Document:

Exhibit 10.20

 

EXECUTION
COPY

 

AMENDED AND RESTATED

 

FIBER SUPPLY AGREEMENT

 

By and between

 

CYPRESS CREEK, LLC

 

 

and

 

WICKLIFFE PAPER COMPANY

 

 

December 16, 2005

 

 

 

 

EXECUTION
COPY

 

AMENDED
AND RESTATED FIBER SUPPLY AGREEMENT

 

THIS AMENDED AND RESTATED FIBER SUPPLY AGREEMENT,
(this “Agreement”) dated as December 16, 2005, by and among CYPRESS CREEK,
LLC (“Seller”) and WICKLIFFE PAPER COMPANY, a Delaware corporation (“Buyer”),
amends and restates the Fiber Supply Agreement, dated as of May 2, 2005
(the “Original Agreement”), by and between ESCANABA TIMBER LLC, a Delaware
limited liability company, (“Escanaba Timber”) and Buyer.

 

RECITALS

 

WHEREAS, Escanaba Timber and Buyer entered
into the Original Agreement, pursuant to which Escanaba Timber sold and Buyer
purchased wood fiber located on certain timberlands owned by Escanaba Timber;

 

WHEREAS, Escanaba Timber and E&C Land
Co., LLP, a Kentucky limited liability partnership (“E&C”), an affiliate of
Seller, have entered into a Real Estate Purchase and Sale Agreement (the “Sale
Agreement”), dated as of November 10, 2005, pursuant to which, subject to
the terms and conditions thereof, Escanaba Timber has agreed to sell and
E&C has agreed to purchase all of the Timberlands as described in the Sale
Agreement;

 

WHEREAS, one of the conditions to the
consummation of the purchase and sale contemplated by the Sale Agreement is the
assignment and assumption of all of Escanaba Timber’s rights and obligations
under the Original Agreement to Seller and the amendment and restatement of the
Original Agreement as provided herein, in each case effective as of the closing
of the transactions contemplated by the Sale Agreement;

 

NOW, THEREFORE, in consideration of the
mutual covenants described in this Agreement and other good and valuable
consideration the receipt and sufficiency of which are acknowledged, Seller and
Buyer hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Whenever used in this Agreement, the
following terms shall have the respective meanings given to them in the provisions
thereof indicated below:

 

“AAA” shall have the meaning provided in Section 10.14(a).

 

“AF&PA” shall have the meaning provided in the definition of
“Sustainable Forest Practice Standards”.

 

 

“Agreement” shall have the meaning provided in the opening
paragraph of this Agreement.

 

“Annual Plan” shall have the meaning provided in Section 2.2(a).

 

“Annual Volumes” shall have the meaning provided in Section 2.2(c).

 

“Assumed Volume” shall have the meaning provided in Section 10.2(b).

 

“Base Price Adjustment Date” shall mean January 1, 2006,
and each subsequent second anniversary from such date during the Term of this
Agreement.

 

“Calendar Year” means a full year beginning on January 1
and continuing through December 31 thereof.

 

“Delivery Distance” means the trucking distance between Seller’s
harvest site and the Buyer’s delivery location (which delivery location is
within the Market Region).

 

“Fair Market Timber Value” shall mean the then current fair
market value of a Product as mutually determined by Buyer and Seller.  If Buyer and Seller are unable to reach
mutual determination, then the applicable Fair Market Timber Value shall be
determined in accordance with the Fair Market Timber Value Mechanism.

 

“Fair Market Timber Value Mechanism” shall mean the following
procedure used to determine the Fair Market Timber Value of each type of
Qualifying Timber hereunder.  Either
Seller or Buyer may initiate commencement of the Fair Market Timber Value
Mechanism by notice to the other (a “Mechanism Notice”).  Not later than ten (10) days following
receipt of a Mechanism Notice, Seller and Buyer shall agree on the Valuation
Consultant.  Not later than thirty (30)
days following selection of the Valuation Consultant, each of Seller, Buyer and
the Valuation Consultant shall submit to the others not less than six (6) Qualifying
Sales relating to the then applicable Fair Market Timber Value
determination.  The Fair Market Timber
Value of the Qualifying Timber at issue shall be (a) the sum of (i) the
average price per ton of all Qualifying Sales submitted by Seller, plus (ii) the
average price per ton of all Qualifying Sales submitted by Buyer, plus (iii) the
average price per ton of all Qualifying Sales submitted by the Valuation
Consultant, (b) divided by three.

 

“Force Majeure” shall have the meaning provided in Section 2.3(a).

 

“Force Majeure Period” shall have the meaning provided in Section 2.3(c).

 

“Hardwood Pulpwood” means pulpwood from hardwood species of
timber.

 

“KY bottomlands” shall mean all Timberlands located in Ballard,
Carlisle, Fulton and Hickman Counties, Kentucky.

 

“KY uplands” shall mean all Timberlands owned by Seller and
located in Crittendon, Livingston, Lyon and Trigg Counties, Kentucky.

 

 

 “Liens” shall have the
meaning provided in Section 6.2(b).

 

“Losses” shall have the meaning provided in Section 6.2(b).

 

“Market Region” shall mean all areas which are located within
one hundred forty (140) miles of the Mill.

 

“Mill” shall mean Buyer’s pulp and paper mill located in
Wickliffe, Kentucky.

 

“Minimum Volumes” shall have the meaning provided in Section 2.2(b).

 

“Natural Hardwood” means Hardwood Pulpwood from timber stands
that are naturally regenerated.

 

“New Owner” shall have the meaning provided in Section 10.2(b).

 

“Objection Notice” shall have the meaning provided in Section 10.2(b).

 

“Past Due” shall have the meaning provided in Section 4.4.

 

“Person” shall have the meaning provided in Section 10.1(b).

 

“Pine Pulpwood” shall mean pulpwood from pine species of timber.

 

“Plantation Hardwood” means Hardwood Pulpwood from timber stands
that are artificially regenerated.

 

“Products” means Pine Pulpwood and Hardwood Pulpwood.

 

“Product Price” shall mean the per ton
price for each Product as set forth on Schedule 4.1(a) attached
hereto (the “Base Price”) adjusted up or down on a quarterly basis
beginning January 1, 2006.  An
example of the quarterly price adjustment mechanism is set forth on Schedule 4.1(b) to
this Agreement.  On each Base Price
Adjustment Date during the Term of this Agreement, the Base Price for the
applicable Product shall be adjusted to equal the Fair Market Timber Value for
such Product on the applicable Base Price Adjustment Date.  On each such Base Price Adjustment Date a new
“Base Price” shall be used in determining the Product Price with respect to
each Product until the Base Price is adjusted on the next Base Price Adjustment
Date.

 

“Product Specifications” shall have the meaning provided in the
introductory paragraph of Article II.

 

“Pulpwood” means Hardwood Pulpwood and Pine Pulpwood.

 

“Qualifying Sales” shall mean per unit (as opposed to lump sum) sales
of the type of Qualifying Timber at issue made during the six months
immediately prior to the six month period in which the applicable Base Price
Adjustment Date occurs, provided such sales (i) are made within the Market
Region, and (ii) involve not less than 2,000 tons of the type of
Qualifying Timber at issue as to each such sale.

 

 

“Qualifying Timber” shall mean Products which meets or exceeds
the specifications set forth in Schedule 2.1 to this Agreement.

 

“Sustainable Forest Practice Standards” shall mean practices
substantially in compliance with standards substantially similar to the
Sustainable Forestry Initiative of the American Forest and Paper Association
(the “AF&PA”) as those standards may be modified by AF&PA from time to
time.

 

“Term” shall have the meaning provided in Section 5.1.

 

“Timberlands” shall mean all timberland properties purchased by
Seller under the Sale Agreement (defined in the foregoing recitals) and located
in the States of Illinois, Missouri and Ballard, Carlisle, Crittendon, Fulton,
Hickman, Livingston, Lyon and Trigg Counties, Kentucky.

 

“TMS” shall mean the publication known as Timber Mart South, or in the event TMS is no longer published, a comparable
publication mutually acceptable to Seller and Buyer.

 

“Transfer” shall mean any sale, lease, conveyance, exchange,
assignment, hypothecation, disposition, foreclosure or other transfer
(excluding the granting of a mortgage or other security agreement), directly or
indirectly (whether by agreement, operation of law or otherwise), of all or any
portion of the Timberlands.

 

“Valuation Consultant” shall mean either Sizemore &
Sizemore of Tallassee, Alabama or Larson & McGowin of Mobile, Alabama,
or if such firms are no longer in existence, another reputable, professionally
qualified Person meeting all of the following criteria.  Such Person (i) is not an “Affiliate”
(as defined in Section 10.1 (b) below) of either Seller or Buyer, (ii) during
the past two (2) years has not transacted substantial business with either
Seller or Buyer, and (iii) does not have less than five (5) years
experience relating to sales of timber within the Market Region.  If Seller and Buyer are unable to agree on
the Valuation Consultant, an arbitrator selected pursuant to Section 10.14
below shall select such Valuation Consultant. 
Seller and Buyer shall provide to the Valuation Consultant such
information as the Valuation Consultant shall reasonably request to facilitate
the determinations to be made by the Valuation Consultant hereunder.

 

“Zone” shall mean the zone designated in TMS as Tennessee Area
2.

 

ARTICLE II

 

PURCHASE
OF PRODUCTS

 

Section 2.1             Purchase
of Softwood Pulpwood and Hardwood Pulpwood.  Seller agrees to sell, and Buyer agrees to
purchase, receive and pay for, in each calendar year (a “Calendar Year”), the
Annual Volumes, as defined herein, of Pine Pulpwood and Hardwood Pulpwood.  All Pine Pulpwood and Hardwood Pulpwood
purchased pursuant to this Agreement shall satisfy, respectively, the
specifications for the Products set forth in Schedule 2.1, as may be
modified from time to time in accordance 

 

 

with Section 2.2
(the “Product Specifications”).  For the
purposes of this Agreement, a ton shall weigh two thousand (2,000) pounds.

 

Section 2.2             Modification
of Specifications.. 
Buyer may, from time to time, and upon at least two (2) months
prior written notice to Seller, reasonably modify any of the Product
Specifications that Buyer applies to substantially all of its Product suppliers
to the Mill.  Buyer shall not modify the
Product Specifications to set higher standards for Seller than for any such
other Products suppliers.  All Products
sold by Seller to Buyer following the date the new specifications become
effective shall satisfy such modified Product Specifications.  If Product Specifications are modified to set
higher standards, the Annual Volumes shall be adjusted downward as deemed
reasonably necessary by Seller, and subject to Buyer’s reasonable approval, as
a result of said higher standards.

 

Section 2.3             Annual
Plan.

 

(a)           Seller
shall on the date hereof and prior to September 1 of each Calendar Year
during the Term, complete and submit to Buyer a written delivery plan with
respect to the Products to be made available for purchase by Buyer during the
next Calendar Year (the “Annual Plan”). 
Said Annual Plan shall include estimates of delivery of the Products by
Delivery Distances, month and accumulated into estimated quarterly
deliveries.  The Annual Plan shall set
forth the quantity of Products Seller intends to make available to Buyer during
the next Calendar Year, said quantities to be subject to the terms of Article III.

 

(b)           Subject
to Seller’s obligation to offer at least the minimum volumes required to be offered
to Buyer pursuant to Section 3.1 below (the “Minimum Volumes”):  (i) all Pulpwood volumes projected to be
harvested from the Timberlands in the applicable Calendar Year shall be made
available in said Annual Plan for Calendar Years 2006 through 2010; (ii) ninety
percent (90%) of all Pulpwood volumes projected to be harvested from the
Timberlands in the applicable Calendar Year shall be made available in said
Annual Plan for Calendar Years 2011 through 2013; and (iii) eighty-five
percent (85%) of all Pulpwood volumes projected to be harvested from the
Timberlands in the applicable Calendar Year shall be made available in said
Annual Plan for Calendar Years 2014 through 2016, and, if the Term is extended
pursuant to Section 5.2 below, for Calendar Years 2017 through 2019.

 

(c)           Buyer
shall within 30 days of receipt of said Annual Plan confirm with Seller the
volumes of the Products Buyer agrees to purchase from Seller during the next
Calendar Year; provided, however, that unless Seller agrees otherwise, Buyer
must agree to purchase at least ninety percent (90%) of the volumes set forth
in the Annual Plan.  Said agreed upon
volumes shall then become in the aggregate the “Annual Volumes” Buyer agrees to
purchase and Seller agrees to deliver in the next Calendar Year.

 

(d)           Following
adoption of each Annual Plan (or as adjusted according to Section 2.3(c) above),
the parties shall act in good faith and each use their

 

 

respective
commercially reasonable efforts to implement such Annual Plan in accordance
with its terms.  Products shall be
delivered throughout the Calendar Year in accordance with the Annual Plan for
such year; provided, however, that during any Calendar Year,
Seller may vary its deliveries, and Buyer may vary its purchases of Products,
subject to Section 4.2 herein, as long as variations in delivery are
immaterial and will not impair the operations of the Mill or the operations of
Seller on the Timberlands.

 

Section 2.4             Force
Majeure.  

 

(a)           For
the purposes of this Agreement, the term “Force Majeure” means any cause,
condition or event beyond Buyer’s and/or Seller’s reasonable control that
delays or prevents either party’s performance of its obligations hereunder,
including war, acts of terrorism (which shall not include civil
demonstrations), acts of government, acts of public enemy, riots, lightning,
fires, explosions, storms, floods, infestation, power failures, other acts of
God or nature, labor strikes or lockouts by employees, or other disputes
involving either party, adverse financial or market conditions, an involuntary
ceasing of operations at the Mill for a minimum of thirty (30) consecutive
days, and other similar events or circumstances; provided, however, that “Force
Majeure” shall not include (i) a party’s financial inability to perform
(unless such inability is caused by a general suspension of payments by banks
in the United States), or (ii) an act, omission or circumstance arising
from the negligence or willful misconduct of the party claiming that a Force
Majeure event has occurred.  The parties
shall use commercially reasonable efforts to mitigate the effects of the Force
Majeure, and if the cause of Force Majeure can be minimized or remedied, both
parties shall use reasonable best efforts to do so promptly.

 

(b)           Subject
to the provisions of this Section 2.3, neither party shall be liable
hereunder for a delay in or failure of performance of its obligations hereunder
that is caused by Force Majeure.  If
Force Majeure results in a reduction, but not a complete cessation, of Buyer’s operations
in connection with this Agreement, Buyer shall not reduce its purchases of any
Product from Seller in greater proportion than the reduction in Buyer’s
purchases of any such Products from all its suppliers of pulpwood to the
Mill.  Notwithstanding anything contained
in this Agreement to the contrary, Force Majeure (other than a general
suspension of payments by banks in the United States) shall not excuse Buyer
from its obligation to pay, pursuant to the terms of this Agreement, Seller for
any quantity of Product delivered by Seller.

 

(c)           The
quantity of any Product otherwise required to be purchased or delivered
hereunder shall be reduced as a result of Force Majeure for the period during
which such Force Majeure is in effect and continuing (such period, the “Force
Majeure Period”), based on the respective quantity for each Calendar Year in
which such Force Majeure is in effect, prorated (if applicable) for the portion
of such year constituting all or part of such Force Majeure Period.  If the Force Majeure Period is less than 15
days, (i) Buyer shall be required to purchase the volume of Products not
purchased during the Force Majeure Period within the next 180 days following
the end of the Force Majeure Period, and (ii) Seller shall be required to
make available the volume of Products not delivered during the Force Majeure
Period within the next 180 days 

 

 

following the end
of the Force Majeure Period.  If the
Force Majeure Period is more than 14 days, Buyer shall not be required to
purchase the volume of Products not purchased during the Force Majeure Period,
and Seller shall not be required to make available the volume of Products not
delivered during the Force Majeure Period. 
Notwithstanding anything contained in this Agreement to the contrary,
Seller shall have the right, but not the obligation, to sell that quantity of
the Product Buyer is unable to purchase because of Force Majeure to any third
party purchaser or purchasers in the event Force Majeure prevents Buyer from
performing hereunder.

 

(d)           Force
Majeure shall not relieve a party of its obligations or liability hereunder
unless such party shall give notice (including a reasonable description of such
Force Majeure) to the other party as soon as reasonably possible and in any
event within fifteen (15) days after the occurrence of such Force Majeure.  Upon request, the party whose obligations
were suspended shall provide the other party with a plan for remedying the
effects of such Force Majeure.  The party
prevented from performing by Force Majeure shall keep the other party advised
by written notice of all matters affecting such Force Majeure, and the extent
of the delay by reason thereof.  Such
party shall notify the other party in writing of the termination of such Force
Majeure within ten (10) days after such termination.

 

ARTICLE III

 

QUANTITY
AND PRODUCT MIX

 

Section 3.1             Minimum
Volumes by Calendar Year.  With
respect to the Products to be purchased by Buyer hereunder, Seller shall make
available to Buyer in the applicable Annual Plan the following Minimum Volumes
of Products for each Calendar Year during the Term of this Agreement:

 

(a)           2006
– 2016.  For the Calendar Years
beginning January 1, 2006 and ending December 31, 2016, not less than
the volumes in thousands of tons by year in the following table:

 

	
  Year

  Source

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  	
  2009

  	
   

  	
  2010

  	
   

  	
  2011

  	
   

  	
  2012

  	
   

  	
  2013

  	
   

  	
  2014

  	
   

  	
  2015

  	
   

  	
  2016

  	
   

  
	
  (i)Plantation
  Hardwood

  	
   

  	
  50

  	
   

  	
  30

  	
   

  	
  30

  	
   

  	
  30

  	
   

  	
  25

  	
   

  	
  25

  	
   

  	
  25

  	
   

  	
  25

  	
   

  	
  25

  	
   

  	
  25

  	
   

  	
  25

  	
   

  
	
  (ii) Pine
  Pulpwood

  	
   

  	
  30

  	
   

  	
  30

  	
   

  	
  30

  	
   

  	
  30

  	
   

  	
  30

  	
   

  	
  30

  	
   

  	
  30

  	
   

  	
  30

  	
   

  	
  30

  	
   

  	
  30

  	
   

  	
  30

  	
   

  
	
  (iii) Natural
  Hardwood

  	
   

  	
  11

  	
   

  	
  11

  	
   

  	
  11

  	
   

  	
  11

  	
   

  	
  10

  	
   

  	
  8

  	
   

  	
  7

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  	
  2

  	
   

  

 

 

(b)           2017
– 2019 - To the extent Buyer exercises its option to extend the Term
pursuant to Section 5.2 below, for Calendar Years beginning January 1,
2017 and ending December 31, 2019, the mix of Products Seller shall make
available to Buyer shall be as follows:

 

	
  Pine Pulpwood:

  	
  not less than 30,000 tons

  

 

Section 3.2             Adjustments
to Product Mix.

 

Seller and Buyer acknowledge and agree that
Seller may from time to time request modifications to the Product mix set forth
above during any Calendar Year as a result of its temporary inability to
satisfy such Product mix due to adverse weather or similar conditions.  So long as the aggregate total volume of all
Products required to be delivered for the Calendar Year is not reduced, and so
long as the Buyer’s operations would not be adversely affected in any material
respect as a result thereof, Buyer agrees to grant such requests.

 

Section 3.3             Harvest
Volume Variances.

 

Following the submission by the Seller of the
Annual Plan for a given Calendar Year in accordance with Section 2.2(a),
Seller and Buyer shall be deemed to have satisfied the volume requirements of Section 3.1(a) in
respect of such Calendar Year regardless of whether Buyer actually receives the
volumes contemplated by Section 3.1(a) where harvesting shortfalls
arise from (i) variances between actual timber volume and the inventory
volumes of such timber tracts used to calculate the volumes in the Annual Plan;
or (ii) operational constraints associated with Seller’s adherence to
Sustainable Forestry Practice Standards or applicable Forestry Best Management
Practices, whether voluntary or as promulgated by the applicable Department of
Agriculture Division of Forestry or any successor agency or standards thereto.
In the event that Buyer’s harvest volumes exceed the minimum volume
requirements for any Harvest Year as specified in Section 3.1(a), such
excess harvest volume shall directly offset the corresponding volume
requirement for the subsequent Calendar Year.

 

ARTICLE IV

 

PRICE
AND DELIVERY TERM

 

Section 4.1             Prices.  

 

(a)           The
initial Product Prices shall be as set forth in Schedule 4.1(a).  Products delivered by Seller to Buyer will be
paid for at the Product Prices outlined in Schedule 4.1(a), as adjusted
pursuant to Section 4.1(b), based on the Delivery Distance.  Such Product Prices for the Pulpwood Products
shall be adjusted on a quarterly basis throughout the Term beginning as of January 1,
2006 based on the adjustment mechanism set forth in Section 4.1(b).

 

 

(b)           The
Product Prices for the Products set forth on Schedule 4.1 (a) shall
be adjusted as provided in the definition of Product Prices herein, and based
on the formula set forth on Schedule 4.1(b) attached hereto.

 

(c)           In
addition to the other amounts payable hereunder, in the event Buyer pays any
amounts to any pulpwood supplier to the Mill for fuel adjustments or snow
bonuses, Buyer shall make comparable and contemporaneous payments to Seller.

 

Section 4.2             Pay
or Take.  

 

(a)           Seller
agrees to sell and deliver, subject to Force Majeure and Section 3.3, and
Buyer agrees to purchase, subject to Force Majeure and Section 3.3, the
Annual Volumes of Products to be produced under the direction of Seller during
each Calendar Year as determined in Article II.  If for any Calendar Year, Seller fails for
any reason other than Force Majeure to tender to Buyer at least ninety percent
(90%) of the designated Annual Volumes of Products, Seller will pay Buyer at a
rate of $15.00 per ton multiplied by the difference between (x) ninety percent
(90%) of the Annual Volumes of Products for the applicable Calendar Year minus
(y) the volume of Products actually tendered by Seller during such Calendar
Year, as liquidated damages and not as a penalty, and Buyer shall have no
further claim for damages on account of such shortfall in the delivery of the
Annual Volumes.  Payment shall be made by
Seller to Buyer on demand no later than fifteen (15) days from Buyer’s written
request for such payment. 
Notwithstanding the foregoing:  (i) if
adverse weather conditions during the last ninety (90) days of any Calendar
Year prevent Seller from delivering the Annual Volumes of Natural Hardwood or
Pine Pulpwood for said Calendar Year, the payments provided for in this Section 4.2(a) shall
not apply unless and to the extent said volumes (together with any volumes
required with respect to the first quarter of the following Calendar Year) are
not delivered on or before March 31 of the following Calendar Year, and (ii) if
adverse weather conditions during any Calendar Year prevent Seller from
delivering the Annual Volumes of Plantation Hardwood for said Calendar Year,
the payments provided for in this Section 4.2(a) shall not apply
unless and to the extent said volumes (together with any volumes required with
respect to the following Calendar Year) are not delivered on or before December 31
of the following Calendar Year.  Seller
shall keep Buyer advised of any such adverse weather conditions and Seller’s
need for additional time to deliver said volumes.

 

(b)           If
for any Calendar Year, Buyer fails for any reason other than Force Majeure to
purchase at least ninety percent (90%) of the Annual Volumes of Products from
Seller, then Buyer shall pay Seller for the shortage at a rate of $15.00 per
ton multiplied by the difference between (x) ninety percent (90%) of the Annual
Volumes of Products for the applicable Calendar Year minus (y) the volume of
Products actually purchased by Buyer hereunder during such Calendar Year, as
liquidated damages and not as a penalty, and Seller shall have no further claim
for damages on account of Buyer’s failure to purchase the Annual Volumes.  Payment shall be made by Buyer to Seller on
demand no later than fifteen (15) days from Seller’s written request for such
payment.

 

 

(c)           Subject
to the terms of Section 3.2 above, any payments made pursuant to this Section 4.2
shall be calculated separately for Pine Pulpwood and Hardwood Pulpwood.  If this Agreement is in termination at a time
other than the beginning or end of a Calendar Year, the Annual Volumes for
purposes of calculating such shortage payment for either party will be prorated
equitably.

 

Section 4.3             Delivery
Terms.  All Products covered by this
Agreement shall be delivered to Buyer F.O.B. to the Mill or to such other
locations in the Market Region as Buyer may direct upon reasonable advance
notice to Seller.  Risk of loss and title
shall pass when the Products are unloaded at the Mill or the applicable
delivery location.

 

Section 4.4             Payment.  Buyer shall pay Seller within fifteen (15)
days after the date of delivery for any Products delivered to Buyer, based upon
the weight of such Products at the time of delivery.  Payments made after fifteen (15) days from
the date of delivery shall be considered past due (“Past Due”).  For payments that are Past Due, Buyer shall
pay interest at a rate per annum equal to the daily prime rate as reported in
the Wall Street Journal plus four percent (4%) for each day that the payments
are Past Due.  Such interest shall be
calculated daily on the basis of a year of 365 days and the actual number of
days for which interest is due.  If at
any time during the Term there are any payments outstanding to Seller that are
Past Due, then, in addition to any other remedies it may have hereunder, Seller
may suspend deliveries to Buyer until such time as all Past Due payments have
been paid in full.  In such event, Seller
shall have no obligation to supply or make up any portion of the Annual Volumes
scheduled for delivery and not delivered during such suspension and shall in no
way be liable to Buyer for any Losses (as defined below in Section 6.2(b))
or payments pursuant to Section 4.2(a) related to any shortfall in
delivered volumes of Products arising out of said suspension.

 

Section 4.5             Disputes.  If the personnel designated by Buyer and
Seller with operational responsibility for implementing this Agreement are
unable to agree as to any matter set forth in this Article IV then such
matter shall be addressed by the executives responsible for timberland
management for Seller and wood procurement for Buyer.  If such executives are unable to agree, then
such matter shall be determined by an arbitrator pursuant to Section 10.14.

 

Section 4.6             Compliance
with Product Specifications. 
If any shipment of any Product fails to satisfy the applicable Product
Specifications, Buyer shall have the right to reject such shipment. Buyer shall
notify Seller of any such rejection as soon as reasonably possible.

 

Section 4.7             Limitation
of Warranties.  EXCEPT FOR THE
WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PRODUCTS ARE BEING SOLD “AS
IS,” AND SELLER IS NOT MAKING ANY OTHER WARRANTIES, WRITTEN OR ORAL, STATUTORY,
EXPRESS OR IMPLIED, INCLUDING, IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE (AS

 

 

DEFINED IN THE DELAWARE UNIFORM COMMERCIAL CODE), ALL OF WHICH ARE
HEREBY EXPRESSLY EXCLUDED, DISCLAIMED AND WAIVED BY BUYER.

 

ARTICLE V

 

TERM

 

Section 5.1             Term.  This
Agreement shall expire on December 31, 2016, unless this Agreement is
sooner terminated for cause pursuant to Section 9.1 hereof, or unless this
Agreement is extended as provided in Section 5.2 (the “Term”). 

 

Section 5.2             Extension
of Term.  Provided that Buyer
shall not then be in default under this Agreement, the Term of this Agreement
may be extended at the option of Buyer for one (1) additional three (3) year
term, which extension term shall commence concurrently with the expiration of
the initial term, upon the same terms and conditions as contained in this
Agreement.  In the event that Buyer
desires to extend this Agreement pursuant to the above extension option, it
shall give written notice of such desire to extend the Term to Seller no later
than January 1, 2016.

 

ARTICLE VI

 

REPRESENTATIONS,
WARRANTIES AND COVENANTS

 

Section 6.1             Warranty
of Quality.  Seller warrants
and covenants that it will act in good faith and use its commercially
reasonable efforts to cause all Products to meet the Product Specifications.

 

Section 6.2             Ownership
of Products.  (a)  Seller
warrants and covenants that all Products delivered to Buyer will be free and
clear of all Liens (as defined in Section 6.2(b) below).  Seller shall protect, indemnify, defend and
hold harmless Buyer against any Losses (as defined in Section 6.2(b) below)
incurred or sustained by Buyer arising out of or resulting from any Liens
applicable to any of the Products at the time delivered by Seller.

 

(b)  The term “Liens” means any and all
liens, charges, mortgages, deeds to secure debt, pledges, security interests,
options of record, adverse claims or other encumbrances of a liquidated amount
or which are otherwise statutorily enforceable, other than liens for ad valorem
taxes not yet due and payable; provided, however, none of the aforementioned
shall constitute a “Lien” in the event the same fails to prevent Seller from
performing any of its obligations hereunder. 
The term “Losses” means any and all claims, liabilities, obligations,
losses, fines, costs, royalties, proceedings, deficiencies or damages (whether
absolute, accrued, conditional or otherwise and whether or not resulting from
third party claims) including, but not limited to, out-of-pocket expenses and
reasonable actual attorneys’ and actual accountants’ fees incurred in the
investigation or defense of any of the same or in enforcing any of their
respective rights hereunder.

 

 

Section 6.3             Power and Authority; Enforceability.  Seller represents and warrants that it is a
limited liability partnership duly organized and validly existing under the
laws of the State of Kentucky, and that it has all requisite corporate
authority to enter into this Agreement and to perform its obligations
hereunder.  Seller represents and
warrants that this Agreement has been duly authorized, executed and delivered
by Seller and constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except as may be
limited by (i) bankruptcy, reorganization, insolvency, moratorium,
receivership or other similar laws affecting or relating to the enforcement of
creditors’ rights or remedies generally, and (ii) general principles of
equity (whether considered at law or in equity).

 

Section 6.4             Compliance
with Laws; Maintenance of Timberlands.  Seller agrees that its performance of this
Agreement shall comply in all material respects with applicable state and
federal laws and regulations, including, but not limited to, all environmental
laws and the Fair Labor Standards Act of 1938, as amended.

 

Section 6.5             Seller
as Independent Contractor.  No
relationship of employer and employee, or master and servant, is intended to
exist, nor shall any be construed to exist, between Buyer and Seller, or
between Buyer and any servant, agent, employee, subcontractor or supplier of or
to Seller as a result of the parties entering into or performing this
Agreement.  Each party hereto shall select and pay its own servants, agents, employees,
subcontractors and suppliers, and neither such party nor any of its servants, agents,
employees, subcontractors and suppliers shall be subject to any orders,
supervision or control of the other party hereto.  The parties acknowledge that this Agreement
does not create a partnership, joint venture or any relationship other than a
contract between independent parties.

 

Section 6.6             Buyer
Power and Authority; Enforceability. 
Buyer represents and warrants that it is a corporation duly organized
and validly existing under the laws of the State of Delaware, and that it has
all requisite corporate authority to enter into this Agreement and to perform
its obligations hereunder. Buyer represents and warrants that this Agreement
has been duly authorized, executed and delivered by Buyer and constitutes the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as may be limited by (i) bankruptcy,
reorganization, insolvency, moratorium, receivership or other similar laws
affecting or relating to the enforcement of creditors’ rights or remedies generally;
and (ii) general principles of equity (whether considered at law or in
equity).

 

ARTICLE VII

 

DEFAULT
AND INDEMNIFICATION

 

Section 7.1             Indemnity.

 

(a)           Buyer
shall in no way be liable for any personal injuries (including death), property
damage or other Losses caused by, resulting from, or attributable to, Seller’s
performance under this Agreement, the operation of the business

 

 

of Seller or the acts of any servant, agent, employee, subcontractor or
supplier of Seller in connection with this Agreement, except to the extent such
Loss is finally judicially determined to have arisen out of or resulted from
the negligence or intentional misconduct of any of Buyer, its subsidiaries and
other affiliates, or any of its or their respective servants, agents, officers,
partners, directors, employees, subcontractors or suppliers. Seller shall
protect, defend, indemnify and hold harmless NewPage Holding Corporation,
NewPage Corporation, Buyer, and their respective subsidiaries and
affiliates, and each of its and their respective agents, officers, partners,
directors, employees, successors and assigns, from and against any claim,
demand, cause of action, lawsuit or other Loss arising out of or resulting from
performance of this Agreement by Seller, or by any servant, agent, employee,
subcontractor or supplier of or to Seller, including any Loss based on the
strict liability of Buyer except to the extent such Loss is finally judicially
determined to have arisen out of or resulted from the negligence or intentional
misconduct of Buyer, its subsidiaries and other affiliates (other than Seller),
or any of its or their respective servants, agents, officers, partners,
directors, employees, subcontractors or suppliers.

 

(b)           Seller
shall in no way be liable for any personal injuries (including death), property
damage or other Losses caused by, resulting from, or attributable to,  Buyer’s performance under this Agreement, the
operation of the business of Buyer or the acts of any servant, agent, employee,
subcontractor or supplier of Buyer in connection with this Agreement, except to
the extent such Loss is finally judicially determined to have arisen out of or
resulted from the negligence or intentional misconduct of any of Seller, its
subsidiaries and other affiliates, or any of its or their respective servants,
agents, officers, partners, directors, employees, subcontractors or
suppliers.  Buyer shall protect, defend,
indemnify and hold harmless Seller, and its subsidiaries and other affiliates,
and each of its and their respective agents, officers, partners, directors,
employees, successors and assigns, from and against any claim, demand, cause of
action, lawsuit or other Loss arising out or resulting from performance of this
Agreement by Buyer, or by any servant, agent, employee, subcontractor or
supplier of or to Buyer, including any Loss based on the strict liability of
Seller, except to the extent such Loss is finally judicially determined to have
arisen out of or resulted from the negligence, or intentional misconduct of any
of Seller, its subsidiaries and other affiliates, or any of its or their
respective servants, agents, officers, partners, directors, employees,
subcontractors or suppliers.

 

Section 7.2             Certain
Remedies.  Notwithstanding anything
in this Agreement to the contrary, Buyer’s sole and exclusive remedies against
Seller (following the expiration of any applicable cure period) in the event
that Seller breaches its obligation to provide the Annual Volumes of Products
required under this Agreement shall be (a) to receive the payment provided
pursuant to Section 4.2(a) of this Agreement, and (b) to
terminate this Agreement pursuant to Section 9.1 of this Agreement.

 

 

ARTICLE VIII

 

CONSENT
TO JURISDICTION

 

Section 8.1             Consent
to Jurisdiction.  In
connection with any proceeding initiated by either party under or with respect
to this Agreement and the transactions contemplated hereby, each party hereby
consents to the jurisdiction of any United States Federal Court sitting in the
State of Kentucky having jurisdiction in the matter.  Each party acknowledges and agrees that any
controversy that may arise under this Agreement is likely to involve
complicated and difficult issues, and therefor it hereby irrevocably and
unconditionally waives any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of or relating to this
Agreement, or the breach, termination or validity of this Agreement, or the
transactions contemplated by this Agreement.

 

ARTICLE IX

 

TERMINATION

 

Section 9.1             Termination
for Cause.  This Agreement
shall immediately terminate upon election by the nondefaulting party if any one
of the following events (each, a “default”) has occurred and is continuing upon
the expiration of the cure or dismissal period specified below (each, an “Event
of Default”):

 

(a)           Breach
by Seller or Buyer of any term of this Agreement, which breach is not cured
within sixty (60) days after receipt of written notice thereof; from the
nondefaulting party

 

(b)           Insolvency
or the filing by or against Seller or Buyer of a petition in bankruptcy (which,
in the event of an involuntary bankruptcy, is not dismissed within ninety (90)
days from the date of its commencement), or appointment by a court of a
temporary or permanent receiver, trustee or custodian; or

 

(c)           If
the Mill for any reason ceases all pulping operations for a period that exceeds
twelve (12) consecutive months at any time during the Term.

 

Section 9.2             Effect
of Termination.  Termination
shall not relieve a defaulting party of any liability to the nondefaulting
party for breach of its obligations hereunder.

 

 

ARTICLE X

 

MISCELLANEOUS

 

Section 10.1           Definitions.  

 

(a)           The
words “hereby,” “herein,” “hereof,” “hereunder” and words of similar import
refer to this Agreement as a whole and not merely to the specific section,
paragraph or clause in which such word appears. 
The word “party” or “parties” means a party or the parties to this
Agreement, unless preceded by the word “third” or unless the context shall
otherwise expressly require.  All
references herein to Articles, Sections, Annexes and Exhibits shall be deemed
references to Articles and Sections of, and Annexes and Exhibits to, this
Agreement unless the context shall otherwise require.  The words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without limitation,” unless
already expressly followed by such phrase or the phrase “but not limited to.”  The definitions given for terms in this Section 10.1
or in Article I shall apply equally to both the singular and plural forms
of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.

 

(b)           Whenever
used in this Agreement, the following terms shall have the respective meanings
given to them below.

 

“Affiliate” of a Person means any
other Person directly, or indirectly through one or
more intermediaries, controlling, controlled by or under common control with
the first Person.  As used in this
definition of the term “affiliate,” and elsewhere herein with respect to any
affiliate of any Person, “control” (including the terms “controlled by” and “under
common control with”) means the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of a Person,
whether through the ownership of voting securities, by voting trust, contract
or similar arrangement, as trustee or executor, or otherwise.

 

“Person” means any individual, sole
proprietorship, trust, estate, executor, legal representative, unincorporated
association, association, institution, corporation, company, partnership,
limited liability company, limited liability partnership, joint venture,
government (whether national, Federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof) or other entity.

 

Section 10.2           Assignment
by Seller.  

 

(a)           Except
as provided in this Section 10.2, this Agreement may not be assigned by
Seller in whole or in part. 
Notwithstanding the foregoing, at any time during the Term, Seller may
assign this Agreement (i) to any lender or lenders as security for
obligations to such lender or lenders in respect to financing arrangements of
Seller or any Affiliate thereof with such lender or lenders, or (ii) upon
prior written notice to Buyer, to any Person that is and at all times remains
an Affiliate of Seller or that merges or consolidates with or into Seller or
that acquires all or substantially all of the Timberlands.

 

(b)           Notwithstanding
any other provision of this Agreement to the contrary, Buyer and Seller
acknowledge and agree that Seller shall not be prohibited from selling all or
any portion of the Timberlands, provided that any such sale of the

 

 

Timberlands shall be made subject to the terms of this Agreement and
the obligation to supply the applicable portion of timber volumes required
hereunder.  Upon any sale of a portion of
the Timberlands, the purchaser of said portion of the Timberlands (“New Owner”)
shall assume the obligation to supply a portion of the timber volumes to be
supplied hereunder, said portion of the timber volumes (“Assumed Volume”) to be
agreed to by Seller and said New Owner, subject to Buyer’s consent to such
volume allocation, which consent shall not be unreasonably withheld or
delayed.  Upon such assumption by said
New Owner, Seller’s obligations to supply Products hereunder shall be reduced
by the volumes assumed by said New Owner, and Seller shall thereafter have no
obligation or liability with respect to said assumed volumes or with respect to
the portion of the Timberlands so conveyed. 
At the request of Seller, upon any such sale to a New Owner Buyer shall
execute an amendment to this Agreement acknowledging the foregoing.  Furthermore, upon request of Seller or Buyer,
upon such sale to a New Owner, Buyer and such New Owner shall enter into a
separate fiber supply agreement on the same terms and conditions as contained
in this Agreement (or such other terms as Buyer and such New Owner shall
mutually agree) except for the portion of the Timberlands covered thereby and
the volume of Products to be supplied thereunder.  In the event Buyer objects to any proposed
Assumed Volume, Buyer shall provide written notice of the same to Seller within
fifteen (15) days of notice to Buyer of said proposed Assumed Volume (“Objection
Notice”), said Objection Notice to include a detailed explanation of the basis
for said objection.  Failure by Buyer to
timely provide said Objection Notice shall be deemed to constitute the consent
of Buyer to said proposed Assumed Volume.  In the event Buyer timely provides an
Objection Notice, Seller shall have the option of (i) revising said
proposed Assumed Volume, in which case Buyer shall have the further right to
object by providing a new Objection Notice as provided above or (ii) retaining
the Valuation Consultant to determine whether the proposed Assumed Volume is
reasonable.  In the event the Valuation
Consultant is so retained and determines that said proposed Assumed Volume is
reasonable, Buyer shall be deemed to have consented to said
Assumed Volume and shall pay all costs and expenses of said Valuation
Consultant.  Otherwise, said costs and
expenses shall be paid by Seller. 
Notwithstanding the foregoing, Seller may convey during the Term hereof
up to 8,000 acres of the Timberlands free and clear of the obligations of this
Agreement (the “Exempt Acres”), provided that Seller is able to supply the
volume of Products required to be supplied hereunder from the remaining portion
of the Timberlands.  Buyer agrees to
execute any and all documentation requested by Seller in order to evidence the
release of the Exempt Acres from this Agreement.

 

Section 10.3           Assignment
by Buyer.

 

Except as provided in this Section 10.3,
this Agreement may not be assigned by Buyer in whole or in part.  Notwithstanding the foregoing, at any time
during the Term, Buyer may assign this Agreement (a) to any lender or
lenders as security for obligations to such lender or lenders in respect of
financing arrangements of Buyer or any affiliate thereof with such lender or
lenders, or (b) upon prior written notice to Seller, to any Person that is
and at all times remains an Affiliate of Buyer or that merges or consolidates
with or into Buyer or that acquires all or substantially all of the assets or
stock of Buyer and in the case of an acquisition of all or substantially all of
the assets of

 

 

Buyer, in writing, assumes all obligations of the Buyer hereunder, a
copy of such assumption agreement to be promptly delivered to Seller.

 

Section 10.4.  Notices.  All notices, requests, demands and other
communications provided for hereunder shall be in writing and personally
delivered or sent by regular U.S. certified mail, telecopy or Federal Express (or
similar type of overnight delivery) to the applicable party at the address
indicated below:

 

	
  If to Buyer:

  	
  Wickliffe Paper Company

  1724 Westvaco Road

  Wickliffe, Kentucky  42087

  
	
   

  	
   

  
	
  With a copy to:

  	
  Bernie F. Coyle

  3901 Mayfield Road

  Wickliffe, Kentucky  42087

  Telecopier No.  270-335-6240

  Telephone No.  270-335-6241

  
	
   

  	
   

  
	
  and

  	
  Greg Hansrote

  1724 Westvaco Road

  Wickliffe, Kentucky  42087

  Telecopier No.  270-335-4110

  Telephone No.  270-335-4587

  
	
   

  	
   

  
	
  If to Seller:

  	
  Cypress Creek, LLC

  450 Pryor Boulevard

  P.O. Box 409

  Sturgis, Kentucky 42459

  Attn:  Vickie A. Davis, Esq.

  
	
   

  	
   

  
	
  With a copy to:

  	
  Chorey, Taylor & Feil

  The Lenox Building, Suite 1700

  3399 Peachtree Road, NE

  Atlanta, Georgia 30326

  Attn:  John E. Taylor, Esq.

  

 

or, as to each
party, at such other address as shall be designated by such party in a written
notice to the other party complying as to delivery with the terms of this
Section.  Notice shall be deemed received
when (i) hand delivered; (ii) sent, after receipt of confirmation or
answer back if sent by telecopy; (iii) five Business Days after deposit in
the U.S. mails, postage prepaid, for certified mail; and (iv) one Business
Day after delivery to Federal Express (or similar type of overnight delivery),
properly addressed to the applicable party.

 

Section 10.5           Amendment;
Waiver.  No amendment,
modification or discharge of this Agreement, and no waiver hereunder, shall be
valid or binding unless

 

 

set forth in
writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought.  Any such waiver shall constitute a waiver
only with respect to the specific matter described in such writing and shall in
no way impair the rights of the party granting such waiver in any other respect
or at any other time.  The failure of
either party to insist in any one or more instances upon strict performance of
any of the provisions of this Agreement or take advantage of any of its rights
hereunder shall not be construed as a waiver of any such provisions or the
relinquishment of any such rights, but the same shall continue and remain in
full force and effect.

 

Section 10.6           Entire
Agreement.  This instrument
constitutes the entire agreement between the parties relating to the subject
matter hereof, and there are no agreements,
understandings, conditions, representations, or warranties not expressly set
forth herein.

 

Section 10.7           Sovereign
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Kentucky,
without reference to the conflicts of laws or choice of law provisions thereof.

 

Section 10.8           Binding
Agreement.  Subject to the
provisions of Sections 10.2 and 10.3, this Agreement shall bind and inure to
the benefit of the parties and their respective successors and assigns.

 

Section 10.9           Headings.  The section and other headings in this
Agreement are inserted solely as a matter of convenience and for reference, are
not a part of this Agreement, and shall not be deemed to affect the meaning or
interpretation of this Agreement.

 

Section 10.10         Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

 

Section 10.11         Annexes
and Exhibits.  All annexes, attachments,
schedules and exhibits to this Agreement referenced herein are incorporated
herein by reference.

 

Section 10.12         Severability,
etc.  Any term or provision of
this Agreement that is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability, without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
unenforceability of any of the terms or provisions of this Agreement in any
other jurisdiction.  If any term or
provision of this Agreement is so broad as to be invalid or unenforceable, the
provision shall be interpreted to be only so broad as
is valid or enforceable.  Subject to the
foregoing provisions of this Section 10.12, if any term or provision of
this Agreement is invalid or unenforceable for any reason, such circumstances
shall not have the effect of rendering such term or provision invalid or
unenforceable in any other case or circumstance.

 

 

Section 10.13         No
Presumption Against Drafter.  Each of
the parties hereto has jointly participated in the negotiation and drafting of
this Agreement.  In the event of an
ambiguity or a question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by each of the parties hereto and no
presumptions or burdens of proof shall arise favoring any party by virtue of
the authorship of any of the provisions of this Agreement.

 

Section 10.14         Arbitration.

 

(a)           All
controversies, disputes, or claims arising among the parties in connection
with, or with respect to, any provision of this Agreement which have not been
resolved within twenty (20) days after either Buyer, on the one hand, or
Seller, on the other hand, has notified the other in writing of such
controversy, dispute or claim, shall be settled by arbitration administered by
the American Arbitration Association (“AAA”) under its Commercial Arbitration
Rules, and judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof. 
Notwithstanding anything contained in this Section 10.14 or the AAA
Commercial Arbitration Rules to the contrary, any arbitrator appointed
hereunder to resolve disputes shall be an attorney licensed to practice law in
the United States with experience in commercial real estate and the timber and
paper industries and shall have expertise appropriate to the dispute.  In addition to the aforementioned
qualifications, any arbitrator appointed hereunder to resolve disputes arising
out of any Article IV matter shall have a familiarity with the factors
taken into account in pricing wood fiber products and shall otherwise be
qualified to make the pricing determinations required by Article IV.

 

(b)           Nothing
herein contained shall bar the right of any of the parties to seek and obtain
temporary injunctive relief from a court of competent jurisdiction in
accordance with applicable law against threatened conduct that will cause loss
or damage, pending completion of the arbitration, and the prevailing party
therein shall be entitled to an award of its reasonable attorneys’ fees and
costs.

 

(c)           Notwithstanding
anything contained in this Agreement to the contrary, in the event that any
controversy, dispute, or claim exceeds $10,000,000, this Section 10.14
shall not apply.

 

Except as otherwise provided in this
Agreement, this Section shall be interpreted, governed by and enforced in
accordance with the United States Arbitration Act, 9 U.S.C. Section 1-14.

 

Section 10.15         Sustainable
Forestry Initiative.  Seller
shall continue to manage the Timberlands in accordance with the Sustainable
Forestry Initiative during the Term of this Agreement.  From time to time it may be necessary to
agree upon a recognized successor or alternative standard to the Sustainable
Forestry Initiative, which shall be negotiated in good faith to reflect changes
or developments in the evolution of widely accepted industry standards.

 

 

Section 10.16         Option
to Convert to Stumpage Agreement.  At any time during the Term of this
Agreement, upon not less than one hundred twenty (120) days prior written
notice from Seller to Buyer, Seller shall have the one-time option to convert
this Agreement from a delivered wood agreement to a stumpage agreement.  Upon such conversion (the “Conversion Date”),
the parties shall enter into a new agreement substantially in the form of the
agreement attached hereto as Schedule 10.16 (the “Stumpage Agreement”).  The Base Prices for such Stumpage Agreement
shall be the fair market value of the Products on the Conversion Date, as
reasonably and mutually agreed to by Buyer and Seller.  If the parties are unable to agree on said
Base Prices, said Base Prices shall be determined by the Valuation Consultant.

 

Section 10.17         Memorandum
of Contract.  At the request
of any party hereto, a Memorandum of this Agreement shall be recorded in the
recording offices of each and every County in which the Timberlands are
located.

 

Section 10.18         Publicity.  This Agreement is confidential and no party
shall issue press releases or engage in other types of publicity of any nature
dealing with the commercial and legal details of this Agreement without the
other party’s prior written approval. 
However, approval of such disclosure shall be deemed to be given to the extent
such disclosure is required to comply with applicable laws, governmental rules,
regulations or other governmental requirements; in connection with any
financing arrangements of such party; in connection with the sale of any
portion of the Timberlands by Seller; or in connection with any dispute
resolution procedures of litigation hereunder. In such event, the publishing
party shall, to the extent reasonably practicable, furnish, in advance, a copy
of such proposed disclosure, to the other party.

 

Section 10.19         Estoppel
Certificates.  Either party shall, at
no cost to the requesting party, from time to time, upon twenty (20) days prior
request by the other party, execute, acknowledge and deliver to the requesting
party a certificate signed by an officer of the certifying party stating that
this Agreement is unmodified and in full force and effect (or, if there have
been modifications, that this Agreement is in full force and effect as
modified, and setting forth such modifications) and the dates through which
payments have been made, and either stating that to the knowledge of the signer
of such certificate no default exists under this Agreement or specifying each
such default to which the signer has knowledge.

 

Section 10.20         Prevailing
Party.  If
either party brings any proceeding for the judicial or other interpretation,
enforcement, termination, cancellation or rescission of this Agreement, or for
damages for the breach thereof, the prevailing party in any such proceeding or
appeal thereon shall be entitled to its reasonable attorneys’ fees and court
and other reasonable costs incurred, to be paid by the losing party as fixed by
the court in the same or a separate proceeding, and whether or not such
proceeding is pursued to decision or judgment. 

 

Section 10.21         Original
Agreement.  The parties agree
that upon execution of this Agreement by the parties hereto, the Original
Agreement shall be superseded and replaced in all respects by this Agreement
and Escanaba Timber is hereby released from

 

 

any obligation
accruing under the Original Agreement, except for the obligation to return the
deposit made under Section 4.4 of the Original Agreement.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

 

	
   

  	
  CYPRESS
  CREEK, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William
  J. Cavins

  	
   

  
	
   

  	
   

  	
  William J.
  Cavins, member of the Board of Directors

  
	
   

  	
   

  	
      as
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WICKLIFFE
  PAPER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gary
  E. Ervin

  	
   

  
	
   

  	
   

  	
  Gary E.
  Ervin, member of Board of Directors

  
	
   

  	
   

  	
      as
  Manager10.21

 

EXECUTION
COPY

 

 

STUMPAGE
AGREEMENT

 

Between

 

 

SCIOTO
LAND COMPANY, LLC

 

 

and

 

WICKLIFFE
PAPER COMPANY

 

 

December 16, 2005

 

 

STUMPAGE AGREEMENT

 

This Agreement is made as of December 16,
2005, by and between SCIOTO LAND COMPANY, LLC, a Delaware limited liability
company (“Seller”) and WICKLIFFE PAPER COMPANY, a Delaware corporation (“Buyer”).

 

Recitals

 

Seller desires to sell and Buyer desires to
purchase, on the terms and conditions hereinafter set forth, certain quantities
and types of wood fiber located on certain timberlands owned by Seller.

 

Therefore, in consideration of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:

 

Agreement

 

1.             Definitions.  For the purposes of this Agreement the
capitalized terms set forth below shall have the meanings set forth after them.

 

1.1           “Affiliate”
shall mean with respect to any Person, any Person controlling, controlled by,
or under common Control with, such Person.

 

1.2           “Annual
Buyer Harvesting Notice” shall mean a written notice from Buyer to Seller to be
given not later than October 1 of the year preceding each Harvesting Year
during the Term of this Agreement (beginning with Harvesting Year 2006)
specifying which of the Actual Designated Tracts Buyer will harvest during the
upcoming calendar year.

 

 

1.3           “Annual
Purchase Amount” shall mean the volumes of Qualifying Timber as set forth in Section 2.2
of this Agreement.

 

1.4           “Annual
Seller Notice” shall mean the annual notice provided by Seller to Buyer in
accordance with the provisions of Section 3.1.2.1 of this Agreement.

 

1.5           “Applicable
Laws” shall mean, with respect to any Person, all laws, ordinances, judgments,
decrees, injunctions, writs, orders, rules, regulations, determinations,
licenses and permits of any Governmental Authority applicable to or binding
upon such Person or any of its property.

 

1.6           “Base
Price Adjustment Date” shall mean January 1, 2006, and each subsequent
second anniversary from such date during the Term of this Agreement.

 

1.7           “Business
Day” shall mean any day other than a Saturday, Sunday, or other day on which banks are authorized to be closed in Kentucky.

 

1.8           “Control”
shall mean, with respect to any Person, the power to direct or cause the
direction of the management of such Person, directly or indirectly, whether
through the ownership of voting securities or otherwise.

 

1.9           “Event
of Default” shall have the meaning set forth in Section 9.3 hereof.

 

1.10         “Fair
Market Timber Value” shall mean the then current fair market value of a Product
as mutually determined by Buyer and Seller. 
If Buyer and Seller are unable to reach mutual determination, then the
applicable Fair Market Timber Value shall be determined in accordance with the
Fair Market Timber Value Mechanism.

 

1.11         “Fair
Market Timber Value Mechanism” shall mean the following procedure used to
determine the Fair Market Timber Value of each type of Qualifying Timber
hereunder.  Either Seller or Buyer may
initiate commencement of the Fair Market Timber Value

 

 

Mechanism by notice to the other (a “Mechanism
Notice”). 
Not later than ten (10) days following receipt of a Mechanism
Notice, Seller and Buyer shall agree on the Valuation Consultant.  Not later than thirty (30) days following
selection of the Valuation Consultant, each of Seller, Buyer and the Valuation
Consultant shall submit to the others not less than six (6) Qualifying
Sales relating to the then applicable Fair Market Timber Value
determination.  The Fair Market Timber
Value of the Qualifying Timber at issue shall be (a) the sum of (i) the
average price per ton of all Qualifying Sales submitted by Seller, plus (ii) the
average price per ton of all Qualifying Sales submitted by Buyer, plus (iii) the
average price per ton of all Qualifying Sales submitted by the Valuation Consultant,
(b) divided by three.

 

1.12         “Force
Majeure Event” shall mean any act, omission or circumstance occasioned by or
resulting from any acts of God, acts of the public enemy, wars, blockades,
insurrections, riots, epidemics, infestation, disease, landslides, lightning,
earthquakes, tornadoes, windstorms, volcanoes, fires, storms, floods,
disasters, civil disturbances, explosions, sabotage, governmental actions, the
failure to act of any Governmental Authority, strikes or other labor disputes,
failures or partial failures of any equipment, failure of transportation, an
involuntary ceasing of operations at the Mill for a minimum of thirty (30)
consecutive days, or any other events or circumstances not within the control
of a party hereto which prevents such party from performing its obligations
hereunder; provided, however, that “Force Majeure Event” shall not include (i) a
party’s financial inability to perform, or (ii) an act, omission or
circumstance arising from the negligence or willful misconduct of the party
claiming that a Force Majeure Event has occurred.

 

1.13         “Governmental
Authority” shall mean any federal, state, local or foreign government,
political subdivision, agency, board, court, regulatory body or commission, any

 

 

arbitrator with
authority to bind a party at law, or any Person acting lawfully on behalf of
any of the foregoing.

 

1.14         “Hardwood
Pulpwood” shall mean pulpwood from hardwood species of timber.

 

1.15         “Harvesting
Plan” shall mean a description of the type of harvest (such as clear cuts or
thins), together with diameter limits and residual basal area, as applicable.

 

1.16         “Harvesting
Year” shall mean the period from January 1, 2006 through December 31,
2006 for calendar year 2006 and January 1 through December 31 of each
year thereafter during the Term of this Agreement.

 

1.17         “Natural
Hardwood” means Hardwood Pulpwood from timber stands that are naturally
regenerated.

 

1.18         “Market
Region” shall mean all areas which are located within one hundred forty (140)
miles of the Mill.

 

1.19         “Mechanism
Notice” shall have the meaning set forth in Section 1.11 hereof.

 

1.20         “Mill”
shall mean Buyer’s pulp and paper mill located in Wickliffe, Kentucky.

 

1.21         “Person”
means any individual, corporation, partnership, limited liability company, joint
venture, association, joint-stock company, trust, unincorporated organization
or Governmental Authority.

 

1.22         “Pine
Pulpwood” shall mean pulpwood from pine species of timber.

 

1.23         “Plantation
Hardwood” means Hardwood Pulpwood from timber stands that are artificially
regenerated.

 

1.24         “Preliminary
Designated Tract” shall have the meaning set forth in Section 3.1.2.1
hereof.

 

1.25         “Product”
shall mean the individual types of Timber listed in Section 1.33  below.

 

 

1.26         “Product
Price” shall mean the per ton price for each Product
as set forth on Schedule 1.26(a) attached hereto (the “Base Price”)
adjusted up or down on a quarterly basis beginning January 1, 2006.  An example of the quarterly price adjustment
mechanism is set forth on Schedule 1.26(b) to this Agreement.  On each Base Price Adjustment Date during the
Term of this Agreement, the Base Price for the applicable Product shall be
adjusted to equal the Fair Market Timber Value for such Product on the applicable
Base Price Adjustment Date.  On each such
Base Price Adjustment Date a new “Base Price” shall be used in determining the
Product Price with respect to each Product until the Base Price is adjusted on
the next Base Price Adjustment Date.

 

1.27         “Pulpwood”
shall mean Hardwood Pulpwood and Pine Pulpwood.

 

1.28         “Qualifying
Sales” shall mean per unit (as opposed to lump sum) sales of the type of
Qualifying Timber at issue made during the six months immediately prior to the
six month period in which the applicable Base Price Adjustment Date occurs,
provided such sales (i) are made within the Market Region, and (ii) involve
not less than 2,000 tons of the type of Qualifying Timber at issue as to each
such sale.

 

1.29         “Qualifying
Timber” shall mean Timber which meets or exceeds the specifications set forth
in Schedule 1.29 to this Agreement.

 

1.30         “SMZ’s”
shall mean Streamside Management
Zones, designated as such by Seller, and any similar environmentally protected
zones so designated during the Term of this Agreement.

 

1.31         “Saw
Logs” means logs cut to be made into solid wood products from hardwood and pine
species of timber that do not include Pulpwood.

 

 

1.32         “Sustainable
Forest Practice Standards” shall mean practices substantially in compliance
with standards substantially similar to the Sustainable Forestry Initiative of
the American Forest and Paper Association (the “AF&PA”) and as that
standard may be modified by AF&PA from time to time.

 

1.33         “Timber”
shall mean the following types of timber now or hereafter located on the
Timberlands: Hardwood Pulpwood, Pine Pulpwood, Saw Logs.

 

1.34         “Timberlands” shall mean
all timberland properties acquired by Seller from Escanaba Timber LLC on the
date hereof and located in the State of Tennessee.

 

1.35         “TMS”
shall mean the publication known as Timber Mart-South, or in the event TMS is
no longer published, a comparable publication mutually acceptable to Seller and
Buyer.

 

1.36         “Valuation
Consultant” shall mean either Sizemore & Sizemore of Tallassee,
Alabama or Larson & McGowin of Mobile, Alabama, or if such firms are
no longer in existence, another reputable, professionally qualified Person
meeting all of the following criteria. 
Such person (i) is not an Affiliate of either Seller or Buyer, (ii) during
the past two (2) years has not transacted substantial business with either
Seller or Buyer, and (iii) does not have less than five (5) years
experience relating to sales of Timber within the Market Region.  If Seller and Buyer are unable to agree
within thirty (30) days, then an arbitrator selected pursuant to Subsection 10(b) below
shall select such reputable, professionally qualified Person meeting the
foregoing criteria.  Seller and Buyer
shall provide to the Valuation Consultant such information as the Valuation
Consultant shall reasonably request to facilitate the determinations to be made
by the Valuation Consultant hereunder.

 

1.37         “Zones”
shall mean the Zone designated in TMS as Tennessee Area 2.

 

 

2.             Agreement to Sell
and Purchase.

 

2.1           Quantities
to be Sold and Purchased.  Subject to
the terms and conditions of this Agreement, Seller agrees to sell and Buyer
agrees to purchase for each Harvesting Year during the Term of this Agreement
all Qualifying Timber harvested from the Actual Designated Tracts (as
hereinafter defined).

 

2.2           Required
Product Mix.  With respect to the
Timber to be purchased by Buyer hereunder, Seller shall make available to Buyer
the following product mix for each Harvesting Year during the Term of this
Agreement:

 

2.2.1        2006
– 2016.  For the Harvesting Years
beginning January 1, 2006 and ending December 31, 2016, the mix of
Timber Seller shall make available to Buyer shall be not less than the volumes
in thousands of tons by year in the following table:

 

	
  Year

  Source

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  	
  2009

  	
   

  	
  2010

  	
   

  	
  2011

  	
   

  	
  2012

  	
   

  	
  2013

  	
   

  	
  2014

  	
   

  	
  2015

  	
   

  	
  2016

  	
   

  
	
  (i)Hardwood
  Pulpwood

  	
   

  	
  50

  	
   

  	
  50

  	
   

  	
  50

  	
   

  	
  50

  	
   

  	
  50

  	
   

  	
  40

  	
   

  	
  30

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  (ii) Pine
  Pulpwood

  	
   

  	
  35

  	
   

  	
  35

  	
   

  	
  35

  	
   

  	
  35

  	
   

  	
  35

  	
   

  	
  35

  	
   

  	
  35

  	
   

  	
  35

  	
   

  	
  35

  	
   

  	
  35

  	
   

  	
  35

  	
   

  

 

2.2.2        2017
– 2019 - To the extent Buyer exercises its option to extend the Term
pursuant to Section 9.2 below, for Harvesting Years beginning January 1,
2017 and ending December 31, 2019, the mix of Timber Seller shall make
available to Buyer shall be as follows:  

 

	
  (a)

  	
  Pine Pulpwood:

  	
   

  	
  not less than 35,000 tons

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
  All Other Products:

  	
   

  	
  no minimum requirement

  

 

 

3.             Designation of
Tracts and Determination of Volumes.

 

3.1           Designation
of Tracts to Be Harvested.  During
the Term of this Agreement, Seller shall designate the portions of the
Timberlands which Seller shall make available to Buyer for harvesting during
each of the next two Harvesting Years.  A
sufficient number of tracts shall be made available so as to satisfy the
obligations of Seller herein to sell to Buyer and Buyer to purchase from Seller
the applicable Annual Purchase Amount. 
Seller shall follow the procedure for designating such tracts
hereinafter set forth in this Section 3.

 

3.1.1        Initial
Designation of Tracts to be Harvested.  Schedule 3.1.1 attached hereto
and made a part hereof sets forth the portions of the Timberlands which Seller
shall make available to Buyer for the Harvesting Year commencing January 1,
2006 and the Harvesting Year commencing January 1, 2007.

 

3.1.2        Subsequent
Designation of Tracts to be Harvested.  For the Harvesting Year commencing January 1,
2007, and for all subsequent Harvesting Years during the Term of this
Agreement, the portions of the Timberlands which Seller shall make available
for harvesting shall be determined in accordance with the following procedure.

 

3.1.2.1     Designation
of Potential Harvesting Areas.  On or
before the November 1 prior to the applicable Harvesting Year (e.g. November 1,
2006 for the Harvesting Year commencing January 1, 2007), Seller shall
designate in a notice to Buyer those portions of the Timberlands which it
proposes to make available to Buyer for harvesting during the subsequent two
Harvesting Years (the “Preliminary Designated Tracts”).  To the extent practicable and not
inconsistent with the silvicultural and long-term management objectives of
Seller, the land which Seller designates as the Preliminary Designated Tracts
shall be distributed relatively uniformly over the four geographical quadrants
(north, south, east and west) of the Timberlands.

 

 

3.1.2.2     Selection
of Actual Harvesting Areas.  During
the thirty (30) day period following receipt by Buyer of the applicable Annual
Seller Notice, Seller and Buyer shall meet to discuss any proposed modification
to the Preliminary Designated Tracts which may be reasonably requested by
Buyer.  At the end of said thirty (30)
day period, Seller shall notify Buyer of the actual tracts which Seller will
harvest to satisfy the volume requirements of this Agreement for the applicable
Harvesting Year, taking into account said proposed modifications reasonably
requested by Buyer, to the extent practicable (the “Actual Designated Tracts”),
and Seller shall simultaneously therewith deliver to Buyer a Harvesting Plan
for each of the Actual Designated Tracts.

 

3.2           Boundary
and Timber Markings.  Within fifteen
(15) Business Days prior to the scheduled commencement of harvesting activities
on the applicable Actual Designated Tract, Seller and Buyer will proceed with
the designation of boundary lines consistent with past practices of
MeadWestvaco Corporation, but Seller reserves the right to designate on the
ground (using bright timber-marking paint) the boundary lines of all such
Actual Designated Tracts.  The boundary
lines shall clearly delineate the boundaries of the Actual Designated Tracts
from the boundaries of adjacent land not owned or leased by Seller, and from
the boundaries of other Timberlands not constituting Actual Designated Tracts
for such Harvesting Year.  Seller shall
also designate on the ground (using bright timber-marking paint) all SMZ’s
within the Actual Designated Tracts and any Timber to be removed from such
designated SMZ’s.

 

4.             Harvesting
Procedures. 

 

4.1           Harvesting
Schedule.  Following determination of
the Actual Designated Tracts, Buyer shall provide a harvesting schedule to
Seller setting forth approximate start and completion dates relating to
harvesting Timber within each of the Actual Designated Tracts.

 

 

Buyer shall modify said
harvesting schedule based upon any reasonable objections raised by Seller
with respect to any of said harvesting dates, said reasonable objections may be
for reasons which include, but are not limited to, (a) a violation of
Sustainable Forestry Certification Requirements, (b) potential logging
damage to the site, such as rutting, or (c) failure to comply with
Sustainable Forestry Initiative regeneration requirements applicable to
harvesting on adjacent lands. 
Notwithstanding the foregoing, Buyer shall harvest the Actual Designated
Tracts on the basis of the Annual Buyer Harvesting Notices provided by Buyer to
Seller each calendar year during the Term of this Agreement, subject to a Force
Majeure Event, and subject to the provisions of Section 4.3 below.

 

4.2           Timber
Roads.  Seller shall construct, or cause to be
constructed, at Seller’s sole cost and expense, haul roads (including
temporary, winter haul roads when appropriate) to the Actual Designated Tracts
necessary to provide Buyer in a timely manner with proper access to such Actual
Designated Tracts for its harvesting operations.  Construction of such roads shall be
accomplished in a good and workmanlike manner in compliance with all Applicable
Laws so that Buyer is provided with effective and functional access to all
Actual Designated Tracts for its logging practices.  Following the construction of said roads,
Buyer shall at its sole cost and expense maintain and repair said roads for so
long as it is harvesting on the relevant Actual Designated Tracts.  Upon completion of harvesting on the relevant
Actual Designated Tracts, Buyer shall leave such roads in a condition equal to
or better than their condition prior to the start of the operation.  All such road maintenance and repair shall be
performed in a manner so as not to violate any Applicable Laws, or with respect
to SMZ’s, so as to comply with best management practices sanctioned by the
State of Tennessee.

 

 

4.3           Timber
Harvesting.  Buyer shall harvest
(i.e. cut and remove) in each Harvesting Year, all merchantable Timber as
identified in the Harvesting Plan for the Actual Designated Tracts for such
Harvesting Year, subject to a Force Majeure Event.  Such harvesting operations shall be conducted
in accordance with all Applicable Laws, in a manner consistent with established
industry logging practices, and in compliance with any reasonable additional
guidelines which may be established from time to time by Seller.  Buyer shall repair all fences or structures
damaged by its harvesting operations and shall leave all roads, fire breaks,
property lines, lakes, streams, and drainage ditches clear of logs, timber,
limbs or other debris.  All oil drums,
cans, bottles, cartons, delimbing bars, loading decks, abandoned equipment and
other debris resulting from Buyer’s operations shall be removed from the
applicable portions of the Timberlands upon completion of the harvesting
operations at Buyer’s expense.  If
repairs are not made or if the debris is not removed and cleared within thirty
(30) days after notice from Seller to Buyer, then Seller may undertake such
repair or removal for Buyer’s account, and Buyer shall be liable to Seller for
any expense incurred in repairing or removing same.  Buyer shall not, under any circumstance, bury
any material underground nor discharge, release or
otherwise cause the Timberlands or any portion thereof to be affected by
hazardous wastes or hazardous substances. 
Buyer shall use normal and customary care while conducting its
harvesting operations so as not to materially damage the Timberlands.  Buyer acknowledges that a higher degree of
care is required when the site is abnormally wet and that such circumstances may
require Buyer to halt all harvesting activities.  Seller reserves the right to suspend Buyer’s
harvesting operations when Seller deems site damage will result from continued
operations; provided, however, that in the event of such suspension, Buyer
shall be entitled to an extension of the time allotted for its harvesting
operations equal to the number of

 

 

days
that the suspension continues.  Seller
also reserves the right to suspend Buyer’s harvesting operations on an Actual
Designated Tract when Seller determines, in the exercise of its reasonable
discretion, that Buyer is not conducting harvesting operations on the Actual
Designated Tract in accordance with the relevant Harvesting Plan.  In the event Buyer conducts harvesting
operations in violation of the relevant Harvesting Plan or outside the scope of
the relevant Harvesting Plan, then Seller shall be entitled to pursue all
remedies available at law for timber trespass.

 

4.4           Saw
Log Disposition.  Buyer will
coordinate the harvest of Saw Log timber from Actual Designated Tracts in
conjunction with its Pulpwood harvesting operations and will separate Saw Logs
from Buyer’s harvested Pulpwood.  Seller
shall be responsible for the merchandising and delivery of
such Saw Logs and bear the expenses and be entitled to all proceeds
associated therewith.  Buyer and Seller
shall cooperate to ensure that Saw Log removal is accomplished in an efficient
manner without undue interference with Buyer’s Pulpwood harvesting operations.

 

5.             Prices and
Payment.  

 

5.1           Prices.  Buyer shall pay Seller for all Timber
purchased by Buyer in an amount equal to the then current applicable Product
Price.

 

5.2           Payment.  Promptly after harvest all Qualifying Timber
shall be weighed at the Mill or at one of Buyer’s remote woodyards.  Buyer shall provide Seller on a weekly basis
with a settlement statement that shows the date, species and net tonnage for
each load, and shall pay Seller each week for all Timber weighed-in or scaled
during the previous week.  The equipment
used for the weighing of Timber shall be maintained by Buyer in good and
accurate working order in accordance with all applicable laws and regulations
and prudent practice.  Seller shall

 

 

have
the right to check and audit said equipment at any time upon reasonable notice
to Buyer.  Payments made after twenty
(20) days from the date of delivery shall be considered past due (“Past Due”).  For payments that are Past Due, Buyer shall
pay interest at a rate per annum equal to the daily prime rate as reported in
the Wall Street Journal plus four percent (4%) for each day that the payments
are Past Due.  Such interest shall be
calculated daily on the basis of a year of 365 days and the actual number of
days for which interest is due.  If at
any time during the Term there are any payments outstanding to Seller that are
Past Due, then, in addition to any other remedies it may have hereunder, Seller
may suspend harvesting by Buyer (or deliveries by Seller to the Mill, if
applicable) until such time as all Past Due payments have been paid in full.

 

6.             Indemnity.

 

6.1           Indemnification
by Seller.  Seller shall defend,
indemnify and hold Buyer harmless from and against any and all claims,
liabilities, costs or damages (including without limitation reasonable
attorneys fees and court costs through all appeals) arising out of personal
injury, death or property damage arising from (i) Seller’s ownership,
operation and/or maintenance of the Timberlands, and (ii) the performance
or non-performance by Seller of its obligations hereunder.

 

6.2           Indemnification
by Buyer.  Buyer shall defend,
indemnify and hold Seller harmless from and against any and all claims,
liabilities, costs or damages (including without limitation reasonable
attorneys fees and court costs through all appeals) arising out of personal
injury, death or property damage arising from (i) Buyer’s harvesting
operations on the Timberlands, and (ii) the performance or non-performance
by Buyer of its obligations hereunder.

 

(a)           Survival.  The provisions of this Section 6 shall
survive the expiration or earlier termination of this Agreement.

 

 

7.             Force Majeure.

 

7.1           Effect
of Force Majeure.  Except for the
obligation of a party to make payments required hereunder, the parties shall be
excused from performing any of their respective obligations under this
Agreement and shall not be liable in damages or otherwise on account of the
non-performance of any such obligation, for so long as and to the extent that
such party is unable to perform such obligation as a result of any Force
Majeure Event.

 

7.2           Mitigation
and Notice.  The occurrence of a
Force Majeure Event shall not relieve a party of its obligations and liability
hereunder to the extent such party fails to use commercially reasonable efforts
to remove the cause and remedy or mitigate the effects of the Force Majeure
Event if, with commercially reasonable efforts, such party could have removed
such cause or remedied or mitigated such effects.  In addition, no Force Majeure Event shall
relieve a party of its obligations or liability hereunder unless such party
shall give notice (including a reasonable description of such Force Majeure
Event) to the other party as soon as reasonably possible and in any event
within twenty (20) days of the occurrence of such Force Majeure Event. Upon request,
the party whose obligations were suspended shall provide the other party with a
plan for remedying the effects of such Force Majeure Event.

 

7.3           Failure
to Give Notice.  A failure to give
notice under Section 7.2 above “as soon as reasonably possible” will not
affect the rights and obligations of the party whose obligations are suspended
except if, and only to the extent that, the party which was entitled to receive
such notice was actually and materially prejudiced as a result of such failure.

 

7.4           Force
Majeure Event Affecting Actual Designated Tracts.  If either party becomes aware of a Force
Majeure Event that makes a portion of any Actual Designated Tract unavailable
for harvesting by Buyer in accordance with the schedule contemplated by
the

 

 

parties,
then it shall promptly notify the other party and Seller shall promptly
designate and make available for harvesting such other portions of the
Timberlands as shall be necessary to satisfy its obligations under this
Agreement.  If the Seller is unable to
designate sufficient portions of the Timberlands to satisfy its obligations
under this Agreement, then the provisions of Section 7.5 shall apply to
the unsatisfied obligations occasioned by such Force Majeure Event.

 

7.5           Volume
Reduction Based on Force Majeure Event. 
If the party that becomes subject to a Force Majeure Event (the “Affected
Party”) reduces the volume of Timber to be purchased or sold due to a Force
Majeure Event (the amount of such reduction, the “Reduction Amount”), the
Affected Party shall give written notice to the other party (the “Non-Affected
Party”) of such reduction and the effective date thereof.  If such reduction continues in effect for a
period of sixty (60) days or more, the Non-Affected Party shall then have the
right, in the case of Seller, to sell all or part of the Reduction Amount of
such Timber not purchased by Buyer to another buyer or buyers, and in the case
of Buyer, to purchase all or part of the Reduction Amount of Timber not sold by
Seller from another seller or sellers, subject to the following:

 

(i)                                     The
Non-Affected Party shall not enter into any contract for any such sale or
purchase for a term longer than one (1) year’s duration.

 

(ii)                                  The
Non-Affected Party shall give the Affected Party written notice of each such
contract, including the volume sold or purchased thereunder and the term
thereof.

 

 

(iii)                               The
annual volume commitment of the Non-Affected Party for Timber as specified
herein shall be reduced by such volume sold or purchased under such contract
for the duration thereof.

 

7.6           Harvest
Volume Variances.  Following the
determination by Seller and Buyer of the Actual Designated Tracts for a given
Harvesting Year in accordance with Section 3.1.2.2, Seller and Buyer shall
be deemed to have satisfied the volume requirements of Section 2.2 in
respect of such Harvest Year regardless of whether Buyer actually harvests the
volumes contemplated by Section 2.2 where harvesting shortfalls arise from
(i) variances between actual timber volume and the inventory volumes of
such Actual Designated Tracts; or (ii) operational constraints associated
with Buyer’s adherence to Sustainable Forestry Practice Standards or applicable
Forestry Best Management Practices as promulgated by the Tennessee Department
of Agriculture Division of Forestry or any successor agency or standards
thereto.  In the event that Buyer’s
harvest volumes exceed the minimum volume requirements for any Harvest Year as
specified in Section 2.2, such excess harvest volume shall directly offset
the corresponding volume requirement for the subsequent Harvest Year.

 

 

8.             Pay or Take

 

8.1           Seller Responsibility.   Seller agrees to sell ,
subject to Force Majeure, and Buyer agrees to purchase, subject to Force
Majeure, the Annual Volumes of Products to be produced under the direction of
Seller during each Calendar Year as determined in Section 2.3 (c).  If for any Calendar Year, Seller fails for
any reason other than Force Majeure to tender to Buyer at least ninety percent
(90%) of the designated Annual Volumes of Products, Seller will pay Buyer at a
rate of $15.00 per ton multiplied by the difference between (x) ninety percent
(90%) of the Annual Volumes of Products for the applicable Calendar Year minus
(y) the volume of Products actually tendered by Seller during such Calendar
Year, as liquidated damages and not as a penalty, and Buyer shall have no
further claim for damages on account of such shortfall in the delivery of the
Annual Volumes.  Payment shall be made by
Seller to Buyer on demand no later than fifteen (15) days from Buyer’s written
request for such payment. 
Notwithstanding the foregoing, :  (i) if
adverse weather conditions during the last ninety (90) days of any Calendar
Year prevent Buyer from purchasing the Annual Volumes of Natural Hardwood or Pine
Pulpwood for said Calendar Year, the payments provided for in this Section 8.1
shall not apply unless and to the extent said volumes (together with any
volumes required with respect to the first quarter of the following Calendar
Year) are not purchased on or before March 31 of the following Calendar
Year.

 

8.2           Buyer
Responsibility.  If for any Calendar
Year, Buyer fails for any reason other than Force Majeure to purchase at least
ninety percent (90%) of the Annual Volumes of Products from Seller, then Buyer
shall pay Seller for the shortage at a rate of $15.00 per ton multiplied by the
difference between (x) ninety percent (90%) of the Annual Volumes of

 

 

Products for the applicable
Calendar Year minus (y) the volume of Products actually purchased by Buyer
hereunder during such Calendar Year, as liquidated damages and not as a
penalty, and Seller shall have no further claim for damages on account of Buyer’s
failure to purchase the Annual Volumes. 
Payment shall be made by Buyer to Seller on demand no later than fifteen
(15) days from Seller’s written request for such payment.

 

8.3           Additional
Terms.  Subject to the terms of Section 7
above, any payments made pursuant to this Section 8.3 shall be calculated
separately for Pine Pulpwood and Hardwood Pulpwood.  If this Agreement is in termination at a time
other than the beginning or end of a calendar year, the Annual Volumes for
purposes of calculating such shortage payment for either party will be prorated
equitably.

 

9.             Term and
Termination.

 

9.1           Term.  This Agreement shall expire on December 31,
2016, unless this Agreement is sooner terminated for cause pursuant to Section 9.3
hereof, or unless this Agreement is extended as provided in Section 9.2
(the “Term”).

 

9.2           Extension
of Term.               Provided that Buyer shall not then be in
default under this Agreement, the Term of this Agreement may be extended at the
option of Buyer for one (1) additional three (3) year term, which
extension term shall commence concurrently with the expiration of the initial
term, upon the same terms and conditions as contained in this Agreement.  In the event that Buyer desires to extend
this Agreement pursuant to the above extension option, it shall give written
notice of such desire to extend the Term to Seller no later than January 1,
2016.

 

9.3           Termination
for Cause.  This Agreement shall
immediately terminate if any one of the following events (each, a “default”)
has occurred and is continuing on the tenth (10th) day

 

 

after
receipt of notice of an intent to cancel by reason of such default (each, an “Event
of Default”):

 

(a)           Breach
of any other term of this Agreement, which breach is not cured within twenty
(20) days after receipt of written notice thereof; or

 

(b)           Insolvency
or the filing by or against Seller or Buyer of a petition in bankruptcy (which,
in the event of an involuntary bankruptcy, is not dismissed within sixty (60)
days from the date of its commencement), or appointment by a court of a
temporary or permanent receiver, trustee or custodian.

 

9.4           Effect
of Termination.  Termination shall
not relieve a defaulting party of any liability to the nondefaulting party for
breach of its obligations hereunder.

 

10.           Dispute Resolution.  Disputes under this Agreement shall be
resolved as follows, it being understood that each party shall work in good
faith at each step of the process to try to resolve the dispute as
expeditiously and fairly as possible:

 

(a)           The
appropriate responsible persons from Seller and Buyer shall meet and seek
amicably to resolve all differences.

 

(b)           If
any material difference remains unresolved ten (10) Business Days after
the start of the process referenced in Subsection 10(a), or such longer
period as the persons referenced in Subsection 10(a) shall have
agreed, then the parties shall submit such matter to arbitration, pursuant to
the Rules of Commercial Arbitration of the American Arbitration
Association.  Any such arbitration shall
be conducted by a single arbitrator, whose decision shall be final.  The parties shall first attempt to agree on
the selection of the arbitrator, and, if they

 

 

cannot agree
within fourteen (14) days after it becomes necessary to submit the dispute to
arbitration, either party may request the American Arbitration Association to
appoint the arbitrator.  In all cases,
the arbitrator shall be a person knowledgeable about sales of timber in the
Market Region.  The arbitrator shall be
instructed to schedule all proceedings so that, if possible, a decision
may be reached and communicated to the parties within forty-five (45) days after
the appointment of the arbitrator.  All
expenses of the arbitration shall be divided equally between the parties,
except that each party shall bear the expense of its own counsel and the
expense of the preparation of its presentation. 
Seller and Buyer shall provide to the arbitrator such information as the
arbitrator shall reasonably request to facilitate the determinations to be made
by the arbitrator hereunder.

 

(c)           Notwithstanding
the existence of a dispute or the progress of the arbitration proceeding, but
subject to the terms of Section 5.2 above, the parties shall continue to
perform their respective obligations under this Agreement during such
period.  To the extent that this
Agreement provides for specific performance or other equitable remedies for a
particular violation, and with respect to the ability of Seller to suspend
Buyer’s harvesting operations pursuant to Section 4.3 and the ability of
Seller to suspend Buyer’s harvesting operations (or deliveries by Seller to the
Mill, if applicable) pursuant to Section 5.2, this Section 10 shall
not apply, it being the intent that the aggrieved party be able to bring the
matter to court to seek enforcement as soon as possible.  Further, this Section 10 shall not
preclude any party from seeking injunctive relief or such other interim
equitable remedies as may be required to preserve any claims hereunder.

 

 

11.           Assignment.

 

11.1         Assignment
by Seller.

 

(a)           Except
as provided in this Section 11.1, this Agreement may not be assigned by
Seller in whole or in part. 
Notwithstanding the foregoing, at any time during the Term, Seller may
assign this Agreement (i) to any lender or lenders as security for
obligations to such lender or lenders in respect to financing arrangements of
Seller or any Affiliate thereof with such lender or lenders, or (ii) upon
prior written notice to Buyer, to any Person that is and at all times remains
an Affiliate of Seller or that merges or consolidates with or into Seller or
that acquires all or substantially all of the Timberlands.

 

(b)           Notwithstanding
any other provision of this Agreement to the contrary, Buyer and Seller
acknowledge and agree that Seller shall not be prohibited from selling all or
any portion of the Timberlands, provided that any such sale of the Timberlands
shall be made subject to the terms of this Agreement and the obligation to
supply the applicable portion of Timber volumes required hereunder.  Upon any sale of a portion of the
Timberlands, the purchaser of said portion of the Timberlands (“New Owner”)
shall assume the obligation to supply a portion of the Timber volumes to be
supplied hereunder, said portion of the Timber volumes (“Assumed Volume”) to be
agreed to by Seller and said New Owner, subject to Buyer’s consent to such
volume allocation, which consent shall not be unreasonably withheld or
delayed.  Upon such assumption by said
New Owner, Seller’s obligations to supply Timber hereunder shall be reduced by
the volumes assumed by said New Owner, and Seller shall thereafter have no
obligation or liability with respect to said assumed volumes or with respect to
the portion of the Timberlands so conveyed. 
At the request of Seller, upon any such sale to a New Owner Buyer shall
execute an amendment to this Agreement acknowledging the foregoing.  Furthermore, upon request of Seller or Buyer,
upon such sale to a New Owner, Buyer and such New Owner shall enter into a
separate Stumpage Agreement on the same terms and conditions as contained
in this

 

 

Agreement (or such other terms as Buyer and
such New Owner shall mutually agree) except for the portion of the Timberlands
covered thereby and the volume of Timber to be supplied thereunder.  In the event Buyer objects to any proposed
Assumed Volume, Buyer shall provide written notice of the same to Seller within
fifteen (15) days of notice to Buyer of said proposed Assumed Volume (“Objection
Notice”), said Objection Notice to include a detailed explanation of the basis
for said objection.  Failure by Buyer to
timely provide said Objection Notice shall be deemed to constitute the consent
of Buyer to said proposed Assumed Volume.  In the event Buyer timely provides an
Objection Notice, Seller shall have the option of (i) revising said
proposed Assumed Volume, in which case Buyer shall have the further right to
object by providing a new Objection Notice as provided above or (ii) retaining
the Valuation Consultant to determine whether the proposed Assumed Volume is
reasonable.  In the event the Valuation
Consultant is so retained and determines that said proposed Assumed Volume is
reasonable, Buyer shall be deemed to have consented to said
Assumed Volume and shall pay all costs and expenses of said Valuation
Consultant.  Otherwise, said costs and
expenses shall be paid by Seller. 
Notwithstanding the foregoing, Seller may convey during the Term hereof
up to 7,000 acres of the Timberlands free and clear of the obligations of this
Agreement (the “Exempt Acres”), provided that Seller is able to supply the
volume of Timber required to be supplied hereunder from the remaining portion
of the Timberlands.  Buyer agrees to
execute any and all documentation requested by Seller in order to evidence the
release of the Exempt Acres from this Agreement.

 

11.2         Assignment
by Buyer.  Except as provided in this
Section 11.2, this Agreement may not be assigned by Buyer in whole or in
part.  Notwithstanding the foregoing, at
any time during the Term, Buyer may assign this Agreement (a) to any
lender or lenders as security for

 

 

obligations to such lender or
lenders in respect of financing arrangements of Buyer or any affiliate thereof
with such lender or lenders, or (b) upon prior written notice to Seller,
to any Person that is and at all times remains an affiliate of Buyer or that
merges or consolidates with or into Buyer or that acquires all or substantially
all of the assets or stock of Buyer.

 

12.           Publicity.  This Agreement is confidential and no party
shall issue press releases or engage in other types of publicity of any nature
dealing with the commercial and legal details of this Agreement without the
other party’s prior written approval. 
However, approval of such disclosure shall be deemed to be given to the
extent such disclosure is required to comply with Applicable Laws, governmental
rules, regulations or other governmental requirements, or in connection with
any financing arrangements of such party. 
In such event, the publishing party shall, to the extent reasonably
practicable, furnish, in advance, a copy of such proposed disclosure, to the other
party.

 

13.           Headings.  The headings contained in this Agreement are
for convenience only and should not be construed to limit or expand any terms
otherwise provided.

 

14.           Notices.  All notices, requests, demands and other
communications provided for hereunder shall be in writing and personally
delivered or sent by regular U.S. certified mail, telecopy or Federal Express
(or similar type of overnight delivery) to the applicable party at the address
indicated below:

 

	
  If to Buyer:

  	
   

  	
  Wickliffe Paper Company

  
	
   

  	
   

  	
  1724 Westvaco Road

  
	
   

  	
   

  	
  Wickliffe, Kentucky 42087

  

 

 

	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Bernie F. Coyle

  
	
   

  	
   

  	
  3901 Mayfield Road

  
	
   

  	
   

  	
  Wickliffe, Kentucky 42087

  
	
   

  	
   

  	
  Telecopier No.  270-335-6240

  
	
   

  	
   

  	
  Telephone No.  270-335-6241

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
  Greg Hansrote

  
	
   

  	
   

  	
  1724 Westvaco Road

  
	
   

  	
   

  	
  Wickliffe, Kentucky 42087

  
	
   

  	
   

  	
  Telecopier No.  270-335-4110

  
	
   

  	
   

  	
  Telephone No.  270-335-4587

  
	
   

  	
   

  	
   

  
	
  If to
  Seller:

  	
   

  	
   

  	
  Scioto Land Company, LLC

  
	
   

  	
   

  	
   

  	
  c/o Tolleson
  Land & Timber, Inc.

  
	
   

  	
   

  	
   

  	
  P.O. Box
  970

  
	
   

  	
   

  	
   

  	
  Perry,
  Georgia 31069

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attn.:
  Robert G. Chambers

  
	
   

  	
   

  	
   

  	
   

  
	
  with a copy
  to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Mazursky &
  Dunaway LLP

  
	
   

  	
   

  	
   

  	
  Monarch
  Tower, Suite 2400

  
	
   

  	
   

  	
   

  	
  3424
  Peachtree Road

  
	
   

  	
   

  	
   

  	
  Atlanta,
  Georgia 30326-1118

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attn: C. Glenn Dunaway,Esq.

  

 

or, as to each
party, at such other address as shall be designated by such party in a written
notice to the other party complying as to delivery with the terms of this
Section.  Notice shall be deemed received
when (i) hand delivered; (ii) sent, after receipt of confirmation or
answer back if sent by telecopy; (iii) five Business Days after deposit in
the U.S. mails, postage prepaid, for certified mail; and (iv) one Business
Day after delivery to Federal Express (or similar type of overnight delivery),
properly addressed to the applicable party.

 

15.           Partial Illegality.  If any provision, or part of a provision, of
this Agreement is held to be invalid or unenforceable under any Applicable Law,
then the parties shall use all commercially reasonable efforts to replace the
invalid or unenforceable provision by a provision that, to the

 

 

extent permitted
by Applicable Law, achieves the purposes intended under the original provision
and to allow the parties to have the intended benefit of their bargain.  If it cannot be so reformed, it shall be
omitted.  The balance of this Agreement
shall remain valid and unchanged and in full force and effect.

 

16.           Waiver of Compliance.  Any delay or omission on the part of either
party to this Agreement in requiring performance by the other party hereunder
or in exercising any right hereunder shall not operate as a waiver of any
provision of this Agreement or of any right or rights hereunder.  Further, any failure by either party to
enforce at any time any term or condition under this Agreement shall not be
considered a waiver of that party’s right thereafter to enforce each and every
term and condition of this Agreement.

 

17.           Amendments and
Waivers.  This Agreement may not be
terminated, amended, supplemented, waived or modified orally, but only by a
document in writing signed by the party against which the enforcement of such
termination, amendment, supplement, waiver or modification is sought.

 

18.           Counterparts.  This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same document.  All
signatures need not be on the same counterpart.

 

19.           Estoppel
Certificates.  Either party shall, at
no cost to the requesting party, from time to time, upon twenty (20) days prior
request by the other party, execute, acknowledge and deliver to

 

 

the requesting party a certificate signed by an officer of the
certifying party stating that this Agreement is unmodified and in full force
and effect (or, if there have been modifications, that this Agreement is in
full force and effect as modified, and setting forth such modifications) and
the dates through which payments have been made, and either stating that to the
knowledge of the signer of such certificate no default exists under this
Agreement or specifying each such default to which the signer has knowledge.

 

20.           Prevailing Party.  If either party brings any proceeding for the
judicial or other interpretation, enforcement, termination, cancellation or
rescission of this Agreement, or for damages for the breach thereof, the
prevailing party in any such proceeding or appeal thereon shall be entitled to
its reasonable attorneys’ fees and court and other reasonable costs incurred,
to be paid by the losing party as fixed by the court in the same or a separate
proceeding, and whether or not such proceeding is pursued to decision or
judgment.  The terms and provisions of
this Section 20 shall survive the expiration or earlier termination of
this Agreement.

 

21.           Entire Agreement.  This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject matter hereof
and merges all prior discussions and negotiations between the parties.  None of the parties shall be bound by any
conditions, definitions, representations, or warranties with respect to the
subject matter of this Agreement other than as expressly set forth above.

 

22.           Third Party
Beneficiaries.  Except as hereinafter
provided, this Agreement is intended to be solely for the benefit of the
parties thereto and their permitted assigns and is not intended to and shall
not confer any rights or benefits on any third party not a signatory
hereto.  

 

 

23.           Memorandum of
Contract.  At the request of any
party hereto, a Memorandum of this Agreement shall be recorded in the recording
offices of each and every County in which the Timberlands are located.

 

24.           Insurance.  In the event that Buyer retains any third
party contractor to conduct harvesting operations on the Timberlands, said
third party contractor shall, before conducting any operations, obtain and
maintain the following types of insurance, in addition to any other insurance
required by law:  (a) Worker’s
Compensation and, to the extent the same is reasonably commercially obtainable,
Employer’s Liability Insurance, fully covering all operations; (b)
Comprehensive Vehicle Liability Insurance, including owned, hired and non-owned
vehicles, with limits of not less than $1,000,000 single occurrence and
$1,000,000 cumulative bodily injury liability; and (c) Comprehensive General
Liability Insurance, including all contractual liability hereunder, with limits
of not less than $1,000,000 single occurrence and $1,000,000 cumulative bodily
injury liability.  Prior to the beginning
of any harvesting operations hereunder, evidence of all such insurance shall be
furnished to Seller, and such insurance shall provide for at least thirty (30)
days notice to Seller of cancellation of such insurance policies.  All such insurance policies shall name Seller
as an additional insured.

 

24.1         Sustainable
Forestry Initiative.  Seller shall
continue to manage the Timberlands in accordance with the Sustainable Forestry
Initiative during the Term of this Agreement. 
From time to time it may be necessary to agree upon a recognized
successor or alternative standard to the Sustainable Forestry Initiative, which
shall be negotiated in good faith to reflect changes or developments in the
evolution of widely accepted industry standards.  In the future, Seller agrees to provide from
time to time at Buyer’s request third-party verification of its compliance

 

 

with such a
standard on the portion of the Actual Designated Tracts from which Timber is
then being harvested.

 

 

Executed under
seal as of the date first set forth above.

 

	
   

  	
  WICKLIFFE PAPER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Peter H.Vogel

  
	
   

  	
   

  	
  Name:

  	
  Peter H. Vogel

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLYNELISH, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SCIOTO LAND COMPANY, LLC, its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Tolleson-Knox Land Management Company, LLC,
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert G. Chambers

  
	
   

  	
   

  	
  Name:

  	
  Robert G. Chambers

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

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