Document:

Exhibit 10.3

 

SECOND
AMENDMENT TO

EQUITY AND ASSET PURCHASE
AGREEMENT

 

THIS SECOND AMENDMENT TO EQUITY AND ASSET PURCHASE AGREEMENT,
dated as of April 30,
2005 (this “Amendment”), is
made and entered into by and between MeadWestvaco Corporation, a Delaware
corporation (“Seller”), and Escanaba Timber LLC (formerly
known as Maple Acquisition LLC), a Delaware limited liability company (“Purchaser”). Capitalized
terms used herein but otherwise not defined shall have the meaning given to
such terms in the Purchase Agreement (as defined below).

 

WHEREAS, Seller and Purchaser have entered into that certain Equity and
Asset Purchase Agreement, dated as of January 14, 2005 (the “Purchase
Agreement”), which contemplates that Seller and
its Subsidiaries will sell, assign and transfer to Purchaser and/or one or more
of its Designated Affiliates, and that Purchaser and/or one or more of its
Designated Affiliates will purchase and acquire from Seller and its
Subsidiaries, all of the right, title and interest of Seller and its
Subsidiaries in and to the Purchased Equity Interests and the Purchased Assets,
and that Purchaser and/or one or more of its Designated Affiliates will assume
the Assumed Liabilities, in each case, upon the terms and subject to the
conditions set forth in the Purchase Agreement; and

 

WHEREAS, Seller and Purchaser have entered into that certain First
Amendment to Equity and Asset Purchase Agreement, dated as of April 22,
2005 (the “First Amendment,” together with the Purchase
Agreement, the “Amended Purchase Agreement”)

 

WHEREAS, Seller and Purchaser desire to further amend the Amended
Purchase Agreement as set forth below;

 

NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

ARTICLE I

AMENDMENT
TO PURCHASE AGREEMENT

 

Section 1.1                                      Amendment of Section 6.12(e).   Section 6.12(e) of
the Purchase Agreement is hereby amended by adding the following at the end of Section 6.12(e):

 

“It is hereby acknowledged that Purchaser has not received Express Maps
for all of the Timberlands prior to the Closing. If it shall be determined
after the Closing that less than the applicable minimum acreage (determined as
set forth in this Section 6.12(e)) in the Escanaba Forest, the Chillicothe
Forest and/or the Wickliffe Forest was conveyed to Purchaser at Closing, then
Purchaser shall be entitled to claim the applicable Purchase Price Credit under
this Section 6.12(e), and Seller shall promptly cause such amount to be
paid to Purchaser, which amount shall be deemed to be an adjustment to the
Purchase Price; provided, however, that Purchaser must make any such claim in
writing not later than the earlier of (x) fifteen (15) days after its receipt
of the last of all the Express Maps covering all of the Escanaba Forest, the
Chillicothe Forest and the Wickliffe Forest and (y) ninety (90) days after the
Closing. Purchaser shall make available to Seller any GIS data and other
documents and personnel reasonably required by Seller to

 

1

 

evaluate
and respond to any such claim. Notwithstanding anything to the contrary in Section 6.11
or in this Section 6.12, Purchaser shall not be entitled to deliver, after
the Closing, any notices of Title Defects with respect to the Titled Properties
for which Purchaser has obtained Title Policies at the Closing.”

 

Section 1.2                                      Amendment of Section 7.6. The last sentence of Section 7.6 of
the Purchase Agreement is hereby amended and restated in its entirety as
follows:

 

“To the extent such substitution contemplated by the first sentence of
this Section 7.6 has not been effected, Purchaser shall (i) use
commercially reasonable efforts to affect such substitution as soon as
practicable following the Closing, but in any event within 6 months thereof
(except with respect to the Guarantee described in Schedule 7.6(i), for
which Purchaser shall continue to use commercially reasonable efforts to effect
such substitution until such substitution occurs), and (ii) indemnify
Seller and its Subsidiaries that are not Acquired Companies with respect to any
such Guarantees (including the Guarantee described in Schedule 7.6(i)) in
accordance with Article XI; provided, however, that notwithstanding
anything in the foregoing, with respect to any of the Guarantees (other than
the Guarantee set forth in Schedule 7.6(i)), Seller and its Subsidiaries
may at any time following the six month anniversary of the Closing terminate
one or more of such Guarantees and thereafter cease to have any obligation whatsoever
arising from or in connection with any such terminated Guarantee.”

 

Section 1.3                                      Amendment of Section 8.9. Section 8.9 of the Purchase Agreement
is hereby amended and restated in its entirety as follows:

 

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

 

Section 1.4                                      Amendment of Section 11.7. Section 11.7 of the Purchase Agreement
is hereby amended by adding the following at the end of such Section 11.7:

 

“The parties hereby confirm that, (1) pursuant to Section 6.10(b) and
Section 8.10 of this Agreement, Purchaser has obtained Title Policies with
respect to (among other properties) the properties conveyed at the Closing
pursuant to the Deeds (which term shall be deemed to include, for purposes of
this Section 11.7, any deeds for Timberlands in Escanaba, Michigan
executed and delivered pursuant to clause (b) of the first sentence of Section 1.6
of this Agreement, as amended by the First Amendment), and (2) pursuant to
clause (a) of the first sentence of this Section 11.7, the grantor
under such Deeds shall have no liability to the grantee under such Deeds (or to
any successors or assigns of such grantee) pursuant to any warranty (express or
implied) contained or deemed contained in any such Deed, including (without limitation)
any such express or implied warranties pertaining to the legal descriptions
annexed to any such Deeds.” 

 

Section 1.5                                      Amendment of Section 15.1. Section 15.1 of the Purchase Agreement
is hereby amended by adding the following definition:

 

“UPRC
2001 IRBs” means the Upper Potomac River, Maryland, June 1, 2001, Series 2001
($1,600,000) industrial revenue bond issue.”

 

 

Section 1.6                                      Assumed Indebtedness. The parties hereto acknowledge and agree
that, to (the extent that (i) the Capital Charge (as defined in the
Facilities Agreement between Seller and the Upper Potomac River Commission,
dated as of November 8, 2001 (the “Facilities Agreement”)) payable
by Purchaser and/or its Designated Affiliates following the Closing does not
exceed (x) $892,934.16 (or such other amount determined using a proportionate
share of the Capital Charge other than 28.11%, as determined in accordance with
Section 6.01 of the Facilities Agreement) in the aggregate through final
maturity of the 2001 UPRC IRBs (either amount, the “Aggregate Capital Charge”), and
(y) $26,782 (or such other amount determined using a proportionate share of the
Capital Charge other than 28.11%, as determined in accordance with Section 6.01
of the Facilities Agreement) per annum (either amount, the “Per Annum Capital
Charge,”) and (ii) Purchaser and/or its Designated Affiliates have no
obligations with respect to the 2001 UPRC IRBs other than as set forth in the
Facilities Agreement, the 2001 UPRC IRBs shall be treated as Assumed
Indebtedness for all purposes, except for purposes of determining the Final
Cash Consideration pursuant to Article II, and shall not be included in
any calculation of Assumed Indebtedness, Estimated Assumed Indebtedness, or
Final Assumed Indebtedness.  The parties
hereto also acknowledge and agree that, to the extent that the Capital Charge
payable by Purchaser and/or its Subsidiaries following the Closing either (i) does
exceed (x) on an aggregate basis through final maturity, the Aggregate Capital
Charge, or (y) on a per annum basis, the Per Annum Capital Charge, or (ii) the
Purchaser and/or its Designated Affiliates have obligations with respect to the
2001 UPRC IRBs other than as set forth in the Facilities Agreement, the 2001
UPRC IRBs shall be included in any calculation of Assumed Indebtedness,
Estimated Assumed Indebtedness, or Final Assumed Indebtedness, in each case for
purposes of determining the Final Cash Consideration pursuant to Article II,
but only to the extent of such excess or additional obligation, or, if such
determination is made after Final Assumed Indebtedness is finally determined,
Seller shall pay Purchaser or its Designated Affiliate the amount of such
excess or the amount in respect of such additional obligation.

 

ARTICLE II

AMENDMENT TO SCHEDULES TO PURCHASE AGREEMENT

 

Section 2.1             Amendment
of Schedule 1.1.   Schedule 1.1
of the Purchase Agreement is hereby amended by deleting such schedule in
its entirety and replacing the same with Annex A hereto, and such
amended Schedule shall be deemed for all purposes to have been delivered
as of the date of the Purchase Agreement.

 

Section 2.2                                      Amendment of Schedule 1.2(a)(i).   Schedule 1.2(a)(i) of
the Purchase Agreement is hereby amended by deleting such schedule in its
entirety and replacing the same with Annex B hereto, and such amended Schedule shall
be deemed for all purposes to have been delivered as of the date of the
Purchase Agreement.

 

Section 2.3                                      Amendment of Schedule 1.2(a)(ii).   Schedule 1.2(a)(ii) of
the Purchase Agreement is hereby amended by deleting such schedule in its
entirety and replacing the same with Annex C hereto, and such amended Schedule shall
be deemed for all purposes to have been delivered as of the date of the
Purchase Agreement.

 

 

Section 2.4                                      Amendment of Schedule 1.2(b)(i).   Schedule 1.2(b)(i) of the Purchase
Agreement is hereby amended by deleting such schedule in its entirety and
replacing the same with Annex D hereto, and such amended Schedule shall
be deemed for all purposes to have been delivered as of the date of the
Purchase Agreement.

 

Section 2.5                                      Amendment of Schedule 1.2(b)(ii).   Schedule 1.2(b)(ii) of the Purchase
Agreement is hereby amended by deleting such schedule in its entirety and
replacing the same with Annex E hereto, and such amended Schedule shall
be deemed for all purposes to have been delivered as of the date of the
Purchase Agreement.

 

Section 2.6                                      Amendment of Schedule 1.2(g).   Schedule 1.2(g) of the Purchase
Agreement is hereby amended by deleting such schedule in its entirety and
replacing the same with Annex F hereto, and such amended Schedule shall
be deemed for all purposes to have been delivered as of the date of the
Purchase Agreement.

 

Section 2.7                                      Amendment of Schedule 1.2(n).   Schedule 1.2(n) of the Purchase Agreement
is hereby amended by deleting such schedule in its entirety and replacing
the same with Annex G hereto, and such amended Schedule shall be
deemed for all purposes to have been delivered as of the date of the Purchase
Agreement.

 

Section 2.8                                      Amendment of Schedule 1.3(d).   Schedule l.3(d) of the Purchase Agreement
is hereby amended by deleting such schedule in its entirety and replacing
the same with Annex H hereto, and such amended Schedule shall be
deemed for all purposes to have been delivered as of the date of the Purchase
Agreement.

 

Section 2.9                                      Amendment of Schedule 1.3(e).   Schedule 1.3(e) of
the Purchase Agreement is hereby amended by deleting such schedule in its
entirety and replacing the same with Annex I hereto, and such amended Schedule shall
be deemed for all purposes to have been delivered as of the date of the
Purchase Agreement.

 

Section 2.10                                Amendment of Schedule 1.4(o).   Schedule 1.4(o) of the Purchase Agreement
is hereby amended by deleting such schedule in its entirety and replacing
the same with Annex J hereto, and such amended Schedule shall be
deemed for all purposes to have been delivered as of the date of the Purchase
Agreement.

 

Section 2.11                                Amendment of Schedule 3.2(h).   Schedule 3.2(h) of the Purchase
Agreement is hereby amended by deleting such schedule in its entirety and
replacing the same with Annex K hereto, and such amended Schedule shall
be deemed for all purposes to have been delivered as of the date of the
Purchase Agreement.

 

Section 2.12                                Amendment of Schedule 4.1.   Schedule 4.1
of the Purchase Agreement is hereby amended by deleting such schedule in
its entirety and replacing the same with Annex L hereto, and such
amended Schedule shall be deemed for all purposes to have been delivered
as of the date of the Purchase Agreement.

 

Section 2.13                                Amendment of Schedule 4.2.   Schedule 4.2
of the Purchase Agreement is hereby amended by deleting such schedule in
its entirety and replacing the

 

 

same
with Annex M hereto, and such amended Schedule shall be deemed for
all purposes to have been delivered as of the date of the Purchase Agreement.

 

Section 2.14                                Amendment of Schedule 4.3.   Schedule 4.3 of the Purchase Agreement is
hereby amended by deleting such schedule in its entirety and replacing the
same with Annex N hereto, and such amended Schedule shall be deemed
for all purposes to have been delivered as of the date of the Purchase
Agreement.

 

Section 2.15                                Amendment of Schedule 4.5.   Schedule 4.5
of the Purchase Agreement is hereby amended by deleting such schedule in
its entirety and replacing the same with Annex O hereto, and such
amended Schedule shall be deemed for all purposes to have been delivered
as of the date of the Purchase Agreement.

 

Section 2.16                                Amendment of Schedule 4.9(a)(i).   Schedule 4.9(a)(i) of the Purchase Agreement
is hereby amended by deleting such schedule in its entirety and replacing
the same with Annex P hereto, and such amended Schedule shall be
deemed for all purposes to have been delivered as of the date of the Purchase
Agreement.

 

Section 2.17                                Amendment of Schedule 4.9(b).   Schedule 4.9(b) of
the Purchase Agreement is hereby amended by deleting such schedule in its
entirety and replacing the same with Annex Q hereto.

 

Section 2.18                                Amendment of Schedule 4.9(c).   Schedule 4.9(c) of
the Purchase Agreement is hereby amended by deleting such schedule in its
entirety and replacing the same with Annex R hereto, and such amended Schedule shall
be deemed for all purposes to have been delivered as of the date of the
Purchase Agreement.

 

Section 2.19                                Amendment of Schedule 4.9(c)(iii).   Schedule 4.9(c)(iii) of
the Purchase Agreement is hereby amended by deleting such schedule in its
entirety and replacing the same with Annex S hereto, and such amended Schedule shall
be deemed for all purposes to have been delivered as of the date of the
Purchase Agreement.

 

Section 2.20                                Amendment of Schedule 4.10(a).   Schedule 4.10(a) of
the Purchase Agreement is hereby amended by deleting such schedule in its
entirety and replacing the same with Annex T hereto, and such amended Schedule shall
be deemed for all purposes to have been delivered as of the date of the
Purchase Agreement.

 

Section 2.21                                Amendment of Schedule 4.11(a).   Schedule 4.11(a) of
the Purchase Agreement is hereby amended by deleting such schedule in its
entirety and replacing the same with Annex U hereto, and such amended Schedule shall
be deemed for all purposes to have been delivered as of the date of the
Purchase Agreement.

 

Section 2.22                                Amendment of Schedule 4.14.   Schedule 4.14 of the Purchase Agreement is
hereby amended by deleting such schedule in its entirety and replacing the
same with Annex V hereto, and such amended Schedule shall be deemed
for all purposes to have been delivered as of the date of the Purchase
Agreement.

 

 

Section 2.23                                Amendment of Schedule 6.14.   Schedule 6.14
of the Purchase Agreement is hereby amended by deleting such schedule in
its entirety and replacing the same with Annex W hereto, and such
amended Schedule shall be deemed for all purposes to have been delivered
as of the date of the Purchase Agreement.

 

Section 2.24                                Amendment of Schedule 7.6.    Schedule 7.6
of the Purchase Agreement is hereby amended by deleting such schedule in
its entirety and replacing the same with Annex X hereto, and such
amended Schedule shall be deemed for all purposes to have been delivered
as of the date of the Purchase Agreement.

 

Section 2.25                                Schedule 7.6(i).   The
Schedules to the Purchase Agreement are hereby amended by adding Annex Y
as Schedule 7.6(i) of the Purchase Agreement, and such Schedule shall
be deemed for all purposes to have been delivered as of the date of the Purchase
Agreement.

 

Section 2.26                                Amendment of Schedule 7.9.   Schedule 7.9
of the Purchase Agreement is hereby amended by deleting such schedule in
its entirety and replacing the same with Annex Z hereto, and such
amended Schedule shall be deemed for all purposes to have been delivered
as of the date of the Purchase Agreement.

 

ARTICLE III

MISCELLANEOUS

 

Section 3.1                                      No Waiver. Nothing in this Amendment shall constitute a waiver by Seller or
Purchaser of any breach or default on the part of any party to the Purchase Agreement.

 

Section 3.2                                      Governing Law; Jurisdiction. The provisions of Sections 15.3 and 15.4 of
the Purchase Agreement shall apply to this Amendment as if references to “Agreement”
therein were to this Amendment.

 

Section 3.3                                      No Other Agreements.  
This Amendment together with the Purchase Agreement (as amended by this
Amendment and together with the Schedules, Exhibits and other agreements
referenced therein), the Transition Agreements (together with the Schedules,
Exhibits and other agreements referenced therein) and the Confidentiality
Agreement contain, and are intended as, a complete statement of all of the
terms and the arrangements between the parties hereto with respect to the
matters provided for herein, and supersede any previous agreements and
understandings between the parties hereto with respect to those matters.

 

Section 3.4                                      Effect. Except as expressly set forth herein, this Amendment shall not by
implication or otherwise alter, modify, amend or in any way affect any of the
representations, warranties, terms, conditions, obligations, covenants or
agreements contained in the Purchase Agreement, all of which shall continue in
full force and effect in accordance with their respective terms. For the
avoidance of doubt, except as expressly set forth herein, the execution,
delivery and effectiveness of this Amendment shall not constitute a
reaffirmation, remaking, withdrawal or modification as of the date of this
Amendment of any of the representations, warranties or covenants of any party
hereto.

 

 

Section 3.5                                      Counterparts; Execution and Delivery by
Facsimile. This Amendment
may be executed in two or more counterparts, each of which shall be deemed to
be an original, but all of which shall constitute one and the same agreement.
This Amendment may be executed and delivered by facsimile, with such delivery
to be as effective as delivery of an originally executed counterpart hereof.

 

 

IN WITNESS WHEREOF, the parties hereto caused this Amendment to be duly
executed as of the date first above written.

 

 

	
   

  	
  MEADWESTVACO
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Robert E. Birkenholz

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert
  E. Birkenholz

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ESCANABA
  TIMBER LLC

  (formerly known as Maple Acquisition LLC)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Linda Sheffield

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Linda
  Sheffield

  
	
   

  	
   

  	
  Title:

  	
  Treasurer

  
					

 

 

ANNEX A

 

Schedule 1.1

Purchased Companies

 

1.          Escanaba Paper Company

 

2.          MeadWestvaco Maryland, Inc.

 

3.          MeadWestvaco Kentucky, LP

 

4.          MeadWestvaco Oxford Corporation

 

5.          MeadWestvaco Energy Services LLC

 

6.          Upland Resources, Inc.

 

7.          EPC Timberlands LLC

 

8.          Oxford Paper CompanyExhibit 10.4

 

FIBER SUPPLY AGREEMENT

 

by and between

 

ESCANABA TIMBER LLC

 

and

 

ESCANABA PAPER COMPANY

 

 

May 2, 2005

 

 

FIBER SUPPLY AGREEMENT

 

FIBER SUPPLY AGREEMENT, dated as of May 2, 2005 (this “Agreement”),
by and between ESCANABA TIMBER LLC, a Delaware limited liability company, (“Seller”)
and ESCANABA 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.

 

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 2.3(a).

 

“Annual Volumes” shall have the
meaning provided in Section 2.3(c).

 

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

 

“Aspen Pulpwood” means pulpwood from
aspen.

 

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

 

“Contract Prices” shall have the
meaning provided in Section 4.1(b).

 

“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).

 

 

“Force Majeure” shall have the meaning
provided in Section 2.4(a).

 

“Force Majeure Period” shall have the
meaning provided in Section 2.4(c).

 

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

 

“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 the Upper
Peninsula of Michigan.

 

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

 

“Minimum Volumes” shall have the
meaning provided in Section 2.3(b).

 

“Mixed Softwood Pulpwood” means all
softwood pulpwood other than Pine Pulpwood.

 

“Most Recent Price by Species” shall
have the meaning provided in Section 4.1(b).

 

“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” means the following
species of timber:  Jack Pine Pulpwood
and Red Pine Pulpwood.

 

“Price Period” shall have the meaning
provided in Section 4.1(b).

 

“Products” means Softwood Pulpwood,
Hardwood Pulpwood and Aspen Pulpwood.

 

“Product Specifications” shall have
the meaning provided in Section 2.1.

 

“Softwood Pulpwood” shall mean Mixed
Softwood Pulpwood and Pine Pulpwood.

 

“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.

 

“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.

 

2

 

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

 

“Timberlands” shall mean all
timberland properties now or hereafter owned by Seller and located in the State
of Michigan.

 

“Valuation Consultant” shall mean
either George Banzhaf & Company of Milwaukee, Wisconsin or
Steigerwaldt Land Services of Tomahawk, Wisconsin, 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 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.

 

ARTICLE II

 

PURCHASE OF PRODUCTS

 

Section 2.1             Purchase of Softwood Pulpwood,
Hardwood Pulpwood and Aspen Pulpwood. 
Seller agrees to sell, and Buyer agrees to purchase, receive and pay
for, in each calendar year (a “Calendar Year”), the Annual Volumes of
Products.  All Products purchased
pursuant to this Agreement shall satisfy, respectively, the specifications for
the Products set forth in Annex A, 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

 

3

 

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 reasonable best 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

 

4

 

(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 reasonable best 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 2.4,
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 of 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.

 

5

 

ARTICLE III

 

MINIMUM VOLUMES

 

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)           2005.  For the Calendar Year beginning May 2,
2005 and ending December 31, 2005, 400,000 tons.

 

(b)           2006
– 2010.  For the Calendar Years
beginning January 1, 2006 and ending December 31, 2010, 490,000 tons.

 

(c)           2011
– 2016.  For the Calendar Years
beginning January 1, 2011 and ending December 31, 2016, 500,000 tons.

 

(d)           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, 500,000 tons.

 

ARTICLE IV

 

PRICE AND DELIVERY TERM

 

Section 4.1             Prices.

 

(a)           The initial prices for the Products shall be as set
forth in Schedule 4.1.  Products
delivered by Seller to Buyer will be paid for at the prices outlined in Schedule 4.1,
or as adjusted pursuant to Section 4.1(b), based on the Delivery
Distance.  Such prices for the Products
shall be adjusted as of January 1, 2006 and each subsequent July 1
and January 1 thereafter.

 

(b)           On or before January 1, 2006 and each subsequent July 1st
and January 1st of each Calendar Year of the Term, Buyer shall
calculate the average volume-weighted open market price by Delivery Distance
for each of the Softwood Pulpwood species, Hardwood Pulpwood and Aspen Pulpwood
as paid by Buyer to open market suppliers delivering pulpwood to the Mill from
harvesting sites in the Market Region for the previous six months.  Said open market prices will be exclusive of
the prices paid by Buyer for any of the Products delivered pursuant to this
Agreement, but shall include all amounts paid to all other pulpwood suppliers
to the Mill (exclusive of any payments to such suppliers made pursuant to Section 4.1(c)).  If requested by Seller, Buyer shall provide
to a third party mutually agreeable to Seller and Buyer all information and
documentation necessary to allow such third party to confirm to Seller the
accuracy of said calculation and the pricing information used in connection with
said

 

6

 

calculation.  Such prices, as calculated, for each of the
Softwood Pulpwood species, Hardwood Pulpwood and Aspen Pulpwood shall become
the Most Recent Price by Species (“Most Recent Price by Species”).  The initial prices as set forth in Section 4.1(a),
or as adjusted pursuant to this Section 4.1(b), shall be adjusted each July 1
and January 1, based on the latest absolute dollar change in the Most
Recent Price by Species.  Such prices, as
adjusted, shall be the “Contract Prices” for each of the Softwood Pulpwood
species, Hardwood Pulpwood and Aspen Pulpwood, as the case may be, for the
upcoming six month Price Period.  Each
calendar half, including the first, in any Calendar Year is a “Price Period”.

 

(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.  Any such payments
made to Seller pursuant to this Section 4.1(c) shall not be used in
calculating the Most Recent Price by Species.

 

Section 4.2             Pay
or Take.

 

(a)           Seller agrees to sell and deliver, 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, if adverse weather conditions during the
last ninety (90) days of any Calendar Year prevent Seller from delivering the
Annual Volumes 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.  Seller shall keep Buyer advised of any such
adverse weather conditions and Buyer’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.

 

7

 

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 volume of the Products delivered, as determined by 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.  Concurrently with the execution hereof, Buyer
has paid to Seller a deposit in the amount of $3,696,000.00 (the “Deposit”).  Seller may, in its sole discretion, apply all
or any part of the Deposit against any payments of Buyer that are Past
Due.  Provided that Buyer is current in
its payment obligations hereunder, the Deposit (less any amounts applied in accordance
with the preceding sentence) shall be deemed applied to reduce each payment due
Seller hereunder by an amount equal to 8.33% of each invoice, until the
unapplied portion of the Deposit is reduced to zero.  Any portion of the Deposit that is not so
applied on the second anniversary of the date of this Agreement shall be fully
applied against subsequent payments due Seller hereunder.

 

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

 

8

 

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 reasonable best 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

 

9

 

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 company
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. 
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).

 

10

 

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 (other than Seller), 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 (other than Seller), 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 Seller, or of 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 any
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 (other than NewPage Holding
Corporation and its subsidiaries), 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 (other than
NewPage Holding Corporation and its subsidiaries), 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 of 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 (other than NewPage Holding Corporation
and its subsidiaries), or any of its or their respective servants, agents,
officers, partners, directors, employees, subcontractors or suppliers.

 

11

 

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
Michigan 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 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 term of this Agreement, which breach is
not cured within sixty (60) days after receipt of written notice thereof;

 

(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.

 

12

 

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
and in Article I above 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.

 

13

 

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 110,000 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

 

14

 

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.

 

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:

  	
  Escanaba Paper Company

  7100 County 426 M.5 Road

  Escanaba, Michigan  49829

  
	
   

  	
   

  
	
  With a copy to:

  	
  James D. Okraszewski

  7100 County 426 M.5 Road

  Escanaba, Michigan 49829

  Telecopier No.  906-789-3276

  Telephone No.  906-233-2150

  
	
   

  	
   

  
	
  and

  	
  Mark Lukacs

  7100 County 426 M.5 Road

  Escanaba, Michigan 49829

  Telecopier No.  906-233-3221

  Telephone No.  906-233-2600

  
	
   

  	
   

  
	
  If to Seller:

  	
  Escanaba Timber LLC

  c/o NewPage Corporation

  Courthouse Plaza N.E.

  Dayton, Ohio  45463

  

 

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

 

15

 

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 Michigan,
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

 

16

 

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

 

17

 

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, 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.

 

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.  

 

18

 

[SIGNATURES ON FOLLOWING PAGE]

 

 

19

 

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

 

	
   

  	
  ESCANABA TIMBER LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda Sheffield

  	
   

  
	
   

  	
  Name: 
  Linda Sheffield

  
	
   

  	
  Title: 
  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ESCANABA PAPER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter Vogel

  	
   

  
	
   

  	
  Name: 
  Peter Vogel

  
	
   

  	
  Title: 
  President

  

 

20

 

ANNEX A  - PRODUCT SPECIFICATIONS

 

Specifications:

 

1.     Pulpwood
shall be produced from live trees.

 

2.     Entire
loads will be rejected if stick contains BURN or CHAR, metal (nails, spikes,
wire, etc.), plastic or fiberglass.

 

3.     Sticks
will be reasonably straight, with sweep or crook restricted to one plane.  No elbows or forks permitted.

 

4.     Limbs,
stubs and burls shall be trimmed flush with the surface of bole.  Individual loads containing a mixture of
hardwood and softwood will not be accepted.

 

5.     Pulpwood
which is excessively aged (cut and decked for a lengthy time before delivery)
will be treated as cull material.

 

6.     Dimensions:  100” long, 4” minimum diameter inside bark,
24” maximum diameter inside bark (a maximum of 24” at any point on the stick –
includes burls, stubs and swellings).

 

7.     Rot,
doze, stains:

 

8.     GROUNDWOOD
ASPEN:  White heart rot shall not exceed
one-half of the diameter; dark stain shall not exceed one-fourth of the
diameter; 10% or more cull per load – classified as hardwood or refused.

 

9.     NORTHERN
WHITE CEDAR:  Individual loads limited to
10% cedar

 

Wood Species Mix:

 

1.     GROUNDWOOD
ASPEN:  Trembling or large-tooth aspen
only (no Balm-of-Gilead).

 

2.     MIXED
HARDWOOD:  All northern hardwood species;
elm, ash, oak and basswood shall not exceed 10% on a load.

 

3.     MIXED
SOFTWOOD:  All northern softwood species;
restricted to no more than 10% hemlock. 
Loads containing more than 10% hemlock by volume will be paid as hemlock
(see item 9 under specifications).  Also
restricted to no more than 10% northern white cedar.

 

4.     HEMLOCK:  Hemlock in pure loads or hemlock mixed with
other softwoods.  Loads containing more
than 10% hemlock by volume will be paid as hemlock.

 

5.     PINE/SPRUCE:  Red pine, jack pine, white pine and spruce;
white pine volume not to exceed 20% per load.

 

 

SCHEDULE 4.1

 

$/green ton

 

	
  Delivery

  Distance

  (miles)

  	
   

  	
  Zone

  	
   

  	
  Hardwood

  	
   

  	
  Aspen

  	
   

  	
  Mixed

  Softwood

  	
   

  	
  Pine

  	
   

  	
  Wood

  Fuel/

  Residue

  Chips

  	
   

  
	
  0-30

  	
   

  	
   

  	
  1

  	
   

  	
  $

  	
  30.08

  	
   

  	
  $

  	
  35.40

  	
   

  	
  $

  	
  37.59

  	
   

  	
  $

  	
  46.81

  	
   

  	
  $

  	
   

  	
   

  
	
  31-60

  	
   

  	
   

  	
  2

  	
   

  	
  $

  	
  31.27

  	
   

  	
  $

  	
  36.59

  	
   

  	
  $

  	
  38.78

  	
   

  	
  $

  	
  48.00

  	
   

  	
  $

  	
   

  	
   

  
	
  61-90

  	
   

  	
   

  	
  3

  	
   

  	
  $

  	
  32.67

  	
   

  	
  $

  	
  37.92

  	
   

  	
  $

  	
  39.90

  	
   

  	
  $

  	
  49.75

  	
   

  	
  $

  	
   

  	
   

  
	
  91-120

  	
   

  	
   

  	
  4

  	
   

  	
  $

  	
  34.77

  	
   

  	
  $

  	
  40.02

  	
   

  	
  $

  	
  42.00

  	
   

  	
  $

  	
  51.85

  	
   

  	
  $

  	
   

  	
   

  
	
  121-150

  	
   

  	
   

  	
  5

  	
   

  	
  $

  	
  36.69

  	
   

  	
  $

  	
  41.94

  	
   

  	
  $

  	
  43.92

  	
   

  	
  $

  	
  53.77

  	
   

  	
  $

  	
   

  	
   

  
	
  151-180

  	
   

  	
   

  	
  6

  	
   

  	
  $

  	
  38.39

  	
   

  	
  $

  	
  43.64

  	
   

  	
  $

  	
  45.62

  	
   

  	
  $

  	
  55.47

  	
   

  	
  $

  	
   

  	
   

  
	
  181-210

  	
   

  	
   

  	
  7

  	
   

  	
  $

  	
  39.92

  	
   

  	
  $

  	
  45.17

  	
   

  	
  $

  	
  47.15

  	
   

  	
  $

  	
  57.00

  	
   

  	
  $

  	
   

  	
   

  

 

Wood fuel/residue price to be negotiated as needed and if Buyer and
Seller can agree to terms.

 

 

SCHEDULE 10.16

 

[FORM STUMPAGE AGREEMENT]

 

 

 

SCHEDULE 10.16

 

STUMPAGE
AGREEMENT

 

Between

 

 

ESCANABA
TIMBER LLC

 

and

 

 

ESCANABA
PAPER COMPANY

 

 

May 2,
2005

 

 

STUMPAGE AGREEMENT

 

This Agreement is made as
of                                    ,
2005, by and between             
                   
                 
                     ,
a                      
                 
              
(“Seller”) and              
                      ,
a                  
                   
                  
                           
           (“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

 

1.1           “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 each Harvesting Year during the Term of
this Agreement (beginning with Harvesting Year 2005) specifying which of the
Actual Designated Tracts Buyer will harvest during the upcoming calendar year.

 

1.3           “Annual
Purchase Amount” shall mean (a) for the Harvesting Year beginning May 2,
2005, a minimum of Four Hundred Thousand (400,000) tons of Qualifying Timber; (b) for
each Harvesting Year from January 1, 2006 through the Harvesting Year
beginning January 1, 2010, a minimum of Four Hundred Ninety Thousand
(490,000) tons of Qualifying Timber; (c) for each Harvesting Year from January 1,
2011 through the Harvesting Year beginning January 1, 2016, a minimum of
Five Hundred Thousand (500,000) tons of Qualifying Timber; and (d) to the extent
Buyer exercises its option to extend the Term pursuant to Section 9.2
below, for each Harvesting Year from January 1, 2017 through the
Harvesting Year beginning January 1, 2019, a minimum of Five Hundred
Thousand (500,000) tons of Qualifying Timber.

 

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

 

2

 

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 the second anniversary of the date of this
Agreement, and each subsequent second anniversary 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 Michigan.

 

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

 

3

 

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

 

4

 

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 the following types of Timber:  Aspen Pulpwood and Other Hardwood Pulpwood.

 

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 May 2, 2005 through December 31,
2005 for calendar year 2005 and January 1 through December 31 of each
year thereafter during the Term of this Agreement.

 

1.17         “Market
Region” shall mean the Upper Peninsula of Michigan.

 

1.18         “Mechanism
Notice” shall have the meaning set forth in Section 1.12 hereof.

 

1.19         “Mill” shall
mean Buyer’s pulp and paper mill located in Escanaba, Michigan.

 

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

 

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

 

1.22         “Product”
shall mean the individual types of Timber listed in Section 1.31 below.

 

5

 

1.23         “Product
Price” shall mean the per ton price for each Product as set forth on Schedule 1.23(a) attached
hereto (the “Base Price”) adjusted up or down on a semiannual basis beginning January 1,
2006 by the percentage change in the published TMN average stumpage prices
for the applicable Product in the Zones, initially from the previous four
semiannual reporting periods and then on a rolling average based on the four
most recent semiannual reporting periods. 
An example of the semiannual price adjustment mechanism is set forth on Schedule 1.23(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
rolling average shall commence and shall continue until the next Base Price
Adjustment Date.

 

1.24         “Pulpwood”
shall mean Hardwood Pulpwood and Softwood Pulpwood.

 

1.25         “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 1,000 tons of the type of Qualifying Timber at issue as to each
such sale.

 

1.26         “Qualifying
Timber” shall mean Timber which meets or exceeds the specifications set forth
in Schedule 1.26 to this Agreement.

 

6

 

1.27         “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.

 

1.28         “Softwood
Pulpwood” shall mean the following types of Timber:  Jack Pine Pulpwood, Red Pine Pulpwood,
Spruce/Fir Pulpwood, Hemlock Pulpwood and Other Softwood Pulpwood.

 

1.29         “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.

 

1.30         “Timber”
shall mean the following types of timber now or hereafter located on the
Timberlands:  Aspen Pulpwood, Other
Hardwood Pulpwood, Jack Pine Pulpwood, Other Softwood Pulpwood, Red Pine
Pulpwood, Spruce/Fir Pulpwood, Hemlock Pulpwood, Ash Saw Bolts, Aspen Saw Bolts,
Beech Saw Bolts, Hard Maple Saw Bolts, Other Hardwood Saw Bolts, Red Oak Saw
Bolts, Soft Maple Saw Bolts, White Birch Saw Bolts, Yellow Birch Saw Bolts,
Jack Pine Saw Bolts, Red Pine Saw Bolts, White Pine Saw Bolts, Ash Sawtimber,
Aspen Sawtimber, Basswood Sawtimber, Beech Sawtimber, Hard Maple Sawtimber,
Other Hardwood Sawtimber, Red Oak Sawtimber, Soft Maple Sawtimber, White Birch
Sawtimber, White Oak Sawtimber, Yellow Birch Sawtimber, Jack Pine Sawtimber,
Other Softwood Sawtimber, Red Pine Sawtimber, Spruce Sawtimber and White Pine
Sawtimber.

 

7

 

1.31         “Timberlands”
shall mean all timberland properties now or hereafter owned by Seller and
located in the State of Michigan.

 

1.32         “TMN” shall
mean the publication known as Timber Mart-North published by George Banzhaf &
Company, or in the event TMN is no longer published, a comparable publication
mutually acceptable to Seller and Buyer.

 

1.33         “Valuation
Consultant” shall mean either George Banzhaf & Company of Milwaukee,
Wisconsin or Steigerwaldt Land Services of Tomahawk, Wisconsin, 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.

 

1.34         “Zones”
shall mean the following Zones designated in TMN: Michigan Zone 2 and Michigan
Zone 3.

 

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

 

8

 

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        2005.  For the Harvesting Year beginning May 2,
2005, the mix of Timber Seller shall make available to Buyer shall be as
follows:

 

	
  (a)

  	
   

  	
  Pulpwood:

  	
   

  	
  not less than 400,000
  tons

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  All Other Products:

  	
   

  	
  no minimum requirement

  

 

2.2.2        2006
– 2010.  For the Harvesting Years
beginning January 1, 2006 and ending December 31, 2010, the mix of
Timber Seller shall make available to Buyer shall be as follows:

 

	
  (a)

  	
   

  	
  Pulpwood:

  	
   

  	
  not less than 490,000
  tons

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  All Other Products:

  	
   

  	
  no minimum requirement

  

 

2.2.3        2011
– 2016.  For the Harvesting Years
beginning January 1, 2011 and ending December 31, 2016, the mix of
Timber Seller shall make available to Buyer shall be as follows:

 

	
  (a)

  	
   

  	
  Pulpwood:

  	
   

  	
  not less than 500,000
  tons

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  All Other Products:

  	
   

  	
  no minimum requirement

  

 

9

 

2.2.4        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)

  	
   

  	
  Pulpwood:

  	
   

  	
  not less than 500,000
  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 May 2,
2005 and the Harvesting Year commencing January 1, 2006.

 

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

 

10

 

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 Buyer 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.

 

11

 

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

 

12

 

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 Michigan.

 

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

 

13

 

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.

 

14

 

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 (or, with respect to sawtimber, scaled in board feet
Scribner) at the Mill.  Buyer shall
provide Seller on a weekly basis (with photocopies of scale tickets if
requested by Seller) and a settlement statement, 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.  Personnel scaling sawtimber in board feet
shall be qualified according to regional standards.  Seller shall have the right to check and audit
sawtimber board feet scaling practices at any time upon reasonable notice to
the 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. [Buyer previously has paid to Seller
a deposit in the amount of $3,696,000.00 (the “Deposit”).  Seller may, in its

 

15

 

sole discretion, apply all or any part of the Deposit against any
payments of Buyer that are Past Due.  Provided
that Buyer is current in its payment obligations hereunder, the Deposit (less
any amounts applied in accordance with the preceding sentence) shall be deemed
applied to reduce each payment due Seller hereunder by an amount equal to 8.33%
of each invoice, until the unapplied portion of the Deposit is reduced to zero.
 Any portion of the Deposit that is not
so applied on the second anniversary of the date of this Agreement shall be
fully applied against subsequent payments due Seller hereunder.]

 

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.

 

16

 

6.3           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

 

17

 

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:

 

18

 

(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.

 

8.             [Intentionally Left Blank].

 

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

 

19

 

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:

 

20

 

(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

 

21

 

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

 

22

 

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

 

23

 

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 110,000 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

 

24

 

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, to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn.:

  	
   

  
	
   

  	
   

  	
  Telecopier No.

  	
   

  
	
   

  	
   

  	
  Telephone No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn.:

  	
   

  
	
   

  	
   

  	
  Telecopier No.

  	
   

  
	
   

  	
   

  	
  Telephone No.

  	
   

  
					

 

25

 

	
   

  	
  If to Seller:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn.:

  	
   

  
	
   

  	
   

  	
  Telecopier No.

  	
   

  
	
   

  	
   

  	
  Telephone No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  With copies to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn.:

  	
   

  
	
   

  	
   

  	
  Telecopier No.

  	
   

  
	
   

  	
   

  	
  Telephone No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn.:

  	
   

  
	
   

  	
   

  	
  Telecopier No.

  	
   

  
	
   

  	
   

  	
  Telephone No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  and

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn.:

  	
   

  
	
   

  	
   

  	
  Telecopier No.

  	
   

  
	
   

  	
   

  	
  Telephone No.

  	
   

  
					

 

26

 

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

 

27

 

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

 

28

 

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

 

29

 

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.

 

25.           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.

 

[SIGNATURES BEGIN
ON NEXT PAGE]

 

30

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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31

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
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32

 

List of Schedules

 

	
  Schedule 1.23(a)

  	
   

  	
  Base Price Per Product

  
	
  Schedule 1.23(b)

  	
   

  	
  Wood Supply Calculation Formula for Price
  Indexing

  
	
  Schedule 1.26

  	
   

  	
  General Product Specifications

  
	
  Schedule 3.1.1

  	
   

  	
  Description of Tracts to be Harvested For
  Harvesting Year Commencing May 2, 2005 and Harvesting Year Commencing July 1,
  2006

  

 

 

Schedule 1.23(a)

 

Base Price Per
Product

 

	
  Product

  	
   

  	
  Base Price Per Ton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aspen Pulpwood:

  	
   

  	
  $

  	
   

  	
   

  
	
  Other Hardwood Pulpwood

  	
   

  	
  $

  	
   

  	
   

  
	
  Jack Pine Pulpwood

  	
   

  	
  $

  	
   

  	
   

  
	
  Other Softwood Pulpwood

  	
   

  	
  $

  	
   

  	
   

  
	
  Red Pine Pulpwood

  	
   

  	
  $

  	
   

  	
   

  
	
  Spruce/Fir Pulpwood

  	
   

  	
  $

  	
   

  	
   

  
	
  Hemlock Pulpwood

  	
   

  	
  $

  	
   

  	
   

  
	
  Ash Saw Bolts

  	
   

  	
  $

  	
   

  	
   

  
	
  Aspen Saw Bolts

  	
   

  	
  $

  	
   

  	
   

  
	
  Beech Saw Bolts

  	
   

  	
  $

  	
   

  	
   

  
	
  Hard Maple Saw Bolts

  	
   

  	
  $

  	
   

  	
   

  
	
  Other Hardwood Saw
  Bolts

  	
   

  	
  $

  	
   

  	
   

  
	
  Red Oak Saw Bolts

  	
   

  	
  $

  	
   

  	
   

  
	
  Soft Maple Saw Bolts

  	
   

  	
  $

  	
   

  	
   

  
	
  White Birch Saw Bolts

  	
   

  	
  $

  	
   

  	
   

  
	
  Yellow Birch Saw Bolts

  	
   

  	
  $

  	
   

  	
   

  
	
  Jack Pine Saw Bolts

  	
   

  	
  $

  	
   

  	
   

  
	
  Red Pine Saw Bolts

  	
   

  	
  $

  	
   

  	
   

  

 

 

	
  Product

  	
   

  	
  Base Price Per Ton

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  White Pine Saw Bolts

  	
   

  	
  $

  	
   

  	
   

  

 

	
  Product

  	
   

  	
  Base Price/Board Feet Scribner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Ash Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Aspen Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Basswood Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Beech Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Hard Maple Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Other Hardwood
  Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Red Oak Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Soft Maple Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  White Birch Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  White Oak Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Yellow Birch Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Jack Pine Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Other Softwood
  Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Red Pine Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  Spruce Sawtimber

  	
   

  	
  $

  	
   

  	
   

  
	
  White Pine Sawtimber

  	
   

  	
  $

  	
   

  	
   

  

 

 

Schedule 1.23(b)

 

Wood Supply
Calculation Formula for Price Indexing

 

For January, 2006
Adjustment:

 

	
   

  	
  (4/04 + 9/04 +
  4/05 + 9/05)

  	
   

  	
   

  
	
  Base Price X

  	
  (9/03 + 4/04 +
  9/04 + 4/05)

  	
  =

  	
  Price – January 1,
  2005

  

 

For July, 2006
Adjustment:

 

	
  Price from

  	
  (9/04 + 4/05 +
  9/05 + 4/06)

  	
   

  	
   

  
	
  previous Period X

  	
  (4/04 + 9/04 +
  4/05 + 9/05)

  	
  =

  	
  Price – July 1,
  2006

  

 

 

Schedule 1.26

 

General Product
Specifications

 

 

Schedule 3.1.1

 

Description of Tracts to
be Harvested for Harvesting Year Commencing May 2, 2005 and for Harvesting
Year Commencing January 1, 2006.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}]]