Exhibit 10.1


 


 


EXECUTION COPY


 


EQUITY AND ASSET PURCHASE AGREEMENT


 


BY AND BETWEEN




MEADWESTVACO CORPORATION


 


AND


 


MAPLE ACQUISITION LLC


 


Dated as of January 14, 2005


 





















 


TABLE OF
CONTENTS


 


	
  recitals  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE I     THE
  PURCHASE AND SALE

  	
   

  
	
   

  	
   

  
	
  Section 1.1.

  	
  Purchase and Sale
  of Shares

  	
   

  
	
  Section 1.2.

  	
  Purchase and Sale
  of the Purchased Assets

  	
   

  
	
  Section 1.3.

  	
  Excluded Assets

  	
   

  
	
  Section 1.4.

  	
  Assumed
  Liabilities

  	
   

  
	
  Section 1.5.

  	
  Excluded Liabilities

  	
   

  
	
  Section 1.6.

  	
  Acquired
  Company Timber Assets

  	
   

  
	
  Section 1.7.

  	
  Insurance
  Proceeds

  	
   

  
	
  Section 1.8.

  	
  Separate
  Businesses

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II     CONSIDERATION

  	
   

  
	
   

  	
   

  
	
  Section 2.1.

  	
  Amount and Form
  of Consideration

  	
   

  
	
  Section 2.2.

  	
  Payment of Cash
  Consideration

  	
   

  
	
  Section 2.3.

  	
  Purchase Price
  Adjustment

  	
   

  
	
   

  	
   

  	
   

  
	
  article iii     the
  closing

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  Closing Date

  	
   

  
	
  Section 3.2.

  	
  Deliveries by
  Seller to Purchaser

  	
   

  
	
  Section 3.3.

  	
  Deliveries by
  Purchaser to Seller

  	
   

  
	
  Section 3.4.

  	
  Proceedings at
  Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV     REPRESENTATIONS
  AND WARRANTIES OF SELLER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Organization and
  Good Standing

  	
   

  
	
  Section 4.2.

  	
  Capital Structure
  of Acquired Companies

  	
   

  
	
  Section 4.3.

  	
  Subsidiaries

  	
   

  
	
  Section 4.4.

  	
  Authorization
  of Agreement

  	
   

  
	
  Section 4.5.

  	
  No Conflicts;
  Consents of Third Parties

  	
   

  
	
  Section 4.6.

  	
  Financial
  Statements

  	
   

  
	
  Section 4.7.

  	
  Material
  Adverse Changes

  	
   

  
	
  Section 4.8.

  	
  Taxes

  	
   

  
	
  Section 4.9.

  	
  Real Property

  	
   

  
	
  Section 4.10.

  	
  Operations
  Sites

  	
   

  
	
  Section 4.11.

  	
  Timberlands

  	
   

  
	
  Section 4.12.

  	
  Tangible
  Personal Property

  	
   

  
	
  Section 4.13.

  	
  Intellectual
  Property

  	
   

  
	
  Section 4.14.

  	
  Contracts

  	
   

  
	
  Section 4.15.

  	
  Employee
  Benefits

  	
   

  
	
  Section 4.16.

  	
  Labor

  	
   

  
	
  Section 4.17.

  	
  Litigation

  	
   

  
	
  Section 4.18.

  	
  Compliance
  with Other Laws/Permits

  	
   

  



 


ii





















 


	
  Section 4.19.

  	
  Environmental
  Matters

  	
   

  
	
  Section 4.20.

  	
  Ownership
  of Necessary Assets and Rights

  	
   

  
	
  Section 4.21.

  	
  Distributors,
  Customers, Licensees and Suppliers

  	
   

  
	
  Section 4.22.

  	
  Absence of
  Certain Business Practices

  	
   

  
	
  Section 4.23.

  	
  Potential
  Conflicts of Interest

  	
   

  
	
  Section 4.24.

  	
  Power/Natural
  Gas

  	
   

  
	
  Section 4.25.

  	
  Brokers

  	
   

  
	
  Section 4.26.

  	
  Disclaimers
  of Seller

  	
   

  
	
  Section 4.27.

  	
  No Other
  Representations or Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V     REPRESENTATIONS AND WARRANTIES OF PURCHASER

  	
   

  
	
   

  	
   

  
	
  Section 5.1.

  	
  Organization
  and Good Standing

  	
   

  
	
  Section 5.2.

  	
  Authorization
  of Agreement

  	
   

  
	
  Section 5.3.

  	
  No
  Conflicts; Consents of Third Parties

  	
   

  
	
  Section 5.4.

  	
  Litigation

  	
   

  
	
  Section 5.5.

  	
  Financing

  	
   

  
	
  Section 5.6.

  	
  Brokers

  	
   

  
	
  Section 5.7.

  	
  No
  Inducement or Reliance; Independent Assessment

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI     COVENANTS
  OF SELLER

  	
   

  
	
   

  	
   

  
	
  Section 6.1.

  	
  Access to
  Documents; Access to Assets; Opportunity to Ask Questions

  	
   

  
	
  Section 6.2.

  	
  Conduct of
  Business

  	
   

  
	
  Section 6.3.

  	
  Consents
  and Conditions

  	
   

  
	
  Section 6.4.

  	
  Public
  Statements

  	
   

  
	
  Section 6.5.

  	
  Intercompany
  Accounts

  	
   

  
	
  Section 6.6.

  	
  Litigation
  Support

  	
   

  
	
  Section 6.7.

  	
  [Reserved]

  	
   

  
	
  Section 6.8.

  	
  Further
  Actions

  	
   

  
	
  Section 6.9.

  	
  Delivery
  of Additional Financial Data

  	
   

  
	
  Section 6.10.

  	
  Title
  Reports; Title Policies

  	
   

  
	
  Section 6.11.

  	
  Objections
  to Title

  	
   

  
	
  Section 6.12.

  	
  Defect
  Notices; Deleted Parcels

  	
   

  
	
  Section 6.13.

  	
  Computer
  Software; Data

  	
   

  
	
  Section 6.14.

  	
  Intellectual
  Property

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII     COVENANTS OF PURCHASER

  	
   

  
	
   

  	
   

  
	
  Section 7.1.

  	
  Opportunity
  to Participate in Q&A

  	
   

  
	
  Section 7.2.

  	
  Public
  Statements

  	
   

  
	
  Section 7.3.

  	
  Consents
  and Conditions

  	
   

  
	
  Section 7.4.

  	
  Seller’s
  Access to Documents

  	
   

  
	
  Section 7.5.

  	
  Further
  Actions

  	
   

  
	
  Section 7.6.

  	
  Guarantees;
  Letters of Credit

  	
   

  
	
  Section 7.7.

  	
  Use
  of Seller’s Name

  	
   

  



 


iii





















 


	
  Section 7.8.

  	
  Litigation
  Support

  	
   

  
	
  Section 7.9.

  	
  Patent
  License

  	
   

  
	
  Section 7.10.

  	
  Bulk
  Sales Law

  	
   

  
	
  Section 7.11.

  	
  Unidentified
  Properties

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII     CONDITIONS PRECEDENT TO PURCHASER’S
  OBLIGATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
  Accuracy
  of Representations and Warranties

  	
   

  
	
  Section 8.2.

  	
  Performance
  of Covenants

  	
   

  
	
  Section 8.3.

  	
  Antitrust
  Laws

  	
   

  
	
  Section 8.4.

  	
  No
  Injunctions

  	
   

  
	
  Section 8.5.

  	
  Debt
  Financing Condition

  	
   

  
	
  Section 8.6.

  	
  Third
  Party Consents

  	
   

  
	
  Section 8.7.

  	
  Guarantees

  	
   

  
	
  Section 8.8.

  	
  Absence
  of Material Adverse Change

  	
   

  
	
  Section 8.9.

  	
  Officer’s
  Certificate

  	
   

  
	
  Section 8.10.

  	
  Title
  Policies

  	
   

  
	
  Section 8.11.

  	
  Business
  IRBs

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX     CONDITIONS PRECEDENT TO SELLER’S OBLIGATIONS

  	
   

  
	
   

  	
   

  
	
  Section 9.1.

  	
  Accuracy
  of Representations and Warranties

  	
   

  
	
  Section 9.2.

  	
  Performance
  of Covenants

  	
   

  
	
  Section 9.3.

  	
  Antitrust
  Laws

  	
   

  
	
  Section 9.4.

  	
  No
  Injunctions

  	
   

  
	
  Section 9.5.

  	
  Officer’s
  Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X     ADDITIONAL POST-CLOSING COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 10.1.

  	
  Certain
  Employment Matters

  	
   

  
	
  Section 10.2.

  	
  Cooperation

  	
   

  
	
  Section 10.3.

  	
  Transition
  Agreements

  	
   

  
	
  Section 10.4.

  	
  Further
  Assurances; Further Conveyances and Assumptions; Consent of Third Parties

  	
   

  
	
  Section 10.5.

  	
  Historical
  Off-Site Environmental Liabilities Limitations

  	
   

  
	
  Section 10.6.

  	
  Environmental
  Reports

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI     SURVIVAL, INDEMNIFICATION AND RELATED MATTERS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.1.

  	
  Survival

  	
   

  
	
  Section 11.2.

  	
  Indemnification

  	
   

  
	
  Section 11.3.

  	
  Procedures
  for Indemnification

  	
   

  
	
  Section 11.4.

  	
  Limitations
  and Procedures Applicable to Indemnification for Historical Environmental
  Liabilities

  	
   

  
	
  Section 11.5.

  	
  Procedures
  for Allocation of Responsibility for Straddle Environmental Liabilities

  	
   

  



 


iv





















 


	
  Section 11.6.

  	
  Procedures
  Applicable to Indemnification by Purchaser for Pre-Closing Reserved
  Environmental Liabilities and Post-Closing Environmental Liabilities

  	
   

  
	
  Section 11.7.

  	
  Warranties
  in Deeds

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII     NONCOMPETITION; NONSOLICITATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
  Noncompetition

  	
   

  
	
  Section 12.2.

  	
  Nonsolicitation
  of Purchaser Employees

  	
   

  
	
  Section 12.3.

  	
  Nonsolicitation
  of Seller Employees

  	
   

  
	
  Section 12.4.

  	
  Remedies

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIII     TERMINATION

  	
   

  
	
   

  	
   

  
	
  Section 13.1.

  	
  Termination

  	
   

  
	
  Section 13.2. 

  	
  Procedure
  and Effect of Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIV     TAX MATTERS

  	
   

  
	
   

  	
   

  
	
  Section 14.1.

  	
  Tax
  Indemnification

  	
   

  
	
  Section 14.2.

  	
  Section
  338(h)(10) Elections

  	
   

  
	
  Section 14.3.

  	
  Allocation
  of Consideration

  	
   

  
	
  Section 14.4.

  	
  Allocation
  of Purchase Price for the Purchased Equity Interests

  	
   

  
	
  Section 14.5.

  	
  Preparation
  and Filing of Tax Returns

  	
   

  
	
  Section 14.6.

  	
  Refunds,
  Credits and Carrybacks

  	
   

  
	
  Section 14.7.

  	
  Tax
  Contests

  	
   

  
	
  Section 14.8.

  	
  Cooperation

  	
   

  
	
  Section 14.9.

  	
  Tax
  Treatment of Indemnification Payments

  	
   

  
	
  Section 14.10.

  	
  Transfer
  Taxes

  	
   

  
	
  Section 14.11.

  	
  Post-Closing
  Dispositions

  	
   

  
	
  Section 14.12.

  	
  Termination
  of Tax Sharing Agreements

  	
   

  
	
  Section 14.13.

  	
  Partnerships

  	
   

  
	
  Section 14.14.

  	
  Taxes
  Governed by Article XIV

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XV     MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 15.1.

  	
  Certain
  Definitions

  	
   

  
	
  Section 15.2.

  	
  Entire
  Agreement

  	
   

  
	
  Section 15.3.

  	
  Governing
  Law

  	
   

  
	
  Section 15.4.

  	
  Jurisdiction

  	
   

  
	
  Section 15.5.

  	
  Expenses

  	
   

  
	
  Section 15.6.

  	
  Table
  of Contents and Headings

  	
   

  
	
  Section 15.7.

  	
  Notices

  	
   

  
	
  Section 15.8.

  	
  Severability

  	
   

  
	
  Section 15.9.

  	
  Binding
  Effect; No Third Party Beneficiaries; No Assignment

  	
   

  
	
  Section 15.10.

  	
  Amendments

  	
   

  
	
  Section 15.11.

  	
  Waiver

  	
   

  
	
  Section 15.12.

  	
  Counterparts

  	
   

  



 


v





















 


EXHIBITS


 


	
  Exhibit
  A

  	
  —

  	
  Description
  of the Business

  	
   

  
	
  Exhibit
  B

  	
  —

  	
  Form
  of Bill of Sale

  	
   

  
	
  Exhibit
  C

  	
  —

  	
  Form
  of Limited Warranty Deed

  	
   

  
	
  Exhibit
  D

  	
  —

  	
  Form
  of Assignment and Assumption of Real Property Lease Agreement

  	
   

  
	
  Exhibit
  E

  	
  —

  	
  Form
  of Intellectual Property Assignment and Assumption Agreement

  	
   

  
	
  Exhibit
  F

  	
  —

  	
  Form
  of Assignment and Assumption Agreement

  	
   

  
	
  Exhibit
  G

  	
  —

  	
  Form
  of Laser License Agreement

  	
   

  
	
  Exhibit
  H

  	
  —

  	
  Form
  of Transition Services Agreement

  	
   

  
	
  Exhibit
  I

  	
  —

  	
  Form
  of Information Technology Transition Services Agreement

  	
   

  
	
  Exhibit
  J

  	
  —

  	
  Form
  of Human Resources Transition Services Agreement

  	
   

  
	
  Exhibit
  K

  	
  —

  	
  Form
  of Wickliffe Services Agreement

  	
   

  
	
  Exhibit
  L

  	
  —

  	
  Form
  of Chillicothe Services Agreement

  	
   

  
	
  Exhibit
  M

  	
  —

  	
  Form
  of Lease and Services Agreement

  	
   

  



 


vi





















 


EQUITY AND ASSET PURCHASE AGREEMENT


 


EQUITY AND ASSET PURCHASE AGREEMENT, dated as of:January
14, 2005 (this “Agreement”), by and between
Maple Acquisition LLC, a Delaware limited liability company (“Purchaser”), and MeadWestvaco Corporation, a
Delaware corporation (“Seller”). 


 


Unless otherwise indicated, terms used herein have
the respective meanings set forth in Section 15.1


 


RECITALS


 


WHEREAS, Seller and its Subsidiaries are, among
other things, engaged in the manufacture and distribution of coated papers and
carbonless papers from the Operations Sites and through the ownership,
operation, maintenance and harvesting of the Timberlands and the use or sale of
products derived therefrom, as more fully described in Exhibit A (the “Business”); and


 


WHEREAS, upon the terms and subject to the
conditions hereinafter set forth, the parties desire that Seller and its
Subsidiaries sell, assign and transfer to Purchaser and/or one or more of its
Designated Affiliates, and that Purchaser and/or one or more of its Designated Affiliates
purchase and acquire from Seller and its Subsidiaries, all of the right, title
and interest of Seller and its Subsidiaries in and to the Purchased Equity
Interests and the Purchased Assets, and that Purchaser and/or one or more of
its Designated Affiliates assume the Assumed Liabilities.


 


NOW, THEREFORE, in consideration of the foregoing
and the respective representations, warranties, covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby agree
as follows:


 


article i


 


THE PURCHASE AND SALE


 


Section
1.1.                                  Purchase and Sale of Shares. On the terms and subject to the conditions
set forth herein, at the Closing, Seller shall sell and deliver, or cause one
or more of its Subsidiaries to sell and deliver, to Purchaser and/or one or
more of its Designated Affiliates, and Purchaser and/or one or more of its
Designated Affiliates shall purchase, acquire and accept from Seller, or the
applicable Subsidiary or Subsidiaries of Seller, legal and beneficial ownership
of all of the issued and outstanding capital stock or other equity interests
(the “Purchased
Equity Interests”) of
each of the entities on Schedule 1.1 (each, a “Purchased Company” and, collectively, the “Purchased
Companies”; the Purchased Companies, collectively with
their Subsidiaries, being referred to as the “Acquired Companies”).


 


Section
1.2.                                   Purchase and Sale of the Purchased Assets. On the terms and subject to the conditions
hereof, and subject to the exclusions set forth in Section 1.3, at the Closing,
Seller shall, and shall cause its Subsidiaries (other than any Acquired
Companies), to sell, assign, transfer, convey and deliver to Purchaser and/or
one or more of its Designated


 





















 


Affiliates,
and Purchaser and/or one or more of its Designated Affiliates shall purchase,
acquire and accept from Seller and/or its Subsidiaries (other than any Acquired
Companies), all of the right, title and interest of Seller and/or its
Subsidiaries (other than any Acquired Companies) in, to and under all of the
following assets, properties, rights, Contracts and claims of Seller and/or its
Subsidiaries (other than any Acquired Companies), wherever located, whether
tangible of intangible, real, personal or mixed (collectively, and excluding
the Excluded Assets, the “Purchased Assets”):


 


(a)                                  (i) the real property listed on Schedule
1.2(a)(i) together with any and all buildings, structures, improvements and
fixtures located thereon (the “CP Owned Real Property”, which term shall
include all interests and rights of CP appurtenant to such real property and
related to the operation of the Business thereon) and (ii) the real property leases
listed on Schedule 1.2(a)(ii) and all such real property leases
(pursuant to which MW Custom Papers LLC (“CP”)
is the lessee) Related to the Business entered into by CP (as lessee) between
the date of this Agreement and the Closing Date in accordance with Section 6.2
hereof (the “CP Real Property Leases”); provided that
CP Owned Real Property and CP Real Property Leases shall include all real
property (other than Timberlands) owned or leased by CP or any Subsidiary of CP
that is Related to the Business conducted by or through CP, and not expressly
excluded from this transaction pursuant to any other provision of this
Agreement, whether or not such owned or leased real property is listed on Schedule 1.2(a)(i)
or Schedule 1.2(a)(ii);


 


(b)                                 (i) the real property listed on Schedule
1.2(b)(i) together with any and all buildings, structures, improvements and
fixtures located thereon (the “Seller Owned Real Property”, which
term shall include all interests and rights of Seller appurtenant to such real
property and related to the operation of the Business thereon) and (ii) the real
property leases (pursuant to which Seller or a Subsidiary of Seller is the
lessee) listed on Schedule 1.2(b)(ii) and all real property leases Related to
the Business entered into by Seller (as lessee) or a Subsidiary of Seller
(other than CP or an Acquired Company) between the date of this Agreement and
the Closing Date in accordance with Section 6.2 hereof (the “Seller
Real Property Leases”); provided that Seller Owned Real Property and Seller Real
Property Leases shall include all real property (other than Timberlands) owned
or leased by Seller or a Subsidiary of Seller (other than CP or an Acquired
Company) that is Related to the Business, and not expressly excluded from this
transaction pursuant to any other provision of this Agreement, whether or not
such owned or leased real property is listed on Schedule 1.2(b)(i) or Schedule
1.2(b)(ii);


 


(c)                                  the Timberlands;


 


(d)                                 all machinery, equipment, Computer Hardware
(as configured for use in the Business but excluding any Computer Hardware
located at Seller’s data center or South Carolina regional IT center),
furniture, automobiles, trucks, tractors, trailers, tools and other tangible
personal property Related to the Business owned by Seller or any of its
Subsidiaries (other than any Acquired Companies), whether located on site at the
Owned Real Properties or Leased Real Properties or stored or used off site in
the


 


2





















 


Ordinary Course of the operation of the Business (collectively, the “Purchased
Equipment”);


 


(e)                                  all inventories and supplies of raw
materials, works-in-process, finished goods, supplies, packaging materials,
storeroom contents and other inventoried items, whether located on site at the
Owned Real Properties or Leased Real Properties or stored or used off site in
the Ordinary Course, in each case Related to the Business;


 


(f)                                    the manufacturing know-how employed by Seller
or any of its Subsidiaries exclusively in the Business;


 


(g)                                 all
Intellectual Property owned by Seller or any of its Subsidiaries (other than
the Acquired Companies) and Related to the Business (the “Purchased Intellectual
Property”), including
without limitation the Intellectual Property identified on Schedule 1.2(g)
and all such Intellectual Property acquired or developed by Seller or any of
its Subsidiaries (other than the Acquired Companies) between the date of this
Agreement and the Closing Date in accordance with Section 6.2 hereof;


 


(h)                                 all trade accounts and notes receivable and
other receivables as of the Closing Date arising out of the sale or other
disposition of goods or services of the Business, to the extent reflected in
the Estimated Closing Date Working Capital Statement, as the same may be
adjusted in the Closing Date Working Capital Statement;


 


(i)                                     all rights and incidents as of the Closing
Date in, to and under all Business Contracts, including but not limited to (i)
contracts for the purchase, or the sale, supply or provision, of merchandise,
steam, materials, energy supplies or services, including operating, land
management and resource management and repair and timber and logging hauling or
cutting; (ii) contracts for the purchase or lease of equipment or Computer
Hardware (excluding contracts relating to Computer Hardware located at Seller’s
data center or South Carolina regional IT center); (iii) contracts relating to
franchise, distributorship or sale agency arrangements; (iv) personal property
leases; (v) Computer Software licenses; (vi) IP Licenses; (vii) all open
purchase and sales orders, but excluding Contracts with employees of the
Business who are not Transferred Employees; and (viii) the benefits under
Hedging Agreements to the extent Related to the Business or otherwise allocable
to the Business;


 


(j)                                     to the extent permitted by applicable Law,
all books and records (other than Tax Returns), files (including personnel and
workers’ compensation claim files and other employee books and records, or
copies thereof, pertaining to Transferred Employees), papers, tapes, disks, manuals,
keys, reports, plans, catalogs, sales and promotional materials, supplier and
customer lists, price lists, historical research, environmental and engineering
data and all other printed and written materials Related to the Business;


 


3





















 


(k)                                  except to the extent the transfer of the
following information is prohibited by applicable Law, all Data that is Related
to the Business (collectively, “Business Data”);


 


(l)                                     the Permits Related to the Business issued by
any Governmental Bodies (to the extent permitted by applicable Law to be
transferred);


 


(m)                               all deferred and prepaid charges and other
current assets of the Business, other than those that relate to any Excluded
Asset, to the extent reflected in the Estimated Closing Date Working Capital
Statement, as the same may be adjusted in the Closing Date Working Capital
Statement;


 


(n)                                 all Computer Software owned by Seller or any
of its Subsidiaries (other than the Acquired Companies) and Related to the
Business (the “Purchased Seller Software”), including
without limitation the Computer Software listed on Schedule 1.2(n), and
all such Computer Software acquired or developed by Seller or any Subsidiary of
Seller (other than an Acquired Company) between the date of this Agreement and
the Closing Date in accordance with Section 6.2 hereof;


 


(o)                                 all rights, claims, causes of action,
recoveries and rights of reimbursement to the extent arising out of, relating
to or otherwise in any way in respect of, the Purchased Assets or any Assumed
Liability including all rights, guaranties, manufacturer and supplier
warranties, indemnities and similar rights in favor of Seller or any of its
Subsidiaries (other than any Acquired Companies) in respect of any Purchased
Asset or any Assumed Liability (but with respect to any Tax refund claim, Tax
payment or Tax reduction or credit related thereto, the provisions of Articles
XIV shall apply);


 


(p)                                 all rights of Seller or any of its
Subsidiaries (other than any Acquired Companies) under the Collective
Bargaining Agreements, and all Collective Bargaining Agreements entered into
after the date hereof and prior to the Closing Date in accordance with Section
6.2;


 


(q)                                 all cash or cash equivalents (“Workers’ Compensation Cash Security”) securing all
surety bonds, letters of credit or other forms of security used to secure workers’
compensation obligations of the Business; and


 


(r)                                    all other assets, properties, rights,
Contracts and claims of Seller and any of its Subsidiaries (other than any Acquired
Companies) of any kind and nature Related to the Business not otherwise
described above.


 


Section 1.3.                                   Excluded Assets. Notwithstanding anything to the contrary
contained in Section 1.2, the parties expressly understand and agree that the
Purchased Assets shall not include, and neither Seller nor any of its
Subsidiaries is hereunder selling, assigning, transferring or conveying to
Purchaser any right to or interest in. any of the following assets, properties,
rights, contracts and claims, whether tangible or intangible, real, personal or
mixed (collectively, the “Excluded Assets”):


 


4





















 


(a)                                  all cash, cash equivalents, bank deposits,
investment accounts, lockboxes certificates of deposit, marketable securities
or similar cash items, of Seller or any Subsidiary (other than any Workers’
Compensation Cash Security), provided that (i) cash and cash equivalents,
deposits and restricted cash accounts owned or held by any of the Acquired
Companies on the Closing Date shall not be Excluded Assets to the extent that
they are taken into account when calculating the Estimated Closing Date Cash
and the Closing Date Cash and (ii) any Workers’ Compensation Cash Security shall
not be taken into account when calculating Estimated Closing Date Cash and the.
Closing Date Cash;


 


(b)                                 any data and records (or copies thereof)
required to administer the Benefits of Acquired Company Employees and Business
Employees under any Seller Employee Benefit Plan;


 


(c)                                  except as provided in Section 1.7, any and
all insurance policies, binders and claims of Seller and any of its
Subsidiaries (other than any Acquired Companies) and rights thereunder,
including with respect to any insurance settlement agreements, and the proceeds
thereof and all prepaid insurance premiums;


 


(d)                                 subject to Section 7.7, all of Seller’s
right, title and interest in the “Mead,”, “Westvaco” and “MeadWestvaco” marks
and any name, Trademark, trade dress, internet address, trade name, service
mark or logo, or any derivation of any of the foregoing, together with all of
the goodwill represented thereby, or pertaining thereto listed on Schedule
1.3(d), together with all patents and invention records listed on Schedule
1.3(d) (collectively, the “Excluded IP Assets”);


 


(e)                                  the assets and contracts (other than real
property, which is addressed in Section 1.3(i) below) listed on Schedule 1.3(e);


 


(f)                                    any books, records and other materials that
Seller or any of its Subsidiaries is required by Law to retain, all Tax Returns
(including income tax returns) and all “MeadWestvaco” marked sales and
promotional materials and brochures;


 


(g)                                 all claims, defenses, causes of action,
choses in action or claims of any kind that are available to or being pursued
by Seller or any of its Subsidiaries whether as plaintiff, claimant,
counterclaimant or otherwise, to the extent relating to Excluded Assets or
Excluded Liabilities;


 


(h)                                 all assets, business lines, properties,
rights, contracts and claims of Seller or any Subsidiary (including any Acquired
Company) not Related to the Business, including those listed on Schedule 1.3(h);


 


(i)                                     all real property, including mill facilities,
waste disposal facilities, treatment operations and landfills, whether owned or
leased, that are listed on Schedule 1.3(i) or that are not currently
used or currently intended for future use in the Business, other than (subject
to provisions of Section 6.12 with respect to the Timberlands and the
provisions of Section 7.11 with respect to the Owned Real Property) any property
listed on Schedule 1.2(a)(i), Schedule 1.2(a)(ii), Schedule 1.2(b)(i), Schedule
1.2(b)(ii),


 


5





















 


Schedule 4.9(a)(i), Schedule 4.9(c) and the Timberlands, whether or not
currently used (the “Excluded Real Property”);


 


(j)                                     the Specialty Chemicals and Specialty Papers
business as conducted by the Seller and its Subsidiaries (as described in
Seller’s most recent Form 10-K filed with the U.S. Securities and Exchange
Commission), including all assets relating primarily thereto;


 


(k)                                  all refunds or credits of or against any
Excluded Taxes; and


 


(1)                                  except as set forth on Schedule 1.3(l),
all intercompany receivables, payables, loans and investments (i) between Seller
or any of its Subsidiaries (other than an Acquired Company), on the one hand,
and Seller or any of its
Subsidiaries (other than an Acquired Company), on the other hand, or (ii)
required to be settled in accordance with Section 6.5.


 


Section
1. 4.                                Assumed Liabilities. Simultaneously with the Closing, Purchaser and/or
one or more of its Designated Affiliates shall assume and be liable for, and
shall pay, perform and discharge, all of the following obligations and
Liabilities of Seller and its Subsidiaries (other than the Acquired Companies),
whether known or unknown, fixed or contingent, asserted or unasserted, to the
extent not satisfied or extinguished as of the Closing Date, in each case as
and to the extent Related to the Business (collectively, and excluding the
Excluded Liabilities, the “Assumed Liabilities”);


 


(a)                                  all Liabilities to the extent related to the
Business or any Purchased Asset to the extent such Liabilities (i) arise out of
events or conditions occurring on or after the Closing Date or arise out of the
operation of the Business on or after the Closing Date or (ii) are reflected,
or are expressly reserved therefor, in the Estimated Closing Date Working
Capital Statement, as the same may be adjusted in the Closing Date Working
Capital Statement;


 


(b)                                 all Liabilities under Business Contracts,
including any disputes with counterparties thereunder, whether relating to
events or conditions occurring before, on or after the Closing Date; provided
that no Liability shall be assumed arising under or with respect to any
Business Contracts to the extent related to any Excluded Real Property or other
Excluded Asset;


 


(c)                                  all Liabilities assigned to Purchaser or its
Designated Affiliates under Section 10.1;


 


(d)                                 all accounts and trade payables, in each case
to the extent such Liabilities are reflected, or are expressly reserved for, in
the Estimated Closing Date Working Capital Statement, as the same may be
adjusted in the Closing Date Working Capital Statement;


 


(e)                                  all Liabilities that Purchaser or any of its
Designated Affiliates has assumed or agreed to pay for or be responsible for
pursuant to the terms hereof or of the Transition Agreements;


 


6





















 


(f)                                    all Liabilities arising from commitments (in
the form of accepted purchase orders, or otherwise) to sell products, or
outstanding quotations, proposals or bids (provided, that, with respect to such
commitments, quotations, proposals or bids arising between the date hereof and
the Closing Date, such commitments, quotations, proposals or bids have been
made in accordance with Section 6.2 hereof);


 


(g)                                 all Liabilities arising from commitments (in
the form of issued purchase orders or otherwise), or outstanding quotations,
proposals or bids, to purchase or acquire raw materials, components, supplies
or services (provided, that, with respect to such commitments, quotations,
proposals or bids arising between the date hereof and the Closing Date, such
commitments, quotations, proposals or bids have been made in accordance with
Section 6.2 hereof);


 


(h)                                 all Liabilities with respect to any return,
rebate, recall, warranty or similar liabilities relating to products;


 


(i)                                     all Liabilities (other than Liabilities
arising out of the use or alleged use of asbestos or asbestos-containing
materials in products of the Business) for death, personal injury, advertising
injury, other injury to persons or property damage relating to, resulting from, caused by or arising out
of, directly or indirectly, use of or exposure to any of the products (or any
part or component) designed, manufactured, serviced or sold, or services
performed, by the Business, including any such Liabilities for negligence,
strict liability, design or manufacturing defect, conspiracy, failure to warn, or
breach of express or implied warranties or merchantability or fitness for any
purpose or use;


 


(j)                                     all Liabilities (other than Liabilities
arising out of the use or alleged use of asbestos or asbestos-containing
materials in products of the Business) relating to, resulting from, caused by
or arising out of, directly or indirectly, the Business or any Assets, to the
extent that the same constitute, may constitute or are alleged to constitute a
tort, breach of contract or violation of, or non-compliance with, any Law or
Permit (excluding Environmental Laws and Environmental Permits or related
torts), which, in any case, (i) relate to claims for death, personal injury,
advertising injury, torts, other injury to persons or property damage and (ii)
arise in the Ordinary Course and are of the type which customarily occur in the
Business being conveyed to Purchaser or on the Owned Real Properties, the
Leased Real Properties, the Operation Sites and the Timberlands;


 


(k)                                  all Liabilities relating to, resulting from,
caused by or arising out of, directly or indirectly, the Business or any
Assets, including those that constitute, may constitute or are alleged to
constitute a tort, breach of contract or violation of, or non-compliance with,
any Law or Permit (excluding Environmental Laws and Environmental Permits)
relating to occupational health and safety, occupational disease or
occupational injury, other than those relating to occupational health and safety,
occupational disease or occupational injury relating to facilities not included
in the Assets;


 


7





















 


(1)                                  all Liabilities relating to workers’
compensation and relating to, resulting
from, caused by or arising out of, directly or indirectly, the Business or any
Purchased Assets, including those that constitute, may constitute or are
alleged to constitute a tort, breach of contract or violation of, or
non-compliance with, any Law or Permit (excluding Environmental Laws and
Environmental Permits), other than those relating to workers’ compensation for
injury or illness incurred at facilities not included in the Assets;


 


(m)                               solely to the extent provided in Article XI,
Environmental Liabilities first occurring after the Closing Date, Historical
On-Site Environmental Liabilities, and Straddle Environmental Liabilities, with
respect to the Business and the Assets conveyed hereunder;


 


(n)                                 all Liabilities to the extent arising out of Legal Proceedings not constituting or
primarily relating to Excluded Liabilities or Excluded Assets;


 


(o)                                 all obligations for written contractual
commitments by the Business to make the charitable contributions listed on Schedule
1.4(o) hereto (provided, however, that the parties agree that such
commitments may be fulfilled directly by Purchaser or one or more of its
Designated Affiliates and in the name of Purchaser or one or more of its
Designated Affiliates);


 


(p)                                 (i) the non-current Indebtedness of the
Business to the extent listed on Schedule 1.4(p) (the “Assumed
Indebtedness”) and (ii) the other Indebtedness of
the Business reflected, or expressly reserved therefor, in the Estimated
Closing Date Working Capital Statement, as the same may be adjusted in the
Closing Date Working Capital Statement;


 


(q)                                 all Liabilities (i) for the repair,
reforestation, conservation, erosion maintenance and/or prevention, and/or
restoration of all Timberlands other than Timberlands excluded pursuant to
Section 6.12, or (ii) relating to, resulting from, caused by or arising out of,
directly or indirectly, any boundary disputes of the type that would ordinarily
relate to or occur on the Timberlands (provided that nothing in this clause
(ii) shall be deemed to modify the definition of Timberlands Permitted Exceptions
with respect to boundary disputes);


 


(r)                                    all Taxes imposed on or payable with respect
to the Acquired Companies or the Business for which Purchaser is responsible
pursuant to Section 14.1(b); and


 


(s)                                  all Liabilities, in respect of lawsuits,
actions and proceedings arising in the Ordinary Course in respect of the
Transferred Employees, whether or not attributable to circumstances occurring
before, on or after the Closing Date, including Ordinary Course grievances
under Collective Bargaining Agreements, but excluding Liabilities relating to
Transferred Employees for which Seller has retained responsibility under the
terms of this Agreement, but only to the extent of such agreed retention.


 


Nothing in this Section 1.4 is intended or shall be construed to
limit or restrict the right of Purchaser or any of its Designated Affiliates
(except to the extent expressly provided in


 


8





















 


Article
XI) to recover against Seller for any breach of representation, warranty or
covenant in this Agreement in the manner and to the extent provided with
respect to such breach pursuant to Article XI of the Agreement.


 


Section
1.5.                                   Excluded Liabilities. Notwithstanding the provisions of Section
1.4, it is expressly understood and agreed that there shall be excluded from
the Liabilities and obligations being assumed by Purchaser and/or its
Designated Affiliates hereunder (and to the extent that the following
Liabilities and obligations have been incurred by any Acquired Company, Seller
and its Subsidiaries (other than its Acquired Companies) shall assume and be solely
responsible for) the following Liabilities and obligations of Seller or any of
its Subsidiaries (collectively, the “Excluded Liabilities”):


 


(a)                                  All Liabilities of Seller or any of its
Subsidiaries (including any Acquired Company) not Related to the Business,
including all Liabilities primarily relating to assets, business lines, rights,
contracts and claims specified in Sections 1.3(h) and 1.3(i);


 


(b)                                 all Liabilities for which Seller or any of
its Subsidiaries (other than the Acquired Companies) is expressly made
responsible pursuant hereto or the Transition Agreements;


 


(c)                                  all Liabilities to the extent related to any
Excluded Asset;


 


(d)                                 all Excluded Taxes;


 


(e)                                  except as set forth on Schedule 1.5(e),
all intercompany receivables, payables, loans and investments (i) between
Seller or any of its Subsidiaries (other than an Acquired Company), on the one
hand, and Seller or any of its Subsidiaries (other than an Acquired Company),
on the other hand, or (ii) required to be settled in accordance with Section
6.5;


 


(f)                                    all Liabilities assigned to or retained by
Seller under Section 10.1;


 


(g)                                 all Liabilities arising under or with respect
to any Business Contracts to the extent related to any Excluded Real Property;


 


(h)                                 except to the extent provided in Section
1.4(m) (Assumed Liabilities) and subject to the provisions set forth in Article
XI, all Environmental Liabilities whether or not Related to the Business,
provided, however, with respect to Historical Off-Site Environmental
Liabilities, such Liabilities shall be subject to the procedures set forth in
Section 11.4;


 


(i)                                     all Liabilities to the extent arising out of
Legal Proceedings relating to the matters constituting Excluded Liabilities
specified in the foregoing clauses (a) – (h) of this Section 1.5;


 


9





















 


(j)                                     all Liabilities to the extent relating to the
Deleted Parcels and other real property not conveyed (including through the
Acquired Companies) to Purchaser (or its designee) hereunder; and


 


(k)                                  the Indebtedness of the Business other than
(i) the Assumed Indebtedness; and (ii) the Indebtedness of the Business
reflected, or expressly reserved for, in the Estimated Closing Date Working
Capital Statement, as the same may be adjusted in the Closing Date Working
Capital Statement


 


Section
1.6.                                  Timber Assets. On the terms and subject to the conditions
hereof, and subject to the exclusions set forth in Section 1.3, at or
immediately prior to the Closing, Seller shall, and shall cause CP and the
Acquired Companies to, sell, assign, transfer, convey and deliver to the
Purchaser (or one or more of its Designated Affiliates), and Purchaser (or one
or more of its Designated Affiliates) shall purchase, acquire, accept and
assume from Seller, CP and such Acquired Companies, all of the right, title and
interest of Seller, CP and such Acquired Companies in and to all of the Assets
and Liabilities that are being conveyed hereunder that are Related to the
Timber Business. Notwithstanding anything to the contrary contained herein,
Purchaser shall be responsible for the excess of (i) the Transfer Taxes
incurred in connection with the transfers by the Acquired Companies
contemplated by this Section 1.6, over (ii) the Transfer Taxes with respect to
Timberlands that would otherwise have been incurred (and as a result of the
transfers by the Acquired Companies contemplated by this Section 1.6 will not
be incurred) at Closing on account of the stock of the Acquired Companies being
transferred to Purchaser (and the amount of any and all other Transfer Taxes
shall be paid by Seller and Purchaser as provided in Section 14.10).


 


Section
1.7.                                  Insurance Proceeds. If between the date hereof and the Closing,
(i) any loss or damage to any Purchased Asset or any asset owned by any
Acquired Company shall occur from fire, casualty or any other occurrence, (ii)
Seller or the applicable Acquired Company does not, prior to the Closing Date,
rebuild or restore such Purchased Asset or such other asset owned by an
Acquired Company to a state at least substantially the same as the state of
such asset immediately prior to the date of such loss or damage, and (iii) the
Closing occurs, then the Purchase Price shall be reduced by an amount
reasonably agreed to by Seller and Purchaser to equal the reasonable additional
cost to rebuild or restore (or, if applicable, finish rebuilding or restoring)
such Purchased Asset or such other asset owned by an Acquired Company to a
state at least substantially the same as the state of such asset immediately
prior to the date of such loss or damage, and, subject to the provision below,
Seller shall be entitled to receive and/or retain all insurance proceeds
resulting from such loss or damage. For the avoidance of doubt, (a) Seller and
its Subsidiaries shall not have any obligation to rebuild or restore any such
property, and (b) Purchaser’s sole right shall be to receive the agreed upon
reduction of the Purchase Price; provided, that no reduction of the
Purchase Price as contemplated by this Section 1.7 shall be made or required if
the Purchase Price reduction relates to loss of or damage to any assets
included in the calculation of Working Capital in the Estimated Closing Date
Working Capital Statement, as the same may be adjusted in the Closing Date
Working Capital Statement. Seller shall have the sole right and authority to
provide notices and claims to the applicable insurance carrier and otherwise to
communicate and negotiate with such carrier. Notwithstanding anything in this
Section 1.7 to the contrary, the benefit of any insurance proceeds in relation
to “business interruption” damages based upon lost profits or business
opportunities in respect of the period


 


10





















 


prior
to the Closing Date, and insurance proceeds in relation to such loss or damage
to the extent attributable to any such property rebuilt or restored before the
Closing Date or otherwise used for such purpose will inure to the benefit of
and be payable to Seller, and Purchaser will not be entitled to receive or
retain such proceeds. Notwithstanding anything in this Section 1.7 to the
contrary, the benefit of any insurance proceeds in relation to “business
interruption’’ damages based upon lost profits or business opportunities in
respect of the period following the Closing Date will inure to the benefit of
and be payable to Purchaser, and Seller will not be entitled to receive or
retain such proceeds. It is understood and agreed that for purposes of
determining whether any change, event, effect or circumstance constitutes a “Material
Adverse Effect” as defined herein, any credit received by Purchaser on account
of this Section 1.7 shall be taken into account.


 


Section
1.8.                                   Separate Businesses. Purchaser and Seller acknowledge, understand
and agree that, unless Purchaser otherwise notifies Seller in writing, it is
Purchaser’s intention to operate the Paper Business and Timber Business as
separate businesses from and following the Closing Date. In furtherance of and
notwithstanding anything in this Agreement inconsistent or contrary to the
foregoing, to the extent any right, asset or benefit inures to Purchaser or any
obligation or liability is imposed upon or is to be assumed by Purchaser under this
Agreement (including indemnification obligations under Article XI hereof), the
Exhibits and the other agreements or instruments referenced herein or therein
that: (a) if Related to the Timber Business, such right, asset, benefit,
obligation or liability shall be solely for the benefit of and the responsibility
of the Purchaser and only those of its Affiliates, if any, designated by
Purchaser at Closing to acquire the Assets and assume the Liabilities Related
to the Timber Business and their respective successors and assigns (“Purchaser’s Timber Entities”) and (b) if Related to the Paper
Business, such right, asset, benefit, obligation or liability shall be solely
for the benefit and the responsibility of the Designated Affiliates of
Purchaser designated by Purchaser at Closing to acquire the Assets and assume
the Liabilities Related to the Paper Business and their respective successors
and assigns (“Purchaser’s Paper Entities”). For the avoidance of doubt, in no
event shall Seller or any of its Affiliates be entitled under this Agreement,
the Exhibits or any other agreement or instrument referenced herein or therein
to make any claim against, or seek recovery from, by or through (i) any of
Purchaser’s Timber Entities for matters Related to the Paper Business or (ii)
any of Purchaser’s Paper Entities for matters Related to the Timber Business.


 


ARTICLE
II


 


CONSIDERATION


 


Section
2.1.                                   Amount and Form of Consideration. The consideration to be paid by Purchaser
to Seller in full consideration of the Purchased Equity Interests and the
Purchased Assets shall consist of:


 


(a)               U.S.$ 2,300,000,000.00 (the “Initial Cash Consideration”) in cash, subject
to adjustment as set forth in Section 2.3 and 6.12 (the Initial Cash Consideration,
as so adjusted, the “Final Cash Consideration”), to
be paid in the manner and at the time set forth in Sections 2.2 and 2.3; and


 


11





















 


(b)              the assumption by Purchaser and/or one or
more of its Designated Affiliates on and as of the Closing Date of the Assumed
Liabilities.


 


Section
2.2.                                   Payment of Cash Consideration: At the Closing, the Closing Date Cash Consideration
(as defined below) shall be paid by wire transfer of immediately available
funds in U.S. Dollars to an account or accounts designated by Seller, such
designation to be made in writing at least three Business Days prior to the
Closing Date.


 


Section
2.3.                                   Purchase Price Adjustment. (a) At least five Business Days prior to
the Closing Date, Seller shall prepare, or cause to be prepared, and deliver to
Purchaser a good faith estimated statement of Working Capital of the Business
as of the close of business on the Closing Date (the “Estimated Closing Date Working
Capital Statement”), and a certificate setting forth a
good faith estimate of Working Capital as of close of business on the Closing
Date (“Estimated Closing Date Working Capital”), an estimate of Closing Date Cash (“Estimated Closing Date Cash”) and an estimate
of Assumed Indebtedness (“Estimated Assumed Indebtedness”). The Estimated Closing Date Working
Capital Statement shall be prepared in accordance with GAAP, as modified by the
accounting policies specified on Schedule 2.3(a) (“Specified
Accounting Policies”), and to the extent consistent with GAAP, in accordance with
the accounting principles, procedures, policies, methods that were employed in
preparing the Benchmark Balance Sheet, consistently applied. The Initial Cash
Consideration shall be (i)(A) increased dollar for dollar to the extent the
Estimated Closing Date Working Capital exceeds the Target Working Capital, or
(B) decreased dollar for dollar to the extent the Estimated Closing Date
Working Capital is less than the Target Working Capital, (ii) increased dollar
for dollar to the extent that Estimated Closing Date Cash is greater than
U.S.$0 and (iii) decreased dollar for dollar by the Estimated Assumed
Indebtedness (the Initial Cash Consideration, as adjusted pursuant to this
sentence and Section 6.12, the “Closing Date Cash Consideration”).


 


(b)                                 Within 90 calendar days following the Closing
Date, Purchaser shall prepare, or cause to be prepared, and deliver to Seller a
statement of Working Capital of the Business as of the close of business on the
Closing Date (as such may be adjusted following resolution of disputes in
accordance with Section 2.3(d), the “Closing Date Working Capital Statement”), and
a certificate setting forth a calculation of Working Capital as of the close of
business on the Closing Date (“Closing Date Working Capital”), a calculation of Closing Date Cash
and a calculation of Assumed Indebtedness. The Closing Date Working Capital
Statement shall be prepared in accordance with GAAP, as modified by the
Specified Accounting Policies, using (to the extent consistent with GAAP) the
same accounting principles, procedures, policies, methods that were employed in
preparing the Benchmark Balance Sheet, consistently applied.


 


(c)                                  During the preparation of the Estimated
Closing Date Working Capital Statement and the calculation of Estimated Closing
Date Working Capital, Estimated Closing Date Cash and Estimated Assumed
Indebtedness (the “Estimated Closing Date Financial Data”), Seller
shall, and shall cause its Subsidiaries to afford Purchaser reasonable
opportunity to review such preparation, including supporting detail. Purchaser
shall provide to Seller the same reasonable opportunity to review, during such
preparation, Seller’s preparations of the Closing Date Working Capital
Statement and the accompanying certificate.


 


12





















 


(d)                                 After receipt of the Closing Date Working
Capital Statement, Seller shall have 30 calendar days to review the Closing
Date Working Capital Statement and the accompanying certificate (collectively,
the “Closing Date Financial Data”), together
with the work-papers used in the preparation thereof. Seller and its authorized
representatives shall have full access to all relevant books and records and
employees of Purchaser and the Acquired Companies to the extent reasonably
required to complete their review of the Closing Date Financial Data. Seller
may dispute items reflected in the calculation of Closing Date Working Capital
and Closing Date Cash and Assumed Indebtedness only on the basis that such
amounts (i) were not determined in conformity with GAAP, as modified by the
Specified Accounting Policies, applied by Purchaser on a consistent basis (to
the extent consistent with GAAP) with the accounting principles, procedures,
policies, methods that were employed in preparing the Benchmark Balance Sheet,
consistently applied) or (ii) contain arithmetic error. Unless Seller delivers
written notice to Purchaser on or prior to the 20th calendar day after Seller’s
receipt of the Closing Date Working Capital Statement, which notice shall set
forth a specific description of the basis of Seller’s objection or objections
and the adjustments to the amount of Closing Date Working Capital and/or
Closing Date Cash and/or Assumed Indebtedness which Seller believes should be
made, Seller shall be deemed to have accepted and agreed to the calculation of
Closing Date Working Capital and Closing Date Cash and/or Assumed Indebtedness.
If Seller so notifies Purchaser of its objection to the calculation of Closing
Date Working Capital, Closing Date Cash and/or Assumed Indebtedness, Purchaser
and Seller shall, within 30 calendar days following such notice (the “Resolution
Period”), attempt to resolve their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive. If following resolution of any disputed amounts
there do not remain in dispute amounts the aggregate net effect of which exceeds
U.S.$l million with respect to the Closing Date Working Capital, the Closing Date
Cash or Assumed Indebtedness, then all amounts remaining in dispute shall be deemed
to have been resolved in favor of the calculation of Closing Date Working
Capital, Closing Date Cash or Assumed Indebtedness, as the case may be,
delivered by Seller to Purchaser.


 


(e)                                  If, at the conclusion of the Resolution
Period, the aggregate net effect of all amounts remaining in dispute exceeds
U.S.$l million with respect to Closing Date Working Capital, Closing Date Cash
or Assumed Indebtedness, then all amounts remaining in dispute shall be
submitted to Deloitte & Touche LLP (the “Neutral Auditors”). Each
party agrees to execute, if requested by the Neutral Auditors, a reasonable
engagement letter, including customary indemnities in favor of the Neutral
Auditors. All fees and expenses relating to the
work, if any, to be performed by the Neutral Auditors shall be borne pro rata
as between Seller on the one hand and Purchaser on the other, in proportion to
the allocation of the dollar value of the amounts remaining in dispute between
Seller and Purchaser made by the Neutral Auditors such that the prevailing
party pays the lesser proportion of the fees and expenses. The Neutral Auditors
shall act as an expert to determine, based solely on the provisions of this
Section 2.3 and the presentations by Seller and Purchaser, and not by
independent review, only those issues still in dispute and only as to whether
such amounts were arrived at in conformity with Specified Accounting Policies
and Section 2.3(a) hereof. The Neutral Auditors’ determination shall be made
within 30 calendar days of their selection, shall be set forth in a written
statement delivered to Seller and Purchaser and shall be final, binding and
conclusive. The term “Final Closing Date Working Capital” shall mean the definitive Closing Date
Working Capital, the term “Final Closing Date Cash” shall mean the definitive Closing Date
Cash and the term “Final
Assumed Indebtedness” shall mean the definitive Assumed
Indebtedness, respectively, agreed to (or


 


13





















 


deemed
to be agreed to) by Purchaser and Seller in accordance with the terms of
Section 2.3(d) or the definitive Closing Date Financial Data resulting from the
determinations made by the Neutral Auditors in accordance with this Section 2.3(e)
(in addition to those items theretofore agreed to by Seller and Purchaser).


 


(f)                                    The Closing Date Cash Consideration shall be
(i)(A) increased dollar for dollar to the extent the Final Closing Date Working
Capital exceeds Estimated Closing Date Working Capital, or (B) decreased dollar
for dollar to the extent the Final Closing Date Working Capital is less than
Estimated Closing Date Working Capital and (ii)(A) increased dollar for dollar
to the extent that Final Closing Date Cash is greater than Estimated Closing
Date Cash or (B) decreased dollar for dollar to the extent that Final Closing
Date Cash is less than Estimated Closing Date Cash and (iii)(A) increased dollar
for dollar by the amount Estimated Assumed Indebtedness exceeds Final Assumed
Indebtedness and (B) decreased dollar for dollar by the amount Final Assumed
Indebtedness exceeds Estimated Assumed Indebtedness. Any adjustments to the
Closing Date Cash Consideration made pursuant to this Section 2.3(f), together
with interest on such amount from the Closing Date to the date of payment at a
per annum rate equal to the JP Morgan Chase prime rate (determined as of the
Closing Date), shall be paid by wire transfer of immediately available funds to
the account or accounts specified by Seller, if Seller is owed payment, or to
the account or accounts specified by Purchaser, if Purchaser is owed payment,
within five Business Days after the Final Closing Date Working Capital, Final
Closing Date Cash and Final Assumed Indebtedness are agreed to by Purchaser and
Seller or any remaining disputed items are ultimately determined by the Neutral
Auditors.


 


(g)                                 Notwithstanding
anything herein to the contrary, if at any time prior to the Closing, Seller or
Purchaser determines that, in the course of the preparation or review of the
balance sheet included in the Historical Audited Financial Statements or Stub
Period Consolidated Financial Statements or otherwise, any asset or liability
recorded on the Benchmark Balance Sheet was improperly classified as a “current”
or “non-current” asset or liability, Seller or Purchaser shall notify the other
party and, unless the other party delivers a notice of objection to such
determination within 10 days of such notice, the Benchmark Balance Sheet and
the Target Working Capital shall be adjusted to reflect the reclassification of
any such assets or liabilities. Irrespective of whether any such adjustment is
made on or prior to the Closing Date, Purchaser shall not be bound by any
determination by Seller with respect to the classification of any assets or
liabilities included in the Benchmark Balance Sheet, the Estimated Closing Date
Working Capital or the Estimated Closing Date Working Capital Statement in its
determination of Closing Date Working Capital or the Closing Date Working
Capital Statement (except with respect to determinations by Seller that are
consistent with GAAP to use one classification
rather than another, which determinations shall be final and binding upon the
parties). To the extent there is any dispute concerning the classification of
assets or liabilities in the calculation of the Benchmark Balance Sheet, the
Target Working Capital and the Closing Date Working Capital, such dispute,
whether arising before or (within the time periods in which Seller may deliver
a notice of objection generally with respect to the Closing Date Working
Capital Statement) after the Closing Date, shall be subject to resolution by
the Neutral Auditors in accordance with the terms of this Section 2.3.


 


14





















 


ARTICLE
III


 


THE CLOSING


 


Section
3.1.                                   Closing Date. Except as hereinafter provided, the closing
of the transactions contemplated hereunder (the “Closing”) shall
take place at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue,
New York, New York 10022, at 10:00 a.m. (local time) on (i) the earlier to
occur of (1) the last Business Day of the calendar month in which the last of
the conditions set forth in Articles VIII and IX have been satisfied (other
than those conditions that by their terms cannot be satisfied until the Closing
Date) or, in the case of Article VIII, waived by Purchaser, or, in the case of
Article IX, waived by Seller, or (ii) at such other place and at such other
time and date as may be mutually agreed upon by Purchaser and Seller (such date
and time being referred to herein as the “Closing Date”).


 


Section
3.2.                                   Deliveries by Seller to Purchaser. At the Closing, Seller shall deliver, or
shall cause to be delivered, to Purchaser and/or one or more of its Designated Affiliates
the following:


 


(a)               stock certificates or appropriate
certificates of ownership, as applicable, representing all of the Purchased
Equity Interests (other than those that are in book-entry form), in each case
accompanied by stock powers duly executed in blank or other duly executed
instruments of transfer;


 


(b)              one or more bills of sale, substantially in
the form of Exhibit B, or local transfer agreements as may be necessary
or desirable under applicable Law, or comparable instruments of transfer
transferring to Purchaser and/or one or more of its Designated Affiliates all
of the Purchased Assets, duly executed by Seller;


 


(c)               limited warranty deeds, substantially in the
form of Exhibit C (with such modifications as may be required in the
applicable local jurisdiction), with respect to the Owned Real Properties
(other than Acquired Company Owned Real Property) and the Timberlands
transferred pursuant to Section 1.6 (collectively, the “Deeds”);


 


(d)              duly executed instruments of assignment and
assumption of the Real Property Leases to which Seller or any of its
Subsidiaries (other than Acquired Companies) is a party, substantially in the
form of Exhibit D, subject to Sections 6.3(b) and 10.4(b) (and all other
applicable terms of this Agreement);


 


(e)               a receipt duly executed by Seller
acknowledging payment of the Closing Date Cash Consideration;


 


(f)                 duly executed instruments of assignment or
transfer and assumption of the Purchased Intellectual Property other than
Computer Software, which is covered by other Sections of this Agreement,
substantially in the form of Exhibit E or local assignment agreements as
may be necessary or desirable under applicable Law;


 


(g)              the certificates referred to in Section 8.9
signed by a duly authorized officer of Seller;


 


15





















 


(h)              the resignations of the officers, as
corporate officers, and directors of the Acquired Companies set forth on Schedule
3.2(h);


 


(i)                  the Transition Agreements, duly executed by
Seller;


 


(j)                  a certificate of non-foreign status pursuant
to Treasury Regulations Section l.1445-2(b)(2) from Seller and each domestic
Subsidiary of Seller that transfers Purchased Equity Interests or Purchased
Assets pursuant to this Agreement;


 


(k)               a duly executed assignment and assumption
agreement or other comparable instrument of assignment and assumption,
substantially in the form of Exhibit F, evidencing assumption of the
Assumed Liabilities by Purchaser or one or more of its Designated Affiliates
and retention of the Excluded Liabilities by Seller or its Subsidiaries (other
than any Acquired Companies), and all other instruments or documents as shall
be necessary in the reasonable judgment of Purchaser to evidence the assignment
by Seller of the Purchased Assets and the assumption by Purchaser or one or
more of its Designated Affiliates of the Assumed Liabilities and acquisition, assumption
or retention of the Excluded Assets and Excluded Liabilities by Seller or its
Subsidiaries (other than the Acquired Companies), subject to Sections
6.3(b) and 10.4(b); 


 


(l)                  any real property Transfer Tax returns (as
described in Section 14.10 hereof) required to be executed by Seller or any of
its Subsidiaries; and


 


(m)            the Laser License Agreement (the “Laser License Agreement”), substantially
in the form of Exhibit G, duly executed by Seller.


 


Section
3.3.                                   Deliveries by Purchaser to Seller. At the Closing, Purchaser and/or one or more
of its Designated Affiliates shall deliver to Seller the following:


 


(a)               the Closing Date Cash Consideration by wire
transfer of immediately available funds in the amount and manner provided in
Section 2.2;


 


(b)              a duly executed assignment and assumption
agreement or other comparable instrument of assignment and assumption,
substantially in the form of Exhibit F, evidencing assumption of the
Assumed Liabilities and all other instruments or documents as shall be
necessary in the reasonable judgment of Seller to evidence the assignment by
Seller of the Purchased Assets and the assumption by Purchaser or its
Designated Affiliates of the Assumed Liabilities, subject to Sections 6.3(b)
and 10.4(b);


 


(c)               completed and duly executed copies of
Internal Revenue Service Form 8023, required schedules thereto, and any similar
state, local or foreign forms;


 


(d)              any applicable resale certificates and other
exemption certificates reasonably requested by the Seller pursuant to Section
14.10;


 


16





















 


(e)               the certificate referred to in Section 9.5
signed by a duly authorized officer of Purchaser;


 


(f)                 the Transition Agreements, duly executed by
Purchaser and/or one or more of its Designated Affiliates;


 


(g)              duly executed instruments of assignment and
assumption of the Real Property Leases to which Seller or any of its
Subsidiaries (other than Acquired Companies) is a party, substantially in the
form of Exhibit D, subject to Sections 6.3(b) and 10.4(b) (and all other
applicable terms of this Agreement);


 


(h)              any real property Transfer Tax returns (as
described in Section 14.10 hereof) required to be executed by Purchaser;


 


(i)                  the Laser License Agreement, duly executed by
Purchaser and/or one or more of its Designated Affiliates; and


 


(j)                  duly executed instruments of assignment or
transfer and assumption of the Purchased Intellectual Property other than
Computer Software, which is covered by other Sections of this Agreement,
substantially in the form of Exhibit E or local assignment agreements as
may be necessary or desirable under applicable Law.


 


Section
3.4.                                   Proceedings at Closing. All acts and proceedings to be taken and all
documents to be executed and delivered by the parties at the Closing shall be
deemed to have been taken and executed simultaneously, and, except as permitted
hereunder, no acts or proceedings shall be deemed taken nor any documents
executed or delivered until all have been taken, executed and delivered.


 


ARTICLE
IV


 


REPRESENTATIONS AND WARRANTIES OF SELLER


 


As an inducement to Purchaser to enter into this
Agreement and to consummate the transactions contemplated hereby, Seller hereby
represents and warrants to Purchaser that, except as set forth in the
applicable Schedules to this Agreement delivered by Seller to Purchaser and
dated as of the date hereof;


 


Section
4.1.                                   Organization and Good Standing. Each of Seller, CP and the Acquired
Companies is an entity duly organized, validly existing and, if applicable, in
good standing under the laws of the jurisdiction of its organization or
formation, as set forth on Schedule 4.1, and has the requisite power and
authority to own or lease and operate its properties and to carry on, in all
material respects, its business as now being conducted. Each of Seller, CP and
the Acquired Companies is duly qualified, authorized or licensed to conduct its
business as a foreign corporation and, if applicable, is in good standing under
the laws of each jurisdiction in which the conduct of its business or the
ownership of its properties or assets requires such qualification,
authorization or license, except where the failure to be so qualified,
authorized or licensed or to be in good standing would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
CP is a direct, wholly-owned Subsidiary of Seller.


 


17





















 


Section
4.2.                                   Capital Structure of Acquired Companies. As of the date hereof, the authorized
capital stock or other equity interests of each of the Acquired Companies and
the number of shares of such capital stock or other equity interests that are
issued and outstanding and the ownership thereof, are as set forth on Schedule
4.2. The Acquired Company Equity Interests are duly authorized, validly issued,
fully paid and nonassessable (except as disclosed on Schedule 4.2) and
are not subject to any pre-emptive or subscription rights (and were not issued in
violation of any preemptive or subscription rights). As set forth on Schedule
4.2, Seller, directly or indirectly through one or more wholly owned
Subsidiaries of Seller, beneficially owns and has good and valid title to all
the Acquired Company Equity Interests, free and clear of all Liens other than
Liens disclosed on Schedule 4.2 and Liens imposed by this Agreement and under
state and federal securities Laws. Except as set forth in Schedule 4.2,
(i) there are no options, warrants, or similar rights to purchase any of the
shares or other equity interests of any of the Acquired Companies, and no
obligations binding upon any Acquired Company to issue, sell, redeem, purchase
or exchange any of its capital stock or any other equity interest or any right
relating thereto, and (ii) there are no shareholders’ agreements, voting
agreements, voting trusts or other agreements or rights of third parties with
respect to or affecting any of the Acquired Companies or any of their shares of
capital stock or other equity interests. Seller has delivered to Purchaser
prior to the date hereof true and complete copies of the certificate of incorporation,
bylaws, operating agreement and each other organizational document of each of the
Acquired Companies, each as in effect as of the date hereof.


 


Section
4.3.                                   Subsidiaries. Schedule 4.3 contains a true and
complete list of all Subsidiaries of the Purchased Companies and the ownership
thereof. All of the outstanding shares of capital stock or other equity
interests of each Subsidiary of the Purchased Companies (collectively, the “Purchased Company Subsidiaries”) are
owned directly or indirectly by the Purchased Companies, as set forth on Schedule
4.3, free and clear of all Liens other than Liens disclosed on Schedule
4.3 and Liens imposed by this Agreement and under state and federal
securities Laws, and are duly authorized, validly issued, fully paid and
nonassessable and are not subject to any preemptive or subscription rights. The
applicable Purchased Companies and/or Subsidiaries thereof, as set forth on Schedule
4.3, have good and valid title to all such shares.


 


Section
4.4.                                  Authorization of Agreement. Seller has all requisite corporate power
and authority to execute and deliver (or cause to be executed and delivered)
this Agreement and each other agreement, document, instrument or certificate
contemplated hereby to be executed by Seller or its Subsidiaries in connection
with the consummation of the transactions contemplated hereby (all such other
agreements, documents, instruments and certificates required to be executed by
Seller or any of its Subsidiaries being hereinafter referred to, collectively,
as the “Seller Documents”), and
to perform (or cause to be performed) fully Seller’s obligations hereunder and
thereunder. The execution, delivery and performance by Seller of this Agreement
and by Seller or its Subsidiaries of each of the Seller Documents has been duly
and validly authorized by all necessary action on the part of Seller or such
Subsidiaries, as applicable, and no additional authorization, consent or
approval by Seller, its Subsidiaries or the shareholders of Seller is required
in connection with the execution, delivery and performance by them of the
Seller Documents. This Agreement has been, and each of the Seller Documents
will be, on or prior to the Closing Date, duly executed and delivered by Seller
and its Subsidiaries, as applicable, and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each of the Seller


 


18





















 


Documents
when so executed and delivered will constitute valid and legally binding
obligations of Seller and its Subsidiaries, as applicable, enforceable against
each in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting the enforcement of creditors’ rights generally, and
general principles of equity (regardless of whether such enforceability is considered
in a proceeding in Law or equity).


 


Section
4.5.                                  No Conflicts; Consents of Third Parties. (a) None of the execution and delivery by
Seller or any of its Subsidiaries of this Agreement and the Seller Documents,
the consummation of the transactions contemplated hereby or thereby or
compliance by Seller and its Subsidiaries with any of the provisions hereof or
thereof will (i) result in the breach of any provision of the certificate or
articles of incorporation, by-laws or similar organizational documents of
Seller, CP or any Acquired Company; (ii) except as set forth on Schedule 4.5,
violate, result in the breach or termination of, or constitute (with or without
notice or lapse of time or both) a default or give rise to any right of
consent, cancellation, termination or acceleration or right to increase the
obligations or otherwise modify the terms under any Business Contract; or (iii)
constitute a violation of any Law applicable to Seller or any Acquired Company,
except as would not, in the case of clause (ii) only, reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.


 


(b)                                 No consent, waiver, approval, Order, Permit
or authorization of, or declaration or filing with, or notification to, any
Person or Governmental Body is required on the part of Seller, CP or any
Acquired Company in connection with the execution and delivery of this
Agreement or the Seller Documents, the consummation of the transactions
contemplated hereby and thereby or the compliance by Seller, CP and Seller’s
other Subsidiaries with any of the provisions hereof or thereof, except for (i)
compliance with the applicable requirements of any competition or antitrust
laws, including (x) the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and
the rules and regulations promulgated thereunder (the “HSR Act”), (y) comparable requirement in foreign
jurisdictions, and (z) Permits required under Environmental Laws, and (ii)
other than those referred to in clause (i), such consents, waivers, approvals,
Orders, Permits or authorizations of, or declarations or filings with, or
notifications to, any Person or Governmental Body the failure of which to be
received or made would not reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the Purchaser’s ability to operate
the Business after Closing substantially as conducted as of the date hereof or
a material adverse effect on the Purchaser’s or Seller’s ability to consummate
the transactions contemplated by this Agreement.


 


Section
4.6.                                   Financial Statements. (a) Schedule 4.6(a) contains true
and complete copies of the unaudited balance sheets of the Business, as of
September 30, 2004, December 31, 2003 and December 31, 2002, and the unaudited
statements of operations of the Business for the nine months ended September
30, 2004 and the fiscal years ended December 31, 2003 and December 31, 2002
(collectively, the “Unaudited Historical Financial Statements”). Each
of the Unaudited Historical Financial Statements has been prepared in
accordance with GAAP as applied to carve-out financial statements (except for
normal and recurring year end adjustments, which are not expected in the
aggregate to be material in amount, and the omission of footnotes, the omission
of cash flow statements and the selection of periods presented), consistently
with Regulation S-X. The Unaudited Historical Financial Statements were
prepared


 


19





















 


on
the basis of the books and records of the Business (in each case, as of the
date of such Unaudited Historical Financial Statements) and present fairly, in
all material respects, the financial position of the Business as of the dates
thereof and the results of its operations for each of the periods then ended in
conformity with GAAP as applied to carve-out financial statements (except for
normal and recurring year end adjustments, which are not expected in the
aggregate to be material in amount, and the omission of footnotes, the omission
of cash flow statements and the selection of periods presented), consistently
with Regulation S-X. Such books and records are a portion of the books and
records from which Seller’s audited financial statements are prepared. The
procedures and application of GAAP used in the preparation of the Unaudited
Historical Financial Statements were consistent with the procedures and
application of GAAP used by Seller in preparation of Seller’s audited financial
statements as filed with the Securities and Exchange Commission, except as set
forth in Schedule 4.6(a)(ii).


 


(b)                                 Seller has made available to Purchaser a true
and correct copy of the unaudited balance sheet of the Business, as of
September 30, 2004 (the “Balance Sheet Date”), which
reflects adjustments to the balance sheet of the Business as of such date as if
the balance sheet were prepared in accordance with GAAP as modified by the
Specified Accounting Principles (such balance sheet being the “Benchmark
Balance Sheet”). The Benchmark Balance Sheet was
prepared on the basis of the books and records of the Business as of the date
thereof and presents fairly, in all material respects, the financial position
of the Business as of the date thereof in conformity with GAAP, as modified by
the Specified Accounting Principles, as applied to carve-out financial
statements (except for normal and recurring year end adjustments, which are not
expected in the aggregate to be material in amount, and the omission of
footnotes, the omission of cash flow statements and the selection of periods
presented), consistently with Regulation S-X.


 


(c)                                  The Historical Audited Financial Statements,
the 2004 Audited Financial Statements, the Stub Period Financial Statements and
the Additional Financial Data will, upon their delivery to Purchaser in
accordance with Section 6.9 hereof, fairly present in all material respects,
the results of operations, the financial condition and cash flows of the
Business, the Timber Business or the Paper Business, as applicable, stated and
presented in compliance with Regulation S-X and GAAP, consistently applied with
the preparation of the Unaudited Historical Financial Statements, except as set
forth in Schedule 4.6(c).


 


(d)                                 Except as set forth in Schedule 4.6(d),
when delivered pursuant to Section 6.9, the Historical Combined Audited
Financial Statements will not, excluding the effect of all extraordinary gains
or losses (as determined in accordance with GAAP), differ in any material respect
from the corresponding Unaudited Historical Financial Statements for the
corresponding period. Except as set forth in Schedule 4.6(d), when
delivered pursuant to Section 6.9, the Stub Period Combined Financial
Statements will not, excluding the effect of all extraordinary gains or losses
(as determined in accordance with GAAP), differ in any material respect from
the corresponding Unaudited Financial Statements.


 


(e)                                  None of the Seller, CP nor any of the
Acquired Companies has or is subject to any Liabilities which would be required
to be recorded by GAAP other than: (i) Liabilities recorded or disclosed on the
September 30, 2004 balance sheet included in the Unaudited Historical Financial
Statements, (ii) Liabilities which have arisen after September 30,


 


20





















 


2004 in the Ordinary Course
that are not material to the Balance Sheet of the Business, (iii) Liabilities
reflected in the Closing Date Working Capital, (iv) Excluded Liabilities and
(v) Liabilities arising from matters disclosed by Seller in the Schedules to
this Agreement as of the date hereof.


 


(f)                                    All accounts and notes receivable reflected
on the Unaudited Historical Financial Statements were, and all accounts and
notes receivable to be shown in the computation of Closing Date Net Working
Capital will be, bona fide receivables, accounted for in accordance with GAAP,
consistently applied, and subject to no offsets or counterclaims (other than
any offsets or counterclaims for which adequate reserves have been, or will be,
recorded to the extent required by GAAP), representing amounts due with respect
to actual transactions in the operation of the Business.


 


(g)                                 [Reserved].


 


(h)                                 Except as set forth in Schedule 4.6(h),
the Seller and its Subsidiaries maintain, as it relates to the Business, in all
material respects internal controls over financial reporting to provide
reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements of Seller and its Subsidiaries on a consolidated,
enterprise-wide basis, for external purposes in accordance with GAAP, including
policies and procedures that (i) pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Seller and its Subsidiaries, (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial
statements of Seller on a consolidated basis in accordance with GAAP, and that
receipts and expenditures of the Seller and its Subsidiaries are being made
only in accordance with authorizations of management and directors of the
Seller and its Subsidiaries and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the assets of the Seller and its Subsidiaries.


 


Section
4.7.                                  Material Adverse Changes. Since the Balance Sheet Date, except as
expressly contemplated by the transactions contemplated hereby or as set forth
on Schedule 4.7, (a) the Business has been conducted in all material
respects in the Ordinary Course and (b) there has been no Material Adverse
Effect nor has there been any event or circumstance (or series of events or
circumstances) that, individually or in the aggregate, would reasonably be expected
to result in a Material Adverse Effect. From the Balance Sheet Date until the
date hereof, except as set forth on Schedule 4.7, none of the Seller nor any of
its Subsidiaries has, with respect to the Business:


 


(a)                                   sold, assigned, pledged, hypothecated or
otherwise transferred any portion of the Assets, including the Timberlands and
the timber located thereon, in any case except for (i) sales of inventory and
standing timber in the Ordinary Course and not inconsistent with the Harvesting
Plan, (ii) sales of other assets or properties not in excess of $5 million in
the aggregate, and (iii) the Timberland sales reflected in Schedule 4.7(a);


 


(b)                                  other than in the Ordinary Course, entered
into, terminated or materially amended any Business Contracts or Leases that
are individually or in the aggregate material to the Business;


 


21





















 


(c)                                  suffered any extraordinary damage, destruction
or other casualty loss to any assets that are, individually or in the
aggregate, material to the Business;


 


(d)                                 except as required by applicable Law or the
terms of any Employee Benefit Plan or Individual Agreement, and except for (i)
normal salary administration and ordinary course promotions for Business
Employees or Acquired Company Employees, (ii) increases required by Collective
Bargaining Agreements, Employee Benefit Plans or Individual Agreements, (iii)
increases applicable to Corporate Business Employees that do not exceed $150,000
in the aggregate and (iv) or other compensation increases in the Ordinary
Course, increased the compensation payable or to become payable to any of the
Business Employees or Acquired Company Employees or increased any bonus,
insurance, pension or other employee benefit plan, payment or arrangement made
by Seller, CP or any of the Acquired Companies, for or with any of the Business
Employees or Acquired Company Employees;


 


(e)                                  experienced any material shortage, cessation
or interruption of raw materials, supplies or other services required to
conduct the Business;


 


(f)                                    except as set forth on Schedule 4.7(f),
experienced any material grievance or labor dispute, claim or litigation by or
involving the Business Employees or Acquired Company Employees which could
reasonably be expected to result in liability to the Business in excess of
$200,000 individually or $500,000 in the aggregate;


 


(g)                                 experienced any material adverse dispute of
any kind pending or, to the Seller’s Knowledge, threatened with any material
lessor, lessee, contract vendor or vendee, customer, supplier, distributor or
joint venturer;


 


(h)                                 except for renewals of existing contracts or
the entering into of similar renewed or replacement contracts with different
vendors on substantially the same terms (disregarding reasonable cost or
similar increases), entered into any Business Contract which is for a term of
one year or more and involves the annual payment of more than (i) $5,000,000,
in the case of Business Contracts with customers and merchant distributors of
the Business, (ii) $2,500,000, in the case of Business Contracts with suppliers
to the Business, including pulp and timber Contracts, Contracts regarding the
purchase or sale of energy, steam, and power and (iii) $1,000,000 in the case
of all other Business Contracts;


 


(i)                                     entered into any Business Contract pursuant
to which it agrees to (i) indemnify any Person in any material respect (other
than in the Ordinary Course), or (ii) refrain from competing with any Person or
from engaging in any business or carrying on any business in any geographic
area or during any period of time (excluding, in the case of this clause (ii),
any such Business Contracts which do not impose material business restraints on
the Business and which would not by their terms apply to the shareholder(s) of
Purchaser or any other entities or businesses owned by such shareholder(s));


 


(j)                                     except as required by Law or otherwise in the
Ordinary Course: (i) entered into or made any amendment to any Contract with
any labor or trade union or association representing any Business Employee or
Acquired Company Employee or (ii) adopted, entered into or made any amendment to
any Employee Benefit Plan, in either case that would materially


 


22





















 


increase the cost to the
Business of such Contract or Employee Benefit Plan; or made any material change
in the actuarial methods or assumptions used in funding any defined benefit
pension plan, or made any material change in the assumptions or factors used in
determining benefit equivalencies thereunder;


 


(k)                                  created or assumed any Lien of any kind on
any property or assets, other than Permitted Exceptions;


 


(1)                                  except as listed on Schedule 4.7(1)
granted any material severance or termination pay to any of the employees,
directors, officers or consultants of the Business or materially increased any
benefits payable under any existing severance or termination pay policies or
agreements with any of employees, officers, directors or consultants, including
any of the foregoing that would be triggered by the consummation of the
transactions contemplated by this Agreement, except (as to any of the
foregoing) pursuant to any Employee Benefit Plan or Individual Agreement that
is set forth on Schedule 4.15(a)(i);


 


(m)                               accelerated the collection of accounts or
notes receivable of the Business or deferred the payment of any trade payables
of the Business, other than in the Ordinary Course; or


 


(n)                                 entered into an agreement to do any of the
foregoing.


 


Section
4.8.                                   Taxes.  Except as set forth on Schedule
4.8:


 


(a)                                  all Tax Returns required to be filed by or
with respect to the Acquired Companies or the Business have been timely filed
(taking into account extensions) and all such Tax Returns are complete and
accurate in all material respects;


 


(b)                                 all Taxes for which Seller is obligated to
indemnify Purchaser pursuant to the terms of this Agreement arising in a
Pre-Closing Tax Period and attributable to the Acquired Companies or the
Business, whether or not shown to be due on such Tax Returns (or payable
pursuant to any assessments with respect to such Tax Returns) have been or will
be timely paid to the appropriate taxing authority or to the Purchaser pursuant
to the terms of this Agreement;


 


(c)                                  there is no action, suit, audit, claim or
assessment pending, with respect to a material amount of Taxes of the Acquired
Companies or the Business;


 


(d)                                 all material amounts required to be withheld
or collected for payment by the Acquired Companies, including from employee
salaries, wages and other compensation, have been collected or withheld and
paid to the appropriate taxing authorities;


 


(e)                                  (i) no property of the Acquired Companies and
none of the Purchased Assets is “tax exempt use property” within the meaning of
Section 168(h) of the Code and (ii) none of the Acquired Companies is a party
to and none of the Purchased Assets is subject to any lease made pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954;


 


23





















 


(f)                                    each of the 338(h)(10) Election Entities is a
member of the affiliated group that files a consolidated federal income Tax
Return with Seller as the common parent, and Seller is eligible to join with
Purchaser in making a 338(h)(10) Election with respect to the acquisition by
the Purchaser of each such 338(h)(10) Election Entity;


 


(g)                                 none of the Acquired Companies is obligated
to make any payments (or is a party to any agreement that could obligate it to
make any future payments), and none of the Assumed Liabilities is an obligation
to make any payments, that will not be deductible under Sections 162(m) or 280G
of the Code;


 


(h)                                 none of the Acquired Companies has distributed
stock of another Person, or has had its stock distributed by another Person, in
a transaction that was purported or intended to be governed in whole or in part
by Section 355 or Section 361 of the Code; and


 


(i)                                     since their formations, each Acquired Company
that is a limited liability company has been taxed as a disregarded entity for
income Tax purposes and no elections have been or will be made to treat any
such Acquired Company as a corporation for any income Tax purposes.


 


Section
4.9.                                   Real Property.


 


(a)                                  CP, Seller, a Subsidiary of Seller or an
Acquired Company, in each case as designated on

Schedule 1.2(a)(i), Schedule 1.2(b)(i) or Schedule 4.9(a)(i),
owns valid fee simple title in and to (as to CP) all CP Owned Real Property,
(as to Seller or a Subsidiary of Seller) all Seller Owned Real Property, and
(as to an Acquired Company) all of the real property owned by an Acquired
Company as listed On Schedule 4.9(a)(i) (the real property listed on Schedule
4.9(a)(i) owned by an Acquired Company, the “Acquired Company Owned Real
Property”, which term shall include all
interests and rights of such Acquired Company that are appurtenant to such real
property and related to the operation of the Business thereon) (the CP Owned
Real Property, the Seller Owned Real Property, and the Acquired Company Owned
Real Property, together, the “Owned Real Properties” which term, as defined and used herein,
shall not include the Timberlands, but shall include all interests and rights
of Seller, CP or such Acquired Company that are appurtenant to such real
property and related to the operation of the Business thereon), free and clear
of all Liens other than Permitted Exceptions.


 


(b)                                 Except as disclosed on Schedule 4.9(b),
none of the Owned Real Properties is subject to any material lease, sublease,
license or other agreement that grants to any other Person any rights to
acquire, lease, use or occupy such Owned Real Property or any part thereof.


 


(c)                                  Except as set forth on Schedule 4.9(c),
(i) each material CP Real Property Lease constitutes a valid leasehold estate
in the real estate subject to each such lease, each material Seller Real
Property Lease constitutes a valid leasehold estate in the real estate subject
to each such lease, and each of the material real property leases listed on Schedule
4.9(c), pursuant to which an Acquired Company is the lessee (the “Acquired
Company Real Property


 


24





















 


Leases”;
and each property subject to an Acquired Company Real Property Lease, an “Acquired
Company Leased Real Property”) constitutes a
valid leasehold estate in the real estate subject to each such lease (the CP
Real Property Leases, the Seller Real Property Leases, and the Acquired Company
Real Property Leases, together, the “Real Property Leases”; and
each property subject to a Real Property Lease, a “Leased Real Property” all of which terms, as defined and used
herein, shall not include the Timberlands), subject in each case only to
Permitted Exceptions, (ii) each material Real Property Lease is in full force
and effect and is valid and enforceable in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, moratorium or other laws
affecting the enforcement of creditor’s rights generally or by general principles
of equity, (iii) other than as expressly provided on Schedule 4.9(c)(iii),
neither Seller nor any of its
Subsidiaries acts as a landlord with respect to any Real Property Lease, and
(iv) to the Knowledge of Seller, there is no outstanding material default by
Seller, a Subsidiary of Seller, CP or an Acquired Company (as the case may be)
under any material Real Property Lease.


 


(d)                                 Except as set forth on Schedule 4.9(d),
none of the real estate demised to Seller, a Subsidiary of Seller, CP or an
Acquired Company pursuant to a material Real Property Lease is subject to any
other lease, sublease, license or other agreement granting to any other Person
any rights to lease, use or occupy such real property or any part thereof.


 


(e)                                  Except as set forth in Schedule 4.9(e),
there does not exist any actual or, to the Knowledge of Seller, threatened,
condemnation or eminent domain proceedings that affect any Owned Real Property
or material Leased Real Property, and none of Seller or any of its Subsidiaries
have received any written notice of the intention of any Governmental Body or
other Person to take or use any Owned Real Property or material Leased Real
Property.


 


(f)                                    No Acquired Company owns or leases any
material real property that is Related to the Business, except (i) as included
in the Acquired Company Owned Real Property or as leased under the Acquired
Company Real Property Leases, (ii) as shall be conveyed by Seller or a
Subsidiary of Seller to an Acquired Company (or to Purchaser or its designee,
at Purchaser’s request) at or prior to the Closing, and (iii) the Timberlands.


 


Section
4.10.                             Operations Sites.


 


(a)                                  Mills. (i) Except as set forth in clause (ii) of this Section 4.10(a) and
subject to clause (iv) of this Section 4.10(a): MeadWestvaco Kentucky, L.P., an
Acquired Company, owns valid fee simple title in and to the real property and
the improvements located thereon commonly known as the Wickliffe Mill, located
in Wickliffe, Kentucky (the “Wickliffe Mill”); MeadWestvaco
Oxford Corporation, an Acquired Company, owns valid fee simple title in and to
the real property and the improvements located thereon commonly known as the
Rumford Mill, located in Rumford, Maine (the “Rumford Mill”); MeadWestvaco
Maryland, Inc., an Acquired Company, owns valid fee simple title in and to the
real property and the improvements located thereon commonly known as the Luke
Mill, located in Luke, Maryland (the “Luke Mill”); Escanaba Paper
Company, an Acquired Company, owns valid fee simple title in and to the real
property and the improvements located thereon commonly known as the Escanaba
Mill, located in Escanaba, Michigan (the “Escanaba Mill”); and MW Custom
Papers LLC., owns valid fee simple title in and to the real property and the
improvements located


 


25





















 


thereon
commonly known as the Chillicothe Mill, located in Chillicothe, Ohio (the “Chillicothe
Mill”), the Chilpaco Mill, located in
Chillicothe, Ohio (the “Chilpaco Mill”) and
the Fremont Mill, located in Fremont, Ohio (the “Fremont Mill”, and, together with the Wickliffe Mill,
the Rumford Mill, the Luke Mill, the Escanaba Mill, the Chillicothe Mill and
the Chilpaco Mill, the “Mills”), in each case subject only to
Permitted Exceptions. Except as set forth in clause (ii) of this Section
4.10(a), each Mill is an Owned Real Property and is accurately identified as
such on Schedule 1.2(a)(i) or on Schedule 4.9(a)(i).


 


(ii)                                  The portions of the Mills identified as such
on Schedule 4.10(a) are Leased Real Properties leased to the Seller or
the applicable Subsidiary of Seller (including CP or an Acquired Company)
identified on such Schedule 4.10(a), such Leased Real Properties are
accurately identified in all material respects on such Schedule and are the
subject of the valid and subsisting Real Property Leases identified on such
Schedule, which permit the use of such portions of such Mills for their current
uses (each, together with all amendments and side agreements relating thereto,
a “Mill Lease”). True,
complete and correct copies of each material Mill Lease have been made
available by Seller to Purchaser.


 


(iii)                               All right, title and interest of Seller or a
Subsidiary of Seller in and to all real property, fixtures, easements,
licenses, access rights and appurtenances used in connection with the Business
currently conducted at each Mill is included as part of the Acquired Company
Owned Real Property, Acquired Company Leased Real Property or is otherwise
being transferred (directly or indirectly) by Seller or a Subsidiary of Seller
to Purchaser pursuant to the terms of this Agreement, including, without
limitation, all of Seller’s (or a Subsidiary of Seller’s) right, title and
interest in and to any easements, licenses and other rights necessary (w) to
obtain power, water and other utilities for the benefit of the Mills, (x) to
obtain supplies and other materials for the benefit of the Mills, (y) to
dispose of waste at the Mills in accordance with applicable Law, and (z) to
carry out the operation of the Business currently conducted at each Mill.


 


(iv)                              Notwithstanding anything to the contrary in
this Section 4.10 or elsewhere in this Agreement, it shall not be deemed to be
a misrepresentation or breach of this Agreement by Seller if (x) certain real
property listed in Schedules 1.2(a)(i), 1.2(a)(ii), l.2(b)(i), 1.2(b)(ii),
4.9(a)(i) and 4.9(c) attached hereto is Related to the Business but is not
owned or leased by the particular entity indicated on such Schedule (but is
nevertheless owned or leased by Seller, an Acquired Company or another
Subsidiary of Seller), (y) certain real property listed on such Schedules is in
fact not Related to the Business, or (z) certain real property Related to the
Business is in fact not listed on such Schedules; provided that Seller shall at
its sole cost and expense (other than sharing of transfer taxes as provided
herein, which shall not apply to clause (B) below), (A) in the case of the real
property described in clause (x) above, at the Closing, convey such real
property (or cause such real property to be conveyed) to the correct Acquired
Company (if related to (or a portion of) a Mill owned by such Acquired Company)
or directly to Purchaser (or its designee) as provided herein (provided that
any such conveyances shall be made pursuant to deeds and/or other instruments
of assignment contemplated hereby and otherwise in compliance with the terms
hereof, and any representations, warranties and covenants of Seller hereunder
with respect to Owned Real Property or Leased Real Property shall be applicable
to any such real property, and, if transferred directly to Purchaser, with
applicable transfer taxes being shared as provided herein), (B) in the case of
the real property


 


26





















 


described
in clause (y) above, prior to Closing, cause any Acquired Company owning or
leasing such real property to convey such real property to Seller or a
Subsidiary of Seller (other than an Acquired Company), and if such real
property is owned or leased by Seller or a Subsidiary of Seller, then such real
property shall not be conveyed to Purchaser pursuant to this Agreement, and (C)
in the case of the real property described in clause (z) above, cause such real property to be
conveyed to Purchaser at Closing in accordance with this Agreement (and such
real property shall be deemed to be Owned Real Property or Leased Real Property
hereunder), subject to Section 7.11 (and, if such Undisclosed Business
Property is part of the Mills, Chillicothe Distribution Center or the
Timberlands, Section 6.10) of this Agreement.


 


(b)                                 Distribution Centers. (i) A Subsidiary of Seller owns, directly
or indirectly, good and valid fee simple title in and to the real property
commonly referred to as the Chillicothe Distribution Center, located in
Chillicothe, Ohio (the “Chillicothe Distribution
Center”), subject only to Permitted
Exceptions, which is an Owned Real Property accurately identified on Schedule 1.2(a)(i),
and good and valid leasehold interests in and to the real property commonly
referred to as the Bedford Distribution Center, located in Bedford,
Pennsylvania (the “Bedford Distribution Center”), and
the Keyser Distribution Center, located in Keyser, West Virginia (the “Keyser
Distribution Center”, and, together
with the Chillicothe Distribution Center, the Bedford Distribution Center, and
the Keyser Distribution Center, the “Distribution Centers”).


 


(ii)                                  Each Distribution Center other than the
Chillicothe Distribution Center is a Leased Real Property accurately identified
on Schedule 1.2(b)(ii) which is the subject of a valid Real Property
Lease providing for the use for warehousing and distribution center purposes of
the related Distribution Center by the lessee thereunder. Copies of the Real
Property Leases for the Bedford and Keyser Distribution Centers have been
provided by Seller to Purchaser, and such copies are true, correct and complete
in all material respects.


 


(iii)                               All right, title and interest of Seller or a
Subsidiary of Seller in and to all real property, fixtures, easements,
licenses, access rights and appurtenances used in connection with the Business
currently conducted at each Distribution Center is included as part of the
Acquired Company Owned Real Property, Acquired Company Leased Real Property or
is otherwise being transferred (directly or indirectly) by Seller or a
Subsidiary of Seller to Purchaser pursuant to the terms of this Agreement,
including, without limitation, all right, title and interest of Seller or any
Subsidiary of Seller in and to any easements, licenses and other rights
relating to (x) power, water and other utilities for the benefit of the
Distribution Centers, (y) parking, access and egress (including railroad spur
access and egress) as currently utilized at the Distribution Centers, and (z)
the distribution of products by Seller or its Subsidiaries, in each case, as
necessary for the operation of the Business currently conducted at each
Distribution Center.


 


Section 4.11.                             Timberlands.


 


(a)                                  The term “Timberlands” shall mean the real property (including any
and all interests and rights of Seller (or Seller’s Subsidiary, as applicable)
that are appurtenant to such real property and related to the operation of the
Business thereon) identified on Schedule 4.11(a), which real
property is forest land used or intended for use for the purpose of growing and
harvesting timber for use in the Business and uses directly related thereto
(provided that the


 


27





















 


term
“Timberlands” shall exclude (i) any timberlands sold by
Seller or its Subsidiaries as permitted pursuant to Section 6.2(c) hereof,
and (ii) any Deleted Parcels (as defined in Section 6.12(f)(ii) hereof). Except
as set forth on Schedule 4.11(a), Seller or a Subsidiary of Seller
owns valid fee simple title to the Timberlands, subject only to the Permitted
Exceptions. The Timberlands constitute all the real property owned by Seller or
its Subsidiaries and used by (or intended to be used by) Seller or any of its
Subsidiaries for the purpose of growing and harvesting timber for the use in
the Business, except for the timberlands (the “Covington Timberlands”) that
provide timber for both the Luke Mill and Seller’s bleached board mill in
Covington, Virginia. Schedule 4.11(a) lists the states and
approximate acreage of the Timberlands. Except as set forth on Schedule 4.1l(a)
and except for the Covington Timberlands, the Seller does not, directly or
through one of more of its Subsidiaries, own, lease, license or occupy any real
property that is used in the growing and harvest of timber for the Business,
other than the Timberlands.


 


(b)                                 [Reserved].


 


(c)                                  To the Knowledge of Seller, (i) there are no
outstanding violations of Laws (or violation of Laws claimed by any
Governmental Body) on the part of Seller or a Subsidiary of Seller in
connection with its operation and management of the Timberlands that have had a
material adverse effect on Seller’s (or such Subsidiary’s) use of the
Timberlands as commercial timberland or tree farms or on Seller’s commercial
harvesting of timber therefrom, (ii) there is no outstanding material failure
by Seller or any of its Subsidiaries to comply with any Order imposed upon
Seller or any such Subsidiary by
any Governmental Body pertaining to any of the Timberlands or the use,
occupancy, logging or condition thereof, and (iii) there is no pending change
in the application of any forestry, zoning, land classification, environmental,
or land use Laws to the Timberlands that would have a material adverse effect
on the ability to log or conduct commercial timber or tree farming operations
on such property after Closing.


 


(d)                                 Except as set forth in the Geographic
Information System (the “GIS”)
maintained by Seller with respect to the Timberlands and a copy or copies of
which have been delivered to Purchaser on or prior to the date hereof (on three
CD-ROMs, one per forest, labeled with the date December 31, 2004), to the
Knowledge of Seller, (i) there are no areas of the Timberlands with respect to
which Seller or its Subsidiaries have a legal obligation under the Federal
Endangered Species Act or comparable state, local or municipal Laws to protect
endangered species (“Protected Species”) which inhabit such areas; and (ii)
there are no pending or threatened Legal Proceedings against Seller, any of its
Subsidiaries or the Timberlands based upon the presence of any Protected
Species on the Timberlands.


 


(e)                                  To
the Knowledge of Seller, and except as set forth on Schedule 4.11(e),
there has been no material loss of timber from the Timberlands due to any
casualty, insect infestation or other causes beyond the control of Seller since
January 1, 2002.


 


(f)                                    Except as set forth on Schedule 4.11(f),
there are no Contracts or Liens affecting or pertaining to the Timberlands or
any portion thereof other than (i) Permitted Exceptions, (ii) Contracts entered
into in the Ordinary Course, and (iii) such other Contracts and Liens that do
not materially and adversely affect the commercial harvesting of timber on the
Timberlands (or any portion thereof).


 


28





















 


(g)                                 Except as set forth on Schedule 4.11(g),
to the Knowledge of Seller, there are no unresolved boundary disputes, and no
unresolved disputes with respect to encroachments, between Seller (or any
Subsidiary of Seller) and any third party affecting any of the Timberlands or
any portion thereof, nor is any Person adversely possessing any of the
Timberlands or any portion thereof, except for such matters that do not have a
material adverse effect on the commercial harvesting of timber on the
Timberlands (or any portion thereof).


 


(h)                                 There are no management or brokerage
agreements affecting the Timberlands to which Seller, or any Subsidiary of
Seller, is a party that will or are reasonably likely to create a liability for
Purchaser or any of its Designated Affiliates, or a Lien upon the Timberlands
(other than obligations to pay brokerage fees pursuant to land sales contracts
set forth in Schedule 4.11(h) hereto), and there are no agreements
to which Seller or its Subsidiaries are a party for operation or maintenance
services to be provided to the Timberlands, other than those that are
terminable on not more than 90 days’ notice to the service provider or are
otherwise referenced on Schedule 4.11(h).


 


(i)                                     Except as set forth on Schedule 4.11(i), to Seller’s Knowledge, there are no
unresolved disputes between Seller (or any Subsidiary of Seller) and any third
party with respect to access to the Timberlands that would have a material
adverse effect on the continued commercial timberland use, tree farming, and
commercial logging, in the manner currently conducted by Seller or its
Subsidiaries on any parcel included in the Timberlands.


 


(j)                                     Seller and its Subsidiaries have during the
past two years operated the Timberlands in the Ordinary Course, including (i)
conducting their ongoing timber harvest operations on the Timberlands (x) in a
manner sufficient to obtain certification from the Sustainable Forestry
Initiative Program (“SFI Certification”) with respect to the Timberlands
during such period, and (y) in accordance in all material respects with any
applicable state forestry Best Management Practices, and (ii) performing
necessary and prudent maintenance of roads, drainage systems, fire protection
and prevention as well as appropriate stand establishment activities. Seller
has obtained SFl Certification for the Timberlands and such certification is in
full force and effect.


 


(k)                                  Except as set forth on Schedule 4.11(k),
to the Seller’s Knowledge, there has been no mining activity on the Timberlands
during the three (3) years immediately preceding the date hereof that has
materially and adversely affected, or that would reasonably be expected to
materially and adversely affect, the commercial harvesting of timber on the
Timberlands or any portion thereof.


 


(l)                                     Except as set forth on Schedule 4.11(l),
during the three (3) years immediately preceding the date hereof, none of
Seller or any of its Subsidiaries has taken any action or failed to take any
action that would reasonably be expected to cause a change in the
classification of the Timberlands for tax purposes (including real estate tax
purposes), or any portion thereof (other than with respect to amounts of
acreage that are immaterial), as “forest land” or “timberland”.


 


(m)                               To the Knowledge of Seller, and subject to
(i) land sales described on Schedule 6.2(c) hereto, (ii) normal and
customary harvesting of timber performed by or on


 


29





















 


behalf
of Seller or any Subsidiary of Seller in the Ordinary Course and not
inconsistent with the Harvesting Plan, and (iii) the natural growth and
mortality of timber, the (A) aggregate amount of merchantable timber tonnage
across all of the Timberlands set forth on Schedule 4.11(m)-1, and
(B) breakdown of merchantable hardwood and softwood timber tonnage by forest
set forth on Schedule 4.11(m)-2 are true and correct in all
material respects. For purposes of the representations set forth in this
Section 4.11(m), the parties agree that (i) “in all material respects” as
to merchantable timber tonnage will be defined as within a 10% variance, and
(ii) the truth or falsify thereof may be determined prior to, on or after
Closing pursuant to timber cruises of statistically relevant parcels (given the
nature of Seller’s representations being made in this Section 4.11(m)) of
the Timberlands and analysis thereof, which timber cruises shall be completed
within six (6) months after the Closing Date, all in accordance with usual
custom and practice of purchasers and sellers in the timber industry. The
breakdown of merchantable pulpwood and saw timber tonnage by forest as set
forth on Schedule 4.11(m)-3 has been prepared by Seller in good
faith in the Ordinary Course and for utilization by Seller in the operation of
the Business.


 


(n)                                 Except as set forth in Schedule 4.11(n),
no Persons other than Seller or a Subsidiary of Seller (or contractors
harvesting on their behalf) have the right to harvest timber on the
Timberlands, except pursuant to Contracts entered into by Seller or its
Subsidiaries in the Ordinary Course and in a manner not inconsistent with the
Harvesting Plan.


 


(o)                                 To the Knowledge of Seller, there are no
currently existing facts or conditions with respect to the Timberlands that
would prevent an owner of the entire Timberlands from growing and making
available for harvest such volumes of timber on the Timberlands as are
indicated in the Harvesting Plan, provided that such owner operates and manages
the Timberlands (including making capital expenditures) in the same manner as
Seller and its Subsidiaries, and excluding the adverse effect of weather
conditions, casualty, insect infestations, and other causes beyond the control
of an owner of Timberlands.


 


(p)                                 As used in this Section 4.11, the term “to
the Knowledge of Seller” or “to Seller’s Knowledge” shall refer to the actual
knowledge of James H. Hill (Vice President, Land Acquisition and Sales),
Bradley Homeier (Region Director, Escanaba Forest), Steve Mathey (Harvesting
Director and former Forest Manager, Chillicothe Forest), Greg Dale (Forest
Manager, Wickliffe Forest), Sam Houston (VP Finance and Strategy of Forestry),
Gene Parker (President, Forestry Division) and Mark Watkins (Senior Vice
President of Seller). Seller represents and warrants to Purchaser that (i) Mr.
Hill is knowledgeable with respect to the matters described in this
Section 4.11, based partly on his own knowledge and based partly on the
knowledge of others (including the individuals listed in the following clause
(ii)), (ii) Messrs. Homeier, Mathey and Dale are knowledgeable with respect to
the matters described in this Section 4.11 (as applicable to the Escanaba,
Chillicothe and Wickliffe forests, respectively), (iii) Messrs. Hill, Homeier,
Mathey and Dale have made due inquiry with respect to such matters, and (iv)
Messrs. Houston, Parker and Watkins are supervisory personnel in Seller’s
forestry division.


 


30





















 


Section 4.12.                             Tangible Personal Property.


 


(a)          Each lease of personal property (i) included in the Purchased Assets
requiring lease payments equal to or exceeding U.S.$500,000 per annum, or (ii)
the loss of which would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect (collectively, the “Personal
Property Leases”), is
in full force and effect and is valid and enforceable in accordance with its
terms, and there is no material default under any Personal Property Lease
either by Seller or its Subsidiaries or, to the Knowledge of Seller, by any
other party thereto, and no event has occurred that, with the lapse of time or
the giving of notice or both, would constitute a material default by Seller or
its Subsidiaries thereunder; and


 


(b)         Seller or one of its Subsidiaries has good and valid title to each
material item of owned Purchased Equipment, free and clear of any and all Liens
other than Tangible Personal Property Permitted Liens.


 


Section 4.13.                             Intellectual Property. (a) Schedule 4.13(a) sets forth
a true and complete list and description of (i) all Registered Acquired
Intellectual Property and (ii) all Intellectual Property used in the operation
of the Business that constitutes Excluded IP Assets.


 


(b)                                 As of the date hereof, there are no Legal
Proceedings decided, settled, pending or, to the Knowledge of Seller,
threatened, by or against Seller or any of its Subsidiaries that concern any
Acquired Intellectual Property or Business Data, including any such Legal
Proceedings involving claims of infringement or other violation, validity,
enforceability, ownership or the right to use any of the foregoing.


 


(c)                                  To Seller’s Knowledge, the operation of the
Business and the use of the Acquired Intellectual Property are not, and during
the immediately preceding two years were not, infringing or otherwise in
violation, in any material respect, of any Intellectual Property of any other
Person.


 


(d)                                 To Seller’s Knowledge, no Person is
infringing or otherwise in violation, in any material respect, of any of the
Acquired Intellectual Property in connection with the operation of the
Business.


 


(e)                                  Schedule 4.13(e) sets forth a true and complete list of all
material IP Licenses. There are no Legal Proceedings decided, settled, pending,
or to the Knowledge of Seller, threatened, by or against Seller or any of its
Subsidiaries, concerning any material IP License, including any Legal
Proceeding concerning a claim or position that Seller or any of its
Subsidiaries or another party thereto has breached any material IP License or
that any material IP License is invalid or unenforceable. Seller and its
Subsidiaries are in compliance with, and have conducted their business so as to
comply with, all material terms of all material IP Licenses. There exists no
event, condition or occurrence which, with the giving of notice or lapse of time,
or both, would constitute a material breach or default by Seller or any of its
Subsidiaries or another party under any material IP License. No party to any
material IP License has given Seller or any of its Subsidiaries notice of its
intention to cancel, terminate or fail to renew any material IP License.


 


31





















 


(f)                                    To the Knowledge of Seller, (i) the Acquired
Intellectual Property is valid, subsisting and enforceable and (ii) Seller and
each Acquired Company has timely made in all material respects all filings,
payments and ownership recordations with the appropriate foreign and domestic
agencies required to maintain in subsistence, in the name of Seller or one of
its Subsidiaries, all Acquired Intellectual Property.


 


(g)                                 All Intellectual Property of Seller and its
Subsidiaries, except the Excluded IP Assets, used in the operation of the
Business will be transferred to Purchaser (or one of its Subsidiaries) at
Closing and such Intellectual Property will be available to Purchaser (or one
of its Subsidiaries) immediately after Closing on the same terms and conditions
under which it was available to Seller and its Subsidiaries prior to the
Closing (except to the extent that any consent is required by any licensor of
licensed Intellectual Property in connection with the transactions contemplated
by this Agreement). The Seller Name and the other Trademarks, designs or logos
used in the operation of the Business that do not constitute part of the
Acquired Intellectual Property will remain available for use by Purchaser,
without restriction and without infringing on the rights of any other Person,
in the operation of the Business after Closing in the manner and to the extent
provided in Section 7.7 hereof.


 


(h)                                 Seller and each of its Subsidiaries have
taken reasonable measures to protect the secrecy, confidentiality and value of
all the Trade Secrets Related to the Business, and to Seller’s Knowledge, no
unauthorized disclosure of any such Trade Secrets has occurred.


 


(i)                                     The Computer Hardware Related to the Business
as of the Closing Date is in good working condition (normal wear and tear
excepted). Other than those errors and defects inherent in Computer Hardware
that are generally known within the information technology industry, there has
not been any material and recurring malfunction with respect to such Computer
Hardware since January 1, 2002 that has not been remedied or replaced in
all material respects.


 


(j)                                     Schedule 4.13(j) sets forth a true and complete list of all
Computer Software that is (i) Purchased Seller Software; (ii) owned by Seller
or any of its Subsidiaries (other than the Acquired Companies) and used in the
Business but not contained within the definition of the term “Related to the
Business” (“Included Seller Software”); (iii) Purchased Third Party Software; or
(iv) licensed by Seller or any of its Subsidiaries (other than the Acquired
Companies) and used in the Business but not contained within the definition of
the term “Related to the Business” (“Included Third Party Software”).


 


(k)                                  All Business Software is transferred or made
available to Purchaser and/or one or more of its Designated Affiliates
hereunder on an “AS IS” basis as currently used in the Business. Without
limiting the foregoing, to the Knowledge of Seller, the Business Software: (i)
is in machine readable form and is in good working condition (normal wear and
tear excepted); (ii) contains no Disabling Devices, and (iii) other than those
errors and defects inherent in Computer Software that are generally known
within the information technology industry, has not suffered from any material
and recurring malfunctions since January 1, 2002 that have not been
remedied in all material respects.


 


32





















 


(1)                                  To the Knowledge of Seller, the use of the
Business Data by Seller or its Subsidiaries prior to the Closing Date does not
infringe or violate the rights of any Person, or otherwise violate any United
States Law.


 


Section 4.14.                             Contracts. Schedule 4.14 sets forth a true, complete and correct
list, as of the date hereof (or if not in writing, a description thereof), of
each of the following Contracts related to the Business to which Seller or any
of its Subsidiaries is a party or by which it is bound:


 


(a)                                  Contracts for, or setting forth any of the
terms or conditions relating to, the employment or termination of employment of
any officer, consultant or employee whose basic annual compensation (including
bonus and/or commission) is in excess of $150,000, other than any Contract that
is terminable within 90 days without the Business incurring any penalty or fee;


 


(b)                                 (i) Contracts for the purchase, or the sale,
supply or provision, of merchandise, steam, materials, energy, supplies or
services, including operating, land management and resource management and
repair and timber hauling or cutting; (ii) Contracts for the purchase or lease
of equipment, or (iii) Contracts relating to franchise, distributorship or sale
agency arrangement, in each case ((i), (ii) or (iii)) not capable of being
fully performed or not terminable by Seller or its Subsidiaries without penalty
or premium within a period of 90 calendar days and involving annual payments in
excess of (A) $5,000,000, in the case of Contracts with customers and merchant
distributors of the Business, (B) $2,500,000, in the case of Contracts with
suppliers to the Business, including pulp and timber Contracts and Contracts
regarding the purchase or sale of energy, steam, and power, and (C) $2,000,000
in the case of all other Business contracts;


 


(c)                                  Contracts for the purchase or sale of any of
its assets in excess of $2,500,000, other than in the Ordinary Course, or any
shares of its subsidiaries or interests in its businesses or joint ventures;


 


(d)                                 Contracts relating to any partnership or
joint venture involving payments by the Business in excess of $1,000,000 in the
aggregate


 


(e)                                  Contracts that contain a non-compete or
customer non-solicitation covenant or similar obligation (excluding any such
Contracts which do not restrict the Business in any material respect and which
would not apply to the shareholder(s) of Purchaser or any other entities or
businesses owned by such shareholder(s) as a result of Purchaser’s acquisition
of the Business);


 


(f)                                    Contracts that contain any material
indemnification obligation by or for the benefit of the Seller or any of its
Subsidiaries, other than agreements entered into in the Ordinary Course;


 


(g)                                 Collective Bargaining Agreements; 


 


(h)                                 Real Properly Leases;


 


33





















 


(i)                                     Intercompany Contracts; and


 


(j)                                     Contracts relating to Indebtedness (Including
any Guarantees and any Hedging Agreements) ((a) through (j) being referred to
collectively, the “Material Business Contracts”).


 


True
and correct copies of all Material Business Contracts have been provided to
Purchaser prior to the date hereof, together with any amendments, supplements,
exhibits, schedules or addendums thereto. Seller and its Subsidiaries have
performed, in all, material respects, all of the obligations required to be
performed by them to date, and are not in material default under, any of the
Material Business Contracts, and, to the Knowledge of Seller, no other party to
one of the Material Business Contracts is in material default thereunder. Each
Material Business Contract is in full force and effect and constitutes the
valid and legally binding obligation of the Seller or its applicable Subsidiary
and, to the Knowledge of Seller, each other party thereto, enforceable in
accordance with its terms, extent as may be limited by applicable bankruptcy,
insolvency, moratorium or other laws affecting the enforcement of creditors’
rights generally or by general principles of equity.


 


Section 4.15.                             Employee Benefits.  (a) Schedule 4.15(a)(i)  sets forth a true and correct list, as of the
date hereof, of each Employee Benefit Plan providing benefits to Acquired
Company Employees and Business Employees at an annual cost to Seller and its
Affiliates in excess of $200,000. For purposes of this Agreement, “Employee Benefit Plan” means each written employee benefit plan,
and any other written incentive compensation or employee benefit plan,
arrangement or agreement (including pension benefit, welfare benefit,
retention, change in control, severance, disability, fringe benefit, deferred
compensation, bonus or other incentive compensation and stock option, purchase
or other equity based plans, agreements and arrangements, but excluding payroll
practices and plans, agreements and arrangements that are mandated by Law) (“Plans”) that are sponsored or
maintained by Seller or any of its Subsidiaries, to which Seller or any of its
Subsidiaries contributes or is obligated to contribute, in any such case, for
the benefit of Acquired Company Employees and Business Employees, including
those Plans listed on Schedule 4.15(a)(i)(B) that are applicable to
Acquired Company Employees and Business Employees who are employed outside the
United States. Schedule 4.15(a)(ii) identifies each Plan that is
sponsored, maintained or contributed to or required to be contributed to solely
by one or more of the Acquired Companies, or to which solely the Acquired
Companies are required to contribute (collectively, the “Acquired Company Plans”) and
each employment, change-in-control or severance agreement between Seller or any
of its Subsidiaries, on the one hand, and any Business Employee or Acquired
Company Employee, on the other hand (the “Individual Agreements”).


 


(b)                                 Except as would not reasonably be expected to
have a Material Adverse Effect, each Employee Benefit Plan has been established
and administered in accordance with its terms, and in compliance with the
applicable provisions of ERISA, the Code and other applicable laws, rules and
regulations.


 


(c)                                  True and correct copies of the Employee
Benefit Plans and the most recent plan summaries, if any, and all amendments or
supplements thereto, with respect to each of the Employee Benefit Plans (as
applicable) have been made available by Seller to Purchaser. Except


 


34





















 


as
would not reasonably be expected to result in material liability to the
Business, there are no pending or, to the Knowledge of Seller, threatened Legal
Proceedings, audits or investigations against or involving any Acquired Company
Plan, the assets of any such plan or the plan administrator or fiduciary of any
Acquired Company Plan (other than routine benefit claims).


 


(d)                                 Schedule 4.15(d)  sets
forth a true and correct list, as of the date of this Agreement, of each
Employee Benefit Plan that is a defined contribution pension plan in which
Acquired Company Employees or Business Employees participate (the “Seller Savings Plans”) or a defined
benefit pension plan in which Acquired Company Employees or Business Employees
participate (the “Seller Pension Plans”). The
Internal Revenue Service has issued a favorable determination letter with
respect to each Seller Savings Plan and each Seller Pension Plan and the
related trust that has not been revoked, and, to the Knowledge of Seller, there
are no existing circumstances and no events have occurred that could be
reasonably expected to adversely affect the qualified status of any Seller
Savings Plan or any Seller Pension Plan or the related trust. No “reportable event”
as defined in Section 4043(c) of ERlSA has occurred with respect to any
Seller Pension Plan (other than an event for which the 30-day notice-period has
been waived).


 


(e)                                  Schedule 4.15(e)  sets
forth a true and correct list, as of the date of his Agreement, of each Plan
sponsored by Seller or any of its Subsidiaries under which Former Acquired
Company Employees or Former Business Employees and their respective
beneficiaries and dependents receive post-retirement medical, health and life
insurance benefits (other than Cobra Coverage) (the “Retiree Medical Plans”). Seller
has used its reasonable best efforts to provide to Purchaser each written
communication to Acquired Company Employees, Former Acquired Company Employees,
Business Employees and Former Business Employees that, to the Knowledge of
Seller, describe the terms and conditions for receipt of Retiree Medical
Benefits under the Retiree Medical Plans by Acquired Company Employees. The
obligation to provide benefits for Non-Represented Employees under the Retiree
Medical Plans may be amended or terminated at any time for any reason.


 


(f)                                    Schedule 4.15(f) sets forth a true and correct list, as of
the date of this Agreement, of each Employee Benefit Plan providing medical,
dental, life insurance, disability and other welfare benefits to Acquired
Company Employees or Business Employees (the “Seller Welfare Plans”).


 


(g)                                 Except for severance benefits provided under
the terms of any Collective Bargaining Agreement, Schedule 4.15(g)
sets forth a true and correct list, as of the date of this Agreement, of each
Employee Benefit Plan under which Acquired Company Employees or Business
Employees are eligible for severance benefits (the “Severance Plans”).


 


(h)                                 With respect to each of the Employee Benefit
Plans referred to in Sections 4.15(d) – (g) (the “Specified Seller Plans”), Seller
has made available to Purchaser a true, correct and complete copy of: (i) each
writing constituting a part of such Specified Seller Plan, including without
limitation all plan documents, employee communications that to the Knowledge of
Seller describe the terms and conditions for receipt of benefits, benefit
schedules, trust agreements, and insurance contracts and other funding
vehicles: (ii) the most recent Annual Report (Form 5500 Series) and
accompanying schedule, if any; (iii) the current summary plan


 


35





















 


description
and any material modifications thereto, if any; and (iv) the most recent annual
financial report, if any. Seller has delivered or made available to Purchaser a
true, correct and complete copy of each Individual Agreement. Except as
specifically provided in the foregoing documents made available to Purchaser,
there are no amendments to any Specified Seller Plan or Individual Agreement
that have been adopted or approved nor has Seller or any of its Subsidiaries
undertaken to make any such amendments or to adopt or approve any new Specified
Seller Plan or Individual Agreement.


 


(i)                                     Except as set forth on Schedule 4.15(i),
and except as required by Law or relating to the vesting of benefits under the
Mead Westvaco Corporation Retirement Plan for Salaried and Non-Bargained Hourly
Employees; neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will (whether alone or together with any other
event or events) (i) entitle any Acquired Company Employee or Business Employee
to any increase in any compensation or benefits (including any cash or equity
award or benefit), (ii) accelerate the time at which any compensation, benefits
or award may become payable, vested or required to be funded in respect of any
Acquired Company Employee or Business Employee, (iii) entitle any Acquired
Company Employee or Business Employee to any additional compensation, benefits
or award, or (iv) constitute a “change of control” as defined in any Employee
Benefit Plan or Individual Agreement.


 


(j)                                     No Acquired Company Plan is maintained
outside the jurisdiction of the United States, or covers any employee residing
or working outside the United States


 


(k)                                  Except as set forth on Schedule 4.15(k),
neither the Seller nor any ERISA Affiliate is required to contribute to any “multiemployer
plan” (as defined in Section 4001(a)(3) of ERISA) or, during the six years
prior to the date hereof, has withdrawn from any multiemployer plan where such
withdrawal has resulted in or would result in any “withdrawal liability”
(within the meaning of Section 4201 of ERISA).


 


Section 4.16.                             Labor. (a) Set forth on Schedule 4.16(a) is a true and correct list,
as of the date hereof, of each labor or collective bargaining agreement to
which Seller on its Subsidiaries are a party that apply to Acquired Company
Employees or Business Employees (each, a “Collective Bargaining Agreement”).


 


(b)                                 No labor organization representing any
Acquired Company Employees or Business Employees or group of Acquired Company
Employees or Business Employees has made a written demand against Seller or any
of its Subsidiaries for recognition; and there are no representation
proceedings or written petitions seeking a representation proceeding presently
pending against Seller or any of its Subsidiaries involving any Acquired
Company Employees or Business Employees or, to the Knowledge of Seller,
threatened in writing to be brought or filed against Seller or any of its
Subsidiaries Related to the Business with the United States National Labor
Relations Board or other labor relations tribunal. To the Knowledge of Seller,
there is no ongoing organizing activity involving Acquired Company Employees or
Business Employees pending or, to the Knowledge of Seller, threatened by any
labor organization or group of Acquired Company Employees or Business
Employees.


 


36





















 


(c)                                  Except as set forth on Schedule 4.16(c),
as of the date hereof there are no (i) strikes, work stoppages, slowdowns or
lockouts, (ii) grievances or other labor disputes or proceedings pending or
threatened in writing against or involving any Acquired Company Employees or
Business Employees (except as would not reasonably be expected to have a
Material Adverse Effect), or (iii) unfair labor practice charges, grievances or
complaints pending or, to the Knowledge of Seller, threatened by or on behalf
of any Acquired Company Employees or Business Employees (except as would not
reasonably be expected to have a Material Adverse Effect).


 


(d)                                 To the Knowledge of Seller, except as would
not reasonably be expected to result in material liability to the Business, the
Acquired Companies are in substantial compliance with all Laws and Orders
affecting the Business relating to the employment of their respective
employees, including all such Laws and Orders relating to wages, hours,
collective bargaining, employment discrimination, immigration, disability,
civil rights, occupational safety and health, workers’ compensation, pay equity
and the collection and payment of withholding and/or social contribution taxes
and similar Taxes.


 


(e)                                  Except as set forth on Schedule 4.16(e),
from January 1, 2003 through the date hereof there has been no event that
has caused or required Seller to issue a notice under the Worker Adjustment and
Retraining Notification Act or any similar Law with respect to any Acquired
Company Employees, Business Employees, Former Acquired Company Employees or
Former Business Employees. Seller has provided Purchaser with a list of (x) the Former Acquired Company
Employees and/or Former Business Employees who have suffered an “employment
loss” (as defined under WARN) within a ninety (90) day period prior to the date
hereof and (y) the Acquired Company Employees and Business Employees who have
been notified that they will incur an “employment loss,” within a ninety (90)
day period prior to the date hereof.


 


Section 4.17.                             Litigation. As of the date hereof, there is no Legal Proceeding pending or, to
the Knowledge of Seller, threatened in writing against Seller or any of its
Subsidiaries that challenges, or questions the validity of, this Agreement, any
Seller Document or any action taken or to be taken by Seller and its
Subsidiaries in connection with, or which seeks to enjoin or obtain monetary
damages in respect of, the consummation of the transactions contemplated hereby
or thereby. Schedule 4.17 sets forth a true and correct list, as of
the date hereof, of all material pending or, to the Knowledge of Seller,
threatened Legal Proceedings Related to the Business, the Assets or the Assumed
Liabilities, the Acquired Company Employees or the Business Employees in which
Seller or any of its Subsidiaries or any officer or director thereof (in such
capacity) is a party. There is no Legal Proceeding pending or, to Seller’s
Knowledge, threatened against Seller or any of Seller’s Subsidiaries or any of
their respective assets or properties that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. None of
Seller nor any of its Subsidiaries (with respect to the Business) nor the
Assets is subject to any Order except for regulatory decrees and orders of
general applicability to both the Business and others conducting similar
businesses in the affected jurisdiction which do not and could not reasonably
be expected to materially impair the operation of the Business or materially
detract from the value of the Business.


 


37





















 


Section 4.18.                             Compliance with Other Laws/Permits. With respect to the Business conducted by
it and its Subsidiaries (including the Business conducted by Seller and its
Subsidiaries at the Mill Sites and Distribution Centers), Seller and each
Subsidiary of Seller is and has been since January 1, 2002 in compliance
with all applicable Laws and all Orders and Permits of or from Governmental
Bodies, except for instances of noncompliance or possible noncompliance that
(i) are within the scope of Section 4.13 (Intellectual Property, 4.14
(Contracts), 4.15 (Employee Benefits), 4.16 (Labor) or 4.19 (Environmental
Matters), or (ii) would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Seller, CP and the Acquired
Companies have all Permits that are material to the operation of the Business
(other than environmental Permits, which are covered by Section 4.19), a
true and complete list of which is contained in Schedule 4.18,
required for the ongoing conduct of the Business where and as it is currently
being conducted, including at the Mill Sites and Distribution Centers. To
Seller’s Knowledge, there is no pending or threatened Legal Proceeding before any
Governmental Body to suspend, revoke, materially modify (other than
modifications made in connection with a normal renewal of an expiring Permit)
or cancel any such material Permit, or any claims by or before any Governmental
Body alleging or investigating any violation of Law with respect to any such
material Permit.


 


Section 4.19.                             Environmental Matters. 
Except as set forth on Schedule 4.19 or as would not
reasonably be expected to have a Material Adverse Effect: (a) to the Knowledge
of Seller, the Business as currently operated is being conducted by Seller and
its Subsidiaries in compliance with all applicable Environmental Laws (it being
understood that Seller makes no representation or warranty pursuant to this
Section 4.19 as to conditions or activities that do not originate from or
otherwise relate to the Business), (b) to the Knowledge of Seller, the Business
as currently operated is in possession of and in compliance with all necessary
Environmental Permits, (c) to the Knowledge of Seller, there have been no
Releases of Hazardous Materials in violation of applicable Environmental Laws
at, on or under the Business Facilities, (d) to the Knowledge of Seller, as of
the date hereof, there are no Environmental Claims have been asserted or
threatened in writing against Seller or any of its Subsidiaries in connection
with the Business, (e) to the Knowledge of the Seller, no Environmental Claims
have been asserted in writing against facilities that received Hazardous
Materials Handled by the Business which are reasonably likely to result in
Environmental Liabilities, and (f) to the Knowledge of the Seller, there are no
violations of Environmental Law or any Releases of Hazardous Materials at any
of the woodyards used in the Business on the Closing Date which are reasonably
likely to result in Environmental Liabilities.


 


Section 4.20.                             Ownership of Necessary Assets and Rights. (a) Except for the (a) Excluded Assets
referred to in Sections 1.3(a), (c), (d), (f), (g), (j) and (k), and (b) those
assets and services to be provided pursuant to the terms of the Transition
Agreements, the Assets to be transferred to Purchaser on the Closing Date are
in all material respects sufficient for the conduct of the Business immediately
following the Closing in substantially the same manner as conducted on the date
hereof.


 


(b)                                 Seller, CP and/or one or more of the Acquired
Companies have, and will at Closing convey to the Purchaser, good and valid
title to (or valid leasehold interest in) the Assets (other than Real Property
and Timberlands, which are addressed in Sections 4.9. 4.10 and 4.11), free and
clear of all Liens (other than Tangible Personal Property Permitted Liens).


 


38





















 


Section 4.21.                             Distributors, Customers. Licensees and
Suppliers.  Schedule 4.21 contains a list of
each of the top ten customers, distributors and suppliers of the Business, on
the basis of revenues generated or expenditures made, as applicable, during the
twelve months ended on the Balance Sheet Date. From the Balance Sheet Date to
the date hereof, none of the customers, distributors or suppliers listed on Schedule 4.21
has canceled, terminated or materially and adversely modified or, to the
Knowledge of Seller, threatened to cancel, terminate or materially and
adversely modify, its relationship with the Business and the relationship with
each such customer, distributor or supplier has not changed in any materially
adverse respect.


 


Section 4.22.                             Absence of Certain Business Practices. 
During the two years immediately preceding the date hereof, none of the
Seller nor any of its Subsidiaries, nor any officer, director, employee,
consultant or agent thereof acting on their respective behalf has directly or
indirectly (as it relates to the Business), (a) made any contribution or gift
which contribution or gift is in material violation of any applicable Law, (b)
in material violation of applicable Law, made any bribe, rebate, payoff,
influence payment, kickback or other payment to any Governmental Body (or representative
or official thereof) or made any bribe, rebate, payoff influence payment,
kickback or other payment to any Person other than a Governmental Body, in each case, regardless of
form, whether in money, property or services (i) to obtain favorable treatment
in securing business (ii) to pay for favorable treatment for business secured,
or (iii) to obtain special concessions or for special concessions already
obtained for or in respect of the Business, or (c) established or maintained,
directly or indirectly, any fund or asset for the purpose of making any payment
described in the foregoing clauses (a) and (b). In addition to, and not in
limitation of, the foregoing, none of Seller nor any of its Subsidiaries, nor
any officer, director, employee, consultant or agent thereof acting on their
respective behalf has made (as it relates to the Business), directly or
indirectly, any payment or promise to pay, or gift or promise to give or
authorized such a promise or gift, of any money or anything of value, directly
or indirectly, to: (x) any foreign official (as such term is defined in the
Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”)) for the purpose of influencing any
official act or decision of such official or inducing him or her to use his or
her influence to affect any act or decision of a foreign government, or any
agency or subdivision thereof; or (y) any foreign political party or official,
thereof or candidate for foreign political office for the purpose of
influencing any official act or decision
of such party, official or candidate or inducing such party, official or
candidate to use his, her or its influence to affect any act or decision of a
foreign government or agency or subdivision thereof, in the case of both (x)
and (y) above in order to assist the Business to obtain or retain business for
or direct business to Seller or any of its Subsidiaries and under circumstances
which would subject the Business to liability under the FCPA or any
corresponding foreign Laws.


 


Section 4.23.                             Potential Conflicts of Interest. 
Except as set forth on Schedule 4.23, none of Seller nor any
of its Subsidiaries (other than the Acquired Companies) nor, to the Knowledge
of Seller, any executive officer of Seller or of the Business:


 


(a)                                  owns, directly or indirectly, any interest in
(excepting not more than five percent stock holdings held solely for investment
purposes in securities of any Person which is listed on any national securities
exchange or regularly traded in the over-the-counter market) or is an owner,
sole proprietor, stockholder, partner, director, officer, employee, consultant
or agent of any Person which is a lessor, lessee, customer,


 


39





















 


licensee, or supplier of the Business (other than pursuant to
arrangements on terms that would be obtained on an arms’ length basis and other
than Contracts entered into by the Seller for the benefit of the Business and
the Seller’s other businesses); or


 


(b)                                 owns, directly or indirectly, in whole or in
part, any tangible property, patent, trademark, service mark, trade name,
copyright, franchise, invention; permit or license which is used and necessary
for the operation of the Business.


 


Section 4.24.                             Power/Natural Gas. (a) The
power generating stations used in the Business, including but not
limited to the operations conducted by Rumford Cogeneration, Inc. and Rumford
Falls Power Company (the “Generating Stations”), have been maintained in good repair and working order
consistent with customary practice in the industry. Seller, CP and the Acquired
Companies have made all necessary repairs, renewals, replacements, betterments
and improvements of the Generating Stations, all as may be necessary so that
the operations carried on in connection therewith may be conducted at all times
in accordance with applicable Law. To Seller’s Knowledge, there are no
conditions existing in respect of the Generating Stations which would require
Seller, CP or any Acquired Company to incur any capital expenditures relating
thereto which are materially in excess of the amounts budgeted by Seller in the
Capital Budgets for maintenance, repair or renewal of the Generating Stations.
For the avoidance of doubt, (i) nothing in this Section 4.24(a) shall be
read to be a representation as to environmental matters which shall be
exclusively governed by Section 4,19, and (ii) notwithstanding anything to
the contrary, indemnification for any Environmental Condition related to the
Generating Stations shall be governed exclusively by Sections 11.4 and 11.5.


 


(b)                                 With respect to any pipelines owned or
operated by the Seller, CP and/or an Acquired Company and Related to the
Business, all fee, leasehold, easement or other rights as may be necessary for
the operation of any such pipeline in the location and manner in which it is
currently operated and in material compliance with all applicable Laws have
been obtained by Seller, CP or such Acquired Company, as applicable, from the
owner(s) of each of the tracts or parcels of land and the bodies of water, or
portions thereof, necessary for the use of such pipeline (either voluntarily or
through condemnation).


 


Section 4.25.                             Brokers.  Except for Goldman, Sachs
& Co. and UBS Investment Bank and Greenhill & Co., LLC, no Person has
acted directly or indirectly as a broker, finder or financial advisor for
Seller in connection with the negotiations relating to or the transactions
contemplated hereby and no Person is entitled to any fee or commission or like
payment in respect thereof from Purchaser based in any way on any agreement,
arrangement or understanding made by or on behalf of Seller. Seller is solely
responsible for the fees and expenses of Goldman, Sachs & Co. and UBS
Investment Bank and Greenhill & Co., LLC, payable under engagements by
Seller (which do not include the provision of the Acquisition Financing) in
connection with the transactions contemplated hereby.


 


Section 4.26.                             Disclaimers of Seller.  (a)
EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY TRANSITION AGREEMENT OR IN ANY
OTHER AGREEMENT OR INSTRUMENT ENTERED INTO IN CONNECTION HEREWITH, (A) SELLER
EXCLUDES AND DISCLAIMS ALL WARRANTIES, INCLUDING IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR


 


40





















 


PURPOSE,
WITH RESPECT TO THE BUSINESS OR THE PURCHASED ASSETS, (B) SELLER MAKES NO
REPRESENTATION OR WARRANTY WITH RESPECT TO THE MEMORANDA, PRESENTATIONS,
REPORTS, OR ANY FINANCIAL FORECASTS OR PROJECTIONS OR OTHER INFORMATION
FURNISHED BY SELLER OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES, (C) SELLER UNDERTAKES NO LIABILITY FOR ANY DAMAGE, LOSS,
EXPENSE OR CLAIM OR OTHER MATTER RELATING TO ANY CAUSE WHATSOEVER ARISING UNDER
OR PURSUANT HERETO (WHETHER SUCH CAUSE BE BASED IN CONTRACT, NEGLIGENCE, STRICT
LIABILITY, OTHER TORT OR OTHERWISE) AND IN NO EVENT SHALL SELLER BE LIABLE FOR
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES THAT ARE NOT REASONABLY
FORESEEABLE BY SELLER NOR FOR ANY EXEMPLARY OR PUNITIVE DAMAGES RESULTING FROM
ANY SUCH CAUSE, (D) SELLER SHALL NOT BE LIABLE FOR, AND PURCHASER ASSUMES
LIABILITY FOR, ALL PERSONAL INJURY AND PROPERTY DAMAGE CONNECTED WITH THE
HANDLING, TRANSPORTATION, POSSESSION, PROCESSING, FURTHER MANUFACTURE OR OTHER
USE OR RESALE OF ANY OF THE PURCHASED ASSETS AFTER THE CLOSING DATE, WHETHER
SUCH PURCHASED ASSETS ARE USED OR RESOLD ALONE OR IN COMBINATION WITH OTHER
ASSETS OR MATERIALS, AND (E) PURCHASER ACKNOWLEDGES THAT THE PURCHASED ASSETS
ARE BEING SOLD IN THEIR PRESENT STATE AND CONDITION, “AS IS, WHERE IS,” WITH
ALL FAULTS, AND PURCHASER IS PURCHASING AND ACQUIRING SUCH PURCHASED ASSETS ON
THAT BASIS PURSUANT TO PURCHASER’S OWN INVESTIGATION AND EXAMINATION AFTER
HAVING BEEN PROVIDED WITH AN ADEQUATE OPPORTUNITY AND ACCESS TO SUCH PURCHASED
ASSETS TO COMPLETE SUCH INVESTIGATION OR EXAMINATION.


 


(b)                                 EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT OR IN ANY TRANSITION AGREEMENT OR IN ANY OTHER AGREEMENT OR
INSTRUMENT ENTERED INTO IN CONNECTION HEREWITH, WITH RESPECT TO THE TIMBERLANDS,
PURCHASER ACKNOWLEDGES AND AGREES THAT (A) SELLER HAS NOT MADE, DOES NOT MAKE
AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, GUARANTIES,
COMMITMENTS, PROMISES OR AGREEMENTS OF ANY KIND, EXPRESS OR IMPLIED, WITH
RESPECT TO THE TIMBERLANDS, INCLUDING, WITHOUT LIMITATION, GOVERNMENTAL
REGULATIONS, REQUIREMENTS OR CONSTRAINTS, SITE OR PHYSICAL CONDITIONS,
CONDITION OF THE TIMBERLANDS, ACCESS TO AND FROM THE TIMBERLANDS, MATTERS
AFFECTING USE OR OCCUPANCY, PROFITABILITY, VOLUMES, AGE CLASSES, SPECIES,
MERCHANTABILITY, YIELDS, ACREAGE, ACCESS, AVAILABILITY, QUANTITY OR QUALITY OF
WATER, ENVIRONMENTAL COMPLIANCE, ENVIRONMENTAL CONDITION, PROSPECTS FOR FUTURE
IMPROVEMENTS OR FUTURE DEVELOPMENT, ECONOMIC FEASIBILITY, MARKETABILITY OR ANY
OTHER MATTER RELATING TO THE TIMBERLANDS; AND (B) PURCHASER IS ACQUIRING THE
TIMBERLANDS PURSUANT TO PURCHASER’S OWN INDEPENDENT INVESTIGATIONS AND
EXAMINATIONS RELATING TO THE TIMBELRLANDS.


 


41





















 


Section 4.27.                             No Other Representations or Warranties. 
Except for the representations and warranties contained in this
Article IV or in any Transition Agreement or in any other agreement or
instrument entered into in connection herewith, none of Seller, any Affiliate
of Seller or any other Person makes any representations or warranties, and
Seller hereby disclaims any other representations or warranties, whether made
by Seller or any Affiliate of Seller, or any of their respective officers,
directors, employees, agents or representatives, with respect to the execution
and delivery of this Agreement or any Seller Document, the transactions
contemplated hereby or the Business, notwithstanding the delivery or disclosure
to Purchaser or its representatives of any documentation or other information
with respect to any one or more of the foregoing.


 


ARTICLE V


 


REPRESENTATIONS AND WARRANTIES OF PURCHASER


 


As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser hereby represents
and warrants to Seller that, except as set forth in the applicable Schedules to
this Agreement delivered by Purchaser to Seller and dated as of the date
hereof:


 


Section 5.1.                                   Organization and Good Standing. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.


 


Section 5.2.                                   Authorization of Agreement. Purchaser has all requisite corporate power
and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated hereby or to be executed by
Purchaser in connection with the consummation of the transactions contemplated
hereby and thereby (all of such agreements, documents, instruments and
certificates required to be executed by Purchaser and any of its Subsidiaries
being hereinafter referred to, collectively, as the “Purchaser Documents”), and to perform fully its
obligations hereunder and thereunder. The execution, delivery and performance
by Purchaser of this Agreement and by Purchaser of each Purchaser Document has
been duly authorized by all necessary corporate action on the part of
Purchaser. This Agreement has been, and each of Purchaser Documents will be, on
or prior to the Closing Date, duly executed and delivered by Purchaser and
(assuming the due authorization, execution and delivery by the other parties
hereto) this Agreement constitutes, and each of Purchaser Documents when so
executed and delivered will constitute, the valid and legally binding
obligations of Purchaser, enforceable against Purchaser in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting the
enforcement of creditors’ rights generally, and general principles of equity
(regardless of whether such enforceability is considered in a proceeding in Law
or equity).


 


Section 5.3.                                   No Conflicts; Consents of Third Parties.  None
of the execution and delivery by Purchaser of this Agreement and Purchaser
Documents, the consummation of the transactions contemplated hereby or thereby
or the compliance by Purchaser with any of the provisions hereof or thereof
will (a) result in the breach of, any provision of the certificate or articles
of incorporation, by-laws or similar organizational documents of Purchaser or (b)
violate, result in the breach of, or constitute a default under any Order by
which Purchaser or any of their


 


42





















 


properties
or assets is bound or subject. No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any Person
or Governmental Body is required on the part of Purchaser in connection with
the execution and delivery of this Agreement or Purchaser Documents, the
consummation of the transactions contemplated hereby and thereby or the
compliance by Purchaser with any of the provisions hereof or thereof, except
for compliance with the applicable requirements of the HSR: Act and other
applicable merger control or similar Laws and the receipt of appropriate
Permits by Purchaser to conduct the business and operate the Assets.


 


Section 5.4.                                   Litigation.  As of the date hereof, there
is no Legal Proceeding pending or, to the knowledge, after due investigation,
of Purchaser, threatened in writing against Purchaser that challenges, or
questions the validity of, this Agreement, the Purchaser Documents or any
action taken or to be taken by Purchaser in connection with, or that seeks to
enjoin or obtain monetary damages in respect of, the consummation of the
transactions contemplated hereby or thereby.


 


Section 5.5.                                   Financing. Schedule 5.5  sets
forth true, accurate and complete copies of debt and equity commitment letters
and related term sheets (collectively, excluding any engagement and fee letters
associated therewith, the “Financing Commitments”) to be used in
connection with the transaction contemplated hereby (the “Acquisition Financing”). As
of the date hereof, the Financing Commitments are in full force and effect,
have not been withdrawn or terminated or otherwise amended or modified in any
respect, and, as of the date hereof, Purchaser has no reason to believe that
the Financing Commitments will not lead to the Acquisition Financing
contemplated thereby. The proceeds from such Acquisition Financing constitute
all of the financing required to be provided by Purchaser for the consummation
of the transactions contemplated hereby. The Financing Commitments (other than
the engagement and fee letters entered into in connection therewith)
constitute, as of the date hereof, the entire and complete agreement between
the parties thereto with respect to the financing contemplated thereby, and, to
the Purchaser’s knowledge, there are no conditions precedent or other
contingencies related to the funding of the Acquisition Financing other than as
set forth in the Financing Commitments.


 


Section 5.6.                                   Brokers.  No Person has acted directly
or indirectly as a broker, finder or financial advisor for Purchaser in
connection with the negotiations relating to or the transactions contemplated
hereby and no Person is entitled to any fee or commission or like payment in
respect thereof from Seller based in any way on agreements, arrangements or
understandings made by or on behalf of Purchaser.


 


Section 5.7.                                   Electric Power.  Neither
Purchaser nor any of its Affiliates is engaged in the generation or sale of
electric power, or has any ownership or operating interest, directly or
indirectly, in any electric facilities other than qualifying facilities (as
defined in the Public Utility Regulatory Policies Act of 1978 and the Federal
Energy Regulatory Commission’s regulations promulgated thereunder), power
marketers, facilities of foreign utility companies under section 33 of the
Public Utility Holding Company Act of 1935, as amended, and eligible facilities
of exempt wholesale generators (as defined in section 32 of the Public
Utility Holding Company Act of 1935, as amended).


 


43





















 


Section 5.8.                                   No Inducement or Reliance; Independent Assessment. 
(a)  With respect to the Purchased
Assets, the Business or any other rights or obligations to be transferred
hereunder or under the Transition Agreements or pursuant hereto or thereto,
Purchaser has not been induced by and has not relied upon any representations,
warranties or statements, whether express or implied, made by Seller, any
Affiliate of Seller, or any agent, employee, attorney or other representative
of Seller representing or purporting to represent Seller that are not expressly
set forth herein, any other Seller Documents or in the Transition Agreements
(including the Schedules and Exhibits hereto and thereto and any other Seller
Documents), whether or not any such representations, warranties or statements
were made in writing or orally, and none of Seller, any Affiliate of Seller, or
any agent, employee, attorney other representative of Seller or other Person
shall have or be subject to any liability to Purchaser or any other Person
resulting from the distribution to Purchaser, or Purchaser’s use of, any such
information, including management presentations and investment banker books
relating to the Business and any information, documents or material made
available in any “data rooms” or management presentations or in any other form
in expectation of the transactions contemplated hereby.


 


(b)                                 Purchaser acknowledges that it has made its
own assessment of the present condition and the future prospects of the
Business and is sufficiently experienced to make an informed judgment with
respect thereto. Purchaser acknowledges that, except as explicitly set forth
herein and in the other Seller Documents, neither Seller nor any of its
Affiliates has made any warranty, express or implied, as to the prospects of
the Business or its profitability for Purchaser, or with respect to any
forecasts, projections or business plans prepared by or on behalf of Seller and
delivered to Purchaser in connection with Purchaser’s review of the Business
and the negotiation and the execution of this Agreement.


 


ARTICLE VI


 


COVENANTS OF SELLER


 


From and after the date hereof and until the Closing (except with
respect to Sections 6.1(c), 6.3(b), 6.6, 6,8, 6.9, 6.13 and 6.14 which shall
survive the Closing in accordance with their terms), Seller hereby covenants
and agrees that:


 


Section 6.1.                                   Access to Documents; Access to Assets;
Opportunity to Ask Questions.


 


(a)                                  Prior to the Closing, Sellers shall, and
shall cause its Subsidiaries to, permit Purchaser and its financing sources and
representatives to have reasonable access, during regular business hours and
upon reasonable advance notice, and without undue interruption to Seller’s
business, to the Assets, the Business, the Acquired Company Employees and
Business Employees and Seller’s outside accountants and other advisors and to
the Business’ customers, suppliers and others with whom it has material
commercial dealings (provided that Seller shall have the right to participate
in any meetings or discussion with any customers, suppliers, employees or
others with whom it has material commercial dealings), and shall furnish, or
caused to be furnished, to Purchaser and its financing sources and
representatives any financial and operating data and other information that is
available with respect to the Business, the Assets, the Assumed Liabilities,
the Acquired Company Employees and Business Employees as


 


44





















 


Purchaser
shall from time to time reasonably request (excluding confidential portions of
personnel and medical records) and subject to any limitations that are
reasonably required to preserve any applicable attorney-client privilege or
third-party confidentiality obligation); provided, that in each case,
such access shall be given at reasonable times and upon reasonable notice and without
undue interruption to Seller’s business or personnel. Such access to the Assets
shall include, without limitation, access to the Timberlands for cruises, as
provided in Section 4.11(m), environmental testing as provided in
Section 11.5(h) and lender appraisals as contemplated in
Section 6.1(b). All requests for access (including with respect to any
meetings or discussion with any Business customers, suppliers, employees or
others with whom it has material commercial dealings) shall be made to such representatives
of Seller as Seller shall designate, who shall be solely responsible for
coordinating all such requests and access thereunder.


 


(b)                                 In addition to and not by way of limitation
of the foregoing, Seller shall cooperate with Purchaser in connection with the
financing contemplated by the Financing Commitment, including using (and
causing its Subsidiaries to use) commercially reasonable efforts to satisfy all
conditions precedent to be satisfied by Seller and its Subsidiaries in the
Financing Commitments (or conditions within the control of Seller and its
Subsidiaries), providing information to and permitting the financing sources
and their representatives access to, the Assets, the Business, the Acquired
Company Employees and Business Employees and Seller’s outside accountants and
other advisors, as provided in Section 6.1(a) hereof, participating in
meetings with prospective investors and participating (and permitting members
of its senior management of the Business to participate) in “road shows” in
connection with the financing, participating in meetings with rating agencies,
participating in drafting sessions related to the offering materials for the
debt financing of Purchaser and its Subsidiaries contemplated by the Financing
Commitments, causing the present and former independent accountants for Seller
to participate in drafting sessions related to the offering materials for the
debt financing contemplated by the Financing Commitments and making work papers
available to Purchaser, the underwriters or placement agents for the debt
financing and their respective representatives; provided that Purchaser shall
endeavor to minimize the interference with the ability of such senior
management of the Business to carry out their normal responsibilities for
ongoing management of the Business resulting from such participation in
drafting sessions and the road show.


 


(c)                                  Seller shall, and shall cause its
Subsidiaries to, afford to Purchaser’s representatives, upon reasonable notice
and without undue interruption to Seller’s business, access during normal
business hours to the books and records of Seller pertaining to the operations
of the Business prior to the Closing Date for a period of eight years following
the Closing Date in connection with financial statements and U.S. Securities
and Exchange Commission reporting obligations, Assumed Liabilities, Purchased
Assets, assets and liabilities of Acquired Companies, and other reasonable
business purposes provided that nothing herein shall limit Purchaser’s rights
of discovery. Seller agrees to hold all of the books and records of the
Business existing on the Closing Date or included in the Purchased Assets in
accordance with Seller’s standard record retention policies.


 


Section 6.2.                                   Conduct of Business. 
Until the Closing Date, Seller shall, and shall cause its Subsidiaries
to, solely with respect to the operation of the Business (unless


 


45


















 


Purchaser
shall otherwise consent in writing (which consent shall not be unreasonably
withheld, conditioned or delayed) or except as otherwise contemplated hereby or
by any Transition Agreement or as disclosed on Schedule 6.2), to the extent permitted by applicable Law:


 


(a)                                  use it reasonable best efforts to: (i)
operate the Business in the Ordinary Course, (ii) preserve its present material
business operations, organization and goodwill, (iii) keep available the
services of its present officers and key employees, (iv) preserve its present
relationships with Persons having business dealings with it, (v) maintain all
Permits necessary for the operation of the Business and (vi) except for changes
resulting from transactions in the Ordinary Course or from the seasonality of
the Business, keep the level of its inventories, supplies, accounts receivable
and accounts payables reasonably consistent in all material respects with past
practice;


 


(b)                                 not incur, guarantee or assume any
Indebtedness in connection with the Business, other than Indebtedness in an
amount in excess of U.S.$20 million in the aggregate, in each case only to the
extent such Indebtedness may be prepaid without penalty or premium at any time
and does not result in any Lien on the Assets that will not be eliminated at
Closing (unless otherwise agreed to by Purchaser);


 


(c)                                  not dispose of or otherwise transfer, or
incur, create or assume any Lien (other than Permitted Exceptions) on any asset
of the Business, other than (i) sales of inventory and standing timber, (ii)
dispositions of worn out or obsolete assets in an amount not in excess of
$1,000,000 in the aggregate, in the case of each of (i) and (ii) in the
Ordinary Course and not inconsistent with the Harvesting Plan, or (iii) sales
of Timberlands pursuant to the Timberlands sales set forth on Schedule 6.2(c);


 


(d)                                 not enter into, amend, terminate, renew or
supplement any contract that constitutes (or, in the case of contracts not in
existence on the date hereof, would constitute) a Material Business Contracts,
except in the Ordinary Course;


 


(e)                                  not engage in any transactions with, or enter
into any Business Contracts with, any Affiliate of Seller in connection with
the Business, except for any such transactions or Business Contracts in the
Ordinary Course on terms no less favorable than would be obtained in an arms’
length third-party transaction and that are terminable at will by Seller, CP or
the Acquired Company party thereto at any time without penalty or premium upon
not greater than 30 days’ notice;


 


(f)                                    not enter into, adopt, amend, renegotiate or
terminate any (A) Employee Benefit Plan or plan that would be an Employee
Benefit Plan if in effect on the date hereof or (B) Business Contract relating
to the compensation, benefits or severance entitlement of any Acquired Company
Employee or Business Employee, except (i) to the extent required by Law or any
existing Business Contracts or Employee Benefit Plans, (ii) for any such
actions taken in the Ordinary Course and which would not result in an increased
annual cost to the Business in excess of $1,000,000 and (iii) for increases
applicable to Corporate Business Employees that would not result in increased
annual liability to the Business in excess of $150,000 in the aggregate;


 


46





















 


(g)                                 except to the extent required by Law,
including any bargaining obligations imposed by the National Labor Relations
Act, or the terms of the applicable Collective Bargaining Agreements, (i) not
enter into any new collective bargaining agreements, or amend or modify any
existing Collective Bargaining Agreements, that would materially affect the
Purchaser’s interests following the Closing Date, provided, that following
consultation with the Purchaser, Seller may commence negotiations on the
Collective Bargaining Agreements relating to the Chillicothe site if the
Closing has not occurred by May 31, 2005, and thereafter enter into new
collective bargaining agreements relating to the Chillicothe site and (ii)
during any and all negotiations of new collective bargaining agreements or
existing Collective Bargaining Agreements, advise the Purchaser of the status
and details of the negotiations on a reasonable basis, as dictated by such
negotiations (or at such times that Purchaser in writing reasonably requests of
Seller the status and details of such negotiations), and in advance of
execution of any agreement, and allow a designated representative of Purchaser
to consult on such negotiations;


 


(h)                                 not enter into any Contract pursuant to which
it agrees to indemnify any Person in any material respect (except in the
Ordinary Course) or to refrain from competing with any Person or from engaging
in any business or carrying on any business in any geographic area or during
any period of time;


 


(i)                                     not revalue any portion of its assets,
properties or businesses including, without limitation, any write-down of the
value of inventory or other assets or any write-off of notes or accounts
receivable, except as required by GAAP or in connection with the preparation
and delivery of the Regulation S-X Financial Statements;


 


(j)                                     not change, in any material respect, any of
their accounting principles, practices, methodologies or policies (including
any reserving and depreciation methodologies, practices and policies) used in
connection with the Business, the Assets and Assumed Liabilities;


 


(k)                                  except as otherwise required by GAAP, not
release any material non-cash reserves;


 


(l)                                     not issue or sell, or authorize for issuance
or sale, or grant any rights with respect to, the securities of any Acquired
Company, or alter any term of any of the outstanding securities of any Acquired
Company;


 


(m)                               not institute or settle any Legal Proceeding
that would have a material adverse impact on the operation of the Business or
impose any material non-monetary obligation on the Business after Closing;


 


(n)                                 not institute any material change in the
methods of purchase, sale, lease or other accounting or engage in any activity
which would accelerate the collection of accounts receivable, accelerate or
delay the payment of the accounts payable, or increase, reduce or otherwise
affect the amount of inventory (including raw material, packaging,
work-in-process, or finished goods) on hand, other than as a result of the seasonality
of the Business;


 


(o)                                 continue to establish reserves with respect
to workers’ compensation, litigation, environmental matters and other
contingent Liabilities in accordance with GAAP;


 


47





















 


(p)                                 maintain levels of insurance covering the
operations of the Business and the Assets in full force and effect, with at
least such policy limits, deductible amounts and overall scopes of coverage as
are in effect on the date hereof, consistent with past practice;


 


(q)                                 (i) use its commercially reasonable efforts
to maintain the Assets in accordance with its normal and customary maintenance
practices and (ii) make capital expenditures substantially in the amounts and
at the times set forth in the 2004 and 2005 capital budgets of the Business
attached to Schedule 6.2(q) (the “Capital Budgets”), other
than capital expenditures relating to information technology at Business
locations;


 


(r)                                    not enter into commitments for new capital
expenditures in excess of $5 million in the aggregate to the extent not
otherwise contemplated substantially in the amounts and at the times set forth
in the Capital Budgets;


 


(s)                                  not acquire (by merger, exchange,
consolidation, acquisition of stock or assets or otherwise) any Person or division
or material assets thereof, whether or not engaged in a business similar to the
Business;


 


(t)                                    not sell, transfer, or grant licenses of
Intellectual Property to any Person outside the Ordinary Course or allow any
material registered Intellectual Property to lapse, expire, or become
abandoned;


 


(u)                                 not amend the organizational documents of any
Acquired Company;


 


(v)                                 with respect to state and local Taxes of any
Acquired Company for a Straddle or Post-Closing Tax Period, not (i) make or
change any Tax election, (ii) change an annual Tax accounting period, (iii)
adopt or change any Tax accounting method except as required by applicable Law,
(iv) file any amended Tax Return, (v) enter into any Tax closing agreement,
(vi) settle any material tax claim or assessment, (vii) surrender any right to
claim a Tax refund, or (viii) consent to the extension or waiver of any
limitation period applicable to any material Tax claim or assessment;


 


(w)                               operate the Timberlands in the Ordinary
Course, including (i) conducting their ongoing timber harvest operations on the
Timberlands substantially in accordance with the Harvesting Plan, and (ii)
performing maintenance of roads, drainage systems, fire protection and
prevention as well as stand establishment activities consistent with past
practice; and


 


(x)                                   not agree to take any action or actions
prohibited by any of the foregoing clauses (a) through (v).


 


Section 6.3.                                   Consents and Conditions. 
(a)  Seller shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with Purchaser in doing, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated hereby, including, but not limited to: (i) obtaining
all necessary consents, approvals or waivers from, and giving any necessary
notifications to, third parties; provided, however, that such
efforts shall not require Seller or any of its Subsidiaries to make any payment
to obtain any such consent, approval or waiver or to give such notice, except
as specifically provided in the Transition Agreements and except to the extent


 


48





















 


provided
in Section 6.13(b); including any consents, approvals or waivers with
respect to the assignment or conveyance of any of the Purchased Assets or
Permits or to the extent the transactions contemplated by this Agreement
constitute a “change in control” transaction under any Business Contract; (ii)
making all registrations and filings with, and obtaining all necessary actions
or non-actions, waivers, consents and approvals from, all Governmental Bodies
(including those in connection with the HSR Act) and taking all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, a Governmental Body; (iii) defending any Legal
Proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby, including seeking to have any stay or temporary
restraining order entered by any Governmental Body vacated or reversed and (iv)
causing each Acquired Company which holds any assets which are Excluded Assets
to transfer such assets to Seller or one of its Subsidiaries that is not an
Acquired Company; and cause each Acquired Company which has any obligations
constituting Excluded Liabilities to assign such obligations to Seller or one
of its Subsidiaries that is not an Acquired Company, and Seller (or such other
Subsidiary) will assume such Excluded Liabilities.


 


(b)                                 If any consent of a third party that is
required in order to assign or transfer any Contract or Permit, or any claim,
right or benefit arising thereunder or resulting therefrom, is not obtained
prior to the Closing Date, or if an attempted assignment would be ineffective
or would adversely affect the ability of Seller to convey its interest in
question to Purchaser, Seller will cooperate with Purchaser in any lawful
arrangement to provide that Purchaser shall receive the interest of Seller in
the benefits and obligations under any such Contract or Permit until such
consent is obtained.


 


(c)                                  Seller shall keep Purchaser reasonably
apprised of the status of matters relating to the completion of the
transactions contemplated hereby, including promptly furnishing Purchaser with
copies of notices or other communications received by Seller or by any of its
Subsidiaries from any third party and/or any Governmental Body with respect to
the transactions contemplated hereby. Seller shall promptly furnish to
Purchaser such necessary information and reasonable assistance as Purchaser may
request in connection with the foregoing and shall promptly provide counsel for
Purchaser with copies of all filings made by Seller, and all correspondence
between Seller (and its advisors) with any Governmental Body and any other
information supplied by Seller and its Affiliates to a Governmental Body in
connection herewith and the transactions contemplated hereby, provided, however,
that Seller may, as it deems advisable and necessary, reasonably designate any
competitively sensitive material provided to Purchaser as “outside counsel
only,” and materials may be redacted (i) to remove references concerning the
valuation of the Business and (ii) as necessary to comply with contractual
arrangements. Materials designated as for “outside counsel only” and the
information contained therein shall be given only to the outside legal counsel
of Purchaser and will not be disclosed by such outside counsel to employees,
officers or directors of Purchaser unless express permission is obtained in
advance from Seller or its legal counsel. Seller shall, subject to applicable
Law, permit counsel for Purchaser reasonable opportunity to review in advance,
and consider in good faith the views of Seller in connection with, any proposed
written communication to any Governmental Body. Seller agrees not to
participate, or to permit its Affiliates to participate, in any substantive
meeting or discussion, either in person or by telephone, with any Governmental
Body in connection herewith and the transactions contemplated hereby unless it
consults with


 


49





















 


Purchaser
in advance and, to the extent not prohibited by such Governmental Body, gives
Purchaser the opportunity to attend and participate.


 


(d)                                 Seller shall promptly, but in any event
within seven (7) Business Days after having Knowledge thereof, (i) notify
Purchaser of any representation or warranty made hereunder ceasing to be true
in any material respect, or any material breach of any covenant or agreement
made hereunder, (ii) notify Purchaser of any emergency or other change in the
normal course of the Business or in the condition of the Assets or the Assumed
Liabilities or the operation of the Business and of any pending or threatened
Legal Proceeding relating to the Business, the Assets, the Assumed Liabilities
or the Acquired Company Employees or Business Employees that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.


 


Section 6.4.                                   Public Statements. 
Before Seller shall issue any press release or otherwise make any public
statement concerning this Agreement or the transactions contemplated hereby,
Seller shall so advise and cooperate with Purchaser and shall not release such
information without Purchaser’s consent (which consent shall not be
unreasonably withheld, conditioned or delayed), unless (a) such information is
otherwise publicly available other than as a result of a disclosure by Seller
made in breach of this Section 6.4 or (b) the release thereof is, in the
reasonable judgment of Seller, required by any Law (including any rule of any
securities exchange on which Seller’s securities are traded) or Order to which
Seller is bound or subject, in which case Seller shall consult with Purchaser
in advance to the extent reasonably practicable.


 


Section 6.5.                                   Intercompany Accounts. 
Effective as of the Closing Date, except as otherwise contemplated
hereby or by any Transition Agreement or as contemplated by Schedule 1.3(1)
or Schedule l.5(e), all intercompany receivables, payables, loans and
investments then existing between Seller or any of its Subsidiaries that is not
an Acquired Company, on the one hand, and the Acquired Companies, on the other
hand, shall be settled, including by way of capital contribution (with respect
to intercompany payables or loans due to Seller or any of its Subsidiaries that
is not an Acquired Company) or by way of dividend in kind (with respect to
intercompany payables or loans owed by Seller or any of its Subsidiaries that
is not an Acquired Company or investments by the Acquired Companies).


 


Section 6.6.                                   Litigation Support.  In
the event and for so long as Purchaser actively is contesting or defending
against any action, investigation, charge, claim, or demand by a third party in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
the Business, Seller will cooperate with Purchaser and its counsel in the
contest or defense, make available its personnel, and provide such testimony
and access to its books and records as shall be reasonably necessary in
connection with the contest or defense, all at the sole cost and expense of
Purchaser (unless Purchaser is entitled to indemnification therefor under
Article XI).


 


Section 6.7.                                   [Reserved].


 


50





















 


Section 6.8.                                   Further Actions.  Seller,
whether before, at or after the Closing, shall execute and deliver such
instruments and take such other actions as may reasonably be required to (a)
carry out the intent hereof and of the Transition Agreements and (b) consummate
the transactions contemplated hereby and thereby, including the taking of all
acts necessary to cause the conditions to Closing to be satisfied as promptly
as possible.


 


Section 6.9.                                   Delivery of Additional Financial Data.


 


(a)                                  As soon as practicable, but in any event no
later than 30 days after each calendar month-end following the date hereof that
occurs prior to the Closing Date, Seller will deliver to Purchaser a copy of
Seller’s normal, internal operating balance sheet and internal profit and loss
statement (as such internal reports are currently generated in the Business)
for each of the Papers Business and the Timber Business on a stand-alone basis
(the “Subsequent Financial Statements”).


 


(b)                                 As soon as reasonably practicable, but in no
event later than the earlier of (i) March 15, 2005 and (ii) 45 days prior
to the Closing, Seller shall furnish the following financial statements for the
Business, on a combined basis, each in a form meeting the requirements of
Regulation S-X of the Securities Act of 1933, as amended (“Regulation S-X”): (x)
the audited combined balance sheets of the Business as of December 31,
2003 and December 31, 2002, together with the related audited combined
statements of operations and combined statements of cash flows for the
twelve-month periods ended December 31, 2003 and December 31, 2002
(collectively, “Historical Combined Audited Financial Statements”) and
(y) the audited combined balance sheets of the Business as of December 31,
2004 and December 31, 2003, together with the related audited combined
statements of operations and combined statements of cash flows for the
twelve-month periods ended December 31, 2004 and December 31, 2003 (collectively,
“2004 Combined Audited Financial Statements”).


 


(c)                                  As soon as reasonably practicable, but in no
event later than the earlier of (i) March 15, 2005 and (ii) 45 days prior
to the Closing, Seller shall furnish the following financial statements for the
Timber Business, on a stand-alone basis, each in a form meeting the
requirements of Regulation S-X: (x) the audited balance sheet of the Timber
Business as of December 31, 2003, together with the related audited
statement of operations and cash flows for the twelve-month period ended
December 31, 2003 (“Historical Timber Audited Financial Statements”) and (y) the
audited balance sheet of the Timber Business as of December 31, 2004 and
December 31, 2003, together with the related audited statement of
operations and statement of cash flows for the twelve-month periods ended
December 31, 2004 and December 31, 2003 (collectively, “2004
Timber Audited Financial Statements”).


 


(d)                                 As soon as reasonably practicable, but in no
event later than the earlier of (i) March 15, 2005 and (ii) 45 days prior
to the Closing, Seller shall furnish the following financial statements for the
Paper Business, on a stand-alone basis, each in a form meeting the requirements
of Regulation S-X:  (x) the audited
balance sheets of the Paper Business as of December 31, 2003 and
December 31, 2002, together with the related audited statement of operations
and of cash flows for the twelve-month periods ended December 31, 2003 and
December 31, 2002 (collectively, “Historical Paper Audited Financial Statements”) and
(y) the audited balance sheets of the Paper Business as of December 31, 2004
and December 31, 2003,


 


51





















 


together
with the related audited statements of operations and statements of cash flows
for the twelve-month periods ended December 31, 2004 and December 31,
2003 (collectively, “2004 Paper Audited Financial Statements” and, together with the 2004 Combined
Audited Financial Statements and the 2004 Timber Audited Financial Statements,
the “2004 Audited Financial Statements”).


 


(e)                                  Whether or nor the Closing has occurred,
Seller shall furnish the following financial statements for the Business, on a
combined basis, each in a form meeting the requirements of Regulation S-X as
follows (collectively referred to herein as the “Stub Period Combined Financial
Statements”): (i) as soon as reasonably
practicable, but in no event later than March 31, 2005, the unaudited
combined balance sheets of the Business as of March 31, 2004 together with
the related unaudited combined statement of operations and combined statement
of cash flows for each of the quarterly periods then ended, (ii) as soon as
reasonably practicable, but in no event later than April 30, 2005, the
unaudited combined balance sheets of the Business as of June 30, 2004
together with the related unaudited combined statement of operations and
combined statement of cash flows for each of the quarterly periods then ended
and (iii) as soon as reasonably practicable, but in no event later than
April 30, 2005 the unaudited combined balance sheets of the Business as of
September 30, 2004 together with the
related unaudited combined statement of operations and combined
statement of cash flows for each of the quarterly periods then ended.


 


(f)                                    Whether or not the Closing has occurred,
Seller shall furnish the following financial statements for the Timber
Business, on a stand-alone basis, each in a form meeting the requirements of
Regulation S-X as follows (collectively referred to herein as the “Stub
Period Timber Financial Statements”): (i) as soon as reasonably
practicable, but in no event later than March 31, 2005, the unaudited
combined balance sheets of the Timber Business as of March 31, 2004
together with the related unaudited combined statement of operations and
combined statement of cash flows for each of the quarterly periods then ended,
(ii) as soon as reasonably practicable, but in no event later than
April 30, 2005, the unaudited combined balance sheets of the Timber
Business as of June 30, 2004 together with the related unaudited combined
statement of operations and combined statement of cash flows for each of the
quarterly periods then ended and (iii) as soon as reasonably practicable, but
in no event later than April 30, 2005, the unaudited combined balance
sheets of the Timber Business as of September 30, 2004 together with the
related unaudited combined statement of operations and combined statement of
cash flows for each of the quarterly periods then ended.


 


(g)                                 Whether or not the Closing has occurred,
Seller shall furnish the following financial statements for the Paper Business,
on a stand-alone basis, each in a form meeting the requirements of Regulation
S-X as follows (collectively referred to herein as the “Stub Period Paper Financial
Statements” and,
together with the Stub Period Combined Financial Statements and the Stub Period
Timber Financial Statement, the “Stub Period Financial Statements”): (i) as soon as reasonably
practicable, but in no event later than March 31, 2005, the unaudited
combined balance sheets of the Paper Business as of March 31, 2004
together with the related un-audited combined statement of operations and
combined statement of cash flows for each of the quarterly periods then ended,
(ii) as soon as reasonably practicable, but in no event later than
April 30, 2005, the unaudited combined balance sheets of the Paper
Business as of June 30, 2004 together with the related unaudited combined
statement of operations and combined statement of


 


52





















 


cash
flows for each of the quarterly periods then ended and (iii) as soon as
reasonably practicable, but in no event later than April 30, 2005, the
unaudited combined balance sheets of the Paper Business as of
September 30, 2004 together with the related unaudited combined statement
of operations and combined statement of cash flows for each of the quarterly
periods then ended.


 


(h)                                 In addition, as soon as reasonably
practicable upon reasonable request, Seller shall provide to Purchaser such
other financial data as may be reasonably requested by Purchaser, including
reasonably requested financial data on a combined basis for the Business, on a
stand-alone basis for each of the Timber Business and the Paper Business, or
any combination of the foregoing, in connection with the debt financing
contemplated by the Financing Commitments, including any offering memorandum,
prospectus, or registration statement required to be delivered or filed in
connection therewith (collectively, the “Additional Financial Data”).


 


(i)                                     The financial statements and financial data
in this Section 6.9 (other than the Subsequent Financial Statements) are
collectively known as the “Regulation S-X Financial Statements.” Seller will prepare, or cause the Regulation S-X Financial
Statements to be prepared, in accordance with GAAP and in a form meeting the
requirements of Regulation S-X for Purchaser’s or its Subsidiaries’ offering
memorandum, prospectus, registration statement and any amendments thereto in
connection with the debt financing contemplated by the Financing Commitments
and any updated filings. Seller shall furnish to Purchaser any information or
documents requested by Purchaser, which is in Seller’s possession or to which
Seller has access, constituting, or necessary or desirable for the completion
of, the Regulation S-X Financial Statements or any updated filings or
amendments thereto, and Seller agrees to execute any reasonably necessary
management representation letters to permit Purchaser or its Subsidiaries’
independent accountants to issue unqualified reports with respect to the
Regulation S-X Financial Statements to be included in the offering memorandum,
prospectus, registration statement and any updated filings or amendments
thereto. Seller shall furnish to Purchaser any available drafts of the
Regulation S-X Financial Statements as they become available and shall consider
in good faith any reasonable suggestions Purchaser may have regarding the
Regulation S-X Financial Statements.


 


(j)                                     Seller shall use its reasonable best efforts
to obtain prior to the Closing the consent of PricewaterhouseCoopers LLP (“PWC”) to permit the use of
the Regulation S-X Financial Statements in connection with offerings of
securities by Purchaser and/or one or more of its Subsidiaries as contemplated
by the Financing Commitments. In addition, Seller will use reasonable best
efforts to cause PWC to provide a comfort letter in accordance with SAS 72 for
any such offering.


 


Section 6.10.                             Title Reports; Title Policies.


 


(a)                                  Purchaser
and Seller have ordered preliminary title reports from First American Title
Insurance Company and Fidelity National Title Insurance Company (collectively,
the “Title Company”) on
(i) the Mills, other than any Leased Real Property that is not material to the operation of the Mills or the
Business conducted at the Mills, (ii) the Chillicothe Distribution Center, and
(iii) the Timberlands (collectively, the “Titled Property”).


 


53





















 


Seller
and its Subsidiaries shall provide full cooperation to Purchaser and the Title
Company in connection with the compilation, review and examination of the title
to the Titled Property. Such cooperation by Seller and its Subsidiaries shall
include providing Purchaser reasonable access to (and access to make copies of)
any (and to use reasonable efforts to provide copies of reasonably requested
specific) existing surveys, maps, GIS data (including GIS-based compartment
maps), aerial photographs, existing Contracts relating to the Titled Properties
and title reports in Seller’s possession pertaining to the Titled Property,
access to its forestry personnel and providing the Title Company with full and
complete (subject to reasonable restrictions so as not to unreasonably
interfere with Seller’s business) access to (A) Seller’s existing title records
pertaining to the Titled Property, and (B) the Titled Property itself for
purposes of preparation of Express Maps.


 


(b)                                 Purchaser and Seller shall cooperate with the
Title Company and use commercially reasonable efforts so that Purchaser will
obtain (a) no later than forty five (45) days prior to the Closing Date, a
commitment from the Title Company for an ALTA Owner’s (or, if applicable,
Leasehold) Title Insurance Policy (and a commitment for a corresponding lender’s
policy), 1992 Form (or other ALTA form currently used in the applicable
jurisdiction), together with a copy of all underlying title documents
referenced therein (including any amendments, modifications or supplements
thereto, the “Title Commitments”), and
(b) at Closing, title insurance policies from the Title Company (which may be
in the form of a mark-up of a pro forma of the Title Commitments) in accordance
with the Title Commitments, insuring Purchaser’s fee simple title (or a valid
leasehold interest with respect to any material Leased Real Property relating
to the Mills, as the case may be) to the Titled Properties (without blanket
exceptions for matters that would be addressed or eliminated with delivery of a
survey), with gap coverage through the date of recording, and (except as
provided in Section 6.12) subject only to the Permitted Exceptions, in
such amounts as Purchaser and the Title Company shall reasonably determine (the
“Title Policies”). The
Title Policies will include affirmative insurance and/or title insurance
indorsements (in customary form and if available in the applicable
jurisdiction) with respect to (1) commercial vehicular access to the Titled
Property from public roads; (2) the separate tax parcels that comprise the
Titled Property (in the case of the Timberlands, based upon a forest as a whole);
(3) the Titled Property being the “same as” shown on the applicable Express
Map; (4) non-imputation coverage regarding the
Acquired Company Owned Real Property (or Acquired Company Leased Real Property,
if applicable), (5) the Titled Property being the “same as” the real property
listed on the applicable Owned Real Property Schedules attached hereto, subject
to modifications thereto as may be required under Section 4.10(a)(iv) or
Section 7.11; (6) “tie-in” coverage; (7) subsequent purchasers (through a “future
purchaser” indorsement); and (8) such other customary title insurance
indorsements as may be reasonably required by Purchaser’s lender. Seller shall
execute (or shall cause its Subsidiary that is the owner of any Titled Property
to execute) at Closing such customary title affidavits with respect to the
Titled Property as shall be reasonably required by the Title Company. The
premiums, fees, costs and expenses charged by the Title Company for the Title
Commitments and Title Policies shall be borne by Purchaser. Notwithstanding
anything to the contrary in this Agreement, from and after the date hereof and
through the date that is ninety (90) days after the Closing Date, Seller and
its Subsidiaries shall use commercially reasonable and good faith efforts to
resolve, remove and/or cure Title Defects, which efforts shall in include (i)
delivering affidavits to the Title Company (including indemnifications
customarily contained in title affidavits) containing factual statements within
Seller’s knowledge with respect to the Titled Property, (ii) retaining outside
counsel as may be


 


54





















 


reasonable and appropriate to assist in resolving, removing and/or
curing such Title Defects (as hereinafter defined), and (iii) making available
all appropriate internal resources, including James Hill and other forestry
division personnel, to address and attempt to resolve, remove and/or cure such
Title Defects, provided that (except as contemplated by subsection (ii)
above) Seller or its Subsidiaries shall not be required to pay consideration to
third parties to resolve, remove or cure such matters. During the ninety (90)
day period subsequent to the Closing, Purchaser shall reasonably cooperate with
Seller and its Subsidiaries in connection with Seller’s efforts to resolve,
remove and/or cure such Title Defects.


 


(c)                                  Purchaser and Seller have ordered an express
map (an “Express Map”) from the Title Company for
each Titled Property (and, with respect to the Chillicothe Distribution Center,
Purchaser and Seller have ordered a survey), which Express Map (or, with
respect to the Chillicothe Distribution Center, survey) shall (i) indicate all
perimeter boundaries of the Titled Properties, (ii) be sufficient to remove any
survey exceptions from the Title Policies in respect of such properties, (iii)
be certified to Seller, Purchaser, Purchaser’s financing sources and the Title
Company, and (iv) indicate no encroachments or other title defects other than
Permitted Exceptions. Seller shall fully cooperate and shall cause its
Subsidiaries to cooperate (as contemplated in Section 6.10(a)) in
connection with the preparation of the Express Maps (and with respect to the
Chillicothe Distribution Center, the survey). The fees, costs and expenses with
respect (i) to Express Maps for any Mills (and the survey with respect to the
Chillicothe Distribution Center) shall be borne by Seller, and (ii) to Express
Maps for any Timberlands shall be borne by 50% by Seller and 50% by Purchaser.
Any references in the definition of Permitted Exceptions set forth herein to “any
state of facts which a visual inspection or an accurate survey of the property
would disclose” (or other references in such definition relating to matters
shown or disclosed in a survey or visual inspection of real property) shall not
modify Purchaser’s rights with respect to obtaining Express Maps (and, with
respect to the Chillicothe Distribution Center, a survey) and the deletion of
survey exceptions on the Title Policies as set forth in this Section 6.10.


 


Section 6.11.                             Objections to Title. Up until the date that is thirty (30) days
from the receipt of a Title Commitment and copies of all material underlying
title documents, together with Purchaser’s receipt of and opportunity to
inspect such maps, surveys and diagrams of the Titled Properties as are in
Seller’s (or its Subsidiaries’) possession and the applicable Express Maps (or
the survey, in the case of the Chillicothe Distribution Center) (the “Title Review
Period”), Purchaser
shall have the right to object to any matter set forth in a Title Commitment
which is not a Permitted Exception, by giving written notice to Seller of
Purchaser’s objection and the basis (in reasonable detail) for Purchaser’s
position that such matter is not a Permitted Exception (any such matter that is
not a Permitted Exception, a “Title Defect”). Purchaser
shall also have the right to object to any title exceptions created or suffered
by Seller (or its Subsidiaries), or first made known to Purchaser, between the date
of the applicable Title Commitment obtained by Purchaser and the date of
Closing, which is not a Permitted Exception, by written notice to Seller on or
before the Closing Date. Purchaser shall not be entitled to object to any Liens
or other title exceptions (and the same shall not constitute Title Defects or
any breach of Seller’s representations hereunder, but shall instead be deemed
to be Permitted Exceptions) (i) over which the Title Company is willing to
insure (without additional cost to Purchaser or where Seller elects to pay such
cost for Purchaser’s account), (ii) against which the Title Company is willing
to provide affirmative insurance (without additional cost to Purchaser


 


55





















 


or
where Seller elects to pay such cost for Purchaser’s account), or (iii) which
will be extinguished upon the transfer of the Property. Seller shall have the
right, but not the obligation, to cure or remove at or prior to Closing, any
Title Defects; provided, however, that Seller will cause any deed to secure
debt, any deed of trust, any mortgage or any monetary lien encumbering any
Titled Property to be satisfied or otherwise released on or before the Closing.
In the event that a Title Defect exists and Purchaser gives a timely notice of
objection to such Title Defect and Seller fails to cure or remove such
exception at or prior to Closing, Purchaser shall have the rights set forth in
Section 6.12 hereof (with respect to the Timberlands), in addition to any
other applicable rights set forth in this Agreement.


 


Section 6.12.                             Defect Notices; Deleted Parcels.


 


(a)                                  In addition to Purchaser’s right to give
Seller notice during the Title Review Period of a Title Defect with respect to
the Timberlands as provided in Section 6.11, Purchaser shall have the
right to deliver to Seller a written objection notice if there shall be any Environmental Condition affecting
the Timberlands or any portion thereof (an “Environmental Defect”), which
notice shall be given by Purchaser to Seller within thirty (30) days after
Purchaser shall have obtained knowledge of the material facts and circumstances
concerning such Environmental Condition. Any written objection notice from
Purchaser to Seller shall set forth, in reasonable detail, the basis for Purchaser’s
claim that a defect exists, and the particular portion of the Timberlands that
is subject to such alleged Title Defect or Environmental Defect (any
Timberlands parcel on which such defect exists being referred to herein as a “Defective Parcel,” which
parcel shall only be the portion of the Timberlands which is actually affected
by such defect, and may be less than a deeded or legal tract). Notwithstanding
anything to the contrary contained in this Agreement, any buffer zones or other
areas within the Timberlands that are not harvested pursuant to applicable Law,
Sustainable Forestry Initiative Program standards or applicable state forestry
Best Management Practices shall not be deemed to Defective Parcels due to the
fact that commercial harvesting of timber is not performed thereon.


 


(b)                                 With respect to a Defective Parcel that has
an Environmental Defect (an “Environmentally Defective Parcel”), Seller has the right, but not the obligation
to remediate such Environmental Defect and if, by the Closing Date, Seller has
cured or remediated such defect, the Environmentally Defective Parcel shall
remain part of the Timberlands to be conveyed by Seller to Purchaser at Closing
and shall not be deemed to be a Deleted Parcel (as hereinafter defined). If Seller
refuses or fails to remediate, in a manner reasonably satisfactory to
Purchaser, any Environmental Defect prior to Closing, Purchaser shall have the
option upon written notice delivered to Seller at least ten (10) days prior to
Closing of: (i) waiving the Environmental Defect and accepting title to the
Environmentally Defective Parcel at Closing with no adjustment to the Purchase
Price therefor (in which event Purchaser shall acquire the Environmentally
Defective Parcel subject to the Environmental Defect, further subject to the
applicable provisions of Article XI), or (ii) by written notice to Seller,
electing not to purchase the Environmentally Defective Parcel at Closing, in
which event (A) Seller shall not convey such Environmentally Defective Parcel to
Purchaser at Closing, (B) the applicable Deleted Parcel shall be excluded from
this transaction at Closing and shall be retained by Seller, and (C) the
Purchase Price shall be reduced by an amount equal to $300 per acre of the
Deleted Parcel if such parcel is in the Escanaba forest, and $400 per acre of
the Deleted Parcel for any other Timberlands.


 


56





















 


(c)                                  Notwithstanding anything to the contrary
herein, in the event that any Title Commitment for any portion of the
Timberlands in the Escanaba Forest shall not provide for Access Insurance (as
hereinafter defined) with respect to such portion of the Timberlands for which
Seller has represented that it has had legal or historical access (i.e., all
the Timberlands in the Escanaba Forest other than the acres in such forest
(estimated by Seller in good faith to be approximately 13,635 acres) for which
Seller has not had such access and to which the provisions of this
Section 6.12 concerning Defective Parcels shall be applicable), the
Purchaser shall give Seller prompt written notice thereof, and if Seller shall
be unable to cause the Title Company (whether by delivery of an affidavit or
otherwise) to provide affirmative insurance and/or indorsement (in customary form),
with respect to commercial vehicular access to the applicable Timberlands
property from public roads (the “Access Insurance”) in the Title
Policy delivered at Closing with respect to such property (which Title Policy
may also include an exception on Schedule B thereto with respect to lack
of documented access, to the extent that same is the subject of such Access
Insurance), then (provided that such property is not otherwise a Defective
Parcel for reasons other than lack of documented access) such property shall be
conveyed to Purchaser at Closing and shall be deemed not to be a Defective
Parcel, provided that Purchaser shall receive a credit at Closing in the
amount of $200 multiplied by the number of acres in the Escanaba Forest for
which Seller has represented that it has had legal or historical access and
Access Insurance shall not have been obtained at Closing. If, within ninety
(90) days after the Closing, Seller shall cause the Title Company to deliver to
Purchaser Access Insurance for any such property in the Escanaba Forest for
which Purchaser received such credit at Closing (and Purchaser shall reasonably
cooperate with any efforts of Seller in this regard), then Purchaser, within
fifteen (15) days after receipt of such Access Insurance, shall pay to Seller
the amount of such credit received at Closing with respect to such property.
Purchaser’s rights to a $200 per acre credit under this Section 6.12(c)
shall not be modified or affected by any provisions of the definition of “Permitted
Exceptions” that refer to lack of access, access restrictions or similar
matters.


 


(d)                                 With respect to Defective Parcels which are
the subject of a Title Defect, Purchaser shall be required to purchase such
Defective Parcels at Closing without adjustment in the Purchase Price, provided
that if the aggregate acreage of such Defective Parcels exceeds (i) 45,220
acres in the Escanaba Forest, (ii) 7,700 acres in the Wickliffe Forest, or
(iii) 10,360 acres in the Chillicothe Forest (each such number of acres, a “Threshold
Amount”), then Purchaser shall be entitled
to a Purchase Price Credit (as hereinafter defined) at Closing with respect to
the number of acres of Defective Parcels in a forest that exceeds the Threshold
Amount for such forest, provided that, if within ninety (90) days after the
Closing, Seller shall have cured any Title Defect with respect to a Defective
Parcel (and Purchaser shall reasonably cooperate with Seller in this regard),
then Purchaser, within fifteen (15) days after such cure shall have been completed
and Seller shall have given Purchaser written notice thereof, shall pay to
Seller the amount of the Purchase Price Credit that Purchaser shall have
received at Closing with respect to the applicable Defective Parcel.


 


(e)                                  In addition, if Seller (or its Subsidiaries)
shall own on the Closing Date and convey to Purchaser at Closing in accordance
with the terms hereof less than 647,000 acres of Timberlands in the Escanaba
Forest, 149,000 acres of Timberlands in the Chillicothe Forest, or 108,000
acres of Timberlands in the Wickliffe Forest (as determined by Seller’s GIS
data), Purchaser shall be entitled to a credit equal to $300 per acre (with
respect to the Escanaba Forest)


 


57





















 


or
$400 per acre (with respect to the Chillicothe or Wickliffe Forests) for each
acre of Timberlands owned and conveyed by Seller (or its Subsidiaries) at
Closing that is less than the applicable minimum acreage (with the acreage of
any Deleted Parcels being deducted from such applicable minimum acreage amount
for purposes of determining such credit).


 


(f)                                    As used in this Section 6.12, the term (i) “Purchase Price Credit”
for each Defective Parcel (excluding
any Environmentally Defective Parcel) that exceeds the applicable Threshold Amount
shall equal $200 per acre with respect to such Defective Parcel, provided
that the Purchase Price Credit with respect to all Defective Parcels (excluding
any reduction in the Purchase Price on account of an Environmentally Defective
Parcel pursuant to Section 6.12(b) hereunder and any Purchase Price credit
provided pursuant to Sections 6.12(c) or 6.12(e) hereunder) shall not exceed
$20 million in the aggregate, and (ii) “Deleted Parcel” shall mean, (A) the Environmentally
Defective Parcel, if such Environmentally Defective Parcel is either an entire
separate legal or deeded tract, or (if not) can be subdivided by the execution
and recordation of a deed (in which event Purchaser and Seller, each acting
reasonably, shall mutually agree on the boundaries and configuration of such
Deleted Parcel, provided that such Deleted Parcel shall be configured to be
merchantable timberlands and to not adversely affect the ability of Purchaser
or its successors to operate and harvest the Timberlands contiguous thereto),
or (B) otherwise, the full deeded or legal tract or tracts in which such
Environmentally Defective Parcel is located (regardless of how much larger the
Deleted Parcel is than the Environmentally Defective Parcel).


 


(g)                                 At Closing, Purchaser shall grant to Seller,
without cost, access easements over and across the Timberlands upon reasonable
terms and over reasonable routes as may be necessary for Seller’s access to any
Deleted Parcels, and Seller shall grant to Purchaser, without cost, access
easements over and across the Deleted Parcels upon reasonable terms and over
reasonable routes as may be necessary for Purchaser’s access to the
Timberlands. The grantor of any such easements shall have the right to relocate
the easements, from time to time, at grantor’s expense, so long as adequate
access shall be assured to the grantee.


 


(h)                                 Notwithstanding anything to the contrary in
this Section 6.12, if within ninety (90) days after the Closing, Seller
completes the remediation of the Environmental Defect on a Deleted Parcel in a
manner reasonably acceptable to Purchaser, and notifies Purchaser thereof in
writing, Purchaser shall purchase the Deleted Parcel from Seller at a price
equal to the value by which the Purchase Price was reduced because of the
Deleted Parcel (and otherwise on the terms set forth in this Agreement),
provided that the Deleted Parcel is in substantially the same condition,
reasonable wear and tear excluded, as it was as of the date of Closing, and
provided that Seller shall not have harvested timber (other than to a de minimis
extent) on such Deleted Parcel since the Closing Date. The parties shall close
the purchase and sale of any such Deleted Parcel on a date that is on or about
thirty (30) days after Seller so notifies Purchaser that the cure or
remediation has been completed (or on such other date as Purchaser and Seller
may agree), and at such closing the parties shall take the actions (and bear
the costs) with respect to the purchase and sale of such Deleted Parcel that
would have been taken (or borne) by such party under this Agreement had the
Deleted Parcel been included in the Property, and such closing thereafter shall
be considered the “Closing” with respect to such parcel for all
purposes of this Agreement.


 


58





















 


(i)                                     If Seller objects to any timely notice from
Purchaser raising a Title Defect, then Seller, within fifteen (15) days after
receipt of Purchaser’s notice, shall send to Purchaser a written notice setting
forth, in reasonable detail, the basis of Seller’s objection to Purchaser’s
notice. If Seller and Purchaser have not resolved, within ten (10) days after
such written response by Seller to Purchaser’s delivery of written notice of
objection within the applicable time period provided herein (prior to the
Closing), any dispute between them with respect to any alleged Title Defect,
then either Seller or Purchaser shall have the right by written notice (“Resolution Notice”) given within five (5) days
thereafter to submit such dispute for determination. (“Expedited
Resolution”) by
an independent appraiser experienced in commercial timberlands, to be mutually
approved by Seller and Purchaser, which approval shall not be unreasonably
withheld or delayed (each, the “Forestry Expert”), whose
decision as to whether the applicable title matter constitutes a Title Defect
or a Permitted Exception (and/or as to the particular acreage affected by any
such Title Defect, if such question cannot first be resolved by the Title
Company to the satisfaction of Seller and Purchaser) shall be final,
unappealable and binding on the parties. Seller and Purchaser may each submit
all relevant written materials (including affidavits) for consideration by the
Forestry Expert within ten (10) days after the Resolution Notice, and the
Forestry Expert shall render his written decision within fifteen (15) days
after the Resolution Notice. The Forestry Expert shall make his determination
based on the particular relevant provisions of this Agreement, the materials submitted
by the parties hereunder and such other materials that such Forestry Expert may
deem to be relevant to its determination as described above. The parties shall
each pay one-half (1/2) of the fees and expenses of the Forestry Expert and
shall otherwise bear their own costs and expenses of any Expedited Resolution.
Notwithstanding the foregoing, it is acknowledged and agreed that the following
limitations shall apply to the duties of, and matters subject to review and
determination by, a Forestry Expert hereunder: (i) prior to the approval of any
Forestry Expert, all material relationships, affiliations and business dealings
that such proposed Forestry Expert currently has or has had during the three
(3) year period prior to the date hereof with Purchaser, Seller and each of
their respective Affiliates must be disclosed to each party hereto, and the
Forestry Expert and each party hereto (to the extent applicable to it) must
certify to such statement; and (ii) if Seller takes a position that the
instrument, document, agreement or other matter that is the subject of the
alleged Title Defect no longer exists or no longer affects the Timberlands,
then Seller shall cause the Title Company to remove such alleged Title Defect
and such dispute shall not be subject to the review or determination of the
Forestry Expert.


 


(j)                                     If (x) any parcel of the Timberlands is an
Environmentally Defective Parcel, (y) the relevant Environmental Defect on such
Environmentally Defective Parcel existed prior to the Closing Date or there is
no credible evidence that the applicable Environmental Defect first occurred
subsequent to the Closing Date, and (z) Purchaser did not have actual knowledge
of the material facts and circumstances concerning such Environmental Defect on
or prior to the date that is ten (10) days prior to the Closing Date, then, in
addition to Purchaser’s rights pursuant to Section 6.12(a) and Section 6.12(b)
hereunder, Purchaser shall also have the right after the Closing Date up until
the date that is six (6) months after the Closing Date to give Seller written
notice of such Environmental Defect, which notice shall be in reasonable
detail, whereupon (i) Seller shall have the right to remediate such
Environmental Defect at Seller’s cost, and Purchaser shall reasonably cooperate
with Seller’s efforts in such regard, and (ii) if seller shall fail to
remediate such Environmental Defect, in a manner reasonably satisfactory to
Purchaser, within ninety (90) days after Seller’s receipt of Purchaser’s notice
with respect to


 


59





















 


such Environmental Defect,
then Purchaser, within sixty (60) days after the expiration of such ninety (90)
day period, may elect to convey back to Seller the applicable Timberlands
parcel subject only to title matters that existed as of the Closing Date, and
which parcel shall conform to the requirements set forth in the definition of “Deleted
Parcel” in Section 6.12(f)(ii) and Seller shall pay to Purchaser, at the
closing of such re-conveyance, the applicable amount set forth in Section
6.12(b)(ii)(C). Any such parcel reconveyed by Purchaser to Seller in accordance
with this Section 6.12(j) shall be deemed to be a Deleted Parcel hereunder.


 


(k)                                  Notwithstanding anything to the contrary in
this Section 6.12, Purchaser’s rights to any credits against the Purchase Price
pursuant to Sections 6.12(b), 6.12(c), 6.12(d) and 6.12(e) shall be applicable
only in the event the Closing occurs in accordance with this Agreement and
shall not modify or affect the provisions of Article VIII with respect to the
conditions to Purchaser’s obligation to close or to Seller’s obligations under
Section 6.2.


 


(l)                                     The parties hereto agree that the measurement
of “acre” and
“acreage”
as used in this Agreement has been, and shall be, calculated in
accordance with the GIS method, absent manifest error.


 


(m)                               This Section 6.12 shall survive the Closing.


 


Section
6.13.                             Computer Software; Data.


 


(a)                                  Included Seller
Software.  Seller hereby conveys to Purchaser and its
Affiliates and designees, effective as of the Closing, a perpetual,
royalty-free, fully-paid, non-exclusive
license (with the right to sublicense) to use, modify and make derivative works
of the Included Seller Software.


 


(b)                                 Included Third Party
Software and Purchased Third Party Software. 
Seller hereby agrees
to obtain for Purchaser and its Designated Affiliates the right to operate the
Included Third Party Software and the Purchased Third Party Software as it was
operated by or for the benefit of the Business (including all configurations
and customizations thereof) prior to the Closing (the “Necessary IT Licenses”). Notwithstanding
anything to the contrary in Section 6.3 (relating to obtaining consents for the
assignment of Contracts), Purchaser shall pay the costs or fees required to
obtain the Necessary IT Licenses (the “IT Transfer
Fees”) up
to $8,000,000. If the IT Transfer Fees exceed $8,000,000, then Seller and
Purchaser shall share equally in the payment of same up to a maximum of
$16,000,000 in the aggregate. Seller shall pay all IT Transfer Fees in excess
of $16,000,000.


 


(c)                                  Shared Data. Seller and Purchaser shall be co-owners,
without any rights or obligations of accounting, of any and all Business Data
that was used by Seller or any of its Subsidiaries (other than the Acquired
Companies), and not solely used by the Business, prior to the Closing Date.


 


Section
6.14.                             Intellectual Property.


 


(a)                                  Subject to Section 12.1(b), Seller hereby
grants to Purchaser, its Affiliates and designees, effective as of the Closing,
a perpetual, royalty-free, fully-paid, non-exclusive license (with the right to
sublicense) to use, practice, lease, license, reproduce, modify and make


 


60





















 


derivative
works of, and to make, sell and distribute goods and services utilizing or
incorporating, the Copyrights, Patents, Invention Records and Trade Secrets
owned or licensed by Seller or any of its Subsidiaries (other than the Acquired
Companies) to the extent necessary to perform the processes performed in, and
otherwise conduct, the Business as of the Closing Date and not otherwise part
of the Acquired Intellectual Property, including without limitation the
Intellectual Property listed on Schedule 6.14 (the “Licensed Seller IP”). For the avoidance of doubt, if
Intellectual Property listed on Schedule 1.3(d) is not listed on Schedule
6.14, such Intellectual Property is not included in the Licensed Seller IP.
Such license is transferable in connection with the sale or transfer of the
Business or the portion of the Business to which such Intellectual Property
relates, and does not require Purchaser to account for or share revenues
resulting from such use.


 


(b)                                 Seller shall have the initial right to
prosecute and control the prosecution of, and make all requisite filings for
maintaining, all applications and payment of any fees related to any Licensed
Seller IP.


 


(c)                                  Within sixty (60) days of any prosecution
deadline or fee due date for any Licensed Seller IP, Seller will notify
Purchaser if it intends to abandon such Licensed Seller IP by failing to meet
such deadline or pay such fee. Upon receiving such notice, Purchaser may, in
its discretion, pursue and control such Licensed Seller IP at its own expense.


 


(d)                                 In the event that either party has reason to
believe that any person may be infringing any of the Licensed Seller IP, such
party will promptly notify the other party by providing all information in its
possession, custody or control to permit the other party to determine whether
such infringement is occurring.


 


(e)                                  Seller shall have the sole right to bring or
defend any action to enforce the Licensed Seller IP and protect against
infringement or unauthorized use thereof, and may join Purchaser in any such
action. Purchaser will cooperate with Seller in any such enforcement efforts at
Seller’s expense. In the event that Seller, in the exercise of its reasonable
business judgment, elects not to enforce the Licensed Seller IP, through legal
action or otherwise, Purchaser may bring legal action or otherwise take any
action to enforce the Licensed Seller IP unless Seller reasonably believes that
doing so would be likely to adversely affect Seller’s business interests and
provides notice to Purchaser indicating the basis for such belief. Seller will
cooperate with Purchaser in such permitted enforcement efforts at Seller’s
expense.


 


(f)                                    Each party agrees that it will have no right
or interest in any new developments, enhancements or improvements to the
Licensed Seller IP developed by the other party or its Affiliates.


 


Section
6.15.                             Compliance with Environmental Transfer
Statutes.  Seller shall, at its own cost and expense, be
responsible for complying with the notice requirements of any Environmental
Laws regarding the sale or transfer of the Business Facilities, including, but
not limited to, in each case, to the extent possible, prior to the Closing
Date.


 


61





















 


ARTICLE
VII


 


COVENANTS OF PURCHASER


 


From and after the date hereof and until the Closing
(except with respect to Sections 7.4, 7.5, 7.6, 7.7, 7.8, 7.9 and 7.10 which
shall survive the Closing in accordance with their terms), Purchaser hereby
covenants and agrees that:


 


Section
7.1.                                   Opportunity to Participate in Q&A.  In
accordance with Purchaser’s exercise of its rights under Section 6.1, Purchaser
shall abide by the obligations imposed on Purchaser set forth in such Section
6.1, including permitting Seller to participate in any meetings or discussions
with any Business customers, suppliers, employees or others with whom it has
material commercial dealings.


 


Section
7.2.                                   Public Statements. 
Before Purchaser shall issue any press release or otherwise make any
public statement concerning this Agreement or the transactions contemplated
hereby, Purchaser shall so advise and cooperate with Seller and shall not
release such information without Seller’s consent (which consent shall not be
unreasonably withheld, conditioned or delayed), unless (a) such information is
otherwise publicly available other than as a result of a disclosure by
Purchaser made in breach of this Section 7.2 or (b) the release thereof is, in
the reasonable judgment of Purchaser, required by any Law (including any rule
of any securities exchange on which Purchaser’s securities are traded) or Order
to which Purchaser is bound or subject, or is otherwise necessary for the
consummation of the Acquisition Financing.


 


Section
7.3.                                   Consents and Conditions. 
(a)  Purchaser shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with Seller in doing, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated hereby as promptly as practicable, including, but not
limited to: (i) obtaining all necessary consents, approvals or waivers from,
and giving any necessary notifications to, third parties; (ii) making all
registrations and filings with, and obtaining all necessary actions or
non-actions, waivers, consents and approvals from, all Governmental Bodies
(including those in connection with the HSR Act and comparable requirements in
foreign jurisdictions) and taking all steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, a Governmental
Body; and (iii) defending any Legal Proceedings challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order or preliminary or permanent
injunction entered by any Governmental Body vacated or reversed.


 


(b)                                 [Intentionally Omitted]


 


(c)                                  Purchaser shall keep Seller reasonably
apprised of the status of matters relating to the completion of the
transactions contemplated hereby, including promptly furnishing Seller with
copies of notices or other communications received by Purchaser or by any of
its Subsidiaries from any third party and/or any Governmental Body with respect
to the transactions contemplated hereby. Purchaser shall promptly furnish to
Seller such necessary information and reasonable assistance as Seller may
request in connection with the foregoing and


 


62





















 


shall
promptly provide counsel for Seller with copies of all filings made by
Purchaser, and all correspondence between Purchaser (and its advisors) with any
Governmental Body and any other information supplied by Purchaser and its
Affiliates to a Governmental Body in connection herewith and the transactions
contemplated hereby; provided, however, that Purchaser may, as it
deems advisable and necessary, reasonably designate any competitively sensitive
material provided to Seller as “outside counsel only,” and materials may be
redacted (i) to remove references concerning the valuation of the Business and
(ii) as necessary to comply with contractual arrangements. Materials designated
as for “outside counsel only” and the information contained therein shall be
given only to the outside legal counsel of Seller and will not be disclosed by
such outside counsel to employees, officers or directors of Seller unless
express permission is obtained in advance from Purchaser or its legal counsel.
Purchaser shall, subject to applicable Law, permit counsel for Seller
reasonable opportunity to review in advance, and consider in good faith the
views of Seller in connection with, any proposed written communication to any
Governmental Body. Purchaser agrees not to participate, or to permit its
Affiliates to participate, in any substantive meeting or discussion, either in person
or by telephone, with any Governmental Body in connection herewith and the
transactions contemplated hereby unless it consults with Seller in advance and,
to the extent not prohibited by such Governmental Body, gives Seller the
opportunity to attend and participate.


 


Section
7.4.                                   Seller’s Access to Documents. 
Purchaser shall, and shall cause its Subsidiaries to, afford to Seller’s
representatives, upon reasonable notice and without undue interruption to
Purchaser’s business, access during normal business hours to the books and
records of Purchaser pertaining to the operations of the Business prior to the
Closing Date for a period of eight years following the Closing Date in
connection with financial statements and U.S. Securities and Exchange Commission
reporting obligations, Excluded Liabilities, Excluded Assets and other
reasonable business purposes; provided that nothing herein shall limit Seller’s
rights of discovery. Purchaser agrees to hold all of the books and records of
the Business (other than records relating to Taxes, which shall be governed by
Section 14.5) existing on the Closing Date or included in the Purchased Assets
in accordance with Purchaser’s standard record retention policies; provided
that Purchaser shall not destroy, alter or dispose of any of such books and
records for a period of eight years from the Closing Date or such longer time
as may be required by Law without first offering in writing at least 90
calendar days prior to such destruction or disposition to surrender them to Seller.


 


Section
7.5.                                   Further Actions. 
Purchaser, whether before, at or after the Closing, shall execute and
deliver such instruments and take such other actions as may reasonably be
required to (a) carry out the intent hereof and of the Transition Agreements
and (b) consummate the transactions contemplated hereby and thereby including
the taking of all acts necessary to cause the conditions to Closing to be
satisfied as promptly as possible. Purchaser shall use its reasonable best
efforts to secure the Acquisition Financing pursuant to the Financing
Commitments. If Purchaser’s financing source notifies Purchaser that it is
unwilling or unable to provide the Acquisition Financing on the terms and
conditions set forth in the Financing Commitments, then Purchaser shall so
notify the Seller of such fact and then Purchaser shall use its reasonable best
efforts to secure alternative financing with its original and any other
nationally recognized financial institutions; provided that such alternative
financing is on terms and conditions that in the aggregate are no less
favorable to the Purchaser than the terms and conditions contemplated by the
original Financing Commitments and in no event shall Purchaser


 


63





















 


be
required to enter into any alternative financing arrangements pursuant to which
the cost of capital to Purchaser shall exceed the cost of capital contemplated
by the original Financing Commitments.


 


Section
7.6.                                   Guarantees; Letters of Credit. 
Purchaser shall use commercially reasonable efforts to cause itself or
one or more of its Affiliates to be substituted in all respects for Seller or
any of its Subsidiaries that is not an Acquired Company, effective as of the
Closing Date, in respect of all obligations of Seller and any such Subsidiary
that is not an Acquired Company under each of the guarantees, surety bonds,
letters of credit, letters of comfort, bid bonds, performance bonds and other
financial assurance arrangements or commitments obtained or entered into by
Seller or any of its Subsidiaries that is not an Acquired Company for the
benefit of the Business (and Seller and its Subsidiaries shall be released from
any such obligations), including those guarantees, surety bonds, letters of
credit, letters of comfort, bid bonds and performance bonds are set forth in Schedule
7.6 (the “Guarantees”). To
the extent such substitution contemplated by the first sentence of this Section
7.6 has been effected, Seller and its Subsidiaries that are not Acquired
Companies shall from and after the Closing cease to have any obligation
whatsoever arising from or in connection with the Guarantees. To the extent
such substitution contemplated by the first sentence of this Section 7.6 has
not been effected, Purchaser shall (i) use commercially reasonable efforts to
affect such substitution as soon as practicable following the Closing, but in
any event within 6 months thereof, and (ii) indemnify Seller and its
Subsidiaries that are not Acquired Companies with respect to any such Guarantees
in accordance with Article XI; provided, however, that
notwithstanding anything in the foregoing, with respect to any of the
Guarantees set forth in Schedule 7.6, Seller and its Subsidiaries may at
any time following the six month anniversary of the Closing terminate one or
more of such Guarantees and thereafter cease to have any obligation whatsoever
arising from or in connection with any such terminated Guarantee.


 


Section
7.7.                                   Use of Seller’s Name. 
Purchaser agrees that, subject to the terms of the Transition
Agreements:


 


(a)                                  within six months after the Closing Date,
Purchaser shall remove “MeadWestvaco,” the MeadWestvaco logo and any other
similar mark (the “Seller Name”) and
any other Trademark, design or logo previously or currently used by Seller or
any of its Affiliates that is not part of the Acquired Intellectual Property
from all buildings, signs and vehicles of the Business;


 


(b)                                 except for use of the MeadWare name in the
presently existing MeadWare product line for one year, as set forth in Schedule
6.14(6), within six months after the Closing Date, Purchaser shall cease
using the Excluded IP Assets and the Seller Name and any other Trademark,
design or logo previously or currently used by Seller or any of its Affiliates
that is not part of the Acquired Intellectual Property in all invoices,
letterhead, domain names and web sites, advertising and promotional materials,
office forms and business cards;


 


(c)                                  Purchaser will (i) within twelve months after
the Closing Date, remove the proprietary MeadWestvaco packaging from the
inventory of packaging materials of the Business that is in existence as of the
Closing Date (“Existing Inventory”) and (ii) will


 


64





















 


use its best efforts to remove within six months after the Closing Date
the Seller Name, and any other Trademark, design or logo previously or
currently used by Seller that is not part of the Acquired Intellectual
Property, from those assets of the Business that are not Existing Inventory, including
those assets (such as, but not limited to, tools, molds and machines) used in
association with the manufacture of the products of the Business or otherwise
reasonably used in the conduct of the Business after the closing Date (such
assets, “Other Marked Assets”);


 


(d)                                 At the Closing, Seller will grant to
Purchaser a limited right to use the Seller Name and associated Trademarks,
designs and logos with regard to the Existing Inventory and Other Marked
Assets, and any other Trademarks forming a part of the Excluded IP Assets, in
accordance with the terms and conditions set forth in this Section 7.7;


 


(e)                                  In no event shall Purchaser or any Affiliate
of Purchaser advertise or hold itself out as Seller or an Affiliate of Seller
at any time before, on or after the Closing Date; and


 


(f)                                    As soon as reasonably practicable after the
Closing Date, but in no event later than three months following the Closing
Date, Purchaser shall change the name of the Acquired Companies, to the extent
applicable, to delete any references to “MeadWestvaco.”


 


Section
7.8.                                   Litigation Support.  In
the event and for so long as Seller actively is contesting or defending against
any action, investigation, charge, claim, or demand by a third party (other
than Purchaser or any of its Affiliates) in connection with (a) any transaction
contemplated under this Agreement or (b) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date
involving the Business, Purchaser will cooperate with Seller and its counsel in
the contest or defense, make available its personnel, and provide such
testimony and access to its books and records as shall be reasonably necessary
in connection with the contest or defense, all at the sole control, cost and
expense of Seller (unless Seller is entitled to indemnification therefor under
Article XI).


 


Section
7.9.                                   Patent License.


 


(a)                                  Subject to Section 12.1(a), Purchaser and/or
one or more of its Designated Affiliates hereby grant(s) to Seller, its
Affiliates and designees, effective as of the Closing, a perpetual,
royalty-free, fully-paid, non-exclusive license (with the right to sublicense)
to make, use or sell products or services based upon, and practice, the Patents
and Invention Records set forth on Schedule 7.9 (the “Licensed
Purchaser Patents”). For the avoidance of doubt, if
Patents listed on Schedule 1.2(g) are not listed on Schedule 7.9,
such Patents are not included in the Licensed Purchaser Patents. Such license
is transferable in connection with the sale or transfer of Seller’s business to
which such Patents relate, and does not require Seller to account for or share
revenues resulting from such use.


 


65





















 


(b)                                 Purchaser shall have the initial right to
prosecute and control the prosecution of, and make all requisite filings for
maintaining, all applications and payment of any fees related to any Licensed
Purchaser Patents.


 


(c)                                  Within sixty (60) days of any prosecution
deadline or fee due date for any Licensed Purchaser Patents, Purchaser will
notify Seller if it intends to abandon such Licensed Purchaser Patents by
failing to meet such deadline or pay such fee. Upon receiving such notice, Seller
may, in its discretion, pursue and control such Licensed Purchaser Patents at
its own expense.


 


(d)                                 In the event that either party has reason to
believe that any person may be infringing
any of the Licensed Purchaser Patents, such party will promptly notify the
other party by providing all information in its possession, custody or control
to permit the other party to determine whether such infringement is occurring.


 


(e)                                  Purchaser shall have the sole right to bring
or defend any action to enforce the Licensed Purchaser Patents and protect
against infringement or unauthorized use thereof, and may join Seller in any
such action. Seller will cooperate with Purchaser in any such enforcement
efforts at Purchaser’s expense. In the event that Purchaser, in the exercise of
its reasonable business judgment, elects not to enforce the Licensed Purchaser
Patents, through legal action or otherwise, Seller may bring legal action or
otherwise take any action to enforce the Licensed Purchaser Patents unless
Purchaser reasonably believes that doing so would be likely to adversely affect
Purchaser’s business interests and provides notice to Seller indicating the
basis for such belief. Purchaser will cooperate with Seller in such permitted
enforcement efforts at Purchaser’s expense.


 


(f)                                    Each party agrees that it will have no right
or interest in any new developments, enhancements or improvements to the
Licensed Purchaser Patents developed by the other party or its Affiliates


 


Section
7.10.                             Bulk Sales Law. 
Purchaser hereby waives compliance by Seller, in connection with the
transactions contemplated hereby, with the provisions of any applicable bulk
sales law; provided that, Seller shall indemnify Purchaser for any Losses
arising from such non-compliance under Article XI.


 


Section
7.11.                             Unidentified Properties. Seller shall use its reasonable best
efforts from and after the date hereof to identify any real property (whether
leased or owned) of the Seller or any of its Subsidiaries that is Related to
the Business (other than the Timberlands) and that has not been identified in
Seller’s Disclosure Schedule as real property that comprises part of the Assets
to be conveyed hereunder (each, an “Undisclosed Business Property”).  As promptly as practicable, but in no event more than fifteen
(15) Business Days, after becoming aware of the existence of any Undisclosed
Business Property, Seller shall deliver to Purchaser a written description of
such Undisclosed Business Property, the location and approximate acreage
thereof and the basis on which such Undisclosed Business Property is Related to
the Paper Business. Seller shall afford Purchaser and its representatives full
access for a period of 45 days after delivery of any written notification of
the existence of such Undisclosed Business Property


 


66





















 


to
the Undisclosed Business Property and all information, data, reports, surveys
and other written materials (including any correspondence or written
communications with Governmental Authorities relating to the Undisclosed
Business Property), including the right to conduct Phase I environmental
surveys with respect to such Undisclosed Business Property. If during such
45-day period, Purchaser notifies Seller in writing either (i) that Purchaser’s
environmental consultant has determined that Environmental Liabilities
associated with such Undisclosed Business Property exceed $250,000 or (ii) that
the fair market value of such Undisclosed Business Property is less than the
amount of Environmental Liabilities associated with such Undisclosed Business
Property, Purchaser, at its option, may treat such Undisclosed Business
Property as an Asset to be conveyed under this Agreement or may treat such
Undisclosed Business Property as an Excluded Property, and such determination
by Purchaser shall be final, binding and conclusive for all purposes of this
Agreement. Absent such notification by Purchaser within such 45-day period,
such Undisclosed Business Property shall become part of the Assets to be conveyed
pursuant to the terms of this Agreement (including, if such Undisclosed
Business Property is part of the Mills, Chillicothe Distribution Center or the
Timberlands, Sections 6.10, 6.11 and 6.12).


 


ARTICLE
VIII


 


CONDITIONS PRECEDENT TO PURCHASER’S OBLIGATIONS


 


The obligation of Purchaser to consummate the
transactions contemplated hereby on the Closing Date is subject to the
satisfaction (or, if permitted, waiver by Purchaser in its sole discretion) of
each of the following conditions:


 


Section
8.1.                                    Accuracy of Representations and Warranties.  (i)
Each of the representations and warranties of Seller contained herein that is
qualified as to Material Adverse Effect shall be true and correct in all
respects at and as of the Closing Date, with the same force as if made on and
as of the Closing Date, and (ii) each of the representations and warranties of
Seller contained herein that is not so qualified shall be true and correct in
all respects (disregarding materiality qualifications contained therein, except
in the case of Section 4.6) with the same force as if made on and as of the
Closing Date, except for any such failure to be true and correct as would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect (except, in each case, to the extent any such representation or
warranty speaks as of a specific date, in which case such representation or
warranty shall be, subject to the qualifications set forth above, true and
correct as of such specific date).


 


Section
8.2.                                   Performance of Covenants. 
Seller shall have performed and complied with the covenants and
provisions hereof required to be performed or complied with by it between the
date hereof and the Closing Date, other than any such nonperformance or
noncompliance that would not, individually or in the aggregate, reasonably be
expected to result in a material diminution of value to the Purchaser with
respect to the transactions contemplated by this Agreement.


 


Section 8.3.                                   Antitrust Laws. Any applicable waiting periods under the HSR
Act and other applicable foreign
requirements relating to the transactions contemplated by this Agreement shall
have expired or been terminated and, any other approvals of any Governmental


 


67





















 


Body
related to antitrust or competition laws shall have been obtained, except in
each case for such approvals the failure of which to obtain would not
reasonably be expected to have a Material Adverse Effect.


 


Section
8.4.                                   No Injunctions.  No
preliminary or permanent injunction, restraining order or decree of any nature
of any court of competent jurisdiction or Governmental Body restraining or
prohibiting the consummation of the transactions contemplated hereby shall be
in effect.


 


Section
8.5.                                   Debt Financing Condition. 
Purchaser shall have obtained the debt portion of the Acquisition
Financing from such sources and in such amounts and on such terms and
conditions as set forth in the Financing Commitments or similar letters relating
to any alternative financing contemplated by Section 7.5.


 


Section
8.6.                                   Third Party Consents. 
Seller shall have obtained (i) the written consents, in form and
substance reasonably satisfactory to Purchaser, listed on Schedule 8.6(i)
and (ii) such other written consents, in form and substance reasonably
satisfactory to Purchaser, the failure of which to obtain would, individually
or in the aggregate, have a Material Adverse Effect.


 


Section
8.7.                                   Guarantees.  All guarantees of any
Indebtedness of Seller or any of its Affiliates (other than any Acquired
Companies) by any Acquired Company shall have been released to the reasonable
satisfaction of Purchaser.


 


Section
8.8.                                   Absence of Material Adverse Change. 
There shall not have occurred after the date hereof any event or
circumstance (or series of events or circumstances) that, individually or in
the aggregate, has resulted in or could reasonably be expected to result in a
Material Adverse Effect.


 


Section
8.9.                                   Officer’s Certificate. 
Purchaser shall have received a certificate from Seller to the effect
set forth in Sections 8.1, 8.2 and 8.8, dated the Closing Date, signed on
behalf of Seller by the Chief Executive Officer, Chief Financial Officer or any
Vice President of Seller.


 


Section
8.10.                             Title Policies. 
Purchaser shall have obtained the Title Policies and (to the extent
required pursuant to Section 6.10 hereof) Express Maps (or a survey, in the
case of the Chillicothe Distribution Center) for each of the Titled Properties.


 


Section
8.11.                             Business IRBs. 
Purchaser shall have received evidence reasonably satisfactory to it
that the Business IRBs shall have been repaid or legally defeased in full
pursuant to agreements and instruments reasonably satisfactory to Purchaser,
that all Liens securing obligations thereunder shall have been released or
terminated, and that each Leased Real Property which shall have been the
subject of a lease relating thereto shall have been reconveyed to Seller or the
applicable Seller Subsidiary or Acquired Company prior to Closing.


 


68





















 


ARTICLE
IX


 


CONDITIONS PRECEDENT TO SELLER’S OBLIGATIONS


 


The obligation of Seller to consummate the
transactions contemplated hereby on the Closing Date is subject to the
satisfaction (or, if permitted, waiver by Seller in its sole discretion) of
each of the following conditions:


 


Section
9.1.                                   Accuracy of Representations and Warranties.  Each
of the representations and warranties of Purchaser contained herein shall be
true and correct in all respects (disregarding any materiality qualifications
contained therein) with the same force as if made on and as of the Closing
Date, except for any such failures to be true and correct as would not
reasonably be expected, individually or in the aggregate, to materially and
adversely affect Purchaser’s ability to consummate the transactions
contemplated hereunder or to perform its obligations under any agreement
contemplated hereby (except to the extent any such representation and warranty
speaks as of a specific date, in which case such representation and warranty
shall be, subject to the qualifications set forth above, true and correct as of
such specific date).


 


Section
9.2.                                   Performance of Covenants. 
Purchaser shall have performed and complied, in all material respects,
with the covenants and provisions hereof required herein to be performed or
complied with by it between the date hereof and the Closing Date.


 


Section
9.3.                                   Antitrust Laws.  Any
applicable waiting periods under the HSR Act and other applicable foreign
requirements relating to the transactions contemplated by this Agreement shall
have expired or been terminated and, any other approvals of any Governmental
Body related to antitrust or competition laws shall have been obtained, except
in each case for such approvals the failure of which to obtain would not
reasonably be expected to expose Seller or any of its Subsidiaries to any
material liability, including criminal liability in any jurisdiction.


 


Section
9.4.                                   No Injunctions.  No
preliminary or permanent injunction, restraining order or decree of any nature
of any court of competent jurisdiction or Governmental Body restraining or
prohibiting the consummation of the transactions contemplated hereby shall be
in effect.


 


Section
9.5.                                   Officer’s Certificate. 
Seller shall have received a certificate from Purchaser to the effect
set forth in Sections 9.1 and 9.2, dated the Closing Date, signed by officers
corresponding to those signing on behalf of Seller.


 


ARTICLE
X


 


ADDITIONAL POST-CLOSING COVENANTS


 


Section
10.1.                             Certain Employment Matters. 
(a)  Transferred Employees.  (i)  Offers
of Employment.  The parties hereto
intend that there will be a continuity of employment for all Acquired Company
Employees and Business Employees following the Closing Date, except as
specifically provided in this Section 10.1(a). At least five days prior to the
Closing Date, Purchaser shall, or shall cause one or more of its Designated
Affiliates to, make a general


 


69





















 


offer of employment,
effective as of the Closing Date, through a general notice of transfer
(pursuant to methodologies mutually agreed upon by Seller and Purchaser) to
each Business Employee (including any individuals on maternity leave, short-term disability leave or another
approved leave of absence). In the case of each Business Employee whose terms
of employment are governed by a Collective Bargaining Agreement (“Represented Employees”), such offer shall be on terms and
conditions satisfying the requirements of the applicable Collective Bargaining
Agreement (as set forth in Section 10.1(a)(ii) below concerning Purchaser’s (or
one or more of its Designated Affiliates’) assumption of the Collective
Bargaining Agreements). In the case of each other Business Employee (“Non-Represented Employees”), such offer shall be at the same
base salary or base hourly wage rate as in effect immediately before the
Closing Date. Each Business Employee will be deemed to have accepted such
offer, unless (A) the Business Employee expressly rejects such offer before the
Closing Date or (B) the Business Employee otherwise indicates by his or her
actions that such offer of employment has not been accepted and Purchaser or
one or more of its Designated Affiliates notifies Seller within 30 days
following the Closing Date of such non-acceptance of the offer. The Business
Employees who are deemed to have accepted such offer, and all Acquired Company
Employees, are collectively referred to as the “Transferred Employees.” The parties will cooperate to comply with
legal and regulatory requirements to accomplish the employment transfers
described in this Section 10.1.


 


(ii)                                  Collective Bargaining Agreements.  As
of the Closing, Purchaser shall, or shall cause one or more of its Designated
Affiliates to, assume all Collective Bargaining Agreements and Seller’s
obligations under the Collective Bargaining Agreements (which specifically
shall require Purchaser or one or more of its Designated Affiliates to
establish employee benefit plans with the same benefit levels, benefit design
and, if applicable, employee contribution rates as in effect under each of the
Employee Benefit Plans in which Represented Employees are entitled to
participate under the Collective Bargaining Agreements).


 


(b)                                 Post-Closing Compensation and Benefits
Generally.  (i)  Benefit
Plans Generally. Effective as of the Closing, Seller shall cause the
Acquired Companies to cease to be participating employers in the Seller
Employee Benefit Plans and, as of the Closing Date, all Transferred Employees
shall cease to accrue benefits under and otherwise to participate as active
participants in the Seller Employee Benefit Plans. Purchaser agrees that, from
the Closing Date until December 31, 2005, it shall, or shall cause one or more
of its Designated Affiliates and/or the Acquired Companies to, maintain
employee benefit and compensation (including incentive bonus opportunity but
excluding (i) post-employment health and life benefits (other than Cobra
Coverage), (ii) defined benefit pension benefits for Non-Represented Employees,
(iii) equity-based or related compensation, (iv) supplemental executive
retirement benefits and (v) deferred compensation arrangements) plans, programs
and arrangements for the benefit of the Non-Represented Employees that, when
taken as a whole, are comparable to those provided to such Non-Represented
Employees immediately before the Closing.


 


(ii)                                  Service Credit; Benefit Transition.  For
all purposes under the employee benefit plans of Purchaser and its Designated
Affiliates providing benefits to any Non-Represented Employees after the
Closing (the “New  Plans”), each Non-Represented Employee shall
be credited with his or her years of service with Seller and its Subsidiaries
(including the Acquired Companies) as of the Closing Date (and any additional service
credited under the Employee Benefit Plans), to the same extent as such
Non-Represented Employee was entitled,


 


70





















 


before
the Closing, to credit for such service under any similar Employee Benefit Plans,
except to the extent such credit would result in a duplication of benefits, and
except for purposes of benefit accrual under any defined benefit pension plan.
In addition, and without limiting the generality of the foregoing: (A) each
Non-Represented Employee shall be immediately eligible to participate, without
any waiting time, in any and all New Plans to the extent coverage under such
New Plan replaces coverage under a comparable Employee Benefit Plan in which
such Non-Represented Employee previously participated (such plans,
collectively, the “Old Plans”);
and (B) for purposes of each New Plan providing medical, dental,
pharmaceutical, vision and/or disability benefits to any Non-Represented
Employee, Purchaser shall, or shall cause one or more of its Designated
Affiliates to, cause all preexisting condition exclusions and actively-at-work
requirements of such New Plan to be waived for such employee and his or her
covered dependents, to the extent such exclusions and requirements were waived
with respect to the Non-Represented Employee under comparable Old Plans, and
Purchaser shall, or shall cause one or more of its Designated Affiliates to,
cause any eligible expenses incurred by such Non-Represented Employee and his
or her covered dependents during the portion of the plan year of the Old Plan
ending on the date such Non-Represented Employee’s participation in the
corresponding New Plan begins to be taken into account under such New Plan for
purposes of satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such Non-Represented Employee and his or her covered
dependents for the applicable plan year as if such amounts had been paid in
accordance with such New Plan.


 


(c)                                  Certain Specific Compensation and Benefits.  (i)  Severance.  Purchaser will maintain, or cause one or more
of its Designated Affiliates and/or the Acquired Companies to maintain, for the
benefit of Non-Represented Employees whose employment terminates at any time
from the Closing Date through December 31, 2005, a severance plan or plans
providing benefits, terms and conditions that are not less favorable to such
employees than those provided under the MeadWestvaco Corporation Severance Pay
Plan for Salaried and Non-Union Hourly Employees as in effect on the Closing
Date.


 


(ii)                                  Other Welfare Benefits.  (A)
Without in any way limiting Purchaser’s (or its Designated Affiliates’ or,
following Closing, the Acquired Companies’) obligations under Section
10.1(a)(ii), Seller, the Acquired Companies, and Purchaser shall cooperate so
that there shall be in effect, as of Closing, medical, life insurance,
disability and other welfare plans sponsored by the Acquired Companies,
Purchaser, and/or one or more of its Designated Affiliates (“New Welfare Plans”), that provide Transferred Employees
with benefits that, when taken as a whole, are comparable to the benefits
provided under the Seller Welfare Plans immediately prior to Closing (such
benefits being collectively referred to as “Welfare Benefits”). Seller
and its Subsidiaries (other than the Acquired Companies) shall be responsible
for, and shall retain all Liability and indemnify and hold Purchaser, its
Subsidiaries and Designated Affiliates harmless with respect to all medical,
life insurance and other welfare plan expenses and benefits for each
Transferred Employee with respect to claims incurred by such employees or their
covered dependents prior to the Closing Date, including providing Cobra
Coverage from and after the Closing Date for Former Acquired Company Employees,
Former Business Employees and their respective beneficiaries and dependents.
Purchaser shall, or shall cause one or more of its Designated Affiliates to, be
responsible for, and shall assume all Liability and indemnify and hold Seller,
its Subsidiaries and Affiliates harmless with respect to (x) all medical, life
insurance and other welfare plan expenses and benefits for each Acquired


 


71





















 


Company or Business Employee
with respect to claims incurred by such employees or their covered dependents
on or after the Closing Date, (y) providing any required notices regarding
Cobra Coverage for all Transferred Employees and their beneficiaries and
dependents with respect to qualifying events that occur on or after the Closing
Date, and (z) providing Cobra Coverage from and after the Closing Date for
Transferred Employees and their beneficiaries and dependents, regardless of
whether the applicable qualifying event occurred or occurs before, on or after the Closing Date, to the
extent such coverage was being provided under the Seller Employee Benefit
Plans. For purposes of this paragraph, a claim is deemed incurred when the
services that are the subject of the claim are performed; in the case of life
insurance, when the death occurs and, in the case of a hospital stay, when the
employee first enters the hospital. Notwithstanding anything to the contrary in
this Section 10.l(c)(ii)(A), Liabilities in respect of Retiree Medical Benefits
and long term disability shall be treated in accordance with the provisions of
Sections 10.1(c)(ii)(B) and 10.1(c)(ii)(C), respectively.


 


(B)                                Following the Closing Date, Purchaser or one
or more of its Designated Affiliates that employs the Transferred Represented
Employees (as defined below) shall assume all liabilities, obligations and
responsibilities to provide post-retirement medical, health and life insurance
benefits (“Retiree Medical Benefits”) for Transferred Employees who are
Represented Employees (the “Transferred Represented Employees”) pursuant
to the terms of any Retiree Medical Plan. Seller shall retain all liabilities,
obligations and responsibilities to provide Retiree Medical Benefits to all
employees other than Transferred Represented Employees.


 


(C)                                Notwithstanding anything herein to the
contrary, any individual who has, as of the Closing, met the conditions to
receive long-term disability benefits under Seller Employee Benefit Plan that
is a long-term disability plan of Seller and its Subsidiaries as of Closing
shall receive such benefits under such Seller Employee Benefit Plan in
accordance with its terms after Closing, and neither Purchaser nor any of its
Designated Affiliates nor any Acquired Company shall assume any Liabilities for
providing such benefits to such individuals, provided, that any such individual
does not return to service within twelve (12) months of the Closing Date and
(ii) any Transferred Employee who is in a long-term disability waiting period
prior to the Closing Date (including a Transferred Employee receiving
short-term disability from the Purchaser or one or more of its Designated
Affiliates after the Closing Date for injuries or illnesses occurring prior to
the Closing Date) and becomes “Disabled” (as defined under Seller’s long-term
disability plan) after the Closing Date as a result of such injuries or
illnesses, shall be entitled to benefits under Seller’s long-term disability
plan, provided, that such employee does not return to service.


 


(D)                               As of the Closing Date, (i) Seller’s flexible
spending account plan (“Seller’s Flex Plan”) shall transfer and a plan under
Section 125 of the Code established or maintained by Purchaser or one or more
of its Designated Affiliates (“Purchaser’s Flex Plan”) shall accept the
transfer of all of the account balances (whether positive or negative) (the “Transferred
Account Balances”) under Seller’s Flex Plan of the
Transferred Employees, (ii) the elections, contribution levels and coverage
levels of the Transferred Employees shall apply under Purchaser’s Flex Plan in
the same manner as under Seller’s Flex Plan; and (iii) the Transferred
Employees shall be reimbursed from Purchasers’ Flex Plan for claims incurred at
any time during the plan year of Seller’s Flex Plan in which the Closing Date
occurs submitted to


 


72





















 


Purchaser’s Flex Plan from
and after the Closing Date on the same basis and the same terms and conditions
as under Seller’s Flex Plan. As soon as practicable after the Closing Date, and
in any event within 10 Business Days after the amount of the Transferred
Account Balances is determined,
Seller shall pay Purchaser or one or more of its Designated Affiliates the net
aggregate amount of the transferred Account Balances, if such amount is
positive, and Purchaser shall, or shall cause one or more of its Designated
Affiliates to, pay Seller the net aggregate amount of the Transferred Account
Balances, if such amount is negative.


 


(iii)                               Savings Plans. 
(A)  Transferred Employees shall
not be entitled to make contributions to or to benefit from matching or other
contributions under the Seller Sayings Plans on and after the Closing Date.


 


(B)                                Purchaser shall, or shall cause one or more
of its Designated Affiliates to, take all action necessary and appropriate to ensure
that, as soon as practicable after the Closing Date and, effective as of the
Closing Date, Purchaser or one or more of its Designated Affiliates (including
the Acquired Companies) has in effect one or more savings plans (hereinafter
referred to in the aggregate as the “Purchaser Savings Plans” and individually as the “Purchaser Sayings Plan”) meeting the
following requirements: (I) each Purchaser Savings Plan is a qualified,
single-employer individual account plan under Section 401(a) of the Code; (II)
each Transferred Employee is eligible to participate in a Purchaser Savings
Plan that permits him or her to make before-tax contributions (under Section
40.1(k) of the Code) and to take participant loans on a basis at least as
favorable as under the applicable Seller Savings Plan; and (III) each Purchaser
Savings Plan in which Represented Employees are eligible to participate
satisfies any applicable requirements of the relevant Collective Bargaining
Agreement(s).


 


(C)                                The terms of the Purchaser Savings Plans, or
each such Purchaser Savings Plan, shall provide that each Transferred Employee
shall have the right to make a direct rollover to a Purchaser Savings Plan of
his or her account in a Seller Savings Plan, including a direct rollover of any
notes evidencing loans made to such Transferred Employee; provided that
each Transferred Employee who elects to roll over an account in a Seller
Savings Plan must roll over his or her entire account balance (including a
rollover of any notes evidencing loans made to such Transferred Employee).


 


(D)                               As soon as practicable after the Closing
Date, Seller (shall deliver to Purchaser or one or more of its Designated
Affiliates a list of the Transferred Employees covered by the Seller Savings
Plans, together with each Transferred Employee’s service under each of the
Seller Savings Plans as of the Closing Date.


 


(iv)                              Annual Bonus.  Each
Transferred Employee who is eligible for an annual bonus under any of the
Employee Benefit Plans for the year in which the Closing occurs shall be paid
such an annual bonus, to the extent earned and payable under the terms of the
applicable Employee Benefit Plan (without regard to any requirement of service
through (x) the end of the plan year or (y) the applicable date of payment),
and pro-rated through the Closing Date. Seller shall pay or cause to be paid
such bonuses that are payable to Corporate Business Employees. Purchaser shall,
or shall cause one or more of its Designated Affiliates to, play or cause to be
paid such bonuses to all other Transferred Employees; provided, that in no
event shall the aggregate amount of the bonuses so paid by Purchaser or one or
more of its Designated


 


73





















 


Affiliates
be greater than the amount accrued for such bonuses on the final Closing Date
Working Capital.


 


(v)                                 Vacation.  To the extent applicable Law
requires the payment in cash of the vacation entitlements that Transferred
Employees have, under the applicable policies of Seller and the Acquired
Companies, accrued but not used through closing (“Accrued Vacation”) Purchaser shall,
or shall cause one or more of its Designated Affiliates to, pay or cause to be
paid such amounts to Transferred Employees at or promptly following Closing.
Purchaser shall permit Transferred Employees to carry over, and to use after
Closing, all other Accrued Vacation in accordance with the applicable policies
of Seller and the Acquired Companies as in effect as of the Closing Date,
subject to the requirements of any applicable Collective Bargaining Agreement
and to such reasonable limitations and conditions as Purchaser may impose. In
no event shall Purchaser or one or more of its Designated Affiliates be liable
for payments or accruals with respect to Accrued Vacation which exceeds the
amount accrued for Accrued Vacation on the Final Closing Date Working Capital.


 


(vi)                              Workers’ Compensation. 
Notwithstanding anything herein to the contrary, Purchaser and its
Designated Affiliates shall be solely responsible (including where Seller remains
primarily liable as a matter of law) for claims for workers’ compensation that
are incurred with respect to any Business Employee or Acquired Company Employee
or any Former Acquired Company Employee or Former Business Employee prior to,
on or after the Closing Date.


 


(vii)                            Defined Benefit Pension Plans.  (A)
Purchaser shall, or shall cause one or more of its Designated Affiliates to,
establish a defined benefit pension plan (“Purchaser’s Bargained Pension Plan”) for Transferred Represented
Employees who are participants in the MeadWestvaco Corporation Retirement Plan
for Bargained Hourly Employees (“Seller’s Bargained Pension Plan”) effective as of the Closing Date.


 


(B)                                Subject to Section 10.1(c)(vii)(E), as soon
as practicable following the Closing Date, Seller will direct that the trustee
of Seller’s Bargained Pension Plan transfer to the Purchaser’s Bargained
Pension Plan an amount (the “Pension Transfer Amount”) in
cash or readily marketable securities (to the extent determined by the
fiduciaries of Seller’s Bargained Pension Plan; provided, that such fiduciaries
shall inform and discuss with the trustee of Purchaser’s Bargained Pension Plan
as to the nature of any non-cash amounts to be transferred prior to such
transfer; it being understood that the final mix of cash or readily marketable
securities to be transferred shall be determined by the fiduciaries of Seller’s
Bargained Pension Plan in their sole discretion), calculated in accordance with
the following formula:


 


W = X minus Y


 


where:


 


W =                         the amount to be transferred, to Purchaser’s
Bargained Pension Plan under this clause 10.1(c)(vii)(B);


 


X =                             the assets in Seller’s Bargained Pension Plan
with a value equal to the amount required to be transferred under Section
414(1) of the Code (using ERISA Section


 


74





















 


4044 safe harbor assumptions and where an assumption
is not defined under Section 4044 relying on the assumptions used in Seller’s
most recent actuarial valuation prior to the date of this Agreement calculated
by or on behalf of Seller in accordance with FAS 87 prior to the date of this
Agreement) as of the first Business Day after the Closing Date (the “Measurement Date”); and


 


Y =                              any benefits paid by Seller’s Bargained
Pension Plan to or in respect of the Transferred Represented Employees after
the Closing Date and prior to the date of such transfer under this Section
10.1(c)(vii)(B).


 


(C)                                All determinations of the amount of assets of
Seller’s Bargained Pension Plan to be transferred under Section 10.1(c)(vii)(B)
will be made by the actuary for Seller’s Bargained Pension Plan. Purchaser or
one or more of its Designated Affiliates may retain its designated actuary to
perform the determinations under Section 10.1(c)(vii)(B). The actuary for
Seller’s Bargained Pension Plan shall provide all information to the actuary
for Purchaser’s Bargained Pension Plan as such actuary, acting reasonably and
in good faith, determines is reasonably necessary to perform the transfer
calculation. If there is a dispute between those actuaries, then Seller and
Purchaser (or one or more of Purchaser’s Designated Affiliates) will agree on a
third actuary to resolve the dispute. The independent actuary shall act on the
following bases, as applicable:


 


(i)                                     the independent actuary shall not act as an
arbitrator;


 


(ii)                                  Seller
and Purchaser shall (or Purchaser shall cause one or more of its Designated
Affiliates to) each provide the independent actuary with all information
relating to the dispute which the independent actuary reasonably requires; and


 


(iii)                               any
findings or reports prepared by the independent actuary will be provided to
both Seller and Purchaser (or one or more of its Designated Affiliates) at the
same time.


 


The
decision of the independent actuary will be, in the absence of fraud or
manifest error, final and binding on the parties. Seller and Purchaser shall
each pay one-half of the independent actuary’s costs.


 


(D)                               In connection with matters addressed in this
Section 10.l(c)(vii), Purchaser and Seller will cooperate in:


 


(i)                                     the filing by Seller of any IRS Forms 5310-A
required with respect to the transfer of assets and liabilities described in
this Section 10.1(c)(vii);


 


(ii)                                  the parties hereto making all other filings
required under the Code or ERISA and any applicable securities laws;


 


(iii)                               implementing all appropriate communications
with participants;


 


(iv)                              transferring appropriate records;


 


(v)                                 taking all such other actions as may be
necessary and appropriate to implement the provisions of this

Section 10.1(c)(vii) in a timely manner; and


 


75





















 


(vi)                              transferring
all information to enable the enrolled actuaries for Seller’s Bargained Pension
Plan and Purchaser’s Bargained Pension Plan to issue the certifications required
by Section 6058(b) of the Code (Form 5310-A).


 


(E)                                 The
transfer referred to in Section 10.1(c)(vii)(B) will not take place until the “Transfer
Date”, which shall be the date that is as
soon as practicable after the latest of:


 


(i)                                     the
expiration of the 30-day period following the filing of any required notices
with the IRS pursuant to Section 6058(b) of the Code;


 


(ii)                                  the
date Seller has delivered to Purchaser (or one or more of its Designated
Affiliates) at Seller’s option (with respect to the Seller’s Bargained Pension
Plan) either:


 


(a)          a
copy of the most recent determination letter from the IRS to the effect that
the Seller’s Bargained Pension Plan is qualified under Section 401(a) of the
Code, together with documentation (in a form and substance satisfactory to
Purchaser (or one or more of its Designated Affiliates) acting reasonably)
evidencing the due adoption of any amendments to the Seller’s Bargained Pension
Plan required by the IRS as a condition to such qualification and a certificate
from Seller that no events have occurred that would adversely affect the
continued validity of such determination letters (apart from the enactment of
any law for which the remedial amendment period under Section 401(b) of the
Code has not yet expired); or


 


(b)         an
opinion of Seller’s attorneys (in form and substance satisfactory to Purchaser
(or one or more of its Designated Affiliates) acting reasonably) that the
Seller’s Bargained Pension Plan is qualified under Section 401(a) of the
Code as of the date of transfer; and


 


(iii)                               the
date Purchaser (or one or more of its Designated Affiliates that is the sponsor
of Purchaser’s Bargained Pension Plan) has delivered to Seller at Purchaser’s
option (with respect to Purchaser’s Bargained Pension Plan) either:


 


(a)          a
copy of the most recent determination letter from the IRS to the effect that
Purchaser’s Bargained Pension Plan is qualified under Section 401(a) of the
Code, together with documentation (in a form and substance satisfactory to
Seller acting reasonably) evidencing the due adoption of any amendments to
Purchaser’s Bargained Pension Plan required by the IRS as a condition to such
qualification and a certificate from Purchaser (or one or more of its
Designated Affiliates that is the sponsor of Purchaser’s Bargained Pension
Plan) that no events have occurred that would adversely affect the continued
validity of such letters (apart from the enactment of any law for which the
remedial amendment period under Section 401(b) of the Code has not yet
expired); or


 


(b)         an
opinion of Purchaser’s attorneys (or of the attorneys for one or more of
Purchaser’s Designated Affiliates that is the sponsor of Purchaser’s Bargained
Pension Plan) (in form and substance satisfactory to Seller acting


 


76





















 


reasonably) that Purchaser’s Bargained Pension Plan is qualified under
Section 401(a) of the Code as of the date of transfer.


 


The parties agree to pursue the receipt of the items described in this
Section 10.1(c)(vii)(E) as soon as reasonably practicable following the Closing
Date. If Purchaser’s Bargained Pension Plan is newly created, Purchaser will
(or will cause one or more of its Designated Affiliates that is the sponsor of
Purchaser’s Bargained Pension Plan to) provide Seller with written evidence (in
form and substance satisfactory to Seller acting reasonably) of: (x) the
adoption of Purchaser’s Bargained Pension Plan; and (y) the creation of the
trust under Purchaser’s Bargained Pension Plan.


 


(F)                                 With
respect to Transferred Employees who are Non-Represented Employees, Seller
shall fully vest, as of the Closing Date, the accrued benefit of such employees
under the MeadWestvaco Corporation Retirement Plan for Salaried and
Non-Bargained Hourly Employees based on their service with the Seller or any of
its Subsidiaries prior to the Closing Date.


 


(d)                                 General.
(i) Seller’s Retained Liabilities. Except as specifically provided in
this Section 10.1, Seller shall remain solely responsible for any and all
Liabilities and obligations arising under, in connection with or in respect of
the Seller Employee Benefit Plans, and neither Purchaser nor any Designated
Affiliate (including, after the Closing Date, the Acquired Companies) shall
have any responsibility or obligation in respect of any such plan, including,
but not limited to, any severance pursuant to the terms of the MeadWestvaco
Corporation Severance Pay Plan for Salaried and Non-Union Hourly
Employees.  Except with respect to
Sections 10.1(c)(ii)(D), 10.1(c)(iii) and 10.1(c)(vii), no assets held in trust
for any Seller Employee Benefit Plan will be transferred to Purchaser or one or
more of its Designated Affiliates or to any employee benefit plan adopted or
maintained by Purchaser or any of its Subsidiaries.


 


(ii)                                  Purchaser’s
Assumed Liabilities. Effective as of the Closing Date, and except as
specifically provided in this Section 10.1, Purchaser shall (and shall cause
its Designated Affiliates, including, as of the Closing Date, the Acquired
Companies to) be solely responsible for any and all Liabilities and obligations
arising under, in connection with or in respect of the Acquired Company Plans
and neither Seller nor any of its Subsidiaries (other than the Acquired
Companies) shall have any responsibility or obligation in respect of any such
plan. Without limiting the generality of Section 1.4, and except as
specifically provided in this Section 10.1, Purchaser shall (and shall cause
its Designated Affiliates, including the Acquired Companies to) be solely
responsible for any Liabilities arising out of the employment of any
Transferred Employee before, on or after the Closing Date, including without
limitation Accrued obligations for salaries, wages and other compensation
payable after the Closing Date, personal days and floating holidays and sick
pay of the Transferred Employees, and Liabilities relating to, arising out of
or resulting from any Collective Bargaining Agreement, and including, effective
upon the transfer of assets under Section 10.1(c)(vii) above, all liabilities
for benefits under the Seller’s Bargained Pension Plan with respect to
Transferred Represented Employees.


 


(e)                                  WARN.
Seller retains sole responsibility for any obligations or liabilities to any
Former Acquired Company Employees, Former Business Employees, Acquired Company


 


77





















 


Employees and Business Employees under WARN and any other state, local
or provincial law regarding notice of employment termination in respect of the
termination of employment of any such employees effective prior to the Closing
Date, and indemnifies and agrees to hold Purchaser, its Designated Affiliates
and Affiliates harmless for same. Purchaser assumes (or shall cause one or more
of its Designated Affiliates to assume) sole responsibility for any obligations
or liabilities to any Transferred Employees under WARN and any other state,
local or provincial law regarding notice of employment termination in respect
of the termination of employment of any Transferred Employee effective on or following
the Closing Date.  Any indemnification
pursuant to this Section 10.1(c) shall cover, but shall not be limited to, any
claim for back pay, front pay, notice pay, benefits, or compensatory or
punitive damages, any claim by any Governmental Body for penalties regarding
any issue of prior notification (or any Lack thereof) of any plant closing or
mass layoff, as well as defense costs, including attorneys’ fees, in defending
any such claim.


 


(f)                                    Actions
of Purchaser.  Until the Closing
Date, except as required by applicable Law or permitted by the terms of this
Agreement, Purchaser will not, and will cause its Designated Affiliates and
Affiliates and its and their representatives not to, take any intentional
action to cause or influence any Acquired Company Employee(s) or Business
Employee(s) to take any actions (or fail to take actions) to adversely affect
the Business, the financial condition of the Business, or the results of
operations of the Business.


 


Section 10.2.   Cooperation.  After the Closing, Purchaser and Seller (and
their Subsidiaries and Affiliates) will each mutually cooperate in providing
the other party access to and/or copies of relevant data and employment records
of Transferred Employees (including personnel files, workers’ compensation claim
files and other employee books and records pertaining to Transferred Employees)
to the extent (a) permitted by applicable law and (b) reasonably necessary to
administer the benefits of Acquired Company Employees and Business Employees
under any Seller Employee Benefit Plan or any New Plan, as applicable, or
otherwise concerning the employment relationship of Transferred Employees.


 


Section 10.3.   Transition Agreements.  Effective at the Closing, Purchaser and
Seller, or such of their respective Subsidiaries as appropriate, shall enter
into agreements substantially in the form of Exhibits H, I, J, K, L and M, each
as listed on Schedule 10.3 (collectively, the “Transition Agreements”). The Parties agree that to the extent
any Transition Agreement explicitly provides that the Parties shall agree prior
to the Closing on a specific matter described in such agreement, the Parties
shall negotiate in good faith to reach a reasonable resolution with respect to
such specified matter in accordance with the guidelines, if any, specified with
respect to such matter in such agreement.


 


Section 10.4.   Further Assurances; Further Conveyances
and Assumptions: Consent of Third Parties. (a) From time to time following
the Closing, Seller and Purchaser shall, and shall cause their respective
Subsidiaries or Designated Affiliates to, execute, acknowledge and deliver all
such further conveyances, notices, assumptions, releases and acquittances and
such other instruments, and shall take such further actions, as may be necessary
or appropriate to assure fully to Purchaser and its respective successors or
assigns, all of the properties, rights, titles, interests, estates, remedies,
powers and privileges intended to be conveyed to Purchaser, and the retention
or assumption of the Liabilities intended to be retained


 


78





















 


or assumed by Seller and/or its Subsidiaries, under this Agreement and
the Transition Agreements and to assure fully to Seller and its Subsidiaries
and their successors and assigns, the assumption of the Liabilities intended to
be assumed by Purchaser under this Agreement and the Transition Agreements, and
to otherwise make effective the transactions contemplated hereby and thereby
(including (i) transferring back to Seller or the applicable Subsidiary any
asset or Liability not contemplated by this Agreement to be a Purchased Asset
or an Assumed Liability, respectively, which asset or Liability was transferred
to Purchaser at the Closing, (ii) transferring back to Seller any asset or
Liability of the Acquired Companies not related to the Business and (iii)
transferring to Purchaser any asset or Liability contemplated by this Agreement
to be a Purchased Asset or an Assumed Liability, respectively, which was not
transferred to Purchaser at the Closing).


 


(b)                                 Nothing
in this Agreement nor the consummation of the transactions contemplated hereby
shall be construed as an attempt or agreement to assign any Purchased Asset,
including any Contract, Permit, certificate, approval, authorization or other
right, which by its terms or by Law is nonassignable without the consent of a
third party or a Governmental Body or is cancelable by a third party in the
event of an assignment (“Nonassignable Assets”) unless and until such consent shall
have been obtained. Seller shall, and shall cause its Subsidiaries to, use
reasonable best efforts to obtain such consents promptly; provided, however,
that, such cooperation shall not require Seller or any of its Subsidiaries to
remain secondarily liable or to make any payment to obtain any such consent
with respect to any Nonassignable Asset, except to the extent provided in
Section 6.13(b).


 


(c)                                  Purchaser
and Seller shall use their respective reasonable best efforts to obtain, or to
cause to be obtained, any consent, substitution, approval or amendment required
to novate all obligations under any and all Contracts or other Liabilities that
constitute Assumed Liabilities or to obtain in writing the unconditional
release of Seller and its Subsidiaries so that, in any such case, Purchaser and
its Subsidiaries shall be solely responsible for such Liabilities. To the
extent permitted by applicable Law, in the event consents to the assignment
thereof cannot be obtained, such Nonassignable Assets shall be held, as of and
from the Closing Date, by Seller or the applicable Subsidiaries of Seller in
trust for Purchaser and the covenants and obligations thereunder shall be
performed by Purchaser in Seller’s or Such Subsidiaries’ name and all benefits
and obligations existing thereunder shall be for Purchaser’s account. Seller
shall take or cause to be taken at Purchaser’s expense such actions in its name
or otherwise as Purchaser may reasonably request so as to provide Purchaser
with the benefits of the Nonassignable Assets and to effect collection of money
or other consideration that becomes due and payable under the Nonassignable
Assets, and Seller or the applicable Subsidiaries of Seller shall promptly pay
over to Purchaser all money or other consideration received by it in respect of
all Nonassignable Assets.


 


(d)                                 As
of and from the Closing Date, Seller on behalf of itself and its Subsidiaries
authorizes Purchaser, to the extent permitted by applicable Law and the terms
of the Nonassignable Assets, at Purchaser’s expense, to perform all the
obligations and receive all the benefits of Seller or its Subsidiaries under
the Nonassignable Assets and appoints Purchaser its attorney-in-fact to act in
its name on its behalf or in the name of the applicable Subsidiary of Seller
and on such Subsidiary’s behalf with respect thereto.


 


79





















 


(e)                                  Notwithstanding
anything in this Agreement to the contrary, unless and until any consent or
approval with respect to any Nonassignable Asset is obtained, such
Nonassignable Asset shall not constitute a Purchased Asset and any associated
Liability shall not constitute an Assumed Liability for any purpose under this
Agreement.


 


Section 10.5.   Historical Off-Site Environmental
Liabilities Limitations. Purchaser agrees that, with regard to Historical
Off-Site Environmental Liabilities, neither Purchaser nor any of its Affiliates
shall undertake any non-subsurface sampling or analysis, subsurface
investigation, or any communication with any Governmental Body by or on behalf
of Purchaser or its Affiliates after the Closing Date unless such sampling,
analysis, investigation, or communication is (1) required by any Environmental
Law; (2) in response to a request of a Governmental Body; or (3) during the
normal course of business arising out of repairs, modifications, maintenance or
construction activities that are conducted consistent with normal industrial
practices (provided, however, any such sampling or analysis, subsurface
investigation, or communication with a Governmental Body shall not be
considered “required by Environmental Law” if such sampling, analysis,
investigation or communication occurs as a result of: (a) a Change at a
Business Facility; or (b) due diligence conducted by a future purchaser or
financing source). Subject to the limitations set forth in Section 11.1(d),
Seller shall have the right to recover for Losses from Purchaser for a breach
of this provision, notwithstanding the status of Historical Off-Site
Environmental Liabilities as Excluded Liabilities, if and solely to the extent
that the action taken constituting the breach of this provision was taken by an
employee of the Purchaser or its Designated Affiliates who, at the time of such
action, was (i) a managerial employee, (ii) a person whose principal
responsibility is environmental compliance, (iii) an officer of Purchaser or
its Designated Affiliates, or (iv) any person acting at the request, or with
the authorization, of any of the foregoing. In the event of a sale of the
Business or change in control involving the Business, the foregoing limitation
shall apply to a comparable employee or agent of any successor entity or its
Affiliates. For the avoidance of doubt, Seller’s right to pursue a contractual
claim to recover any Losses from Purchaser caused by a breach of this provision
by Purchaser shall in no way affect Seller’s and Purchaser’s rights or
obligations under Article XI with respect to Historical Off-Site Environmental
Liabilities, and any amount paid by Purchaser as damages resulting from such a
breach shall not be considered a Loss that is subject to indemnification by
Seller under Section 11.2.


 


Section 10.6.  Environmental Reports.  Seller Agrees to transfer with the Business
all material environmental reports, studies, investigations and correspondence
regarding Environmental Liabilities of the Business in the possession of the
Seller, or its counsel and environmental consultants on the Closing Date or, on
request, within a reasonable period thereafter.


 


ARTICLE XI


 


SURVIVAL, INDEMNIFICATION AND RELATED MATTERS


 


Section 11.1.  
Survival. (a) All representations and warranties contained
herein, in any Seller Document or in any Purchaser Document, and the right to
commence any claim with respect thereto, shall terminate at the close of
business on the date that is eighteen months


 


80





















 


after the
Closing Date, except that (i) the representations and warranties contained in
Sections 4.1 (Organization and Good Standing), 4.2 (Capital Structure of
Acquired Companies), and 4.4 (Authorization of Agreement) hereof and the right
of Purchaser to seek indemnification with respect thereto shall survive
indefinitely (ii) the representations and warranties contained in Section 4.8 (Taxes)
hereof and the right of Purchaser to seek indemnification with respect thereto
shall survive until the expiration of the statute of limitations applicable to
the matters described therein (including extensions thereof), (iii) the
representations and warranties contained in Sections 4.15 (Employee Benefits)
and 4.16 (Labor) hereof and the right of Purchase to seek indemnification with
respect thereto shall terminate at the close of business on the date that is
five years after the Closing Date, (iv) the representations and warranties
contained in Section 4.19 (Environmental Matters) hereof shall terminate at the
close of business on the date that is eight years after the Closing Date (it
being understood that any indemnity obligation of the Seller with respect to
such representations and warranties shall be governed exclusively in the manner
provided for in the proviso to Section 11.2(a)(i)), and (v) the representations
and warranties contained in Sections 4.9, 4.10 and 4.11 with respect to title
to the Owned Real Property, Leased Real Property and Timberlands shall
terminate as of the Closing Date with respect to such properties for which
Purchaser has obtained a Title Policy pursuant to Section 6.10 hereof and has
received any Purchase Price Credit to which Purchaser may be entitled pursuant
to Section 6.12, and neither Purchaser nor Seller nor their respective
Subsidiaries shall have any Liability whatsoever with respect to such
representations or warranties after each such date as applicable (other than as
to claims properly asserted under the appropriate provisions of this Article
XI). For purposes of clarity, the obligations of Seller to indemnify the
Purchaser Indemnified Group for Excluded Assets, Historical Off-Site
Environmental Liabilities and Excluded Liabilities shall be without limitation
as to duration; provided, however, that Seller’s obligation to
indemnify the Purchaser Indemnified Group for Historical On-Site Environmental
Liabilities shall terminate (other than as to claims properly asserted under
Section 11.4 prior to such date) at the close of business on the date that is
eight years after the Closing Date, and neither Seller nor its Subsidiaries
shall have any Liability whatsoever under Sections 11.2(a)(v) and 11.4 after
that date; provided, further, that Seller’s responsibility of its
allocated share of Straddle Environmental Liabilities under Sections
11.2(a)(vii) and 11.5 shall terminate (other than as to claims properly
asserted under Section 11.5 prior to such date) at the close of business on the
date that is eight years after the Closing Date, and neither Seller nor its
Subsidiaries shall have any Liability whatsoever under Sections 11.2(a)(vii)
and 11.5 after that date. The covenants and agreements of the parties hereto
contained herein, in any Seller Document and in any Purchaser Document (A) that
contemplate actions to be taken after Closing shall survive the Closing and
continue in effect in accordance with their terms and (B) that contemplate
actions to be taken only on or prior to Closing shall terminate and cease to be
obligations as of the Closing and no claim, action or proceeding with respect
to such covenant or agreement may be brought after the Closing except with
respect to breaches of such covenant or agreement occurring on or prior to
Closing.


 


(b)                                 Except
as specifically set forth in this Agreement, effective as of the Closing, in
the absence of fraud or willful misconduct on the part of either Seller or any
of its Representatives in connection with the negotiation, execution or
delivery of this Agreement or any of the Seller or Purchaser Documents or any
schedule, certificate or other document delivered pursuant hereto or thereto or
in connection with the transactions contemplated hereby (to the extent
determined by a final judgment by a court of competent jurisdiction), Purchaser
(on


 


81





















 


behalf of
itself and its Affiliates) waives any rights and claims it may have against
either Seller or any of its Affiliates and their respective directors,
officers, employees, Affiliates, controlling persons or Representatives,
whether in law or in equity, relating to the transactions contemplated hereby,
the Business or the assets thereof. The rights and claims waived pursuant to
the immediately preceding sentence include, without limitation, claims for
contribution or other rights of recovery arising out of or relating to any
Environmental Laws, claims for breach of contract, breach of representation or
warranty, negligent misrepresentation and all other claims for breach of duty.
After the Closing, subject to the foregoing, this Article XI will provide the
exclusive remedy of the Purchaser and its Affiliates, and their respective
successors and assigns for any breach of any representation or warranty or
other claim arising out of this Agreement or any of the Ancillary Agreements or
any schedule, certificate or other document delivered pursuant hereto or
thereto or in connection with the transactions contemplated hereby; provided,
however, the foregoing shall not limit the right of either party hereto
to seek specific enforcement for a breach of such covenants or agreements. Each
Person entitled to indemnification hereunder shall use commercially reasonable
efforts to mitigate Losses for which it seeks indemnification hereunder.


 


(c)                                  In
calculating any amount of Losses recoverable pursuant to this Section 11.1, the
amount of such Losses shall be reduced by (i) any insurance proceeds actually
received from any unaffiliated insurance carrier offsetting the amount of such
Loss, net of any expenses incurred by the Indemnified Party in obtaining such
insurance proceeds (provided that the Indemnified Party shall be
obligated to reasonably seek any such proceeds to which it may be entitled) and
(ii) any recoveries from third parties pursuant to indemnification (or
otherwise) with respect thereto, net of any expenses incurred by the
Indemnified Party in obtaining such third party payment. If any Losses for
which indemnification is provided hereunder are subsequently reduced by any
insurance payment or other recovery from a third party, the Indemnified Party
shall promptly remit the amount of such reduction to the Indemnifying Party.


 


(d)                                 Notwithstanding
anything herein to the contrary, no party shall be liable to any Indemnified
Party for special, incidental or consequential damages that are not reasonably
foreseeable by the Indemnifying Party nor for any punitive or exemplary Losses.


 


(e)                                  Anything
in Article XI to the contrary notwithstanding, indemnification for any and all
Tax matters and the procedures with respect thereto shall be governed
exclusively by Article XIV, and the limitations set forth in the final
paragraphs of Sections 11.2(a) and (b) shall not be applicable with respect to
Tax matters.


 


Section 11.2.  
Indemnification.  (a)
Seller hereby agrees to indemnify and hold the Purchaser Indemnified Group
harmless from and against any and all claims, judgments, causes of action,
liabilities, obligations, damages, losses, deficiencies, costs, penalties,
interest and expenses (including the reasonable fees and expenses of counsel)
(collectively, “Losses”) arising out of
or resulting from:


 


(i)                                     any
inaccuracy of any representation or any breach of warranty on the part of
Seller herein or in any Seller Document or any schedule or certificate which is
delivered pursuant thereto (other than in the case of Section 4.6, the first
sentence of Section 4.7 and Section


 


82





















 


4.11(m), disregarding Material Adverse Effect and materiality
qualifications contained in such representations and warranties, and in the
case of the representations contained in Section 4.11(e) and in clause (A) of
Section 4.11(m), disregarding the Knowledge qualifications therein), provided,
however, that in the case of the representations contained in Section
4.19 (Environmental Matters) all indemnity obligations of the Seller will be
governed exclusively by Sections 11.2(a)(v), 11.2(a)(vi), 11.2(a)(vii),
11.2(a)(viii), 11.4, 11.5, and 11.6, unless Purchaser establishes actual fraud
on the part, of the Seller in connection with the negotiation and execution of
this Agreement (after taking into account the Material Adverse Effect and
Knowledge qualifications contained in Section 4.19);


 


(ii)                                  any
breach or non-fulfillment of any covenant, agreement or undertaking on the part
of Seller herein or in any Seller Document;


 


(iii)                               any
Excluded Liability;


 


(iv)                              the
failure of Seller to comply with any applicable bulk sales law, except that
this clause (iv) shall not affect the obligation of Purchaser to pay and
discharge the Assumed Liabilities;


 


(v)                                 Historical
On-Site Environmental Liabilities in excess of any amounts designated to cover
Historical On-Site Environmental Liabilities specifically identified and
reserved for in the balance sheet, reserves, capital expenditure budgets,
accruals, transferred financial assurance instruments, working capital
statements or operating budgets of the Business disclosed to Purchaser prior to
the Closing as set forth on Schedule 11.2(a)(v), in accordance with and
subject to the limitations and procedures set out below and in Section 11.4;


 


(vi)                              Historical
Off-Site Environmental Liabilities in accordance with and subject to the
procedures set out below and in Section 11.4;


 


(vii)                           Seller’s
share of Losses arising from Straddle Environmental Liabilities allocated to
Seller pursuant to Section 11.5, in accordance with and subject to the
limitations and procedures set out below and in Section 11.5 and in excess of
any amounts designated to cover Straddle Environmental Liabilities identified
and reserved for in the balance sheet, reserves, capital expenditure budgets,
accruals, transferred financial assurance instruments, working capital
statements or operating budgets of the Business disclosed to Purchaser prior to
Closing as set forth on Schedule 11.2(a)(vii) (“Straddle
Environmental Liability Reserves”); and


 


(viii)                        Seller’s
responsibility Losses set forth in Schedule 11.2(a)(viii).


 


83





















 


Notwithstanding anything in this Agreement to the contrary, (1) Seller
shall not be liable for any Losses with respect to the matters set forth in
Section 11.2(a)(i), unless (x) a claim is timely asserted during the survival
period specified in Section 11.1(a) and (y) the aggregate of all Losses under
Section 11.2(a)(i), exceeds, on a cumulative basis, 1% of the Initial Cash
Consideration (and then only to the extent of such excess); (2) Seller shall
not be liable for any Losses with respect to the matters set forth in Sections
11.2(a)(v) and 11.2(a)(vii) unless (x) a claim is timely asserted during the
applicable survival period specified in Section 11.1(a) and (y) the aggregate
of all indemnifiable Losses under Section 11.2(a)(v) and Seller’s allocated
portion of indemnifiable Losses under Section 11.2(a)(vii) exceeds, on a
cumulative basis, 1% of the Initial Cash Consideration (and then only to the
extent of such excess), and (3) Seller shall not be required to pay an
aggregate amount in excess of 15% of the Initial Cash Consideration in respect
of all Losses for the matters set forth in Sections 11.2(a)(i), 11.2(a)(v) and
11.2(a)(vii). For the avoidance of doubt, (1) Seller shall not be liable
for any Losses under Section 11.2(a) arising out of any breach of the
representations contained in Section 4.19 (Environmental Matters) other than
exclusively in the manner provided for in the proviso to Section 11.2(a)(i),
and (2) the limitations in this paragraph do not apply to clauses (ii), (iii),
(iv), (vi) or (viii) of Section 11.2(a).


 


Notwithstanding anything in this Agreement to
the contrary, and consistent with Schedule 11.2(a)(viii), Seller shall
have no indemnification obligations under Sections 11.2(a)(v) (subject to the
limitations set forth in Section 11.4) and 11.2(a)(vii) (subject to the
limitations set forth in Section 11.5) for any Losses resulting from changes in
any Environmental Law occurring after the Closing Date, provided that any
Remedial Action of Straddle Environmental Liabilities or Historical On-Site
Environmental Liabilities may be governed by applicable post-Closing
requirements for conducting Remedial Actions, so long as any Remedial Action is
conducted in a Lowest-Cost Commercially Reasonable Manner.


 


(b)                                 Purchaser
hereby agrees to indemnify and hold the Seller Indemnified Group harmless from
and against any and all Losses arising out of or resulting from:


 


(i)                                     any
inaccuracy of any representation or any breach of warranty on the part of
Purchaser herein or in any Purchaser Document or any schedule or certificate
which is delivered pursuant thereto, (disregarding Material Adverse Effect and
materiality qualifications contained in such representations and warranties);


 


(ii)                                  any
breach or non-fulfillment of any covenant, agreement or undertaking on the part
of Purchaser herein or in any Purchaser Document, subject to the limitations
and conditions contained therein;


 


(iii)                               any
Guarantee which Purchaser or one or more of its Affiliates is not able to
assume in place of Seller or its Subsidiaries pursuant to Section 7.6;


 


(iv)                              Purchaser’s
and any of its Subsidiaries’ ownership or operation of the Business., the
Acquired Companies or the Purchased Assets


 


84





















 


from and after the Closing Date (excluding Excluded Liabilities or
Liabilities for which Seller has agreed to indemnify Purchaser hereunder);


 


(v)                                 any
Assumed Liabilities or the failure of any of the Acquired Companies (or their
successors or assigns) to pay, perform and discharge when due any of their
respective Liabilities except to the extent that the existence of such
Liabilities constitutes a breach of any Seller representation or warranty or
results from a breach of any of Seller’s covenants under this Agreement or any
Seller Document;


 


(vi)                              Reserved
Pre-Closing Environmental Liabilities;


 


(vii)                           Post-Closing
Environmental Liabilities;


 


(viii)                        Purchaser’s
responsibility for Losses arising from Straddle Environmental Liabilities
allocated to Purchaser pursuant to Section 11.5;


 


(ix)                                any
failure to satisfy Purchaser’s responsibilities as set forth in Schedule
11.2(a)(viii).


 


Purchaser shall not be liable for any Losses with respect to the
matters set forth in Section 11.2(b)(i) unless (x) a claim is timely asserted
during the survival period specified in Section 11.1(a) and (y) the aggregate
of all Losses under Section 11.2(b)(i) exceeds, on a cumulative basis, 1%
of the Initial Cash Consideration (and then only to the extent of such excess);
provided, however, notwithstanding anything herein to the
contrary, Purchaser shall not be required to pay an aggregate amount in excess
of 15% of the Initial Cash Consideration in respect of Losses for the matters
set forth in Section 11.2(b)(i). For the avoidance of doubt, the limitations in
this paragraph do not apply to clauses (ii), (iii), (iv), (v), (vi), (vii)
(viii) or (ix) of Section 11.2(b).


 


Section 11.3.   Procedures for Indemnification.
Subject to the following sentence, whenever a claim shall arise for
indemnification under this Article XI (other than claims arising under (1)
Sections 11.2(a)(v) and 11.2(a)(vi), which are governed by the limitations and
procedures set out in Section 11.4, (2) Sections 11.2(a)(vii) and (b)(viii),
which are governed by the limitations and procedures set out in Section 11.5,
(3) Sections 11.2(b)(vi) and (vii), which are governed by the limitations and
procedures set out in Section 11.6, and (4) Section 11.2(a)(viii) and
11.2(b)(ix), which is governed by the limitations and procedures set out in Schedule 11.2(a)(viii)),
the party entitled to indemnification (the “Indemnified Party”) shall promptly notify the party from
which indemnification is sought (the “Indemnifying Party”) of such claim and, when known, the
facts constituting the basis for such claim; provided, however,
that in the event of any claim for indemnification hereunder resulting from or
in connection with any claim or Legal Proceeding by a third party, the
Indemnified Party shall give such notice thereof to the Indemnifying Party not
later than ten Business Days prior to the time any response to the asserted
claim is required, if possible, and in any event within five Business Days


 


85





















 


following
receipt of notice thereof. Notwithstanding the foregoing, in the case of claims
for indemnification hereunder not arising in connection with any claim or Legal
Proceeding by a third party, the Indemnified Party shall not submit such claims
to the Indemnifying Party in increments aggregating less than $50,000. The
Indemnified Party’s failure to give timely notice or to furnish the
Indemnifying Party with any relevant facts in connection with any third party
claim shall not constitute a defense (in part or in whole) to any claim for
indemnification by such party, except and only to the extent that such failure
shall result in any material prejudice to the Indemnifying Party. In the event
of any such claim for indemnification resulting from or in connection with a
claim or Legal Proceeding by a third party, the Indemnifying Party may, at its
sole cost and expense, assume the defense thereof by written notice within 10
Business Days, using counsel that is reasonably satisfactory to the Indemnified
Party. If an Indemnifying Party assumes the defense of any such claim or Legal
Proceeding, the Indemnifying Party shall be entitled to take all steps
necessary in the defense thereof including the settlement of any case that
involves solely monetary damages without the consent of the Indemnified Party; provided,
however, that the Indemnified Party may, at its own expense, participate
in any such proceeding with the counsel of its choice without any right of
control thereof. The Indemnifying Party, if it has assumed the defense of any
claim or Legal Proceeding by a third party as provided herein, shall not
consent to, or enter into, any compromise or settlement of (which settlement
(i) commits the Indemnified Party to take, or to forbear to take, any action or
(ii) does not provide for a full and complete written release by such third
party of the Indemnified Party), or consent to the entry of any judgment that
does not relate solely to monetary damages arising from, any such claim or
Legal Proceeding by a third party without the Indemnified Party’s prior written
consent, which shall not be unreasonably withheld, conditioned or delayed. The
Indemnifying Party and the Indemnified Party shall cooperate fully in all
aspects of any investigation, defense, pre-trial activities, trial, compromise,
settlement or discharge of any claim in respect of which indemnity is sought
pursuant to this Article XI, including, but not limited to, by providing the
other party with reasonable access to employees and officers (including as
witnesses) and other information, provided, that in each case, such access
shall be given at reasonable times and upon reasonable notice and without undue
interruption to such party’s business or personnel. So long as the Indemnifying
Party is in good faith defending such claim or proceeding, the Indemnified
Party shall not compromise or settle such claim without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed. If the Indemnifying Party does not assume the
defense of any such claim or litigation in accordance with the terms hereof,
the Indemnified Party may defend against such claim or litigation in such
manner as it may deem appropriate, including settling such claim or litigation
(after giving prior written notice of the same to the Indemnifying Party and
obtaining the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld, conditioned or delayed) on such terms as
the Indemnified Party may reasonably deem appropriate, and the Indemnifying
Party will promptly indemnify the Indemnified Party in accordance with the
provisions of this Section 11.3.


 


Section 11.4.   Limitations and Procedures Applicable to
Indemnification for Historical Environmental Liabilities.


 


(a)                                  Subject
to the terms of this Section 11.4, whenever
a claim shall arise for indemnification under Section 11.2(a)(v) or
11.2(a)(vi), the claim shall be submitted by the


 


86





















 


Indemnified Party to the Indemnifying Party in accordance with the timelines
and procedures set out in Section 11.3.


 


(b)                            Indemnification
Procedures Relating to Historical Off-Site Environmental Liabilities. In
the event that Purchaser submits a claim for indemnification under Section
11.2(a)(vi) relating to an Historical Off-Site Environmental Liability, the
Seller may, at its sole cost and expense, assume the defense and/or resolution
(including, without limitation, undertaking Remedial Action) by written notice
to Purchaser given within twenty (20) Business Days of receipt of Purchaser’s
written notice of claim. If Seller assumes the defense and/or resolution of any
Historical Off-Site Environmental Liability, Seller shall be entitled to take
all steps necessary in the defense and/or resolution thereof. Where Remedial
Action is required, Seller agrees to use commercially reasonable efforts to
avoid (i) unreasonable interference with the operations of any Business
Facilities provided there is no Change after the Closing Date or (ii)
unreasonably restricting the ability to use any Business Facility for the use
it was employed on the Closing Date or for substantially similar uses, without
the consent of Purchaser or its Designated Affiliates, which consent shall not
be unreasonably withheld, conditioned or delayed. Purchaser may, at its own
expense, monitor any proceeding with counsel of its choice without any right of
control thereof. If Seller does not assume the defense and/or resolution of any
Environmental Claim relating to any Historical Off-Site Environmental
Liability, then Purchaser may defend and/or resolve such Environmental Claim in
a commercially reasonable manner, including settling claims or litigation
(after giving prior notice of the same to the Seller and obtaining the prior
written consent of Seller, which consent shall not be unreasonably withheld,
conditioned or delayed).


 


(c)                                  Indemnification
Provisions Relating to Historical On-Site Environmental Liabilities. In the
event that Purchaser submits a claim for indemnification under Section
11.2(a)(v) relating to an Historical On-Site Environmental Liability, the
Seller shall assume the defense and/or resolution (including without
limitation, undertaking Remedial Action) thereof. Seller shall be entitled to
take all steps necessary in the defense and/or resolution thereof, including
the settlement thereof (which settlement shall require the consent of
Purchaser, such consent not to be unreasonably withheld, delayed or
conditioned); provided, however, that (i) Purchaser may, at its expense,
monitor any proceeding with counsel of its choice without any right of control
thereof, and (ii) Seller shall consult with Purchaser regarding the defense and
resolution thereof, allowing Purchaser reasonable participation therein. “Reasonable
participation” shall be broadly construed and shall include, by way of example
and not limitation, being given reasonable advanced notice for conduct of
investigations and an opportunity to participate in significant meetings or
communications with any Governmental Body. Seller shall afford Purchaser or its
designees with the opportunity to review draft documents prepared in connection
with such matters and shall reasonably consider Purchaser’s comments. Seller
shall provide all plans, reports, pleadings and other documents in draft form
to Purchaser in a reasonable time prior to delivering such documents to a
governmental entity or claimant, and Seller shall reasonably consider Purchaser’s
comments thereon. Where an On-Site Remedial Action is required, Seller agrees
to use commercially reasonable efforts to avoid (i) unreasonable interference
with the operations of any Business Facilities provided there is no Change
after the Closing Date or (ii) unreasonably restricting the ability to use any
Business Facility for the use it was employed on the Closing Date or for
substantially similar uses, without


 


87





















 


the consent of Purchaser or its Designated Affiliates, which consent
shall not be unreasonably withheld, conditioned or delayed.


 


(d)                                 Seller
and Purchaser shall cooperate fully in all aspects of any investigation,
defense, pre-trial activities, trial, compromise, settlement, discharge or
Remedial Action arising in connection with any claim in respect of which
indemnity is sought, including, but not limited to, by providing the other
party with reasonable access to: 1) employees and officers (including as
witnesses); 2) other relevant information; and 3) facilities, provided, that in
each case, such access shall be given at reasonable times and upon reasonable
notice and without undue interruption to such party’s business or personnel. So
long as Seller is in good faith defending and/or resolving a Historical
Environmental Liability under this Section, Purchaser shall not compromise,
settle or in any manner interfere with the defense or resolution of such
Historical Environmental Liability. If Seller does not assume the defense
and/or resolution of any such Historical Environmental Liability claim or
litigation in accordance with the terms hereof, Purchaser may defend and/or
resolve Historical Environmental Liability in a commercially reasonable manner,
including settling claims or litigation (after giving prior written notice of
the same to the Seller and obtaining the prior written consent of Seller, which
consent shall not be unreasonably withheld, conditioned or delayed).


 


(e)                                  In connection with any Remedial
Action covered by the indemnities in Sections 11.2(a)(v) and 11.2(a)(vi), Seller shall only be
required to undertake or reimburse Losses incurred in the course of Remedial
Action conducted in a “Lowest-Cost Commercially Reasonable
Manner,” which shall mean, the lowest cost methods
permitted by applicable Environmental Law determined from the perspective of a
reasonable business person acting without regard to the availability of
indemnification hereunder to achieve compliance with Environmental Law (taking
all relevant circumstances into consideration, including, without limitation,
the lowest-cost method that would minimize exposure to additional Losses that
would be subject to indemnification hereunder). Such Lowest-Cost Commercially
Reasonable Manner shall include, where appropriate, the use of risk-based
remedies, institutional or engineering controls, or deed restrictions, provided
such remedies, controls, or restrictions do not: (1) unreasonably interfere
with the operations of any Business Facilities provided there is no Change to
such facilities after the Closing Date, or (2) unreasonably restrict the
ability to use any Business Facility for the use it was employed on the Closing
Date or for substantially similar uses, without the consent of Purchaser or its
Designated Affiliates, which consent shall not be unreasonably withheld,
conditioned or delayed. Seller shall have no indemnification obligations under
Section 11.2(a)(v) to the extent Losses result from any Change after the
Closing Date caused by Purchaser or any subsequent owner or operator of the
Business Facilities. For purposes of this Article XI, “Change” means a material
change in the use of a Business Facility after the Closing Date, provided that
a material change in use does not include a cessation in operations other than
a voluntary decommissioning or demolition (or involuntary decommissioning or
demolition that is not required by Environmental Law) of all or substantially
all of a Business Facility or the operations conducted thereon.


 


(f)                                    Seller
shall have no indemnification obligations under Section 11.2(a)(v) for Losses
arising from any non-subsurface sampling or analysis, subsurface investigation,
or any communication with any Governmental Body by or on behalf of Purchaser or
any of its Affiliates after the Closing Date unless (and only to the extent)
such sampling, analysis,


 


88





















 


investigation
or communication is: (1) required by any Environmental Law; (2) in response to
a request of a Governmental Body; or (3) during the normal course of business
arising out of repairs, modifications, maintenance or construction activities
that are conducted consistent with normal industrial practices; (provided,
however, that any such sampling, analysis, investigation or communication with
a Governmental Body shall not be considered “required by Environmental Law” for
purposes of this Article XI if such sampling, analysis, investigation or
communication occurs as a result of: 1) a Change at a Business Facility; or 2)
due diligence conducted by a future purchaser or financing source.


 


(g)                                 Seller
shall have no indemnification obligations under Section 11.2(a)(v) to the
extent that, as a result of any negligence or willful misconduct of Purchaser
or its Affiliates after the Closing Date, the amount of Losses subject to
indemnification by Seller is exacerbated.


 


(h)                                 Purchaser
or its designees agree to make commercially reasonable efforts to provide
Seller with advance notice of repairs, modifications, maintenance or
construction activities that might cause Losses related to Environmental
Matters listed on Schedule 4.19 (to the extent that the location of the
environmental matter is reasonably identified therein) for purposes of
consultation with Seller. The Purchaser and Seller agree that any
communications between the parties during such consultation are made without
prejudice and shall be treated as confidential settlement discussions not to be
used in evidence in any dispute.


 


Section 11.5.   Procedures for Allocation of
Responsibility for Straddle Environmental Liabilities


 


(a)                                  A
Party seeking to have responsibility for that Straddle Environmental Liability
allocated pursuant to this Section 11.5 shall promptly notify the other party
in writing of the matter and the facts constituting the basis for the notifying
party’s belief that the matter qualifies as a Straddle Environmental Liability.


 


(b)                                 For
purposes of Section 11.2(a)(vii) and 11.2(b)(viii), responsibility for Losses
arising from Straddle Environmental Liabilities will be allocated as follows.


 


(i)                                     Responsibility
for Losses that are the subject of a Straddle Environmental Liability Claim
Notice delivered by one party to another on or before the second anniversary of
the Closing Date shall be allocated 70% to Seller and 30% to Purchaser.


 


(ii)                                  Responsibility
for Losses that are the subject of a Straddle Environmental Liability Claim
Notice delivered by one party to another after the second anniversary of the
Closing Date and on or before the third anniversary of the Closing Date shall
be allocated 60% to Seller and 40% to Purchaser.


 


(iii)                               Responsibility
for Losses that are the subject of a Straddle Environmental Liability Claim
Notice delivered by one party to another after the third anniversary of the
Closing Date and on or before the sixth anniversary of the Closing Date shall
be allocated 50% to Seller and 50% to Purchaser.


 


89





















 


(iv)                              Responsibility
for Losses that are the subject of a Straddle Environmental Liability Claim
Notice delivered by one party to another after the sixth anniversary of the
Closing Date and on or before the seventh anniversary of the Closing Date shall
be allocated 40% to Seller and 60% to Purchaser.


 


(v)                                 Responsibility
for Losses that are the subject of a Straddle Environmental Liability Claim
Notice delivered by one party to another after the seventh anniversary of the
Closing Date and on or before the eighth anniversary of the Closing Date shall
be allocated 30% to Seller and 70% to Purchaser.


 


(vi)                              Responsibility
for any and all Losses arising from Straddle Environmental Liabilities incurred
after the eighth anniversary of the Closing Date shall reside with Purchaser.


 


(c)                                  Seller
shall have the right to control the defense and/or resolution of any Straddle
Environmental Liabilities covered by the allocation ratios set out in Sections
11.5(b)(i), and (b)(ii). Purchaser shall have the right to control the defense
and/or resolution of any Straddle Environmental Liabilities covered by the
allocation ratios set out in Sections 11.5(b)(iii), (b)(iv), (b)(v) and
(b)(vi). The party controlling defense and/or resolution of a Straddle
Environmental Liability under either of the two immediately preceding sentences
(the “Controlling Party”) shall
be entitled to take all steps necessary in the defense and/or resolution
thereof including, without limitation, the settlement of any matter without the
consent of the other party (the “Non-Controlling Party”) (so
long as such settlement obtains for the Non-Controlling Party a complete
release of future liability in connection with the subject matter); provided,
however, that the Non-Controlling Party may, at its own expense, monitor
any proceeding with the counsel of its choice without any right of control
thereof. If the Controlling Party elects to control the defense and/or
resolution of any Straddle Environmental Liabilities with respect to which it
has such election right, the Controlling Party alone shall control all Remedial
Action or other actions (including without limitation all communications with
Governmental Bodies) undertaken in connection with the defense or resolution of
the Straddle Environmental Liabilities for which it is responsible; provided,
however, that any Remedial Action responsibility for which is allocated
under this Section 11.5 shall be conducted in a Lowest-Cost Commercially
Reasonable Manner; provided further, that where any On-Site Remedial
Action is required, Seller agrees to use commercially reasonable efforts to
avoid (i) unreasonable interference with the operations of any Business
Facilities provided there is no Change after the Closing Date or (ii)
unreasonably restricting the ability to use any Business Facility for the use
it was employed on the Closing Date or for substantially similar uses, without
the consent of Purchaser or its Designated Affiliates, which consent shall not
be unreasonably withheld, conditioned or delayed. The Controlling Party shall
afford the Non-Controlling Party or its designees with the opportunity to
review draft documents prepared in connection with such matters and shall
reasonably consider such other party’s comments. The Controlling Party to shall
provide all plans, reports, pleadings and other documents in draft form to the
Non-Controlling Party in a reasonable time prior to delivering such documents
to a governmental entity or claimant, and the Non-Controlling Party and the
Controlling Party shall each use its reasonable best efforts not to delay the
filing or submission of such documents.


 


90





















 


(d)                               Seller
shall have no obligation under Section 11.2(a)(vii) to contribute its allocated
share of Losses arising from any Straddle Environmental Liability to the extent
such Losses result from: (1) any Change after the Closing Date caused by
Purchaser or any subsequent owner or operator of the Business Facilities; (2)
any Remedial Action not conducted in a Lowest-Cost Commercially Reasonable
Manner; (3) any gross negligence or willful misconduct of Purchaser or its
Affiliates after the Closing Date; or (4) any non-subsurface sampling or
analysis, or any subsurface investigation, or any communication with any
Governmental Body by or on behalf of Purchaser or any of its Affiliates after
the Closing Date related thereto, unless (and only to the extent) such
sampling, analysis, subsurface investigation or communication is: (X) required
by any Environmental Law; (Y) in response to a request of a Governmental Body;
or (Z) during the normal course of business arising out of repairs,
modifications, maintenance or construction activities that are conducted
consistent with normal industrial practices; provided further that any sampling
or analysis, subsurface investigation, or communication with a Governmental
Body shall not be considered “required by Environmental Law” for purposes of
this Article XI if such sampling, analysis, investigation or communication
occurs as a result of: (a) a Change at a Business Facility; or (b) due
diligence conducted by a future purchaser or financing source.


 


(e)                                  Purchaser
or its designees agree to make commercially reasonable efforts to provide
Seller with advance notice of repairs, modifications, maintenance or
construction activities that might cause Losses related to Environmental
Matters listed on Schedule 4.19 for purposes of consultation with
Seller. The Purchaser and Seller agree that any communications between the parties
during such consultation are made without prejudice and shall be treated as
confidential settlement discussions not to be used in evidence in any dispute.


 


(f)                                    Seller
and Purchaser shall cooperate fully in all aspects of any investigation,
defense, pre-trial activities, trial, compromise, settlement, discharge or
Remedial Action arising in connection with any claim covered by this Section
11.5. So long as the Controlling Party is in good faith defending and/or
resolving a Straddle Environmental Liability under this Section, the
Non-Controlling Party shall not compromise, settle or in any manner interfere
with the defense or resolution of such Straddle Environmental Liability. If the
Controlling Party does not assume the defense and/or resolution of any such
Straddle Environmental Liability claim or litigation in accordance with the
terms hereof, the Non-Controlling Party may defend and/or resolve such Straddle
Environmental Liability in such manner as it may deem appropriate, including
settling claims or litigation (after giving prior written notice of the same to
the Controlling Party and obtaining the prior written consent of the
Controlling Party, which consent shall not be unreasonably withheld,
conditioned or delayed) on such terms as the Non-Controlling Party may
reasonably deem appropriate, and the Controlling Party will promptly indemnify
the Non-Controlling Party in accordance with the provisions of this Article XI.


 


(g)                                 Schedule
11.5(g) includes, without limitation, identified items that the parties
agree meet the definition of “Straddle Environmental Liability.” The inclusion
of any matter on Schedule 11.5(g) shall not in any way be construed as
an admission of the existence of any liability with respect to or breach of a
representation or warranty.


 


91





















 


(h)                                 Notwithstanding
anything to the contrary in Sections 11.4(f) and 11.5(d), Purchaser may
undertake commercially reasonable non-subsurface sampling or analysis, and
subsurface investigations to the extent necessary to give effect to the rights
granted in Section 6.12 regarding Environmentally Defective Parcels. Purchaser
may communicate to Seller the results of Such sampling, analysis or
investigations consistent with the provisions of Section 6.12, provided,
however, Purchaser or any of its Affiliates will not communicate with any
Governmental Body concerning the results of such sampling, analysis, or
investigation unless: (1) required by any Environmental Law or (2) in response
to a request of a Governmental Body (and then only to the extent so required).
This Section 11.5(h) applies only to Timberlands and expires entirely six
months after the Closing Date.


 


Section 11.6.   Procedures Applicable to Indemnification
by Purchaser for Pre-Closing Reserved Environmental Liabilities and
Post-Closing Environmental Liabilities


 


(a)                                  In
the event that Seller submits a claim for indemnification under Section
11.2(b)(vi) or (vii), Purchaser may, at its sole cost and expense, assume the
defense and/or resolution (including, without limitation, undertaking Remedial
Action) thereof by written notice to Seller within 20 Business Days of receipt
of Seller’s written notice of claim. If Purchaser assumes the defense and/or
resolution of any Reserved Pre-Closing Environmental Liabilities or
Post-Closing Environmental Liability, Purchaser shall be entitled to take all
steps necessary in the defense and/or resolution thereof including, without
limitation, the settlement of any matter without the consent of Seller (so long
as such settlement obtains for Seller a complete release of future liability in
connection with the subject matter); provided, however, that
Seller may, at its own expense, monitor any proceeding with the counsel of its
choice without any right of control thereof. If Purchaser elects to assume the
defense and/or resolution of any Reserved Pre-Closing Environmental Liability
or Post-Closing Environmental Liability, Purchaser alone shall control all
Remedial Action or other actions (including without limitation all
communications with Governmental Bodies) undertaken pursuant to the indemnity
in Section 11.2(b)(vi) or (b)(viii); provided, however, that such Remedial
Action and other actions shall be conducted in a Lowest-Cost Commercially
Reasonable Manner.


 


(b)                                 Seller
and Purchaser shall cooperate fully in all aspects of any investigation,
defense, pre-trial activities, trial, compromise, settlement, discharge or
Remedial Action arising in connection with any claim in respect of which
indemnity is sought, including, but not limited to, by providing the other
party with reasonable access to: 1) employees and officers (including as
witnesses); 2) other relevant information; and 3) facilities, provided, that in
each case, such access shall be given at reasonable times and upon reasonable
notice and without undue interruption to such party’s business or personnel. So
long as Purchaser is in good faith defending and/or resolving a Reserved
Pre-Closing Environmental Liability or Post-Closing Environmental Liability under
this Section, Seller shall not compromise, settle or in any manner interfere
with the defense or resolution of such Reserved Pre-Closing Environmental
Liability or Post-Closing Environmental Liability. If Purchaser does not assume
the defense and/or resolution of any such Reserved Pre-Closing Environmental
Liability or Post-Closing Environmental Liability in accordance with the terms
hereof, Seller may defend and/or resolve such Reserved Pre-Closing
Environmental Liability or Post-Closing Environmental Liability in a
commercially reasonable manner, including settling claims or litigation (after
giving prior


 


92





















 


written notice of the same to the Purchaser and obtaining the prior
written consent of Purchaser, which consent shall not be unreasonably withheld,
conditioned or delayed).


 


Section 11.7.   Warranties in Deeds.  Notwithstanding anything to the contrary set
forth in this Agreement, (a) the grantor under any Deed shall not be liable to
the grantee pursuant to any warranty set forth in such Deed if the grantee
shall have obtained title insurance with respect to the applicable real
property conveyed pursuant to such Deed, and (b) if the grantee under such Deed
shall not have obtained title insurance with respect to such transfer, then any
liability of the grantor under such Deed with respect to warranties of title
set forth in such Deed shall be subject to and governed by the terms and
conditions of this Article XI.


 


ARTICLE XII


 


NONCOMPETITION; NONSOLICITATION


 


Section 12.1.  
Noncompetition.  (a) Subject
to Section 12.1(c), Seller covenants and agrees that for a period of two (2)
years following the Closing Date (the “Covenant Term”) it shall not,
and shall cause its Subsidiaries not to engage in the manufacture or sale of
products that are within the scope of the Business (a “Seller Competitive Business”) in
direct or indirect competition with Purchaser, whether as employer, proprietor,
partner, stockholder, consultant, agent, lender or guarantor or otherwise.


 


(b)                                 Purchaser
covenants and agrees that for the Covenant Term it shall not, and shall cause
its Subsidiaries not to, engage in the manufacture or sale of paperboard or
paperboard packaging products using the Mills acquired under this Agreement in
direct or indirect competition with Seller’s retained paperboard or paperboard
packaging businesses as of a time immediately after the Closing (each such
retained business, a “Purchaser Competitive Business”), whether
as employer, proprietor, partner, stockholder, consultant, agent, lender or
guarantor or otherwise; provided that nothing in this Section 12.1(b) shall
restrict Purchaser or its Subsidiaries from continuing to manufacture the
paperboard and paperboard packaging products at the Wickliffe Mill as currently
manufactured, or, with respect to the Enhanced Surface Cover Gradeline - C1S and C2S, as currently under
development for manufacturing, and sell such products so manufactured.


 


(c)                                  Notwithstanding
anything to the contrary contained in Section 12.1(a):


 


(i)                                     in
the event that during the Covenant Term Seller completes a business combination
transaction with a Person that is engaged in any Seller Competitive Business,
which transaction results in the holders of the voting securities of Seller
outstanding immediately prior to the consummation of such transaction owning
less than 50% of the voting power of the voting securities of Seller or the
surviving entity in the transaction or any parent thereof (any such entity, an “Acquiror”) outstanding
immediately after the consummation of such transaction, such Acquiror or any of
its Subsidiaries or Affiliates may engage in any activity prohibited or
restricted by Section 12.1(a);


 


93





















 


(ii)                                  Seller
may directly or indirectly hold interests in or securities of any Person to the
extent that such investment does not directly or indirectly confer on Seller
more than 15% of the voting power of such Person; and Seller does not have any
representation on the board of directors or other managing body of such Person;


 


(iii)                               Seller
may maintain and continue, and Section 12.1(a) shall not be understood to
restrict in any manner whatsoever, the operations of Seller and its
Subsidiaries that are not being transferred to Purchaser hereunder in
accordance with current and past practices and the normal expansion thereof,
including the production, sale and distribution of all products and grades
currently produced by Seller and its Subsidiaries that are not included within
the Business;


 


(iv)                              Seller
may acquire interests in or securities of any Person as an investment by Seller’s
pension funds or funds of any other benefit plan of Seller whether or not such
Person is engaged in, any Seller Competitive Business;


 


(v)                                 Seller
may acquire interests in or securities of any Person that derived 25% or less
of its total annual revenues in its most recent fiscal year from activities
that constitute Seller Competitive Businesses;


 


(vi)                              Subject
to Section 12.1(e) hereof, Seller may acquire a business, assets and/or more
than 50% of the outstanding capital stock or other equity interests in any
Person (or any lesser percentage if, pursuant to contractual or other
arrangements, Seller has the right to cause such Person to take the actions
specified in the following proviso) that derived in excess of 25% of its total
annual revenues in its most recent fiscal year from activities that constitute
Seller Competitive Businesses; provided, however, that Seller
shall use commercially reasonable efforts to divest that portion of such Person
that engages in activities constituting Seller Competitive Businesses on
commercially reasonable terms as soon as reasonably practicable and in any
event within twelve months following the acquisition of such ownership or interest;


 


(vii)                           Seller
may acquire or use any product for internal uses or to conduct Seller’s or its
Subsidiaries’ other businesses that consume, use, contain, depend upon or
otherwise incorporate any product; and


 


(viii)                        Seller
may perform any act or conduct any business contemplated hereby or the
Transition Agreements.


 


94





















 


(d)           The parties hereto
acknowledge and agree that nothing herein shall be deemed to require Seller to
give notice to or obtain the consent of Purchaser in order to engage in any
activity or transaction of the types described in Section 12.1(c) or otherwise.


 


(e)           If at any time and from
time to time during the Covenant Term, Seller engages in any acquisition or
series of related acquisitions covered under Section 12.l(c)(vi) hereof (a “Permitted Competitive Acquisition”), Seller shall notify Purchaser of such Permitted
Competitive Acquisition as promptly as practicable following the consummation
of such acquisition. Not later than the ninetieth (90th) calendar
day after the consummation of the Permitted Competitive Acquisition (or an
earlier date, as determined by Seller), Seller shall provide Purchaser (or its
designee) and its counsel, accountants, debt financing sources and other
representatives reasonable access to the books, records, employees, officers,
accountants, attorneys, representatives and properties of the Seller
Competitive Business, for a period of sixty (60) calendar days from the date
such access is first provided (such period, the “Due
Diligence Period”), subject to any
then existing confidentiality restrictions and limitations on access to
competitively sensitive information required for compliance with antitrust Law
and to Purchaser’s entry into a confidentiality agreement on substantially the
same terms as those contained in the Confidentiality Agreement. Within sixty
(60) days of the commencement of the Due Diligence Period, Purchaser (or its
designee) may, but is not obligated to, make a final comprehensive written offer
(the “Final Offer”) to
Seller to acquire the Seller Competitive Business. In the event that Seller
determines that Final Offer is acceptable, subject to completion of definitive
documentation, the Purchaser (or its designee) and Seller shall engage in good
faith negotiations following the delivery of such Final Offer to reach
agreement on the definitive terms of such transaction. In the event that (a)
Seller rejects such Final Offer in writing, Purchaser (or its designee) fails
to make any such Final Offer within such sixty (60) day period described above
or notifies Seller that Purchaser (or its designee) does not intend to make any
such Final Offer, or (c) Purchaser (or its designee) and Seller are unable to
reach agreement on the definitive terms of such transaction within thirty (30)
calendar days from the receipt of the Final Offer, Seller may engage in
discussions regarding and consummate a divestiture of the Seller Competitive
Business; provided that Seller may not enter into any definitive
agreement concerning or consummate a divestiture of the Seller Competitive
Business with any other third party on terms that are, in the aggregate, less
favorable to Seller than those offered by Purchaser (or its designee), unless
Purchaser (or its designee) has been provided a summary of the material terms
of the offer made by any such third party, and Purchaser has not within a
period often (10) calendar days following receipt of such third party offer
notified Seller in writing that it is willing to acquire the Seller Competitive
Business on the terms and conditions contained in such third party offer and
within ten (10) calendar days following such written notification from
Purchaser., Seller and Purchaser enter into definitive agreements on such terms
and conditions. Seller agrees that from the consummation of a Permitted
Competitive Acquisition until the earlier to occur of (a) the date on which
Purchaser notifies Seller in writing that Purchaser (or its designee) does not
intend to make a Final Offer, (b) the end of the Due Diligence Period, provided
that Purchaser (or its designee) has failed to make a Final Offer within the
Due Diligence Period, (c) the date on which Seller rejects such Final Offer in
writing, and (d) the date which is 30 days after the end of the Due Diligence
Period, Seller may not engage in discussions with, or provide confidential
information to, a third party regarding the divestiture to such party of, or
consummate such a divestiture of the Seller Competitive Business.


 


95


















 


Section 12.2.   Nonsolicitation
of Purchaser Employees.  Seller
covenants and agrees that, except to the extent otherwise mutually agreed
between the parties hereto, for a period of one year following the Closing Date
it shall not, and shall cause its Subsidiaries not to, (i) solicit any Acquired
Company Employee or Transferred Employee (at a time when such person is an
employee of Purchaser or any of its Subsidiaries or for a period of six months
is thereafter) to terminate his or her employment relationship with Purchaser
or any of its Subsidiaries or (ii) hire or extend an offer to hire any employee
of Purchaser or any of its Subsidiaries (at a time when such person is an
employee of Purchaser or any of its Subsidiaries or for a period of six months
thereafter).


 


Section 12.3.
  Nonsolicitation
of Seller Employees.  Purchaser
covenants and agrees that, except (x) as expressly contemplated by this
Agreement and (y) except to the extent otherwise mutually agreed between the
parties hereto, for a period of one year following the Closing Date it shall
not, and shall cause its Subsidiaries not to, (i) solicit any employee of
Seller or any of its Subsidiaries (at a time when such person is an employee of
Seller or any of its Subsidiaries or for a period of six months thereafter) to
terminate his or her employment relationship with Seller or any of its
Subsidiaries or (ii) hire or extend an offer to hire any employee of Seller or
any of its Subsidiaries (at a time when such person is an employee of Seller or
any of its Subsidiaries or for a period of six months thereafter).


 


Section 12.4.   Remedies. Purchaser and Seller each
acknowledge that the time, scope and other provisions of this Article XII have
been specifically negotiated by sophisticated commercial parties and
specifically hereby agree that such time, scope and other provisions are
reasonable under the circumstances. It is further agreed that other remedies
cannot fully compensate Purchaser or Seller, as the case may be, for a
violation by Seller or Purchaser, as the case may be, of the terms of this
Article XII and that Purchaser or Seller, as the case may be, shall be entitled
to injunctive relief to prevent any such violation or continuing violation by
Seller or Purchaser, as the case may be. It is the intent and understanding of
each party hereto that if, in any Legal Proceeding, any term, restriction,
covenant or promise herein is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be deemed
modified to the extent necessary to make it enforceable.


 


ARTICLE XIII


 


TERMINATION


 


Section 13.1.   Termination. This Agreement may be
terminated and the transactions contemplated hereby abandoned any time prior to
the Closing:


 


(a)   upon
the written agreement of Purchaser and Seller;


 


(b)   by
Purchaser, upon ten Business Days’ prior written notice to Seller, if any of
the conditions set forth in Section 8.1 or 8.2 becomes incapable of fulfillment,
other than as a result of actions or inactions by Purchaser in violation of
this Agreement that render any such condition incapable of fulfillment;


 


96





















 


(c)   by
Seller, upon ten Business Days’ prior written notice to Purchaser, if any of
the conditions set forth in Section 9.1 or 9.2 becomes incapable of
fulfillment, other than as a result of actions or inactions by Seller in
violation of this Agreement that render any such condition incapable of
fulfillment;


 


(d)   by
Purchaser or by Seller on or after June 30, 2005 if the Closing has not
occurred prior to such date or at such earlier time if either a court of
competent jurisdiction in the United States issues a preliminary injunction
prohibiting closing; provided, that the right to terminate this
Agreement under this Section 13.1(d) shall not be available to any party hereto
whose failure to perform any covenant or obligation hereunder has caused or
resulted into the failure of the Closing to occur on or before such date; or


 


(e)   by
Purchaser, on or after April 15, 2005, if (i) Seller has not delivered to Purchaser on or before such
date the Historical Combined Audited Financial Statements and the Stub Period
Combined Financial Statements in accordance with Section 6.9 hereof or (ii) the
representation and warranty set forth in Section 4.6(d) shall not be true and
correct such that the Historical Combined Audited Financial Statements or the
Stub Period Combined Financial Statements reflect a material impairment in the
value of the Business as evidenced by lower earnings before interest, tax,
depreciation and amortization or tangible net worth, as compared to the
earnings before interest, tax, depreciation and amortization or tangible net
worth reflected in the corresponding Unaudited Historical Financial Statements
or the corresponding Unaudited Financial Statements for the corresponding
periods.


 


Section 13.2.   Procedure and Effect of Termination.
In the event of termination party under Section 13.1(b), (c), or (d), written
notice thereof shall be given to the other party and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned, without
further action by either party, upon delivery of such notice, except that the Confidentiality
Agreement shall survive in accordance with its terms and Sections 13.2, 15.3,
15.4 and 15.5 shall also survive such termination. Upon any termination hereof
pursuant to Section 13.1, no party hereto shall thereafter have any further
liability or obligation hereunder or under any Transition Agreement (except as
expressly provided therein); provided, however, that no such
termination shall relieve any party hereto or thereto of any liability for any
willful breach of any term hereof prior to the date of such termination; provided
further, however, that if the Agreement is terminated by
Purchaser under Section 13.1(e), Seller shall, within ten Business Days of
written request from Purchaser, reimburse Purchaser and its Affiliates for all
specifically documented and invoiced, actual third party out-of pocket fees and
expenses incurred by them in connection with the negotiation and execution of
this Agreement and the agreements ancillary hereto (including those relating to
the Acquisition Financing) and their due diligence investigations, including,
without limitation, the fees and expenses of their legal counsel, engineers,
auditors and other advisors and consultants; provided that Seller shall in no
event be obligated to reimburse Purchaser for amounts in excess of $10 million
pursuant to this Section 13.2.


 


97





















 


ARTICLE XIV


 


TAX MATTERS


 


Section 14.1.   Tax Indemnification. (a) Seller shall
indemnify Purchaser and its Affiliates and hold them harmless from all
liability for (A) Excluded Taxes (other than (i) the portion of Transfer Taxes
required to be borne by Purchaser pursuant to Section 14.10 and (ii) Tax
liabilities or Tax accruals taken into account in the calculation of Closing
Date Working Capital), (B) the portion of Transfer Taxes required to be borne
by Seller pursuant to Section 14.10 and (C) all reasonable costs and expenses,
including reasonable legal fees and expenses, attributable to any item in
clause (A) or (B).


 


(b)           Purchaser shall
indemnify Seller and its Affiliates and hold them harmless from all liability
for (A) any and all Taxes imposed on or payable with respect to the Acquired
Companies or the Business, other than Excluded Taxes, (B) the Transfer Taxes
required to be borne by Purchaser pursuant to Section 1.6 and the portion of
Transfer Taxes required to be borne by Purchaser pursuant to Section 14.10, and
(C) all reasonable costs and expenses, including reasonable legal fees and
expenses, attributable to any item in clauses (A) and (B).


 


(c)           Any indemnity payment
to be made pursuant to Section 14.1 shall be paid no later than the later of
(i) ten (10) days after the indemnified party makes written demand upon the
indemnifying party and (ii) five (5) days prior to the date on which the
underlying amount is required to be paid by the indemnified party.


 


(d)           The indemnification
provisions in this Section 14.1 shall survive the Closing until 90 days after
the expiration of the applicable statute of limitations.


 


Section 14.2.  Section 338(h)(10) Elections. (a)
Seller and Purchaser shall jointly make timely and irrevocable elections under
Section 338(h)(10) of the Code (and any corresponding elections under state or
local tax law) (the “338(h)(10) Elections”) with
respect to the Acquired Companies for which an election may be made under
Section 338(h)(10) of the Code and the applicable Treasury Regulations
thereunder (such Acquired Companies, the “338(h)(10) Election Entities”). Seller
and Purchaser shall cause their respective subsidiaries and affiliates to (i)
treat the 338(h)(10) Elections as valid, (ii) file all Tax Returns in a manner
consistent with such 338(h)(10) Elections and (iii) take no position contrary
thereto, except to the extent required to do otherwise pursuant to a
determination (as defined in Section 13.13(a) of the Code or any similar state
or local tax provision) (a “Determination”). Seller shall pay any Tax
attributable to the making of the Section 338(h)(10) Elections and shall
indemnify Purchaser and its Affiliates and hold them harmless from all
liability arising out of any failure to pay such Tax.


 


Section 14.3.   Allocation of Consideration. Within
90 calendar days following the determination of the Final Consideration,
Purchaser and Seller shall attempt in good faith to agree upon the allocation
of the Final Consideration among the Purchased Equity Interests and the
Purchased Assets. The allocation of this amount shall be made in the manner
required by Section 1060 of the Internal Revenue Code and the applicable
Treasury Regulations thereunder. In the event that Purchaser and Seller are
unable to reach an agreement within such 90 calendar day period, Purchaser and
Seller shall each set forth in writing their positions regarding any


 


98





















 


remaining disagreed items and such positions shall be submitted to the
Neutral Auditors for resolution in the next 20 days. The Neutral Auditors shall
be instructed to determine whether the position maintained by Seller or by
Purchaser is the more reasonable allocation of such difference in respect of any
item in dispute and shall select one of the two positions. Each of Seller and
Purchaser shall bear all fees and costs incurred by it in connection with such
dispute, except that each party shall pay one-half (50%) of the fees and
expenses of the Neutral Auditors. Once the allocation is agreed upon (or
determined by the Neutral Auditors), the parties shall prepare and reflect such
allocation on Schedule 14.3 which shall be attached to this agreement
and become a part thereof. Except as otherwise required pursuant to a
Determination, Purchaser and Seller agree to act in accordance with the
allocations contained in Schedule 14.3, for all Tax purposes and that
neither of them will (or will permit its Affiliates to) take any position
inconsistent therewith in any Tax Returns or similar filings (including IRS
Form 8594 or any similar form required to be filed under state, local or
foreign Law), any refund claim, litigation, or otherwise. Purchaser and Seller
each agree to provide the other party with any additional information
reasonably required to complete IRS Form 8594 (or any similar form required to
be filed under state, local or foreign Law) and with completed copies of such
forms.


 


Section 14.4.   Allocation of Purchase Price for the
Purchased Equity Interests. Seller and Purchaser agree that the portion of
the Final Consideration allocated to the Purchased Equity Interests pursuant to
Section 14.3 shall be further allocated in the manner described in this
Section. With respect to each 338(h)(10) Election, Seller and Purchaser shall
agree within 90 calendar days following the determination of the Final
Consideration on (i) the aggregate deemed sale price (as defined in Treasury
Regulation § 1.338-4) (the “ADSP”) and (ii) the allocation of the
ADSP among the assets of each of the 338(h)(l 0) Election Entities
(collectively, the “338(h)(10) Election Allocations”). The
338(h)(10) Election Allocations shall be reasonable and shall be determined in
accordance with Section 338(h)(10) of the Internal Revenue Code and the
applicable Treasury Regulations thereunder. Purchaser and Seller shall jointly
prepare, consistent with the 338(h)(10) Election Allocations (if any), any form
or document required to effect a valid and timely 338(h)(10) Election. Except
as may be required by a Determination, Seller and Purchaser shall file, or
cause to be filed, all Tax Returns in a
manner consistent with the 338(h)(10) Election Allocations (if any).


 


Section 14.5.   Preparation and Filing of Tax Returns.
(a) Seller shall timely prepare and file or shall cause to be timely prepared
and filed (i) any combined, consolidated or unitary Tax Return that includes
Seller or any of its Affiliates, and (ii) any Tax Return of the Acquired
Companies for any Pre-Closing Tax Period and pay any Taxes due with respect to
such Tax Returns. Purchaser shall not amend or revoke such Tax Returns (or any
notification or election relating thereto). Seller shall prepare and submit to
Purchaser, no later than three months after the Closing Date, blank Tax Return
workpaper packages or questionnaires for Pre-Closing Tax Periods. Purchaser
shall, and shall cause the Acquired Companies to, prepare in good faith and
submit to Seller in accordance with past practice, within three months of receipt,
all information as Seller shall reasonably request in such Tax Return workpaper
packages or questionnaires.


 


(b)           Purchaser shall, except
to the extent that such Tax Returns are the responsibility of Seller under
Section 14.5(a), timely prepare and file or shall cause to be timely prepared
and filed all Tax Returns with respect to the Acquired Companies. For any
Straddle


 


99





















 


Period Tax Return of the Acquired Companies that is the responsibility
of Purchaser under this Section 14.5(b), Purchaser shall, and shall cause its
Affiliates to, prepare such Tax Return in a manner consistent with past
practices of the Acquired Companies unless otherwise required by applicable
Laws and Purchaser shall deliver to Seller for its review, comment and approval
(which approval shall not be unreasonably withheld) a copy of such proposed Tax
Return (accompanied, in the case of a Straddle Period Tax Return, by an
allocation between the Pre-Closing Tax Period and the Post-Closing Tax Period
of the Taxes shown to be due on such Tax Return) at least thirty Business Days
prior to the due date (giving effect to any validly obtained extensions)
thereof. Purchaser shall not unreasonably fail to reflect any comments received
from Seller within ten Business Days following Seller’s receipt of such Tax
Return and the failure of Seller to propose any changes within such ten
Business Days shall constitute its approval thereof. Purchaser shall not amend
or revoke any Straddle Period Tax Return (or any notification or election
relating thereto). Purchaser shall promptly reimburse Seller for any
overpayment of Taxes with respect to a Pre-Closing Tax Period, including by
reason of the payment of any estimated Taxes by Seller or its Affiliates.


 


Section 14.6.  Refunds, Credits and Carrybacks. (a)
Seller shall be entitled to any refunds or credits of or against any Excluded
Taxes. Purchaser shall, at Seller’s reasonable request and at Seller’s expense,
cause the relevant entity to file for and use commercially reasonable efforts
to obtain any refund to which Seller is entitled. Subject to Section 14.6(c),
Purchaser shall be entitled to any refunds or credits of or against any Taxes
other than refunds or credits of or against Excluded Taxes.


 


(b)           Purchaser shall, and
shall cause the Acquired Companies to, promptly forward to Seller or reimburse
Seller for any refunds or credits of Taxes due Seller (pursuant to the terms of
this Article XIV) after receipt thereof, and Seller shall promptly forward to
Purchaser or reimburse Purchaser for any refunds or credits of Taxes due
Purchaser (pursuant to the terms of this Article XIV) after receipt thereof.


 


(c)           Purchaser shall cause
the Acquired Companies to elect, where permitted by applicable Law, to carry
forward any item of loss, deduction or credit which arises in any taxable
period ending after the Closing Date.


 


Section 14.7.   Tax Contests. (a) If any taxing
authority asserts a Tax Claim in respect of the Acquired Companies, then the
party hereto first receiving notice of such Tax Claim shall provide written
notice thereof to the other party or parties hereto within fourteen (14)
calendar days; provided, however, that the failure of such party
to give timely notice shall not relieve the other party of any of its
obligations under this Article XIV, but the other party’s indemnity obligations
shall be reduced (including the complete elimination thereof if applicable),
but only to the extent of any liability under this Article XIV (or any increase
thereof) incurred as a result of the delay or failure to receive such timely
notice. Such notice shall specify in reasonable detail the basis for such Tax
Claim and shall include a copy of the relevant portion of any correspondence
received from the taxing authority.


 


(b)           Seller shall have the
sole and absolute right to control any audit, examination, contest, litigation
or other proceeding involving federal income Taxes of the Acquired Companies
for all taxable periods that end on or before the Closing Date. Seller shall


 


100





















 


have the right
to control, any audit, examination, contest, litigation or other proceeding by
or against any state and local taxing authority (a “Tax Proceeding”) of
the Acquired Companies for any taxable period that ends on or before the
Closing Date, provided, that Seller shall not settle, compromise or abandon any
such Tax Proceeding if such action would reasonably be expected to have a
significant adverse impact on Purchaser without obtaining the prior written
consent of Purchaser, which consent shall not be unreasonably withheld,
conditioned or delayed. Purchaser shall promptly notify Seller upon receipt by
Purchaser or any of its
Subsidiaries of notice of any claim, assessment or dispute relating to any Tax
Proceeding which Seller is entitled to control under this Section 14.7(b) and
shall promptly forward to Seller any communications received from or sent to
any taxing authority in connection with any such Tax Proceeding. Notwithstanding
Section 14.7(a) and the foregoing provisions of this Section 14.7(b), in the
event that Seller is entitled to and does seek Purchaser’s consent to settle a
Tax Claim and Purchaser determines that it prefers to pursue the Tax Claim
further, Purchaser may take over control of the Tax Claim at its own cost and
expense and, to the extent that the amount of the Tax Claim ultimately is
determined to be greater than the amount for which Seller was willing to
settle, Purchaser shall bear such excess cost. In the event that Purchaser
takes over control of a Tax Claim, Seller shall cooperate fully with Purchaser
in connection with such Tax Claim (including, if necessary, executing or
causing to be executed powers-of-attorney or other documents necessary in order
for Purchaser to exercise its control over such Tax Claim) and Purchaser shall
then be able to settle such Tax Claim without the consent of Seller. In the
case of a Tax Proceeding for a Straddle Period of the Acquired Companies,
Purchaser shall have right to control such Tax Proceeding, provided, however,
that (i) Purchaser shall provide Seller with a timely and reasonably detailed
account of each phase of such Tax Proceeding, (ii) shall be entitled to receive
copies of all correspondence and documents related to such Tax Proceeding,
(iii) Purchaser shall consult with Seller before taking any significant action
in connection with such Tax Proceeding, (iv) Purchaser shall consult with
Seller and offer Seller an opportunity to comment before submitting any written
materials prepared or furnished in connection with such Tax Proceeding, (v)
Purchaser shall defend such Tax Proceeding diligently and in good faith as if it
were the only party in interest in connection with such Tax Proceeding, (vi)
Seller shall be entitled to participate in (but not control) such Tax
Proceeding, at its own expense, if such Tax Proceeding could have a significant
adverse impact on Seller or any of its Affiliates and (vii) Purchaser shall not
settle, compromise or abandon any such Tax Proceeding without obtaining the prior
written consent, which consent shall not be unreasonably withheld, conditioned
or delayed, of Seller if such settlement, compromise or abandonment would have
a significant adverse impact on Seller or any of its Affiliates.


 


(c)           Subject to Sections
14.7(a) and (b), Purchaser shall have the right to control any Tax Proceeding
involving the Acquired Companies; provided, however, that
Purchaser shall not settle, compromise or abandon any such Tax Proceeding, if
such action would reasonably be expected to have a significant adverse impact
on Seller, without obtaining the prior written consent of Seller, which consent
shall not be unreasonably withheld, conditioned or delayed. Notwithstanding
Sections 14.7(a) and (b) or the foregoing provisions of this Section 14.7(c),
in the event that Purchaser is entitled to and does seek Seller’s consent to
settle a Tax Claim and Seller determines that it prefers to pursue the Tax
Claim further, Seller may take over control of the Tax Claim at its own cost
and expense and, to the extent that the amount of the Tax Claim ultimately is
determined to be greater than the amount for which Purchaser was willing to
settle, Seller shall bear such excess cost. In the event that Seller takes


 


101





















 


over control of a Tax Claim, Purchaser shall cooperate fully with
Seller in connection with such Tax Claim (including, if necessary, executing or
causing to be executed powers-of-attorney or other documents necessary in order
for Seller to exercise its control over such Tax Claim) and Seller shall then
be able to settle such Tax Claim without the consent of Purchaser.


 


Section 14.8.  Cooperation. Each party hereto shall,
and shall cause its Affiliates to, provide the other party hereto with such cooperation,
documentation and information as either of them reasonably may request in (a)
filing any Tax Return, amended Tax Return or claim for refund, (b) determining
a liability for Taxes or an indemnity obligation under this Article XIV or a
right to refund of Taxes, (c) conducting any Tax Proceeding or (d) determining
an allocation of Taxes between a Pre-Closing Tax Period and Post-Closing Tax
Period. Such cooperation and information shall include providing copies of all
relevant portions of relevant Tax Returns, together with all relevant
accompanying schedules and work papers (or portions thereof) and other
supporting documentation, relevant documents relating to rulings or other
determinations by taxing authorities and relevant records concerning the ownership
and Tax basis of property and any other relevant information, which any such
party may possess. Each party will retain all Tax Returns, schedules and work
papers, and all material records and other documents relating to Tax matters,
of the relevant entities for their respective Tax periods ending on or prior to
or including the Closing Date until the earlier of (x) the expiration of the
statute of limitations for the Tax periods to which the Tax Returns and other
documents relate or (y) eight years following the due date (without extension)
for such Tax Returns. Thereafter, the party holding such Tax Returns or other
documents may dispose of them after offering the other party reasonable notice
and opportunity to take possession of such Tax Returns and other documents at
such other party’s own expense. Each party shall make its employees reasonably
available on a mutually convenient basis at its cost to provide explanation of
any documents or information so provided.


 


Section 14.9.   Tax Treatment of Indemnification Payments.
Except as otherwise required pursuant to a Determination, Seller, Purchaser,
the Acquired Companies and their respective Affiliates shall treat any and all
payments under Article XI or Article XIV as an adjustment to the purchase price
for all Tax purposes. Seller and Purchaser agree, for all Tax purposes, to
allocate any such adjustment among the Acquired Companies and/or the Purchased
Assets based upon the item or items to which such adjustment is principally
attributable.


 


Section 14.10.
Transfer Taxes. Except as set forth in Section 1.6, Seller, on the one
hand, and Purchaser, on the other hand, shall share equally any and all sales,
use, registration, transfer (including all real estate transfer and conveyance
and recording fees, if any), stamp, stamp duty reserve, stamp duty land tax,
value added tax, or other similar Taxes and all notarial fees, together with
all interest, penalties, fines, additions to tax or additional amounts imposed
by any taxing authority with respect to such amounts, (collectively, “Transfer
Taxes”) that may be imposed upon, payable,
collectible or incurred in connection herewith and the transactions
contemplated hereby, regardless of the Person liable for such Taxes under
applicable Law. Seller and Purchaser shall cooperate in the execution and
filing of any Tax Returns, affidavits or other documents relating to any
Transfer Taxes and in attempting to obtain all available exemptions from such
Transfer Taxes (including by providing each other with resale certificates and
any other documents necessary to satisfy any such exemptions).


 


102





















 


Section 14.11.
  Post-Closing Dispositions. For
the absence of doubt, the covenants of Purchaser and the Acquired Companies set
forth in this Article XIV shall apply to Purchaser and the Acquired Companies
regardless of any post-Closing disposition of the Acquired Companies by
Purchaser or any of its subsidiaries.


 


Section 14.12.
  Termination of Tax Sharing
Agreements. Anything in any other agreement to the contrary
notwithstanding, all liabilities and obligations between Seller or any of its
Affiliates (other than any of the Acquired Companies), on the one hand, and any
of the Acquired Companies, on the other hand, under any Tax allocation or Tax
sharing agreement in effect prior to the Closing Date (other than this
Agreement) shall cease and terminate with respect to the Acquired Companies as
of the Closing and from and after the Closing, none of the Acquired Companies
shall be obligated to make any payment, or entitled to receive any payment,
pursuant to any such agreement for any past or future period.


 


Section 14.13.
  Partnerships. Each Acquired
Company that is classified as a partnership for Tax purposes shall be treated
for purposes of this Agreement as if its taxable year ended as of the close of
business on the Closing Date and Taxes attributable to the income and gain of
each such entity through the close of business on the Closing Date shall be
considered to be attributable to the Pre-Closing Tax Period.


 


Section 14.14.  Taxes Governed by Article XIV.
Claims for indemnification with respect to Taxes shall be governed by this
Article XIV and Section 11.l(e) but not by any other provision of Article XI.


 


ARTICLE XV


 


MISCELLANEOUS


 


Section 15.1.   Certain Definitions.


 


“338(h)(10)
Elections” has the meaning set forth in Section 14.2.


 


“338(h)(10)
Election Allocations” has the meaning set forth in Section
14.4.


 


“338(h)(10)
Election Entities” has the meaning set forth in Section 14.2.


 


“Acquired Companies” has the meaning set forth in Section 1.1.


 


“Acquired Company Employee” means any individual who is employed by
an Acquired Company immediately before the Closing, including any individual
who is absent due to vacation, holiday, sickness or other approved leave of
absence.


 


“Acquired Company Intellectual Property” means the Intellectual Property set forth
on Schedule 15.1(a).


 


“Acquired Company Owned Real Property” has the meaning set forth in Section
4.9(a).


 


103





















 


“Acquired Company Plans” has the meaning
set forth in Section 4.15(a).


 


“Acquired Company Real Property Leases” has the meaning set forth in Section
4.9(c).


 


“Acquired Company Leased Real Property” has the meaning set forth in Section
4.9(c).


 


“Acquired Intellectual Property” means the Purchased Intellectual Property
and the Acquired Company Intellectual Property.


 


“Acquiror” has the meaning set forth in Section 12.l(c)(i).


 


“Acquisition Financing” has the meaning set forth in Section 5.5.


 


“ADSP” has the meaning set forth in Section
14.4.


 


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


 


“Agreement” has the meaning set forth in the
preamble.


 


“Assets” means, collectively, and excluding the
Excluded Assets, the Purchased Assets and any and all assets owned, leased or
used by an Acquired Company and that do not constitute Excluded Assets. 


 


“Assumed Indebtedness” has the meaning set forth in Section
1.4(p).


 


“Assumed Liabilities” has the meaning set forth in Section 1.4.


 


“Balance Sheet Date” has the meaning set forth in Section
4.6(b).


 


“Benchmark Balance Sheet” has the meaning set forth in Section 4.6(b).


 


“Business” has the meaning set forth in the
Recitals.


 


“Business Contracts” means all Contracts Related to the
Business (other than this Agreement and any lease of real property that is part
of the Excluded Assets), including the Contracts listed on Schedule 4.14.


 


“Business Data” has the meaning set forth in Section
1.2(k).


 


“Business Day” means any day other than a Saturday, a
Sunday or a day on which banks in New York, New York are authorized or
obligated by Law to close.


 


104





















 


“Business Employees” means the Chillicothe Employees,
Divisional Employees and Corporate Business Employees.


 


“Business Facilities” means the Owned Real Property and the
Leased Real Property, and any other facilities (other than the Timberlands)
owned or operated by the Business.


 


“Business IRBs” means the industrial revenue bond issues
listed on Schedule 15.1(c).


 


“Business Software” means the Purchased Seller Software, the
Included Seller Software, the Acquired Third Party Software and the Purchased
Third Party Software.


 


“Capital Budgets” has the meaning set forth in Section
6.2(q).


 


“CERCLA” means the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq.


 


“Chillicothe Employee” means any individual who is employed at
the Business’s Chillicothe, Ohio facility immediately before the Closing,
including any individual who is absent due to vacation, holiday, sickness or
other approved leave of absence, other than those individuals listed in
Schedule 15.1(d).


 


“Closing” has the meaning set forth in Section 3.1.


 


“Closing Date” has the meaning set forth in Section 3.1.


 


“Closing Date Cash” means cash and cash equivalents of the
Business as of the Closing Date, but excluding Workers’ Compensation Cash
Security.


 


“Closing Date Cash Consideration” has the meaning set forth in Section
2.3(a).


 


“Closing Date Financial Data” has the meaning
set forth in Section 2.3(d).


 


“Closing Date Working Capital” has the meaning set forth in Section
2.3(b).


 


“Closing Date Working Capital Statement” has the meaning set forth in Section
2.3(b).


 


“Cobra Coverage” means health care continuation
coverage required by Code Section 4980B or part 6 of Title I of ERISA.


 


“Code” means the Internal Revenue Code of 1986,
as amended.


 


“Collective Bargaining Agreement” has the meaning set forth in Section 4.16(a).


 


“Computer Hardware” means any computer hardware, equipment
and peripherals of any kind and of any platform, including desktop and laptop
personal computers,


 


105





















 


handheld computerized devices, cellular telephones, mid-range and
mainframe computers, process control and distributed control systems, and
network telecommunications equipment, in each case located at any of the
Business Locations.


 


“Computer Software” means any and all computer programs,
including operating system and applications software, implementations of
algorithms, and program interfaces, whether in source code or object code form
(including, but not limited to, all of the foregoing that is installed on
Computer Hardware) and all documentation relating to the foregoing, including
user manuals relating to the foregoing.


 


“Confidentiality Agreement” means the confidentiality agreement
between Cerberus Capital Management L.P. and Seller, dated July 29, 2004.


 


“Contract” means any contract, agreement, indenture, note, bond, loan,
instrument, lease (including real property leases), conditional sale contract,
collective bargaining agreement, purchase or sales orders, mortgage, deed,
license, franchise, insurance policy, undertaking, commitment or other
enforceable arrangement or agreement, whether written or oral.


 


“Copyrights” means published and unpublished works of
authorship, including Computer Software, all copyright rights therein and
thereto in any and all media, whether now known or hereafter developed, and
registrations and applications therefor, and all renewals, extensions,
restorations and reversions thereof.


 


“Corporate Business Employees” means the individuals listed on Schedule
15.1(e) who remain employed by Seller and its Subsidiaries immediately
before the Closing, including any such individual who is absent due to
vacation, holiday, sickness or other approved leave of absence.


 


“Covenant Term” has the meaning set forth in Section
12.1(a).


 


“CP”
has the meaning set forth in Section 1.2(a).


 


“CP
Owned Real Property” has the meaning set forth in Section
1.2(a).


 


“CP
Real Property Leases” has the meaning set forth in Section
1.2(a).


 


“Data” means all information and data, whether
in printed or electronic form and whether contained in a database or otherwise.



 


“Designated Affiliates” shall mean Subsidiaries or Affiliates of
Purchaser designated pursuant to Section 15.9, and shall include, after the Closing
Date, the Acquired Companies.


 


“Determination” has the meaning set forth in Section
14.2.


 


“Disabling Devices” means computer software viruses, time
bombs, logic bombs, Trojan horses, trap doors, back doors, or other computer
instructions, intentional devices or


 


106





















 


techniques that are designed to threaten, infect, assault, vandalize,
defraud, disrupt, damage, disable, maliciously encumber, back into,
incapacitate, infiltrate of slow or shut down a computer system or any
component of such computer system, including any such device affecting system
security or compromising or disclosing user data.


 


“Divisional Employees” means the individuals listed on Schedule
15.1(f) who remain employed by Seller and its Subsidiaries immediately
before the Closing, including any such individual who is absent due to
vacation, holiday, sickness or other approved leave of absence.


 


“Employee Benefit Plans” has the meaning set forth in Section 4.15(a).


 


“Environment” means any surface water, groundwater,
land surface, subsurface strata, river sediment, plant or animal life, natural
resources, air and soil.


 


“Environmental Claims” refers to any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, notice of
violation, judicial or administrative proceeding, judgment, letter or other
communication from any Governmental Body, department, bureau, office or other
authority, or any third party involving violations of Environmental Laws,
Handling of Hazardous Materials or Releases of Hazardous Materials from, on or
under (i) any assets or properties used in the Business; (ii) from any
adjoining properties or businesses; or (iii) from or onto any facilities which
received Hazardous Materials generated by the Business.


 


“Environmental Conditions” means any condition, known or unknown,
foreseen or unforeseen, arising out of: (1) the Release, threat of Release, or
exposure of Persons to Hazardous Materials; (2) any violation of any
Environmental Law; (3) the Handling of Hazardous Materials or (4) any
Environmental Claim.


 


“Environmental Laws” includes the Comprehensive Environmental
Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C, 9601 et seq., as amended; the Resource
Conservation and Recovery Act (“RCRA”), 42 U.S.C. 6901 et seq., as amended; the Clean Air Act (“CAA”), 42 U.S.C.
7401 et seq., as amended; the Clean Water Act (“CWA”), 33 U.S.C. 1251 et seq., as amended; the Occupational
Safety and Health Act (“OSHA”), 29 U.S.C. 655 et seq., as amended; Toxic Substances
Control Act (“TOSCA”),
15 U.S.C. 2601 et seq., as amended; Hazardous Materials Transportation Act, 49
U.S.C, 5101 et seq., as amended; the Federal insecticide, Fungicide, and
Rodenticide Act (“FIFRA”),
7 U.S.C. 136-136y et seq., as amended; the Emergency Planning and Community
Right-to-Know Act of 1986 (Title III of SARA or “EPCRA”); 42 U.S.C 11001, et seq., as amended, and any other
foreign, federal, static, local or municipal laws, statutes, regulations, rules
or ordinances imposing liability or establishing standards for Handling of
Hazardous Materials and the protection of the health, safety and the
environment, within the applicable jurisdiction.


 


“Environmental Liabilities” means any Losses, including without
limitation, costs of investigation, Remedial Action or other response actions,
known or unknown, foreseen or unforeseen, arising out of: (i) Environmental
Conditions, (ii) any violation of any Environmental Law, (iii) the Handling of
Hazardous Materials, or (iv) any Environmental Claim. For the avoidance of
doubt, Environmental Liabilities shall not include Losses after the Closing


 


107





















 


Date resulting
from increases in operating expenses of the Business, including but not limited
to, depreciation, wages, administration of environmental programs, chemicals,
materials, sewer fees and permit fees.


 


“Environmental Permits” means any approvals, authorizations,
certificates, consents, licenses, or permits required under any Environmental
Law for operation of the Business.


 


“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended, and the regulations promulgated thereunder.


 


“Estimated Closing Date Cash” has the meaning set forth in Section
2.3(a).


 


“Estimated Closing Date Working Capital” has the meaning set forth in Section 2.3(a).


 


“Estimated
Closing Date Working Capital Statement” has
the meaning set forth in Section 2.3(a).


 


“Excluded Assets” has the meaning set forth in
Section 1.3.


 


“Excluded IP Assets” has the meaning
set forth in Section 1.3(d).


 


“Excluded Liabilities” has the meaning set forth in Section 1.5.


 


“Excluded Taxes” means (a) any Taxes imposed on or payable
with respect to any of the Acquired Companies or the Business for any
Pre-Closing Tax Period (other than Taxes resulting from any act or transaction
taken by Purchaser or its Affiliates on the Closing Date not in the ordinary
course of business) and (b) any Taxes of Seller or any of its Affiliates (other
than the Acquired Companies) for which the Acquired Companies may be liable
under Section 1.1502-6 of the Treasury Regulations (or any similar provision of
state, local, or foreign Tax law). For purposes of this Agreement, in the case
of any Straddle Period, (i) Property Taxes of the Acquired Companies or the
Business allocable to the Pre-Closing Tax Period shall be equal to the amount
of such Property Taxes for the entire period multiplied by a Fraction, the
numerator of which is the number of calendar days during such period that are
in the Pre-Closing Period and the denominator of which is the number of
calendar days in the entire period, and (ii) Taxes (other than Property Taxes)
of the Acquired Companies or the Business allocable to the Pre-Closing Tax
Period shall be computed as if such taxable period ended as of the Closing,
provided that exemptions, allowances or deductions that are calculated on an
annual basis (including, but not limited to, depreciation and amortization
deductions) shall be allocated, between the period ending on the Closing Date
and the period beginning after the Closing Date in proportion to the number of
days in each period. For the absence of doubt, Excluded Taxes shall not include
the portion of Transfer Taxes for which Purchaser is responsible pursuant to
Section 14.1(b).


 


“Existing inventory” has the meaning set forth in Section
7.7(c).


 


“Final Cash Consideration” has the meaning set forth in Section
2.1(a).


 


108





















 


“Final Closing Date Cash”
has the meaning set forth in Section 2.3(e).


 


“Final Closing Date Working Capital” has the meaning set forth in Section 2.3(e).


 


“Final Consideration” means the sum of the Final Cash
Consideration and the Assumed Liabilities (other than liabilities or
obligations of the Acquired Companies).


 


“Financial Statements” has the
meaning set forth in Section 4.6(a).


 


“Financing Commitments” has the meaning set forth in Section 5.5.


 


“Former Acquired Company Employee” means any individual who is not an Acquired
Company Employee but who was, at any time before the Closing, an employee of an
Acquired Company.


 


“Former Business Employee” means any individual who is not a
Business Employee and who is not, immediately before the Closing, employed by
Seller and its Subsidiaries, but who was, at any time before Closing, employed
in the Business.


 


“GAAP” means generally accepted accounting
principles in the United States of America set forth in the opinions and
pronouncements of the Accounting Principles Board, the Public Company
Accounting Oversight Board and the American Institute of Certified Public
Accountants and the statements and pronouncements of the Financial Accounting
Standards Board, or in such other statements by such other entity as may be in
general use by significant segments of the accounting profession, which are
applicable to the circumstances as of the date of determination.


 


“GIS” has the meaning set forth in Section
4.11(d).


 


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


 


“Guarantees” has the meaning set forth in Section 7.6.


 


“Handling” means any manner of generating,
accumulating, storing, treating, disposing of, or transporting, as any such
terms may be defined in any Environmental Law, of Hazardous Materials.


 


“Harvesting Plan” means the harvesting plan for the
Timberlands set forth in Schedule 15.1(g).


 


“Hazardous Materials” means any substance or material that has
been defined or otherwise listed as a “hazardous
material,”  “hazardous
waste” or “hazardous
substance” or words of similar import under any
Environmental Law or any other waste substance or material that is


 


109





















 


regulated under any Environmental Law, including, without limitation,
petroleum and petroleum products, polychlorinated biphenyls, and
asbestos-containing materials.


 


“Hedging Agreement” means any interest rate, foreign
currency, commodity or equity swap, collar, cap, floor or forward rate
agreement, or other agreement or arrangement designed to protect against
fluctuations in interest rates or currency, commodity or equity values
(including, without limitation, any option with respect to any of the foregoing
and any combination of the foregoing agreements or arrangements), and any
confirmation executed in connection with any such agreement or arrangement, all
as amended or otherwise modified from time to time.


 


“Historical Environmental Liabilities” means any Historical On-Site
Environmental Liabilities or Historical Off-Site Environmental Liabilities.


 


“Historical Off-Site Environmental Liabilities” means any Environmental Liabilities
(other than Historical On-Site Environmental Liabilities) that arise from
operations, practices, Handling of Hazardous Materials, transfers, disposals or
other activities (or omissions) of or on behalf of Seller or any of its
Subsidiaries (including any Acquired Company) prior to the Closing Date,
including but not limited to Environmental Liabilities related to dioxin and
furans, polychlorinated biphenyls and chlorinated solvents and contamination
related to the pre-Closing removal of USTs; provided, further, that the
term “Historical Off-Site Environmental
Liabilities” shall not include Straddle
Environmental Liabilities.


 


“Historical On-Site Environmental Liabilities” means any Environmental Liabilities
arising from Environmental Conditions on or under the Business Facilities
existing prior to the Closing Date, or that arise from operations, practices,
Handling of Hazardous Materials, transfers, disposals or other activities (or
omissions) of or on behalf of Seller or any of its Subsidiaries (including any
Acquired Company) prior to the Closing Date, including but not limited to
Environmental Liabilities related to dioxin and furans, polychlorinated
biphenyls and chlorinated solvents, and contamination related to the
pre-Closing removal of USTs; provided, however, that any Environmental
Liabilities associated with subsurface groundwater contaminated with Hazardous
Materials that flows beneath a Business Facility, where such Hazardous
Materials were not Released, or alleged to be Released, from the Business
Facilities, is not considered a Historical On-Site Environmental Liability;
provided, further, notwithstanding anything to the contrary in this Agreement,
Seller shall have no liability for historical on-site asbestos-containing
materials (other than waste asbestos-containing material that is not in
compliance with the Environmental Laws as of the Closing Date); provided,
further, that the term “Historical
On-Site Environmental Liabilities” shall not
include Straddle Environmental Liabilities.


 


“HSR Act” has the meaning set forth in Section
4.5(b).


 


“Included Seller Software” has the meaning set forth in Section
4.13(j).


 


“Included Third Party Software” has the meaning set forth in Section
4.13(j).


 


“Increases in Current CBA Multiples” has the meaning
set Forth in Section 10.1(c)(vii)(B).


 


110





















 


“Indebtedness” means with respect to the Business, on
any date, each of the following obligations of Seller and its Subsidiaries in
connection with the Business: (i) any obligation for borrowed money or issued
in substitution for or exchange of indebtedness for borrowed money; (ii) any
obligation evidenced by any note, bond, debenture or other debt security; (iii)
any obligations under capitalized or synthetic leases (as determined in
accordance with GAAP) with respect to which any such Person is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or with respect
to which obligations any such Person assures a creditor against loss; (iv) any
non-current purchase money indebtedness or obligations with respect to an earn
out; and (v) any fees, penalties, premiums or accrued and unpaid interest with
respect to the foregoing (in the case of prepayments or otherwise). For the
avoidance of doubt, Indebtedness shall not include any liabilities of type
which are described by the line item “Other
Long-Term Liabilities” in the
Benchmark Balance Sheet.


 


“Indemnified Party” has the meaning set forth in
Section 11.3.


 


“Indemnifying Party” has the meaning set forth in
Section 11.3.


 


“Individual Agreements” has the meaning set forth in
Section 4.15(a).


 


“Initial Cask Consideration” has the meaning set forth in
Section 2.1(a).


 


“Initial Consideration” means the sum of the Initial Cash
Consideration and the Assumed Liabilities (other than liabilities or
obligations of the Acquired Companies).


 


“Intellectual Property” means all intellectual or industrial
property rights or other similar proprietary rights in any jurisdiction owned
or held for use under license, including such rights in and to: (a) Trademarks;
(b) Patents; (c) invention disclosures, discoveries and improvements, whether
or not patentable; (d) Copyrights; (e) Trade Secrets; (f) rights to limit the
use or disclosure of confidential information by any Person; (g) Internet
domain names; (g) registrations of, and applications to register, any of the
foregoing with any Governmental Body and any renewals or extensions thereof;
and (i) the goodwill associated with each of the foregoing.


 


“IP Licenses” means all licenses and other Contracts
concerning Intellectual Property Related to the Business, including without
limitation, agreements granting the Seller or any of its Subsidiaries rights to
use such Intellectual Property owned by any Person and agreements granting any
Person rights to use such Intellectual Property owned by the Seller or any of
its Subsidiaries.


 


“Invention Records” means the internal documentary forms
of Seller used, for the purpose of recording inventive activity, the subject
matter thereof, the right to file patent applications relating to such subject
matter, and any patents that may be granted from such applications.


 


“Knowledge” means the actual knowledge of the
individuals set forth on Schedule 15.1(h) after reasonable
investigation and inquiry (except as provided in Section 4.11(p) hereof
regarding the representations set forth in Section 4.11).


 


111





















 


“Law” means any national, federal, state or
local law (including common law), statute, constitutional provision, code,
ordinance, rule, regulation, directive, concession, Order or other requirement
or guideline of any country or subdivision thereof.


 


“Leased Real Properties”
has the meaning set forth in Section 4.9(c).


 


“Legal Proceeding” means any judicial, administrative or
arbitral action, suit, proceeding (public or private) or governmental
proceeding or investigation.


 


“Liabilities” means any indebtedness, obligations or
liabilities of any kind (whether accrued, absolute, contingent or otherwise,
and whether or not due or to become due or asserted or unasserted).


 


“Lien” means any
lien (statutory or otherwise), pledge, mortgage, deed of trust, security
interest, charge, option, right of first refusal, right of first offer,
easement, covenant, condition, restriction, servitude, transfer restriction or
other encumbrance.


 


“Losses”
has the meaning set forth in Section 11.2(a).


 


“Material Adverse Effect” means any change, event, effect or circumstance (or series of changes,
events, effects or circumstances) that is or would reasonably be expected to be
materially adverse to (i) the Business, (ii) the financial condition of the
Business, or (iii) the results of operations of the Business (provided that, a
change to the results of operations of the Business, by itself, shall not be
deemed to constitute a “Material
Adverse Effect” if the change, event, effect or
circumstance (or series of the foregoing) that results in a material adverse
change to the results of operations of the Business is caused by or the result
of non-recurring events or circumstances that could not, individually or in the
aggregate, reasonably be expected to materially impair the value of the
Business as a whole), except for any such change, event, effect or circumstance
resulting from or arising out of (a) changes in Laws applicable to the
Business, (b) changes in international, national, regional, state or local
wholesale or retail markets for coated paper products to the extent they do not
disproportionately affect the Business, (c) changes or developments resulting
from any action taken by Purchaser or Seller or any of their respective
representatives in accordance with the terms of this Agreement or in order to
consummate the transactions contemplated hereby, or resulting from Purchaser’s
withholding of consent to Seller’s request to take any action prohibited by, or
to omit to take any action required by, Section 6.2 (but only to the
extent such consent is unreasonably withheld on the part of Purchaser), (d)
changes or developments in financial or securities markets or the economy in
general, including changes in currency exchange or interest rates, or (e)
changes or developments resulting from acts of terrorism or war (whether or not
declared), except to the extent causing damage to the physical facilities of
the Business or the Timberlands or the Acquired Company Employees or Business
Employees,


 


“Material Business Contracts” has the meaning set forth in
Section 4.14(j).


 


“Minerals” has the meaning set forth in the
definition of Permitted Exceptions.


 


“Multiemployer Plan” means a “multiemployer
plan” within the meaning of
Section 4001(a)(3) of ERISA.


 


112





















 


“Neutral Auditors” has the meaning set forth in
Section 2.3(e).


 


“New Plans” has the meaning set forth in
Section 10.1(b)(ii).


 


“New Welfare Plans” has the meaning set forth in
Section 10.1(c)(ii)(A).


 


“Nonassignable Assets” has the meaning set forth in
Section 10.4(b).


 


“Non-Represented Employee” has the meaning set forth in Section 10.1(a)


 


“Old Plans” has the meaning set forth in
Section 10.1(b)(ii)


 


“Operations Site Permitted Exceptions”
means


 


(A)                              Liens
for current Taxes, assessments or other claims by a Governmental Body not yet
delinquent or the amount or validity of which is being contested in good faith
by appropriate proceedings or for which an appropriate reserve or security
deposit is established by Seller therefor in the latest Historical Unaudited
Financial Statements and in Closing Date Working Capital;


 


(B)                                mechanics’,
carriers’, workers’, repairers’ and similar Liens arising or incurred in the
Ordinary Course that are not material to the Business conducted on such
Operations Site, the amount or validity of which is being contested in good
faith by appropriate proceedings or for which an appropriate reserve or
security deposit is established by Seller therefor in the latest Historical
Unaudited Financial Statements and in Closing Date Working Capital;


 


(C)                                zoning,
entitlement and other land use, building and fire, and environmental acts,
codes, ordinances, laws, rules, and regulations by Governmental Bodies;


 


(D)                               rights
to Minerals of whatever kind and character located on, in or under each parcel
of real property and all rights, limitations, restrictions and reservations
with respect to the mining, extraction, storage, transmission and removal of
the Minerals so located, which have been granted or leased to, or excepted or
reserved by persons other than Seller or its Subsidiaries;


 


(E)                                 all
existing public and private roads and streets (whether dedicated or
undedicated), and all railroad lines and rights-of-way in connection therewith;


 


(F)                                 access
restrictions on, or lack of or absence of access, prescriptive easement or
adverse possession claims, cemeteries and burial grounds, and conservation and
other easements (provided that the foregoing items in this clause (F) do not
interfere with the continued use, consistent with the present use of or conduct
of Business on, such Operations Site), shortages in area, drainage and slope
easements, encroachments, boundary line disputes overlaps, gaps, strips and
gores, and other physical property matters (to the extent such other physical
property matters are common to commercial paper mills and factories such as
those relating to the Business);


 


113





















 


(G)                                all
electric power, telephone, cable, gas, sanitary sewer, storm sewer, water and
other utility lines, pipelines, service lines, drains, drainage ditches,
culverts, electric power or gas generating or cogeneration, storage and
transmission facilities, and all other similar facilities, improvements and
structures located on, over or under any real property, and all licenses,
easements, rights-of-way and other similar agreements or arrangements relating
thereto granted or reserved in the Ordinary Course;


 


(H)                            all
easements, rights of access, ingress and egress and rights-of-way of record;


 


(I)                                 any
state of facts which a visual
inspection or an accurate survey of the property would disclose;


 


(J)                                   the
grant or lease to, or the
exception or reservation of, development, air or water rights by, persons
other than Seller or its Subsidiaries, including rights of riparian landowners for the use and the continued flow
of the streams and creeks running over, upon, and through the property, if any;


 


(K)                               any
loss or claim that could arise by reason of or in connection with any
indefiniteness or uncertainty in the legal descriptions of the respective real
property;; and


 


(L)                              all
such other imperfections in title, including without limitation, all charges,
easements, quasi-easements, licenses, covenants, conditions, declarations,
restrictions and encumbrances;


 


in each case
as to the clauses (A) through (L) above, (x) which do not materially detract
from or diminish the value of or materially interfere with the continued use,
consistent with the present use, of, or conduct of Business on, such Operations
Site, (y) the existence of which or exercise of rights under which would
disturb any material existing structure or improvement, or (z) do not secure
indebtedness that is not expressly disclosed in the Schedules hereto.


 


“Operations Sites” means the Mills and the Distribution
Centers.


 


“Order” means any order, injunction Judgment,
decree, ruling, writ, assessment or arbitration award of any Governmental Body.


 


“Ordinary Course” means, as it relates to the Business, in
a manner substantially the same as that normally employed by Seller and its
Subsidiaries in the ordinary course with respect to businesses it holds with a
view towards operating and maintaining such businesses rather than a view
towards the sale of such business to an unaffiliated third party.


 


“Other Marked Assets” has the meaning set forth in
Section 7.7(c).


 


“Owned Real Properties” has the meaning set forth in
Section 4.9(a).


 


“Paper Business”
means the Business other than the Timber Business.


 


114





















 


“Patents” means patents, including design patents
and utility patents, reissues, divisions, continuations, continuations-in-part,
re-examinations and extensions thereof, in each case including all applications
therefor.


 


“Pension Transfer Amount” has the meaning set forth in
Section 10.1(c)(vii).


 


“Permit” means any approval, authorization,
consent, franchise, license, permit or certificate by any
Governmental Body.


 


“Permitted Exceptions” means the following:


 


(i)                                     as
to the Operations Sites, the Operations Site Permitted Exceptions;


 


(ii)                                  as
to the Timberlands, the Timberland Permitted Exceptions; and


 


(iii)                               as
to any real property other than the Operations Sites or the Timberlands, the
following:


 


(A)                              Liens
for current Taxes, assessments or other claims by a Governmental Body not yet
delinquent or the amount or validity of which is being contested in good faith
by appropriate proceedings or for which an appropriate reserve or security
deposit is established by Seller therefor in the latest Historical Unaudited
Financial Statements and in Closing Date Working Capital;


 


(B)                                mechanics’,
carriers’, workers’, repairers’ and similar Liens arising or incurred in the
Ordinary Course that are not material to the Business conducted on the real
property to which such Lien relates, the amount or validity of which is being
contested in good faith by appropriate proceedings or for which an appropriate
reserve or security deposit is established by Seller therefor in the latest
Historical Unaudited Financial Statements and in Closing Date Working Capital;


 


(C)                                zoning,
entitlement and other land use, building and fire, and environmental acts,
codes, ordinances, laws, rules, and regulations by Governmental Bodies;


 


(D)                               rights
to minerals of whatever kind and character, including all coal, iron ore, oil,
gas, sulfur, methane gas in coal seams, limestone and other minerals, metals
and ores (“Minerals”) located on, in or under each
parcel of real property and all rights, limitations, restrictions and
reservations with respect to the mining, extraction, storage, transmission and
removal of the Minerals so located, which have been granted or leased to, or
excepted or reserved by, persons other than Seller or its Subsidiaries;


 


(E)                                 all
existing public and private roads and streets, and all railroad lines and
rights-of-way in connection therewith;


 


(F)                                 encroachments,
boundary line disputes, overlaps, gaps, strips and gores, shortages in area,
drainage, slope, other easements, and other title or physical property matters


 


115





















 


(including those which are common to commercial paper mills and factories
such as those relating to the Business);


 


(G)                                all
electric power, telephone, cable, gas, sanitary sewer, storm sewer, water and
other utility lines, pipelines, service lines, drains, drainage ditches,
culverts, improvements and structures located on, over or under any real
property, and all licenses, easements, rights-of-way and other similar
agreements or arrangements relating thereto granted or reserved in the Ordinary
Course;


 


(H)                               all
easements, rights of access, ingress and egress and rights-of-way of record;


 


(I)                                    any
state of facts which a visual inspection or an accurate survey of the property
would disclose; and


 


(J)                                   all
such other imperfections in title, including without limitation, all charges,
easements, quasi-easements, licenses, covenants, conditions, declarations,
restrictions and encumbrances;


 


in each case as to the clauses above, which
do not (x) materially detract from or diminish the value of or materially
interfere with the continued use, consistent with the present use of, or
conduct of Business on, such Owned Real Property, or any other property (real,
personal or intangible) or assets, as the case may be or (y) do not secure
indebtedness that is not expressly disclosed in the Schedules hereto.


 


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


 


“Personal Property Leases” has the meaning set forth in
Section 4.12(a).


 


“Post-Closing Environmental Liabilities” means any Environmental Liabilities
relating to the Business or the Business Facilities that arise from events,
conditions or circumstances occurring after the Closing Date.


 


“Post-Closing Tax Period” means any
taxable period (or portion thereof) beginning after the Closing Date.


 


“Pre-Closing Tax Period” means any taxable period (or portion
thereof) ending on or before the Closing Date.


 


“Property Taxes” means real, personal, and intangible ad valorem property Taxes.


 


“Purchased Assets” has the meaning set forth in
Section 1.2.


 


“Purchased Companies” has the meaning set forth in
Section 1.1.


 


116





















 


“Purchased Company” has the meaning set forth in
Section 1.1.


 


‘‘Purchased Equipment” has the meaning set forth in Section 1.2(d).


 


“Purchased Equity Interests” has the meaning set forth in
Section 1.1.


 


“Purchased Intellectual Property” has the meaning set forth in Section
1.2(g).


 


“Purchased Seller Software” has the meaning set forth in
Section 1.2(n).


 


“Purchased Third Party Software” means all Computer Software which is the
subject of a Business Contract as of the date hereof and all Computer Software
which is the subject of a Business Contract entered into between the date of
this Agreement and the Closing Date in accordance with Section 6.2 hereof.


 


“Purchaser” has the meaning set forth in the
preamble.


 


“Purchaser Competitive Business” has the meaning set forth in
Section 12.1(b).


 


“Purchaser Documents” has the meaning set forth in
Section 5.2.


 


“Purchaser Indemnified Group” means Purchaser, its Subsidiaries and
their respective Affiliates (including, after the Closing Date, the Acquired
Companies), together with their
successors and assigns, and their officers, directors, employees and agents.


 


“Purchaser Savings Plan” has the meaning set forth in
Section 10.1(c)(iii)(B).


 


“Purchaser’s Bargained Pension Plan” has the meaning set forth in Section
10.1(c)(vii)(A).


 


“RCRA” means
the Resource Conservation and Recovery Act, 42 U. S. C. 6901 et seq.


 


“Real Property Leases” has the meaning set forth in
Section 4.9(c).


 


“Registered” means issued, registered, reviewed or the
subject of a pending application.


 


“Related to the Business” means required for, primarily related to,
or used primarily in the Business as conducted by Seller and its Subsidiaries.


 


“Related to the Paper Business” means, as between the Paper Business and
the Timber Business, required for, primarily related to or used primarily in
the Paper Business as conducted by Seller and its Subsidiaries.


 


“Related to the Timber Business” means, as between the Paper Business
and the Timber Business, required for, primarily related to or used primarily
in the Timber Business as conducted by Seller and its Subsidiaries.


 


117





















 


“Release” means any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching,
or migration at, into or onto the Environment, including movement or migration
through or in the air, soil, surface water or groundwater, whether sudden or
non-sudden and whether accidental or non-accidental, or any release, emission
or discharge as those terms are defined in any applicable Environmental Law.


 


“Remedial Action” means any
response action, removal action, remedial action, corrective action, monitoring
program, sampling program, investigation or other actions taken to (i) clean
up, remove, remediate, treat, monitor, assess or evaluate Hazardous Materials
in the environment; (ii) prevent or minimize a Release or threatened Release of
Hazardous Materials so that they do not migrate or endanger or threaten to
endanger, public health or welfare or the environment; or (iii) perform
pre-remedial studies and investigations and post-remedial operation and
maintenance activities, or any other actions authorized by 42 U. S. C.
§ 9601.


 


“Represented Employee” has the meaning set forth in
Section 10.1(a).


 


“Reserved Pre-Closing Environmental Liabilities” means any Environmental Liabilities
(other than Historical Off-Site Liabilities) relating to the Business or the
Business Facilities arising from any events, conditions or circumstances in
existence or occurring on or prior to the Closing Date, which Environmental
Liabilities are specifically identified and reserved for in the balance sheet,
reserves, capital expenditure budgets, accruals, transferred financial
assurance instruments, working capital statement or operating budgets of the
Business disclosed to Purchaser prior to the Closing on Schedule 15.1(i).


 


“Resolution Period” has the meaning set forth in
Section 2.3(d).


 


“Retiree Medical Benefits” has the meaning set forth in
Section 10.1(c)(ii)


 


“Retiree Medical Plans” has the meaning set forth in Section 4.15(e).


 


“Seller” has the meaning set forth in the
preamble.


 


“Seller Competitive Business” has the meaning set forth in
Section 12.1(a)(i).


 


“Seller Documents” has the meaning set forth in
Section 4.4.


 


“Seller Employee Benefit Plan” means any Employee Benefit Plan that is
not an Acquired Company Plan.


 


“Seller Indemnified Group” means Seller, its Subsidiaries and their
respective Affiliates, together with their successors and assigns, and their
officers, directors, employees and agents.


 


“Seller Name” has the meaning set forth in
Section 7.7(a).


 


“Seller Owned Real Property” has the meaning set forth in
Section 1.2(b).


 


“Seller Real Property Leases” has the meaning set forth in
Section 1.2(b).


 


118





















 


“Seller Savings Plans” has the meaning set forth in
Section 4.15(d).


 


“Seller Welfare Plans” has the meaning set forth in
Section 4.15(f).


 


“Seller’s Bargained Pension Plan”
has the meaning set forth in Section 10.1(c)(vii)(A).


 


“Seller’s Salaried and Non-Bargained Hourly Pension
Plan” has
the meaning set forth in Section 10.1(c)(vii)(A).


 


“Severance Plans” has the meaning set forth in
Section 4.15(g).


 


“Specified Accounting Policies” has the meaning set forth in
Section 2.3(a).


 


“Specified Seller Plans” has the meaning set forth in
Section 4.15(h).


 


“Straddle Environmental Liabilities” means any Environmental Liabilities of
the Business occurring on any location which is an Asset that arise from
practices, activities, operating procedures and courses of conduct that
occurred prior to the Closing Date and that Purchaser or its Designated
Affiliates continues or aggravates after the Closing Date.


 


“Straddle Environmental Liability Claim Notice” means a claim submitted by a duly
authorized officer of Purchaser or Seller setting out with reasonable
specificity the basis for the Claim with respect to an alleged Straddle
Environmental Liability, including, but not limited to, to the extent
available, the following: (a) the type, volume and concentration of any Hazardous
Material Released or otherwise involved with the subject Straddle Environmental
Liability; (b) the location, aerial extent, depth and media impacted by any
Release of Hazardous Materials associated with the subject Straddle
Environmental Liability; (c) the Environmental Laws violated or otherwise
giving rise to the subject Straddle Environmental Liability; (d) the date and
circumstances of discovery of the subject Straddle Environmental Liability; (e)
the name, address and other identifying information regarding any third party
or Governmental Body involved in any with the subject Straddle Environmental
Liability; and (f) the anticipated cost of remedying the subject Straddle
Environmental Liability. Either Party can dispute the adequacy hereunder of such
a Straddle Claim Notice, provided that, any such written dispute shall set
forth in reasonable detail the basis for the dispute. If after good faith
efforts, the Parties are unable to resolve their dispute, they shall have the
opportunity to present the dispute to a committee consisting of one senior
manager from each Party with authority to bind Purchaser and Seller,
respectively, which committee shall endeavor to resolve the dispute in good
faith. If these efforts are not successful, the dispute shall be resolved by an
independent arbitrator, selected by the Parties. The independent arbitrator
shall be jointly retained and Purchaser and Seller will share equally the
arbitrator’s fees and expenses.


 


“Straddle Period” means any taxable period beginning on or
prior to and ending after the Closing Date.


 


“Subsidiary” means, with respect to any Person, any
other Person of which such Person (either alone or through or together with any
other Subsidiary) owns, directly or


 


119





















 


indirectly, a majority of the outstanding equity securities or
securities carrying a majority of the voting power in the election of the board
of directors or other governing body of such Person.


 


“Tangible Personal Property Permitted Liens” shall mean:


 


(A)                              Liens
for current Taxes, assessments or other claims by a Governmental Body not yet
delinquent or the amount or validity of which is being contested in good faith
by appropriate proceedings or for which an appropriate reserve or security deposit
is established by Seller therefor in the latest Historical Unaudited Financial
Statements and in Closing Date Working Capital;


 


(B)                                Liens
that are not material in amount or effect on use of such property in the
Business; or


 


(C)                                mechanics’,
carriers’, workers’, repairers’ and other similar Liens that arise in the
Ordinary Course and do not impact the use of the relevant property in the
Business the amount or validity of which is being contested in good faith by
appropriate proceedings or for which an appropriate reserve or security deposit
is established by Seller therefor in the latest Historical Unaudited Financial
Statements and in Closing Date Working Capital.


 


“Target, Working Capital” means U. S. $353,969,000 (calculated in the manner and upon the
numbers set forth on Schedule 15.1(j)).


 


“Tax” or “Taxes” means all federal, state, local or
foreign taxes, charges, fees, imposts, levies or other assessments, including
all net income, gross receipts, capital, sales, use, ad valorem, value added tax, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp,
occupation, property and estimated taxes, customs duties, fees, assessments and
other governmental charges of any kind whatsoever, together with all interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing
authority with respect to such amounts.


 


“Tax Claim” means any claim with respect to Taxes
made by any taxing authority that, if pursued successfully, would reasonably be
expected to serve as the basis for a claim for indemnification under
Article XIV.


 


“Tax Item” means
any item of income, gain, loss, deduction, credit, recapture of credit or any
other item which increases or decreases Taxes paid or payable.


 


“Tax Proceeding” has the meaning set forth in
Section 14.7(b).


 


“Tax Return” means
a report, return or other information required to be supplied to a governmental
entity with respect to Taxes (including any amendments thereto).


 


“Timber Business” means that portion of the Business
relating to the ownership, operation, maintenance and harvesting of the
Timberlands and the use or sale of products derived therefrom.


 


120





















 


“Timberlands” has the meaning set forth in
Section 4.11.


 


“Timberlands Permitted
Exceptions” means


 


(A)                              Liens
for current Taxes, assessments or other claims by a Governmental Body not yet
delinquent or the amount or validity of which is being contested in good faith
by appropriate proceedings or for which an appropriate reserve or security
deposit is established by Seller therefor in the latest Historical Unaudited
Financial Statements and in Closing Date Working Capital;


 


(B)                                mechanics’,
carriers’, workers’, repairers’ and similar Liens arising or incurred in the
Ordinary Course that are not material to the Business conducted on the
Timberlands the amount or validity of which is being contested
in good faith by appropriate proceedings or for which an appropriate reserve or
security deposit is established by Seller therefor in the latest Historical
Unaudited Financial Statements and in Closing Date Working Capital;


 


(C)                                zoning,
entitlement and other land use, building and fire, and environmental acts,
codes, ordinances, laws, rules, and regulations by Governmental Bodies
(including, with respect to the Timberlands, the provisions of the Coastal
Marshlands Protection Act of 1970, the Michigan Commercial Forest Act, Title
13A, Part 511, Section 51101 et seq. of Michigan Compiled Laws, or any
so-called “endangered species”
act applicable to any portion thereof (“Timberlands Acts”)), and any rights of any state or the
United States in and to the Timberlands (including riparian rights and
navigational servitudes, including all obligations to repair and restore any
Timberlands under such Timberlands Acts);


 


(D)                               rights
to Minerals of whatever kind and character located on, in or under each parcel
of real property and all rights, limitations, restrictions and reservations
with respect to the mining, extraction, storage, transmission and removal of
the Minerals so located, which have been granted or leased to, or excepted or
reserved by, persons other than Seller or its Subsidiaries;


 


(E)                                 all
existing public and private roads and streets (whether dedicated or
undedicated), and all railroad lines and rights-of-way in connection therewith;


 


(F)                                 encroachments,
boundary line disputes, overlaps, gaps, strips and gores, access restrictions
on, or lack of or absence of access pursuant to a deed, easement or other
recorded instrument, prescriptive easement or adverse possession claims,
shortages in area, drainage, slope, conservation and other easements,
cemeteries and burial grounds, and other physical properly matters (to the extent
such other physical property matters are common to timberlands such as the
Timberlands);


 


(G)                                (i)
all existing leases, licenses, and other agreements or arrangements, if any,
for roads and research, bridges, boat ramps, woodyards, forestry practice and research
and testing activities, hunting and fishing (including cabins and camps
relating thereto) and other residential and recreational purposes, whether or
not of record, and (ii) all timber cutting and


 


121





















 


hauling contracts and timber sales agreements and similar agreements
which have been entered into in the Ordinary Course;


 


(H)                               all
electric power, telephone, cable, gas, sanitary sewer, storm sewer, water and
other utility lines, pipelines, service lines, drains, drainage ditches,
culverts, electric power or gas generating or co-generation, storage and
transmission facilities, and other similar facilities, improvements and
structures located on, over or under any real property, and all licenses,
easements, rights-of-way and other similar agreements or arrangements relating
thereto granted or reserved in the Ordinary Course;


 


(I)                                    all
easements, rights of access, ingress and egress and rights-of-way of record;


 


(J)                                   any
state of facts which a visual inspection or an accurate survey of the property
would disclose;


 


(K)                               the
grant or lease to, or the exception or reservation of, development, air or
water rights by, persons other than Seller or its Subsidiaries, including
rights of riparian landowners for the use and the continued flow of the streams
and creeks running over, upon, and through the property, if any;


 


(L)                                 any
loss or claim that could arise by reason of or in connection with any
indefiniteness or uncertainty in the legal descriptions of the respective real
property;


 


(M)                            all
such other imperfections in title, including without limitation, all charges,
easements, quasi-easements, licenses, covenants, conditions, declarations,
restrictions and encumbrances; and


 


(N)                               any
access restrictions to any portions of the Timberlands to which there is access
through other portion of Timberlands (being conveyed to Purchaser) that are not
encumbered by such access restrictions; 


 


in each case as to clauses (A) through (N) above, which do not (x) in
the aggregate with respect to any portion of the Timberlands property so
affected, (i) prevent or restrict in any material manner the continued ability
to commercially harvest timber thereon in the same manner as such harvesting is
currently conducted in the operation of the Business or (ii) materially impair
the value of the property so affected as commercial timberlands or (y) do not
secure indebtedness that is not expressly disclosed in the Disclosure Schedule.


 


“Trade Secrets” means trade secrets and other similar confidential or non-public
business information including ideas, formulas, compositions, technical
documentation, operating manuals and guides, plans, designs, sketches,
inventions, production molds, product specifications, equipment lists,
engineering reports and drawings, architectural and engineering plans,
manufacturing and production processes and techniques; drawings,
specifications, plans, proposals, research records, inspection processes
invention records and technical data; financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information, licensing records, advertising and promotional


 


122





















 


materials, service and parts records, warranty records, maintenance
records and similar records; and all other know-how in each case, as recognized
under patent, copyright, trade secret law or similar law.


 


“Trademarks” means trademarks, service marks, brand
names, logos, certification marks, trade dress, assumed names and trade names,
including all applications for registration therefor and all renewals,
modifications and extensions thereof.


 


“Transferred Employee” has the meaning set forth in
Section 10.1(a).


 


“Transferred Represented Employee” has the meaning set forth in Section
10.1(c)(ii)(B).


 


“Transfer
Taxes” Has the meaning set forth in
Section 14.10.


 


“Transition Agreements” has the meaning set forth in
Section 10.3.


 


“U.S.$” means United States Dollars.


 


“Welfare Benefits” has the meaning set forth in
Section 10.1(c)(ii)(A).


 


“Withdrawal Liability” means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as those terms are defined in Part I of Subtitle E of Title IV of ERlSA.


 


“Workers’ Compensation Cash Security” has the meaning set forth in Section
1.2(q).


 


“Working Capital” means accounts current assets less
current liabilities (in each case, as determined in conformity with Specified
Accounting Policies), provided, that, such current assets shall not include any
cash or cash equivalents or Excluded Assets and current liabilities shall not
include any Assumed Indebtedness or any Excluded Liabilities.


 


This Agreement is the result of the joint
efforts of Purchaser and Seller, and each provision hereof has been subject to
the mutual consultation, negotiation and agreement of the parties and there is
to be no construction against either party based on any presumption of that
party’s involvement in the drafting thereof. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. Whenever used in this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, any noun or pronoun shall be
deemed to include the plural as well as the singular and to cover all genders,
and the terms “include”
and “including”
shall be inclusive and not exclusive and shall be deemed to be followed by the
following phrase “without limitation.” Unless otherwise specified, the terms “hereof,”  “herein,”  “hereunder,”  “herewith” and similar terms refer to this Agreement as a whole
(including the schedules and disclosure letters to this Agreement), and
references herein to Sections and Articles refer to sections and articles of
this Agreement.


 


123





















 


Section 15.2.   Entire Agreement. The Schedules and
Exhibits attached to this Agreement shall be construed with and as an integral
part of this Agreement to the same extent as if the same had been set forth
verbatim herein. Any matter disclosed by Seller on any one Schedule shall
be deemed disclosed for purposes of any other Schedule only to the extent
the relevance of the disclosure in such other Schedule is reasonably
apparent on its face. This Agreement and the Transition Agreements (together
with the Schedules, Exhibits and other agreements referenced herein) and the
Confidentiality Agreement contain, and are intended as, a complete statement of
all of the terms and the arrangements between the parties hereto with respect
to the matters provided for herein, and supersede any previous agreements and
understandings between the parties hereto with respect to those matters.


 


Section 15.3.   Governing Law. This Agreement shall
be governed by and construed in accordance with the internal laws of the State
of New York applicable to agreements made in and to be wholly performed in such
state, without regard to principles of conflicts of laws.


 


Section 15.4.   Jurisdiction. (a) Each of Seller and
Purchaser irrevocably submits to the jurisdiction of the Courts of the State of
New York sitting in the City of New York and the United States District Court
located in the borough of Manhattan in the City of New York in connection with
any Legal Proceeding arising out of or relating hereto or the transactions
contemplated hereby, and hereby irrevocably agrees that all claims in respect
of such Legal Proceeding shall be heard and determined in such state or federal
court. Each of Seller and Purchaser hereby irrevocably waives (and agrees not
to plead or claim) any objection to the laying of venue of any Legal Proceeding
arising out of or relating hereto or the transactions contemplated thereby in
the Courts of the State of New York sitting in the City of New York or the
United States District Court located in the borough of Manhattan in the City of
New York and the defense of an inconvenient forum to the maintenance of such
action or proceeding. The parties hereto further agree, to the fullest extent
permitted by law, that final and unappealable judgment against any of them in
any Legal Proceeding contemplated above shall be conclusive and may be enforced
in any other jurisdiction within or outside the United States by suit on the
judgment, a certified copy of which shall be conclusive evidence of the fact
and amount of such judgment. Each
of Seller and Purchaser agrees that service of process, summons, notice or
document by U.S. registered mail to such person’s respective address set forth
in Section 15.7 shall be effective service of process for any Legal
Proceeding with respect to any maters to which it has submitted to jurisdiction
pursuant to this Section 15.4(a).


 


(b)                                 To
the extent that Purchaser or Seller have or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
of Purchaser and Seller hereby irrevocably waives such immunity in respect of
its obligations hereunder.


 


Section 15.5.   Expenses. Subject to Sections 7.3 and
13.2, each of the parties hereto shall bear its own expenses (including fees
and disbursements of its counsel, accountants and other experts) incurred by it
in connection with the preparation, negotiation, execution, delivery and
performance hereof, each of the other documents and instruments executed in connection
herewith or contemplated hereby and the consummation of the transactions


 


124





















 


contemplated hereby and thereby. Purchaser shall pay the costs of all
title insurance premiums, surveys, environmental or engineering tests, reports
or inspections, and any other costs relating to Purchaser’s due diligence
activities.


 


Section 15.6.  
Table of Contents and Headings. The table of contents and
section headings hereof are for convenience of reference only and are to
be given no effect in the construction, interpretation or effect hereof.


 


Section 15.7.   Notices. All notices and other
communications hereunder shall be in writing and shall be deemed given when
delivered personally or by overnight mail or to the extent receipt is
confirmed, facsimile or other electronic transmission service, or five calendar
days after being mailed by registered mail, return receipt requested, to a
party at the following address (or to such other address as such party may have
specified by notice given to the other parties pursuant this
Section 15.7):


 


	
  If to Seller, to:

  
	
   

  
	
  One High Ridge Park

  
	
  Stamford, Connecticut 06905

  
	
  Attention: Wendell L. Willkie,
  II, Esq.

  
	
  Fax: (203) 461-7587

  
	
   

  
	
  with a copy to:

  
	
   

  
	
  Wachtell, Lipton, Rosen & Katz

  
	
  51 West 52nd Street

  
	
  New York, New York 10019-6150

  
	
  Attn:

  	
  Elliott V. Stein, Esq.

  
	
  Fax:

  	
  (212) 403-2000

  
	
   

  
	
  If to Purchaser, to:

  
	
   

  
	
  c/o Cerberus Capital Management, L.P.

  
	
  299 Park Avenue, 22nd Floor

  
	
  New York, New York 10022

  
	
  Attention: Lenard Tessler

  
	
  Fax: (212) 421-2958

  
	
   

  	
   

  
	
  with a copy to:

  
	
   

  
	
  Schulte Roth & Zabel LLP

  
	
  919 Third Avenue

  
	
  New York, New York 10022

  
	
  Attention: Stuart D.
  Freedman, Esq.

  
	
  Fax: (212) 593-5955

  



 


125





















 


Section 15.8.   Severability. The invalidity or
unenforceability of any provision hereof shall not affect the validity or
enforceability of any other provision hereof, each of which shall remain in
full force and effect.


 


Section 15.9.   Binding Effect; No Third Party
Beneficiaries; No Assignment. This Agreement shall be legally binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. Nothing herein shall create or be deemed to create any third party
beneficiary rights in any Person not a party hereto (except for Indemnified
Parties in Article XI). No assignment hereof or of any rights or
obligations hereunder may be made by any party hereto (by operation of law or
otherwise) without the prior written consent of the other party hereto and any
attempted assignment without such required consent shall be without effect; provided,
however, that Purchaser may assign, in whole or in part, its rights,
duties and obligations under this Agreement to any of the lenders providing the
Acquisition Financing (or any replacement financing or refinancing thereof), to
any purchaser of a substantial portion of the Business and to any one or more
of its Affiliates (any such subsidiary or affiliate so designated shall be
deemed a “Designated Affiliate” hereunder); provided that any such
assignment shall not (i) relieve Purchaser of its obligations hereunder to the
extent any such Affiliate does not satisfy its obligations hereunder or (ii) be
reasonably likely to delay the Closing.


 


Section 15.10.   Amendments. This Agreement may be
amended, supplemented or modified, and any provision hereof may be waived, only
pursuant to a written instrument making specific reference hereto signed by
each of the parties hereto.


 


Section 15.11.   Waiver. At any time prior to the
Closing Date, the parties may (a) extend the time for the performance of any of
the obligations or other acts of the parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or
conditions contained herein, to the extent permitted by applicable Law. Any
agreement on the part of a party hereto to any such extension or waiver will be
valid only if set forth in a writing signed on behalf of such party. No waiver
by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
such prior or subsequent occurrence.


 


Section 15.12.   Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.


 


126





















 


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


 


 


	
   

  	
  MAPLE ACQUISITION LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lenard B. Tessler

  	
   

  
	
   

  	
   

  	
  Name: Lenard B. Tessler

  
	
   

  	
   

  	
  Title: Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEADWESTVACO CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James A. Buzzard

  	
   

  
	
   

  	
   

  	
  Name: James A. Buzzard

  
	
   

  	
   

  	
  Title: President