Document:

csk10q20082qex101.htm

    Exhibit 10.1

     

     

    
      	
              
                VIRGINIA:
      IN THE CIRCUIT COURT OF

                HENRICO
      COUNTY

                 

                4301
      E. Parham Road

                Richmond,
      Virginia 23228

                 

              

               

              Plaintiff:  PHILIP
      MORRIS USA INC.

               

              6601
      West Broad Street,

              Richmond,
      Virginia 23230

               

              v.

              
                 

                Defendants:  CHESAPEAKE
      CORPORATION and

                WTM
      I COMPANY

                 

                1021
      East Cary Street

                James
      Center II, 22nd
      Floor

                Richmond,
      Virginia 23219

                 

              

               

               

            	
               

               

               

               

               

               

               

               

               

              
                � Court
      Use Only �

                 

              

               

              Case
      Number:

               

               

               

               

               

               

               

               

               

               

              Division:            Courtroom:

            
	
              ORDER
      AND CONSENT DECREE

            

    

    

    Background

    

    A. Plaintiff
Philip Morris USA Inc. (“PM USA”) filed this action against Defendants
Chesapeake Corporation (“Chesapeake”) and WTM I Company (“WTM I”) (each a
“Party” and collectively with PM USA, the “Parties”) seeking a declaratory
judgment that PM USA did not have an obligation to indemnify Chesapeake or WTM I
for the clean up costs associated with the Fox River.

    

    B. Chesapeake
and WTM I have asserted that PM USA is obligated to indemnify them under the
1985 Stock Purchase Agreement (“1985 Stock Purchase Agreement”) between
Chesapeake and PM USA for the purchase and sale of Wisconsin Tissue Mills, Inc.
(“WTM”).

    

    C. PM USA
does not admit any liability to Chesapeake, WTM I, or any other party arising
out of the transactions or occurrences alleged in the Complaint, nor does
Chesapeake or WTM I admit any liability to PM USA or any other party arising out
of the transactions or occurrences alleged in the Complaint.  All
Parties expressly deny that they are liable to the other.

    

    D. The
Parties recognize, and the Court by entering this Consent Decree finds, that
this Consent Decree has been negotiated by the Parties in good faith and
implementation of this Consent Decree will avoid litigation between the Parties,
and that this Consent Decree is fair, reasonable, and in the public
interest.

    

    NOW,
THEREFORE, it is hereby Ordered, Adjudged, and Decreed:

     

    1. This
Court has jurisdiction over the subject matter of this action pursuant to Va.
Code § 8.01-184.  This Court also has personal jurisdiction over the
Parties.  For the purposes of this Consent Decree, the Parties waive
all objections and defenses that they may have to jurisdiction of the Court or
to venue in this Court.  The Parties shall not challenge the terms of
this Consent Decree or this Court's jurisdiction to enter and enforce this
Consent Decree.

    

    2.  This
Consent Decree applies to and is binding upon each Party, as well as its
respective successors, predecessors, agents, subsidiaries and assigns and any
bankruptcy trustee, debtor in possession, creditors’ committee or other party
acting on its behalf.  Any change in ownership or corporate status of
a Party, including, but not limited to, any transfer of assets or real or
personal property, shall in no way alter such Party’s responsibilities under
this Consent Decree.

    

    3. PM USA
waives and releases all claims to recover past indemnification payments made to
Chesapeake or WTM I for the Fox River matter.

    

    4. PM USA
agrees to cooperate with WTM I claiming all funds available on general liability
insurance policies covering the WTM I losses for the Fox River clean
up.  Cooperation includes waiving all claims relating to or arising
from or connected with WTM I’s liabilities for the Fox River
matter.  PM USA disclaims all rights to such insurance proceeds and
agrees that all such insurance proceeds shall be paid to WTM I (subject to
Paragraph 5) up to the full amount WTM I may become obligated to pay (exclusive
of funds reimbursed by PM USA) for response costs, natural resource damages, and
consultants’ and attorneys’ fees arising from the Fox River matter.

    

    5. All
insurance proceeds recovered on behalf of WTM I for the Fox River matter
shall be used only to pay the liabilities (including, but not limited to,
response costs, natural resource damages, and consultants’ and attorneys’ fees)
of WTM I and Chesapeake arising from the Fox River clean up.  Prior to
using or obtaining any insurance proceeds, Chesapeake and WTM I agree to create
an escrow account in a form reasonably acceptable to PM USA into which all
insurance proceeds will be deposited directly from the insurance carriers to
ensure that all such proceeds are used only to pay the liabilities of WTM I
arising from the Fox River clean up.

    

    6. PM USA
will pay up to $36 million towards the liability of WTM I for all losses and
expenses incurred by or on behalf of WTM I arising from the release of PCBs into
the Fox River from WTM as and when such costs become due and have been paid by
WTM I; provided, however, that, during 2008, PM USA will only pay (i) the
outstanding statement of Chesapeake dated April 14, 2008, for legal, consulting
and expert fees, which PM USA agrees to pay on or before June 27, 2008; (ii) the
$9.5 million due July 15, 2008 under the Amended OU1 Consent Decree; and (iii)
no more than an additional $10 million, if necessary and otherwise consistent
with the terms set forth in this Consent Decree.  Each of the 2008
payments described above shall be part of and count against the $36 million that
PM USA is agreeing to pay under this Consent Decree.  The $36 million
that PM USA is agreeing to pay in this Consent Decree is in addition to the
proceeds of any insurance obtained by WTM I as described in this Consent
Decree.  Under no circumstances will PM USA’s obligations to pay
Chesapeake and/or WTM I exceed a maximum of $36 million, regardless of the
eventual or future liability of WTM I or Chesapeake for the Fox River clean
up.  Subject to the limitations described above on PM USA’s
obligations to make payments in 2008, for payments to EPA, Wisconsin Department
of Natural Resources, or escrow accounts in excess of $2 million, PM USA will
provide same day funding to WTM I or Chesapeake, provided that PM USA receives
30 days prior written notice.  PM USA acknowledges adequate notice of
the obligation to pay $9.5 million due July 15, 2008 under the Amended OU1
Consent Decree.

    

    7. All
moneys contributed by PM USA to Chesapeake or WTM I shall be used only to pay
the liabilities (including, but not limited to, response costs, natural resource
damages, and consultants’ and attorneys’ fees) of WTM I or Chesapeake arising
from the Fox River clean up.

    

    8. Except
for the obligations created by this Consent Decree, Chesapeake and WTM I, for
and on behalf of themselves, their successors, predecessors, agents,
subsidiaries and assigns and any bankruptcy trustee, debtor in possession,
creditors’ committee or other party acting on their behalf, hereby release,
remise, waive, forever discharge and surrender PM USA and all of its respective
past and present affiliates, parents, subsidiaries, predecessors, employees,
heirs, attorneys, agents, representatives, successors, and assigns, from and
against any and all past, present and future claims, causes of action, debts,
suits, liabilities, accounts, contracts, demands, attorneys’ fees, costs,
expenses, judgments, settlements and damages of whatever nature, whether direct
or indirect, known or unknown, matured or unmatured, fixed or contingent, in law
or equity, relating to, based upon or arising out of, directly or indirectly, or
in any way resulting from the 1985 Stock Purchase Agreement or the Fox River
matter, including, but not limited to, all claims for indemnification,
contribution, or cost recovery arising from the Fox River clean up or the
discharge of PCBs from WTM.

    

    9. Except
for the obligations created by this Consent Decree, PM USA, for and on behalf of
itself, its successors, predecessors, agents, subsidiaries and assigns and any
bankruptcy trustee, debtor in possession, creditors’ committee or other party
acting on their behalf, hereby release, remise, waive, forever discharge and
surrender Chesapeake and WTM I and all of their respective past and present
affiliates, parents, subsidiaries, predecessors, employees, heirs, attorneys,
agents, representatives, successors, and assigns, from and against any and all
past, present and future claims, causes of action, debts, suits, liabilities,
accounts, contracts, demands, attorneys’ fees, costs, expenses, judgments,
settlements and damages of whatever nature, whether direct or indirect, known or
unknown, matured or unmatured, fixed or contingent, in law or equity, relating
to, based upon or arising out of, directly or indirectly, or in any way
resulting from the 1985 Stock Purchase Agreement or the Fox River matter,
including, but not limited to, all claims for indemnification, contribution, or
cost recovery arising from the Fox River clean up or the discharge of PCBs from
WTM.

    

    10. WTM I
will regularly keep PM USA reasonably advised of progress on the Fox River
matter.  PM USA will treat all such information as confidential and
privileged.

    

    11. PM USA
will waive control of settlements and selection of counsel, provided that WTM I
and Chesapeake exercise good faith in controlling settlements and selection of
counsel and provide PM USA no less than 30 days written notice of any obligation
under such settlements to make payments.  WTM I and Chesapeake agree
to use reasonable efforts to negotiate and obtain appropriate releases and
protection for PM USA in any settlement agreements or consent decrees related to
the Fox River clean up.

    

    12. As long
as PM USA fulfills its obligations under this Consent Decree, Chesapeake and WTM
I, for and on behalf of themselves, their successors, predecessors, agents,
subsidiaries and assigns and any bankruptcy trustee, debtor in possession,
creditors’ committee or other party acting on their behalf, agree that they will
not assist any other party or entity in any action seeking recovery against PM
USA for any costs arising from the Fox River matter, except as required to do so
to respond to any request for discovery.

    

    13. At PM
USA’s request and expense, Chesapeake and WTM I agree to provide PM USA with
access to and copies of all documents relating to operations at WTM during the
period when it was a wholly-owned subsidiary of PM USA, as well as
non-privileged documents generated within two years thereafter.  At PM
USA’s request, Chesapeake and WTM I will provide PM USA on a priority basis
contact information for and will not object to access to current or former
employees, officers, and directors of WTM so that PM USA can interview
them.

    

    14. The
Parties recognize that irreparable injury will result from a breach of any
provision of this Consent Decree and that money damages will be inadequate to
fully remedy the injury.  Accordingly, in the event of a breach or
threatened breach of one or more of the provisions of this Consent Decree, the
Court orders and all Parties agree that any Party who may be injured by such
action or threatened action shall be entitled to one or more preliminary or
permanent orders (in addition to any other remedies which may be available to
that party) as follows:  (a) restraining and enjoining any act which
would constitute a violation of this Consent Decree; or (b) compelling the
performance of any obligation which, if not performed, would constitute a
violation of this Consent Decree.

    

    15. In
consideration of Chesapeake and WTM I entering into this Consent Decree, PM USA
hereby unconditionally and irrevocably agrees that, if an Insolvency Event
(defined below) occurs, Chesapeake and WTM I shall be entitled to, and PM USA
hereby unconditionally and irrevocably consents to the allowance or approval of,
relief from the automatic stay so as to allow Chesapeake and WTM I to exercise
their rights and remedies under this Consent Decree.  In such event,
PM USA shall not, in any manner, oppose or otherwise delay any motion filed by
Chesapeake and WTM I for relief from the automatic stay.  “Insolvency Event”
means:  (a) the commencement of a proceeding under any applicable
bankruptcy, reorganization, liquidation, insolvency, creditors’ rights or other
similar law now or hereafter in effect or a proceeding in which a receiver,
liquidator, trustee or other similar official is sought to be, or is, appointed
for PM USA; (b) any vote, action or consent by PM USA in favor of causing PM USA
to become a party to any of the foregoing proceedings set forth in clause (a)
(including, without limitation, the failure to oppose any such proceeding); or
(c) the execution of any written agreement by PM USA in furtherance of causing
PM USA to become a party to any of the foregoing proceedings set forth in clause
(a) above.

    

    16. In
consideration of PM USA entering into this Consent Decree, Chesapeake and WTM I
hereby unconditionally and irrevocably agree that, if an Insolvency Event
(defined below) occurs, PM USA shall be entitled to, and Chesapeake and WTM I
hereby unconditionally and irrevocably consent to the allowance or approval of,
relief from the automatic stay so as to allow PM USA to exercise its rights and
remedies under this Consent Decree.  In such event, Chesapeake and WTM
I shall not, in any manner, oppose or otherwise delay any motion filed by PM USA
for relief from the automatic stay.  “Insolvency Event”
means:  (a) the commencement of a proceeding under any applicable
bankruptcy, reorganization, liquidation, insolvency, creditors’ rights or other
similar law now or hereafter in effect or a proceeding in which a receiver,
liquidator, trustee or other similar official is sought to be, or is, appointed
for Chesapeake or WTM I; (b) any vote, action or consent by Chesapeake or WTM I
in favor of causing Chesapeake or WTM I to become a party to any of the
foregoing proceedings set forth in clause (a) (including, without limitation,
the failure to oppose any such proceeding); or (c) the execution of any written
agreement by Chesapeake or WTM I in furtherance of causing Chesapeake or WTM I
to become a party to any of the foregoing proceedings set forth in clause (a)
above.

    

    17. The
undersigned representatives of each Party certify that he or she is fully
authorized to enter into the terms and conditions of this Consent Decree and to
execute and legally bind such Party to this document.

    

    18. Each
Party hereby agrees to support the entry of this Consent Decree by this Court by
means of a Joint Motion and further agrees not to challenge any provision of
this Consent Decree.

    

    19. Each
Party will be responsible for its own fees and costs related to the
litigation.

    

    20. If for
any reason the Court should decline to approve this Consent Decree in the form
presented, the Parties shall meet promptly and attempt to ameliorate the Court’s
concerns.   If the Court declines to approve a subsequent Consent
Decree with agreed-upon modifications that attempt to ameliorate the Court’s
concerns, then the Parties will execute a settlement agreement substantially in
the form of this Consent Decree.

    

    21. Upon
approval and entry of this Consent Decree by the Court, the Consent Decree shall
constitute a final judgment between and among PM USA, Chesapeake, and WTM
I.  The Court finds that there is no just reason for delay and
therefore enters this judgment as a final judgment.

    

    SO
ORDERED.

    

    

    

    /s/ L. A. Harris,
Jr.______________________

    Henrico County Circuit Court
Judge

    

    

    July 1, 2008

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    THE
UNDERSIGNED PARTY enters into this Order and Consent Decree in the matter of
Philip Morris USA v.
Chesapeake Corporation and WTM I Company (Henrico County Va. No.
______).

     

    

    

    

     

    FOR
PHILIP MORRIS USA INC.

     

    
    

     

    
      	 June 26, 2008	 Signature:	 /s/ Craig A.
      Johnson
	 Date	 Name
      (print):	 Craig A.
      Johnson
	 	 Title:	 Executive VP
      Sales & Brand Management
	 	 Address:	 6601 West
      Broad Street
	 	 	 Richmond,
      Virginia 23230
	 	 	 
	 	 	 

    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

     

    THE
UNDERSIGNED PARTY enters into this Order and Consent Decree in the matter of
Philip Morris USA v.
Chesapeake Corporation and WTM I Company (Henrico County Va. No.
______).

     

    

     

    

     

    FOR
WTM I COMPANY

    

    

    
      	June 26, 2008	 Signature:	 /s/ J. P.
      Causey Jr.
	 Date	 Name
      (print):	 J. P. Causey
      Jr.
	 	 Title:	 Vice
      President
	 	 Address:	 3993 Howard
      Hughes Parkway
	 	 	 Suite 250
      North
	 	 	 Las Vegas,
      NV 89109
	 	 	 

       

    

     

     

    THE UNDERSIGNED PARTY
enters into this Order and Consent Decree in the matter of Philip Morris USA v.
Chesapeake Corporation and WTM I Company (Henrico County Va. No.
______).

     

    

     

    FOR
CHESAPEAKE CORPORATION

     

     

    
      	June 26, 2008	 Signature:	 /s/ J. P.
      Causey Jr.
	 Date	 Name
      (print):	 J. P. Causey
      Jr.
	 	 Title:	 Vice
      President
	 	 Address:	 1021 East Cary
      Street
	 	 	 Richmond,
      Virginia 23219
	 	 	 
	 	 	 

       

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    We ask
for this:

    

    

    

    /s/ T. A.
Broughton

    William
R. Mauck, Jr. (VSB #25439)

    Turner A.
Broughton (VSB #42627)

    WILLIAMS
MULLEN

    A
Professional Corporation

    Two James
Center

    1021 East
Cary Street

    Richmond,
VA  23219

    Telephone:  (804)
643-1991

    Facsimile:  (804)
783-6507

    

    

    Thomas H.
Milch (D.C. Bar #935338)

    Timothy
R. Macdonald (CO Bar #29180)

    Allison
B. Rumsey (D.C. Bar #450475)

    ARNOLD
& PORTER LLP

    555
Twelfth Street, N.W.

    Washington,
D.C. 20004

    Telephone:  (202)
942-5000

    Facsimile:  (202)
942-5999

    

    Counsel for
Plaintiff

    

    

    

    /s/ John K. Burke,
Jr.

    John K.
Burke, Jr. (VSB #16798)

    TROUTMAN
SANDERS LLP

    P.O. Box
1122

    Richmond,
VA  23218

    Telephone:  (804)
697-1210

    Facsimile:  (804)
698-5105

    

    Counsel for
Defendantscsk10q20082qex102.htm

    Exhibit
10.2

     

    FIELD
GROUP PENSION PLAN

    RECOVERY
PLAN

    (Revised
July 2008)

    

     

    Introduction

     

    This
recovery plan has been prepared by the Trustee to satisfy the requirements of
Section 226 of the Pensions Act 2004, after obtaining the advice of Alison
Higginbottom, the Scheme Actuary, and after obtaining the agreement of
Chesapeake Plc (formerly Field Group Plc).

     

    It
follows the actuarial valuation of the Plan as at 5 April 2006, which revealed a
funding shortfall (technical provisions minus value of assets) of £43.0
million.

     

    The
original version of this recovery plan dated 8 June 2007 has been revised in
July 2008. Under the original recovery plan Chesapeake Plc (formerly Field Group
Plc) was required to make additional contributions in 2007 and 2008 if these
were necessary to bring the Plan’s funding ratio up to 90% at 5 April 2008. The
Annual Actuarial Report as at 5 April 2008 revealed an estimated funding
shortfall of £58.9 million at 5 April 2008 equivalent to a funding ratio of 75%.
Under the original recovery plan Chesapeake Plc was required to make a total
contribution (over and above those needed to cover benefits being earned in the
future and expenses) of £35.6 million by 15 July 2008. Chesapeake Plc is unable
to afford this level of contribution in 2008 and so the Trustee and Chesapeake
Plc have agreed a revised recovery plan after obtaining the advice of the Scheme
Actuary.

     

     

    Steps
to be taken to ensure that the statutory funding objective is met

     

    To
eliminate this funding shortfall, the Trustee and the employer have agreed that
additional contributions (i.e. contributions over and above those needed to
cover benefits being earned in the future and expenses) will be paid to the Plan
by Chesapeake Plc as follows:

    

    
      	
              ·  

            	
              £6
      million each year for 15 years (from 2007 to 2021 inclusive) payable in
      annual instalments by 15 July each year, save that the contribution
      payable in 2008 shall be paid by 16 July
  2008.

            

    

    

    These
amounts are in addition to the additional contribution of £5.0m which was paid
in July 2006.

    

    The
Scheme Actuary will carry out annual funding updates at 5 April each year using
assumptions determined in line with the latest Statement of Funding Principles
from time to time but with the financial assumptions based on market conditions
at the effective date of the funding update. Should a funding update carried out
at an effective date on or after 5 April 2015 reveal that the funding shortfall
calculated at that date is estimated to have been eliminated then the Schedule
of Contributions will be revised as soon as reasonably practicable. The revised
Schedule of Contributions will not include any further shortfall contributions
under this recovery plan or, if as a result of the immediate termination of
shortfall contributions the Scheme Actuary would be unable to provide any
certificate required under the Pensions Act 2004, will provide that shortfall
contributions under this recovery plan will continue only until the date which
the Scheme Actuary advises is the earliest he/she considers acceptable in order
to be able to provide such certificate.

     

     

    Period
in which the statutory funding objective should be met

     

    Under
this recovery plan, if the assumptions made are borne out in practice the
funding shortfall revealed by the valuation as at 5 April 2006 will be
eliminated in 8 years, which is by 15 July 2014.  The assumptions
are:

     

    
      	
              ·  

            	
              technical
      provisions will continue to be calculated according to the method and
      assumptions set out in the statement of funding principles dated July
      2008, with financial conditions unchanged from those at the valuation
      effective date.

            

    

    
      	
              ·  

            	
              the
      experience of the Plan will be in line with the assumptions underlying the
      technical provisions.

            

    

    

     

    Under
this recovery plan, the estimated funding shortfall revealed by the Annual
Actuarial Report as at 5 April 2008 will be eliminated in 15 years from the date
of the actuarial valuation as at 5 April 2006, which is by 15 July 2021 if the
assumptions underlying the 2008 update are borne out in practice.  The
assumptions are:

     

    
      	
              ·  

            	
              technical
      provisions will continue to be calculated according to the method and
      assumptions set out in the statement of funding principles dated July
      2008, with financial conditions updated to 5 April
  2008.

            

    

    
      	
              ·  

            	
              the
      experience of the Plan after 5 April 2008 will be in line with the
      assumptions underlying the technical
provisions.

            

    

     

     

    Progress
towards meeting the Statutory Funding Objective

     

    On the
assumptions made, 50% of the above additional contributions will be paid in 8
years, which is by 15 July 2014.

     

    This
Recovery Plan was agreed by the Trustee in June 2008.

     

    This
Recovery Plan may be executed in any number of counterparts, and this has the
same effect as if the signatures on the counterparts were on a single copy of
this Recovery Plan.

     

    

    

    

    Signed on
behalf of Chesapeake Plc

     

    Signature:  /s/ G. Faller

    Name:         G.
Faller

    Position:    Director

    Date:          15
Jul. 08

    

    

    

    Signed on
behalf of Field Group Pension Trustee Limited

     

    Signature:  /s/ M. H. O'Connell

    Name:        
M. H. O'Connell

    Position:   
Chairman

    Date:         
15.07.08.

    

    

    
       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

    

    

    Field
Group Pension Plan (the
Plan)

    Statement
of Funding Principles (SFP)

    (Revised
July 2008)

    
       

    

    
      	
              Introduction

            	
              This
      statement sets out the Trustee’s policy for securing that the statutory
      funding objective (SFO) is
      met.  The SFO is defined in section 222 of the Pensions Act
      2004, which states that every scheme must have sufficient and appropriate
      assets to cover its technical provisions.

              The
      original version of this Statement of Funding Principles dated 8 June 2007
      has been revised in July 2008. The original Statement of Funding
      Principles stated that the employer maintained its commitment to reach a
      90% funding level by 2008, as agreed following the 2003 valuation.
      Chesapeake Plc (formerly Field Group Plc) is unable to afford the
      contributions needed to achieve a funding level of 90% at April 2008 and
      so the Statement of Funding Principles has been revised to remove this
      commitment following advice from the Scheme Actuary. Both the Recovery
      Plan and the Schedule of Contributions are also being revised to reflect
      the removal of the commitment to achieve a 90% funding level by 2008. The
      Statement of Funding Principles has also been revised to reflect the fact
      that with effect from 1 July 2008 Chesapeake Plc will meet the Plan’s
      administration expenses directly as they fall due rather than paying
      contributions to the Plan annually in arrears in respect of the Plan’s
      expenses.

            

    

    
      	 
      

    

    
      	
              Technical
      provisions

            	
              The
      technical provisions are the amount that will be needed to pay the Plan
      benefits that relate to service up to the valuation date, if the
      assumptions made are borne out in practice.

              The
      assumptions used to calculate the technical provisions are intended to
      provide a prudent estimate of the future experience of the Plan, with a
      modest allowance for the future potential outperformance over gilts from
      continued investment in more risky asset sectors such as
      equities.  There is an underlying assumption that the Plan will
      continue with benefits being met from the Plan as they fall
      due.

              The
      method and assumptions used to calculate the technical provisions are
      summarised in Appendices A and B.

            

    

    
      	 
      

    

    
      	
              Employer
      contributions

            	
              Employer
      contributions are assessed by calculating the cost of future benefit
      accrual using the same assumptions as for the technical
      provisions:

              plus

              · an
      estimate of the cost of providing lump sum death benefits;

               

              reduced
      by

              · the
      contributions made by members;

               

              adjusted
      by

              · the
      amounts needed to eliminate any shortfall or surplus relative to the
      technical provisions.

               

              The
      employer will also pay an annual contribution to the Plan equal to the
      Plan’s administrative expenses including the Pension Protection Fund (PPF)
      and other levies collected by the Pensions Regulator, in respect of
      expenses incurred before 1 July 2008. From 1 July 2008 the employer will
      pay the Plan’s administrative expenses including the PPF and other levies
      collected by the Pensions Regulator directly as they fall
    due.

            

    

    
      	 
      

    

    
      	
              Dealing
      with shortfalls

            	
              Any
      shortfall in assets compared with technical provisions identified at an
      actuarial valuation will be eliminated as quickly as the employer can
      reasonably afford by the payment of additional contributions in accordance
      with the recovery plan agreed between the Trustee and the
      employer.  The additional contributions will generally consist
      of a stream of regular level payments made over the recovery
      period.

              In
      determining the recovery period at any particular valuation the following
      factors will be taken into account:

              · the
      size of the funding shortfall;

               

              · the
      business plans of the employer;

               

              · the
      Trustee’s assessment of the financial covenant of the employer;
      and

               

              · any
      contingent security offered by the employer.

               

              Should
      future valuations reveal a deficit larger than expected, the payments
      under the original plan will continue, but will be supplemented by
      additional payments.

              The
      assumptions to be used in the shortfall elimination calculations will be
      the same as those for calculating the technical
  provisions.

            

    

    
      	 
      

    

    
      	
              Policy
      on discretionary increases and funding strategy

            	
              Under
      the provisions of the Plan’s Trust Deed and Rules, there are certain
      discretionary powers to provide or increase benefits for, or in respect
      of, all or any of the members of the Plan.

              The
      employer has confirmed that it does not wish to make any advance provision
      for any discretionary benefits that could be provided under the Plan’s
      Trust Deed and Rules. Therefore no allowance for discretionary benefits is
      included in the technical provisions.

              If
      any discretionary increases to benefits are made, the Trustee’s current
      policy is to request immediate additional contributions to meet the cost
      of such increases.  This policy will be reviewed if there is a
      material improvement in the Plan’s discontinuance funding level or if
      substantial financial security is offered to the Plan by the
      employer.

            

    

    
      	 
      

    

    
      	
              Interaction
      with investment strategy

            	
              · The
      assets that most closely match the Plan’s liabilities are index-linked and
      fixed-interest gilts of appropriate term compared to the
      liabilities.

               

              · The
      Plan is partly invested in assets such as equities that are expected,
      although not guaranteed, to produce a higher return than
      gilts.  The Trustee understands that investing in equities
      reduces the expected contributions required from the employer in the
      long-run.

               

              · An
      allowance for the extra return expected from equity investment has been
      taken into account in setting the Plan’s technical
      provisions.  If this extra return is not achieved over the long
      term, the shortfall will ultimately need to be met by increased
      contributions from the employer.

               

              · Both
      the employer and the Trustee appreciate that the contributions required
      can be volatile.

               

              · The
      Trustee regularly reviews the Plan’s investment strategy taking into
      account the funding position and liability profile.  The Trustee
      will consult fully with the employer before any changes are made to the
      investment strategy.

               

            

    

    
      	 
      

    

    
      	
              Risks

            	
              The
      Trustee and the employer recognise that there are a number of risks
      inherent in the funding plan and that additional funding may be required
      at future valuations if the experience of the Plan is not in line with the
      assumptions made.  In addition to the investment risk detailed
      above, particular risks are:

            
	 
      	
              Longevity
      risk

              Future
      improvements in life expectancy may be greater than anticipated. In
      setting the Plan’s funding target standard mortality tables have been
      used, adjusted to make some allowance for future improvements in
      longevity.  The mortality assumptions are reviewed as part of
      the formal triennial actuarial valuations.

            
	 
      	
              Discontinuance
      risk

              The
      Trustee and the employer recognise that the Plan could be discontinued in
      accordance with Clause 12 of the Plan’s Trust Deed &
      Rules.

              If
      the Plan is discontinued then the technical provisions may need to be
      revised to reflect the change in the Plan’s
      circumstances.  There is a risk that the assets in the Plan at
      that time may be insufficient to cover these revised technical
      provisions.  In addition, there is a risk that the employer may
      at that time be unable to meet its obligation to contribute to the
      Plan.  Furthermore, the capacity of the insurance market may be
      insufficient at that time to secure the liabilities externally, if the
      Trustee wished to do so.

            

    

    
      	 
      

    

    
      	
              Monitoring
      employer covenant

            	
              The
      employer will provide the Trustee with quarterly cashflow information for
      the participating employers. In addition, the employer will send copies of
      its annual accounts to the Trustee as soon as they become available and
      inform the Trustee as soon as possible of developments which have or could
      have a material adverse impact on the strength of the employer
      covenant.

              The
      Trustee will review the need for further information on employer covenant
      such as an independent assessment at least once a year, and following any
      valuation or funding report which shows a shortfall against the technical
      provisions.

            

    

    
      	 
      

    

    
      	
              Frequency
      of valuations

            	
              The
      Plan’s first actuarial valuation to which this statement applies is being
      carried out as at 5 April 2006.  Subsequent valuations will
      normally be carried out every three years.

            
	 
      	
              The
      Trustee will obtain an actuarial report on developments affecting the
      Plan’s funding level as at each intermediate anniversary of the valuation
      date.

              If,
      after considering the actuary’s advice, the Trustee becomes of the opinion
      that it is unsafe to rely on the results of the previous full valuation as
      a basis for future employer contributions, it will consider seeking the
      employer’s agreement to the calling of a full
  valuation.

            

    

    
      	 
      

    

    
      	
              Signatures

            	
              This
      statement may be executed in any number of counterparts, and this has the
      same effect as if the signatures on the counterparts were on a single copy
      of this statement.

               

              This
      statement has been agreed by the employer.

               

            
	 
      	
              Signed
      on behalf of Chesapeake Plc

               

               

            
	 
      	
              Signature: 
      /s/ G. Faller

            	
              Name: 
      G. Faller

            	 
      
	 
      	 
      	 
      	 
      
	 
      	
              Position:  
      Director

            	 
      	
              Date:   
      15 Jul. 08

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              This
      statement was agreed by the Trustee in June 2008 and is effective from the
      date of signature.

               

            
	 
      	
              Signed
      on behalf of Field Group Pension Trustee Limited

               

               

            
	 
      	
              Signature: 
      /s/ M. H. O'Connell

            	
              Name: 
      M. H. O'Connell

            	 
      
	 
      	 
      	 
      	 
      
	 
      	
              Position:   
      Chairman

            	 
      	
              Date:  
      15.07.08.

            	 
      

    

    
      	 
      

    

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Appendix
A:

    Method
and financial assumptions for determining the technical provisions and the
employer contributions

    
      

       

      

    

    
      	
              Method

            	
              The
      actuarial method to be used in the calculation of the technical provisions
      is the Projected Unit Method with a three year Control
    Period.

            

    

    
      	 
      

    

    
      	
              Financial
      assumptions -approach

            	
              The
      approach to be used in determining each of the financial assumptions for
      calculating the technical provisions and the employer contributions is set
      out below.

            

    

    
      	 
      

    

    
      	
              Price
      inflation

            	
              The
      assumption is derived from the difference between the market yields on
      long-dated fixed-interest and index-linked gilts at the valuation
      date.

            

    

    
      	 
      

    

    
      	
              Discount
      rate

            	
              The
      annualised gross redemption yield on the 20 year gilt index (all stocks)
      at the valuation date plus 1.0% p.a., rounded to the nearest 0.1%
      p.a.

              The
      same discount rate is to be used for both pre-retirement and
      post-retirement liabilities.

            

    

    
      	 
      

    

    
      	
              Pay
      increases

            	
              Each
      member’s salary is assumed to increase in line with the assumed rate of
      price inflation plus 1.0% p.a.

            

    

    
      	 
      

    

    
      	
              Increases
      to pensions in payment

            	
              Derived
      from the price inflation assumption allowing for the maximum and minimum
      annual increases.

            

    

    
      	 
      

    

    
      	
              Revaluations
      of deferred pensions in excess of GMP

            	
              The
      price inflation assumption (subject to review if there is a significant
      change in the level of this
assumption).

            

    

    
      	 
      

    

    
      	
              Expenses

            	
              No
      allowance in the calculation of the technical provisions.  The
      employer will meet the cost of the Plan’s administrative expenses each
      year.

            

    

    
      	 
      

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

     

    
      	
              Financial
      assumptions -summary

            	
              A
      summary of all the financial assumptions for calculating the technical
      provisions and the employer contributions for the valuation at 5 April
      2006, determined using the approach outlined above, is as
      follows:

               

            

    

    

    
      	 
      	
              (%
      p.a.)

            
	
              Discount
      rate

            	
              5.3

            
	
              Price
      inflation

            	
              3.0

            
	
              Rate
      of pay increases

            	
              4.0

            
	
              Rate
      of increases to pensions in payment in excess of GMPs

              -      subject
      to inflationary increases up to 5% p.a.

              -      subject
      to inflationary increases up to 2.5% p.a.

            	
               

              2.9

              2.1

            
	
              Rate
      of increases to post-88 GMPs in payment

            	
              2.4

            
	
              Rate
      of revaluation of deferred pensions in excess of GMP

            	
              3.0

            

    

    
      	 
      

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Appendix
B:

    Demographic
Assumptions

    
      

       

      

    

    
      	
              Post-retirement
      mortality

            	
              For
      current pensioners and dependants:

              117.5%
      of standard tables PMA92 and PFA92 projected forward to calendar year
      2016, making allowance for improvements in mortality in line with the PA92
      Medium Cohort improvement factors.

              For
      future pensioners and dependants:

              117.5%
      of standard tables PMA92 and PFA92 projected forward to calendar year
      2026, making allowance for improvements in mortality in line with the PA92
      Medium Cohort improvement factors.

              Sample
      life expectancies are shown below.

            
	
              Pre-retirement
      mortality

            	
              Males:
      Standard table AM92 Ultimate rated down by 2 years

              Females:
      Standard table AF92 Ultimate rated down by 2 years

              Sample
      rates are shown below.

            
	
              Early
      retirements

            	
              For
      active members:

              Members
      will be assumed to retire in accordance with the assumptions shown
      below.

              For
      deferred members:

              All
      members are assumed to retire at their Normal Retirement
    Date.

            
	
              Withdrawals

            	
              Allowance
      made for withdrawals from service (see sample rates
  below).

            
	
              Family
      Details

            	
              A
      man is assumed to be three years older than his wife.

              90%
      of non-pensioners are assumed to be married at retirement or earlier
      death.

              90%
      of pensioners are assumed to be married at the valuation
date.

              These
      assumptions include allowance for pensions payable to other dependants
      including civil partners.

            
	
              Commutation

            	
              No
      allowance.

            

    

    
      	
               

               
      

            

    

    
    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
    

     

     

    
      	  

              Sample
      rates

            	  

              The
      tables below illustrate the allowances made for withdrawals, deaths before
      retirement and retirements from service at various
  ages.

            

    

     

    
      	 	
              Percentage
      leaving the Plan in the next year as a result of

            
	 Men	
              Current
      age

            	
              Death
      before retirement

            	
              Withdrawal
      from service

            	
              Retirement

            
	 	
              25

            	
              0.06

            	
              12.5

            	
              0

            
	 	
              30

            	
              0.06

            	
              10.0

            	
              0

            
	 	
              35

            	
              0.06

            	
              7.5

            	
              0

            
	 	
              40

            	
              0.08

            	
              5.0

            	
              0

            
	 	
              45

            	
              0.12

            	
              2.5

            	
              0

            
	 	
              50

            	
              0.20

            	
              0

            	
              0

            
	 	
              55

            	
              0.35

            	
              0

            	
              0

            
	 	
              60

            	
              0.64

            	
              0

            	
              20

            
	 	
              61

            	
              0.71

            	
              0

            	
              10

            
	 	
              62

            	
              0.80

            	
              0

            	
              10

            
	 	
              63

            	
              0.90

            	
              0

            	
              10

            
	 	
              64

            	
              1.01

            	
              0

            	
              10

            
	 	
              65

            	
              1.13

            	
              0

            	
              100

            

    

     

    

     

    
      	  Women	
               

              Percentage
      leaving the Plan in the next year as a result of

            
	 
      	
              Current
      age

            	
              Death
      before retirement

            	
              Withdrawal
      from service

            	
              Retirement

            
	 
      	
              25

            	
              0.02

            	
              18.75

            	
              0

            
	 
      	
              30

            	
              0.03

            	
              15.00

            	
              0

            
	 
      	
              35

            	
              0.04

            	
              11.25

            	
              0

            
	 
      	
              40

            	
              0.06

            	
              7.50

            	
              0

            
	 
      	
              45

            	
              0.10

            	
              3.75

            	
              0

            
	 
      	
              50

            	
              0.16

            	
              0

            	
              0

            
	 
      	
              55

            	
              0.25

            	
              0

            	
              0

            
	 
      	
              60

            	
              0.41

            	
              0

            	
              50

            
	 
      	
              61

            	
              0.46

            	
              0

            	
              10

            
	 
      	
              62

            	
              0.51

            	
              0

            	
              10

            
	 
      	
              63

            	
              0.56

            	
              0

            	
              10

            
	 
      	
              64

            	
              0.62

            	
              0

            	
              10

            
	 
      	
              65

            	
              0.68

            	
              0

            	
              100

            
	
               

            	 
      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Life expectancy of retired
members

    
 

    
      	 	
              Current
      age

            	
              Life
      expectancy of current male pensioners

            	
              Life
      expectancy of current female pensioners

            
	 	
              60

            	
              25.0

            	
              27.8

            
	 	
              65

            	
              20.5

            	
              23.2

            
	 	
              70

            	
              16.3

            	
              18.9

            
	 	
              75

            	
              12.4

            	
              14.9

            
	 	
              80

            	
              9.0

            	
              11.2

            
	 	
              85

            	
              6.2

            	
              8.0

            
	 	
              90

            	
              4.1

            	
              5.6

            
	 	
              95

            	
              2.9

            	
              3.9

            
	 	
              100

            	
              2.1

            	
              2.9

            

    

    

    

    
      	
              Life
      expectancy of future pensioners

            	 
      

    

    

    
      	 	
              Current
      age

            	
              Life
      expectancy of future male pensioners

            	
              Life
      expectancy of future female pensioners

            
	 	
              60

            	
              25.8

            	
              28.5

            
	 	
              65

            	
              21.2

            	
              23.9

            
	 	
              70

            	
              16.8

            	
              19.5

            
	 	
              75

            	
              12.9

            	
              15.3

            
	 	
              80

            	
              9.4

            	
              11.5

            
	 	
              85

            	
              6.4

            	
              8.3

            
	 	
              90

            	
              4.3

            	
              5.8

            
	 	
              95

            	
              3.0

            	
              4.0

            
	 	
              100

            	
              2.2

            	
              3.0

            

    

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    Appendix
C:

    Further
information to meet requirements of Scheme Funding Regulations

    
      

       

      

    

    
      	
              Policy
      on reduction of cash equivalent transfer values

            	
              The
      Trustee will ask the actuary to advise them at each valuation of the
      extent to which assets are sufficient to provide cash equivalent transfer
      values (CETVs) for all non pensioners without adversely affecting the
      security of the benefits of other members and beneficiaries.

               

              Where
      coverage is less than 100%, the Trustee will take advice from the Scheme
      Actuary regarding whether to reduce CETVs and, if appropriate, the extent
      of such reduction.

               

              If
      at any other time, after obtaining advice from the actuary, the Trustee is
      of the opinion that the payment of CETVs at a previously agreed level may
      adversely affect the security of the benefits of other members and
      beneficiaries, the Trustee will commission a report from the actuary
      regarding the extent to which CETVs should be
  reduced.

            

    

    
      	 
      

    

    
      	
              Payments
      to the employer

            	
              Payments
      from the Plan to the employer are only permitted if the Trustee determines
      that there is a surplus following the wind-up of the Plan, under Rule
      12.5(b) of the Trust Deed and
Rules.

            

    

    
      	 
      

    

    
      	
              Contributions
      to the Plan

            	
              There
      are no arrangements currently in place for persons other than the employer
      or members of the Plan to contribute to the
  Plan.

            

    

    
      	 
      

    

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    

    FIELD
GROUP PENSION PLAN

    SCHEDULE
OF CONTRIBUTIONS FOR THE PERIOD 5 APRIL 2007 TO 15 JULY 2021

    (Revised
July 2008)

    

    This
schedule of contributions has been prepared by the Trustee to satisfy the
requirements of Section 227 of the Pensions Act 2004, after obtaining the advice
of Alison Higginbottom, the Scheme Actuary, and after obtaining the agreement of
Chesapeake Plc (formerly Field Group Plc).

    

    The original version of this
Schedule of Contributions dated 8 June 2007 has been revised in July
2008 to reflect
the revised recovery plan agreed between the Trustee and Chesapeake Plc in July
2008 and to reflect the fact that Chesapeake Plc has agreed to meet the Plan’s
administration expenses directly as they fall due rather than reimburse the Plan
annually at the end of each year.

    

    1.
Employer contributions

    

    In
respect of future accrual of benefits and the provision of death-in-service lump
sum benefits the employer will pay the following:

    

    
      	
              ·  

            	
              12.3%
      of Eligible Earnings in respect of Sixtieth Accrual
  Members

            

    

    
      	
              ·  

            	
              9%
      of Eligible Earnings in respect of Eightieth Accrual
    Members

            

    

    
      	
              ·  

            	
              22%
      of Eligible Earnings in respect of Executive
  Members

            

    

    

    To be
paid to the Plan on or before the 19th of the
calendar month following that to which the payment relates.

    

    In
respect of the shortfall in funding in accordance with the recovery plan dated
July 2008:

    

    Chesapeake
Plc will pay £6.0 million per
annum in annual instalments for a period of 15 years, from 2007 to 2021
inclusive. These contributions are to be paid annually no later than 15 July
each year, save that the contribution payable in 2008 shall be paid no later
than 16 July 2008.

    

    

    2. Expenses

    

    For the
period from 5 April 2007 to 30 June 2008: In addition to the amounts shown
above, Chesapeake Plc will also pay an annual contribution to the Plan equal to
the Plan’s administration expenses (including the Pension Protection Fund levy).
The annual contribution will be equal to the expenses paid by the Plan in the
year to 5 April each year and will be paid no later than 15 July that year, save that the expenses payable in
respect of the year to 5 April 2008 shall be paid no later than 16 July
2008. The first contribution will be in respect of expenses paid by the
Plan in the year to 5 April 2007 and will be paid by 15 July 2007.

    

    For the
period from 1 July 2008: The employer will meet the Plan’s administration
expenses (including the Pension Protection Fund levy) directly as they fall
due.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    3.
Augmentation payments

    

    In
respect of augmentations granted, the employer will pay additional amounts to
cover the costs of benefit augmentations within one month of the later of the
date of granting the augmentation and the date on which the Trustee receives the
details of the costs from the Scheme Actuary.

    

    

    4.
Contributions by active members:

    

    
      	
              ·  

            	
              Sixtieth
      Accrual Members:10% of Eligible Earnings (or 1.5% of gross pay, if
      greater, for Previous Scheme Commencement Date
  Joiners)

            

    

    

    
      	
              ·  

            	
              Executive
      Members:12% of Eligible Earnings (or 1.5% of gross pay, if greater, for
      Previous Scheme Commencement Date
Joiners)

            

    

    

    
      	
              ·  

            	
              Eightieth
      Accrual Members:8% of Eligible
Earnings

            

    

    

    These
contributions will be deducted from pay by the employer and paid to the Plan on
or before the 19th of the
calendar month following deduction.

    

    These
amounts do not include members’ Additional Voluntary Contributions.

    

    

    5.
Definition of Eligible Earnings

    

    Eligible
Earnings are defined as a member’s basic salary (excluding overtime payments),
plus any bonus and commission which the employer determines is pensionable, less
the Lower Earnings Limit, and less any amount in excess of the Permitted Maximum
(in the case of certain members as defined in the Plan’s Definitive Trust Deed
and Rules).

    

    This
schedule of contributions may be executed in any number of counterparts, and
this has the same effect as if the signatures on the counterparts were on a
single copy of this schedule of contributions.

    

    

    Signed on
behalf of Chesapeake Plc

     

    Signature:  
/s/ G. Faller

    Name:         
G. Faller

    Position:    
Director

    Date:          
15 Jul. 08

    

    

    

    Signed on
behalf of Field Group Pension Trustee Limited

     

    Signature:  
/s/ M. H. O'Connell

    Name:         
M. H. O'Connell

    Position:    
Chairman

    Date:          
15.07.08.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ACTUARIAL
CERTIFICATION OF THE SCHEDULE OF CONTRIBUTIONS

    

    

    

    

    Name of
scheme:     Field Group Pension
Plan

    

    Adequacy
of rates of contributions

    

    
      	
              1.

            	
              I
      certify that, in my opinion, the rates of contributions shown in this
      schedule of contributions are such that the statutory funding objective
      could have been expected on 5 April 2006 to be met by the end of the
      period specified in the recovery plan dated July
  2008.

            

    

    

    Adherence
to statement of funding principles

    

    
      	
              2.

            	
              I
      hereby certify that, in my opinion, this schedule of contributions is
      consistent with the Statement of Funding Principles dated July
      2008.

            

    

    

    The
certification of the adequacy of the rates of contributions for the purpose of
securing that the statutory funding objective can be expected to be met is not a
certification of their adequacy for the purpose of securing the scheme's
liabilities by the purchase of annuities, if the scheme were wound
up.

    

    

    

    

    
      	
              Signature:             
      /s/ A.
      Higginbottom

            	
              Date:                                          
      15/07/08

            
	
              Name:                     Alison
      Higginbottom

            	
              Qualification:                             FIA

            
	
              Address:                Prospect
      House

              Abbey View

              St Albans

              Herts

              AL1 2QU

            	
              Name
      of
      employer:                    Hewitt
      Associates Ltd

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