaston Development Authority Edge Grant (D)
	  	 	1,700,000	  	 	1,700,000
	 Mortgage payable - bank maturing December 2030 (E)
	  	 	4,547,388	  	 	4,624,026
		  	 	 	  	 	 
		  	 	23,741,031	  	 	10,333,490
			
	 Less: current portion
	  	 	527,567	  	 	365,511
		  	 	 	  	 	 
		  	$	23,213,464	  	$	9,967,979
		  	 	 	  	 	 

  

	(A)	Loan payable - bank maturing December 2019: 

 In December 2004, ALP entered into a refinancing revolving line agreement for $4,320,000 to be used in connection with the funding of the redemption of the $4,000,000 Series A Bonds issued by the
Thomaston - Upson County Industrial Development Authority and pay off a portion of certain equipment financing provided to Lakeside. The loan provides for monthly payments of principal in the amount of $24,000, plus accrued interest. Interest is
variable and payable monthly at the one-month LIBOR, plus 2.15% (6.53% at December 31, 2005). The loan, which was collateralized by a security interest in the deed encumbering the Georgia facility, was paid off in 2006. 
  

	(B)	Second Mortgage: 

 In
September 2006, APFC NY entered into a second mortgage agreement in the amount of $4,750,000. The loan provides for interest only payments for the first twenty-four months, at the interest rate of 7.05%. After that, the agreement calls for monthly
payments of principal and interest of $34,200 through September 2025 and a balloon payment in October 2025 for the remaining balance due. 
  

 14 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia, LLC,

 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements (continued) 
  


 7. Long-Term Debt (continued) 
  


	(C)	GE Capital Loan - Airplane: 

 In September 2006, AP&F LLC entered into a loan agreement for $12,852,000 in connection with an airplane purchase. The loan provides for monthly payments of principal and interest through August 2016 of $107,200 and a balloon payment in
September 2016 for the remaining balance due. The loan bears interest at 6.65% per annum. 
  

	(D)	Edge Grant: 

 Borrowings
issued by the Thomaston Development Authority in connection with the Thomaston facility purchase are non-interest bearing and contain repayment features subject to minimum annual levels of capital investment and employee workforce through 2010.
Repayment of the Edge grant is predicated on a pro-rata portion of the above thresholds not being met through 2010. If the threshold criteria is met throughout the term of the grant, no repayment is warranted. At December 31, 2006 and 2005, the
entire grant has been classified as a long-term debt. Although the Companies have achieved some investment and workforce levels through 2006, there is uncertainty as to whether they will achieve the investment and workforce thresholds as outlined in
the agreement through 2010 and the impact that will have on the required repayment. 
  

	(E)	Mortgage Payable - Bank Maturing December 2030: 

 In December 2005, AP&F NY entered into a mortgage agreement in the amount of $4,624,027 to be used to refinance and consolidate previously existing debt. The loan provides for interest and principal
payments in the amount of approximately $30,900. The loan bears interest at 6.4% per annum and the repayment term is through December 2030. 
  

 15 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia, LLC,

 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements (continued) 
  


 7. Long-Term Debt (continued) 
  

 Annual principal maturities of long-term debt are as follows: 
  

				
	 Year ending December 31:
	  		
	 2007
	  	$	527,567
	 2008
	  	 	590,885
	 2009
	  	 	689,492
	 2010
	  	 	736,856
	 2011
	  	 	787,476
	 Thereafter
	  	 	20,408,755
		  	 	 
		  	$	23,741,031
		  	 	 

 8. Shareholders’ Loans Payable 
 Shareholders’ loans are subordinated to the banks, due on demand and are non-interest bearing (Notes 6 and 7). 
 9. Leases, Commitments and Contingencies 
 In April 2002, AP&F and CLC entered into a ten year operating lease with a related party for the use of certain land and buildings in Hauppauge, New York for manufacturing and warehousing. In December 2005, the lease was extended
through January 31, 2026. Minimum annual rentals under this lease amount to approximately $384,000 per annum. The Companies are also a party to certain other operating lease arrangements for property and equipment. Minimum annual rental
commitments under noncancellable operating leases are as follows: 
  

				
	 Year ending December 31:
	  		
	 2007
	  	$	384,000
	 2008
	  	 	384,000
	 2009
	  	 	384,000
	 2010
	  	 	384,000
	 2011
	  	 	384,000
	 Thereafter
	  	 	5,408,000
		  	 	 
		  	$	7,328,000
		  	 	 

 Rental expense charged to operations was approximately $494,000, $516,000 and $413,000 for the years
ended December 31, 2006, 2005 and 2004, respectively. 
  

 16 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia, LLC,

 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements (continued) 
  

 10. Major Customers 
 During the year ended December 31, 2006, sales to three major customers accounted for approximately 57% of revenues and 60% of accounts receivable. 
 During the year ended December 31, 2005, sales to three major customers accounted for approximately 62% of revenues and 68% of accounts receivable.

 During the year ended December 31, 2004, sales to three major customers accounted for approximately 57% of revenues and 70% of accounts
receivable. 
 11. Common Stock and Additional Paid-in Capital 
 Common stock and additional paid-in capital, consists of the following: 
  

							
	 	  	December 31
	 	  	2006	  	2005
	 Common stock:
	  			  		
	 Atlantic Paper & Foil Corp. of NY - no par value, 200 shares authorized, 10 shares issued and
outstanding
	  	$	500	  	$	500
	 Consumer Licensing Corporation - no par value, 200 shares, authorized, 100 shares issued and outstanding
	  	 	5,000	  	 	5,000
		  	 	 	  	 	 
		  	$	5,500	  	$	5,500
		  	 	 	  	 	 
			
	 Additional paid-in capital:
	  			  		
	 Atlantic Paper & Foil Corp. of NY
	  	$	178,703	  	$	178,703
		  	 	 	  	 	 

 12. Taxes on Income 
 AP&F NY and CLC, accrual basis taxpayers, have elected to be treated as “S” Corporations and the shareholders have consented to include their respective shares of AP&F NY and CLC’s
taxable income and loss in their individual tax returns. In addition, AP&F LLC, ALP and APFG have been organized as limited liability companies, which have elected to be treated as partnerships for tax purposes and accordingly, the members will
include taxable income and loss from their respective membership interests of AP&F LLC, ALP and APFG in their individual tax returns. The Company provides for certain New York State corporate-level income taxes. 
  

 17 










 Atlantic Paper & Foil Corp. of NY, 
 Consumer Licensing Corporation, 
 Atlantic Paper & Foil, LLC, 
 Atlantic Paper & Foil of Georgia, LLC,

 and Atlantic Lakeside Properties, LLC 
 Notes to Combined Financial Statements (continued) 
  

 13. Statement of Cash Flows 
  

	 	(a)	Supplemental disclosures of cash flow information are as follows: 

 Cash paid during the year for: 
  

										
	 	  	Years Ended December 31
	 	  	2006	  	2005	  	2004
				
	 Interest
	  	$	860,655	  	$	845,469	  	$	770,080
		  	 	 	  	 	 	  	 	 
				
	 Taxes
	  	$	425	  	$	200	  	$	—  
		  	 	 	  	 	 	  	 	 

 14. Commitments and Contingencies 
 Through the normal course of operations, the Company is party to various litigation activities. Given the status of these procedures, the criteria for
accrual of any potential loss have not been satisfied and therefore, the Company has not established an accrual for any such loss in the combined financial statements at December 31, 2006 and 2005. 
  

 18 









 ATLANTIC PAPER & FOIL CORP & RELATED COMPANIES 
 COMBINING P/L 
 TWELVE MONTHS ENDING MAY 31, 2008 
  

																													
	 	  	2007 TOTAL
$ TOTAL	 	 	%	 	 	6 mo end
6/31/2007
$ TOTAL
	 	 	%	 	 	6 mo end
6/31/2008
$ TOTAL
	 	 	%	 	 	twelve mos end
6/31/2008
ROLLING	 	 	 	 
	 SALES, NET
	  	$	79,443,648	  	 			 	$	31,029,126	  	 			 	$	37,408,854	  	 			 	$	85,823,376	  	 		
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
									
	 INVENTORY, BEG. OF YR
	  	 	5,723,493	  	 			 	 	5,723,493	  	 			 	 	7,419,700	  	 			 	 	6,432,081	  	 		
	 PURCHASES / COST OF GOODS SOLD
	  	 	48,711,294	  	 	61.3	% 	 	 	18,770,462	  	 	60.5	% 	 	 	24,376,891	  	 	65.2	% 	 	 	54,317,723	  	 		
	 LABOR & PAYROLL BURDEN
	  	 	7,237,834	  	 	9.1	% 	 	 	2,935,085	  	 	9.5	% 	 	 	3,309,374	  	 	8.8	% 	 	 	7,612,123	  	 		
	 DEPRECIATION
	  	 	2,351,531	  	 	3.0	% 	 	 	924,855	  	 	3.0	% 	 	 	1,025,936	  	 	2.7	% 	 	 	2,452,612	  	 		
	 RENT
	  	 	200,618	  	 	0.3	% 	 	 	46,186	  	 	0.1	% 	 	 	111,816	  	 	0.3	% 	 	 	266,248	  	 		
	 UTILITIES
	  	 	786,816	  	 	1.0	% 	 	 	305,435	  	 	1.0	% 	 	 	384,443	  	 	1.0	% 	 	 	865,824	  	 		
	 SECURITY, ALARM SVC, FIRE PROTECTION
	  	 	104,543	  	 	0.1	% 	 	 	43,062	  	 	0.1	% 	 	 	50,854	  	 	0.1	% 	 	 	112,335	  	 		
	 INSURANCE
	  	 	734,373	  	 	0.9	% 	 	 	321,034	  	 	1.0	% 	 	 	366,172	  	 	1.0	% 	 	 	779,511	  	 		
	 UNIFORMS
	  	 	3,233	  	 	0.0	% 	 	 	2,143	  	 	0.0	% 	 	 	—  	  	 	0.0	% 	 	 	1,090	  	 		
	 REPAIRS & MAINT / REPL PARTS
	  	 	774,162	  	 	1.0	% 	 	 	395,681	  	 	1.3	% 	 	 	474,695	  	 	1.3	% 	 	 	853,176	  	 		
	 WAREHOUSE EXP / EQUIP RENTALS
	  	 	74,570	  	 	0.1	% 	 	 	46,941	  	 	0.2	% 	 	 	27,291	  	 	0.1	% 	 	 	54,920	  	 		
	 PRODUCT TESTING / R&D
	  	 	7,518	  	 	0.0	% 	 	 	3,300	  	 	0.0	% 	 	 	4,357	  	 	0.0	% 	 	 	8,575	  	 		
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
	 FACTORY OVERHEAD
	  	 	12,275,198	  	 			 	 	5,023,722	  	 			 	 	5,754,938	  	 			 	 	13,006,414	  	 		
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
	 LESS: INVENTORY, END OF PERIOD
	  	 	7,419,700	  	 			 	 	6,432,081	  	 			 	 	8,943,223	  	 			 	 	8,943,223	  	 		
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
	 COST OF SALES
	  	 	59,290,285	  	 	74.6	% 	 	 	23,085,596	  	 	74.4	% 	 	 	28,608,306	  	 	76.5	% 	 	 	64,812,995	  	 	75.5	% 
		  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
									
	 GROSS PROFIT
	  	$	20,153,363	  	 	25.4	% 	 	$	7,943,530	  	 	25.6	% 	 	$	8,800,548	  	 	23.5	% 	 	$	21,010,381	  	 	24.5	% 
		  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
									
	 SELLING & DELIVERY:
	  				 			 				 			 				 			 				 		
	 FREIGHT
	  	 	3,270,996	  	 	4.1	% 	 	 	1,327,709	  	 	4.3	% 	 	 	1,586,345	  	 	4.2	% 	 	 	3,529,632	  	 		
	 COMMISSIONS
	  	 	1,350,463	  	 	1.7	% 	 	 	497,368	  	 	1.6	% 	 	 	624,347	  	 	1.7	% 	 	 	1,477,442	  	 		
	 PAYROLL & PAYROLL BURDEN
	  	 	303,854	  	 	0.4	% 	 	 	123,109	  	 	0.4	% 	 	 	142,430	  	 	0.4	% 	 	 	323,175	  	 		
	 TRAVEL & LODGING
	  	 	122,953	  	 	0.2	% 	 	 	44,702	  	 	0.1	% 	 	 	49,183	  	 	0.1	% 	 	 	127,434	  	 		
	 AUTO
	  	 	24,187	  	 	0.0	% 	 	 	9,696	  	 	0.0	% 	 	 	9,862	  	 	0.0	% 	 	 	24,353	  	 		
	 MEALS & ENTERTAINMENT
	  	 	9,861	  	 	0.0	% 	 	 	5,584	  	 	0.0	% 	 	 	7,115	  	 	0.0	% 	 	 	11,392	  	 		
	 ADVERT/ PROMO EXP / MARKETING
	  	 	653	  	 	0.0	% 	 	 	653	  	 	0.0	% 	 	 	—  	  	 	0.0	% 	 	 	—  	  	 		
	 DESIGN, PACKAGING & SELLING
	  	 	42,556	  	 	0.1	% 	 	 	35,861	  	 	0.1	% 	 	 	9,317	  	 	0.0	% 	 	 	16,012	  	 		
	 RENT
	  	 	6,624	  	 	0.0	% 	 	 	2,600	  	 	0.0	% 	 	 	2,850	  	 	0.0	% 	 	 	6,874	  	 		
	 TRADE SHOWS
	  	 	6,471	  	 	0.0	% 	 	 	3,428	  	 	0.0	% 	 	 	1,500	  	 	0.0	% 	 	 	4,543	  	 		
		  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
	 TOTAL SELLING & DELIVERY EXP
	  	 	5,138,618	  	 	6.5	% 	 	 	2,050,710	  	 	6.6	% 	 	 	2,432,949	  	 	6.5	% 	 	 	5,520,857	  	 	6.4	% 
		  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
									
	 ADMINISTRATIVE & GENERAL:
	  				 			 				 			 				 			 				 		
	 OFFICER’S SALARIES, TAXES, GUAR PMT
	  	 	722,273	  	 	0.9	% 	 	 	275,860	  	 	0.9	% 	 	 	276,139	  	 	0.7	% 	 	 	722,552	  	 		
	 PROFESSIONAL FEES
	  	 	726,626	  	 	0.9	% 	 	 	123,961	  	 	0.4	% 	 	 	141,282	  	 	0.4	% 	 	 	743,947	  	 		
	 PROPERTY TAXES
	  	 	288,078	  	 	0.4	% 	 	 	96,813	  	 	0.3	% 	 	 	120,512	  	 	0.3	% 	 	 	311,777	  	 		
	 TRAVEL & AUTO
	  	 	95,137	  	 	0.1	% 	 	 	40,655	  	 	0.1	% 	 	 	41,760	  	 	0.1	% 	 	 	96,242	  	 		
	 UTILITIES
	  	 	41,868	  	 	0.1	% 	 	 	17,700	  	 	0.1	% 	 	 	20,073	  	 	0.1	% 	 	 	44,241	  	 		
	 SECURITY, ALARM SVC, FIRE PROTECTION
	  	 	922	  	 	0.0	% 	 	 	386	  	 	0.0	% 	 	 	542	  	 	0.0	% 	 	 	1,078	  	 		
	 OFFICE EXPENSE
	  	 	91,521	  	 	0.1	% 	 	 	40,343	  	 	0.1	% 	 	 	34,976	  	 	0.1	% 	 	 	86,154	  	 		
	 PAYROLL SERVICE
	  	 	36,813	  	 	0.0	% 	 	 	12,831	  	 	0.0	% 	 	 	14,271	  	 	0.0	% 	 	 	38,253	  	 		
	 OFFICE & ADMIN. SALARIES & PYRL TAXES
	  	 	1,444,861	  	 	1.8	% 	 	 	571,770	  	 	1.8	% 	 	 	671,234	  	 	1.8	% 	 	 	1,544,325	  	 		
	 TELEPHONE & WEB-SITE ACCESS
	  	 	102,111	  	 	0.1	% 	 	 	42,229	  	 	0.1	% 	 	 	42,215	  	 	0.1	% 	 	 	102,097	  	 		
	 MEALS & ENTERTAINMENT
	  	 	86,797	  	 	0.1	% 	 	 	34,698	  	 	0.1	% 	 	 	39,771	  	 	0.1	% 	 	 	91,870	  	 		
	 MISCELLANEOUS
	  	 	47,309	  	 	0.1	% 	 	 	18,117	  	 	0.1	% 	 	 	18,556	  	 	0.0	% 	 	 	47,748	  	 		
	 DUES & SUBSCRIPTIONS
	  	 	17,956	  	 	0.0	% 	 	 	11,296	  	 	0.0	% 	 	 	10,096	  	 	0.0	% 	 	 	16,756	  	 		
	 REPAIRS & MAINTENANCE
	  	 	38,370	  	 	0.0	% 	 	 	16,995	  	 	0.1	% 	 	 	18,895	  	 	0.1	% 	 	 	40,270	  	 		
	 CONTRIBUTIONS
	  	 	45,333	  	 	0.1	% 	 	 	8,481	  	 	0.0	% 	 	 	43,110	  	 	0.1	% 	 	 	79,962	  	 		
	 DEPRECIATION
	  	 	294,663	  	 	0.4	% 	 	 	114,675	  	 	0.4	% 	 	 	125,558	  	 	0.3	% 	 	 	305,546	  	 		
	 DEPRECIATION - 50 GILPIN AVE (ALIPI)
	  	 	189,299	  	 	0.2	% 	 	 	78,875	  	 	0.3	% 	 	 	78,875	  	 	0.2	% 	 	 	189,299	  	 		
	 DEPRECIATION - AIRCRAFT
	  	 	822,077	  	 	1.0	% 	 	 	1,073,375	  	 	3.5	% 	 	 	444,090	  	 	1.2	% 	 	 	192,792	  	 		
	 AIRCRAFT EXPENSES
	  	 	729,117	  	 	0.9	% 	 	 	272,553	  	 	0.9	% 	 	 	672,318	  	 	1.8	% 	 	 	1,128,682	  	 		
	 TEMPORARY HELP
	  	 	36,227	  	 	0.0	% 	 	 	19,585	  	 	0.1	% 	 	 	13,622	  	 	0.0	% 	 	 	30,264	  	 		
	 INSURANCE & EMPLOYEE BENEFITS
	  	 	158,154	  	 	0.2	% 	 	 	44,294	  	 	0.1	% 	 	 	102,575	  	 	0.3	% 	 	 	216,435	  	 		
	 EMPLOYMENT AGENCY FEES & AD EXP.
	  	 	23,949	  	 	0.0	% 	 	 	3,926	  	 	0.0	% 	 	 	3,817	  	 	0.0	% 	 	 	23,840	  	 		
	 CREDIT REPORTS & COLL AGENCY FEES
	  	 	15,230	  	 	0.0	% 	 	 	17,711	  	 	0.1	% 	 	 	—  	  	 	0.0	% 	 	 	(2,481	) 	 		
	 BAD DEBT EXPENSE
	  	 	19,077	  	 	0.0	% 	 	 	(240	) 	 	0.0	% 	 	 	—  	  	 	0.0	% 	 	 	19,317	  	 		
	 IT EXPENSE
	  	 	52,149	  	 	0.1	% 	 	 	20,324	  	 	0.1	% 	 	 	19,038	  	 	0.1	% 	 	 	50,863	  	 		
	 LICENSES & FEES & MISC TAXES
	  	 	2,388	  	 	0.0	% 	 	 	560	  	 	0.0	% 	 	 	360	  	 	0.0	% 	 	 	2,188	  	 		
	 AMORTIZATION OF CLOSING & ORG COSTS
	  	 	39,072	  	 	0.0	% 	 	 	13,113	  	 	0.0	% 	 	 	11,460	  	 	0.0	% 	 	 	37,419	  	 		
		  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		
	 TOTAL ADMINISTRATIVE & GENERAL
	  	 	6,167,377	  	 	7.8	% 	 	 	2,970,886	  	 	9.6	% 	 	 	2,965,145	  	 	7.9	% 	 	 	6,161,636	  	 	7.2	% 
		  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
									
	 TOTAL OPERATING EXPENSE
	  	 	11,305,995	  	 			 	 	5,021,596	  	 			 	 	5,398,094	  	 			 	 	11,682,493	  	 		
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
									
	 OPERATING INCOME
	  	$	8,847,368	  	 			 	$	2,921,934	  	 			 	$	3,402,454	  	 			 	$	9,327,888	  	 		
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
									
	 OTHER INCOME (EXPENSES):
	  				 			 				 			 				 			 				 		
	 RENTAL / LEASE INCOME
	  	 	—  	  	 			 	 	—  	  	 			 	 	—  	  	 			 	 	—  	  	 		
	 SALE OF MACHINERY & EQUIPMENT
	  	 	1,235,820	  	 			 	 	—  	  	 			 	 	1,251	  	 			 	 	1,237,071	  	 		
	 GAIN/(LOSS) ON SALE OF SECURITIES
	  	 	(3,419	) 	 			 	 	—  	  	 			 	 	4,539	  	 			 	 	1,120	  	 		
	 INTEREST INCOME
	  	 	145,869	  	 			 	 	90,288	  	 			 	 	64,663	  	 			 	 	120,244	  	 		
	 INTEREST AND OTHER EXPENSE
	  	 	(857,313	) 	 			 	 	(360,615	) 	 			 	 	(310,772	) 	 			 	 	(807,470	) 	 		
	 INTEREST - CAPITALIZED GILPIN LEASE
	  	 	(273,344	) 	 			 	 	(114,833	) 	 			 	 	(111,666	) 	 			 	 	(270,177	) 	 		
	 INTEREST - AIRCRAFT
	  	 	(752,308 	) 	 			 	 	(351,069	) 	 			 	 	(580,635	) 	 			 	 	(981,874	) 	 		
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
									
	 TOTAL OTHER INCOME (EXPENSES)
	  	 	(504,695	) 	 			 	 	(736,229	) 	 			 	 	(932,620	) 	 			 	 	(701,086	) 	 		
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
									
	 INCOME BEFORE TAXES ON INCOME
	  	 	8,342,673	  	 			 	 	2,185,705	  	 			 	 	2,469,834	  	 			 	 	8,626,802	  	 		
	 STATE FRANCH TAX
	  	 	3,596	  	 			 	 	126	  	 			 	 	3,050	  	 			 	 	6,520	  	 		
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
									
	 NET INCOME
	  	$	8,339,077	  	 	10.5	% 	 	$	2,185,579	  	 	7.0	% 	 	$	2,466,784	  	 	6.6	% 	 	$	8,620,282	  	 	10.0	% 
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	RE rollforward	 	 	 	 
	 RETAINED EARNINGS, BEGIN OF PERIOD
	  	 	13,375,038	  	 			 	 	13,375,038	  	 			 	 	16,084,862	  	 			 	 	12,355,617	  	 		
	 PRIOR PERIOD ADJUSTMENT - R.E.
	  	 	550,747	  	 			 	 	—  	  	 			 	 	70,000	  	 			 	 	620,747	  	 		
	 DISTRIBUTIONS TO STOCKHOLDERS
	  	 	(6,180,000	) 	 			 	 	(3,205,000	) 	 			 	 	(2,205,000	) 	 			 	 	(5,180,000	) 	 		
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
	 RETAINED EARNINGS, END OF PERIOD
	  	$	16,084,862	  	 			 	$	12,355,617	  	 			 	$	16,416,646	  	 			 	$	16,416,646	  	 		
		  	 	 	 	 			 	 	 	 	 			 	 	 	 	 			 	 	 	 	 		
									
	 EBITDA (excl Sale of M&E)
	  	 	12,302,460	  	 			 	 	6,067,116	  	 			 	 	4,997,676	  	 			 	 	12,242,920	  	 		
	 % NET SALES
	  	 	16.6	% 	 			 	 	16.3	% 	 			 	 	13.4	% 	 			 	 	14.3	% 	 		
	 EBITDA EXCL AIRCRAFT/LEASE
	  	 	13,031,677	  	 			 	 	6,329,668	  	 			 	 	5,669,893	  	 			 	 	13,371,802	  	 		
		  	 	16.4	% 	 			 	 	17.2	% 	 			 	 	16.2	% 	 			 	 	16.6	% 	 		









 Exhibit I-1 
 Form of Escrow Agreement 








 

 
 ESCROW AGREEMENT 
 among 
 ATLANTIC PAPER & FOIL CORP. OF N.Y.

 ATLANTIC LAKESIDE PROPERTIES, LLC 
 ATLANTIC PAPER & FOIL, LLC 
 ATLANTIC PAPER & FOIL OF GEORGIA, LLC

 CONSUMER LICENSING CORPORATION 
 SHAUN GABBAY, AS THE SELLERS’ REPRESENTATIVE 
 CELLU TISSUE HOLDINGS, INC.

  
  
 and 
 THE BANK OF NEW
YORK TRUST COMPANY, N.A. 
 Dated as of     , 2008 
   ACCOUNT NUMBER(S):
                                         
            
 SHORT TITLE OF ACCOUNT:
                                         
                    
  
  








 ESCROW AGREEMENT made this      day of     
2008, by and among THE BANK OF NEW YORK TRUST COMPANY, N.A. (“Escrow Agent”), ATLANTIC PAPER & FOIL CORP. OF N.Y., ATLANTIC LAKESIDE PROPERTIES, LLC, ATLANTIC PAPER & FOIL, LLC, ATLANTIC PAPER & FOIL OF GEORGIA,
LLC and CONSUMER LICENSING CORPORATION (collectively, the “Sellers”), SHAUN GABBAY, AS THE SELLERS’ REPRESENTATIVE (the “Sellers’ Representative), and CELLU TISSUE HOLDINGS, INC. (the “Buyer”, and collectively with
the Sellers, the “Depositors”). Reference is made to that certain Asset Purchase Agreement (as in effect from time to time, the “Purchase Agreement”) of even date herewith among the Sellers and the Buyer. 
 The Depositors, the Sellers’ Representative and Escrow Agent hereby agree that, in consideration of the mutual promises and covenants
contained herein, Escrow Agent shall hold in escrow and shall distribute the Escrow Property (as defined herein) in accordance with and subject to the following Instructions and Terms and Conditions: 
 I. INSTRUCTIONS: 
  

	1.	The Escrow Property 

 The
property and/or funds deposited or to be deposited with Escrow Agent by the Buyer shall be $1,500,000 (the “Escrow Amount”). 
 The Escrow Amount, plus all interest, dividends and other distributions and payments thereon (collectively, “Distributions”) received by Escrow Agent, less any property and/or funds distributed or paid in accordance with this
Escrow Agreement in respect of such amounts, are collectively referred to herein as the “Escrow Property”. 
  

	2.	Investment of the Escrow Property 

 The Depositors are to select one of the following options: 
  

	 	    	(a) Escrow Agent shall have no obligation to pay interest on or to invest or reinvest any Escrow Property deposited or received hereunder; or 


 

	 	 X 	(b) the Escrow Property shall be held in separate accounts and shall not be commingled in any way. Escrow Agent shall invest or reinvest the Escrow Property held
in each such account, without distinction between principal and income, in BNY Cash Reserve - BNYCR (the “BNYDR”) unless otherwise directed by written instrument signed by the Buyer and the Sellers’ Representative.


 Escrow Agent shall have no liability for any loss arising from or related to any such investment other than in
accordance with paragraph 3 of the Terms and Conditions. 
  

	3.	Distribution of the Escrow Property 

  

 2 









 Escrow Agent is directed to hold and distribute the Escrow Property as set forth in this
Section 3. Amounts distributed pursuant to this Section 3 to the Buyer shall be paid to the Buyer in accordance with wire instructions furnished by the Buyer to Escrow Agent. Amounts distributed pursuant to this Section 3 to the
Sellers shall be paid to the applicable party in accordance with the wire instructions furnished by the Sellers’ Representative to Escrow Agent. 
 Other than as provided in clauses (a) through (e) below, Escrow Agent shall distribute the Escrow Property only in accordance with (i) a written instrument delivered to Escrow Agent that is
executed by the Sellers’ Representative and the Buyer and that instructs Escrow Agent as to the disbursement of some or all of the Escrow Property or (ii) a final non-appealable order of a court of competent jurisdiction, a copy of which
is delivered to Escrow Agent by the Sellers’ Representative or the Buyer, that instructs Escrow Agent as to the disbursement of some or all of the Escrow Property. To the extent any portion of the Escrow Amount is paid to the Buyer or the
Sellers’ Representative in accordance with the terms hereof, such payment shall also include 60% of any Distributions received by the Escrow Agent on such amounts. 
  


	 	(a)	In the event that the Buyer delivers a written certification to Escrow Agent and the Sellers’ Representative asserting that the Buyer is entitled to receive all or
any portion of the Escrow Property in respect of any Losses (as defined in the Purchase Agreement) that any person or party is entitled to indemnification by the Sellers, which such certification shall include a description of the amount and nature
of such claims and Losses, and the Sellers’ Representative does not, in a written notice delivered to the Buyer and Escrow Agent within 30 days after the delivery of the Buyer’s notice, dispute such assertion, then Escrow Agent shall
automatically distribute to the Buyer an amount equal to the portion of the Escrow Amount that the Buyer asserted it is entitled to receive in such notice plus 60% of any Distributions received by the Escrow Agent on such amounts.


  

	 	(b)	On [15 months after closing], the Escrow Agent shall automatically distribute to the Sellers an amount equal to the excess of the (i) the Escrow Property over
(ii) the Outstanding Claims Amount, plus 60% of any Distributions received by the Escrow Agent on the amounts specified in this clause (ii). 

  

	 	(c)	“Outstanding Claims Amount” means, as of a particular date, an amount equal to the amount of any and all claims for indemnification from the Sellers with
respect to pending claims asserted by the Buyer or any other Buyer Indemnified Person (including claims asserted in a notice described in clause (a), but not yet paid), as certified to Escrow Agent (including in a notice described in clause (a)) and
the Sellers’ Representative in a written instrument executed by the Buyer, which instrument shall include a description of the amount and nature of such claims and Losses. 

  

	 	(d)	Within thirty days after the end of each calendar year and on the date on which this Escrow Agreement terminates, the Escrow Agent shall distribute 40% of all
Distributions earned on the Escrow Property during the applicable period to the Sellers. 

  

	 	(e)	 Whenever Escrow Agent will be required to make a payment of Escrow Property pursuant to this Escrow Agreement, Escrow Agent will pay such amounts by



  

 3 










	 	 
liquidating such investments of the Escrow Property as will be directed in writing by the Buyer and the Sellers’ Representative; provided, however, that if the Buyer and the Sellers’
Representative have not furnished such direction to Escrow Agent upon delivery of the certificate or other documentation delivered pursuant to this Section 3, Escrow Agent will pay such amounts by liquidating such investments of the Escrow
Property as will be determined by Escrow Agent in its sole discretion. 


  

	4.	Addresses 

 Notices,
instructions and other communications shall be sent to Escrow Agent, Corporate Trust Administration, The Bank of New York, 101 Barclay Street – 8W, New York, NY 10286, (T) 212-815-2937 Attn.: Gina Jones and to the Depositors as follows:

  

			
	To the Sellers at:	  	To the Buyer at:
		
	Shaun Gabbay	  	Cellu Tissue Holdings, Inc.
	12 Creek Road	  	1855 Lockeway Drive
	Kings Point, NY 11024	  	Suite 501
	Telephone: (516) 317-7776	  	Alpharetta, GA 30004
		  	Telephone number: (678) 393-2651
	with a copy to:	  	Attention: Russell Taylor
		
	Skadden, Arps, Slate, Meagher & Flom LLP	  	with a copy to each of:
	Four Times Square	  	
	New York, NY 10036	  	Ropes & Gray LLP
	Telephone number: (212) 735-2524	  	1211 Avenue of the Americas
	Attention: Randall H. Doud	  	New York, NY 10036-8704
		  	Telephone number: (212) 841-0697
	And	  	Attention: Christopher C. Henry
		  	
	Steve Cohn, PC	  	and
	One Old Country Road	  	
	Carle Place, NY 11514	  	Weston Presidio
	Telephone: (516) 294-6410	  	Pier l, Bay 2
		  	San Francisco, CA 94111
		  	Telephone number: (415) 398-0770
		  	Attention: R. Sean Honey, Therese Mrozek
		  	and Jim Morrone

  

	5.	Distribution of the Escrow Property Upon Termination 

 This Escrow Agreement shall be terminated automatically either (a) on the date on which all of the Escrow Property has been distributed or (b) on the later of (i) [15 months after closing]
and (ii) the date on which there is no Outstanding Claims Amount. This Escrow Agreement may also be terminated at any time by a written agreement executed by the Buyer and the Sellers’ Representative. Upon termination of this Escrow
Agreement, subject to Section 3, the Escrow Property then held hereunder, if any, shall be distributed to the Sellers unless otherwise agreed by the Buyer and the Sellers’ Representative. 
  

	6.	Compensation 

  

 4 










	 	(a)	The Sellers on the one hand, and the Buyer on the other, shall each pay Escrow Agent 50% of an annual fee of $3,500, payable upon execution of this Agreement and
thereafter on each anniversary date of this Agreement, provided that the annual fee shall be waived so long as the Escrow Property is invested in the BNYDR. The annual fee shall not be pro-rated for any portion of a year, but shall be subject to
pro-ration to the extent the Escrow Property is only invested in the BNYDR for a portion of a given year. 

  

	 	(b)	The Depositors shall pay all activity charges as per Escrow Agent’s current fee schedule, which is attached as Exhibit 6(b). 

  

	 	(c)	The Depositors shall be responsible for and shall reimburse Escrow Agent upon demand for all reasonable and documented out-of-pocket expenses which may include, but are
not limited to, telephone; facsimile; courier; copying; postage; supplies; expenses of foreign depositaries. 

  

	 	(d)	The Sellers, on the one hand, and the Buyer, on the other hand, shall be solely responsible for one-half of all amounts payable or reimbursable to Escrow Agent under
this Section 6 or otherwise provided for in this Agreement. 

  

	7.	Sellers’ Representative 

 Each Seller acknowledges the appointment of Shaun Gabbay as the Sellers’ Representative pursuant to Section 11.4 of the Purchase Agreement and agrees, without limiting the scope of the authorization contained therein, that the
Sellers’ Representative will be authorized to: 
  

	 	(a)	give any instructions to Escrow Agent on behalf of the Sellers; and 

  

	 	(b)	provide payment instructions with respect to any amounts paid to the Sellers. 

 II. TERMS AND CONDITIONS: 
  

	1.	The duties, responsibilities and obligations of Escrow Agent shall be limited to those expressly set forth herein and no duties, responsibilities or obligations shall
be inferred or implied. Escrow Agent shall not be subject to, nor required to comply with, any other agreement between or among any or all of the Depositors or to which any Depositor is a party, even though reference thereto may be made herein, or
to comply with any direction or instruction (other than those contained herein or delivered in accordance with this Escrow Agreement) from any Depositor or any person or entity acting on its behalf. Escrow Agent shall not be required to, and shall
not, expend or risk any of its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder. 

  

	2.	This Agreement is for the exclusive benefit of the parties hereto and their respective successors and assigns hereunder, and shall not be deemed to give, either express
or implied, any legal or equitable right, remedy, or claim to any other entity or person whatsoever. 

  

 5 










	3.	(a) Escrow Agent shall not be liable for any action taken or omitted or for any loss or injury resulting from its actions or its performance or lack of performance of
its duties hereunder in the absence of bad faith, gross negligence or willful misconduct on its part. In no event shall Escrow Agent be liable (i) for acting in accordance with or relying upon any instruction, notice, demand, certificate or
document from the Depositors or (ii) for an amount in excess of the value of the Escrow Property. 

 (b)
Escrow Agent may consult legal counsel of its own choosing in the event of any dispute or question as to the construction of this Escrow Agreement, or Escrow Agent’s duties hereunder, and Escrow Agent will incur no liability and will be fully
protected with respect to any action taken or omitted in good faith in accordance with the opinion and instructions of such counsel. Notwithstanding anything to the contrary herein, in no event shall Escrow Agent be entitled to reimbursement of the
expenses of such counsel with respect to any matter arising from Escrow Agent’s bad faith, gross negligence or willful misconduct. 
 (c) Escrow Agent shall not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of Escrow Agent (including but not limited to any act or
provision of any present or future law or regulation or governmental authority, any act of God or war, or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility). 
 (d) If at any time Escrow Agent is served with any judicial or administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way affects the Escrow Property (including but not limited to orders of attachment or garnishment or other forms of levies or injunctions or stays relating to the transfer of the Escrow Property), Escrow Agent is
authorized to comply therewith in any manner as it or its legal counsel of its own choosing deems appropriate; and if Escrow Agent complies with any such judicial or administrative order, judgment, decree, writ or other form of judicial or
administrative process, Escrow Agent shall not be liable to any of the parties hereto or to any other person or entity even though such order, judgment, decree, writ or process may be subsequently modified or vacated or otherwise determined to have
been without legal force or effect. 
  

	4.	Unless otherwise specifically set forth herein, Escrow Agent shall proceed as soon as practicable to collect any checks or other collection items at any time deposited
hereunder. All such collections shall be subject to Escrow Agent’s usual collection practices or terms regarding items received by Escrow Agent for deposit or collection. Escrow Agent shall not be required, or have any duty, to notify anyone of
any payment or maturity under the terms of any instrument deposited hereunder, nor to take any legal action to enforce payment of any check, note or security deposited hereunder or to exercise any right or privilege which may be afforded to the
holder of any such security. 

  

	5.	Escrow Agent shall provide to the Depositors monthly statements identifying transactions, transfers or holdings of the Escrow Property and each such statement shall be
deemed to be correct and final upon receipt thereof by the Depositors unless Escrow Agent is notified in writing to the contrary within thirty (30) business days of the date of such statement. 

  

 6 










	6.	Notices, instructions or other communications shall be in writing and shall be given to the address set forth in the “Addresses” provision herein (or to such
other address as may be substituted therefor by written notification to Escrow Agent or the Depositors). Notices to Escrow Agent shall be deemed to be given when actually received by Escrow Agent’s Corporate Trust Administration division.
Escrow Agent is authorized to comply with and rely upon any notices, instructions or other communications believed by it to have been sent or given by the Depositors or by a person or persons authorized by the Depositors. Whenever under the terms
hereof the time for giving a notice or performing an act falls upon a Saturday, Sunday, or banking holiday, such time shall be extended to the next day on which Escrow Agent is open for business. 

  

	7.	The Sellers on the one hand, and the Buyer on the other hand, shall each jointly and severally be liable for and shall reimburse and indemnify Escrow Agent and hold
Escrow Agent harmless from and against any and all claims, losses, liabilities, costs, damages or expenses (including reasonable attorneys’ fees and expenses) (collectively, “Escrow Agent Losses”) that may be incurred by it as a
result of its involvement in any arbitration or litigation arising from the performance of its duties hereunder, provided, however, that nothing contained herein shall require Escrow Agent to be indemnified for Escrow Agent Losses caused by its bad
faith, gross negligence or willful misconduct. The Sellers and the Buyer agree that irrespective of any joint and several liability that either may have to the Escrow Agent under this Agreement, as between them, the Sellers (collectively) and the
Buyer, shall each only be liable for 50% of any Escrow Agent Losses incurred by the Escrow Agent which result in reimbursement or indemnification under this Section 7. If the Sellers (collectively) or the Buyer incur greater than 50% of any
such Escrow Agent Losses, the Buyer or the Sellers, as applicable, shall promptly make payment(s) to the other(s) such that each of the Buyer and the Sellers (collectively), has borne 50% of all amounts which are paid to the Escrow Agent under this
Section 7. 

  

	8.	(a) The Depositors may remove Escrow Agent at any time by giving to Escrow Agent thirty (30) calendar days’ prior notice in writing signed by the Buyer
and the Sellers’ Representative. Escrow Agent may resign at any time by giving to the Depositors thirty (30) calendar days’ prior written notice thereof. Within ten (10) calendar days after giving the foregoing notice of removal
to Escrow Agent or receiving the foregoing notice of resignation from Escrow Agent, the Buyer and the Sellers’ Representative shall jointly agree on and appoint a successor Escrow Agent. If a successor Escrow Agent has not accepted such
appointment by the end of such 10-day period, Escrow Agent may apply to a court of competent jurisdiction for the appointment of a successor Escrow Agent or for other appropriate relief. One-half of the costs and expenses (including reasonable
attorneys’ fees and expenses) incurred by Escrow Agent in connection with such proceeding shall be paid by each of the Sellers, on the one hand, and the Buyer, on the other hand. 

 (b) Upon receipt of the identity of the successor Escrow Agent, Escrow Agent shall either deliver the Escrow Property then held hereunder to
the successor Escrow Agent, less Escrow Agent’s fees, costs and expenses or other obligations owed to Escrow Agent, or hold such Escrow Property (or any portion thereof), pending distribution, until all such fees, costs and expenses or other
obligations are paid. 
  

 7 









 (c) Upon delivery of the Escrow Property to the successor Escrow Agent, Escrow Agent shall
have no further duties, responsibilities or obligations hereunder. 
  

	9.	(a) In the event of any ambiguity or uncertainty hereunder or in any notice, instruction or other communication received by Escrow Agent hereunder, Escrow Agent
may, in its sole discretion, refrain from taking any action other than retain possession of the Escrow Property, unless Escrow Agent receives written instructions, signed by the Buyer and the Sellers’ Representative, which eliminates such
ambiguity or uncertainty. 

 (b) In the event of any dispute between or conflicting claims by or among the
Depositors and/or any other person or entity with respect to any Escrow Property, Escrow Agent shall be entitled, in its sole discretion, to refuse to comply with any and all claims, demands or instructions with respect to such Escrow Property so
long as such dispute or conflict shall continue, and Escrow Agent shall not be or become liable in any way to the Depositors for failure or refusal to comply with such conflicting claims, demands or instructions. Escrow Agent shall be entitled to
refuse to act until, in its sole discretion, either (i) such conflicting or adverse claims or demands shall have been determined by a final order, judgment or decree of a court of competent jurisdiction, which order, judgment or decree is not
subject to appeal, or settled by agreement between the conflicting parties as evidenced in a writing satisfactory to Escrow Agent or (ii) Escrow Agent shall have received security or an indemnity satisfactory to it sufficient to hold it
harmless from and against any and all Losses which it may incur by reason of so acting. Escrow Agent may, in addition, elect, in its sole discretion, to commence an interpleader action or seek other judicial relief or orders as it may deem, in its
sole discretion, necessary. The Buyer, on the one hand, and the Sellers, on the other hand, shall each be responsible for and pay 50% of the costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with such
proceeding. 
  

	10.	This Agreement shall be interpreted, construed, enforced and administered in accordance with the internal substantive laws (and not the choice of law rules) of the
State of New York. Each party hereto hereby submits to the personal jurisdiction of and each agrees that all proceedings relating hereto shall be brought in courts located within the City and State of New York. Each party hereto hereby waives the
right to trial by jury and to assert counterclaims in any such proceedings. To the extent that in any jurisdiction any party hereto may be entitled to claim, for itself or its assets, immunity from suit, execution, attachment (whether before or
after judgment) or other legal process, each hereby irrevocably agrees not to claim, and hereby waives, such immunity. Each party hereto waives personal service of process and consents to service of process by certified or registered mail, return
receipt requested, directed to it at the address last specified for notices hereunder, and such service shall be deemed completed ten (10) calendar days after the same is so mailed. 

  

	11.	Except as otherwise permitted herein, this Escrow Agreement may be modified only by a written amendment signed by all the parties hereto, and no waiver of any provision
hereof shall be effective unless expressed in a writing signed by the party to be charged. 

  

	12.	The rights and remedies conferred upon the parties hereto shall be cumulative, and the exercise or waiver of any such right or remedy shall not preclude or inhibit the
exercise 

  

 8 









 
of any additional rights or remedies. The waiver of any right or remedy hereunder shall not preclude the subsequent exercise of such right or remedy. 
  

	13.	Each Depositor and Escrow Agent hereby represents and warrants (a) that this Escrow Agreement has been duly authorized, executed and delivered on its behalf and
constitutes its legal, valid and binding obligation and (b) that the execution, delivery and performance of this Escrow Agreement by such party does not and will not violate any applicable law or regulation. 

  

	14.	The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other
provision; and if any provision is held to be enforceable as a matter of law, the other provisions shall not be affected thereby and shall remain in full force and effect. 

  

	15.	This Agreement shall constitute the entire agreement of the parties with respect to the subject matter and supersedes all prior oral or written agreements in regard
thereto. 

  

	16.	This Agreement shall terminate as provided for herein. The provisions of these Terms and Conditions shall survive termination of this Escrow Agreement and/or the
resignation or removal of Escrow Agent. 

  

	17.	No printed or other material in any language, including prospectuses, notices, reports, and promotional material which mentions “The Bank of New York” by name
or the rights, powers, or duties of Escrow Agent under this Agreement shall be issued by any other parties hereto, or on such party’s behalf, without the prior written consent of Escrow Agent. 

  

	18.	The headings contained in this Agreement are for convenience of reference only and shall have no effect on the interpretation or operation hereof.


  

	19.	This Escrow Agreement may be executed by each of the parties hereto in any number of counterparts, each of which counterpart, when so executed and delivered, shall be
deemed to be an original and all such counterparts shall together constitute one and the same agreement. 

  

	20.	 Escrow Agent does not have any interest in the Escrow Property deposited hereunder but is serving as escrow holder only and having only possession
thereof. The Sellers on the one hand, and the Buyer on the other hand, shall each pay or reimburse Escrow Agent upon request for 50% of any transfer taxes or other taxes relating to the Escrow Property incurred in connection herewith and shall
indemnify and hold harmless Escrow Agent for 50% of any amounts that it is obligated to pay in the way of such taxes. Any payments of income pursuant to this Escrow Agreement shall be subject to withholding regulations then in force with respect to
United States taxes. The parties hereto will provide Escrow Agent with appropriate W-9 forms for tax I.D., number certifications, or W-8 forms for non-resident alien certifications. It is understood that Escrow Agent shall be responsible for income
reporting only with respect to income earned on investment of funds which are a part of the Escrow Property and is not responsible for any other reporting. It is expressly agreed and understood that the Escrow Property shall be treated as a grantor
trust of the Sellers for tax purposes, provided, however, that Escrow Agent shall not



  

 9 










	 	 
distribute any amounts from the Escrow Property except as expressly provided in this Agreement. Accordingly, for tax purposes, the assets and all earnings on the assets shall be considered owned
by the Sellers and shall be subject to the claims of the Sellers’ general creditors until distributed pursuant to the terms of this Agreement, and shall be reported as such for all tax reporting purposes. In particular, it is agreed that all
interest or other income earned on the Escrow Property shall be treated as earned by the Sellers and shall be reported by Escrow Agent to the Sellers as income of the Sellers. The Sellers’ Representative shall advise the Escrow Agent as to the
proper allocation of such amounts as among the various Sellers. This paragraph and paragraph 10 shall survive notwithstanding any termination of this Escrow Agreement or the resignation of Escrow Agent. 


  

 10 









 IN WITNESS WHEREOF, each of the parties has caused this Escrow Agreement to be executed by a
duly authorized officer as of the day and year first written above. 
  

							
	THE SELLERS:	 	ATLANTIC PAPER & FOIL CORP. OF N.Y.
			
		 	By:	 	  

		 		 	Name:	 	Shaun Gabbay
		 		 	Title:	 	Secretary
		
		 	ATLANTIC LAKESIDE PROPERTIES, LLC
			
		 	By:	 	  

		 		 	Name:	 	Shaun Gabbay
		 		 	Title:	 	Member
		
		 	ATLANTIC PAPER & FOIL, LLC
			
		 	By:	 	  

		 		 	Name:	 	Shaun Gabbay
		 		 	Title:	 	Member
		
		 	ATLANTIC PAPER & FOIL OF GEORGIA, LLC
			
		 	By:	 	  

		 		 	Name:	 	Shaun Gabbay
		 		 	Title:	 	Member
		
		 	CONSUMER LICENSING CORPORATION
			
		 	By:	 	  

		 		 	Name:	 	Shaun Gabbay
		 		 	Title:	 	
		
	THE SELLERS’ REPRESENTATIVE:	 	  

		 	Shaun Gabbay

 [Signature pages continue.] 
 Signature Page to Escrow Agreement 









					
	BUYER:	 	CELLU TISSUE HOLDINGS, INC.
			
		 	By:	 	  



					
		 	  Name:	 	Russell C. Taylor
		 	  Title:	 	President and Chief Executive Officer

 [Signature pages continue.] 
 Signature Page to Escrow Agreement 









					
	ESCROW AGENT:	 	THE BANK OF NEW YORK, as Escrow Agent
			
		 	By:	 	  



					
		 	  Name:	 	
		 	  Title:	 	

 Signature Page to Escrow Agreement 








 Exhibit I-2 
 Form of Hauppauge Lease - Kennedy Drive 








 LEASE AGREEMENT 
 ATLANTIC PAPER & FOIL CORP. OF N.Y. 
 -with-

 CELLU TISSUE – HAUPPAUGE, LLC 
 PREMISES: 
 325 Kennedy Drive, Hauppauge, New York 11788 








 LEASE AGREEMENT 
 THIS LEASE AGREEMENT (the “Lease”) is dated this 2nd day of July 2008, by and between ATLANTIC PAPER & FOIL CORP. OF
N.Y., a New York corporation with an address at P.O. Box 222144, Great Neck, NY 11022, and CELLU TISSUE – HAUPPAUGE, LLC, a Delaware limited liability company, with an address at 1855 Lockeway Drive, Suite 501, Alpharetta, GA
30004. 
 ARTICLE 1. DEFINITIONS. 
 As used in this Lease, the following terms shall have the meanings ascribed below, which are in addition to other terms defined in this Lease: 
 1. 1. “Building” means the building located on the Premises. 
 1.2. “Commencement Date” means July 2, 2008. 
 1.3. “Initial Expiration Date” means July 2, 2013. 
 1.4.
“Landlord” means Atlantic Paper & Foil Corp. of New York and its permitted successors and assigns. 
 1.5.
“Landlord’s Mortgage” means, at any time (now or hereafter) a mortgage or deed of trust placed upon the Premises by Landlord constituting a mortgage lien and all renewals, modifications, consolidations, replacements, extensions or
substitutions of any such mortgage or deed of trust. 
 1.6. “Landlord’s Mortgagee” means, at any time, the then
holder of the indebtedness secured by Landlord’s Mortgage. 
 1.7. “Lease Term” means the Initial Term, First
Option Term, Second Option Term and the Third Option Term, if the First Option Term, Second Option Term and Third Option Term, as applicable, to renew set forth in Article 3.2, 3.3 and 3.4 of this Lease are exercised. 
  

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 1.8. “First Option Term Commencement Date means July 2, 2013. 
 1.9. “First Option Term Expiration Date” means July 2, 2018. 
 1.10 “Second Option Term Commencement Date” means July 2, 2018. 
 1.11 “Second Option Term Expiration Date” means July 2, 2023. 
 1.10 “Third Option Term Commencement Date” means July 2, 2023. 
 1.11 “Third Option Term Expiration Date” means July 2, 2028. 
 1.12. “Premises” means the land and building described on Exhibit “A” annexed hereto and made a part hereof known as and
by the street address 325 Kennedy Drive, Hauppauge, New York, together with all fixtures and other improvements now or hereafter located thereon and easements and other rights appurtenant thereto. 
 1.13 “Rent” means all sums, monies or payments required to be paid by Tenant to Landlord pursuant to this Lease. 
 1.14. “Tenant” means Cellu Tissue - Hauppauge, LLC a Delaware limited liability company and its permitted successors and assigns.

 ARTICLE 2. GRANT. 
 2.1 In consideration of the rents, covenants, agreements and conditions hereinafter provided to be paid, kept, performed and observed, and upon the following terms and conditions, Landlord leases to Tenant and Tenant hereby leases from
Landlord the Premises. Tenant shall have and hold the Premises for and during the term described herein subject to the terms, covenants and conditions hereinafter set forth. 
 ARTICLE 3. TERM. 
  

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 3.1 Initial Term. The initial term of this Lease (the “Initial Term”) shall
commence on the Commencement Date and expire on the Initial Expiration Date, unless sooner terminated as hereinafter provided. 
 3.2 First Option Term. Provided Tenant is not in Default as provided herein, Tenant shall have the right, upon prior written notice given to Landlord no later than July 2, 2012, time being of the essence, given in accordance
with the terms of this Lease (“Tenant’s First Option Renewal Notice”), to extend the term of this Lease for one additional five (5) year period commencing on the First Option Term Commencement Date and ending on the First Option
Term Expiration Date (the “First Option Term”), on the same terms and conditions and at the rental set forth herein. Tenant’s failure to give Tenant’s First Option Renewal Notice shall be deemed an election by Tenant not to
exercise the option provided herein. 
 3.3 Second Option Term. Provided Tenant is not in Default as provided herein,
Tenant shall have the right, upon prior written notice given to Landlord no later than July 2, 2017, time being of the essence, given in accordance with the terms of this Lease (“Tenant’s Second Option Renewal Notice”), to extend
the term of this Lease for one additional five (5) year period commencing on the Second Option Term Commencement Date and ending on the Second Option Term Expiration Date (the “Second Option Term”), on the same terms and conditions
and at the rental set forth herein. Tenant’s failure to give Tenant’s Second Option Renewal Notice shall be deemed an election by Tenant not to exercise the option provided herein. 
 3.4 Third Option Term. Provided Tenant is not in Default as provided herein, Tenant shall have the right, upon prior written notice
given to Landlord no later than July 2, 2022, time being of the essence, given in accordance with the terms of this Lease (“Tenant’s Third Option Renewal Notice”), to extend the term of this Lease for one additional five
(5) year period commencing on the Third Option Term Commencement Date and ending on the Third Option Term Expiration Date (the “Third Option Term”), on the same terms and conditions and at the rental set forth herein. Tenant’s
failure to give Tenant’s Third Option Renewal Notice shall be deemed an election by Tenant not to exercise the option provided herein. 
  

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 3.5 Tenant Termination Right. Notwithstanding anything herein to the contrary, Tenant
shall have the right to terminate this Lease at any time, with or without cause, upon twelve (12) months’ prior written notice to Landlord. Upon such termination, provided that Tenant returns the Premises to the Landlord and is current in
the payment of rent and vacates in accordance with Article 25 hereof, Tenant shall be released and discharged from all of its further obligations and liabilities under this Lease, except for obligations and liabilities related to any Default of
Tenant under Article 30 hereof. 
 ARTICLE 4. BASE RENT. 
 4.1 Base Rent. During the Initial Term of this Lease, Tenant shall pay to Landlord Base Rent per annum without setoff or deduction, except as otherwise expressly provided herein, as follows:

  

							
	 	  	Annual Rent	  	Monthly Installments
	 Years 1 - 2
	  	$	690,000	  	$	57,500
	 Year 3
	  	$	703,800	  	$	58,650
	 Year 4
	  	$	717,876	  	$	59,823
	 Year 5
	  	$	732,235	  	$	61,019

 Years 6 - 10 Base rent for the initial year of the First Option Term shall be determined pursuant to
Article 4.2 below, with a 5% increase per annum above prior year’s rent for each year of the First Option Term thereafter. 
 Years 11 - 15
Base rent for the initial year of the Second Option Term shall be determined pursuant to Article 4.2 below, with a 5% increase per annum above prior year’s rent for each year of the Second Option Term thereafter. 
 Years 16 - 20 Base rent for the initial year of the Third Option Term shall be determined pursuant to Article 4.2 below, with a 5% increase per annum above
prior year’s rent for each year of the Third Option Term thereafter. 
  

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 4.2 Calculation of Base Rent for Option Terms. During the First Option Term, Second
Option Term and the Third Option Term of this Lease, as provided herein: 
 4.2.1 The Base Rent payable by Tenant for the
Premises for the initial year of the First Option Term, Second Option Term and/or Third Option Term, as the case may be, shall be equal to the greater of (a) the fair market rent value of the Premises (the “FMRV”), which shall reflect
the prevailing fair market rental rate for comparable properly in Suffolk County, New York and shall exclude the value of any, alterations or improvements made to the Premises by Tenant at its own expense, determined as of the Initial Expiration
Date, First Option Expiration Date or Second Option Expiration Date, as the case may be, or (b) One Hundred and Two (102%) percent of Tenant’s then calculated Base Rent during the final Lease Year of the Original Term (or First Option
Term or Second Option Term, as applicable). 
 4.2.2 Nine (9) months before the Initial Expiration Date, the First Option
Term Expiration Date and/ or the Second Option Term Expiration Date, as the case may be, Landlord and Tenant shall commence negotiations in good faith to attempt to agree upon the FMRV. If Landlord and Tenant cannot reach agreement by seven
(7) months before the Initial Expiration Date, the First Option Term Expiration Date, and/or the Second Option Term Expiration Date, as the case may be, Landlord and Tenant shall, no later than six (6) months before the applicable
expiration date, each select a reputable, qualified, independent, licensed real estate broker with at least ten (10) years experience leasing of industrial property in Suffolk County, New York, having office(s) in Nassau or Suffolk County, New
York and familiar with the rental then being charged in Suffolk County, New York (such brokers are referred to, respectively, as “Landlord’s Broker” and “Tenant’s Broker”), who shall confer promptly after their
selection by Landlord and Tenant and shall exercise good faith efforts to attempt to agree upon the renewal FMRV, taking into account all reasonably relevant factors. If Landlord’s Broker and Tenant’s Broker cannot reach agreement no later
than four (4) months prior to the Expirations Date, then, within twenty (20) days thereafter, they shall designate a third reputable, qualified, independent, licensed real estate broker with at least ten (10) years experience in
leasing of industrial property in Suffolk County, New York, having office(s) in Nassau or Suffolk County, New York and familiar with the industrial rentals then being

  

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charged in comparable buildings in Suffolk County, New York (the “Independent Broker”). Upon failure of Landlord’s Broker and Tenant’s Broker timely to agree upon the
designation of the Independent Broker, then the Independent Broker shall be appointed by the President of the Real Estate Board of New York, Inc., or the successor entity thereto, upon ten (10) days notice. Within ten (10) days after such
appointment, Landlord’s Broker and Tenant’s Broker shall each submit a letter to the Independent Broker, with a copy to Landlord and Tenant, setting forth such broker’s estimate of the FMRV and the rationale used in determining it
(respectively, “Landlord’s Broker’s Letter” and “Tenant’s Broker’s Letter”). If the estimates set forth in the Landlord’s Broker’s Letter and Tenant’s Broker’s Letter differ by
(5%) percent per annum or less, then the FMRV shall not be determined by the Independent Broker, and the FMRV shall be the average of the estimates set forth in the Landlord’s Broker’s Letter and Tenant’s Broker’s Letter. If
the estimates differ by more than five (5%) percent per annum, the Independent Broker shall conduct such investigations and hearings as he or she may deem appropriate and shall, within thirty (30) days after the date of his or her
appointment, choose either the estimate set forth in Landlord’s Broker’s Letter or the estimate set forth in Tenant’s Broker’s Letter to be the FMRV or an amount in between such estimates and such choice shall be binding upon
Landlord and Tenant. Landlord and Tenant shall each pay the fees and expenses of its respective broker. The fees and expense of the Independent Broker shall be shared equally by the Landlord and Tenant. 
 4.3 Payment of Rent. Tenant covenants to pay Rent without notice, deduction, set-off or abatement, except as otherwise expressly
provided herein, to Landlord in equal monthly installments (or appropriate pro rata portion thereof for any portion of a month at the beginning or end of the Lease Term) payable in advance on the first day of each month during the Initial Term
hereof and the First Option Term, Second Option Term and Third Option Term, if applicable. 
 4.4 Place of Payment. Rent
shall be payable to Landlord at Landlord’s address set forth herein or at such other place as Landlord may designate from time to time in writing. 
 4.5. Service Charge. Tenant’s failure to make any monetary payment required of Tenant (including payments of Rent) hereunder within ten (10) days after notice from Landlord that

  

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such payment has not been made shall result in the imposition of a service charge for such late payment in the amount of five (5%) percent of the amount due. 
 ARTICLE 5. RESERVATIONS BY LANDLORD. 
 5.1 Landlord reserves the right to place, install, maintain, carry through, repair and replace such utility lines, pipes, wires, appliances, tunneling and the like in, over, through and upon the Premises
as may be reasonably necessary or desirable for the servicing of the Premises, provided, however, in exercising its rights pursuant to this Article 5, Landlord shall not materially interfere with Tenant’s use and enjoyment of the Premises or
Tenant’s business operations thereat. 
 ARTICLE 6. USE. 
 6.1 The Premises shall be used by and/or at the sufferance of Tenant for light industrial manufacturing, warehousing and ancillary office use
and for no other purposes. 
 ARTICLE 7. COMPLIANCE WITH LAWS. 
 7.1 Tenant’s Compliance with Law. Tenant covenants throughout the Lease Term, at Tenant’s sole cost and expense (except as
otherwise provided herein), to comply with all laws, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments which are applicable to the Premises or the use or manner of use of the Premises, and the
orders, rules and regulations of the Board of Fire Underwriters where the Premises are situated, or any other body now or hereafter constituted exercising similar functions, which are applicable to the Premises or the use or manner of use of the
Premises. Tenant will likewise observe and comply with the reasonable requirements of all policies of public liability, fire and all other policies of insurance at any time in force with respect to the Building and other improvements on the Premises
and the equipment thereon. 
 7.2. Landlord Representation. To the best of Landlord’s knowledge, the Premises as
they currently exist, comply with (i) all laws, ordinances, orders, rules, regulations and

  

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requirements of all federal, state and municipal governments which are applicable to the Premises or the use or manner of use of the Premises, including the Americans with Disabilities Act,
(ii) all regulations of the Board of Fire Underwriters where the Premises are situated which are applicable to the Premises or the use or manner of use of the Premises and (iii) the requirements of all policies of public liability, fire
and all other policies of insurance in force with respect to the Building and improvements on the Premises and the equipment thereon. 
 ARTICLE 8. REAL ESTATE TAXES. 
 8.1 Payment. During the Lease Term, Landlord shall pay, satisfy and
discharge, , all Real Estate Taxes (as hereinafter defined) prior to any tax lien sale and shall provide Tenant with proof of payment of Real Estate Taxes upon request. For purposes of this Lease, “Real Estate Taxes” shall mean all real
property taxes and assessments and any other similar taxes or charges levied against or imposed upon the Premises, including: (a) all ad valorem Real Estate Taxes including school taxes assessed against the Premises (adjusted after protest or
litigation, if any) for any part of the Lease Term, (b) any taxes which shall be levied in lieu of any such ad valorem real estate taxes, (c) any special assessments for benefits on or to the Premises, payable in installments,
(d) occupational taxes or excise taxes levied on rental derived from the operation of the Premises or the privilege of leasing Premises, and (e) the expense of protesting, negotiating or contesting the amount or validity of any such taxes,
charges or assessments, such expense to be applicable to the period of the item contested, protested or negotiated (including legal fees and disbursements) incurred in the prosecution of any such tax reduction proceeding. 
 8.2 Right to Contest. Anything to the contrary contained herein notwithstanding, Landlord, at its sole cost and expense, shall have
the right to prosecute a tax certiorari proceeding or otherwise protest, in order to attempt to reduce Real Estate Taxes for which Landlord is responsible hereunder. In such event, Tenant agrees to reasonably cooperate with Landlord and/or
Landlord’s representatives or attorneys, provided such cooperation is at no cost to Tenant (or Landlord shall promptly reimburse Tenant for same). 
 ARTICLE 9. UTILITIES. 
  

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 9.1 From and after the Commencement Date, or such earlier date as Tenant may take possession
of all or part of the Premises, Tenant shall contract in its own name and timely pay for all charges for electricity, gas, water, fuel, sewer charges, telephone, trash hauling, and any other services or utilities used in, servicing or assessed
against the Premises, for periods from and after the Commencement Date or such earlier date of possession until the expiration or earlier termination of the Lease Term, unless otherwise herein expressly provided. 
 ARTICLE 10. TITLE; QUIET ENJOYMENT. 
 10.1 Landlord covenants that Landlord has good and clear, record and marketable fee simple title in and to the Premises, subject only to the encumbrances listed on Exhibit B attached hereto and made a part hereof. Landlord covenants that
Tenant, on paying the Rent as herein provided and keeping, performing and observing the covenants, agreements and conditions herein required of Tenant, shall peaceably and quietly hold and enjoy the Premises for the Lease Term, subject, however, to
the terms and conditions of this Lease. 
 ARTICLE 11. ASSIGNMENT, MORTGAGE AND SUBLETTING. 
 11.1 General. Tenant may not sublease all or any part of the Premises or assign its interest in this Lease without, in each case, the
prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. Notwithstanding any assignment of this Lease or any subletting of the Premises, Tenant shall remain primarily responsible for all obligations of Tenant
hereunder. 
 11.2 Permitted. Notwithstanding the foregoing, Tenant may, without either prior notice to or the consent of
Landlord, assign or otherwise transfer this Lease (i) in connection with any merger, consolidation, reorganization or other corporate restructuring of Tenant, (ii) in connection with any sale of all or substantially all of the stock or
assets of Tenant, or (iii) to any affiliate of Tenant; provided in each case that the successor corporation or entity acquiring Tenant’s stock or assets or the affiliate of Tenant, as applicable, agrees to be bound by all of the terms and
provisions of this Lease for the benefit of Landlord. 
  

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 11.3 Leasehold Mortgages; Liens. Notwithstanding anything herein to the contrary,
Tenant may grant: (i) a collateral assignment of or leasehold mortgage on its leasehold interest in the Premises and/or (ii) a lien on and a security interest in all goods, wares, equipment, fixtures, furniture, inventory, accounts,
contract rights, chattel paper and other personal property of Tenant, including, without limitation, Tenant’s Removable Property located on the Premises. 
 ARTICLE 12, CASUALTY; CONDEMNATION. 
 12.1. Fire and Other Casualty.
In the event of total or partial destruction of the Premises, which exceeds forty (40%) percent of the total square footage of the Building by fire or other peril, Landlord or Tenant, at their option, may terminate this Lease as of the date of
such casualty by written notice to the other given, if at all, within sixty (60) days from and after the date of such casualty. Absent such timely notice, this Lease shall remain in full force and effect (subject to abatement of Rent as
provided in Section 12.2 below), and Landlord shall promptly commence and diligently prosecute to completion the repair and restoration of the Premises as nearly as possible to their condition prior to such destruction. If Landlord elects to
repair or re-build the Premises but does not complete such repair or rebuilding within six (6) months after the adjustment of any insurance loss resulting from the occurrence of such damage or destruction, Tenant shall have the right to
terminate this Lease upon thirty (30) days prior written notice to Landlord. In all cases, due allowance shall be made for reasonable delay caused by adjustment of insurance loss, strikes, labor difficulties or any cause beyond Landlord’s
reasonable control. 
 12.2. Rental Abatement. If the Premises are rendered totally untenantable but this Lease is not
terminated as aforesaid, then all Rent shall abate from the date of the fire or other relevant cause or condition until the Premises are ready for occupancy and reasonably accessible to Tenant. If a portion of the Premises is rendered untenantable
(whether or not such portion exceeds forty (40%) percent of the total square footage of the Building) but this Lease is not terminated as aforesaid, then there shall be an abatement of Rent in proportion to the proportion of space within the
Building that is rendered untenantable until the damaged portion(s) are ready for Tenant’s occupancy and reasonably accessible to Tenant. For purposes of this Lease, the

  

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Premises shall be considered tenantable so long as and to the extent that the Premises are occupied and used by Tenant for its business. 
 12.3. Condemnation. If the Premises or a substantial part thereof (which in Tenant’s reasonable opinion renders the remainder of
the Premises unfit for the uses specified herein) shall be taken by any competent authority under the power of eminent domain or be acquired for any public or quasi-public use or purpose, the Lease Term shall cease and terminate upon the date when
the possession of said Premises or part thereof so taken shall be required for such purpose and without apportionment of the award and Tenant shall have no claim against Landlord for the value of any unexpired Lease Term. Rent at the then current
rate shall be apportioned as of the date of the termination. 
 If any portion of the Premises shall be taken by any competent
authority under the power of eminent domain or be acquired for any public or quasi-public use or purpose, and this Lease is not terminated in the manner provided for above, Landlord shall apply any such damages and compensation awarded (net of the
costs and expenses, including reasonable attorneys’ fees, incurred by Landlord in obtaining the same) to secure and close so much of the Building and/or the Premises, as the case may be, as remain and shall, to the extent possible, replace any
part so taken or appropriated by a suitable structure or parking area or addition of similar size and design to that portion so taken or appropriated. In such event, there shall be an abatement of Rent in proportion to the percentage of space which
is (temporarily or permanently) no longer available for use by Tenant. 
 In the event of such taking or public appropriation,
Landlord shall be entitled to receive the entire award or any judgment for damages caused by the taking, provided that Tenant shall be entitled to make a claim in any condemnation proceeding which does not reduce the amount of Landlord’s award,
for the value of Tenant’s property and nothing in this Section shall preclude an award by such public or quasi-public authority made to Tenant for loss of business or depreciation to and cost of removal of equipment or fixtures. 
 ARTICLE 13. LANDLORD’S RIGHTS. 
  

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 13.1 Reservation of Rights. Landlord reserves the following rights, provided, that in
exercising such rights, Landlord shall provide reasonable prior notice to Tenant and shall use best efforts not to interfere with Tenant’s use and enjoyment of the Premises or Tenant’s business operations thereat, provided, further, that
Landlord shall have the right to access the Premises to make repairs at all times without prior notice to Tenant in emergency circumstances: 
 13.1.1 To change the name of the Building upon sixty (60) days prior written notice to Tenant, but without liability to Tenant; 
 13.1.2 To enter the Premises at all reasonable times during normal business hours, together with Landlord’s employees, agents, repair
and maintenance personnel, brokers, lenders, potential purchasers, tenant’s insurance agents and inspectors, public authorities and others having a legitimate interest in the Premises; 
 13.1.3 To exhibit the Premises to potential tenants at all reasonable times during normal business hours and to display “For
Lease” signs on the Premises at any time during the last year of the Initial Term (provided Tenant has not exercised its right to renew for the First Option Term) or of all applicable Option Terms (provided Tenant has not exercised its right to
renew for a subsequent Option Term), or to display “For Sale” signs on the Premises at any time; and 
 13.1.4 To
inspect, or make repairs to, the Premises as required hereunder or as may be reasonably necessary or desirable for the safety, protection or preservation of the Premises. 
 ARTICLE 14. HOLDING OVER. 
 14.1 In the event of a holding over by Tenant
after expiration or termination of this Lease, Tenant shall be deemed a month-to-month tenant of the Premises, which month-to-month tenancy shall be terminable by either party hereto on sixty (60) days prior written notice from one party to the
other. In the event of a holding over by Tenant after the expiration of the sixty (60) day period referred to in the preceding sentence, without the consent in writing of Landlord, Tenant shall be deemed a tenant at sufferance and shall pay
rent for such occupancy at the rate of (i) one

  

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hundred twenty five (125%) percent of the last-current aggregate Base Rent payable during the last month of the Lease Term for the first two (2) month period after the expiration of the
sixty (60) day period referred to in the first sentence of this Section; (ii) one hundred fifty (150%) percent of the last-current aggregate Base Rent payable during the last month of the Lease Term for the second two (2) month
period following the expiration of the sixty (60) day period referred to in the first sentence of this Section; and (iii) two hundred (200%) percent of the last-current aggregate Base Rent payable during the last month of the Lease
Term for each one (1) month period thereafter; prorated monthly, for the entire holdover period, plus all reasonable attorney’s fees and expenses incurred by Landlord in enforcing its rights hereunder; plus, if the holdover period exceeds
sixty (60) days, any other damages occasioned by such holding over. Except as otherwise agreed, any holding over with the written consent of Landlord shall constitute a month-to-month tenancy. 
 ARTICLE 15. SIGNS. 
 15.1
Tenant shall not put upon nor permit to be put upon any part of the Premises, any signs, billboards or advertisements whatever in any location or any form without the prior written consent of Landlord, and in compliance with all applicable
ordinances and rules of public authority, Landlord’s consent to the installation or modification of such signage shall not be unreasonably withheld. Landlord hereby consents to any existing signage on the Premises as of the date of the
execution of this Lease with such changes to such existing signage as Tenant may reasonably require to reflect Tenant’s occupation of the Premises. 
 ARTICLE 16. MORTGAGE AND TRANSFER. 
 16.1 Landlord’s Right to
Mortgage and Transfer. Landlord shall have the unfettered right to transfer, mortgage, pledge or otherwise encumber, assign and convey, in whole or in part, the Premises, provided that any such transfer, mortgage, pledge, encumbrance, assignment
or conveyance shall be subject to Tenant’s interests under and pursuant to this Lease. Notwithstanding the foregoing, Tenant shall, at Landlord’s request, subordinate its interest under this Lease to the lien, but not the provisions, of
any institutional mortgage provided that the holder

  

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thereof enters into a so-called “subordination, non-disturbance and attornment agreement” or otherwise recognizes and acknowledges this Lease with Tenant in form and substance
acceptable to Tenant. Landlord has obtained a subordination, non-disturbance and attornment agreement among Tenant, Landlord and Landlord’s Mortgagee for each existing Landlord Mortgage, copies of which are attached hereto as Exhibit C.

 16.2. Estoppel Certificates. Landlord and Tenant covenant and agree to execute and deliver to the other and/or its
prospective or existing mortgagee within ten (10) business days of a written request therefore, an estoppel letter setting forth: (i) the date of this Lease and any amendments thereto, (ii) the date through which Rent has been paid
hereunder, (iii) the amount of any security deposit held by Landlord, if any, (iv) that Tenant is in occupancy of the Premises and/or specifying any subleases or assignments, (v) that the Lease is in full force and effect,
(vi) that, to the knowledge of such party, there exists no default under the Lease and that there are no defenses or offsets against the enforcement thereof, or setting forth such defaults, defenses or offsets, and (vii) any other
information with respect to this Lease which the other party or its prospective or existing mortgagee may reasonably request. 
 ARTICLE 17.
OVERHEAD CRANES. 
 17.1. At the expiration or earlier termination of the Term, Landlord shall purchase from Tenant, for a
purchase price of $1.00, any overhead cranes located on the Premises as of the date hereof which are acquired by Tenant pursuant to the Asset Purchase Agreement (as defined below). 
 ARTICLE 18. LANDLORD’S INABILITY TO PERFORM. 
 18.1 If by reason of
inability to obtain and utilize labor, materials or supplies; circumstances directly or indirectly the result of a state of war or national or local emergency; strikes or riots; or by reason of any other cause beyond the reasonable control of
Landlord, Landlord shall be unable to perform or shall be delayed in performance, such non-performance or delay in performance shall not render Landlord liable in any respect for damages to either person

  

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or property, constitute a total or partial eviction, constructive or otherwise, cause an abatement of rent or relieve Tenant from the fulfillment of any covenant or agreement contained in this
Lease, except for any abatement of Rent expressly provided for herein. 
 ARTICLE 19. BANKRUPTCY AND INSOLVENCY. 
 19.1 Bankruptcy. It is understood and agreed that the following shall apply in the event of the bankruptcy or insolvency of Tenant:

 19.1.1 If a petition is filed by, or an order for relief is entered against Tenant under Chapter 7 of the Bankruptcy Code and
the trustee of Tenant elects to assume this Lease for the purpose of assigning it, such election or assignment, or both, may be made only if all of the terms and conditions of this subsection 19.1 and subsection 19.2 below are satisfied. To be
effective, an election to assume this Lease must be in writing and addressed to Landlord, and in Landlord’s business judgment, all of the conditions hereinafter stated, which Landlord and Tenant to be commercially reasonable must have been
satisfied. If the trustee fails so to elect to assume this Lease within sixty (60) days after such filing or order, this Lease will be deemed to have been rejected, and Landlord shall then immediately be entitled to possession of the Premises
without further obligation to Tenant or the trustee, and this Lease shall be terminated. Landlord’s right to be compensated for damages in bankruptcy proceeding, however, shall survive such termination. 
 19.1.2 If Tenant filed a petition for reorganization under Chapter 11 of the Bankruptcy Code, or if a proceeding filed by or against Tenant
under any other chapter of the Bankruptcy Code is converted to a Chapter 11 proceeding and Tenant’s trustee or Tenant as debtor-in-possession fails to assume this Lease within sixty (60) days from the date of the filing of such petition or
conversion, then the trustee or the debtor-in-possession shall be deemed to have rejected this Lease. To be effective, any election to assume this Lease must be in writing addressed to Landlord and, in Landlord’s business judgment, all of the
following conditions, which Landlord and Tenant acknowledge to be commercially reasonable, must have been satisfied: 
  

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 (i) The trustee or the debtor-in-possession has cured or has provided to Landlord adequate
assurance, as defined in this subsection, that: 
 (a) It will cure all monetary defaults under this Lease within ten
(10) days from the date of assumption; and 
 (b) It will cure all nonmonetary defaults under this Lease within thirty
(30) days from the date of assumption; 
 (ii) The trustee or the debtor-in-possession has compensated Landlord, or has
provided Landlord with adequate assurance, as hereinafter defined, that within ten (10) days from the date of assumption Landlord will be compensated for any pecuniary loss it has incurred arising from the default of Tenant, the trustee, or the
debtor-in-possession, as recited in Landlord’s written statement of pecuniary loss sent to the trustee or debtor-in-possession; and 
 (iii) The trustee or the debtor-in-possession has provided Landlord with adequate assurance of the future performance of each of Tenant’s obligations under this Lease; provided, however, that

 (a) From and after the date of assumption of this Lease, it shall pay all monetary obligations, including the Base and
Additional Rent payable under this lease in advance in equal monthly installments on each date that such Rents are payable; 
 (b) It shall also deposit with Landlord, as security for the timely payment of Rent, an amount equal to two (2) months’ Base Rent and other monetary obligations payable under this Lease: 
 (c) If not otherwise required by the terms of this Lease, it shall also pay in advance, on each day that any installment of Base Rent is
payable, one-twelfth of Tenant’s annual tax, escalation and other obligations under this Lease, if any; and 
 (d) The
obligations imposed upon the trustee or the debtor-in-possession will continue for Tenant after the completion of bankruptcy proceedings. 
  

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 (iv) For purposes of this subsection, “adequate assurance” means that:

 (a) Landlord reasonably determines that the Tenant, trustee or the debtor-in-possession has, and will continue to have,
sufficient unencumbered assets, after the payment of all secured obligations and administrative expenses, to assure Landlord that the trustee or the debtor-in-possession will have sufficient funds timely to fulfill Tenant’s obligations under
this Lease and to keep the Premises properly staffed with sufficient employees to conduct a fully operational, actively promoted business in the Premises; and 
 (b) An order shall have been entered segregating sufficient cash payable to Landlord and/or valid and perfected first lien and security interest shall have been granted in property of Tenant, trustee, or
debtor-in-possession which is acceptable in value and kind to Landlord, to secure to Landlord the obligation of Tenant, trustee or debtor-in-possession to cure all monetary and nonmonetary defaults under this Lease within the time periods set forth
above. 
 19.1.3 In the event this Lease is assumed by a trustee appointed for Tenant or by Tenant as debtor-in-possession under
the provisions of subsection 19.1.2 above and, thereafter, Tenant is either adjudicated a bankrupt or files a subsequent petition for arrangement under Chapter 11 of the Bankruptcy Code, then Landlord may, at its option, terminate this Lease and all
the Tenant’s right under it, by giving written notice of Landlord’s election so to terminate. 
 19.1.4 If the trustee
or the debtor-in-possession has assumed this Lease, pursuant to subsection 19.1.1 or 19.1.2. above and desires, to assign or to elect to assign Tenant’s interest under this Lease or the estate created by that interest to any other person, such
interest or estate may be assigned only if the intended assignee has provided adequate assurance of future performance, as defined in this subsection 19.1.4, of all of the terms, covenants and conditions of this Lease. For the purposes of this
subsection 19.1.4, “adequate assurance of future performance” means that Landlord has ascertained that each of the following conditions has been satisfied: 
  

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 (i) The assignee has submitted a current financial statement, audited by a certified public
accountant, which shows a net worth and working capital in amounts reasonably determined by Landlord to be sufficient to assure the future performance by the assignee of the tenant’s obligations under this Lease; 
 (ii) If reasonably requested by Landlord, the assignee will obtain guarantees, in form and substance satisfactory to Landlord, from one or
more persons who satisfy Landlord’s standards of credit worthiness; and 
 (iii) Landlord has obtained consents or waivers
from any third parties which may be required under any lease, mortgage, financing arrangement, or other agreement by which Landlord is bound, to enable Landlord to permit such assignment. 
 19.1.5 When, pursuant to the Bankruptcy Code, the trustee or the debtor-in-possession is obligated to pay reasonable use and occupancy
charges for the use of all or part of the Premises, it is agreed that such charges will not be less than the Base Rent as defined in this Lease, plus additional rent and other monetary obligations of Tenant included herein, 
 19.1.6 Neither Tenant’s interest in this Lease nor any estate of Tenant created in this Lease shall pass to any trustee, receiver,
assignee for the benefit of creditors, or any other person or entity, nor otherwise by operation of law under the laws of any state having jurisdiction of the person or property of Tenant, unless Landlord consents in writing to such transfer.
Landlord’s acceptance of rent or any other payments from any trustee, receiver, assignee, person or other entity will not be deemed to have waived, or waive, either the requirement of Landlord’s consent or Landlord’s right to
terminate this Lease for any transfer of Tenant’s interest under this Lease without such consent 
 ARTICLE 20. TRASH. 

20.1 No trash or refuse shall be permitted anywhere outside the Building by Tenant except in enclosed containers. 
  

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 ARTICLE 21. MAINTENANCE AND CARE. 
 21.1 Acceptance. Tenant acknowledges that it has examined the Premises before taking possession hereunder. Except as otherwise
provided herein, Tenant is accepting the Building and Premises in “As Is:” condition. 
 21.2 Maintenance and
Repair by Tenant. Tenant shall be responsible for all non-structural maintenance and repairs to the Premises of whatever kind or nature, including those with respect to the ventilation and air conditioning systems. Tenant shall keep all fixtures
and the non-structural components of the Building, including, without limitation, the mechanical systems, life safety systems, plumbing, lighting, heating, air conditioning, ventilation, electricity, interior walls, ceilings, floors, windows, doors,
landscaping, driveways, parking lots, and loading doors in good repair and operating condition. 
 21.3 Landlord
Representation. Landlord represents and warrants that to the best of its knowledge, all fixtures, the structural support elements of the Building and the nonstructural components of the Building, including, without limitation, the mechanical
systems, life safety systems, plumbing, lighting, heating, air conditioning, ventilation, electricity, walls (interior and exterior), foundations, ceilings, beams, roofs (interior and exterior), floors, windows, doors, landscaping, driveways,
parking lots, and loading doors of the Building, on the date of this Lease, are in good repair and operating condition. 
 Tenant will keep the interior of the Building in good repair and free from filth, overloading, danger of fire or any pest or nuisance, and repair and/or replace any damage or breakage done by Tenant or Tenant’s agents, employees, or
invitees. To the extent that a repair to the interior of the Building or any equipment therein is covered by warranty granted to Landlord (if any), Landlord will make every reasonable effort to enforce that warranty on behalf of Tenant to effectuate
said repair. Otherwise, Tenant shall be responsible for all repairs to the interior of the Building and to Tenant’s equipment contained therein, except as specifically set forth herein. Tenant shall be responsible for the repair and replacement
of all glass and plate glass on the Premises, including damage done to the Premises by Tenant’s equipment or installations. 
  

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 In the event Tenant fails to maintain the interior of the Building as provided for herein,
Landlord shall have the right, but not the obligation, to perform such maintenance and repair as is required of Tenant in which event Tenant shall promptly reimburse Landlord for its costs in providing such maintenance or repairs together with a ten
(10%) percent charge for Landlord’s overhead. 
 21.4 Maintenance and Repair by Landlord. Landlord shall be
responsible for all maintenance and repairs to the structure of the Building, including but not limited to steel frame, footings, floor slabs, exterior walls, roof and roofing, outside main sprinkler line repairs (provided same was not damaged due
to Tenant’s negligence) and any air conditioning (HVAC) or heating unit replacement. Landlord shall keep the structure of the Building in good working order, condition and repair comparable to similar industrial buildings in Suffolk County, New
York. In the event Tenant requests Landlord to replace the air conditioning (HVAC) and/or heating unit then all costs associated therewith shall be assessed to Tenant and amortized pro rata over the remaining period of this Lease. 
 21.5 Additional Improvements. Except with the prior written consent of Tenant or in connection with fulfilling Landlord’s
express obligations hereunder, which consent may be granted or withheld in Tenant’s sole discretion, Landlord shall not be permitted to construct any additional improvements on or to the Premises, this Lease granting Tenant sole and exclusive
possession of the Premises except as otherwise expressly provided herein. 
 ARTICLE 22. ALTERATIONS AND ADDITIONS, MECHANICS’ LIENS.

 22.1 Alterations or Improvements. Tenant shall not make any alterations or improvements to the Premises without the
prior written consent of Landlord such consent not to be unreasonably withheld or delayed. Notwithstanding the foregoing, Tenant shall not make any external additions on the Premises (meaning those additions that are outside of the exterior walls of
the Building) without the prior written consent of the Landlord, which consent may be withheld in Landlord’s sole discretion. Alterations or improvements made by either of the parties upon the Premises, except furniture, machinery, goods,
wares, inventory, personal property, trade fixtures

  

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and equipment placed in the Premises, including raised flooring, any suspended or wall mounted lighting fixtures and video or computer screens (collectively, “Tenant’s Removable
Property”) and for fixtures added to the Premises by Tenant at its expense and designated by Tenant as removable by written notice to Landlord prior to such addition (“Removable Fixtures”), shall be and become the property of Landlord
and shall remain upon and be surrendered with the Premises as a part thereof at the expiration or termination of this Lease, without disturbance, molestation, injury or damage. Notwithstanding anything to the contrary herein, Tenant shall not be
obligated to remove or restore any alteration or improvement to the Premises at any time, except to the extent Landlord elects in writing at the time of giving its consent to a Tenant alteration or improvement, to require Tenant to remove and
restore such Tenant alteration or improvement at the end of the Term. Tenant shall have the right, at any time, to remove Tenant’s Removable Property from the Premises. In the event damage to the Premises shall be caused by moving Tenant’s
Removable Property in or out of the Premises, said damage shall be promptly repaired at the cost of Tenant. 
 22.2 Permitted
Alterations. Anything to the contrary contained in the preceding subsection notwithstanding, Tenant may make interior, non-structural alterations within the Premises without Landlord’s consent provided that the fair market value cost of
such alterations do not exceed One Hundred Thousand ($100,000.00) Dollars in any one (1) calendar year 
 22.3
Requirements for Structural Changes. Each alteration or improvement to the Premises that requires Landlord’s consent hereunder (each, for purposes of this Section 22.3, a “Structural Change”) shall be subject to the
following requirements: 
 22.3.1 Each Structural Change shall be made under the supervision of an architect or engineer
selected by Tenant and approved by Landlord, which approval shall not be unreasonably withheld or delayed; and shall be made in accordance with detailed plans and specifications prepared by such architect or engineer. Copies of all such plans and
specifications shall be delivered by Tenant to Landlord, and shall be subject to Landlord’s prior approval, not to be unreasonably withheld or delayed. 
  

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 22.3.2 If the estimated cost of any proposed Structural Change shall be One Hundred Fifty
Thousand ($150,000.00) Dollars, or more, Tenant, upon request of Landlord, at Tenant’s sole cost and expense, shall, before commencing the same, furnish to Landlord a surety company bond, issued by a surety company approved by Landlord in an
amount equal to the estimated cost of such change or alteration, or shall furnish to Landlord other security reasonably satisfactory to Landlord, in each case guaranteeing to Landlord the completion of the proposed change or alteration within a
reasonable time, free and clear of all Liens, and other claims and charges in accordance with any plans or specifications, therefor approved by Landlord in such instances where Landlord’s approval is required, or with any contract between
Tenant and a general contractor engaged by it which incorporates such plans and specifications. 
 22.3.3 No Structural Change
shall be made unless Tenant first obtains the written consent thereto of Landlord’s Mortgagee, if any, if such consent is required under such Landlord’s Mortgage. In the event such consent is required by Landlord’s Mortgagee, Landlord
shall notify Tenant, in writing, of such requirement and of the name and address of such mortgagee and shall reasonably cooperate with Tenant in obtaining such consent. 
 22.3.4. Tenant shall reimburse Landlord for all reasonable fees and expenses of architects, engineers and attorneys employed by Landlord in connection with the review or approval of any plans, agreements
or documents in connection with any Structural Change. 
 22.4 Requirements for All Alterations. Tenant covenants and
agrees that no change or alteration to the Premises will be made except in compliance with, and Tenant hereby covenants with, each and all of the following provisions: 
 22.4.1. All changes and alterations shall be made with reasonable diligence and dispatch (subject to unavoidable delays) in a good and workmanlike manner. 
 22.4.2. Before any changes or alterations are begun, Tenant shall procure, at its own sole cost and expense, all necessary licenses,
permits, approvals and authorizations from all

  

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tribunals. Upon Tenant’s request, Landlord shall join in the application for such licenses, permits, approvals and authorizations whenever such action is necessary. 
 22.4.3. All changes and alterations shall be made in compliance and conformity with all applicable Laws and with all applicable licenses,
permits, authorizations and approvals of all tribunals, as well as those of the National and Local Boards of Fire Underwriters, or any other body or bodies exercising similar functions. 
 22.4.4. In making changes and alterations, Tenant shall not violate the terms or conditions of any insurance policy affecting or relating to
the Premises. 
 22.4.5. Promptly after the completion of any changes or alterations, Tenant shall procure, at Tenant’s
sole cost and expense, all such approvals by tribunals and insurance organizations as may be required, and on written demand, shall promptly deliver photocopies thereof to Landlord. 
 22.4.6. No changes or alterations shall be made which would render title to the Premises or any part thereof unmarketable, or which would
reduce the value of the Premises below the value thereof immediately prior thereto. 
 22.4.7. Following the completion of all
such work or alterations, upon request, Tenant shall deliver to Landlord proper waivers of the right to file mechanic’s liens from all contractors, subcontractors or materialmen to be employed in connection with such changes and alterations.

 22.4.8. Tenant shall maintain in force (and require its contractors and subcontractors to take out and maintain in force)
Workers Compensation and public liability insurance in amounts which Landlord may reasonably require, naming Landlord and Landlord’s mortgagee as additional parties insured with respect to such liability insurance policies and deliver
certificates of such insurance to Landlord prior to commencement of any work. 
  

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 22.5 No Cost to Landlord. Landlord shall not be required to make any contribution to
the cost of any changes or alterations or any part thereof made by Tenant, and Tenant covenants that Landlord shall not be required to pay any cost, expense or liability arising out of or in connection with or by reason of any changes or alterations
made by Tenant. 
 22.9 Mechanic’s Liens. Tenant shall not cause nor permit any mechanic’s liens or other liens
to be placed upon the Premises and in case of the filing of any such lien or claim therefor, Tenant shall promptly discharge same; provided, however, that Tenant shall have the right to contest the validity or amount of any such lien provided Tenant
has posted security with Landlord, which security, in Landlord’s reasonable judgment, must be adequate to pay and discharge any such lien in full plus Landlord’s reasonable estimate of its legal fees. Tenant agrees to pay all reasonable
legal fees or disbursements and other costs incurred by Landlord because of any mechanic’s or other liens attributable to Tenant being placed upon the Premises. 
 ARTICLE 23. DEFAULT AND REMEDIES. 
 23.1 Defaults. Anyone or more of
the following events shall be deemed a “Default” or collectively “Defaults”: 
 23.1.1 Tenant shall at any
time fail to pay punctually and in full any item of Rent within ten (10) business days after written notice of such failure from Landlord. 
 23.1.2 Tenant shall fail to keep, perform or observe any other covenant, agreement, condition or undertaking hereunder and shall fail to remedy such default within thirty (30) days after written
notice thereof has been mailed by Landlord to Tenant; or if such default is one that will take longer than thirty (30) days to remedy, Tenant fails to commence curing such default within thirty (30) days and/or fails diligently to pursue
such cure to completion. 
 23.1.3 If either (a) a proceeding is commenced on a petition for relief filed by or against
Tenant (as debtor) under any debtor relief law, which is not vacated, stayed or dismissed within thirty (30) days thereafter; or (b) Tenant should seek or consent to an acquiescence in the appointment of any trustee, receiver or liquidator
of Tenant, as to any substantial portion of its

  

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assets or of the business conducted by Tenant in the Premises; or (c) within sixty (60) days after the appointment of any trustee, receiver or liquidator of Tenant or of the business
conducted by Tenant at the Premises, such appointment shall not have been vacated or stayed on appeal; or (d) Tenant shall make an assignment for the benefit of creditors; or (e) Tenant shall admit in writing its inability to pay debts
generally as they become due; or (f) Tenant shall become insolvent (as defined in the New York Uniform Commercial Code). 
 23.1.4 If Tenant is in Default in the payment of Rent more than seven (7) times in any twelve (12) month period cumulatively under this Lease, the Lease Agreement dated July 2, 2008, between Atlantic Lakeside Properties, Inc.
and Cellu Tissue – Thomaston, LLC (the “Thomaston Lease”) and the Lease Agreement dated July 2, 2008, between Atlantic Long Island Properties, Inc. and Cellu Tissue – Hauppauge, LLC (the “Gilpin Lease”), then, upon
the eighth such Default in the payment of Rent, Tenant shall be considered to be in Default under this Lease, the Thomaston Lease and the Gilpin Lease; provided that, all references to the Thomaston Lease and/or the Gilpin Lease, as the case may be,
in this Article shall be deleted if such property(ies) is/are no longer leased by Cellu Tissue – Hauppauge, LLC. (or its affiliated entities) from Atlantic Lakeside Properties LLC (or its affiliated entities). For purposes of this Lease,
“affiliate” means with respect to any person or entity, any other person or entity controlling or controlled by or under common control with such person or entity. 
 Notwithstanding the above, the cumulative late payments shall not prohibit or in any manner permit Tenant to not pay
rent within (10) ten calendar days of receipt of notice of non-payment from Landlord. In the event payment of rent on any lease is not made by the tenth (10th) calendar day after notice from Landlord, then Tenant shall be in Default and Landlord may enforce any and all rights
under the lease with regard to that leased premises. 
 23.2 Remedies of Landlord. Upon a Default, Landlord shall have
the right, without further notice or demand, to re-enter and take exclusive possession of the Premises, with or without force or legal process, and to refuse to allow Tenant to enter the same or have possession

  

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thereof; to change the locks on the doors to the Premises; all without being liable to Tenant for any damages or to any prosecution therefore; and 
 23.2.1 As agent of Tenant to reasonably relet the Premises for the balance of the Lease Term or for a shorter or longer term and receive the
rents therefor, applying them first to the payment of damages suffered to the Premises and rents due and to become due under this Lease, Tenant remaining liable for and hereby agreeing to pay Landlord any deficiency; or 
 23.2.2 To cancel and terminate the remaining term of this Lease, re-enter and take possession of the Premises free of this Lease and
thereafter this Lease shall be null and void and the Rents in such case shall be apportioned and paid on and up to the date of such entry. Thereafter both parties shall be released and relieved from any and all obligations thereafter to accrue
hereunder. Tenant shall be liable for all reasonable loss and damage resulting from such Default; or 
 23.2.3 To treat such
Default as an anticipatory breach of this Lease and, as liquidated damages for such Default, be entitled to the difference, if any, at the time of such termination for anticipatory breach represents the then present worth (computed at seven
(7%) percent per year) of the excess aggregate Rent payable hereunder that would have accrued over the balance of the then current Initial or Option Term of the Lease, had such term not been prematurely terminated, over the aggregate market
rental value of the Premises over the then current Initial or Option Term that the Lease would have run had it not been prematurely terminated. 
 23.3 Landlord’s Rights to Cure. Landlord may, but shall not be obligated to, cure any Default by Tenant; and whenever Landlord so elects, all reasonable costs and expenses paid by Landlord in
curing such Default, including without limitation reasonable attorneys’ fees, shall be Rent due on the next rent date after such payment, together with interest at the rate equal to the prime rate of interest from the date of the advance to the
date of repayment by Tenant to Landlord. 
  

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 23.4 Remedies Cumulative. All rights and remedies provided in this Lease for the
protection of Landlord and Tenant shall be cumulative and in addition to any other rights and remedies provided by law. 
 23.5
No Waiver. A waiver by Landlord or Tenant of a breach or default by the other, under the terms and conditions of this Lease shall not be construed to be a waiver of any subsequent breach or default nor of any other term or condition of this
Lease, and the failure of Landlord or Tenant to assert any breach or to declare a default by the other shall not be construed to constitute a waiver thereof so long as such breach or default continues unremedied. 
 23.6 No Reinstatement. No receipt of money by Landlord from Tenant after the expiration or termination of this Lease or after the
service of any notice, or after final judgment for possession of the Premises shall reinstate, continue or extend the Lease Term or affect any such notice, demand or suit. 
 ARTICLE 24. LIENS; LANDLORD LIEN WAIVER. 
 24.1 Liens. Except as
provided in Article 11, Tenant shall not create or permit to be created or to remain, any mortgage (other than Landlord’s Mortgage), security agreement, conditional bill of sale, chattel mortgage or otherwise, which might or does constitute a
lien, encumbrance or charge upon the Premises, or any part thereof, having a priority or preference over or ranking on parity with the estate, rights or interest of Landlord in the Premises or any part thereof. 
 24.2 Landlord Waiver. To the extent possible under applicable law, Landlord hereby waives: (i) any lien for base rent in
Landlord’s favor and (ii) any security interest (a) for all base rentals or other sums of money becoming due hereunder from Tenant or (b) upon all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract rights,
chattel paper and other personal property of Tenant, including, without limitation, Tenant’s Removable Property, situated on the Premises. Landlord further waives any right it might have to Tenant’s property under the Uniform Commercial
Code. Upon written request by Tenant, Landlord shall execute, within ten (10) days of

  

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receipt of such request, a customary form of landlord lien waiver and access agreement in favor of any lender or equipment lessor of Tenant, which document shall include a waiver of
Landlord’s right in all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract rights, chattel paper and other personal property of Tenant, including, without limitation, Tenant’s Removable Property situated on the
Premises and a license to enter the Premises to remove all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract rights, chattel paper and other personal property of Tenant, including, without limitation, Tenant’s
Removable Property. Landlord has executed and delivered a Lien Waiver between Landlord and JPMorgan Chase Bank, N.A., a copy of which is attached hereto as Exhibit D. 
 ARTICLE 25. SURRENDER OF THE PREMISES. 
 25.1 Expiration of Term. On
the last day of the Lease Term or upon any earlier termination of this Lease, Tenant shall, without fraud or delay, surrender and deliver the Premises to Landlord, broom clean and in good order, condition and repair, ordinary wear and tear,
casualty, loss, condemnation, permitted alteration and damaged caused by the negligence or willful misconduct of Landlord or the Landlord’s breach of its obligations hereunder excepted, free and clear of all sublettings, occupancies, persons or
tenants in possession. 
 25.2 Removal of Property. At the expiration or sooner termination of the Lease Term, Tenant may
remove from the Premises all Tenant Removable Property and Removable Fixtures, and shall repair any damage caused by such removal. 
 ARTICLE
26. INSURANCE. 
 26.1. Insurance. Tenant, at its own sole cost and expense, shall, throughout the Lease Term, procure
and maintain: 
 26.1.1 Comprehensive general public liability insurance against claims for bodily injury, death or property
damage occurring upon, in or about the Premises, such insurance to afford immediate protection at the Commencement Date to the limit of not less than Five Million ($5,000,000.00) Dollars in respect of bodily injury or death to any one person, and to
the limit of not

  

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less than Five Million ($5,000,000.00) Dollars in respect of anyone accident, and to the limit of not less than Five Million ($5,000,000.00) Dollars for property damage and such protection shall
continue at not less than said limited until reasonably required to be changed by Landlord in writing by reason of changed economic conditions making such protection inadequate. 
 26.1.2 lnsurance against loss by fire, including vandalism, in amount of the full replacement cost of the Premises. 
 26.1.3 In the event Tenant performs construction to or alterations of the Premises, such other insurance and in such amounts as may, from
time to time, be reasonably required by Landlord or Landlord’s Mortgagee against other insurable hazards which at the time are commonly insured against in the case of construction and alteration of buildings and/or in the case of premises
similarly situated, due regard being or to be given to the height or type of building, its location, construction, use and occupancy. 
 26.2 Named Insureds. All policies of insurance provided for or contemplated by this Lease shall name Landlord, Tenant and Landlord’s Mortgagee(s) as the insureds or additional insureds, as their respective interests may appear.

 26.3 Types of Policies. All insurance provided for in this Section 26 shall be effected under valid and
enforceable policies, in such forms and, where not expressly provided for above, in such amounts, as may from time to time be reasonably satisfactory to Landlord or Landlord’s Mortgagee and which at the time are customary for buildings and/or
in the case of premises similarly situated, due regard being or to be given to the height or type of building, its location, construction, use and occupancy, issued by insurers with general policyholder’s rating of not less than A as rated in
the most current available “Best’s lnsurance Reports” qualified to do business in the State of New York. Within thirty (30) days after obtaining any such insurance, Tenant shall cause a certificate thereof to be delivered to
Landlord and/or Landlord’s Mortgagee. 
 26.4 Required Provisions. All policies of insurance provided for in this
Article 26 shall, to the extent obtainable, contain clauses or endorsements to the effect: 
  

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 26.4.1 That no act, omission, or negligence of Tenant, or anyone acting for Tenant, which
might result in a forfeiture of such insurance or any part thereof, shall in any way affect the validity and, enforceability of such insurance insofar as Landlord and Landlord’s Mortgagee are concerned; and 
 26.4.2 That such policies shall not be canceled without at least thirty (30) days prior written notice to Landlord and Landlord’s
Mortgagee; and 
 26.4.3 That neither Landlord nor Landlord’s Mortgagee shall be liable for any premiums thereon or subject
to any assessments therefor. 
 26.5 Waiver of Subrogation. Neither Landlord nor Tenant shall be liable to the other for
any loss or damage to the Premises or other property or injury to or death of persons occurring on the Premises or in any manner growing out of or connected with Landlord’s or Tenant’s use and occupation of the Premises or the condition
thereof, whether or not caused by the negligence or other fault of Landlord, Tenant or their respective agents, employees, subtenants, licensees, invitees or assignees; provided, however, that this release (i) shall apply only to the extent
that such loss or damage is covered by insurance which protects Landlord or Tenant or both of them as the case may be; (ii) shall not be construed to impose any other or greater liability upon either Landlord or Tenant than would have existed
in the absence hereof; and (iii) shall be in effect only to the extent and so long as the applicable insurance policies provide that this release shall not affect the right of the insureds to recover under such policies, which clauses shall be
obtained by the parties hereto whenever available. 
 26.6 Indemnification of Landlord. Tenant shall indemnify and defend
Landlord, its employees and agents and save them harmless from and against any and all loss and against all claims, actions, damages, liability and expense in connection with loss of life, bodily and personal injury or damage to the Premises arising
from the conduct or management of or from any work or other activity whatsoever done in, on or about the Premises by Tenant or any of its agents, employees, subtenants, licensees, invitees or assignees, except to the extent that such liability,
claims, actions, damages and expenses arise from any acts, omissions or negligence by Landlord

  

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or its agents, employees, licensees, invitees or assignees. Tenant assumes all risks of and Landlord shall not be liable for injury to person or damage to property resulting from the condition of
the Premises or from the bursting or leaking of any and all pipes, utility lines, connections, or air conditioning or heating equipment in, on or about the Premises, or from water, rain or snow which may leak into, issue or flow from any part of the
Building except if due to the acts, omissions or negligence of Landlord, its employees or agents including any Landlord breach of this Lease. 
 26.7 Indemnification of Tenant. Landlord shall indemnify and defend Tenant, its employees and agents and save them harmless from and against any and all loss and against all claims, actions,
damages, liability and expense in connection with loss of life, bodily and personal injury or damage to the Premises arising from the conduct or management of or from any work or other activity whatsoever done in, on or about the Premises by
Landlord or its agents, employees, subtenants, licensees, invitees or assignees, except to the extent that such liability, claims, actions, damages and expenses arise from any acts, omissions or negligence by Tenant or any of its agents, employees,
subtenants, licensees, invitees or assignees. 
 26.8 Survival. The provisions of Sections 26.6 and 26.7 shall survive
the expiration or termination of this Lease. 
 ARTICLE 27. EXCULPATION. 
 27.1 Notwithstanding anything to the contrary herein, Tenant shall look solely to the estate and property of Landlord in the Premises
(including the rental receipts therefrom and the proceeds from insurance, condemnation awards or the sale thereof) for the satisfaction of Tenant’s remedies for the collection of a judgment (or judicial process) requiring the payment of money
by Landlord in the event of any default or breach by Landlord with respect to any of the terms, covenants and conditions of this Lease to be observed and/or performed by Landlord, and no other property or assets of Landlord shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant’s remedies. 
 ARTICLE 28. INTENTIONALLY OMITTED.

  

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 ARTICLE 29. INTENTIONALLY OMITTED. 
 ARTICLE 30. HAZARDOUS WASTE. 
 30.1 Tenant’s Representation and
Indemnity. “Hazardous Substance” shall mean any hazardous, toxic, septic, radioactive, explosive or carcinogenic material and any other substances so defined or regulated by the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended or any other federal, state or local law regulating hazardous or toxic substances or materials (collectively, “Environmental Laws”). Tenant shall during the Lease Term (a) keep the Premises free of
contamination of any Hazardous Substance caused by the acts or omissions of Tenant, its employees, agents and invitees, (b) shall prevent any discharge, spillage or uncontrolled loss of oils or petroleum or Hazardous Substances, upon, under or
within the Premises and contiguous real estate caused by the acts or omissions of Tenant, its employees, agents and invitees, (c) shall not be involved in the operation at or near the Premises which would reasonably be expected to lead to the
imposition or creation of a lien on the Premises under any Environmental Laws, (d) shall not use the Premises as a disposal site or as a processing plant for Hazardous Substances, and (e) shall cause all oil and/or gas burners,
incinerators, furnaces and other fuel burning devices at the Premises to comply with law and maintain appropriate operating permits, except to the extent such obligations are the obligations of Landlord under the other provisions of this Lease.
Tenant shall defend, indemnify and hold Landlord harmless from and against any and all claims, loss, cost, damage, liability and expenses, including, without limitation, reasonable attorneys fees and disbursements, suffered by Landlord, arising out
of or in any way related to a breach of the aforesaid representations and warranties. 
 30.2 Right to Use. Anything to
the contrary contained herein notwithstanding, provided Tenant shall fully comply with all Environmental Laws, Tenant shall have the right to: (a) keep and utilize in or about the Premises, products, which contain Hazardous Substances which are
utilized for ordinary cleaning and office and warehouse operations; (b) store any of its inventory which may, contain quantities of Hazardous Substances which inventory shall remain in individual

  

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containers or in its original packaging; (c) keep and utilize in or about the Premises Hazardous Substances that are used in the ordinary course of Tenant’s business. 
 30.3 No Tenant Liability. Anything to the contrary contained herein notwithstanding, Tenant shall have no liability of any kind to
Landlord or any third party as to Hazardous Substances on the Premises caused or permitted by: (i) Landlord, its agents, employees, contractors or invitees; or (ii) any other past or future tenants in the Premises or the Building, their
agents, employees, contractors, subtenants or invitees; or (iii) any other person or entity on property located outside the Premises whether on contiguous real estate or otherwise. Landlord shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances in, on or under the Premises prior to the commencement of the Lease Term. Landlord shall not use,
generate, store, dispose of or release any hazardous substance in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) during the Lease Term in violation of applicable law and shall promptly, at Landlord’s
expense, comply with all applicable laws and take all investigatory and/or remedial action reasonably required by applicable law for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or
neighboring properties, that was caused or materially contributed to by Landlord, or pertaining to or involving any Hazardous Substance used, generated, stored, disposed of or released, in, onto or from the Premises prior to the Lease Term or during
the Lease Term by or for Landlord in violation of applicable law or this Lease. Tenant shall cooperate in any such activities at the request of Landlord, including allowing Landlord and Landlord’s agents to have reasonable access to the
Premises at reasonable times in order to carry out Landlord’s investigative and remedial responsibilities, provided that such actions shall not interfere with the conduct of Tenant’s business on the Premises. 
 30.5 Survival. The provisions of this Article 30 shall survive the expiration or termination of this Lease. 
 ARTICLE 31. SECURITY DEPOSIT. 
  

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 31.1 Tenant has deposited with Landlord the sum of Fifty Seven Thousand Five Hundred
($57,500.00) Dollars (to be adjusted to reflect one (1) month’s base rent for each Option Term) (the “Security Deposit”) to secure the performance and observance by Tenant of the terms, covenants and conditions contained in this
Lease which are the obligations of the Tenant. In the event Tenant is in Default hereunder, including with respect to the payment of Rent, Landlord may use, apply or retain the whole or any portion of the Security Deposit to the extent required for
the payment of any Rent or any other sum as to which Tenant is in default or for any sum which Landlord may reasonably expend by reason of Tenant’s Default. In the case of every such use, application or retention of any such sum, Tenant shall,
on demand, pay to Landlord the sum so used, applied or retained which shall be added to the unused portion of the Security Deposit so that the amount of the Security Deposit shall be the amount required by the first sentence of this Article. The
Security Deposit or the unused portion thereof shall be returned to Tenant promptly after the expiration or earlier termination of the Term and after delivery of exclusive possession of the Premises to Landlord. In the event of a sale of the
Premises by the Landlord, Landlord shall transfer the Security Deposit to the vendee and, upon doing so, Landlord shall ipso facto be released by Tenant from all liability for the return of the Security Deposit, and Tenant agrees to look
solely to the new landlord for the return of the Security Deposit. The provisions hereof shall apply to every transfer or assignment made of the Security Deposit to a new landlord. Tenant further covenants that it will not assign or encumber or
attempt to assign or encumber the moneys deposited as security and that neither Landlord nor is successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. 
 ARTICLE 32. INTENTIONALLY OMITTED. 
 ARTICLE 33. INTENTIONALLY OMITTED. 
 ARTICLE 34. AMERICANS WITH DISABILITIES ACT. 
 34.1 To the extent required by law, Tenant shall make all changes and modifications to the Premises required by the Americans with
Disabilities Act, Title III (“ADA”) that are required as a result of any alterations, additions or improvements made to the Premises by Tenant. 
  

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 ARTICLE 35. AUTHORITY. 
 35.1 Each of Landlord and Tenant hereby represent and warrant to the other that it has full legal right, power and authority to enter into this Lease and the person acting for Landlord or Tenant, as
applicable, hereunder is authorized to execute and deliver this Lease. 
 ARTICLE 36. INTENTIONALLY OMITTED. 
 ARTICLE 37. MODIFICATION OF MORTGAGE. 
 37.1 If, in connection with obtaining financing or refinancing for the Premises form a part, a banking, insurance or other institutional lender shall request reasonable modifications to this Lease as a
condition to such financing or refinancing, Tenant will not withhold, delay or defer its consent thereto, provided that such modifications do not increase the obligations of Tenant hereunder or adversely affect the leasehold interest hereby created.

 ARTICLE 38. LIMITATION ON RENT. 
 38.1 If at the commencement of, or at any time during the Lease Term, the rent reserved in this Lease is not fully collectable by reason of any Federal, State, County, or City law, proclamation, order
regulation, or direction of a public officer or body pursuant to law, Tenant agrees to take such steps as Landlord may reasonably request to permit Landlord to collect the maximum rents which may be legally permissible from time to time during the
continuance of such legal rent restriction (but not in excess of the amounts reserved therefore under the Lease). Upon the termination of such legal rent restriction, Tenant shall pay to Landlord, to the extend permitted by law, an amount equal to
(a) the total amount of the rents payable during the period of such legal restriction less (b) the rents paid by Tenant to Landlord during the period such legal rent restriction was in effect. 
 ARTICLE 39. INTERRUPTION OF SERVICES. 
 39.1 Landlord reserves the right to stop the service of the electrical, plumbing or other mechanical systems or facilities in the Building when necessary by reason of emergency or for

  

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repairs required hereunder until said emergency shall have ceased and/or repairs shall have been completed, provided, that, in exercising such rights, Landlord shall provide reasonable prior
notice to Tenant (except in the case of an emergency) and shall use best efforts not to interfere with Tenant’s use and enjoyment of the Premises or Tenant’s business operations thereat. The exercise of such right by Landlord shall not
constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any compensation or to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon
Landlord or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business, or otherwise provided, that if such interruption shall continue for three (3) business days, then Tenant shall be
entitled to an equitable abatement of Rent, based on the nature and duration of the service interruption, the area of the Premises affected, and the then current Rent amounts, for the period that shall begin on the commencement of such service
interruption and that shall end on the day such service interruption shall cease. If any such service interruption shall continue for at least thirty (30) days, Tenant shall have the right to terminate this Lease upon ten (10) days’
prior written notice to Landlord (provide that such notice shall be null and void, and of no force and effect, if such service interruption ceases within such 10-day period). 
 ARTICLE 40. FLOOR LOADS. 
 40.1 Tenant shall not place a load upon any floor
of the Building exceeding the floor load per square foot area which it was designated to carry and which is allowed by law. Tenant has been advised that Landlord makes no representation as to the load bearing capacity of the structure. Any and all
equipment and/or machinery installed by Tenant in the Premises will not at any time be in violation of existing laws affecting the Premises or in violation of the Certificate of Occupancy issued for the Building of which the Premises are a part.

 ARTICLE 41. EXTERMINATION. 
 41.1 Tenant, at its sole cost and expense, shall maintain all extermination services as are necessary to keep the interior of the Building free of pests and vermin at all times. In furtherance, and not in
limitation of the foregoing, Tenant hereby agrees to promptly enter into

  

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(and keep in full force and effect throughout the Lease Term) a full-service preventative extermination contract with a licensed pest-control operator reasonably acceptable to Landlord to keep
the interior of the Building at all times free from vermin. Without limiting the generality of the foregoing, if the interior of the Building (or any portion thereof) at any time becomes infested with vermin, Tenant shall, at Tenant’s sole cost
and expense, cause the same to be exterminated from time to time, to the reasonable satisfaction of Landlord. Tenant shall cause any such vermin to be exterminated immediately upon discovery of such vermin or immediately upon notice thereof from
Landlord. 
 ARTICLE 42. TENANT’S RIGHT TO CURE. 
 42.1 Tenant shall provide Landlord with notice of Landlord’s failure to perform any of its obligations under this Lease (a “Landlord Default”). If Landlord fails to cure such Landlord
Default within thirty (30) days after receipt of Tenant’s notice, Tenant may, but is not obligated to, cure such Landlord Default in place of Landlord. Any reasonable costs which Tenant or any third-party engaged by Tenant incurs as a
result of such cure, plus a ten percent (10%) charge for Tenant’s overhead, shall be paid by Landlord upon demand and, if not so paid, shall be set off against installment(s) of Rent next coming due. 
 ARTICLE 43. MISCELLANEOUS PROVISIONS. 
 43.1 Brokers. Landlord and Tenant represent one to the other that it has dealt with no broker or agent with regard to this Lease who might claim or be entitled to any commission or other
compensation from Landlord; and Tenant and Landlord hereby agree to indemnify and hold the other harmless from all claims by any broker with regard to this Lease arising out of dealings with the party from whom indemnification is sought. 

43.2 Successor Landlord. In case Landlord (herein called the “Conveying Landlord”) shall convey or otherwise dispose of
its interest in the Premises and turn over to the transferee any funds held by it hereunder in which Tenant has an interest, all liabilities and obligations on the part of the Conveying Landlord under this Lease accruing after such conveyance or
disposal shall

  

 38 









 
terminate upon such conveyance or disposal, and, thereafter all such liabilities and obligations shall be binding upon only the new owner of the Premises and the Conveying Landlord will thereby
be released and discharged from any such liabilities and obligations. 
 43.3 Application of Funds on Default. If this
Lease shall terminate as a result of or while there exists a Default hereunder, any funds then held by Landlord in which Tenant has an interest may be applied by Landlord to any damages payable by Tenant (whether provided for herein or by Law) as a
result of such Default. 
 43.4 Survival of Obligations. All obligations of the parties hereto shall not survive the
expiration or sooner termination of this Lease, except to the extent specifically provided to the contrary herein. 
 43.5 No
Waiver. No waiver of any term, condition, default, or breach of this Lease, or of any document executed pursuant hereto, shall be effective unless in writing and executed by the party making such waiver; and no such waiver shall operate as a
waiver of either (a) such term, condition, default, or breach on any other occasion, or (b) any other term, condition, default, or breach of this Lease or of such document. No delay or failure to enforce any provision in this Lease or in
any document executed pursuant hereto shall operate as a waiver of such provision or any other provision herein or in any document related hereto. The receipt or acceptance of any payment by a party shall not be deemed to operate as a waiver of the
right of such party to enforce the payment of additional amounts or obligations under this Lease by such remedies as may be appropriate, unless otherwise specifically agreed in each instance by such party. The enforcement by any party of any Right
or remedy it may have under this Lease or applicable law shall not be deemed an election of remedies or otherwise prevent such party from enforcement of one or more other remedies at any time. 
 43.6 Consents. Whenever the consent or approval of a party is required under this Lease, such consent or approval shall not be
unreasonably withheld or delayed, unless, otherwise specifically designated above as being in such party’s sole discretion. 
 43.7 Construction. Except as otherwise explicitly specified to the contrary or unless the

  

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context clearly requires otherwise, (a) the capitalized term “Section” refers to sections of this Agreement, (b) the capitalized term “Exhibit” refers to exhibits to
this Agreement, (c) references to a particular Section include all subsections thereof, (d) the word “including” shall be construed as “including without limitation”; and (e) all words used herein shall be
construed according to their proper gender and number, as the context shall require. 
 43.8 Effect of Instrument. This
Lease and that certain Asset Purchase Agreement dated as of July 2, 2008, between Cellu Tissue Holdings, Inc. and Landlord, Atlantic Lakeside Properties, LLC, Atlantic Paper & Foil, LLC, Atlantic Paper & Foil of Georgia, LLC
and Consumer Licensing Corporation (the “Asset Purchase Agreement”) sets forth the entire understanding of the parties relating to the subject matter hereof. The Landlord and the Tenant each acknowledges and agrees that the terms and
provisions of this Lease are in addition to, and are not intended to, and do not, in any way waive, modify, limit, or replace, any of the terms, provisions, rights, or remedies contained in the Asset Purchase Agreement or any document or instrument
executed and delivered in connection with the Asset Purchase Agreement or the transaction contemplated therein. 
 Cellu Tissue
Holdings, Inc. has executed a Note payable to Landlord in accordance with the Asset Purchase Agreement referred to above and in the event Cellu Tissue defaults under the terms of said Note, said default shall be deemed a default under the terms of
this Lease. 
 43.9 Parties Bound; Amendments. All of the terms and provisions of this Lease shall be binding upon, shall
inure to the benefit of, and be enforceable by and against, the parties hereto and their respective heirs, executors, administrators, successors, and permitted assigns. This Lease may be changed, amended, or terminated only by similar written
instrument executed by all parties to be bound thereby. 
 43.10 Severability. If any provision of this Lease is held to
be unlawful, invalid, or unenforceable under any present or future laws, such provision shall be fully severable; and this Lease shall then be construed and enforced as if such unlawful, invalid, or unenforceable provision had not been a part
hereof. The remaining provisions of this Lease shall remain in full force and effect and shall not be affected by such unlawful, invalid, or unenforceable provision or by its

  

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severance herefrom, provided, however, if the invalidity or unenforceability of any provision shall materially deprive either party of the economic benefit intended to be conferred by this Lease,
the Parties shall negotiate in good faith to revise this Lease in a manner whereby the economic effect is as nearly as possible the same as the economic effect of this Lease prior to such invalidity or unenforceability. 
 43.11 No Partnership or Agency Intended. Nothing in this Lease is intended, or shall in any way be construed, so as to create any
form of partnership or agency relationship between the parties. The parties hereby expressly disclaim any intention of any kind to create any partnership or agency relationship between themselves. Nothing in this Lease shall be construed to make
either party liable for any of the indebtedness of the other, except as specifically provided in this Lease. 
 43.12
Notices. Any and all notices, requests, communications, or demands required or permitted to be given pursuant to this Lease shall be in writing, and shall be delivered either (a) by hand, (b) by an established overnight delivery
service, such as Federal Express, or (c) by registered or certified mail, return receipt requested, addressed as follows: 
 If to
Landlord: 
 Atlantic Paper & Foil Corp. of N.Y. 
 P.O. Box 222144 
 Great Neck, NY 11022 
 Attn: Shaun Gabbay 
 with a copy to: 
 Steven Cohn, Esq. 
 1 Old County Road, Suite 420

 Carle Place, New York 11514 
 Skadden, Arps, Slate, Meagher & Flom, LLP 
 Four Times Square 
 New York, New York 10036 
 Attn: Randall H. Doud 
 If to Tenant: 
 Cellu Tissue – Hauppauge LLC

 c/o Cellu Tissue Holdings, Inc. 
  

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 1855 Lockeway Drive, Suite 501 
 Alpharetta, GA 30004 
 Attn: Russell Taylor 
 with a copy to: 
 Weston Presidio 
 Pier 1, Bay 2 
 San Francisco, CA 64111 

Attn: R. Sean Honey and James Morrone 
 Ropes & Gray LLP 
 1211 Avenue of the Americas 
 New York, NY 10036-8704 
 Attn: Christopher C. Henry, Esq. 
 or to such other address or addresses as any party may designate to the others, by notice in writing, given as above provided. Notices given by hand shall
be deemed to have been given upon delivery; notices given by overnight delivery service shall be deemed to have been given on the first (1st) business day following the date of deposit with such overnight delivery service; and notices given by
mail shall be deemed to have been given three (3) days after the date of mailing. 
 43.13 Headings Not Part of
Contract. The headings preceding each Section and the Table of Contents (if any) are inserted merely as a matter of convenience and shall not be deemed to be a part of the contract terms. 
 43.14 Governing Law. This Lease has been accepted, executed and delivered, and is intended to be performed, in the State of New York.
The rights and duties of the parties, and the validity, construction, enforcement, and interpretation of this Lease, shall be governed and construed according to the laws of such state. 
 43.15 Exhibits. All of the Exhibits attached to this Lease are a part of this Lease and are incorporated herein by reference as fully
as if copied herein verbatim. 
 43.16 Further Assurances. Each of the parties, at all times and from time to time
hereafter, and upon reasonable written request to do so, shall make, do, execute, deliver, or cause to be made, done, executed and delivered, all such further acts, deeds, instruments, assurances,

  

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and things as may be reasonably required for more effectually implementing and carrying out the true intent and meaning of this Lease. 
 43.17 Notice of Lease. The parties hereby agree, at the request of either, to execute, acknowledge, and deliver in recordable form a
notice or memorandum of lease and such other notices as may from time to time be necessary for the protection of any interest of Landlord or Tenant. 
 43.18 Venue. The parties hereby agree that the only proper and convenient venue and/or jurisdiction for any litigation between them related to this Lease or the relationship of the parties as
evidenced by this Lease shall be in the Supreme Court of the State of New York, Suffolk County, or the United States District Court for the Eastern District of New York. 
 43.19 Counterparts. This Lease may be executed in any number of counterparts, each of which shall be deemed an original as against any party who signed such counterpart, and all of which together
constitute one and the same instrument. This Lease shall be binding when one or more counterparts hereof, individually or taken together, shall have been signed by all of the parties shown below as signatories to this Lease; and the date of this
Lease, unless otherwise indicated above, shall be the date on which the last of such signatories shall have signed one or more counterparts. 
 43.20 Number of Days. Except as otherwise provided in this Lease, in calculating the number of days for any purpose under this Lease, the day on which the event occurred shall be considered the
first day and all days shall be counted, including Saturdays, Sundays, and holidays. However, if the final day of any time period falls on a Saturday, Sunday, or Holiday, then such final day shall be deemed the next day which is not a Saturday,
Sunday, or Holiday. “Holiday” shall mean only those holidays on which commercial banks within the State of New York shall be closed for business. 
 43.21 Attorney’s Fees. If Landlord or Tenant brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing

  

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Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall mean the party who substantially obtains or defeats the relief sought, as the case may be, whether by
compromise, settlement, judgment, or the abandonment by the other party of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all
attorneys’ fees reasonably incurred. 
 43.22 Performance Under Protest. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one party to the other under the provisions hereof, the party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not
be regarded as a voluntary payment and there shall survive the right on the part of said party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said party to pay such sum or any
part thereof, said party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. 
 43.23 Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PREMISES OR ARISING OUT OF THIS LEASE. 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed as of the
date and year hereinabove set forth. 
  

			
	TENANT:
	
	CELLU TISSUE - HAUPPAUGE, LLC
	
	By: Cellu Tissue Corporation – Natural Dam., its sole member
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	LANDLORD:
	
	ATLANTIC PAPER & FOIL CORP. OF N.Y.
		
	By:	 	  

	Name:	 	
	Title:	 	










 R&G Comments 6/10/08 
 EXHIBIT A 
 LEGAL DESCRIPTION OF PREMISES









 R&G Comments 6/10/08 
 EXHIBIT B 
 PERMITTED ENCUMBRANCES 








 R&G Comments 6/10/08 
 EXHIBIT C 
 SNDA’s 








 R&G Comments 6/10/08 
 EXHIBIT D 
 LIEN WAIVER 








 Exhibit I-3 
 Form of New York Lease - Gilpin 








 LEASE AGREEMENT 
 ATLANTIC LONG ISLAND PROPERTIES, INC. 
 -with- 

 CELLU TISSUE – HAUPPAUGE, LLC 
 PREMISES: 
 50 GILPIN AVENUE, HAUPPAUGE, NEW YORK 11788 








 LEASE AGREEMENT 
 THIS LEASE AGREEMENT (the “Lease”) is dated this 2nd day of July 2008, by and between ATLANTIC LONG ISLAND PROPERTIES,
INC., a New York corporation with an address at P.O. Box 222144, Great Neck, NY 11022, and CELLU TISSUE - HAUPPAUGE, LLC, a Delaware limited liability company, with an address at 1855 Lockeway Drive, Suite 501, Alpharetta, GA 30004.

 ARTICLE 1. DEFINITIONS 
 As used in this Lease, the following terms shall have the meanings ascribed below, which are in addition to other terms defined in this Lease: 
 1.1. “Building” means the building located on the Premises. 
 1.2. “Commencement Date” means July 2, 2008. 
 1.3. “Initial Expiration Date” means July 2, 2010. 
 1.4.
“Landlord” means Atlantic Long Island Properties, Inc. and its permitted successors and assigns. 
 1.5.
“Landlord’s Mortgage” means, at any time (now or hereafter) a mortgage or deed of trust placed upon the Premises by Landlord constituting a mortgage lien and all renewals, modifications, consolidations, replacements, extensions or
substitutions of any such mortgage or deed of trust. 
 1.6. “Landlord’s Mortgagee” means, at any time, the then
holder of the indebtedness secured by Landlord’s Mortgage. 
 1.7. “Lease Term” means the Initial Term, First
Option Term, Second Option Term and the Third Option Term, if the First Option Term, Second Option Term and Third Option Term, as applicable, to renew set forth in Article 3.2, 3.3 and 3.4 of this Lease are exercised. 
  

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 1.8. “First Option Term Commencement Date” means July 2, 2010. 
 1.9. “First Option Term Expiration Date” means July 2, 2015. 
 1.10 “Second Option Term Commencement Date” means July 2, 2015. 
 1.11 “Second Option Term Expiration Date” means July 2, 2020. 
 1.10 “Third Option Term Commencement Date” means July 2, 2020. 
 1.11 “Third Option Term Expiration Date” means July 2, 2025. 
 1.12. “Premises” means the land and building described on Exhibit “A” annexed hereto and made a part hereof known as and
by the street address 50 Gilpin Avenue, Hauppauge, New York 11788, together with all fixtures and other improvements now or hereafter located thereon and easements and other rights appurtenant thereto. 
 1.13 “Rent” means all sums, monies or payments required to be paid by Tenant to Landlord pursuant to this Lease. 
 1.14. “Tenant” means Cellu Tissue - Hauppauge, LLC a Delaware limited liability company and its permitted successors and assigns.

 ARTICLE 2. GRANT 
 2.1 In consideration of the rents, covenants, agreements and conditions hereinafter provided to be paid, kept, performed and observed, and upon the following terms and conditions, Landlord leases to Tenant and Tenant hereby leases from
Landlord the Premises. Tenant shall have and hold the Premises for and during the term described herein subject to the terms, covenants and conditions hereinafter set forth. 
 ARTICLE 3. TERM. 
  

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 3.1 Initial Term. The initial term of this Lease (the “Initial Term”) shall
commence on the Commencement Date and expire on the Initial Expiration Date, unless sooner terminated as hereinafter provided. 
 3.2 First Option Term. Provided Tenant is not in Default as provided herein, Tenant shall have the right, upon prior written notice given to Landlord no later than February 2, 2010, time being of the essence, given in accordance
with the terms of this Lease (“Tenant’s First Option Renewal Notice”), to extend the term of this Lease for a five (5) year period commencing on the First Option Term Commencement Date and ending on the First Option Term
Expiration Date (the “First Option Term”), on the same terms and conditions and at the rental set forth herein. Tenant’s failure to give Tenant’s First Option Renewal Notice shall be deemed an election by Tenant not to exercise
the option provided herein. 
 3.3 Second Option Term. Provided Tenant is not in Default as provided herein, Tenant shall
have the right, upon prior written notice given to Landlord no later than July 2, 2014, time being of the essence, given in accordance with the terms of this Lease (“Tenant’s Second Option Renewal Notice”), to extend the term of
this Lease for one additional five (5) year period commencing on the Second Option Term Commencement Date and ending on the Second Option Term Expiration Date (the “Second Option Term”), on the same terms and conditions and at the
rental set forth herein. Tenant’s failure to give Tenant’s Second Option Renewal Notice shall be deemed an election by Tenant not to exercise the option provided herein. 
 3.4 Third Option Term. Provided Tenant is not in Default as provided herein, Tenant shall have the right, upon prior written notice
given to Landlord no later than July 2, 2019, time being of the essence, given in accordance with the terms of this Lease (“Tenant’s Third Option Renewal Notice”), to extend the term of this Lease for one additional five
(5) year period commencing on the Third Option Term Commencement Date and ending on the Third Option Term Expiration Date (the “Third Option Term”), on the same terms and conditions and at the rental set forth herein. Tenant’s
failure to give Tenant’s Third Option Renewal Notice shall be deemed an election by Tenant not to exercise the option provided herein. 
  

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 3.5 Tenant Termination Right. Notwithstanding anything herein to the contrary,
(i) during the Initial Term, Tenant shall have the right to terminate this Lease at any time, with or without cause, upon ninety (90) days’ prior written notice to Landlord and (ii) during any Option Term, Tenant shall have the
right to terminate this Lease at any time, with or without cause, upon twelve (12) months’ prior written notice to Landlord. Upon such termination, provided that Tenant returns the Premises to the Landlord and is current in the payment of
rent and vacates in accordance with Article 25 hereof, Tenant shall be released and discharged from all of its further obligations and liabilities under this Lease, except for obligations and liabilities related to any Default of Tenant under
Article 30 hereof. 
 ARTICLE 4. BASE RENT. 
 4.1 Base Rent. During the Initial Term of this Lease, Tenant shall pay to Landlord Base Rent per annum without setoff or deduction, except as otherwise expressly provided herein, as follows:

  

							
	 	  	Annual Rent	  	Monthly Installments
	 Year 1
	  	$	310,000	  	$	25,833.33
	 Year 2
	  	$	325,000	  	$	27,083.33

 Years 3 - 7 Base rent for the initial year of the First Option Term shall be determined pursuant to
Article 4.2 below, with a 5% increase per annum above prior year’s rent for each year of the First Option Term thereafter. 
 Years 8 - 12
Base rent for the initial year of the Second Option Term shall be determined pursuant to Article 4.2 below, with a 5% increase per annum above prior year’s rent for each year of the Second Option Term thereafter. 
 Years 13 - 17 Base rent for the initial year of the Third Option Term shall be determined pursuant to Article 4.2 below, with a 5% increase per annum above
prior year’s rent for each year of the Third Option Term thereafter. 
  

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 4.2 Calculation of Base Rent for Option Terms. During the First Option Term, Second
Option Term and the Third Option Term of this Lease, as provided herein: 
 4.2.1 The Base Rent payable by Tenant for the
Premises for the initial year of the First Option Term, Second Option Term and/or Third Option Term, as the case may be, shall be equal to the greater of (a) the fair market rent value of the Premises (the “FMRV”), which shall reflect
the prevailing fair market rental rate for comparable property in Suffolk County, New York and shall exclude the value of any, alterations or improvements made to the Premises by Tenant at its own expense, determined as of the Initial Expiration
Date, First Option Expiration Date or Second Option Expiration Date, as the case may be, or (b) One Hundred and Two (102%) percent of Tenant’s then calculated Base Rent during the final Lease Year of the Original Term (or First Option
Term or Second Option Term, as applicable). 
 4.2.2 Nine (9) months before the Initial Expiration Date, the First Option
Term Expiration Date and/or the Second Option Term Expiration Date, as the case may be, Landlord and Tenant shall commence negotiations in good faith to attempt to agree upon the FMRV. If Landlord and Tenant cannot reach agreement by seven
(7) months before the Initial Expiration Date, the First Option Term Expiration Date, and/or the Second Option Term Expiration Date, as the case may be, Landlord and Tenant shall, no later than six (6) months before the applicable
expiration date, each select a reputable, qualified, independent, licensed real estate broker with at least ten (10) years experience leasing of industrial property in Suffolk County, New York, having office(s) in Nassau or Suffolk County, New
York and familiar with the rental then being charged in Suffolk County, New York (such brokers are referred to, respectively, as “Landlord’s Broker” and “Tenant’s Broker”), who shall confer promptly after their
selection by Landlord and Tenant and shall exercise good faith efforts to attempt to agree upon the renewal FMRV, taking into account all reasonably relevant factors. If Landlord’s Broker and Tenant’s Broker cannot reach agreement no later
than four (4) months prior to the Expirations Date, then, within twenty (20) days thereafter, they shall designate a third reputable, qualified, independent, licensed real estate broker with at least ten (10) years experience in
leasing of industrial property in Suffolk County, New York, having office(s) in Nassau or Suffolk County, New York and familiar with the industrial rentals then being

  

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charged in comparable buildings in Suffolk County, New York (the “Independent Broker”). Upon failure of Landlord’s Broker and Tenant’s Broker timely to agree upon the
designation of the Independent Broker, then the Independent Broker shall be appointed by the President of the Real Estate Board of New York, Inc., or the successor entity thereto, upon ten (10) days notice. Within ten (10) days after such
appointment, Landlord’s Broker and Tenant’s Broker shall each submit a letter to the Independent Broker, with a copy to Landlord and Tenant, setting forth such broker’s estimate of the FMRV and the rationale used in determining it
(respectively, “Landlord’s Broker’s Letter” and “Tenant’s Broker’s Letter”). If the estimates set forth in the Landlord’s Broker’s Letter and Tenant’s Broker’s Letter differ by
(5%) percent per annum or less, then the FMRV shall not be determined by the Independent Broker, and the FMRV shall be the average of the estimates set forth in the Landlord’s Broker’s Letter and Tenant’s Broker’s Letter. If
the estimates differ by more than five (5%) percent per annum, the Independent Broker shall conduct such investigations and hearings as he or she may deem appropriate and shall, within thirty (30) days after the date of his or her
appointment, choose either the estimate set forth in Landlord’s Broker’s Letter or the estimate set forth in Tenant’s Broker’s Letter to be the FMRV or an amount in between such estimates and such choice shall be binding upon
Landlord and Tenant. Landlord and Tenant shall each pay the fees and expenses of its respective broker. The fees and expense of the Independent Broker shall be shared equally by the Landlord and Tenant. 
 4.3 Payment of Rent. Tenant covenants to pay Rent without notice, deduction, set-off or abatement, except as otherwise expressly
provided herein, to Landlord in equal monthly installments (or appropriate pro rata portion thereof for any portion of a month at the beginning or end of the Lease Term) payable in advance on the first day of each month during the Initial Term
hereof and the First Option Term, Second Option Term and Third Option Term, if applicable. 
 4.4 Place of Payment. Rent
shall be payable to Landlord at Landlord’s address set forth herein or at such other place as Landlord may designate from time to time in writing. 
 4.5. Service Charge. Tenant’s failure to make any monetary payment required of Tenant (including payments of Rent) hereunder within ten (10) days after notice from Landlord that

  

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such payment has not been made shall result in the imposition of a service charge for such late payment in the amount of five (5%) percent of the amount due. 
 ARTICLE 5. RESERVATIONS BY LANDLORD. 
 5.1 Landlord reserves the right to place, install, maintain, carry through, repair and replace such utility lines, pipes, wires, appliances, tunneling and the like in, over, through and upon the Premises
as may be reasonably necessary or desirable for the servicing of the Premises, provided, however, in exercising its rights pursuant to this Article 5, Landlord shall not materially interfere with Tenant’s use and enjoyment of the Premises or
Tenant’s business operations thereat. 
 ARTICLE 6. USE. 
 6.1 The Premises shall be used by and/or at the sufferance of Tenant for any lawfully permitted use. 
 ARTICLE 7. COMPLIANCE WITH LAWS. 
 7.1 Tenant’s Compliance with Law. Tenant covenants throughout the Lease Term, at Tenant’s sole cost and expense (except as otherwise provided herein), to comply with all laws, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governments which are applicable to the Premises or the use or manner of use of the Premises, and the orders, rules and regulations of the Board of Fire Underwriters where the Premises are situated,
or any other body now or hereafter constituted exercising similar functions, which are applicable to the Premises or the use or manner of use of the Premises. Tenant will likewise observe and comply with the reasonable requirements of all policies
of public liability, fire and all other policies of insurance at any time in force with respect to the Building and other improvements on the Premises and the equipment thereon. 
 7.2. Landlord Representation. To the best of Landlord’s knowledge, the Premises as they currently exist, comply with
(i) all laws, ordinances, orders, rules, regulations and

  

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requirements of all federal, state and municipal governments which are applicable to the Premises or the use or manner of use of the Premises, including the Americans with Disabilities Act,
(ii) all regulations of the Board of Fire Underwriters where the Premises are situated which are applicable to the Premises or the use or manner of use of the Premises and (iii) the requirements of all policies of public liability, fire
and all other policies of insurance in force with respect to the Building and improvements on the Premises and the equipment thereon. 
 ARTICLE 8. REAL ESTATE TAXES. 
 8.1 Payment. During the Term, Landlord shall pay, satisfy and discharge
all Real Estate Taxes (as hereinafter defined) prior to any tax lien sale and shall provide Tenant with proof of payment of Real Estate Taxes upon request. For purposes of this Lease, “Real Estate Taxes” shall mean all real property taxes
and assessments and any other similar taxes or charges levied against or imposed upon the Premises, including: (a) all ad valorem Real Estate Taxes including school taxes assessed against the Premises (adjusted after protest or litigation, if
any) for any part of the Lease Term, (b) any taxes which shall be levied in lieu of any such ad valorem real estate taxes, (c) any special assessments for benefits on or to the Premises, payable in installments, (d) occupational taxes
or excise taxes levied on rental derived from the operation of the Premises or the privilege of leasing Premises, and (e) the expense of protesting, negotiating or contesting the amount or validity of any such taxes, charges or assessments,
such expense to be applicable to the period of the item contested, protested or negotiated (including legal fees and disbursements) incurred in the prosecution of any such tax reduction proceeding. 
 8.2 Right to Contest. Anything to the contrary contained herein notwithstanding, Landlord, at its sole cost and expense, shall have
the right to prosecute a tax certiorari proceeding or otherwise protest, in order to attempt to reduce Real Estate Taxes for which Landlord is responsible hereunder. In such event, Tenant agrees to reasonably cooperate with Landlord and/or
Landlord’s representatives or attorneys, provided such cooperation is at no cost to Tenant (or Landlord shall promptly reimburse Tenant for same). 
 ARTICLE 9. UTILITIES. 
  

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 9.1 From and after the Commencement Date, or such earlier date as Tenant may take possession
of all or part of the Premises, Tenant shall contract in its own name and timely pay for all charges for electricity, gas, water, fuel, sewer charges, telephone, trash hauling, and any other services or utilities used in, servicing or assessed
against the Premises, for periods from and after the Commencement Date or such earlier date of possession until the expiration or earlier termination of the Lease Term, unless otherwise herein expressly provided. 
 ARTICLE 10. TITLE; QUIET ENJOYMENT. 
 10.1 Landlord covenants that Landlord has good and clear, record and marketable fee simple title in and to the Premises, subject only to the encumbrances listed on Exhibit B attached hereto and made a part hereof. Landlord covenants that
Tenant, on paying the Rent as herein provided and keeping, performing and observing the covenants, agreements and conditions herein required of Tenant, shall peaceably and quietly hold and enjoy the Premises for the Lease Term, subject, however, to
the terms and conditions of this Lease. 
 ARTICLE 11. ASSIGNMENT, MORTGAGE AND SUBLETTING. 
 11.1 General. Tenant may not sublease all or any part of the Premises or assign its interest in this Lease without, in each case, the
prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. Notwithstanding any assignment of this Lease or any subletting of the Premises, Tenant shall remain primarily responsible for all obligations of Tenant
hereunder. 
 11.2 Permitted. Notwithstanding the foregoing, Tenant may, without either prior notice to or the consent of
Landlord, assign or otherwise transfer this Lease (i) in connection with any merger, consolidation, reorganization or other corporate restructuring of Tenant, (ii) in connection with any sale of all or substantially all of the stock or
assets of Tenant, or (iii) to any affiliate of Tenant; provided in each case that the successor corporation or entity acquiring Tenant’s stock or assets or the affiliate of Tenant, as applicable, agrees to be bound by all of the terms and
provisions of this Lease for the benefit of Landlord. 
  

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 11.3 Leasehold Mortgages: Liens. Notwithstanding anything herein to the contrary,
Tenant may grant: (i) a collateral assignment of or leasehold mortgage on its leasehold interest in the Premises and/or (ii) a lien on and a security interest in all goods, wares, equipment, fixtures, furniture, inventory, accounts,
contract rights, chattel paper and other personal property of Tenant, including, without limitation, Tenant’s Removable Property located on the Premises. 
 ARTICLE 12. CASUALTY; CONDEMNATION. 
 12.1. Fire and Other Casualty.
In the event of total or partial destruction of the Premises, which exceeds forty (40%) percent of the total square footage of the Building by fire or other peril, Landlord or Tenant, at their option, may terminate this Lease as of the date of
such casualty by written notice to the other given, if at all, within sixty (60) days from and after the date of such casualty. Absent such timely notice, this Lease shall remain in full force and effect (subject to abatement of Rent as
provided in Section 12.2 below), and Landlord shall promptly commence and diligently prosecute to completion the repair and restoration of the Premises as nearly as possible to their condition prior to such destruction. If Landlord elects to
repair or re-build the Premises but does not complete such repair or rebuilding within six (6) months after the adjustment of any insurance loss resulting from the occurrence of such damage or destruction, Tenant shall have the right to
terminate this Lease upon thirty (30) days prior written notice to Landlord. In all cases, due allowance shall be made for reasonable delay caused by adjustment of insurance loss, strikes, labor difficulties or any cause beyond Landlord’s
reasonable control. 
 12.2. Rental Abatement. If the Premises are rendered totally untenantable but this Lease is not
terminated as aforesaid, then all Rent shall abate from the date of the fire or other relevant cause or condition until the Premises are ready for occupancy and reasonably accessible to Tenant. If a portion of the Premises is rendered untenantable
(whether or not such portion exceeds forty (40%) percent of the total square footage of the Building) but this Lease is not terminated as aforesaid, then there shall be an abatement of Rent in proportion to the proportion of space within the
Building that is rendered untenantable until the damaged portion(s) are ready for Tenant’s occupancy and reasonably accessible to Tenant. For purposes of this Lease, the

  

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Premises shall be considered tenantable so long as and to the extent that the Premises are occupied and used by Tenant for its business. 
 12.3. Condemnation. If the Premises or a substantial part thereof (which in Tenant’s reasonable opinion renders the remainder of
the Premises unfit for the uses specified herein) shall be taken by any competent authority under the power of eminent domain or be acquired for any public or quasi-public use or purpose, the Lease Term shall cease and terminate upon the date when
the possession of said Premises or part thereof so taken shall be required for such purpose and without apportionment of the award and Tenant shall have no claim against Landlord for the value of any unexpired Lease Term. Rent at the then current
rate shall be apportioned as of the date of the termination. 
 If any portion of the Premises shall be taken by any competent
authority under the power of eminent domain or be acquired for any public or quasi-public use or purpose, and this Lease is not terminated in the manner provided for above, Landlord shall apply any such damages and compensation awarded (net of the
costs and expenses, including reasonable attorneys’ fees, incurred by Landlord in obtaining the same) to secure and close so much of the Building and/or the Premises, as the case may be, as remain and shall, to the extent possible, replace any
part so taken or appropriated by a suitable structure or parking area or addition of similar size and design to that portion so taken or appropriated. In such event, there shall be an abatement of Rent in proportion to the percentage of space which
is (temporarily or permanently) no longer available for use by Tenant. 
 In the event of such taking or public appropriation,
Landlord shall be entitled to receive the entire award or any judgment for damages caused by the taking, provided that Tenant shall be entitled to make a claim in any condemnation proceeding which does not reduce the amount of Landlord’s award,
for the value of Tenant’s property and nothing in this Section shall preclude an award by such public or quasi-public authority made to Tenant for loss of business or depreciation to and cost of removal of equipment or fixtures. 
 ARTICLE 13. LANDLORD’S RIGHTS. 
  

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 13.1. Reservation of Rights. Landlord reserves the following rights, provided, that
in exercising such rights, Landlord shall provide reasonable prior notice to Tenant and shall use best efforts not to interfere with Tenant’s use and enjoyment of the Premises or Tenant’s business operations thereat, provided, further,
that Landlord shall have the right to access the Premises to make repairs at all times without prior notice to Tenant in emergency circumstances: 
 13.1.1 To change the name of the Building upon sixty (60) days prior written notice to Tenant, but without liability to Tenant; 
 13.1.2 To enter the Premises at all reasonable times during normal business hours, together with Landlord’s employees, agents, repair
and maintenance personnel, brokers, lenders, potential purchasers, tenant’s insurance agents and inspectors, public authorities and others having a legitimate interest in the Premises; 
 13.1.3 To exhibit the Premises to potential tenants at all reasonable times during normal business hours and to display “For
Lease” signs on the Premises at any time during the last year of the Initial Term (provided Tenant has not exercised its right to renew for the First Option Term) or of all applicable Option Terms (provided Tenant has not exercised its right to
renew for a subsequent Option Term), or to display “For Sale” signs on the Premises at any time; and 
 13.1.4 To
inspect, or make repairs to, the Premises as required hereunder or as may be reasonably necessary or desirable for the safety, protection or preservation of the Premises. 
 ARTICLE 14. HOLDING OVER. 
 14.1 In the event of a holding over by Tenant
after expiration or termination of this Lease, Tenant shall be deemed a month-to-month tenant of the Premises, which month-to-month tenancy shall be terminable by either party hereto on sixty (60) days prior written notice from one party to the
other. In the event of a holding over by Tenant after the expiration of the sixty (60) day period referred to in the preceding sentence, without the consent in writing of Landlord, Tenant shall be deemed a tenant at sufferance and shall pay
rent for such occupancy at the rate of (i) one

  

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hundred twenty five (125%) percent of the last-current aggregate Base Rent payable during the last month of the Lease Term for the first two (2) month period after the expiration of the
sixty (60) day period referred to in the first sentence of this Section; (ii) one hundred fifty (150%) percent of the last-current aggregate Base Rent payable during the last month of the Lease Term for the second two (2) month
period following the expiration of the sixty (60) day period referred to in the first sentence of this Section; and (iii) two hundred (200%) percent of the last-current aggregate Base Rent payable during the last month of the Lease
Term for each one (1) month period thereafter; prorated monthly, for the entire holdover period, plus all reasonable attorney’s fees and expenses incurred by Landlord in enforcing its rights hereunder; plus, if the holdover period exceeds
sixty (60) days, any other damages occasioned by such holding over. Except as otherwise agreed, any holding over with the written consent of Landlord shall constitute a month-to-month tenancy. 
 ARTICLE 15. SIGNS. 
 15.1
Tenant shall not put upon nor permit to be put upon any part of the Premises, any signs, billboards or advertisements whatever in any location or any form without the prior written consent of Landlord, and in compliance with all applicable
ordinances and rules of public authority, Landlord’s consent to the installation or modification of such signage shall not be unreasonably withheld. Landlord hereby consents to any existing signage on the Premises as of the date of the
execution of this Lease with such changes to such existing signage as Tenant may reasonably require to reflect Tenant’s occupation of the Premises. 
 ARTICLE 16. MORTGAGE AND TRANSFER. 
 16.1 Landlord’s Right to
Mortgage and Transfer. Landlord shall have the unfettered right to transfer, mortgage, pledge or otherwise encumber, assign and convey, in whole or in part, the Premises, provided that any such transfer, mortgage, pledge, encumbrance, assignment
or conveyance shall be subject to Tenant’s interests under and pursuant to this Lease. Notwithstanding the foregoing, Tenant shall, at Landlord’s request, subordinate its interest under this Lease to the lien, but not the provisions, of
any institutional mortgage provided that the holder

  

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thereof enters into a so-called “subordination, non-disturbance and attornment agreement” or otherwise recognizes and acknowledges this Lease with Tenant in form and substance
acceptable to Tenant. Landlord has obtained a subordination, non-disturbance and attornment agreement among Tenant, Landlord and Landlord’s Mortgagee for each existing Landlord Mortgage, copies of which are attached hereto as Exhibit C.

 16.2. Estoppel Certificates. Landlord and Tenant covenant and agree to execute and deliver to the other and/or its
prospective or existing mortgagee within ten (10) business days of a written request therefore, an estoppel letter setting forth: (i) the date of this Lease and any amendments thereto, (ii) the date through which Rent has been paid
hereunder, (iii) the amount of any security deposit held by Landlord, if any, (iv) that Tenant is in occupancy of the Premises and/or specifying any subleases or assignments, (v) that the Lease is in full force and effect,
(vi) that, to the knowledge of such party, there exists no default under the Lease and that there are no defenses or offsets against the enforcement thereof, or setting forth such defaults, defenses or offsets, and (vii) any other
information with respect to this Lease which the other party or its prospective or existing mortgagee may reasonably request. 
 ARTICLE 17.
INTENTIONALLY OMITTED. 
 ARTICLE 18. LANDLORD’S INABILITY TO PERFORM. 
 18.1 If by reason of inability to obtain and utilize labor, materials or supplies; circumstances directly or indirectly the result of a state
of war or national or local emergency; strikes or riots; or by reason of any other cause beyond the reasonable control of Landlord, Landlord shall be unable to perform or shall be delayed in performance, such non-performance or delay in performance
shall not render Landlord liable in any respect for damages to either person or property, constitute a total or partial eviction, constructive or otherwise, cause an abatement of rent or relieve Tenant from the fulfillment of any covenant or
agreement contained in this Lease, except for any abatement of Rent expressly provided for herein. 
 ARTICLE 19. BANKRUPTCY AND INSOLVENCY.

  

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 19.1 Bankruptcy. It is understood and agreed that the following shall apply in the
event of the bankruptcy or insolvency of Tenant: 
 19.1.1 If a petition is filed by, or an order for relief is entered against
Tenant under Chapter 7 of the Bankruptcy Code and the trustee of Tenant elects to assume this Lease for the purpose of assigning it, such election or assignment, or both, may be made only if all of the terms and conditions of this subsection 19.1
and subsection 19.2 below are satisfied. To be effective, an election to assume this Lease must be in writing and addressed to Landlord, and in Landlord’s business judgment, all of the conditions hereinafter stated, which Landlord and Tenant to
be commercially reasonable must have been satisfied. If the trustee fails so to elect to assume this Lease within sixty (60) days after such filing or order, this Lease will be deemed to have been rejected, and Landlord shall then immediately
be entitled to possession of the Premises without further obligation to Tenant or the trustee, and this Lease shall be terminated. Landlord’s right to be compensated for damages in bankruptcy proceeding, however, shall survive such termination.

 19.1.2 If Tenant filed a petition for reorganization under Chapter 11 of the Bankruptcy Code, or if a proceeding filed by or
against Tenant under any other chapter of the Bankruptcy Code is converted to a Chapter 11 proceeding and Tenant’s trustee or Tenant as debtor-in-possession fails to assume this Lease within sixty (60) days from the date of the filing of
such petition or conversion, then the trustee or the debtor-in-possession shall be deemed to have rejected this Lease. To be effective, any election to assume this Lease must be in writing addressed to Landlord and, in Landlord’s business
judgment, all of the following conditions, which Landlord and Tenant acknowledge to be commercially reasonable, must have been satisfied: 
 (i) The trustee or the debtor-in-possession has cured or has provided to Landlord adequate assurance, as defined in this subsection, that: 
 (a) It will cure all monetary defaults under this Lease within ten (10) days from the date of assumption; and 
  

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 (b) It will cure all nonmonetary defaults under this Lease within thirty (30) days
from the date of assumption; 
 (ii) The trustee or the debtor-in-possession has compensated Landlord, or has provided Landlord
with adequate assurance, as hereinafter defined, that within ten (10) days from the date of assumption Landlord will be compensated for any pecuniary loss it has incurred arising from the default of Tenant, the trustee, or the
debtor-in-possession, as recited in Landlord’s written statement of pecuniary loss sent to the trustee or debtor-in-possession; and 
 (iii) The trustee or the debtor-in-possession has provided Landlord with adequate assurance of the future performance of each of Tenant’s obligations under this Lease; provided, however, that

 (a) From and after the date of assumption of this Lease, it shall pay all monetary obligations, including the Base and
Additional Rent payable under this lease in advance in equal monthly installments on each date that such Rents are payable; 
 (b) It shall also deposit with Landlord, as security for the timely payment of Rent, an amount equal to two (2) months’ Base Rent and other monetary obligations payable under this Lease; 
 (c) If not otherwise required by the terms of this Lease, it shall also pay in advance, on each day that any installment of Base Rent is
payable, one-twelfth of Tenant’s annual tax, escalation and other obligations under this Lease, if any; and 
 (d) The
obligations imposed upon the trustee or the debtor-in-possession will continue for Tenant after the completion of bankruptcy proceedings. 
 (iv) For purposes of this subsection, “adequate assurance” means that: 
 (a) Landlord reasonably determines that the Tenant, trustee or the debtor-in-possession has, and will continue to have, sufficient unencumbered assets, after the payment of all secured obligations and administrative expenses, to assure
Landlord that the trustee or the

  

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debtor-in-possession will have sufficient funds timely to fulfill Tenant’s obligations under this Lease and to keep the Premises properly staffed with sufficient employees to conduct a fully
operational, actively promoted business in the Premises; and 
 (b) An order shall have been entered segregating sufficient
cash payable to Landlord and/or valid and perfected first lien and security interest shall have been granted in property of Tenant, trustee, or debtor-in-possession which is acceptable in value and kind to Landlord, to secure to Landlord the
obligation of Tenant, trustee or debtor-in-possession to cure all monetary and nonmonetary defaults under this Lease within the time periods set forth above. 
 19.1.3 In the event this Lease is assumed by a trustee appointed for Tenant or by Tenant as debtor-in-possession under the provisions of subsection 19.1.2 above and, thereafter, Tenant is either
adjudicated a bankrupt or files a subsequent petition for arrangement under Chapter 11 of the Bankruptcy Code, then Landlord may, at its option, terminate this Lease and all the Tenant’s right under it, by giving written notice of
Landlord’s election so to terminate. 
 19.1.4 If the trustee or the debtor-in-possession has assumed this Lease, pursuant
to subsection 19.1.1. or 19.1.2. above and desires, to assign or to elect to assign Tenant’s interest under this Lease or the estate created by that interest to any other person, such interest or estate may be assigned only if the intended
assignee has provided adequate assurance of future performance, as defined in this subsection 19.1.4, of all of the terms, covenants and conditions of this Lease. For the purposes of this subsection 19.1.4, “adequate assurance of future
performance” means that Landlord has ascertained that each of the following conditions has been satisfied: 
 (i) The
assignee has submitted a current financial statement, audited by a certified public accountant, which shows a net worth and working capital in amounts reasonably determined by Landlord to be sufficient to assure the future performance by the
assignee of the tenant’s obligations under this Lease; 
  

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 (ii) If reasonably requested by Landlord, the assignee will obtain guarantees, in form and
substance satisfactory to Landlord, from one or more persons who satisfy Landlord’s standards of credit worthiness; and 
 (iii) Landlord has obtained consents or waivers from any third parties which may be required under any lease, mortgage, financing arrangement, or other agreement by which Landlord is bound, to enable Landlord to permit such assignment.

 19.1.5 When, pursuant to the Bankruptcy Code, the trustee or the debtor-in-possession is obligated to pay reasonable use and
occupancy charges for the use of all or part of the Premises, it is agreed that such charges will not be less than the Base Rent as defined in this Lease, plus additional rent and other monetary obligations of Tenant included herein, 
 19.1.6 Neither Tenant’s interest in this Lease nor any estate of Tenant created in this Lease shall pass to any trustee, receiver,
assignee for the benefit of creditors, or any other person or entity, nor otherwise by operation of law under the laws of any state having jurisdiction of the person or property of Tenant, unless Landlord consents in writing to such transfer.
Landlord’s acceptance of rent or any other payments from any trustee, receiver, assignee, person or other entity will not be deemed to have waived, or waive, either the requirement of Landlord’s consent or Landlord’s right to
terminate this Lease for any transfer of Tenant’s interest under this Lease without such consent 
 ARTICLE 20. TRASH. 

20.1 No trash or refuse shall be permitted anywhere outside the Building by Tenant except in enclosed containers. 
 ARTICLE 21. MAINTENANCE AND CARE. 
 21.1 Acceptance. Tenant acknowledges that it has examined the Premises before taking possession hereunder. Except as otherwise provided herein, Tenant is accepting the Building and Premises in “As Is” condition. 

 

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 21.2 Maintenance and Repair by Tenant. Tenant shall be responsible for all
non-structural maintenance and repairs to the Premises of whatever kind or nature, including those with respect to the ventilation and air conditioning systems. Tenant shall keep all fixtures and the non-structural components of the Building,
including, without limitation, the mechanical systems, life safety systems, plumbing, lighting, heating, air conditioning, ventilation, electricity, interior walls, ceilings, floors, windows, doors, landscaping, driveways, parking lots, and loading
doors in good repair and operating condition. 
 Tenant will keep the interior of the Building in good repair and free from
filth, overloading, danger of fire or any pest or nuisance, and repair and/or replace any damage or breakage done by Tenant or Tenant’s agents, employees, or invitees. To the extent that a repair to the interior of the Building or any equipment
therein is covered by warranty granted to Landlord (if any), Landlord will make every reasonable effort to enforce that warranty on behalf of Tenant to effectuate said repair. Otherwise, Tenant shall be responsible for all repairs to the interior of
the Building and to Tenant’s equipment contained therein, except as specifically set forth herein. Tenant shall be responsible for the repair and replacement of all glass and plate glass on the Premises, including damage done to the Premises by
Tenant’s equipment or installations. 
 In the event Tenant fails to maintain the interior of the Building as provided for
herein, Landlord shall have the right, but not the obligation, to perform such maintenance and repair as is required of Tenant in which event Tenant shall promptly reimburse Landlord for its costs in providing such maintenance or repairs together
with a ten (10%) percent charge for Landlord’s overhead. 
 21.3 Landlord Representation. Landlord represents
and warrants that to the best of its knowledge, all fixtures, the structural support elements of the Building and the nonstructural components of the Building, including, without limitation, the mechanical systems, life safety systems, plumbing,
lighting, heating, air conditioning, ventilation, electricity, walls (interior and exterior), foundations, ceilings, beams, roofs (interior and exterior), floors, windows, doors, landscaping, driveways, parking lots, and loading doors of the
Building, on the date of this Lease,

  

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are in good repair and operating condition. 
 21.4 Maintenance and
Repair by Landlord. Landlord shall be responsible for all maintenance and repairs to the structure of the Building, including but not limited to steel frame, footings, floor slabs, exterior walls, roof and roofing, outside main sprinkler line
repairs (provided same was not damaged due to Tenant’s negligence) and any air conditioning (HVAC) or heating unit replacement. Landlord shall keep the structure of the Building in good working order, condition and repair comparable to similar
industrial buildings in Suffolk County, New York. In the event Tenant requests Landlord to replace the air conditioning (HVAC) and/or heating unit then all costs associated therewith shall be assessed to Tenant and amortized pro rata over the
remaining period of this Lease. 
 21.5 Additional Improvements. Except with the prior written consent of Tenant or in
connection with fulfilling Landlord’s express obligations hereunder, which consent may be granted or withheld in Tenant’s sole discretion, Landlord shall not be permitted to construct any additional improvements on or to the Premises, this
Lease granting Tenant sole and exclusive possession of the Premises except as otherwise expressly provided herein. 
 ARTICLE 22. ALTERATIONS
AND ADDITIONS, MECHANICS’ LIENS. 
 22.1 Alterations or Improvements. Tenant shall not make any alterations or
improvements to the Premises without the prior written consent of Landlord such consent not to be unreasonably withheld or delayed. Notwithstanding the foregoing, Tenant shall not make any external additions on the Premises (meaning those additions
that are outside of the exterior walls of the Building) without the prior written consent of the Landlord, which consent may be withheld in Landlord’s sole discretion. Alterations or improvements made by either of the parties upon the Premises,
except furniture, machinery, goods, wares, inventory, personal property, trade fixtures and equipment placed in the Premises, including raised flooring, any suspended or wall mounted lighting fixtures and video or computer screens (collectively,
“Tenant’s Removable Property”) and for fixtures added to the Premises by Tenant at its expense and designated by Tenant as removable by written notice to Landlord prior to such addition (“Removable Fixtures”), shall be and

  

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become the property of Landlord and shall remain upon and be surrendered with the Premises as a part thereof at the expiration or termination of this Lease, without disturbance, molestation,
injury or damage. Notwithstanding anything to the contrary herein, Tenant shall not be obligated to remove or restore any alteration or improvement to the Premises at any time, except to the extent Landlord elects in writing at the time of giving
its consent to a Tenant alteration or improvement, to require Tenant to remove and restore such Tenant alteration or improvement at the end of the Term. Tenant shall have the right, at any time, to remove Tenant’s Removable Property from the
Premises. In the event damage to the Premises shall be caused by moving Tenant’s Removable Property in or out of the Premises, said damage shall be promptly repaired at the cost of Tenant. 
 22.2 Permitted Alterations. Anything to the contrary contained in the preceding subsection notwithstanding, Tenant may make interior,
non-structural alterations within the Premises without Landlord’s consent provided that the fair market value cost of such alterations do not exceed One Hundred Thousand ($100,000.00) Dollars in any one (1) calendar year 
 22.3 Requirements for Structural Changes. Each alteration or improvement to the Premises that requires Landlord’s consent
hereunder (each, for purposes of this Section 22.3, a “Structural Change”) shall be subject to the following requirements: 
 22.3.1 Each Structural Change shall be made under the supervision of an architect or engineer selected by Tenant and approved by Landlord, which approval shall not be unreasonably withheld or delayed; and
shall be made in accordance with detailed plans and specifications prepared by such architect or engineer. Copies of all such plans and specifications shall be delivered by Tenant to Landlord, and shall be subject to Landlord’s prior approval,
not to be unreasonably withheld or delayed. 
 22.3.2 If the estimated cost of any proposed Structural Change shall be One
Hundred Fifty Thousand ($150,000.00) Dollars, or more, Tenant, upon request of Landlord, at Tenant’s sole cost and expense, shall, before commencing the same, furnish to Landlord a surety company bond, issued by a surety company approved by
Landlord in an amount equal to the estimated cost of such change or alteration, or shall furnish to Landlord other security reasonably

  

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satisfactory to Landlord, in each case guaranteeing to Landlord the completion of the proposed change or alteration within a reasonable time, free and clear of all Liens, and other claims and
charges in accordance with any plans or specifications, therefor approved by Landlord in such instances where Landlord’s approval is required, or with any contract between Tenant and a general contractor engaged by it which incorporates such
plans and specifications. 
 22.3.3 No Structural Change shall be made unless Tenant first obtains the written consent thereto
of Landlord’s Mortgagee, if any, if such consent is required under such Landlord’s Mortgage. In the event such consent is required by Landlord’s Mortgagee, Landlord shall notify Tenant, in writing, of such requirement and of the name
and address of such mortgagee and shall reasonably cooperate with Tenant in obtaining such consent. 
 22.3.4. Tenant shall
reimburse Landlord for all reasonable fees and expenses of architects, engineers and attorneys employed by Landlord in connection with the review or approval of any plans, agreements or documents in connection with any Structural Change. 

22.4 Requirements for All Alterations. Tenant covenants and agrees that no change or alteration to the Premises will be made
except in compliance with, and Tenant hereby covenants with, each and all of the following provisions: 
 22.4.1. All changes
and alterations shall be made with reasonable diligence and dispatch (subject to unavoidable delays) in a good and workmanlike manner. 
 22.4.2. Before any changes or alterations are begun, Tenant shall procure, at its own sole cost and expense, all necessary licenses, permits, approvals and authorizations from all tribunals. Upon Tenant’s request, Landlord shall join
in the application for such licenses, permits, approvals and authorizations whenever such action is necessary. 
 22.4.3. All
changes and alterations shall be made in compliance and conformity with all applicable Laws and with all applicable licenses, permits, authorizations and approvals of all tribunals, as well as those of the National and Local Boards of Fire
Underwriters, or any other body or bodies exercising similar functions. 
  

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 22.4.4. In making changes and alterations, Tenant shall not violate the terms or conditions
of any insurance policy affecting or relating to the Premises. 
 22.4.5. Promptly after the completion of any changes or
alterations, Tenant shall procure, at Tenant’s sole cost and expense, all such approvals by tribunals and insurance organizations as may be required, and on written demand, shall promptly deliver photocopies thereof to Landlord. 
 22.4.6. No changes or alterations shall be made which would render title to the Premises or any part thereof unmarketable, or which would
reduce the value of the Premises below the value thereof immediately prior thereto. 
 22.4.7. Following the completion of all
such work or alterations, upon request, Tenant shall deliver to Landlord proper waivers of the right to file mechanic’s liens from all contractors, subcontractors or materialmen to be employed in connection with such changes and alterations.

 22.4.8. Tenant shall maintain in force (and require its contractors and subcontractors to take out and maintain in force)
Workers Compensation and public liability insurance in amounts which Landlord may reasonably require, naming Landlord and Landlord’s mortgagee as additional parties insured with respect to such liability insurance policies and deliver
certificates of such insurance to Landlord prior to commencement of any work. 
 22.5 No Cost to Landlord. Landlord shall
not be required to make any contribution to the cost of any changes or alterations or any part thereof made by Tenant, and Tenant covenants that Landlord shall not be required to pay any cost, expense or liability arising out of or in connection
with or by reason of any changes or alterations made by Tenant. 
 22.9 Mechanic’s Liens. Tenant shall not cause nor
permit any mechanic’s liens or other liens to be placed upon the Premises and in case of the filing of any such lien or claim therefor, Tenant shall promptly discharge same; provided, however, that Tenant shall have the right to contest the
validity or amount of any such lien provided Tenant has posted security with Landlord,

  

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which security, in Landlord’s reasonable judgment, must be adequate to pay and discharge any such lien in full plus Landlord’s reasonable estimate of its legal fees. Tenant agrees to
pay all reasonable legal fees or disbursements and other costs incurred by Landlord because of any mechanic’s or other liens attributable to Tenant being placed upon the Premises. 
 ARTICLE 23. DEFAULT AND REMEDIES. 
 23.1 Defaults. Anyone or more of
the following events shall be deemed a “Default” or collectively “Defaults”: 
 23.1.1 Tenant shall at any
time fail to pay punctually and in full any item of Rent within ten (10) business days after written notice of such failure from Landlord. 
 23.1.2 Tenant shall fail to keep, perform or observe any other covenant, agreement, condition or undertaking hereunder and shall fail to remedy such default within thirty (30) days after written
notice thereof has been mailed by Landlord to Tenant; or if such default is one that will take longer than thirty (30) days to remedy, Tenant fails to commence curing such default within thirty (30) days and/or fails diligently to pursue
such cure to completion. 
 23.1.3 If either (a) a proceeding is commenced on a petition for relief filed by or against
Tenant (as debtor) under any debtor relief law, which is not vacated, stayed or dismissed within thirty (30) days thereafter; or (b) Tenant should seek or consent to an acquiescence in the appointment of any trustee, receiver or liquidator
of Tenant, as to any substantial portion of its assets or of the business conducted by Tenant in the Premises; or (c) within sixty (60) days after the appointment of any trustee, receiver or liquidator of Tenant or of the business
conducted by Tenant at the Premises, such appointment shall not have been vacated or stayed on appeal; or (d) Tenant shall make an assignment for the benefit of creditors; or (e) Tenant shall admit in writing its inability to pay debts
generally as they become due; or (f) Tenant shall become insolvent (as defined in the New York Uniform Commercial Code). 
 23.1.4 If Tenant is in Default in the payment of Rent more than seven (7) times in any twelve (12) month period cumulatively under this Lease, the Lease Agreement dated July 2,

  

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2008, between Atlantic Lakeside Properties, Inc. and Cellu Tissue – Thomaston, LLC (the “Thomaston Lease”) and the Lease Agreement dated July 2, 2008, between Atlantic
Paper & Foil Corp. of N.Y. and Cellu Tissue – Happauge, LLC (the “Kennedy Lease”), then, upon the eighth such Default in the payment of Rent, Tenant shall be considered to be in Default under this Lease, the Thomaston Lease
and the Kennedy Lease; provided that, all references to the Thomaston Lease and/or the Kennedy Lease, as the case may be, in this Article shall be deleted if such property(ies) is/are no longer leased by Cellu Tissue – Hauppauge, LLC. (or its
affiliated entities) from Atlantic Long Island Properties, Inc. (or its affiliated entities). For purposes of this Lease, “affiliate” means with respect to any person or entity, any other person or entity controlling or controlled by or
under common control with such person or entity. 
 Notwithstanding the above, the cumulative late payments
shall not prohibit or in any manner permit Tenant to not pay rent within (10) ten calendar days of receipt of notice of non-payment from Landlord. In the event payment of rent on any lease is not made by the tenth (10th) calendar day after notice from Landlord, then Tenant shall be in
Default and Landlord may enforce any and all rights under the lease with regard to that leased premises. 
 23.2 Remedies of
Landlord. Upon a Default, Landlord shall have the right, without further notice or demand, to re-enter and take exclusive possession of the Premises, with or without force or legal process, and to refuse to allow Tenant to enter the same or have
possession thereof; to change the locks on the doors to the Premises; all without being liable to Tenant for any damages or to any prosecution therefore; and 
 23.2.1 As agent of Tenant to reasonably relet the Premises for the balance of the Lease Term or for a shorter or longer term and receive the rents therefor, applying them first to the payment of damages
suffered to the Premises and rents due and to become due under this Lease, Tenant remaining liable for and hereby agreeing to pay Landlord any deficiency; or 
 23.2.2 To cancel and terminate the remaining term of this Lease, re-enter and take possession of the Premises free of this Lease and thereafter this Lease shall be null and void and the Rents in such case
shall be apportioned and paid on and up to the date of such entry.

  

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Thereafter both parties shall be released and relieved from any and all obligations thereafter to accrue hereunder. Tenant shall be liable for all reasonable loss and damage resulting from such
Default; or 
 23.2.3 To treat such Default as an anticipatory breach of this Lease and, as liquidated damages for such Default,
be entitled to the difference, if any, at the time of such termination for anticipatory breach represents the then present worth (computed at seven (7%) percent per year) of the excess aggregate Rent payable hereunder that would have accrued
over the balance of the then current Initial or Option Term of the Lease, had such term not been prematurely terminated, over the aggregate market rental value of the Premises over the then current Initial or Option Term that the Lease would have
run had it not been prematurely terminated. 
 23.3 Landlord’s Rights to Cure. Landlord may, but shall not be
obligated to, cure any Default by Tenant; and whenever Landlord so elects, all reasonable costs and expenses paid by Landlord in curing such Default, including without limitation reasonable attorneys’ fees, shall be Rent due on the next rent
date after such payment, together with interest at the rate equal to the prime rate of interest from the date of the advance to the date of repayment by Tenant to Landlord. 
 23.4 Remedies Cumulative. All rights and remedies provided in this Lease for the protection of Landlord and Tenant shall be
cumulative and in addition to any other rights and remedies provided by law. 
 23.5 No Waiver. A waiver by Landlord or
Tenant of a breach or default by the other, under the terms and conditions of this Lease shall not be construed to be a waiver of any subsequent breach or default nor of any other term or condition of this Lease, and the failure of Landlord or
Tenant to assert any breach or to declare a default by the other shall not be construed to constitute a waiver thereof so long as such breach or default continues unremedied. 
  

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 23.6 No Reinstatement. No receipt of money by Landlord from Tenant after the
expiration or termination of this Lease or after the service of any notice, or after final judgment for possession of the Premises shall reinstate, continue or extend the Lease Term or affect any such notice, demand or suit. 
 ARTICLE 24. LIENS; LANDLORD LIEN WAIVER. 
 24.1 Liens. Except as provided in Article 11, Tenant shall not create or permit to be created or to remain, any mortgage (other than Landlord’s Mortgage), security agreement, conditional bill
of sale, chattel mortgage or otherwise, which might or does constitute a lien, encumbrance or charge upon the Premises, or any part thereof, having a priority or preference over or ranking on parity with the estate, rights or interest of Landlord in
the Premises or any part thereof. 
 24.2 Landlord Waiver. To the extent possible under applicable law, Landlord hereby
waives: (i) any lien for base rent in Landlord’s favor and (ii) any security interest (a) for all base rentals or other sums of money becoming due hereunder from Tenant or (b) upon all goods, wares, equipment, fixtures,
furniture, inventory, accounts, contract rights, chattel paper and other personal property of Tenant, including, without limitation, Tenant’s Removable Property, situated on the Premises. Landlord further waives any right it might have to
Tenant’s property under the Uniform Commercial Code. Upon written request by Tenant, Landlord shall execute, within ten (10) days of receipt of such request, a customary form of landlord lien waiver and access agreement in favor of any
lender or equipment lessor of Tenant, which document shall include a waiver of Landlord’s right in all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract rights, chattel paper and other personal property of Tenant,
including, without limitation, Tenant’s Removable Property situated on the Premises and a license to enter the Premises to remove all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract rights, chattel paper and other
personal property of Tenant, including, without limitation, Tenant’s Removable Property. Landlord has executed and delivered a Lien Waiver between Landlord and JPMorgan Chase Bank, N.A., a copy of which is attached hereto as Exhibit D.

  

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 ARTICLE 25. SURRENDER OF THE PREMISES. 
 25.1 Expiration of Term. On the last day of the Lease Term or upon any earlier termination of this Lease, Tenant shall, without fraud
or delay, surrender and deliver the Premises to Landlord, broom clean and in good order, condition and repair, ordinary wear and tear, casualty, loss, condemnation, permitted alteration and damaged caused by the negligence or willful misconduct of
Landlord or the Landlord’s breach of its obligations hereunder excepted, free and clear of all sublettings, occupancies, persons or tenants in possession. 
 25.2 Removal of Property. At the expiration or sooner termination of the Lease Term, Tenant may remove from the Premises all Tenant Removable Property and Removable Fixtures, and shall repair any
damage caused by such removal. 
 ARTICLE 26. INSURANCE. 
 26.1. Insurance. Tenant, at its own sole cost and expense, shall, throughout the Lease Term, procure and maintain: 
 26.1.1 Comprehensive general public liability insurance against claims for bodily injury, death or property damage occurring upon, in or about the Premises, such insurance to afford immediate protection
at the Commencement Date to the limit of not less than Five Million ($5,000,000.00) Dollars in respect of bodily injury or death to any one person, and to the limit of not less than Five Million ($5,000,000.00) Dollars in respect of anyone accident,
and to the limit of not less than Five Million ($5,000,000.00) Dollars for property damage and such protection shall continue at not less than said limited until reasonably required to be changed by Landlord in writing by reason of changed economic
conditions making such protection inadequate. 
 26.1.2 Insurance against loss by fire, including vandalism, in amount of the
full replacement cost of the Premises. 
 26.1.3 In the event Tenant performs construction to or alterations of the Premises,
such other insurance and in such amounts as may, from time to time, be reasonably required by

  

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Landlord or Landlord’s Mortgagee against other insurable hazards which at the time are commonly insured against in the case of construction and alteration of buildings and/or in the case of
premises similarly situated, due regard being or to be given to the height or type of building, its location, construction, use and occupancy. 
 26.2 Named Insureds. All policies of insurance provided for or contemplated by this Lease shall name Landlord, Tenant and Landlord’s Mortgagee(s) as the insureds or additional insureds, as
their respective interests may appear. 
 26.3 Types of Policies. All insurance provided for in this Section 26
shall be effected under valid and enforceable policies, in such forms and, where not expressly provided for above, in such amounts, as may from time to time be reasonably satisfactory to Landlord or Landlord’s Mortgagee and which at the time
are customary for buildings and/or in the case of premises similarly situated, due regard being or to be given to the height or type of building, its location, construction, use and occupancy, issued by insurers with general policyholder’s
rating of not less than A as rated in the most current available “Best’s Insurance Reports” qualified to do business in the State of New York. Within thirty (30) days after obtaining any such insurance, Tenant shall cause a
certificate thereof to be delivered to Landlord and/or Landlord’s Mortgagee. 
 26.4 Required Provisions. All
policies of insurance provided for in this Article 26 shall, to the extent obtainable, contain clauses or endorsements to the effect: 
 26.4.1 That no act, omission, or negligence of Tenant, or anyone acting for Tenant, which might result in a forfeiture of such insurance or any part thereof, shall in any way affect the validity and, enforceability of such insurance insofar
as Landlord and Landlord’s Mortgagee are concerned; and 
 26.4.2 That such policies shall not be canceled without at least
thirty (30) days prior written notice to Landlord and Landlord’s Mortgagee; and 
 26.4.3 That neither Landlord nor
Landlord’s Mortgagee shall be liable for any premiums thereon or subject to any assessments therefor. 
  

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 26.5 Waiver of Subrogation. Neither Landlord nor Tenant shall be liable to the other
for any loss or damage to the Premises or other property or injury to or death of persons occurring on the Premises or in any manner growing out of or connected with Landlord’s or Tenant’s use and occupation of the Premises or the
condition thereof, whether or not caused by the negligence or other fault of Landlord, Tenant or their respective agents, employees, subtenants, licensees, invitees or assignees; provided, however, that this release (i) shall apply only to the
extent that such loss or damage is covered by insurance which protects Landlord or Tenant or both of them as the case may be; (ii) shall not be construed to impose any other or greater liability upon either Landlord or Tenant than would have
existed in the absence hereof; and (iii) shall be in effect only to the extent and so long as the applicable insurance policies provide that this release shall not affect the right of the insureds to recover under such policies, which clauses
shall be obtained by the parties hereto whenever available. 
 26.6 Indemnification of Landlord. Tenant shall indemnify
and defend Landlord, its employees and agents and save them harmless from and against any and all loss and against all claims, actions, damages, liability and expense in connection with loss of life, bodily and personal injury or damage to the
Premises arising from the conduct or management of or from any work or other activity whatsoever done in, on or about the Premises by Tenant or any of its agents, employees, subtenants, licensees, invitees or assignees, except to the extent that
such liability, claims, actions, damages and expenses arise from any acts, omissions or negligence by Landlord or its agents, employees, licensees, invitees or assignees. Tenant assumes all risks of and Landlord shall not be liable for injury to
person or damage to property resulting from the condition of the Premises or from the bursting or leaking of any and all pipes, utility lines, connections, or air conditioning or heating equipment in, on or about the Premises, or from water, rain or
snow which may leak into, issue or flow from any part of the Building except if due to the acts, omissions or negligence of Landlord, its employees or agents including any Landlord breach of this Lease. 
 26.7 Indemnification of Tenant. Landlord shall indemnify and defend Tenant, its employees and agents and save them harmless from and
against any and all loss and against all claims, actions, damages, liability and expense in connection with loss of life, bodily and personal

  

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injury or damage to the Premises arising from the conduct or management of or from any work or other activity whatsoever done in, on or about the Premises by Landlord or its agents, employees,
subtenants, licensees, invitees or assignees, except to the extent that such liability, claims, actions, damages and expenses arise from any acts, omissions or negligence by Tenant or any of its agents, employees, subtenants, licensees, invitees or
assignees. 
 26.8 Survival. The provisions of Sections 26.6 and 26.7 shall survive the expiration or termination of this
Lease. 
 ARTICLE 27. EXCULPATION. 
 27.1 Notwithstanding anything to the contrary herein, Tenant shall look solely to the estate and property of Landlord in the Premises (including the rental receipts therefrom and the proceeds from
insurance, condemnation awards or the sale thereof) for the satisfaction of Tenant’s remedies for the collection of a judgment (or judicial process) requiring the payment of money by Landlord in the event of any default or breach by Landlord
with respect to any of the terms, covenants and conditions of this Lease to be observed and/or performed by Landlord, and no other property or assets of Landlord shall be subject to levy, execution or other enforcement procedure for the satisfaction
of Tenant’s remedies. 
 ARTICLE 28. INTENTIONALLY OMITTED. 
 ARTICLE 29. INTENTIONALLY OMITTED. 
 ARTICLE 30. HAZARDOUS WASTE. 
 30.1 Tenant’s Representation and Indemnity. “Hazardous Substance” shall mean any hazardous, toxic, septic, radioactive,
explosive or carcinogenic material and any other substances so defined or regulated by the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended or any other federal, state or local law regulating hazardous or toxic
substances or materials (collectively, “Environmental Laws”). Tenant shall during the Lease Term (a) keep the Premises free of contamination of any Hazardous Substance caused by the

  

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acts or omissions of Tenant, its employees, agents and invitees, (b) shall prevent any discharge, spillage or uncontrolled loss of oils or petroleum or Hazardous Substances, upon, under or
within the Premises and contiguous real estate caused by the acts or omissions of Tenant, its employees, agents and invitees, (c) shall not be involved in the operation at or near the Premises which would reasonably be expected to lead to the
imposition or creation of a lien on the Premises under any Environmental Laws, (d) shall not use the Premises as a disposal site or as a processing plant for Hazardous Substances, and (e) shall cause all oil and/or gas burners,
incinerators, furnaces and other fuel burning devices at the Premises to comply with law and maintain appropriate operating permits, except to the extent such obligations are the obligations of Landlord under the other provisions of this Lease.
Tenant shall defend, indemnify and hold Landlord harmless from and against any and all claims, loss, cost, damage, liability and expenses, including, without limitation, reasonable attorneys fees and disbursements, suffered by Landlord, arising out
of or in any way related to a breach of the aforesaid representations and warranties. 
 30.2 Right to Use. Anything to
the contrary contained herein notwithstanding, provided Tenant shall fully comply with all Environmental Laws, Tenant shall have the right to: (a) keep and utilize in or about the Premises, products, which contain Hazardous Substances which are
utilized for ordinary cleaning and office and warehouse operations; (b) store any of its inventory which may, contain quantities of Hazardous Substances which inventory shall remain in individual containers or in its original packaging;
(c) keep and utilize in or about the Premises Hazardous Substances that are used in the ordinary course of Tenant’s business. 
 30.3 No Tenant Liability. Anything to the contrary contained herein notwithstanding, Tenant shall have no liability of any kind to Landlord or any third party as to Hazardous Substances on the
Premises caused or permitted by: (i) Landlord, its agents, employees, contractors or invitees; or (ii) any other past or future tenants in the Premises or the Building, their agents, employees, contractors, subtenants or invitees; or
(iii) any other person or entity on property located outside the Premises whether on contiguous real estate or otherwise. Landlord shall retain the responsibility and pay for any investigations or remediation measures required by governmental
entities having jurisdiction with respect to the existence of Hazardous Substances in,

  

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on or under the Premises prior to the commencement of the Lease Term. Landlord shall not use, generate, store, dispose of or release any hazardous substance in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) during the Lease Term in violation of applicable law and shall promptly, at Landlord’s expense, comply with all applicable laws and take all investigatory and/or remedial action
reasonably required by applicable law for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Landlord, or pertaining to
or involving any Hazardous Substance used, generated, stored, disposed of or released, in, onto or from the Premises prior to the Lease Term or during the Lease Term by or for Landlord in violation of applicable law or this Lease. Tenant shall
cooperate in any such activities at the request of Landlord, including allowing Landlord and Landlord’s agents to have reasonable access to the Premises at reasonable times in order to carry out Landlord’s investigative and remedial
responsibilities, provided that such actions shall not interfere with the conduct of Tenant’s business on the Premises. 
 30.5 Survival. The provisions of this Article 30 shall survive the expiration or termination of this Lease. 
 ARTICLE 31.
SECURITY DEPOSIT. 
 31.1 Tenant has deposited with Landlord the sum of Twenty Five Thousand Eight Hundred and Thirty Three
Dollars ($25,833) (to be adjusted to reflect one (1) month’s base rent for each Option Term) (the “Security Deposit”) to secure the performance and observance by Tenant of the terms, covenants and conditions contained in this
Lease which are the obligations of the Tenant. In the event Tenant is in Default hereunder, including with respect to the payment of Rent, Landlord may use, apply or retain the whole or any portion of the Security Deposit to the extent required for
the payment of any Rent or any other sum as to which Tenant is in default or for any sum which Landlord is may reasonably expend by reason of Tenant’s Default. In the case of every such use, application or retention of any such sum, Tenant
shall, on demand, pay to Landlord the sum so used, applied or retained which shall be added to the unused portion of the Security Deposit so that the amount of the Security Deposit shall be the amount required by the first

  

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sentence of this Article. The Security Deposit or the unused portion thereof shall be returned to Tenant promptly after the expiration or earlier termination of the Term and after delivery of
exclusive possession of the Premises to Landlord. In the event of a sale of the Premises by the Landlord, Landlord shall transfer the Security Deposit to the vendee and, upon doing so, Landlord shall ipso facto be released by Tenant from all
liability for the return of the Security Deposit, and Tenant agrees to look solely to the new landlord for the return of the Security Deposit. The provisions hereof shall apply to every transfer or assignment made of the Security Deposit to a new
landlord. Tenant further covenants that it will not assign or encumber or attempt to assign or encumber the moneys deposited as security and that neither Landlord nor is successors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance. 
 ARTICLE 32. INTENTIONALLY OMITTED. 
 ARTICLE 33. INTENTIONALLY OMITTED. 
 ARTICLE 34. AMERICANS WITH DISABILITIES ACT. 
 34.1 To the extent required by law, Tenant shall make all changes
and modifications to the Premises required by the the Americans with Disabilities Act, Title III (“ADA”) that are required as a result of any alterations, additions or improvements made to the Premises by Tenant. 
 ARTICLE 35. AUTHORITY. 
 35.1 Each of Landlord and Tenant hereby represent and warrant to the other that it has full legal right, power and authority to enter into this Lease and the person acting for Landlord or Tenant, as applicable, hereunder is authorized to
execute and deliver this Lease. 
 ARTICLE 36. INTENTIONALLY OMITTED. 
 ARTICLE 37. MODIFICATION OF MORTGAGE. 
  

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 37.1 If, in connection with obtaining financing or refinancing for the Premises form a part,
a banking, insurance or other institutional lender shall request reasonable modifications to this Lease as a condition to such financing or refinancing, Tenant will not withhold, delay or defer its consent thereto, provided that such modifications
do not increase the obligations of Tenant hereunder or adversely affect the leasehold interest hereby created. 
 ARTICLE 38. LIMITATION ON
RENT. 
 38.1 If at the commencement of, or at any time during the Lease Term, the rent reserved in this Lease is not fully
collectable by reason of any Federal, State, County, or City law, proclamation, order regulation, or direction of a public officer or body pursuant to law, Tenant agrees to take such steps as Landlord may reasonably request to permit Landlord to
collect the maximum rents which may be legally permissible from time to time during the continuance of such legal rent restriction (but not in excess of the amounts reserved therefore under the Lease). Upon the termination of such legal rent
restriction, Tenant shall pay to Landlord, to the extend permitted by law, an amount equal to (a) the total amount of the rents payable during the period of such legal restriction less (b) the rents paid by Tenant to Landlord during the
period such legal rent restriction was in effect. 
 ARTICLE 39. INTERRUPTION OF SERVICES. 
 39.1 Landlord reserves the right to stop the service of the electrical, plumbing or other mechanical systems or facilities in the Building
when necessary by reason of emergency or for repairs required hereunder until said emergency shall have ceased and/or repairs shall have been completed, provided, that, in exercising such rights, Landlord shall provide reasonable prior notice to
Tenant (except in the case of an emergency) and shall use best efforts not to interfere with Tenant’s use and enjoyment of the Premises or Tenant’s business operations thereat. The exercise of such right by Landlord shall not constitute an
actual or constructive eviction, in whole or in part, or entitle Tenant to any compensation or to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability upon Landlord or its
agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s

  

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business, or otherwise provided, that if such interruption shall continue for three (3) business days, then Tenant shall be entitled to an equitable abatement of Rent, based on the nature
and duration of the service interruption, the area of the Premises affected, and the then current Rent amounts, for the period that shall begin on the commencement of such service interruption and that shall end on the day such service interruption
shall cease. If any such service interruption shall continue for at least thirty (30) days, Tenant shall have the right to terminate this Lease upon ten (10) days’ prior written notice to Landlord (provide that such notice shall be
null and void, and of no force and effect, if such service interruption ceases within such 10-day period). 
 ARTICLE 40. FLOOR LOADS. 

 40.1 Tenant shall not place a load upon any floor of the Building exceeding the floor load per square foot area which it was
designated to carry and which is allowed by law. Tenant has been advised that Landlord makes no representation as to the load bearing capacity of the structure. Any and all equipment and/or machinery installed by Tenant in the Premises will not at
any time be in violation of existing laws affecting the Premises or in violation of the Certificate of Occupancy issued for the Building of which the Premises are a part. 
 ARTICLE 41. EXTERMINATION. 
 41.1 Tenant, at its sole cost and expense,
shall maintain all extermination services as are necessary to keep the interior of the Building free of pests and vermin at all times. In furtherance, and not in limitation of the foregoing, Tenant hereby agrees to promptly enter into (and keep in
full force and effect throughout the Lease Term) a full-service preventative extermination contract with a licensed pest-control operator reasonably acceptable to Landlord to keep the interior of the Building at all times free from vermin. Without
limiting the generality of the foregoing, if the interior of the Building (or any portion thereof) at any time becomes infested with vermin, Tenant shall, at Tenant’s sole cost and expense, cause the same to be exterminated from time to time,
to the reasonable satisfaction of Landlord. Tenant shall cause any such vermin to be exterminated immediately upon discovery of such vermin or immediately upon notice thereof from Landlord. 
  

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 ARTICLE 42. TENANT’S RIGHT TO CURE. 
 42.1 Tenant shall provide Landlord with notice of Landlord’s failure to perform any of its obligations under this Lease (a
“Landlord Default”). If Landlord fails to cure such Landlord Default within thirty (30) days after receipt of Tenant’s notice, Tenant may, but is not obligated to, cure such Landlord Default in place of Landlord. Any reasonable
costs which Tenant or any third-party engaged by Tenant incurs as a result of such cure, plus a ten percent (10%) charge for Tenant’s overhead. shall be paid by Landlord upon demand and, if not so paid, shall be set off against
installment(s) of Rent next coming due. 
 ARTICLE 43. MISCELLANEOUS PROVISIONS. 
 43.1 Brokers. Landlord and Tenant represent one to the other that it has dealt with no broker or agent with regard to this Lease who
might claim or be entitled to any commission or other compensation from Landlord; and Tenant and Landlord hereby agree to indemnify and hold the other harmless from all claims by any broker with regard to this Lease arising out of dealings with the
party from whom indemnification is sought. 
 43.2 Successor Landlord. In case Landlord (herein called the
“Conveying Landlord”) shall convey or otherwise dispose of its interest in the Premises and turn over to the transferee any funds held by it hereunder in which Tenant has an interest, all liabilities and obligations on the part of the
Conveying Landlord under this Lease accruing after such conveyance or disposal shall terminate upon such conveyance or disposal, and, thereafter all such liabilities and obligations shall be binding upon only the new owner of the Premises and the
Conveying Landlord will thereby be released and discharged from any such liabilities and obligations. 
 43.3 Application of
Funds on Default. If this Lease shall terminate as a result of or while there exists a Default hereunder, any funds then held by Landlord in which Tenant has an interest may be applied by Landlord to any damages payable by Tenant (whether
provided for herein or by Law) as a result of such Default. 
  

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 43.4 Survival of Obligations. All obligations of the parties hereto shall not
survive the expiration or sooner termination of this Lease, except to the extent specifically provided to the contrary herein. 
 43.5 No Waiver. No waiver of any term, condition, default, or breach of this Lease, or of any document executed pursuant hereto, shall be effective unless in writing and executed by the party making such waiver; and no such waiver
shall operate as a waiver of either (a) such term, condition, default, or breach on any other occasion, or (b) any other term, condition, default, or breach of this Lease or of such document. No delay or failure to enforce any provision in
this Lease or in any document executed pursuant hereto shall operate as a waiver of such provision or any other provision herein or in any document related hereto. The receipt or acceptance of any payment by a party shall not be deemed to operate as
a waiver of the right of such party to enforce the payment of additional amounts or obligations under this Lease by such remedies as may be appropriate, unless otherwise specifically agreed in each instance by such party. The enforcement by any
party of any Right or remedy it may have under this Lease or applicable law shall not be deemed an election of remedies or otherwise prevent such party from enforcement of one or more other remedies at any time. 
 43.6 Consents. Whenever the consent or approval of a party is required under this Lease, such consent or approval shall not be
unreasonably withheld or delayed, unless, otherwise specifically designated above as being in such party’s sole discretion. 
 43.7 Construction. Except as otherwise explicitly specified to the contrary or unless the context clearly requires otherwise, (a) the capitalized term “Section” refers to sections of this Agreement, (b) the
capitalized term “Exhibit” refers to exhibits to this Agreement, (c) references to a particular Section include all subsections thereof, (d) the word “including” shall be construed as “including without
limitation”; and (e) all words used herein shall be construed according to their proper gender and number, as the context shall require. 
 43.8 Effect of Instrument. This Lease and that certain Asset Purchase Agreement dated as of July 2, 2008, between Cellu Tissue Holdings, Inc. and Atlantic Paper & Foil Corp. of N.Y.,

  

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Atlantic Lakeside Properties, LLC, Atlantic Paper & Foil, LLC, Atlantic Paper & Foil of Georgia, LLC and Consumer Licensing Corporation (the “Asset Purchase
Agreement”) sets forth the entire understanding of the parties relating to the subject matter hereof. The Landlord and the Tenant each acknowledges and agrees that the terms and provisions of this Lease are in addition to, and are not intended
to, and do not, in any way waive, modify, limit, or replace, any of the terms, provisions, rights, or remedies contained in the Asset Purchase Agreement or any document or instrument executed and delivered in connection with the Asset Purchase
Agreement or the transaction contemplated therein. 
 Cellu Tissue Holdings, Inc. has executed a Note payable to Atlantic
Paper & Foil Corp. of N.Y. in accordance with the Asset Purchase Agreement referred to above and in the event Cellu Tissue defaults under the terms of said Note, said default shall be deemed a default under the terms of this Lease.

 43.9 Parties Bound; Amendments. All of the terms and provisions of this Lease shall be binding upon, shall inure to
the benefit of, and be enforceable by and against, the parties hereto and their respective heirs, executors, administrators, successors, and permitted assigns. This Lease may be changed, amended, or terminated only by similar written instrument
executed by all parties to be bound thereby. 
 43.10 Severability. If any provision of this Lease is held to be
unlawful, invalid, or unenforceable under any present or future laws, such provision shall be fully severable; and this Lease shall then be construed and enforced as if such unlawful, invalid, or unenforceable provision had not been a part hereof.
The remaining provisions of this Lease shall remain in full force and effect and shall not be affected by such unlawful, invalid, or unenforceable provision or by its severance herefrom, provided, however, if the invalidity or unenforceability of
any provision shall materially deprive either party of the economic benefit intended to be conferred by this Lease, the Parties shall negotiate in good faith to revise this Lease in a manner whereby the economic effect is as nearly as possible the
same as the economic effect of this Lease prior to such invalidity or unenforceability. 
  

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 43.11 No Partnership or Agency Intended. Nothing in this Lease is intended, or shall
in any way be construed, so as to create any form of partnership or agency relationship between the parties. The parties hereby expressly disclaim any intention of any kind to create any partnership or agency relationship between themselves. Nothing
in this Lease shall be construed to make either party liable for any of the indebtedness of the other, except as specifically provided in this Lease. 
 43.12 Notices. Any and all notices, requests, communications, or demands required or permitted to be given pursuant to this Lease shall be in writing, and shall be delivered either (a) by
hand, (b) by an established overnight delivery service, such as Federal Express, or (c) by registered or certified mail, return receipt requested, addressed as follows: 
 If to Landlord: 
 Atlantic Long Island Properties, Inc. 
 P.O. Box 222144 
 Great Neck, NY 11022 

Attn: Shaun Gabbay 
 with a copy to: 

Steven Cohn, Esq. 
 1 Old County Road, Suite 420

 Carle Place, New York 11514 
 Skadden, Arps, Slate, Meagher & Flom, LLP 
 Four Times Square 
 New York, New York 10036 
 Attn: Randall H. Doud 
 If to Tenant: 
 Cellu Tissue – Hauppauge LLC

 c/o Cellu Tissue Holdings, Inc. 
 1855 Lockeway Drive, Suite 501 
 Alpharetta, GA 30004 
 Attn: Russell Taylor 
 with a copy to: 
 Weston Presidio 
 Pier 1, Bay 2 
 San Francisco, CA 64111 
 Attn: R. Sean Honey and
James Morrone 
  

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 Ropes & Gray LLP 
 1211 Avenue of the Americas 
 New York, NY 10036-8704 
 Attn: Christopher C. Henry, Esq. 
 or to such
other address or addresses as any party may designate to the others, by notice in writing, given as above provided. Notices given by hand shall be deemed to have been given upon delivery; notices given by overnight delivery service shall be deemed
to have been given on the first (1st) business day following the date of deposit with such overnight delivery service; and notices given by mail shall be deemed to have been given three (3) days after the date of mailing. 
 43.13 Headings Not Part of Contract. The headings preceding each Section and the Table of Contents (if any) are inserted merely as a
matter of convenience and shall not be deemed to be a part of the contract terms. 
 43.14 Governing Law. This Lease has
been accepted, executed and delivered, and is intended to be performed, in the State of New York. The rights and duties of the parties, and the validity, construction, enforcement, and interpretation of this Lease, shall be governed and construed
according to the laws of such state. 
 43.15 Exhibits. All of the Exhibits attached to this Lease are a part of this
Lease and are incorporated herein by reference as fully as if copied herein verbatim. 
 43.16 Further Assurances. Each
of the parties, at all times and from time to time hereafter, and upon reasonable written request to do so, shall make, do, execute, deliver, or cause to be made, done, executed and delivered, all such further acts, deeds, instruments, assurances,
and things as may be reasonably required for more effectually implementing and carrying out the true intent and meaning of this Lease. 
 43.17 Notice of Lease. The parties hereby agree, at the request of either, to execute, acknowledge, and deliver in recordable form a notice or memorandum of lease and such other

  

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notices as may from time to time be necessary for the protection of any interest of Landlord or Tenant. 
 43.18 Venue. The parties hereby agree that the only proper and convenient venue and/or jurisdiction for any litigation between them related to this Lease or the relationship of the parties as
evidenced by this Lease shall be in the Supreme Court of the State of New York, Suffolk County, or the United States District Court for the Eastern District of New York. 
 43.19 Counterparts. This Lease may be executed in any number of counterparts, each of which shall be deemed an original as against any party who signed such counterpart, and all of which together
constitute one and the same instrument. This Lease shall be binding when one or more counterparts hereof, individually or taken together, shall have been signed by all of the parties shown below as signatories to this Lease; and the date of this
Lease, unless otherwise indicated above, shall be the date on which the last of such signatories shall have signed one or more counterparts. 
 43.20 Number of Days. Except as otherwise provided in this Lease, in calculating the number of days for any purpose under this Lease, the day on which the event occurred shall be considered the
first day and all days shall be counted, including Saturdays, Sundays, and holidays. However, if the final day of any time period falls on a Saturday, Sunday, or Holiday, then such final day shall be deemed the next day which is not a Saturday,
Sunday, or Holiday. “Holiday” shall mean only those holidays on which commercial banks within the State of New York shall be closed for business. 
 43.21 Attorney’s Fees. If Landlord or Tenant brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing
Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term, “Prevailing Party” shall mean the party who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other

  

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party of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys’ fees
reasonably incurred. 
 43.22 Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of
money to be paid by one party to the other under the provisions hereof, the party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a
voluntary payment and there shall survive the right on the part of said party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said party to pay such sum or any part thereof, said
party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. 
 43.23 Waiver of Jury
Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PREMISES OR ARISING OUT OF THIS LEASE. 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed as of the
date and year hereinabove set forth. 
  

			
	TENANT:
	
	CELLU TISSUE - HAUPPAUGE, LLC
	
	By: Cellu Tissue Corporation - Natural Dam, its sole member
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	LANDLORD:
	
	ATLANTIC LONG ISLAND PROPERTIES, INC.
		
	By:	 	  

	Name:	 	
	Title:	 	










 EXHIBIT A 
 LEGAL DESCRIPTION OF PREMISES 








 EXHIBIT B 
 PERMITTED ENCUMBRANCES 








 EXHIBIT C 
 SNDA’s 








 EXHIBIT D 
 LIEN WAIVER 








 Schedule I-4 
 Form of Thomaston Lease 








 EXHIBIT I-4 
 LEASE AGREEMENT 
 ATLANTIC LAKESIDE PROPERTIES, LLC

 - with - 
 CELLU TISSUE - THOMASTON, LLC 
 PREMISES: 
 1201 BARNESVILLE STREET, THOMASTON, GEORGIA 30286 








 LEASE AGREEMENT 
 THIS LEASE AGREEMENT (the “Lease”) is dated this 2nd day of July, 2008, by and between ATLANTIC LAKESIDE PROPERTIES,
LLC, a Georgia limited liability company with an address at P.O. Box 222144, Great Neck, NY 11022, and CELLU TISSUE - THOMASTON, LLC, a Delaware limited liability company with an address at 1855 Lockeway Drive, Suite 501, Alpharetta, GA
30004. 
 ARTICLE 1. DEFINITIONS. 
 As used in this Lease, the following terms shall have the meanings ascribed below, which are in addition to other terms defined in this Lease: 
 1.1. “Building” means the building located on the Premises. 
 1.2. “Commencement Date” means July 2, 2008. 
 1.3. “Initial Expiration Date” means July 2, 2013. 
 1.4.
“Landlord” means Atlantic Lakeside Properties, LLC. and its permitted successors and assigns. 
 1.5.
“Landlord’s Mortgage” means, at any time (now or hereafter) a mortgage or deed of trust placed upon the Premises by Landlord constituting a mortgage lien and all renewals, modifications, consolidations, replacements, extensions or
substitutions of any such mortgage or deed of trust. 
 1.6. “Landlord’s Mortgagee” means, at any time, the then
holder of the indebtedness secured by Landlord’s Mortgage. 
 1.7. “Lease Term” means the Initial Term, First
Option Term, Second Option Term and the Third Option Term, if the First Option Term, Second Option Term and Third Option Term, as applicable, to renew set forth in Article 3.2, 3.3 and 3.4 of this Lease are exercised. 
  

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 1.8. “First Option Term Commencement Date means July 2, 2013. 
 1.9. “First Option Term Expiration Date” means July 2, 2018. 
 1.10 “Second Option Term Commencement Date” means July 2, 2018. 
 1.11 “Second Option Term Expiration Date” means July 2, 2023. 
 1.10 “Third Option Term Commencement Date” means July 2, 2023. 
 1.11 “Third Option Term Expiration Date” means July 2, 2028. 
 1.12. “Premises” means the land and building described on Exhibit “A” annexed hereto and made a part hereof known as and
by the Street address 1201 Barnesville Street, Thomaston, Georgia 30286, together with all fixtures and other improvements now or hereafter located thereon and easements and other rights appurtenant thereto. 
 1.13 “Rent” means all sums, monies or payments required to be paid by Tenant to Landlord pursuant to this Lease. 
 1.14. “Tenant” means Cellu Tissue - Thomaston, LLC, a Delaware limited liability company, and its permitted successors and
assigns. 
 ARTICLE 2. GRANT. 
 2.1 In consideration of the rents, covenants, agreements and conditions hereinafter provided to be paid, kept, performed and observed, and upon the following terms and conditions, Landlord leases to
Tenant and Tenant hereby leases from Landlord the Premises. Tenant shall have and hold the Premises for and during the term described herein subject to the terms, covenants and conditions hereinafter set forth. 
 ARTICLE 3. TERM. 
  

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 3.1 Initial Term. The initial term of this Lease (the “Initial Term”) shall
commence on the Commencement Date and expire on the Initial Expiration Date, unless sooner terminated as hereinafter provided. 
 3.2 First Option Term. Provided Tenant is not in Default as provided herein, Tenant shall have the right, upon prior written notice given to Landlord no later than July 2, 2012, time being of the essence, given in accordance
with the terms of this Lease (“Tenant’s First Option Renewal Notice”), to extend the term of this Lease for one additional five (5) year period commencing on the First Option Term Commencement Date and ending on the First Option
Term Expiration Date (the “First Option Term”), on the same terms and conditions and at the rental set forth herein. Tenant’s failure to give Tenant’s First Option Renewal Notice shall be deemed an election by Tenant not to
exercise the option provided herein. 
 3.3 Second Option Term. Provided Tenant is not in Default as provided herein,
Tenant shall have the right, upon prior written notice given to Landlord no later than July 2, 2017, time being of the essence, given in accordance with the terms of this Lease (“Tenant’s Second Option Renewal Notice”), to extend
the term of this Lease for one additional five (5) year period commencing on the Second Option Term Commencement Date and ending on the Second Option Term Expiration Date (the “Second Option Term”), on the same terms and conditions
and at the rental set forth herein. Tenant’s failure to give Tenant’s Second Option Renewal Notice shall be deemed an election by Tenant not to exercise the option provided herein. 
 3.4 Third Option Term. Provided Tenant is not in Default as provided herein, Tenant shall have the right, upon prior written notice
given to Landlord no later than July 2, 2022, time being of the essence, given in accordance with the terms of this Lease (“Tenant’s Third Option Renewal Notice”), to extend the term of this Lease for one additional five
(5) year period commencing on the Third Option Term Commencement Date and ending on the Third Option Term Expiration Date (the “Third Option Term”), on the same terms and conditions and at the rental set forth herein. Tenant’s
failure to give Tenant’s Third Option Renewal Notice shall be deemed an election by Tenant not to exercise the option provided herein. 
  

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 3.5 Tenant Termination Right. Notwithstanding anything herein to the contrary, Tenant
shall have the right to terminate this Lease at any time after the expiration of the second year anniversary of the Commencement Date, with or without cause, upon twelve (12) months’ prior written notice to Landlord. Upon such termination,
provided that Tenant returns the Premises to the Landlord and is current in the payment of rent and vacates in accordance with Article 22 hereof, Tenant shall be released and discharged from all of its further obligations and liabilities under this
Lease, except for obligations and liabilities related to any Default of Tenant under Article 25 hereof. 
 ARTICLE 4. BASE RENT.

 4.1 Base Rent During Term. During the Term of this Lease, Tenant shall pay to Landlord Base Rent per annum as
follows: 
  

					
	Annual Rent	  	Monthly Installments
	$	511,000	  	$	42,583.33

 4.2 Payment of Rent. Tenant covenants to pay Rent without notice, deduction,
set-off or abatement, except as otherwise expressly provided herein, to Landlord in equal monthly installments (or appropriate pro rata portion thereof for any portion of a month at the beginning or end of the Lease Term) payable in advance on the
first day of each month during the Term. 
 4.3 Place of Payment. Rent shall be payable to Landlord at Landlord’s
address set forth herein or at such other place as Landlord may designate from time to time in writing. 
 4.4. Service
Charge. Tenant’s failure to make any monetary payment required of Tenant (including payments of Rent) hereunder within ten (10) days after notice from Landlord that such payment has not been made shall result in the imposition of a
service charge for such late payment in the amount of five (5%) percent of the amount due. 
 ARTICLE 5. OPTION TO PURCHASE.

 5.1 Option Purchase. Tenant shall have the right to purchase the Premises

  

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(such right, the “Option to Purchase”) for a purchase price (the “Purchase Price”) of Five Million Dollars ($5,000,000), adjusted as provided below, at any time during the
Term. 
 5.2 Procedure. Tenant may exercise the Option to Purchase by giving written notice (the “Purchase
Notice”) of its exercise of the Option to Purchase to Landlord at least ninety (90) days but not more than six (6) months in advance of the date Tenant desires to consummate the purchase of the Premises. Tenant’s written notice
shall set forth its election of the Option to Purchase as well as the proposed closing date for the transaction. Tenant and Landlord shall enter into a purchase agreement within thirty (30) days (the “Purchase Agreement”), which
Purchase Agreement shall be upon the terms and conditions customary for the sale of comparable properties located within the market area of the Premises, but in all events the Purchase Agreement shall provide for the following: (i) Tenant shall
be allowed a reasonable period of time to perform due diligence investigations (including, without limitation, a Phase I environmental assessment of the Premises and other non-invasive engineering and structural investigations) and the sale shall be
conditioned upon Tenant being satisfied with such investigations in its sole discretion; (ii) Landlord shall be obligated to execute and deliver all customary closing documents, in form reasonably satisfactory to Landlord and Tenant, including
but not limited to, (a) a limited warranty deed and any other documents or instruments then legally required to convey title to the Premises, (b) if requested by Tenant, a bill of sale to any personal property or equipment owned by
Landlord and located on the Premises, (c) an affidavit in the form reasonably required by the title insurance company insuring Tenant’s title to the fee estate covering absence of parties in possession by or through Landlord (other than
Tenant or any of its permitted subtenants), absence of work performed on the Premises by Landlord for the preceding one hundred twenty (120) days and other matters reasonably requested by such title insurance company, (d) evidence
reasonably satisfactory to the title insurance company insuring Tenant’s title to the Premises of Landlord’s authorization to consummate the transaction, (e) an affidavit of residence or other appropriate evidence that Landlord is
exempt from the withholding requirements of O.C.G.A., § 48-7-128 (failing which Tenant shall be fully authorized to withhold and pay to the appropriate taxing authority the amount required to be withheld pursuant to said Section 48-7-128),
(f) an affidavit that Seller is not

  

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a “foreign person” as such term is defined in Section 1445(f)(3) of this Internal Revenue Code of 1986, as amended, and (g) any environmental or other certifications required
by applicable law or otherwise. At the closing of the purchase, Tenant shall deliver to Landlord an amount equal to the Purchase Price by wire transfer and execute and deliver a settlement statement, any other documents or instruments reasonably
required to consummate the purchase and sale of the Premises, in form reasonably satisfactory to Tenant and Landlord; (iii) Landlord shall be required to deliver the Premises free and clear of all liens and encumbrances except for Permitted
Encumbrances and such liens and encumbrances as have attached or been imposed on account of any act or omission of Tenant during the Term and in the condition required to be maintained by Landlord hereunder; (iv) rent, utilities and other
adjustments shall be prorated to the closing date of the Purchase Agreement to the extent applicable given the terms of the Lease; (v) Landlord shall be responsible for and pay any transfer taxes and any other taxes or governmental charges or
fees imposed or assessed upon Landlord in connection with the conveyance of the Premises. Tenant shall be responsible for and pay any recording and filing charges or fees incurred in connection with the recording of the deed to the Premises and any
taxes the payment of which is not expressly provided for herein that are normally and customarily paid by Purchaser. Tenant shall also be solely responsible for any title search and survey charges and any title insurance premiums in respect of title
insurance obtained by Tenant, as well as any costs associated with any loan obtained by Tenant in connection with the purchase of the Premises. Each party shall pay its own legal fees and administrative costs incurred in connection with any such
conveyance of the Premises to Tenant; and (vii) Tenant may designate a nominee to take title to the Premises. 
 5.3
Termination of Option. The Option to Purchase shall automatically terminate and become null, void and of no force and effect upon the earliest to occur of (a) the expiration or earlier termination of the Term in accordance with the terms
of this Lease, (b) an assignment of this Lease that requires Landlord’s consent, and (c) the sublease by Tenant of more than fifty percent of the rentable area of the Premises to persons or entities that are not affiliates of Tenant
for all or substantially all of the remaining Term. 
 5.4. Limit on Encumbrances. Until Tenant’s Option to Purchase
has terminated

  

 7 









 
as provided herein, Landlord shall not take any action that results in any encumbrance on or exception to title to the Premises other than the Permitted Encumbrances, subject in all events to
Section 17 hereof, or the granting to a bank or other institutional lender of a mortgage or deed of trust to secure indebtedness not in excess of the lesser of (i) 80% of the fair market value of the Premises at the time of the granting of
such mortgage/deed of trust or (ii) $4,000,000. 
 ARTICLE 6. LANDLORD’S RIGHTS. 
 6.1. Limited Reservation of Rights. In the event that Tenant notifies Landlord that Tenant is vacating the Premises and/or that Tenant
is waiving its option to purchase hereunder, then Landlord shall have the following rights, provided that in exercising such rights, Landlord shall provide reasonable prior notice to Tenant and shall use best efforts not to interfere with
Tenant’s use and enjoyment of the Premises or Tenant’s business operations thereat, provided, further, that Landlord shall have the right to access the Premises to make repairs at all times without prior notice to Tenant in emergency
circumstances: 
 6.1.1 To enter the Premises at all reasonable times during normal business hours, together with
Landlord’s employees, agents, lenders, tenant’s insurance agents and inspectors, public authorities and others having a legitimate interest in the Premises; 
 6.1.2 To exhibit the Premises to potential tenants and brokers at all reasonable times during normal business hours and to display “For Lease” signs on the Premises at any time during the last
year of the Initial Term (provided Tenant has not exercised its right to renew for the First Option Term) or of all applicable Option Terms (provided Tenant has not exercised its right to renew for a subsequent Option Term), or to display “For
Sale” signs on the Premises at any time; 
 6.1.3 To inspect, and/or make repairs to, the Premises as required hereunder
or as may be reasonably necessary or desirable for the safety, protection and/or preservation of the Premises; 
  

 8 









 6.1.4 To stop the service of the electrical, plumbing or other mechanical systems or
facilities in the Building when necessary by reason of emergency or for repairs required hereunder until said emergency shall have ceased and/or repairs shall have been completed, provided, that, in exercising such rights, Landlord shall provide
reasonable prior notice to Tenant (except in the case of an emergency) and shall use best efforts not to interfere with Tenant’s use and enjoyment of the Premises or Tenant’s business operations thereat. The exercise of such right by
Landlord shall not constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any compensation or to any abatement or diminution of rent, or relieve Tenant from any of its obligations under this Lease, or impose any
liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant, or injury to or interruption of Tenant’s business, or otherwise provided, that if such interruption shall continue for three (3) business days, then
Tenant shall be entitled to an equitable abatement of Rent, based on the nature and duration of the service interruption, the area of the Premises affected, and the then current Rent amounts, for the period that shall begin on the commencement of
such service interruption and that shall end on the day such service interruption shall cease. If any such service interruption shall continue for at least thirty (30) days, Tenant shall have the right to terminate this Lease upon ten
(10) day’s prior written notice to Landlord (provide that such notice shall be null and void, and of no force and effect, if such service interruption ceases within such 10-day period); and 
 6.1.5. To place, install, maintain, carry through, repair and replace such utility lines, pipes, wires, appliances, tunneling and the like
in, over, through and upon the Premises as may be reasonably necessary or desirable for the servicing of the Premises. 
 ARTICLE 7.
INABILITY TO PERFORM. 
 7.1 If by reason of inability to obtain and utilize labor, materials or supplies; circumstances
directly or indirectly the result of a state of war or national or local emergency; strikes or riots; or by reason of any other cause beyond the reasonable control of Landlord, Landlord shall be unable to perform or shall be delayed in performance,
such non-performance or delay in performance shall not render Landlord liable in any respect for damages to either person

  

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or property, constitute a total or partial eviction, constructive or otherwise, cause an abatement of rent or relieve Tenant from the fulfillment of any covenant or agreement contained in this
Lease, except for any abatement of Rent expressly provided for herein. 
 ARTICLE 8. USE. 
 8.1 The Premises shall be used by and/or at the sufferance of Tenant for any lawfully permitted use. 
 ARTICLE 9. COMPLIANCE WITH LAWS. 
 9.1 Tenant’s Compliance with Law. Tenant covenants throughout the Lease Term, at Tenant’s sole cost and expense (except as otherwise provided herein), to comply with all laws, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governments which are applicable to the Premises or the use or manner of use of the Premises, and the orders, rules and regulations of the Board of Fire Underwriters where the Premises are situated,
or any other body now or hereafter constituted exercising similar functions, which are applicable to the Premises or the use or manner of use of the Premises. Tenant will likewise observe and comply with the reasonable requirements of all policies
of public liability, fire and all other policies of insurance at any time in force with respect to the Building and other improvements on the Premises and the equipment thereon. 
 9.2 Landlord Representation. To the best of Landlord’s knowledge, the Premises as they currently exist, comply with (i) all
laws, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments which are applicable to the Premises or the use or manner of use of the Premises, including the Americans with Disabilities Act,
(ii) all regulations of the Board of Fire Underwriters where the Premises are situated which are applicable to the Premises or the use or manner of use of the Premises and (iii) the requirements of all policies of public liability, fire
and all other policies of insurance in force with respect to the Building and improvements on the Premises and the equipment thereon. 
 ARTICLE 10. REAL ESTATE TAXES. 
  

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 10.1 Payment. During the entire term of this Lease, Landlord shall pay, satisfy and
discharge all Real Estate Taxes (as hereinafter defined) prior to any tax lien sale and shall provide Tenant with proof of payment of Real Estate Taxes upon request. For purposes of this Lease, “Real Estate Taxes” shall mean all real
property taxes and assessments and any other similar taxes or charges levied against or imposed upon the Premises, including: (a) all ad valorem Real Estate Taxes including school taxes assessed against the Premises (adjusted after protest or
litigation, if any) for any part of the Lease Term, (b) any taxes which shall be levied in lieu of any such ad valorem real estate taxes, (c) any special assessments for benefits on or to the Premises, payable in installments,
(d) occupational taxes or excise taxes levied on rental derived from the operation of the Premises or the privilege of leasing Premises, and (e) the expense of protesting, negotiating or contesting the amount or validity of any such taxes,
charges or assessments, such expense to be applicable to the period of the item contested, protested or negotiated (including legal fees and disbursements) incurred in the prosecution of any such tax reduction proceeding. 
 10.2 Base Year Increases. Notwithstanding the foregoing, commencing with the 2009 real estate tax year, Tenant shall pay to Landlord,
as additional rent, an amount equal to all Real Estate Taxes for such tax year less the amount of Real Estate Taxes for the 2008 real estate tax year. Said payment shall be paid by Tenant to Landlord within thirty (30) days of receipt by Tenant
of a copy of the applicable tax bill from the Landlord. 
 10.3 Right to Contest. Anything to the contrary contained
herein notwithstanding, Landlord and/or Tenant, at its sole cost and expense, shall have the right to prosecute a tax certiorari proceeding or otherwise protest, in order to attempt to reduce Real Estate Taxes for which the parties are responsible
hereunder. Both parties agree to reasonably cooperate with each other and/or its representatives or attorneys, provided such cooperation is at no cost to other party. 
 ARTICLE 11. UTILITIES. 
 11.1 From and after the Commencement Date, or such
earlier date as Tenant may take possession of all or part of the Premises, Tenant shall contract in its own name and

  

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timely pay for all charges for electricity, gas, water, fuel, sewer charges, telephone, trash hauling, and any other services or utilities used in, servicing or assessed against the Premises, for
periods from and after the Commencement Date or such earlier date of possession until the expiration or earlier termination of the Lease Term, unless otherwise herein expressly provided. 
 ARTICLE 12. TITLE; QUIET ENJOYMENT. 
 12.1 Landlord covenants that Landlord
has good and clear, record and marketable fee simple title in and to the Premises, subject only to the encumbrances listed on Exhibit B attached hereto and made a part hereof. Landlord covenants that Tenant, on paying the Rent as herein provided and
keeping, performing and observing the covenants, agreements and conditions herein required of Tenant, shall peaceably and quietly hold and enjoy the Premises for the Lease Term, subject, however, to the terms and conditions of this Lease.

 ARTICLE 13. ASSIGNMENT, MORTGAGE AND SUBLETTING. 
 13.1 General. Tenant may not sublease all or any part of the Premises or assign its interest in this Lease without, in each case, the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed. Notwithstanding any assignment of this Lease or any subletting of the Premises, Tenant shall remain primarily responsible for all obligations of Tenant hereunder. 
 13.2 Permitted. Notwithstanding the foregoing, Tenant may, without either prior notice to or the consent of Landlord, assign or
otherwise transfer this Lease (i) in connection with any merger, consolidation, reorganization or other corporate restructuring of Tenant, (ii) in connection with any sale of all or substantially all of the stock or assets of Tenant, or
(iii) to any affiliate of Tenant; provided in each case that the successor corporation or entity acquiring Tenant’s stock or assets or the affiliate of Tenant, as applicable, agrees to be bound by all of the terms and provisions of this
Lease for the benefit of Landlord. 
 13.3 Leasehold Mortgages; Liens. Notwithstanding anything herein to the contrary,
Tenant may grant: (i) a collateral assignment of or leasehold mortgage on its leasehold 
  

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interest in the Premises and/or (ii) a lien on and a security interest in all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract rights, chattel paper and other
personal property of Tenant, including, without limitation, Tenant’s Removable Property located on the Premises. 
 ARTICLE 14.
CASUALTY; CONDEMNATION. 
 14.1. Fire and Other Casualty. In the event of total or partial destruction of the
Premises, which exceeds forty (40%) percent of the total square footage of the Building by fire or other peril, Landlord or Tenant, at their option, may terminate this Lease as of the date of such casualty by written notice to the other given,
if at all, within sixty (60) days from and after the date of such casualty. Absent such timely notice, this Lease shall remain in full force and effect (subject to abatement of Rent as provided in Article 14.2 below), and Landlord shall
promptly commence and diligently prosecute to completion the repair and restoration of the Premises as nearly as possible to their condition prior to such destruction. if Landlord elects to repair or re-build the Premises but does not complete such
repair or rebuilding within six (6) months after the adjustment of any insurance loss resulting from the occurrence of such damage or destruction, Tenant shall have the right to terminate this Lease upon thirty (30) days prior written
notice to Landlord. In all cases, due allowance shall be made for reasonable delay caused by adjustment of insurance loss, strikes, labor difficulties or any cause beyond Landlord’s reasonable control. 
 14.2. Rental Abatement. If the Premises are rendered totally untenantable but this Lease is not terminated as aforesaid, then all
Rent shall abate from the date of the fire or other relevant cause or condition until the Premises are ready for occupancy and reasonably accessible to Tenant. If a portion of the Premises is rendered untenantable (whether or not such portion
exceeds forty (40%) percent of the total square footage of the Building) but this Lease is not terminated as aforesaid, then there shall be an abatement of Rent in proportion to the proportion of space within the Building that is rendered
untenantabte until the damaged portion(s) are ready for Tenant’s occupancy and reasonably accessible to Tenant. For purposes of this Lease, the Premises shall be considered tenantable so long as and to the extent that the Premises are occupied
and used by Tenant for its business. 
  

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 14.3. Condemnation. If the Premises or a substantial part thereof (which in
Tenant’s reasonable opinion renders the remainder of the Premises unfit for the uses specified herein) shall be taken by any competent authority under the power of eminent domain or be acquired for any public or quasi-public use or purpose, the
Lease Term shall cease and terminate upon the date when the possession of said Premises or part thereof so taken shall be required for such purpose and without apportionment of the award and Tenant shall have no claim against Landlord for the value
of any unexpired Lease Term. Rent at the then current rate shall be apportioned as of the date of the termination. 
 If any
portion of the Premises shall be taken by any competent authority under the power of eminent domain or be acquired for any public or quasi-public use or purpose, and this Lease is not terminated in the manner provided for above, Landlord shall apply
any such damages and compensation awarded (net of the costs and expenses, including reasonable attorneys’ fees, incurred by Landlord in obtaining the same) to secure and close so much of the Building and/or the Premises, as the case may be, as
remain and shall, to the extent possible, replace any part so taken or appropriated by a suitable structure or parking area or addition of similar size and design to that portion so taken or appropriated. In such event, there shall be an abatement
of Rent in proportion to the percentage of space which is (temporarily or permanently) no longer available for use by Tenant. 
 In the event of such taking or public appropriation, Landlord shall be entitled to receive the entire award or any judgment for damages caused by the taking, provided that Tenant shall be entitled to make a claim in any condemnation
proceeding which does not reduce the amount of Landlord’s award, for the value of Tenant’s property and nothing in this Article shall preclude an award by such public or quasi-public authority made to Tenant for loss of business or
depreciation to and cost of removal of equipment or fixtures. 
 ARTICLE 15. HOLDING OVER. 
 15.1 In the event of a holding over by Tenant after expiration or termination of this Lease, Tenant shall be deemed a month-to-month tenant
of the Premises, which month-to-month

  

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tenancy shall be terminable by either party hereto on sixty (60) days prior written notice from one party to the other. In the event of a holding over by Tenant after the expiration of the
sixty (60) day period referred to in the preceding sentence, without the consent in writing of Landlord, Tenant shall be deemed a tenant at sufferance and shall pay rent for such occupancy at the rate of (i) one hundred twenty five
(125%) percent of the last-current aggregate Base Rent payable during the last month of the Lease Term for the first two (2) month period after the expiration of the sixty (60) day period referred to in the first sentence of this
Article; (ii) one hundred fifty (150%) percent of the last-current aggregate Base Rent payable during the last month of the Lease Term for the second two (2) month period following the expiration of the sixty (60) day period
referred to in the first sentence of this Article; and (iii) two hundred (200%) percent of the last-current aggregate Base Rent payable during the last month of the Lease Term for each one (1) month period thereafter; prorated
monthly, for the entire holdover period, plus all reasonable attorney’s fees and expenses incurred by Landlord in enforcing its rights hereunder; plus, if the holdover period exceeds sixty (60) days, any other damages occasioned by such
holding over. Except as otherwise agreed, any holding over with the written consent of Landlord shall constitute a month-to-month tenancy. 
 ARTICLE 16. MORTGAGE AND TRANSFER. 
 16.1 Landlord’s Right to Mortgage and Transfer. Landlord shall
have the unfettered right to transfer, mortgage, pledge or otherwise encumber, assign and convey, in whole or in part, the Premises, provided that any such transfer, mortgage, pledge, encumbrance, assignment or conveyance shall be subject to
Tenant’s interests under and pursuant to this Lease. Notwithstanding the foregoing, Tenant shall, at Landlord’s request, subordinate its interest under this Lease to the lien, but not the provisions, of any institutional mortgage provided
that the holder thereof enters into a so-called “subordination, non-disturbance and attornment agreement” or otherwise recognizes and acknowledges this Lease with Tenant in form and substance acceptable to Tenant. Landlord has obtained a
subordination, non-disturbance and attornment agreement among Tenant, Landlord and Landlord’s Mortgagee for each existing Landlord Mortgage, copies of which are attached hereto as Exhibit C. 
  

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 16.2. Estoppel Certificates. Landlord and Tenant covenant and agree to execute and
deliver to the other and/or its prospective or existing mortgagee within ten (10) business days of a written request therefore, an estoppel letter setting forth: (i) the date of this Lease and any amendments thereto, (ii) the date
through which Rent has been paid hereunder, (iii) the amount of any security deposit held by Landlord, if any, (iv) that Tenant is in occupancy of the Premises and/or specifying any subleases or assignments, (v) that the Lease is in full
force and effect, (vi) that, to the knowledge of such party, there exists no default under the Lease and that there are no defenses or offsets against the enforcement thereof, or setting forth such defaults, defenses or offsets, and (vii) any
other information with respect to this Lease which the other party or its prospective or existing mortgagee may reasonably request. 
 ARTICLE 17. BANKRUPTCY AND INSOLVENCY. 
 17.1 Bankruptcy. It is understood and agreed that the following
shall apply in the event of the bankruptcy or insolvency of Tenant: 
 17.1.1 If a petition is filed by, or an order for relief
is entered against Tenant under Chapter 7 of the Bankruptcy Code and the trustee of Tenant elects to assume this Lease for the purpose of assigning it, such election or assignment, or both, may be made only if all of the terms and conditions of this
subarticle 17.1 and subarticle 17.2 below are satisfied. To be effective, an election to assume this Lease must be in writing and addressed to Landlord, and in Landlord’s business judgment, all of the conditions hereinafter stated, which
Landlord and Tenant to be commercially reasonable must have been satisfied. If the trustee fails so to elect to assume this Lease within sixty (60) days after such filing or order, this Lease will be deemed to have been rejected, and Landlord
shall then immediately be entitled to possession of the Premises without further obligation to Tenant or the trustee, and this Lease shall be terminated. Landlord’s right to be compensated for damages in bankruptcy proceeding, however, shall
survive such termination. 
 17.1.2 If Tenant filed a petition for reorganization under Chapter 11 of the Bankruptcy Code, or
if a proceeding filed by or against Tenant under any other chapter of the Bankruptcy Code is converted to a Chapter 11 proceeding and Tenant’s trustee or Tenant as 
  


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debtor-in-possession fails to assume this Lease within sixty (60) days from the date of the filing of such petition or conversion, then the trustee or the debtor-in-possession shall be
deemed to have rejected this Lease. To be effective, any election to assume this Lease must be in writing addressed to Landlord and, in Landlord’s business judgment, all of the following conditions, which Landlord and Tenant acknowledge to be
commercially reasonable, must have been satisfied: 
 (i) The trustee or the debtor-in-possession has cured or has provided to
Landlord adequate assurance, as defined in this subarticle, that: 
 (a) It will cure all monetary defaults under this Lease
within ten (10) days from the date of assumption; and 
 (b) It will cure all nonmonetary defaults under this Lease within
thirty (30) days from the date of assumption; 
 (ii) The trustee or the debtor-in-possession has compensated Landlord, or
has provided Landlord with adequate assurance, as hereinafter defined, that within ten (10) days from the date of assumption Landlord will be compensated for any pecuniary loss it has incurred arising from the default of Tenant, the trustee, or
the debtor-in-possession, as recited in Landlord’s written statement of pecuniary loss sent to the trustee or debtor-in-possession; and 
 (iii) The trustee or the debtor-in-possession has provided Landlord with adequate assurance of the future performance of each of Tenant’s obligations under this Lease; provided, however, that

 (a) From and after the date of assumption of this Lease, it shall pay all monetary obligations, including the Base and
Additional Rent payable under this lease in advance in equal monthly installments on each date that such Rents are payable; 
 (b) It shall also deposit with Landlord, as security for the timely payment of Rent, an amount equal to two (2) months’ Base Rent and other monetary obligations payable under this Lease; 
  

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 (c) If not otherwise required by the terms of this Lease, it shall also pay in advance, on
each day that any installment of Base Rent is payable, one-twelfth of Tenant’s annual tax, escalation and other obligations under this Lease, if any; and 
 (d) The obligations imposed upon the trustee or the debtor-in- possession will continue for Tenant after the completion of bankruptcy proceedings. 
 (iv) For purposes of this subarticle, “adequate assurance” means that: 
 (a) Landlord reasonably determines that the Tenant, trustee or the debtor-in-possession has, and will continue to have, sufficient
unencumbered assets, after the payment of all secured obligations and administrative expenses, to assure Landlord that the trustee or the debtor-in-possession will have sufficient funds timely to fulfill Tenant’s obligations under this Lease
and to keep the Premises properly staffed with sufficient employees to conduct a fully operational, actively promoted business in the Premises; and 
 (b) An order shall have been entered segregating sufficient cash payable to Landlord and/or valid and perfected first lien and security interest shall have been granted in property of Tenant, trustee, or
debtor-in-possession which is acceptable in value and kind to Landlord, to secure to Landlord the obligation of Tenant, trustee or debtor-in-possession to cure all monetary and nonmonetary defaults under this Lease within the time periods set forth
above. 
 17.1.3 In the event this Lease is assumed by a trustee appointed for Tenant or by Tenant as debtor-in-possession
under the provisions of subarticle 17.1.2 above and, thereafter, Tenant is either adjudicated a bankrupt or files a subsequent petition for arrangement under Chapter 11 of the Bankruptcy Code, then Landlord may, at its option, terminate this Lease
and all the Tenant’s right under it, by giving written notice of Landlord’s election so to terminate. 
 17.1.4 If
the trustee or the debtor-in-possession has assumed this Lease, pursuant to subarticle 17.1.1. or 17.1.2. above and desires, to assign or to elect to assign Tenant’s interest under this Lease or the estate created by that interest to any other
person, such interest or 
  

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estate may be assigned only if the intended assignee has provided adequate assurance of future performance, as defined in this subarticle 17.1.4, of all of the terms, covenants and conditions of
this Lease. For the purposes of this subarticle 17.1.4, “adequate assurance of future performance” means that Landlord has ascertained that each of the following conditions has been satisfied: 
 (i) The assignee has submitted a current financial statement, audited by a certified public accountant, which shows a net worth and working
capital in amounts reasonably determined by Landlord to be sufficient to assure the future performance by the assignee of the Tenant’s obligations under this Lease; 
 (ii) If reasonably requested by Landlord, the assignee will obtain guarantees, in form and substance satisfactory to Landlord, from one or more persons who satisfy Landlord’s standards of credit
worthiness; and 
 (iii) Landlord has obtained consents or waivers from any third parties which may be required under any
lease, mortgage, financing arrangement, or other agreement by which Landlord is bound, to enable Landlord to permit such assignment. 
 17.1.5 When, pursuant to the Bankruptcy Code, the trustee or the debtor-in-possession is obligated to pay reasonable use and occupancy charges for the use of all or part of the Premises, it is agreed that such charges will not be less than
the Base Rent as defined in this Lease, plus additional rent and other monetary obligations of Tenant included herein, 
 17.1.6 Neither Tenant’s interest in this Lease nor any estate of Tenant created in this Lease shall pass to any trustee, receiver, assignee for the benefit of creditors, or any other person or entity, nor otherwise by operation of law
under the laws of any state having jurisdiction of the person or property of Tenant, unless Landlord consents in writing to such transfer. Landlord’s acceptance of rent or any other payments from any trustee, receiver, assignee, person or other
entity will not be deemed to have waived, or waive, either the requirement of Landlord’s consent or Landlord’s right to terminate this Lease for any transfer of Tenant’s interest under this Lease without such consent 
  

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 ARTICLE 18. MAINTENANCE AND CARE. 
 18.1 Acceptance. Tenant acknowledges that it has examined the Premises before taking possession hereunder. Except as otherwise
provided herein, Tenant is accepting the Building and Premises in “As Is” condition. 
 18.2 Landlord
Representation. Landlord represents and warrants that to the best of its knowledge, all fixtures, the structural support elements of the Building and the nonstructural components of the Building, including, without limitation, the mechanical
systems, life safety systems, plumbing, lighting, heating, air conditioning, ventilation, electricity, walls (interior and exterior), foundations, ceilings, beams, roofs (interior and exterior), floors, windows, doors, landscaping, driveways,
parking lots, and loading doors of the Building, on the date of this Lease, are in good repair and operating condition. 
 18.3
Maintenance and Repair by Tenant. Tenant shall be responsible for all maintenance and repairs to the Premises of whatever kind or nature. Tenant will keep the interior of the Building free from filth, overloading, danger of fire or any pest
or nuisance, and repair and/or replace any damage or breakage done by Tenant or Tenant’s agents, employees, or invitees. To the extent that a repair to the interior of the Building or any equipment therein is covered by warranty granted to
Landlord (if any), Landlord will make every reasonable effort to enforce that warranty on behalf of Tenant to effectuate said repair. Otherwise, Tenant shall be responsible for all repairs to the Building and to Tenant’s equipment contained
therein, except as specifically set forth herein. Tenant shall be responsible for the repair and replacement of all glass and plate glass on the Premises, including damage done to the Premises by Tenant’s equipment or installations. In the
event Tenant fails to maintain the Building as provided for herein, Landlord shall have the right, but not the obligation, to perform such maintenance and repair as is required of Tenant in which event Tenant shall promptly reimburse Landlord for
its costs in providing such maintenance or repairs together with a ten (10%) percent charge for Landlord’s overhead. 
 18.4 Additional Improvements. Except with the prior written consent of Tenant, which consent may be granted or withheld in Tenant’s sole discretion, Landlord shall not be

  

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permitted to construct any additional improvements on or to the Premises, this Lease granting Tenant sole and exclusive possession of the Premises except as otherwise expressly provided herein

 ARTICLE 19. ALTERATIONS AND ADDITIONS, MECHANICS’ LIENS. 
 19.1 Alterations or Improvements. Tenant shall be permitted to make alterations or improvements to the Premises without the prior
written consent of Landlord. Alterations or improvements made by Tenant upon the Premises, except furniture, machinery, goods, wares, inventory, personal property, trade fixtures and equipment placed in the Premises, including raised flooring, any
suspended or wall mounted lighting fixtures and video or computer screens (collectively, “Tenant’s Removable Property”) and for fixtures added to the Premises by Tenant at its expense and designated by Tenant as removable by written
notice to Landlord prior to such addition (“Removable Fixtures”), shall be and become the property of Landlord and shall remain upon and be surrendered with the Premises as a part thereof at the expiration or termination of this Lease,
without disturbance, molestation, injury or damage. Notwithstanding the foregoing, in the event that Tenant does not exercise its purchase option hereunder, at the request of Landlord, at the expiration or earlier termination of the Term Tenant
shall remove or restore all alterations or improvements to the Premises made by Tenant. Tenant shall have the right, at any time, to remove Tenant’s Removable Property from the Premises. In the event damage to the Premises shall be caused by
moving Tenant’s Removable Property in or out of the Premises, said damage shall be promptly repaired at the cost of Tenant. 
 19.2 Requirements for Structural Changes. Each structural alteration or improvement to the Premises that (each, for purposes of this Article 19.3, a “Structural Change”) shall be subject to the following requirements:

 19.2.1 Each Structural Change shall be made under the supervision of an architect or engineer selected by Tenant; and shall
be made in accordance with detailed plans and specifications prepared by such architect or engineer. Copies of all such plans and specifications shall be delivered by Tenant to Landlord. 
  

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 19.2.2 If the estimated cost of any proposed Structural Change shall be One Hundred Fifty
Thousand ($150,000.00) Dollars, or more, Tenant, upon request of Landlord, at Tenant’s sole cost and expense, shall, before commencing the same, furnish to Landlord a surety company bond, issued by a surety company approved by Landlord in an
amount equal to the estimated cost of such change or alteration, or shall furnish to Landlord other security reasonably satisfactory to Landlord, in each case guaranteeing to Landlord the completion of the proposed change or alteration within a
reasonable time, free and clear of all Liens, and other claims and charges in accordance with any plans or specifications, or with any contract between Tenant and a general contractor engaged by it which incorporates such plans and specifications.

 19.2.3 No Structural Change shall be made unless Tenant first obtains the written consent thereto of Landlord’s
Mortgagee, if any, if such consent is required under such Landlord’s Mortgage. In the event such consent is required by Landlord’s Mortgagee, Landlord shall notify Tenant, in writing, of such requirement and of the name and address of such
mortgagee and shall reasonably cooperate with Tenant in obtaining such consent. 
 19.3 Requirements for All Alterations.
Tenant covenants and agrees that no change or alteration to the Premises will be made except in compliance with, and Tenant hereby covenants with, each and all of the following provisions: 
 19.3.1. All changes and alterations shall be made with reasonable diligence and dispatch (subject to unavoidable delays) in a good and
workmanlike manner. 
 19.3.2. Before any changes or alterations are begun, Tenant shall procure, at its own sole cost and
expense, all necessary licenses, permits, approvals and authorizations from all tribunals. Upon Tenant’s request, Landlord shall join in the application for such licenses, permits, approvals and authorizations whenever such action is necessary.

 19.3.3. All changes and alterations shall be made in compliance and conformity with all applicable Laws and with all
applicable licenses, permits, authorizations and

  

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approvals of all tribunals, as well as those of the National and Local Boards of Fire Underwriters, or any other body or bodies exercising similar functions. 
 19.3.4. In making changes and alterations, Tenant shall not violate the terms or conditions of any insurance policy affecting or relating
to the Premises. 
 19.3.5. Promptly after the completion of any changes or alterations, Tenant shall procure, at Tenant’s
sole cost and expense, all such approvals by tribunals and insurance organizations as may be required, and on written demand, shall promptly deliver photocopies thereof to Landlord. 
 19.3.6. No changes or alterations shall be made which would render title to the Premises or any part thereof unmarketable, or which would
reduce the value of the Premises below the value thereof immediately prior thereto. 
 19.3.7. Following the completion of all
such work or alterations, upon request, Tenant shall deliver to Landlord proper waivers of the right to file mechanic’s liens from all contractors, subcontractors or materialmen to be employed in connection with such changes and alterations.

 19.3.8. Tenant shall maintain in force (and require its contractors and subcontractors to take out and maintain in force)
Workers Compensation and public liability insurance in amounts which Landlord may reasonably require, naming Landlord and Landlord’s mortgagee as additional parties insured with respect to such liability insurance policies and deliver
certificates of such insurance to Landlord prior to commencement of any work. 
 19.4 No Cost to Landlord. Landlord shall
not be required to make any contribution to the cost of any changes or alterations or any part thereof made by Tenant, and Tenant covenants that Landlord shall not be required to pay any cost, expense or liability arising out of or in connection
with or by reason of any changes or alterations made by Tenant. 
  

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 19.5 Mechanic’s Liens. Tenant shall not cause nor permit any mechanic’s
liens or other liens to be placed upon the Premises and in case of the filing of any such lien or claim therefor, Tenant shall promptly discharge same; provided, however, that Tenant shall have the right to contest the validity or amount of any such
lien provided Tenant has posted security with Landlord, which security, in Landlord’s reasonable judgment, must be adequate to pay and discharge any such lien in full plus Landlord’s reasonable estimate of its legal fees. Tenant agrees to
pay all reasonable legal fees or disbursements and other costs incurred by Landlord because of any mechanic’s or other liens attributable to Tenant being placed upon the Premises. 
 ARTICLE 20. DEFAULT AND REMEDIES. 
 20.1 Defaults. Anyone or more of
the following events shall be deemed a “Default” or collectively “Defaults”: 
 20.1.1 Tenant shall at any
time fail to pay punctually and in full any item of Rent within ten (10) business days after written notice of such failure from Landlord. 
 20.1.2 Tenant shall fail to keep, perform or observe any other covenant, agreement, condition or undertaking hereunder and shall fail to remedy such default within thirty (30) days after written
notice thereof has been mailed by Landlord to Tenant; or if such default is one that will take longer than thirty (30) days to remedy, Tenant fails to commence curing such default within thirty (30) days and/or fails diligently to pursue
such cure to completion. 
 20.1.3 If either (a) a proceeding is commenced on a petition for relief filed by or against
Tenant (as debtor) under any debtor relief law, which is not vacated, stayed or dismissed within thirty (30) days thereafter; or (b) Tenant should seek or consent to an acquiescence in the appointment of any trustee, receiver or liquidator
of Tenant, as to any substantial portion of its assets or of the business conducted by Tenant in the Premises; or (c) within sixty (60) days after the appointment of any trustee, receiver or liquidator of Tenant or of the business
conducted by Tenant at the Premises, such appointment shall not have been vacated or stayed on appeal; or (d) Tenant shall make an assignment for the benefit of creditors: or (e) Tenant

  

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shall admit in writing its inability to pay debts generally as they become due; or (f) Tenant shall become insolvent (as defined in the Georgia Uniform Commercial Code). 
 20.1.4 If Tenant is in Default in the payment of Rent more than seven (7) times in any twelve (12) month period cumulatively
under this Lease, the Lease Agreement dated July 2, 2008, between Atlantic Paper & Foil Corp. of NY. and Cellu Tissue – Happauge, LLC (the “Hauppauge Lease”) and the the Lease Agreement dated July 2, 2008,
between Atlantic Long Island Properties, Inc. and Cellu Tissue – Happauge, LLC (the “Gilpin Lease”), then, upon the eighth such Default in the payment of Rent, Tenant shall be considered to be in Default under this Lease, the
Hauppauge Lease and the Gilpin Lease; provided that, all references to the Hauppauge Lease and/or the Gilpin Lease, as the case may be, in this Article shall be deleted if such property(ies) is/are no longer eased by Cellu Tissue – Thomaston,
LLC. (or its affiliated entities) from Atlantic Lakeside Properties LLC (or its affiliated entities). For purposes of this Lease, “affiliate” means with respect to any person or entity, any other person or entity controlling or controlled
by or under common control with such person or entity. 
 20.2 Remedies of Landlord. Upon a Default, Landlord shall have
the right, without further notice or demand, to re-enter and take exclusive possession of the Premises, with or without force or legal process, and to refuse to allow Tenant to enter the same or have possession thereof; to change the locks on the
doors to the Premises; all without being liable to Tenant for any damages or to any prosecution therefore; and 
 20.2.1 As
agent of Tenant to reasonably relet the Premises for the balance of the Lease Term or for a shorter or longer term and receive the rents therefor, applying them first to the payment of damages suffered to the Premises and rents due and to become due
under this Lease, Tenant remaining liable for and hereby agreeing to pay Landlord any deficiency; or 
 20.2.2 To cancel and
terminate the remaining term of this Lease, re-enter and take possession of the Premises free of this Lease and thereafter this Lease shall be null and void and the Rents in such case shall be apportioned and paid on and up to the date of such
entry. 
  

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 Thereafter both parties shall be released and relieved from any and all obligations thereafter to accrue
hereunder. Tenant shall be liable for all reasonable loss and damage resulting from such Default; or 
 20.2.3 To treat such
Default as an anticipatory breach of this Lease and, as liquidated damages for such Default, be entitled to the difference, if any, at the time of such termination for anticipatory breach represents the then present worth (computed at seven
(7%) percent per year) of the excess aggregate Rent payable hereunder that would have accrued over the balance of the then current Initial or Option Term of the Lease, had such term not been prematurely terminated, over the aggregate market
rental value of the Premises over the then current Initial or Option Term that the Lease would have run had it not been prematurely terminated. 
 20.3 Landlord’s Rights to Cure. Landlord may, but shall not be obligated to, cure any Default by Tenant; and whenever Landlord so elects, all reasonable costs and expenses paid by Landlord in
curing such Default, including without limitation reasonable attorneys’ fees, shall be Rent due on the next rent date after such payment, together with interest at the rate equal to the prime rate of interest from the date of the advance to the
date of repayment by Tenant to Landlord. 
 20.4 Remedies Cumulative. All rights and remedies provided in this Lease for
the protection of Landlord and Tenant shall be cumulative and in addition to any other rights and remedies provided by law. 
 20.5 No Waiver. A waiver by Landlord or Tenant of a breach or default by the other, under the terms and conditions of this Lease shall not be construed to be a waiver of any subsequent breach or default nor of any other term or
condition of this Lease, and the failure of Landlord or Tenant to assert any breach or to declare a default by the other shall not be construed to constitute a waiver thereof so long as such breach or default continues unremedied. 
  

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 20.6 No Reinstatement. No receipt of money by Landlord from Tenant after the
expiration or termination of this Lease or after the service of any notice, or after final judgment for possession of the Premises shall reinstate, continue or extend the Lease Term or affect any such notice, demand or suit. 
 ARTICLE 21. LIENS; LANDLORD LIEN WAIVER. 
 21.1 Liens. Except as provided in Article 13, Tenant shall not create or permit to be created or to remain, any mortgage (other than Landlord’s Mortgage), security agreement, conditional bill
of sale, chattel mortgage or otherwise, which might or does constitute a lien, encumbrance or charge upon the Premises, or any part thereof, having a priority or preference over or ranking on parity with the estate, rights or interest of Landlord in
the Premises or any part thereof. 
 21.2 Landlord Waiver. To the extent possible under applicable law, Landlord hereby
waives: (i) any lien for base rent in Landlord’s favor and (ii) any security interest (a) for all base rentals or other sums of money becoming due hereunder from Tenant or (b) upon all goods, wares, equipment, fixtures,
furniture, inventory, accounts, contract rights, chattel paper and other personal property of Tenant, including, without limitation, Tenant’s Removable Property, situated on the Premises. Landlord further waives any right it might have to
Tenant’s property under the Uniform Commercial Code. Upon written request by Tenant, Landlord shall execute, within ten (10) days of receipt of such request, a customary form of landlord lien waiver and access agreement in favor of any
lender or equipment lessor of Tenant, which document shall include a waiver of Landlord’s right in all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract rights, chattel paper and other personal property of Tenant,
including, without limitation, Tenants Removable Property situated on the Premises and a license to enter the Premises to remove all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract rights, chattel paper and other personal
property of Tenant, including, without limitation, Tenant’s Removable Property. Landlord has executed and delivered a Lien Waiver between Landlord and JPMorgan Chase Bank, N.A., a copy of which is attached hereto as Exhibit D.

  

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 ARTICLE 22. SURRENDER OP THE PREMISES. 
 22.1 Expiration of Term. On the last day of the Lease Term or upon any earlier termination of this Lease, Tenant shall, without fraud
or delay, surrender and deliver the Premises to Landlord, broom clean and in good order, condition and repair, ordinary wear and tear, casualty, loss, condemnation, permitted alteration and damaged caused by the negligence or willful misconduct of
Landlord or the Landlord’s breach of its obligations hereunder excepted, free and clear of all sublettings, occupancies, persons or tenants in possession. 
 22.2 Removal of Property. At the expiration or sooner termination of the Lease Term, Tenant may remove from the Premises all Tenant Removable Property and Removable Fixtures, and shall repair any
damage caused by such removal. 
 ARTICLE 23. INSURANCE. 
 23.1. Insurance. Tenant, at its own sole cost and expense, shall, throughout the Lease Term, procure and maintain: 
 23.1.1 Comprehensive general public liability insurance against claims for bodily injury, death or property damage occurring upon, in or about the Premises, such insurance to afford immediate protection
at the Commencement Date to the limit of not less than Five Million ($5,000,000.00) Dollars in respect of bodily injury or death to any one person, and to the limit of not less than Five Million ($5000000.00) Dollars in respect of anyone accident,
and to the limit of not less than Five Million ($5,000,000.00) Dollars for property damage and such protection shall continue at not less than said limited until reasonably required to be changed by Landlord in writing by reason of changed economic
conditions making such protection inadequate. 
 23.1.2 Insurance against loss by fire, including vandalism, in amount of the
full replacement cost of the Premises. 
 23.1.3 In the event Tenant performs construction to or alterations of the Premises,
such other insurance and in such amounts as may, from time to time, be reasonably

  

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required by Landlord or Landlord’s Mortgagee against other insurable hazards which at the time are commonly insured against in the case of construction and alteration of buildings and/or in
the case of premises similarly situated, due regard being or to be given to the height or type of building, its location, construction, use and occupancy. 
 23.2 Named Insureds. All policies of insurance provided for or contemplated by this Lease shall name Landlord, Tenant and Landlord’s Mortgagee(s) as the insureds or additional insureds, as
their respective interests may appear. 
 23.3 Types of Policies. All insurance provided for in this Article 23 shall be
effected under valid and enforceable policies, in such forms and, where not expressly provided for above, in such amounts, as may from time to time be reasonably satisfactory to Landlord or Landlord’s Mortgagee and which at the time are
customary for buildings and/or in the case of premises similarly situated, due regard being or to be given to the height or type of building, its location, construction, use and occupancy, issued by insurers with general policyholder’s rating
of not less than A as rated in the most current available “Best’s Insurance Reports” qualified to do business in the State of Georgia. Within thirty (30) days after obtaining any such insurance, Tenant shall cause a certificate
thereof to be delivered to Landlord and/or Landlord’s Mortgagee. 
 23.4 Required Provisions. All policies of
insurance provided for in this Article 23 shall, to the extent obtainable, contain clauses or endorsements to the effect: 
 23.4.1 That no act, omission, or negligence of Tenant, or anyone acting for Tenant, which might result in a forfeiture of such insurance or any part thereof, shall in any way affect the validity and, enforceability of such insurance insofar
as Landlord and Landlord’s Mortgagee are concerned; and 
 23.4.2 That such policies shall not be canceled without at
least thirty (30) days prior written notice to Landlord and Landlord’s Mortgagee; and 
 23.4.3 That neither Landlord
nor Landlord’s Mortgagee shall be liable for any premiums thereon or subject to any assessments therefor. 
  

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 23.5 Waiver of Subrogation. Neither Landlord nor Tenant shall be liable to the other
for any loss or damage to the Premises or other property or injury to or death of persons occurring on the Premises or in any manner growing out of or connected with Landlord’s or Tenant’s use and occupation of the Premises or the
condition thereof, whether or not caused by the negligence or other fault of Landlord, Tenant or their respective agents, employees, subtenants, licensees, invitees or assignees; provided, however, that this release (i) shall apply only to the
extent that such loss or damage is covered by insurance which protects Landlord or Tenant or both of them as the case may be; (ii) shall not be construed to impose any other or greater liability upon either Landlord or Tenant than would have
existed in the absence hereof; and (iii) shall be in effect only to the extent and so long as the applicable insurance policies provide that this release shall not affect the right of the insureds to recover under such policies, which clauses shall
be obtained by the parties hereto whenever available. 
 23.6 Indemnification of Landlord. Tenant shall indemnify and
defend Landlord, its employees and agents and save them harmless from and against any and all loss and against all claims, actions, damages, liability and expense in connection with loss of life, bodily and personal injury or damage to the Premises
arising from the conduct or management of or from any work or other activity whatsoever done in, on or about the Premises by Tenant or any of its agents, employees, subtenants, licensees, invitees or assignees, except to the extent that such
liability, claims, actions, damages and expenses arise from any acts, omissions or negligence by Landlord or its agents, employees, licensees, invitees or assignees. Tenant assumes all risks of and Landlord shall not be liable for injury to person
or damage to property resulting from the condition of the Premises or from the bursting or leaking of any and all pipes, utility lines, connections, or air conditioning or heating equipment in, on or about the Premises, or from water, rain or snow
which may leak into, issue or flow from any part of the Building except if due to the acts, omissions or negligence of Landlord, its employees or agents including any Landlord breach of this Lease. 
 23.7 Indemnification of Tenant. Landlord shall indemnify and defend Tenant, its employees and agents and save them harmless from and
against any and all loss and against all claims, actions, damages, liability and expense in connection with loss of life, bodily and personal

  

 30 









 
injury or damage to the Premises arising from the conduct or management of or from any work or other activity whatsoever done in, on or about the Premises by Landlord or its agents, employees,
subtenants, licensees, invitees or assignees, except to the extent that such liability, claims, actions, damages and expenses arise from any acts, omissions or negligence by Tenant or any of its agents, employees, subtenants, licensees, invitees or
assignees. 
 23.8 Survival. The provisions of Article 23.6 and 23.7 shall survive the expiration or termination of this
Lease. 
 ARTICLE 24. EXCULPATION. 
 24.1 Notwithstanding anything to the contrary herein, Tenant shall look solely to the estate and property of Landlord in the Premises (including the rental receipts therefrom and the proceeds from
insurance, condemnation awards or the sale thereof) for the satisfaction of Tenant’s remedies for the collection of a judgment (or judicial process) requiring the payment of money by Landlord in the event of any default or breach by Landlord
with respect to any of the terms, covenants and conditions of this Lease to be observed and/or performed by Landlord, and no other property or assets of Landlord shall be subject to levy, execution or other enforcement procedure for the satisfaction
of Tenant’s remedies. 
 ARTICLE 25. HAZARDOUS WASTE. 
 25.1 Tenant’s Representation and Indemnity. “Hazardous Substance” shall mean any hazardous, toxic, septic, radioactive, explosive or carcinogenic material and any other substances so
defined or regulated by the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended or any other federal, state or local law regulating hazardous or toxic substances or materials (collectively, “Environmental
Laws”). Tenant shall during the Lease Term (a) keep the Premises free of contamination of any Hazardous Substance caused by the acts or omissions of Tenant, its employees, agents and invitees, (b) shall prevent any discharge, spillage
or uncontrolled loss of oils or petroleum or Hazardous Substances, upon, under or within the Premises and contiguous real estate caused by the acts or omissions of

  

 31 









 
Tenant, its employees, agents and invitees, (c) shall not be involved in the operation at or near the Premises which would reasonably be expected to lead to the imposition or creation of a
lien on the Premises under any Environmental Laws, (d) shall not use the Premises as a disposal site or as a processing plant for Hazardous Substances, and (e) shall cause all oil and/or gas burners, incinerators, furnaces and other fuel
burning devices at the Premises to comply with law and maintain appropriate operating permits, except to the extent such obligations are the obligations of Landlord under the other provisions of this Lease. Tenant shall defend, indemnify and hold
Landlord harmless from and against any and all claims, loss, cost, damage, liability and expenses, including, without limitation, reasonable attorneys fees and disbursements, suffered by Landlord, arising out of or in any way related to a breach of
the aforesaid representations and warranties. 
 25.2 Right to Use. Anything to the contrary contained herein
notwithstanding, provided Tenant shall fully comply with all Environmental Laws, Tenant shall have the right to: (a) keep and utilize in or about the Premises, products, which contain Hazardous Substances which are utilized for ordinary
cleaning and office and warehouse operations; (b) store any of its inventory which may, contain quantities of Hazardous Substances which inventory shall remain in individual containers or in its original packaging; (c) keep and utilize in
or about the Premises Hazardous Substances that are used in the ordinary course of Tenant’s business. 
 25.3 Not Tenant
Liability. Anything to the contrary contained herein notwithstanding, Tenant shall have no liability of any kind to Landlord or any third party as to Hazardous Substances on the Premises caused or permitted by: (i) Landlord, its agents,
employees, contractors or invitees; or (ii) any other past or future tenants in the Premises or the Building, their agents, employees, contractors, subtenants or invitees; or (iii) any other person or entity on property located outside the
Premises whether on contiguous real estate or otherwise. Landlord shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous
Substances in, on or under the Premises prior to the commencement of the Lease Term. Landlord shall not use, generate, store, dispose of or release any hazardous substance in, on, under, or about the Premises (including through the plumbing or
sanitary sewer system) during the Lease

  

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Term in violation of applicable law and shall promptly, at Landlord’s expense, comply with all applicable laws and take all investigatory and/or remedial action reasonably required by
applicable law for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Landlord, or pertaining to or involving any
Hazardous Substance used, generated, stored, disposed of or released, in, onto or from the Premises prior to the Lease Term or during the Lease Term by or for Landlord in violation of applicable law or this Lease. Tenant shall cooperate in any such
activities at the request of Landlord, including allowing Landlord and Landlord’s agents to have reasonable access to the Premises at reasonable times in order to carry out Landlord’s investigative and remedial responsibilities, provided
that such actions shall not interfere with the conduct of Tenant’s business on the Premises. 
 25.5 Survival. The
provisions of this Article 25 shall survive the expiration or termination of this Lease. 
 ARTICLE 26. AMERICANS WITH DISABILITIES ACT. 

 26.1. To the extent required by law, Tenant shall make all changes and modifications to the Premises required by the Americans
with Disabilities Act, Title III (“ADA”) that are required as a result of any alterations, additions or improvements made to the Premises by Tenant. 
 ARTICLE 27. AUTHORITY. 
 27.1. Each of Landlord and Tenant hereby represent
and warrant to the other that it has full legal right, power and authority to enter into this Lease and the person acting for Landlord or Tenant, as applicable, hereunder is authorized to execute and deliver this Lease. 
 ARTICLE 28. MODIFICATION OF MORTGAGE. 
 28.1 If, in connection with obtaining financing or refinancing for the Premises form a part, a banking, insurance or other institutional lender shall request reasonable

  

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modifications to this Lease as a condition to such financing or refinancing, Tenant will not withhold, delay or defer its consent thereto, provided that such modifications do not increase the
obligations of Tenant hereunder or adversely affect the leasehold interest hereby created. 
 ARTICLE 29. LIMITATION ON RENT. 

29.1 If at the commencement of, or at any time during the Lease Term, the rent reserved in this Lease is not fully collectable by reason
of any Federal, State, County, or City law, proclamation, order regulation, or direction of a public officer or body pursuant to law, Tenant agrees to take such steps as Landlord may reasonably request to permit Landlord to collect the maximum rents
which may be legally permissible from time to time during the continuance of such legal rent restriction (but not in excess of the amounts reserved therefore under the Lease). Upon the termination of such legal rent restriction, Tenant shall pay to
Landlord, to the extend permitted by law, an amount equal to (a) the total amount of the rents payable during the period of such legal restriction less (b) the rents paid by Tenant to Landlord during the period such legal rent restriction
was in effect. 
 ARTICLE 30. EXTERMINATION. 
 30.1 Tenant, at its sole cost and expense, shall maintain all extermination services as are necessary to keep the interior of the Building free of pests and vermin at all times. In furtherance, and not in
limitation of the foregoing, Tenant hereby agrees to promptly enter into (and keep in full force and effect throughout the Lease Term) a full-service preventative extermination contract with a licensed pest-control operator reasonably acceptable to
Landlord to keep the interior of the Building at all times free from vermin. Without limiting the generality of the foregoing, if the interior of the Building (or any portion thereof) at any time becomes infested with vermin, Tenant shall, at
Tenant’s sole cost and expense, cause the same to be exterminated from time to time, to the reasonable satisfaction of Landlord. Tenant shall cause any such vermin to be exterminated immediately upon discovery of such vermin or immediately upon
notice thereof from Landlord. 
  

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 ARTICLE 31. TENANT’S RIGHT TO CURE. 
 31.1 Tenant shall provide Landlord with notice of Landlord’s failure to perform any of its obligations under this Lease (a
“Landlord Default”). If Landlord fails to cure such Landlord Default within thirty (30) days after receipt of Tenant’s notice, Tenant may, but is not obligated to, cure such Landlord Default in place of Landlord. Any reasonable
costs which Tenant or any third-party engaged by Tenant incurs as a result of such cure, plus a ten percent (10%) charge for Tenant’s overhead, shall be paid by Landlord upon demand and, if not so paid, shall be set off against
installment(s) of Rent next coming due. 
 ARTICLE 32. MISCELLANEOUS PROVISIONS. 
 32.1 Brokers. Landlord and Tenant represent one to the other that it has dealt with no broker or agent with regard to this Lease who
might claim or be entitled to any commission or other compensation from Landlord; and Tenant and Landlord hereby agree to indemnify and hold the other harmless from all claims by any broker with regard to this Lease arising out of dealings with the
party from whom indemnification is sought. 
 32.2 Successor Landlord. In case Landlord (herein called the
“Conveying Landlord”) shall convey or otherwise dispose of its interest in the Premises and turn over to the transferee any funds held by it hereunder in which Tenant has an interest, all liabilities and obligations on the part of the
Conveying Landlord under this Lease accruing after such conveyance or disposal shall terminate upon such conveyance or disposal, and, thereafter all such liabilities and obligations shall be binding upon only the new owner of the Premises and the
Conveying Landlord will thereby be released and discharged from any such liabilities and obligations. 
 32.3 Application of
Funds on Default. If this Lease shall terminate as a result of or while there exists a Default hereunder, any funds then held by Landlord in which Tenant has an interest may be applied by Landlord to any damages payable by Tenant (whether
provided for herein or by Law) as a result of such Default. 
  

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 32.4 Survival of Obligations. All obligations of the parties hereto shall not survive
the expiration or sooner termination of this Lease, except to the extent specifically provided to the contrary herein. 
 32.5
No Waiver. No waiver of any term, condition, default, or breach of this Lease, or of any document executed pursuant hereto, shall be effective unless in writing and executed by the party making such waiver; and no such waiver shall operate as
a waiver of either (a) such term, condition, default, or breach on any other occasion, or (b) any other term, condition, default, or breach of this Lease or of such document. No delay or failure to enforce any provision in this Lease or in
any document executed pursuant hereto shall operate as a waiver of such provision or any other provision herein or in any document related hereto. The receipt or acceptance of any payment by a party shall not be deemed to operate as a waiver of the
right of such party to enforce the payment of additional amounts or obligations under this Lease by such remedies as may be appropriate, unless otherwise specifically agreed in each instance by such party. The enforcement by any party of any Right
or remedy it may have under this Lease or applicable law shall not be deemed an election of remedies or otherwise prevent such party from enforcement of one or more other remedies at any time. 
 32.6 Consents. Whenever the consent or approval of a party is required under this Lease, such consent or approval shall not be
unreasonably withheld or delayed, unless, otherwise specifically designated above as being in such party’s sole discretion. 
 32.7 Construction. Except as otherwise explicitly specified to the contrary or unless the context clearly requires otherwise, (a) the capitalized term “Article” refers to articles of this Agreement, (b) the
capitalized term “Exhibit” refers to exhibits to this Agreement, (c) references to a particular Article include all subarticles thereof, (d) the word “including” shall be construed as “including without
limitation”; and (e) all words used herein shall be construed according to their proper gender and number, as the context shall require. 
 32.8 Effect of Instrument. This Lease and that certain Asset Purchase Agreement dated as of July 2, 2008, between Cellu Tissue Holdings, Inc. and Landlord, Atlantic

  

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Paper & Foil Corp. of N.Y., Atlantic Paper & Foil, LLC, Atlantic Paper & Foil of Georgia, LLC and Consumer Licensing Corporation (the “Asset Purchase
Agreement”) sets forth the entire understanding of the parties relating to the subject matter hereof, The Landlord and the Tenant each acknowledges and agrees that the terms and provisions of this Lease are in addition to, and are not intended
to, and do not, in any way waive, modify, limit, or replace, any of the terms, provisions, rights, or remedies contained in the Asset Purchase Agreement or any document or instrument executed and delivered in connection with the Asset Purchase
Agreement or the transaction contemplated therein. 
 Cellu Tissue Holdings, Inc. has executed a Note payable to Atlantic
Paper & Foil Corp. of N.Y., in accordance with the Asset Purchase Agreement referred to above and in the event Cellu Tissue defaults under the terms of said Note, said default shall be deemed a default under the terms of this Lease.

 32.9 Parties Bound; Amendments. All of the terms and provisions of this Lease shall be binding upon, shall inure to
the benefit of, and be enforceable by and against, the parties hereto and their respective heirs, executors, administrators, successors, and permitted assigns. This Lease may be changed, amended, or terminated only by similar written instrument
executed by all parties to be bound thereby. 
 32.10 Severability. If any provision of this Lease is held to be
unlawful, invalid, or unenforceable under any present or future laws, such provision shall be fully severable; and this Lease shall then be construed and enforced as if such unlawful, invalid, or unenforceable provision had not been a part hereof.
The remaining provisions of this Lease shall remain in full force and effect and shall not be affected by such unlawful, invalid, or unenforceable provision or by its severance herefrom, provided, however, if the invalidity or unenforceability of
any provision shall materially deprive either party of the economic benefit intended to be conferred by this Lease, the Parties shall negotiate in good faith to revise this Lease in a manner whereby the economic effect is as nearly as possible the
same as the economic effect of this Lease prior to such invalidity or unenforceability. 
  

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 32.11 No Partnership or Agency Intended. Nothing in this Lease is intended, or shall
in any way be construed, so as to create any form of partnership or agency relationship between the parties. The parties hereby expressly disclaim any intention of any kind to create any partnership or agency relationship between themselves. Nothing
in this Lease shall be construed to make either party liable for any of the indebtedness of the other, except as specifically provided in this Lease. 
 32.12 Notices. Any and all notices, requests, communications, or demands required or permitted to be given pursuant to this Lease shall be in writing, and shall be delivered either (a) by
hand, (b) by an established overnight delivery service, such as Federal Express, or (c) by registered or certified mail, return receipt requested, addressed as follows: 
 If to Landlord: 
 Atlantic Lakeside Properties, LLC 
 P.O. Box 222144 
 Great Neck, NY 11022 

Attn: Shaun Gabbay 
 With a copy to: 

Steven Cohn, Esq. 
 One Old County Road, Suite
420 
 Carla Place, New York 11514 
 Skadden, Arps, Slate, Meagher & Flom, LLP 
 Four Times Square 
 New York, New York 10036 
 Attn: Randall H. Doud 
 If to Tenant: 
 Cellu Tissue - Thomaston, LLC

 c/o Cellu Tissue Holdings, Inc. 
 1855 Lockeway Drive, Suite 501 
 Alpharetta, GA 30004 
 Attn: Russell Taylor 
 With a copy to: 
 Weston Presidio 
 Pier 1, Bay 2 
  

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 San Francisco, CA 64111 
 Attn: R. Sean Honey and James Morrone 
 Ropes & Gray LLP 
 1211 Avenue of the Americas 
 New York, NY
10036-8704 
 Attn: Christopher C. Henry, Esq. 
 or to such other address or addresses as any party may designate to the others, by notice in writing, given as above provided. Notices given by hand shall be deemed to have been given upon delivery; notices given by overnight delivery
service shall be deemed to have been given on the first (1st) business day following the date of deposit with such overnight delivery service; and notices given by mail shall be deemed to have been given three (3) days after the date of
mailing. 
 32.13 Headings Not Part of Contract. The headings preceding each Article and the Table of Contents (if any)
are inserted merely as a matter of convenience and shall not be deemed to be a part of the contract terms. 
 32.14 Governing
Law. This Lease has been accepted, executed and delivered, and is intended to be performed, in the State of Georgia. The rights and duties of the parties, and the validity, construction, enforcement, and interpretation of this Lease, shall be
governed and construed according to the laws of such state. 
 32.15 Exhibits. All of the Exhibits attached to this Lease
are a part of this Lease and are incorporated herein by reference as fully as if copied herein verbatim. 
 32.16 Further
Assurances. Each of the parties, at all times and from time to time hereafter, and upon reasonable written request to do so, shall make, do, execute, deliver, or cause to be made, done, executed and delivered, all such further acts, deeds,
instruments, assurances, and things as may be reasonably required for more effectually implementing and carrying out the true intent and meaning of this Lease. 
 32.17 Notice or Memorandum of Lease. This Lease shall not be recorded. A short form or memorandum of this Lease shall be executed and acknowledged by the parties substantially in the form of
Exhibit E attached hereto describing the Premises, setting forth the

  

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Lease term and the Option to Purchase. The memorandum of this Lease may be recorded by either party at such party’s cost and expense. 
 32.18 Intentionally Deleted. 
 32.19 Counterparts. This Lease may be executed in any number of counterparts, each of which shall be deemed an original as against any party who signed such counterpart, and all of which together
constitute one and the same instrument. This Lease shall be binding when one or more counterparts hereof, individually or taken together, shall have been signed by all of the parties shown below as signatories to this Lease; and the date of this
Lease, unless otherwise indicated above, shall be the date on which the last of such signatories shall have signed one or more counterparts, 
 32.20 Number of Days. Except as otherwise provided in this Lease, in calculating the number of days for any purpose under this Lease, the day on which the event occurred shall be considered the
first day and all days shall be counted, including Saturdays, Sundays, and holidays. However, if the final day of any time period falls on a Saturday, Sunday, or Holiday, then such final day shall be deemed the next day which is not a Saturday,
Sunday, or Holiday. “Holiday” shall mean only those holidays on which commercial banks within the State of Georgia shall be closed for business. 
 32.21 Attorney’s Fees. If Landlord or Tenant brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing
Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term, “Prevailing Party” shall mean the party who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other
party of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys’ fees reasonably incurred. 
  

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 32.22 Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions hereof, the party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of said party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said party to pay such sum or any part
thereof, said party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. 
 32.23
Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PREMISES OR ARISING OUT OF THIS LEASE. 
 32.24 Time of Essence. Time is of the essence in this Lease. 
 32.25 Leasehold Estate. This Lease shall convey a leasehold estate from Landlord to Tenant. 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed as of the
date and year hereinabove set forth. 
  

			
	TENANT:
	
	CELLU TISSUE - THOMASTON, LLC
	
	By: Cellu Tissue Holdings, Inc., its sole member
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	LANDLORD:
	
	ATLANTIC LAKESIDE PROPERTIES, LLC
		
	By:	 	  

	Name:	 	
	Title:	 	


  

 42 









 EXHIBIT A 
 LEGAL DESCRIPTION OF PREMISES 








 EXHIBIT B 
 PERMITTED ENCUMBRANCES 








 EXHIBIT C 
 SNDA’S 








 EXHIBIT D 
 LIEN WAIVER 








 EXHIBIT E 
 MEMORANDUM OF LEASE 








 Exhibit I-5 
 Form of Non-Competition, Non-Solicitation and Non-Disclosure Agreement 








 NON-COMPETITION, NON-SOLICITATION AND NON-DISCLOSURE AGREEMENT 
 This Non-Competition, Non-Solicitation and Non-Disclosure Agreement, dated as of July [    ], 2008 (as in effect from
time to time, this “Agreement”) is by and between (i)
[                                ] (an “Individual Owner”), and
(ii) Cellu Tissue Holdings, Inc., a Delaware corporation (the “Buyer”). 
 Reference is hereby made to the Asset
Purchase Agreement, dated on or about the date hereof (as in effect from time to time, the “Asset Purchase Agreement”), by and among the Buyer and Atlantic Paper & Foil Corp. of N.Y., Atlantic Lakeside Properties, LLC,
Atlantic Paper & Foil, LLC, Atlantic Paper & Foil of Georgia, LLC and Consumer Licensing Corporation, as Sellers (each, a “Seller” and, collectively, the “Sellers”). 
 Capitalized terms used herein but not otherwise defined have the meanings ascribed to them in the Asset Purchase Agreement. 
 1. Noncompetition and Nonsolicitation. For a period of five years from and after the Closing Date, neither the Individual Owner nor
any of its Affiliates will directly or indirectly through any Affiliate or otherwise, either as owner, principal, manager, agent, consultant, advisor, officer, director, stockholder, partner, investor, lender or employee, supplier or in any other
capacity (and whether or not for compensation), carry on, be engaged in or employed by or be a supplier, advisor, director, manager, agent or consultant to or have any financial interest in, any Person that is engaged directly or indirectly or in
competition with all or any portion of the Business as conducted as of the Closing Date and/or engaged directly or indirectly in the manufacture of tissue hard rolls for conversion into finished converted product, anywhere in the continental United
States or Canada. Nothing in this Section 1 shall be construed to preclude an Individual Owner from investing in any publicly held company provided that all Individual Owners’ aggregate beneficial ownership of any class of such
company’s securities does not exceed 5% of the outstanding securities of such class. For a period of five years from and after the Closing Date, the Individual Owner will not recruit, offer employment, employ, engage as a consultant, lure or
entice away, or in any other manner persuade or attempt to persuade, any Person who is an employee of any of the Buyer or any of its Affiliates (including any Transferring Employees) to leave the employ of the Buyer or any of its Affiliates. If the
final judgment of a court of competent jurisdiction declares that any term or provision of this Section 1 is invalid or unenforceable, the parties hereto agree that the court making the determination of invalidity or unenforceability will have the
power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and this Agreement will be enforceable as so modified after the expiration of the time within which the judgment may be appealed. 
 2. Confidentiality. The Individual Owner acknowledges that the success of the Business after the Closing depends upon the continued
preservation of the confidentiality of certain information possessed by such Individual Owner, that the preservation of the confidentiality of such information by such Individual Owner is an essential premise of the bargain between the Individual
Owner and the Sellers, on the one hand, and the Buyer, on the









 
other hand, and that the Buyer would be unwilling to enter into this Agreement or the Asset Purchase Agreement, or consummate the Contemplated Transactions, in the absence of this Section 2.
Accordingly, the Individual Owner hereby agrees with the Buyer that such Individual Owner and its Representatives will not, and that such Individual Owner will cause its Affiliates not to, at any time on or after the Closing Date, directly or
indirectly, without the prior written consent of the Buyer, disclose or use, any confidential or proprietary information involving or relating to the Business, the Acquired Assets or the Assumed Liabilities; provided, however, that the
information subject to the foregoing provisions of this sentence will not include any information generally available to, or known by, the public (other than as a result of disclosure in violation hereof); and provided, further, that
the provisions of this Section 2 will not prohibit any retention of copies of records or disclosure (i) required by any applicable Legal Requirement so long as reasonable prior notice is given of such disclosure and a reasonable
opportunity is afforded to contest the same or (ii) made in connection with the enforcement of any right or remedy relating to this Agreement, the Asset Purchase Agreement or the Contemplated Transactions. The Individual Owner agrees that such
Individual Owner will be responsible for any breach or violation of the provisions of this Section 2 by any of its Representatives. 
 3. Transfer of Certain Funds Received Post-Closing. With respect to any and all amounts received or collected by the Individual Owner from and after the Closing (a) attributable to, or in
respect of, any Acquired Asset and (b) which become the property of the Buyer as a result of the consummation of the Contemplated Transactions, the Individual Owner shall provide notice of such receipt or collection to the Buyer and pay
promptly (and in any event within five Business Days of their receipt or collection) to the Buyer any and all such amounts so received or collected by wire transfer of immediately available funds to an account specified by the Buyer or by other
means acceptable to the Buyer. 
 4. Prohibition on the Use of Name. From and after the Closing Date, the Individual
Owner shall not use, and shall cause all of its Affiliates following the Closing to cease using, directly or indirectly, the names “Atlantic” or “Atlantic Paper & Foil” in any trademark, trade name, domain name, address,
corporate name, symbol or identifier or any derivatives thereof or any marks confusingly similar thereto. 
 5. Further
Assurances. From and after the Closing Date, upon the request of either the Sellers’ Representative or the Buyer, the Individual Owner will do, execute, acknowledge and deliver all such further acts, assurances, deeds, assignments,
transfers, conveyances and other instruments and papers as may be reasonably required or appropriate to carry out the Contemplated Transactions. The Individual Owner shall not, and shall cause its Representatives not to, take any action that is
designed or intended to have the effect of discouraging any lessor, licensor, supplier, distributor or customer of the Purchased Business or other Person with whom the Purchased Business has a relationship from maintaining the same relationship with
the Purchased Business after the Closing as it maintained prior to the Closing. The Individual Owner will refer all customer inquiries relating to the Purchased Business to the Buyer from and after the Closing. 
 6. Termination. This Agreement shall terminate forthwith upon termination of the Asset Purchase Agreement in accordance with its
terms. 
  

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 7. Entire Agreement. This Agreement, together with the Asset Purchase Agreement and
the other Ancillary Agreements, constitutes the entire agreement with respect to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral,
among the Individual Owner, on the one hand, and the Buyer, on the other hand. 
 8. Representations and Warranties. The
Individual Owner hereby represents and warrants that: 
 (a) the Individual Owner has carefully read and considered all the
terms and conditions of this Agreement, including the restraints imposed upon the Individual Owner pursuant to Sections 1, 2, 3 and 4 hereof; 
 (b) the Individual Owner agrees without reservation that each of the restraints contained herein is necessary for the reasonable and proper protection of the goodwill, confidential information and other
legitimate interests of the Buyer and its Affiliates; that each and every one of those restraints is reasonable in respect to subject matter, length of time and geographic area; and that these restraints, individually or in the aggregate, will not
prevent the Individual Owner from obtaining other suitable employment during the period in which the Individual Owner is bound by these restraints; and that the Individual Owner will never assert, or permit to be asserted on the Individual
Owner’s behalf, in any forum, any position contrary to the foregoing; 
 (c) the Individual Owner acknowledges that the
Buyer would be unwilling to enter into, or consummate the transactions contemplated by, the Asset Purchase Agreement in the absence of this Agreement and the restraints referred to above, and that this Agreement and such restraints constitute a
material inducement to the Buyer to enter into, and consummate the transactions contemplated by, the Asset Purchase Agreement; 
 (d) the execution of this Agreement and the performance of the Individual Owner’s obligations hereunder will not breach or be in conflict with any other agreement to which the Individual Owner is a party or is bound, and the Individual
Owner is not now subject to any covenants against competition or similar covenants that would affect the performance of the Individual Owner’s obligations hereunder; and 
 (e) this Agreement constitutes a legal, valid and binding obligation of such Individual Owner enforceable against such Individual Owner in
accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) general equitable principles
(whether considered in a proceeding in equity or at law). 
 9. Amendments and Waivers. No amendment or waiver of any
provision of this Agreement will be valid and binding unless it is in writing and signed, in the case of an amendment, by the Sellers’ Representative and the Buyer, or in the case of waiver, by the party against whom the waiver is to be
effective (or in the case of the Individual Owner, the Sellers’ Representative or such Individual Owner). No waiver by a party of any breach or violation of, or default under, this Agreement, whether intentional or not, will be deemed to extend
to any prior

  

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or subsequent breach, violation or default hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No delay or omission on the part of any party in
exercising any right, power or remedy under this Agreement will operate as a waiver thereof. 
 10. Counterparts. This
Agreement may be executed in two or more consecutive counterparts (including by facsimile), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective
when one or more counterparts have been signed by each of the parties and delivered to the other parties. 
 11. Notices.
All notices, requests, demands, claims and other communications required or permitted to be delivered, given or otherwise provided under this Agreement must be in writing and must be delivered, given or otherwise provided: 
 (a) by hand (in which case, it will be effective upon delivery); 
 (b) by facsimile (in which case, it will be effective upon receipt of confirmation of good transmission); or 
 (c) by overnight delivery by a nationally recognized courier service (in which case, it will be effective on the next business day after
being deposited with such courier service; 
 in each case, to the address (or facsimile number) listed below (or to such other address or
facsimile number as a party may designate by notice to the other parties): 
 If to the Individuals Owner, to the Sellers’
Representative at: 
 Shaun Gabbay 
 12 Creek Road 
 Kings Point, NY 11024 
 Telephone: (516) 317-7776 
 with a copy to: 
 Skadden, Arps, Slate, Meagher & Flom LLP 

Four Times Square 
 New York, NY 10036 
 Telephone number: (212) 735-2524 
 Facsimile number: (917) 777-2524 
 Attention: Randall H. Doud 
 and to: 
 Steve Cohn, PC 
 One Old Country Road 
 Carle Place, NY 11514 
 Telephone: (516) 294-6410 
  

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 If to the Buyer, to it at: 
 Cellu Tissue Holdings, Inc. 
 1855 Lockeway Drive 
 Suite 501 
 Alpharetta, GA 30004 
 Telephone number: (678) 393-2651 
 Facsimile number: (678) 393-2657 
 Attention: Russell Taylor 
 with a copy to: 
 Ropes & Gray LLP 
 1211 Avenue of the Americas 
 New York, NY 10036-8704 
 Telephone number: (212) 841-0697 
 Facsimile number: (212) 841-5725 
 Attention: Christopher C. Henry 
 12. Governing Law. This Agreement, the
rights of the parties and all actions arising in whole or part under or in connection herewith, will be governed by and construed in accordance with the domestic substantive laws the State of New York, without giving effect to any choice or conflict
of law provision or rule that would cause the application of the laws of any other jurisdiction. 
 13. Jurisdiction; Venue;
Waiver of Service of Process. 
 (d) Jurisdiction. Each party to this Agreement, by its execution hereof,
(i) hereby irrevocably submits to the exclusive jurisdiction of the state courts of the State of New York or the United States District Court located in the Southern District of the State of New York for the purpose of any action between the
parties arising in whole or in part under or in connection with this Agreement, (ii) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, any
claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such action brought in one of the above-named courts should be dismissed on grounds
of forum non conveniens, should be transferred or removed to any court other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named
courts, or that this Agreement or the subject matter hereof may not be enforced in or by such court and (iii) hereby agrees not to commence any such action other than before one of the above-named courts. Notwithstanding the previous sentence a
party may commence any action in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts. 
 (e) Venue. Each party agrees that for any action between the parties arising in whole or in part under or in connection with this
Agreement, such party will bring actions only in

  

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the Borough of Manhattan. Each party further waives any claim and will not assert that venue should properly lie in any other location within the selected jurisdiction. 
 (f) Service of Process. Each party hereby (i) consents to service of process in any action between the parties arising in whole
or in part under or in connection with this Agreement in any manner permitted by New York law, (ii) agrees that service of process made in accordance with clause (i) or made by registered or certified mail, return receipt requested, at its
address specified pursuant to Section 10 (with copy to its counsel specified in Section 10 at the address for such counsel specified in such section), will constitute good and valid service of process in any such action and
(iii) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such action any claim that service of process made in accordance with clause (i) or (ii) does not constitute good and valid service of
process. 
 14. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE
PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY
AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY WILL INSTEAD BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY. 
 15. Severability. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction. No party hereto shall assert, and each party shall cause its respective affiliates not to assert, that this Agreement or any part hereof is invalid, illegal or unenforceable. 
 16. Specific Performance. Each of the parties to this Agreement acknowledges and agrees that the other parties would be damaged
irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached or violated. Accordingly, each of the parties agrees that, without posting bond or other
undertaking, the other parties will be entitled to an injunction or injunctions to prevent breaches or violations of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any Action
instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter in addition to any other remedy to which it may be entitled, at law or in equity. Each party further agrees that, in the event of
any action for specific performance in respect of such breach or violation, it will not assert that the defense that a remedy at law would be adequate. 
  

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 17. Headings. The headings contained in this Agreement are for convenience purposes
only and will not in any way affect the meaning or interpretation hereof. 
 18. Successors and Assigns. The Buyer may
freely assign all of its rights under this Agreement, at any time to any Person without obtaining the consent or approval of the Individual Owner or of any other Person in connection with a Sales Event. This Agreement shall be binding upon the
Individual Owner and his heirs, executors, estate, personal representatives, successors and assigns, and shall inure to the benefit of the Buyer. As used herein, “Sales Event” shall mean the consummation of (a) a complete
liquidation of the Buyer (or any of its direct or indirect parent companies), (b) a sale of substantially all of the Buyer’s assets (or any of its direct or indirect parent companies), (c) a sale of the Buyer’s stock (or any of
its direct or indirect parent companies) after which voting control of the Buyer (or any of its direct or indirect parent companies) is held by persons who were not stockholders of the Buyer (or any of its direct or indirect parent companies) prior
to the sale, or (d) a merger, consolidation, reorganization or other similar event that shifts voting control of the Buyer (or any successor entity or any of its direct or indirect parent companies) to persons who were not stockholders of the
Buyer (or any of its direct or indirect parent companies) prior to the transaction. 
 19. Attorneys’ Fees. If any
legal action or other legal proceeding relating to this Agreement or the enforcement of any provision of this Agreement is brought against the Individual Owner, the prevailing party shall be entitled to recover all costs and expenses related to such
action, including reasonable attorneys’ fees, costs and disbursements (in addition to any other relief to which the prevailing party may be entitled). 
 [Signature page follows.] 
  

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 IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement as of the
date first written above. 
  

					
	 INDIVIDUAL OWNER:
	 	  

		
	 BUYER:
	 	CELLU TISSUE HOLDINGS, INC.
			
		 	 By:
	 	  



					
		 	   Name:
	 	Russell C. Taylor
		 	   Title:
	 	President and Chief Executive Officer

 Non-Competition, Non-Solicitation and Non-Disclosure Agreement 








 Exhibit I-6 
 Form of Guaranty Agreement 








 GUARANTY AGREEMENT 
 Reference is hereby made to the Asset Purchase Agreement, dated as of July [    ], 2008 (as in effect from time to time,
the “Asset Purchase Agreement”) by and among Cellu Tissue Holdings, Inc., a Delaware corporation (the “Buyer”) and Atlantic Paper & Foil Corp. of N.Y., Atlantic Lakeside Properties, LLC, Atlantic
Paper & Foil, LLC, Atlantic Paper & Foil of Georgia, LLC and Consumer Licensing Corporation, as Sellers (each, a “Seller” and, collectively, the “Sellers”). Capitalized terms used herein but not
otherwise defined have the meanings ascribed to them in the Asset Purchase Agreement. 
 1. Guaranty. On the terms and
subject to the conditions of this Guaranty,
[                                        
]1 (the “Guarantor”) hereby irrevocably
and unconditionally guarantees to the Buyer and the other Buyer Indemnified Persons (collectively, the “Beneficiary”), for and on behalf of each of the Sellers, the payment by each of the Sellers of all such Seller’s
obligations to the Buyer and to the Buyer Indemnified Persons under (i) Section 2.5 of the Asset Purchase Agreement, (ii) Section 8.1.1(a) of the Asset Purchase Agreement as it relates to any fraud or intentional
misrepresentation of any of the Sellers or any of their stockholders, (iii) Section 8.1.1(a) of the Asset Purchase Agreement as it relates to any breach of, or inaccuracy in, any representation or warranty contained in Sections 3.2.1
(Power and Authorization), 3.4(e) (Breach of Organizational Documents), 3.7.2 (Sufficiency of Assets) and/or 3.21 (No Brokers) of the Asset Purchase Agreement and (iv) any of Sections 8.1.1(b), 8.1.l(c) or 8.1.l(d) of the Asset Purchase
Agreement, as the same may be amended from time to time in accordance with the terms of the Asset Purchase Agreement (collectively, the “Guaranteed Obligations”). 
 2. Terms of Guaranty. 
 (a) This Guaranty is one of payment, not collection, and a separate action or actions may be brought and prosecuted against the Guarantor to enforce this Guaranty, irrespective of whether any action is
brought against any of the Sellers, or any other guarantor, or whether any of the Sellers, or any other guarantor, is joined in any such action or actions. 
 (b) The liability of the Guarantor under this Guaranty shall, to the fullest extent permitted under applicable law, be absolute and unconditional irrespective of: 
 (i) the value, genuineness, validity, regularity, illegality or enforceability of the Asset Purchase Agreement or any other
agreement or instrument referred to herein; 
 (ii) any insolvency, bankruptcy, reorganization or other similar
proceeding affecting any of the Sellers or any of their respective assets; 
 (iii) any amendment or modification
of the Asset Purchase Agreement, or change in the manner, place or terms of payment or performance, or any change or extension of the time of payment or performance of, renewal or alteration of, any 
  

	1	Insert name of an Individual Owner. 









 
Guaranteed Obligation, or any amendment or waiver of or any consent by any of the Sellers or the Sellers’ Representative to any departure from the terms of the Asset Purchase Agreement or
the documents entered into in connection therewith; or 
 (iv) (1) the addition, substitution or release of
any entity or other person interested in the transactions contemplated by the Asset Purchase Agreement; (2) any change in the corporate existence, structure or ownership of any of the Sellers or any other person interested in the transactions
contemplated by the Asset Purchase Agreement; (3) any insolvency, bankruptcy, reorganization or other similar proceeding affecting any of the Sellers or any other person interested in the transactions contemplated by the Asset Purchase
Agreement; (4) the existence of any claim, set-off or other right which the Guarantor may have at any time against any of the Sellers or any Beneficiary, whether in connection with the Guaranteed Obligations or otherwise; or (5) the
adequacy of any other means any Beneficiary may have of obtaining payment of any of the Guaranteed Obligations. 
 (c) The
Guarantor hereby waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by the Seller upon this Guaranty or acceptance of this Guaranty. The Guaranteed
Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guaranty, and all dealings between the Buyer or the Guarantor, on the one hand, and any Seller, on the other, shall
likewise be conclusively presumed to have been had or consummated in reliance upon this Guaranty. When pursuing its rights and remedies hereunder against the Guarantor, no Beneficiary shall be under any obligation to pursue such rights and remedies
it may have against any Seller or any other person or entity for the Guaranteed Obligations or any right of offset with respect thereto, and any failure by a Beneficiary to pursue such other rights or remedies or to collect any payments from any
Seller or any such other person or entity or to realize upon or to exercise any such right of offset, and any release by a Beneficiary of any Seller or any such other person or entity or any right of offset, shall not relieve the Guarantor of any
liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of any Beneficiary. 
 (d) To the fullest extent permitted by law, the Guarantor hereby expressly waives any and all rights or defenses arising by reason of any law which would otherwise require any election of remedies by a
Beneficiary. The Guarantor waives promptness, diligence, notice of the acceptance of this Guaranty and of the Guaranteed Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and protest, notice of any Guaranteed
Obligations incurred and all other notices of any kind (other than as required by the Asset Purchase Agreement), and all defenses which may be available by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in
effect, any right to require the marshalling of assets of any Seller or any other person interested in the transactions contemplated by the Asset Purchase Agreement (including any other guarantors). 
 (e) No Beneficiary shall be obligated to file any claim relating to the Guaranteed Obligations in the event that any Seller becomes subject
to a bankruptcy, reorganization or similar proceeding, and the failure of a Beneficiary to so file shall not affect the Guarantor’s obligations hereunder. In the event that any payment to a Beneficiary in respect of

  

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the Guaranteed Obligations is rescinded or must otherwise be returned for any reason whatsoever, the Guarantor shall remain liable hereunder with respect to its Guaranteed Obligations as if such
payment had not been made. 
 (f) Notwithstanding anything herein to the contrary, in connection with the pursuit by a
Beneficiary of a claim under this Guaranty, the Beneficiary may pursue a declaratory judgment claim against any of the Sellers but solely to the extent necessary to demonstrate that such Seller(s) has failed to perform its obligations under the
Asset Purchase Agreement. 
 (g) Notwithstanding any other provision of this Guaranty to the contrary, any payment by the
Guarantor under this Guaranty shall be due and payable on a date which is no later than the date on which any Seller is obligated to make such payment under the Asset Purchase Agreement. 
 (h) Notwithstanding any other provision of this Guaranty or the Asset Purchase Agreement to the contrary, the parties agree that neither the
Buyer nor any other person or entity that constitutes a Buyer Indemnified Person may make or pursue any new or pending claim for indemnification in respect of fraud, intentional misrepresentation or other legal theory requiring substantially the
same elements of proof (any such claim being treated as a fraud claim for purposes of this Guaranty) under this Guaranty or the Asset Purchase Agreement or otherwise pursue any remedy in respect of fraud or intentional misrepresentation against the
Guarantor (whether in his capacity as such or in any other capacity) (a) if a Bankruptcy Event (as defined in Section 4(b) of this Guaranty) shall have occurred with respect to the person or entity making such claim (it being understood
that this clause shall not prohibit claims by persons or entities as to which a Bankruptcy Event shall not have occurred) or (b) as part of bankruptcy proceedings relating to another Buyer Indemnified Person. In addition, the parties agree that
the following limitations shall apply to any claim for fraud or intentional misrepresentation brought by the Buyer or any other Buyer Indemnified Person: (i) no more than one such claim may be brought by all of the Buyer and other Buyer
Indemnified Persons taken together (except that the other Buyer Indemnified Persons may collectively bring or continue a claim to the extent permitted by the first sentence of this Section 2(h) in the event that any Buyer Indemnified Person
shall theretofore have brought a claim which shall have been terminated by reason of the first sentence of this Section 2(h); (ii) no such claim in respect of fraud or intentional misrepresentation may be initiated other than as permitted
under Section 4(a) of this Guaranty or later than any applicable statute of limitations permits; (iii) in the event that the Sellers and/or the Guarantor prevails in a lawsuit in respect of fraud or intentional misrepresentation brought by
the Buyer or any other Buyer Indemnified Person or the court of first instance or any court on appeal determines that the action was brought in contravention of this provision or has resulted in no more than nominal damages to the Buyer and the
other Buyer Indemnified Persons, the Buyer and the other Buyer Indemnified Persons shall be severally and jointly responsible to promptly reimburse the Sellers and the Guarantor for all of their reasonable costs and expenses in their defense of such
claim, including but not limited to reasonable attorneys’ fees; and (iv) in the event that any Buyer Indemnified Person prevails in a lawsuit brought by the Buyer or any other Buyer Indemnified Person for more than nominal damages to the
Buyer or the other Buyer Indemnified Persons, the Sellers and the Guarantor shall be severally and jointly responsible to promptly reimburse the Buyer and/or the other Buyer Indemnified Persons for all of their

  

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reasonable costs and expenses in their assertion and prosecution of such claim, including but not limited to reasonable attorneys’ fees. The Buyer acknowledges and agrees that (i) the
foregoing limitations and the Buyer’s representation hereby that all other Buyer Indemnified Persons have been provided with copies of this Guaranty and the Asset Purchase Agreement and are aware of and agree to these limitations and
acknowledge that they are integral to the Sellers’ and the Sellers’ stockholders willingness to enter into this Agreement and/or the Ancillary Agreements and to proceed with transactions contemplated by this Agreement and (ii) any
assertion in legal proceedings or otherwise in writing by the Buyer or any other Buyer Indemnified Person that the Buyer or any other Buyer Indemnified Person was not aware of this provision or is not bound by it, if such assertion is not withdrawn
or retracted by the Buyer or such Buyer Indemnified Person within 5 Business Days after receiving written notice from the Sellers’ Representative which notifies the Buyer and such Buyer Indemnified Person of the violation of this clause
(ii) by the Buyer or another Buyer Indemnified Person, shall result in all obligations of the Guarantor under this Guaranty and the Sellers’ indemnification obligations under the Asset Purchase Agreement as to fraud and intentional
misrepresentation being deemed terminated with effect from the execution of this Guaranty and the Asset Purchase Agreement. For avoidance of doubt, the provisions of this Guaranty shall take precedence over the provisions of the Asset Purchase
Agreement should there be any conflict between such provisions. 
 3. Subrogation. The Guarantor will not exercise any
rights of subrogation or contribution, whether arising by contract or operations of law (including without limitation any such right arising under bankruptcy or insolvency laws) or otherwise, by reason of any payment by it pursuant to the provisions
of Section 1 hereof unless and until the Guaranteed Obligations have been paid in full. 
 4. Termination.

 (a) This Guaranty shall terminate (i) with respect to fraud, intentional misrepresentation or other
legal theory requiring substantially the same elements of proof (any such claim being treated as a fraud claim for purposes of this Guaranty) on the fourth (4th) yearly anniversary of the Closing Date, and (ii) with respect to Guaranteed
Obligations which are not described in clause (i) of this Section 4, upon the expiration of the applicable statute of limitations, except that this Guaranty shall survive as to such specified claim until such time as such specified claim
is fully and finally resolved if (x) a lawsuit has been brought asserting such specified claim by any Buyer Indemnified Person against any of the Sellers, in each case under the provisions of the Asset Purchase Agreement prior to the applicable
termination date, or (y) in the case of a claim for fraud or intentional misrepresentation, a claim has been asserted prior to the applicable termination date by a Buyer Indemnified Person in writing to the Sellers’ Representative in
accordance with Section 11.1 (Notice) of the Asset Purchase Agreement (which such notice sets forth the basis of the claim with sufficient detail to identify the specific nature and scope of the claims made) and is followed by the commencement
by such Buyer Indemnified Person of a lawsuit consistent with such claim no later than 30 days following the fourth (4th) anniversary of the Closing Date; provided, however, that, notwithstanding the foregoing, with
respect to fraud and intentional misrepresentation claims only, this Guaranty shall terminate (including without limitation as to claims already made or legal actions brought) as to the Buyer or any other Buyer Indemnified Person one day prior to
the occurrence of a Bankruptcy Event (as defined below) with respect to such person or entity (it being understood

  

 - 4 - 









 
that this proviso shall not prohibit claims by persons or entities as to which a Bankruptcy Event shall not have occurred). 
 (b) “Bankruptcy Event” shall mean (i) Buyer (1) files or consents by answer or otherwise to the filing against it
of any insolvency or bankruptcy case or bankruptcy proceeding or any receivership or liquidation in connection therewith relative to Buyer or its assets (each, a “Bankruptcy Proceeding”), (2) makes a general assignment for the
benefit of its creditors, (3) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (4) is adjudicated as insolvent or
to be liquidated by a court of competent jurisdiction, or (5) takes corporate action for the purpose of approving the foregoing or (ii) a court of competent jurisdiction enters an order appointing, without consent by Buyer, a custodian,
receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or approving a petition for a Bankruptcy Proceeding, or any such petition is filed against Buyer and such petition is
not dismissed within 60 days. 
 5. Continuing Guaranty. Unless terminated pursuant to the provisions of Section 4
hereof, this Guaranty is a continuing one and shall remain in full force and effect until the indefeasible payment and satisfaction in full of the Guaranteed Obligations, shall be binding upon the Guarantor, the Grantor’s heirs, executors,
estate, personal representatives, successors and assigns, and shall inure to the benefit of, and be enforceable by, the Beneficiary and its respective successors, transferees and assigns. 
 6. Entire Agreement. This Guaranty, together with the Asset Purchase Agreement, the Ancillary Agreements, constitutes the entire
agreement with respect to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, among the Sellers and the Guarantor or any of their
affiliates, on the one hand, and the Beneficiary or any of its affiliates on the other hand. 
 7. Representations and
Warranties. The Guarantor hereby represents and warrants that: 
 (a) this Guaranty constitutes a legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting creditors’
rights generally, and (ii) general equitable principles (whether considered in a proceeding in equity or at law); and 
 (b) the Guarantor has the financial capacity to pay and perform its obligations under this Guaranty, and all funds necessary for the Guarantor to fulfill its Guaranteed Obligations under this Guaranty shall be available to the Guarantor for
so long as this Guaranty shall remain in effect in accordance with Section 4 hereof. 
 8. Amendments and Waivers.
No amendment or waiver of any provision of this Guaranty will be valid and binding unless it is in writing and signed, in the case of an amendment, by the Guarantor and the Beneficiary, or in the case of waiver, by the party against

  

 - 5 - 









 
whom the waiver is to be effective. No waiver by a party of any breach or violation of, or default under, this Guaranty, whether intentional or not, will be deemed to extend to any prior or
subsequent breach, violation or default hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No delay or omission on the part of any party in exercising any right, power or remedy under this
Guaranty will operate as a waiver thereof. 
 9. Counterparts. This Guaranty may be executed in two or more consecutive
counterparts (including by facsimile), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties. 
 10. Notices. All notices, requests, demands, claims and other
communications required or permitted to be delivered, given or otherwise provided under this Guaranty must be in writing and must be delivered, given or otherwise provided: 
 (a) by hand (in which case, it will be effective upon delivery); or 
 (b) by overnight delivery by a nationally recognized courier service (in which case, it will be effective on the next business day after
being deposited with such courier service; 
 in each case, to the address listed below (or to such other address as a party may designate by
notice to the other parties): 
 If to the Guarantor, to it at: 
 [Insert Address] 
 Telephone number: 
 with a copy to: 
 Skadden, Arps, Slate, Meagher & Flom LLP 
 Four Times Square 

New York, NY 10036 
 Telephone number: (212) 735-2524 
 Attention: Randall H. Doud 
 and to: 
 Steve
Cohn, PC 
 One Old Country Road 
 Carle Place, NY 11514 
 Telephone: (516) 294-6410 
 If to the Buyer (or any other Beneficiary), to: 
 Cellu Tissue Holdings, Inc. 
 1855 Lockeway Drive 
  

 - 6 - 









 Suite 501 
 Alpharetta, GA 30004 
 Telephone number: (678) 393-2651 
 Attention: Russell Taylor 
 with a copy to: 
 Ropes & Gray LLP 
 1211 Avenue of the Americas 
 New York, NY 10036-8704 
 Telephone number: (212) 841-0697 
 Attention: Christopher C. Henry 
 11. Governing Law. This Guaranty, the rights of the parties and all actions arising in whole or part under or in connection herewith, will be governed by and construed in accordance with the
domestic substantive laws the State of New York, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction. 
 12. Jurisdiction; Venue; Waiver of Service of Process. 
 (a) Jurisdiction. Each party to this Guaranty, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction of the state courts of the State of New York or the United
States District Court located in the Southern District of the State of New York for the purpose of any action between the parties arising in whole or in part under or in connection with this Guaranty, (ii) hereby waives to the extent not
prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune
from attachment or execution, that any such action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred or removed to any court other than one of the above-named courts, or
should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Guaranty or the subject matter hereof may not be enforced in or by such court and (iii) hereby agrees
not to commence any such action other than before one of the above-named courts. Notwithstanding the previous sentence a party may commence any action in a court other than the above-named courts solely for the purpose of enforcing an order or
judgment issued by one of the above-named courts. 
 (b) Venue. Each party agrees that for any action between the parties
arising in whole or in part under or in connection with this Guaranty, such party will bring actions only in the Borough of Manhattan. Each party further waives any claim and will not assert that venue should properly lie in any other location
within the selected jurisdiction. 
 (c) Service of Process. Each party hereby (i) consents to service of process in
any action between the parties arising in whole or in part under or in connection with this Guaranty in any manner permitted by New York law, (ii) agrees that service of process made in accordance with clause (i) or made by registered or
certified mail, return receipt requested, at its

  

 - 7 - 









 
address specified pursuant to Section 10 (with copy to its counsel specified in Section 10 at the address for such counsel specified in such section), will constitute good and valid
service of process in any such action and (iii) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such action any claim that service of process made in accordance with clause (i) or (ii) does not
constitute good and valid service of process. 
 13. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS
GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY WILL
INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY. 
 14. Severability. Any
term or provision of this Guaranty that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction. No party hereto shall assert, and each party shall cause its respective affiliates not to assert, that this Guaranty or any part hereof is invalid, illegal or unenforceable.

 15. Headings. The headings contained in this Guaranty are for convenience purposes only and will not in any way affect
the meaning or interpretation hereof. 
 [Signature page follows.] 
  

 - 8 - 









 IN WITNESS WHEREOF, the undersigned have executed and delivered this Guaranty as of the date
first written above. 
  

									
	GUARANTOR:	 		 	  
	 	
				
	BUYER:	 		 	CELLU TISSUE HOLDINGS, INC.	 	
					
		 		 	By:	 	  
	 	
		 		 		 	Name:  Russell C. Taylor
		 		 		 	Title:    President and Chief Executive Officer









 Exhibit I-8 
 List of Personal Belongings Being Detained by Gabbay Family 








 EXHIBIT I-8 
 List of Personal Belongings Being Retained by Gabbay Family 
 Personal belongings and
furnishings of 4 officers including computers, monitors and printers in 4 officers offices, as well as art work in 4 officer’s offices and throughout the building, other than photographs of the building or company products. 








 Schedule I-A-1 
 Acquired Assets 
 Acquired Assets of Atlantic Paper & Foil
Corp. of N.Y. 
 Acquired Assets of Atlantic Lakeside Properties, LLC 
 Acquired Assets of Atlantic Paper & Foil, LLC 
 Acquired Assets of Atlantic
Paper & Foil of Georgia, LLC 
 Trademarks of Consumer Licensing Corporation 








 Schedule I-A-1 
 APF of NY 
 ACQUIRED ASSETS 
 A/R -(NON-INTERCOMPANY) 
 INVENTORY 
 M&E - F&F        SCHEDULE ATTACHED 
  

			
	 SECURITY DEPOSITS
	  	
	 UPS
	  	250.00
	 T DILLON NJ OFFICE
	  	425.00
	 100 MARCUS AVE
	  	31,029.26
		
		  	31,704.26









 Schedule I-A-3 
 Transferred Leases 
 Equipment Lease Agreement between
Wells Fargo Financial Leasing, Inc. and Atlantic Paper & Foil Corp. of N.Y., dated September 10, 2007. 
 Vehicle
Retail Instalment Contract between Thomaston Ford, Inc. and Atlantic Lakeside Properties, LLC, dated September 29, 2004. 
 Commercial Lease Agreement between Toyota Lift of New York and Atlantic Lakeside Properties, LLC, dated December 13, 2004 (59258.001). 
 Commercial Lease Agreement between Toyota Lift of New York and Atlantic Lakeside Properties, LLC, dated March 15, 2005 (59258.002). 
 Commercial Lease Agreement between Toyota Lift of New York and Atlantic Lakeside Properties, LLC, dated April 14, 2005 (59258.003).

 Commercial Lease Agreement between Toyota Lift of New York and Atlantic Lakeside Properties, LLC, dated April 4, 2006
(59258.004). 
 Commercial Lease Agreement between Toyota Lift of New York and Atlantic Lakeside Properties, LLC, dated
January 23, 2008 (59258.005). 
 Commercial Lease Agreement between Toyota Lift of New York and Atlantic Paper &
Foil Corp. of N.Y., dated April 13, 2006 (57596.001). 
 Commercial Lease Agreement between Toyota Lift of New York and
Atlantic Paper & Foil Corp. of N.Y., dated July 31, 2007 (57596.002). 
 Standard Form of Loft Lease between
Haugland Group LLC and Atlantic Paper & Foil Corp. of N.Y., dated April 10, 2007. 
 Lease Agreement between
Haugland Group LLC and Atlantic Paper & Foil Corp. of N.Y., dated April 10, 2007. 
 Rider to Lease Agreement
between Haugland Group LLC and Atlantic Paper & Foil Corp. of N.Y., dated April 10, 2007. 
 Extension to Lease
Agreement between Haughland Group LLC and Atlantic Paper & Foil Corp. of N.Y., dated April 15, 2008. 
 Renewal
Option to Lease Agreement between Haughland Group LLC and Atlantic Paper & Foil Corp. of N.Y., dated April 16, 2008. 
 Lease Agreement between CIT and Atlantic Paper & Foil, LLC, dated July 5, 2007, for Kyocera KM 3035 copier. 








 Schedule I-A-4 
 Tangible Personal Property 
 See Acquired Assets 








 Schedule I-A-5 
 Transferred Plans 








 Schedule I-A-5 
 United HealthCare 
 Mr. Peter Price 
 Account Executive 
 225 Broadhollow Road 
 Melville, NY 11747 
 Policy #174303 
 Plans 02k1698 NY 
 02k1699 NY 
 02k1700 LLC 
 02k1702 GA 
 02k1703 GA 
 02k1704 NH 
 02k4792 NY 
 02k4793 LLC 
 02k4794 GA 
 695546 LLC 
 These are high, middle and low option medical, prescription and EAP plans 
 Assurant Employee Benefits 
 Mr. Nathan Jones 
 Account Manager 
 60 East 42nd Street 
 Suite 1240 
 New York, NY 10165 
 Policy #’s 100/1070329,100/1080375,86065,00606564 
 These are for dental, life, optional life and long term disability plans 
 GA gets dental, 15k life per employee, opt life and ltd, LLC
gets dental, life = to 1 yr base, 
 optional life, ltd. NY gets dental 
 Aflac 
 Barbara Fonti 
 455 Broadhollow Road 
 Suite 124 
 Melville, NY 11747 
 Acct #VN333,NR651,NR650 
 GA, NY LLC 
 Payflex FSA 
 Andy Toohill 
 Email atoohill@payflex.com

 Phone (303) 483-6312 
   Fax 402-231-4317 
 Plan 103294 
 LLC and GA 
 United Healthcare Specialty Benefits 
 Hiromi Umezaki 
 Client Rep 
 6300 Olson Memorial Highway 








 Schedule I-A-5 
 MN010-W115 
 Golden Valley, MN 55427 
 Group 300930 sub groups 1002, 1003 
 GA and NY 
 This is for the United Allies Discount Plan 
 401(k) is Ascensus 200 Dryden Road, Dresher, PA 19025 
 Plans are: GA 205353, LLC 205352, NY 205351 
 Broker is C & B Financial 
 485 Underhill Blvd

 Suite 304 
 Syosset, NY 11791









 Schedule I-A-6 
 Transferred Insurance 








 Schedule I-A-6 
  

									
	CO	  	 APF ETAL
 TRANSFERRED
INSURANCE
  
 CARRIER
	  	COVERAGE	  	POLICY #	  	EXPIRES
					
	APF GA	  	LIBERTY MUTUAL	  	PROPERTY - R/E & CONTENTS	  	YU2 K2L 090238 038	  	1/18/2009
	APF GA	  	LIBERTY MUTUAL	  	COMMERCIAL LIABILTY	  	TB2 121 090238 018	  	1/18/2009
	APF GA	  	LIBERTY MUTUAL	  	WORKERS COMP	  	WC1 121 090238 068	  	1/18/2009
					
	APFC NY	  	LIBERTY MUTUAL	  	PROPERTY - R/E & CONTENTS	  	YU2 K2L 090238 038	  	1/18/2009
	APFC NY	  	LIBERTY MUTUAL	  	COMMERCIAL LIABILTY	  	TB2 121 090238 018	  	1/18/2009
					
	APFC NY	  	NEW YORK STATE INS FUND	  	WORKERS COMP	  	G115449128	  	12/31/2008
	APFC LLC	  	NEW YORK STATE INS FUND	  	WORKERS COMP	  	G115449128	  	12/31/2008









 Schedule I-C 
 Assumed Liabilities 








 Schedule I-C 
  


			
	 APF ETAL
	  	
	 ASSUMED LIABILITIES
	  	
		
	APFC of NY	  	
		
	 ACCOUNTS PAYABLE -
	  	LESS AMOUNTS PER SCHEDULE ON RETAINED LIABILITIES
		
	 PAYROLL TAX LIABILITIES
	  	
		
	 ACCRUED EXPENSES
	  	
		
	 ACCRUED VACATION PAY
	  	
		
	 CAP LEASE - TOYOTA FORKLIFTS #1+#2
	  	
	 CAP LEASE - TOYOTA FORKLIFTS #3+#4
	  	
	 WELLS FARGO LEASE- COMPRESSOR
	  	









 Schedule I-C 
  


			
	APF ETAL	  	
	ASSUMED LIABILITIES	  	
		
	APF of GA	  	
		
	ACCOUNTS PAYABLE -	  	LESS AMOUNTS PER SCHEDULE ON RETAINED LIABILITIES
		
	PAYROLL TAX LIABILITIES	  	
		
	ACCRUED EXPENSES	  	
		
	ACCRUED VACATION PAY	  	









 Schedule I-C 
  


			
	APF ETAL	  	
	ASSUMED LIABILITIES	  	
		
	APF LLC	  	
		
	ACCOUNTS PAYABLE -	  	LESS AMOUNTS PER SCHEDULE ON RETAINED LIABILITIES
		
	PAYROLL TAX LIABILITIES	  	
		
	ACCRUED EXPENSES	  	
		
	ACCRUED VACATION PAY	  	









 Schedule I-C 
  


	
	APF ETAL
	ASSUMED LIABILITIES
	
	LAKESIDE
	
	FORD MOTOR AUTO LOAN - TAURUS
	
	CAP LEASE TOYOTA LEASE #1
	CAP LEASE TOYOTA LEASE #2
	CAP LEASE TOYOTA LEASE #3
	CAP LEASE TOYOTA LEASE #4
	CAP LEASE TOYOTA LEASE #5









 Schedule 3.1 
 Organization 
 1. Atlantic Paper & Foil Corp. of N.Y. is a New
York corporation. 
 2. Atlantic Lakeside Properties, LLC is a Georgia limited liability company. 
 3. Atlantic Paper & Foil, LLC is a New York limited liability company. 
 4. Atlantic Paper & Foil of Georgia, LLC is a Georgia limited liability company. 
 5. Consumer
Licensing Corporation is a New York corporation. 








 Schedule 3.3 
 Authorization of Govcrnmental Authorities 
 Hart-Scott-Rodino
Antitrust Improvements Act of 1976 








 Schedule 3.5 
 Compliance with GAAP 
 None. 








 Schedule 3.6 
 Absence of Certain Developments 
 None. 








 Schedule 3.7 
 Assets 
 None. 








 Schedule 3.7.2 
 Sufficiency of Assets 
 None. 








 Schedule 3.7.3 
 Books and Records 








 FRIEDMAN ALPREN & GREEN LLP 
 CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 
 1700 Broadway New York, NY 10019 212-582-1600 FAX 212-265-4761 
 www.nyccpas.com

 RECORDS RETENTION LIST 
 

 
  








 Schedule 3.9 
 Real Property 








 Schedule 3.9 
  


							
		  	APF ETAL	  		  	
	(O) OWNED	  	REAL PROPERTY	  		  	
	(L) LEASED	  		  		  	
	O	  	LAND	  	PLANT AVENUE	  	HAUPPAUGE, NY 11788
	O	  	LAND & BUILDING	  	325 KENNEDY DRIVE	  	HAUPPAUGE, NY 11788
	L	  	LAND & BUILDING	  	50 GILPIN AVENUE	  	HAUPPAUGE, NY 11788
	L	  	WAREHOUSE	  	100 MARCUS AVENUE	  	HAUPPAUGE, NY 11788
	O	  	LAND & BUILDING	  	1201 BARNESVILLE RD	  	THOMASTON, GA 30286









 Schedule 3.11 
 Intellectual Property 








 Schedule 3.11 
  

																			
	 Trademark
	 	Country Filed In	 	Classes	 	Serial/Reg. #	 	Date Filed	 	Date
Registered	 	Status	 	Next Action	 	Date Due	 	Owner/
Registrant
										
	BIG T	 	United States	 	16	 	2,366,823	 	2/23/1998	 	7/11/2000	 	Registered	 	First Renewal	 	7/11/2010	 	APF LLC
	BIG T	 	United States	 	21	 	77/003,650	 	9/20/2006	 	7/24/2007	 	Registered	 	First Renewal	 	7/24/2017	 	APF LLC
	COMPARE	 	United States	 	16	 	2,955,522	 	9/13/2002	 	5/24/2005	 	Registered	 	Declaration of Use	 	5/24/2011	 	APF LLC
	KACHOOS	 	United States	 	16	 	77/312,427	 	10/24/2007	 		 	Pending	 	Published	 	4/8/2008	 	APF LLC
	KENSINGTON	 	United States	 	16	 	2,672,038	 	3/12/2002	 	1/7/2003	 	Registered	 	Declaration of Use	 	1/7/2008	 	APF LLC
	PERFORMANCE	 	United States	 	16	 	3,197,197	 	9/19/2002	 	1/9/2007	 	Registered	 	Declaration of Use	 	1/9/2013	 	APF LLC
	PLAZA	 	United States	 	6	 	2,362,847	 	2/23/1998	 	6/27/2000	 	Registered	 	First Renewal	 	6/27/2010	 	APF LLC
	SILKY TOUCH	 	United States	 	16	 	2,228,482	 	2/5/1998	 	3/2/1999	 	Registered	 	First Renewal	 	3/2/2009	 	APF LLC
	SILKY TOUCH (Stylized)	 	United States	 	16	 	1,701,102	 	1/9/1991	 	7/14/1992	 	Registered	 	Second Renewal	 	7/14/2012	 	APF LLC
	SUPER FOIL	 	United States	 	6	 	77/003,658	 	9/20/2006	 	1/8/2008	 	Registered	 	Declaration of Use	 	1/8/2014	 	APF LLC
	SUPER WRAP	 	United States	 	16	 	77/007,834	 	9/26/2006	 	1/8/2008	 	Registered	 	Declaration of Use	 	1/8/2014	 	APF LLC
	TREE-FREE	 	United States	 	16	 	77/330,670	 	11/16/2007	 		 	Pending	 	Published	 	4/22/2008	 	APF LLC
	
	Consumer Licensing Marks
										
	SNEEZERS	 	European Union	 	3,16	 	1242858	 	7/15/1999	 	6/29/2009	 	Registered	 	First Renewal	 	7/15/2009	 	CL Corp.
	SNEEZERS & Design	 	European Union	 	3,16	 	1265495	 	8/3/1999	 	8/3/1999	 	Registered	 	First Renewal	 	8/3/2009	 	CL Corp.
	SNEEZERS (Divisional)	 	United States	 	16	 	2,513,429	 	10/30/1998	 	11/27/2001	 	Registered	 	First Renewal	 	11/27/2011	 	CL Corp.









 Schedule 3.14 
 Environmental Matters 
 None. 
  








 Schedule 3.17 
 Customers and Suppliers 
 Terrapin Express Corp. 








 Schedule 3.18 
 Employees 
 None. 








 Schedule 3.19.2 
 Governmental Orders 
 None. 








 Schedule 3.20 
 Product Warranties, Defects; Liability 
 None. 








 Schedule 3.22 
 Insurance 
 None.