Document:

WP Exhibit 10.5  (W0889970.DOC;1)

Exhibit 10.5

SETTLEMENT AGREEMENT

This Settlement Agreement (this “Agreement”), dated as of July 30, 2014 (the “Effective Date”), by and between Wausau Paper Corp. and Wausau Paper Mills, LLC (“Wausau”), Wausau Paper Towel & Tissue, LLC, Wausau Timberland Company, LLC, The Sorg Paper Company, and The Middletown Hydraulic Company (“Affiliates”), and the Pension Benefit Guaranty Corporation (“PBGC” and together with Wausau and Affiliates, each a “Party” and collectively the “Parties”).

RECITALS

A.

PBGC is a wholly-owned United States government corporation and an agency of the United States that administers the pension plan insurance program established under Title IV of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), 29 U.S.C. §§ 1301-1416 (2012).

B.

Wausau Paper Corp. is a Wisconsin corporation and Wausau Paper Mills, LLC is a Wisconsin limited liability company, and Wausau is the sponsor of the Rhinelander Paper Company, Inc. Pension Plan, the Wausau Paper Corp. Pension Plan, the Wausau Paper Corp. Retirement Plan, and the Wausau Papers of New Hampshire, Inc. Pension Plan (collectively, the “Plans”).  

C.

Each Plan is an “employee pension benefit pension plan” as that term is defined in 29 U.S.C. § 1002(2), has been determined by the Secretary of the Treasury to be a plan described in 26 U.S.C. § 401(a), is a plan to which 29 U.S.C. § 1321(a) applies, is not exempt under 29 U.S.C. § 1321(b), and therefore is subject to Title IV of ERISA.

D.

Wausau and Affiliates intend to enter into agreements by and among Wausau, Affiliates, and Bank of America, N.A. (“BOA”), as agent, administrative agent, and collateral agent for certain lending parties (“Refinancing Agreements”) and to thereunder or pursuant thereto grant priority liens on substantially all of Wausau’s and Affiliates’ assets to BOA and any other lenders in connection therewith (all of the foregoing, collectively, the “Transaction”).

E.

PBGC has raised concerns that PBGC’s possible long run loss with respect to each Plan may reasonably be expected to increase unreasonably as a result of the Transaction.

F.

To resolve such concerns, Wausau and Affiliates have reached an understanding with PBGC, under which, inter alia, Wausau will make certain payments directly to the Plans in excess of those required by law and Wausau and Affiliates will provide security to PBGC to secure the payments and liabilities under Title IV of ERISA.

Accordingly, the Parties agree as follows:

Article 1: Fixed Excess Contributions to the Plan; Security; Additional Terms

1.1

In addition to making all minimum funding contributions to the Plans required under 26 U.S.C. §§ 412 and 430 (including installments required under 26 U.S.C. § 430(j)(3)) (“Required Contributions”) for each plan year for which all or any portion of any Excess Contribution (as defined below) is made, and subject to Section 1.7, Wausau shall make the following cash contributions to the Plans in the amounts and by the dates stated below (the “Excess Contributions”):

(a)

$7,500,000, on or before the 30th day after entering into the Refinancing Agreements.

(b)

$2,125,000.00, on or before January 25, 2015.

(c)

$2,125,000.00, on or before April 25, 2015.

(d)

$2,125,000.00, by July 25, 2015.

(e)

$2,125,000.00, by October 25, 2015.

(f)

$1,500,000.00, by January 25, 2016.

(g)

$1,500,000.00, by April 25, 2016.

(h)

$1,500,000.00, by July 25, 2016.

(i)

$1,500,000.00, by October 25, 2016.

(j)

$1,750,000.00, by January 25, 2017.

(k)

$1,750,000.00, by April 25, 2017.

(l)

$1,750,000.00, by July 25, 2017.

(m)

$1,750,000.00, by October 25, 2017.

(n)

$1,750,000.00, by January 25, 2018.

(o)

$1,750,000.00, by April 25, 2018.

(p)

$1,750,000.00, by July 25, 2018.

(q)

$1,750,000.00, by October 25, 2018.

Wausau shall have full discretion with respect to which Plan(s) will have Excess Contributions or portions thereof made to them.

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1.2

Wausau shall not at any time under 26 U.S.C. § 430(f)(6)(B) seek to create or increase any Plan prefunding balance (as defined in 26 U.S.C. § 430(f)(6)) (a “Prefunding Balance”) by using (a) all or any portion of any Excess Contribution, or (b) all or any portion of any excess described in 26 U.S.C. § 430(f)(6)(B) that is attributable to any Excess Contribution (an “Election”).  This covenant not to make an Election is continuing and will survive termination of this Agreement.  Within ten days after the Effective Date, Wausau shall provide PBGC with a copy of a written notification from Wausau to each Plan’s enrolled actuary and plan administrator advising them of Wausau’s Excess Contribution obligations under Section 1.1 and the foregoing prohibition on Elections.  Notwithstanding anything to the contrary in this Agreement, if an Election is made, then Wausau will be liable in the amount so elected, such liability will be immediately due and payable upon the making of such an Election without notice or demand, and such liability will be in addition to all other obligations of Wausau under this Agreement.  Any sums collected on account of any such liability may be deposited in the trust of the Plans.

1.3

Within ten days after the Effective Date, Wausau shall elect to reduce to $0 any funding standard carryover balance or prefunding balance established or maintained for the Wausau Paper Corp. Retirement Plan and deliver a copy of such election to PBGC or a certification that no such balance exists.

1.4

Wausau and Affiliates shall, in order to secure Wausau’s timely payment of the Excess Contributions, performance of all of its other obligations under this Agreement (including any liability under Section 1.2), and payment of all liabilities under 29 U.S.C. § 1362(a) and 29 U.S.C. § 1362(b) in connection with any termination(s) of the Plan(s) under 29 U.S.C. § 1341(c) or 29 U.S.C. § 1342 (all of the foregoing, collectively, the “Obligations”), (a) on the Effective Date enter into a security and pledge agreement with PBGC substantially in the form attached hereto as Exhibit A granting to PBGC a junior and subordinate lien security interest on all of Wausau’s and Affiliates’ presently owned and after-acquired personal property and proceeds thereof which are pledged by Wausau and Affiliates under that certain Credit Agreement dated as of July 30, 2014 or any amendment, renewal, replacement or refinancing thereof (the “Term Loan B Credit Agreement”) and pledged by Wausau and Affiliates under that certain Credit Agreement dated as of July 30, 2014 or any amendment, renewal, replacement or refinancing thereof (the “ABL”) (together, the “Senior Credit Facilities”), and (b) at such time as the mortgage(s) relating to the BOA Indebtedness are granted, enter into mortgage(s) in form acceptable to PBGC (this Agreement, collectively with such security and pledge agreement and mortgage(s), the “PBGC Settlement Documents”) granting PBGC a junior and subordinate lien on all real property owned by Wausau and Affiliates and pledged to Wausau’s and Affiliates’ Senior Credit Facility lenders (all of the foregoing liens on personal property and real property, collectively, the “PBGC Lien” and all such property, the “PBGC Collateral”).  The priority of the PBGC Lien on the PBGC Collateral will be junior to the priority of any BOA lien on such PBGC Collateral securing obligations under the Refinancing Agreements or other loan or security agreements related thereto (all indebtedness under any of the foregoing, “BOA Indebtedness”) under which loans and letters of credit will not exceed $235 million in the aggregate (subject to such allocations and additional amounts as set forth in the Lien Subordination and Intercreditor Agreement entered into among the PBGC and BoA on the date hereof (the “Intercreditor Agreement”).  Any proposed increases in loans and letters of credit secured by BOA priority 

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liens above $235 million will be subject to PBGC’s prior written approval which shall not be unreasonably withheld.  

1.6

Wausau shall require, in its Term Loan B Credit Agreement with BOA, that Excess Cash Flow, as defined therein, for any fiscal year of Wausau will be reduced by the aggregate Excess Contributions actually made by Wausau to the Plans during the course of such fiscal year.

1.7

If after completion of Wausau’s Excess Contributions due in 2014 and 2015, Wausau’s Consolidated Leverage Ratio (as defined in Wausau’s Term Loan B Credit Agreement) (the “Consolidated Leverage Ratio”) is equal to or less than 2.5x over a 12-month period, evaluated on a quarterly basis, then Wausau will be relieved of its obligations to make Excess Contributions for such quarter.  However, in the event that Wausau’s Consolidated Leverage Ratio thereafter exceeds 2.5x over any 12 month period, evaluated on a quarterly basis, then Wausau shall immediately resume making Excess Contributions starting with the next scheduled payment due under Section 1.1.

1.8

If any Plan is merged into or consolidated with another Plan, or another Plan is merged into or consolidated with any Plan, this Agreement will apply to the plan that results from such a merger or consolidation and to each plan in a series of such mergers or consolidations (each, a “Merged Plan”) until the Agreement terminates under Section 3.1.  As soon as practicable before such a merger or consolidation, Wausau and Affiliates shall agree to any modifications to this Agreement that PBGC reasonably requests to ensure the continued fair and reasonable application of this Agreement.

1.9

This Agreement will apply in the event of any spinoff or transfer of plan assets or liabilities to another plan that involves any Plan or a Merged Plan, and as soon as practicable before such spinoff or transfer, Wausau and Affiliates shall agree to any modifications to this Agreement that PBGC reasonably requests to ensure the continued fair and reasonable application of this Agreement.

1.10

Wausau’s and Affiliates’ obligations under this Agreement will not be affected by any change in any Plan’s contributing sponsor or in the membership of the contributing sponsor’s Controlled Group, as those terms are defined in Title IV of ERISA, and as soon as practicable before any such change Wausau and Affiliates shall agree to any modifications to this Agreement that PBGC reasonably requests to ensure the continued fair and reasonable application of this Agreement.  Nothing in this Agreement will affect PBGC’s ability to exercise any right, seek any remedy, or enforce any provision under Title IV of ERISA or other applicable law in connection with any contemplated or consummated transaction associated with any such change.

Article 2: Informational and Reporting Requirements

2.1

During the term of this Agreement in addition to any other requirements for the provision of notices and information under this Agreement, ERISA, the regulations under ERISA, or other federal law, Wausau shall provide PBGC with (a) documentation evidencing the amount and date of each Excess Contribution and each Required Contribution that is made to 

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any Plan, within ten days after such contribution, and (b) written notice of any failure to timely make any Excess Contribution, within ten days after the date such missed contribution became due and payable.

Article 3: Agreement Termination

3.1

This Agreement will terminate and Wausau’s and Affiliates’ obligations hereunder will cease upon the earliest to occur of:

(a)

the 91st day after Wausau has made all Excess Contributions as adjusted pursuant to Section 1.7, provided that all Required Contributions have been made and provided further that no bankruptcy case has been commenced by or against Wausau prior to such 91st day;

(b)

after completion of Wausau’s 2014 and 2015 Excess Contributions under this Agreement, if Wausau shall have maintained a Consolidated Leverage Ratio, evaluated on a quarterly basis, equal to or less than a 2.5 times multiple for four consecutive calendar quarters;

(c)

five years after the Effective Date; or

(d)

the date by which all Plans have terminated in standard terminations, and for each Plan, the date of termination for purposes of this Section 3.1(c) will be deemed to be the later of (1) 180 days after the date on which PBGC receives a Form 501-Post Distribution Certification for such Plan indicating that such Plan has terminated in a standard termination under 29 U.S.C. § 1341(b) if PBGC has not by such 180th day issued audit findings or a notice of noncompliance with respect to such standard termination, and (2) if PBGC by such 180th day, has issued audit findings or a notice of noncompliance with respect to such standard termination, the date on which such audit findings have been complied with or rescinded or on which such notice of noncompliance has been rescinded.

3.2

If Wausau and Affiliates believe that this Agreement has terminated under Section 3.1,Wausau and/or Affiliates shall provide PBGC with written notice so stating, and setting forth the basis for its assertion that this Agreement has terminated.  Within 30 days after receipt of such notice and Wausau’s and/or Affiliates’ provision to PBGC of any additional information reasonably requested by PBGC, PBGC shall respond in writing to Wausau and/or Affiliates as to whether it concurs with such assertion; provided, however, that notwithstanding anything in Sections 7.5 or 8.8 to the contrary, a failure on the part of the PBGC to respond within 30 days in writing to Wausau’s and/or Affiliates’ written notice of termination of the Agreement shall be deemed to be a concurrence with said notice. The notice of termination of the Agreement shall state the 30 day response deadline. 

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Article 4: Forbearance

4.1

So long as no Event of Default (as defined in Section 7) has occurred, PBGC shall forbear from taking any action under 29 U.S.C. 1342(a)(4) to initiate proceedings to terminate any Plan, on the sole basis of the Transaction.

Article 5:  Release

5.1

Effective upon the termination of this Agreement, and in consideration of Wausau’s and Affiliates’ performance of the terms, conditions, mutual covenants and agreements set forth herein, the adequacy and sufficiency of which are hereby acknowledged, PBGC, on its own behalf, and in every other capacity in which it may then act, will be deemed to have released Wausau and Affiliates from the obligations under this Agreement except as otherwise specified herein.

Article 6: Representations and Warranties; Additional Covenants

6.1

Wausau and Affiliates hereby represent and warrant to PBGC that each of the following is true and correct as of the Effective Date:

(a)

Wausau Paper Corp. is a Wisconsin corporation headquartered in Mosinee, Wisconsin.  The Sorg Paper Company and The Middletown Hydraulic Company are Ohio corporations headquartered in Mosinee, Wisconsin.  Wausau Paper Mills, LLC, Wausau Timberland Company, LLC, and Wausau Paper Towel & Tissue, LLC are Wisconsin limited liability companies headquartered in Mosinee, Wisconsin.  Wausau and Affiliates are qualified to do business under the laws of any state where a failure to so qualify would have a material adverse effect on their operations.  Wausau and Affiliates have full power and authority to enter into and perform its obligations under this Agreement and to carry out and consummate the transactions contemplated by this Agreement.

(b)

Wausau’s and Affiliates’ execution, delivery, and performance of this Agreement have been duly authorized by all necessary company action.

(c)

Wausau’s and Affiliates’ execution and delivery of this Agreement, performance of its obligations hereunder, and compliance with the terms and provisions herewith (1) will not violate in any material respect any law applicable to Wausau or Affiliates or any of their properties, the consequences of which violation could reasonably be expected to have a material adverse effect on Wausau’s or Affiliates’ to perform its obligations hereunder, and (2) will not violate any material contract or agreement which is binding on Wausau, Affiliates, or their properties, or result in a breach of or constitute (with due notice, lapse of time or both) a default under any indenture, agreement, lease, or other instrument to which Wausau or Affiliates is a party. 

(d)

This Agreement has been duly executed by an authorized officer or other authorized representative of Wausau and Affiliates.  This Agreement constitutes a legal, valid, and binding contract and agreement of Wausau and Affiliates enforceable by PBGC, and only by PBGC, against Wausau and Affiliates in accordance with its terms, subject to applicable 

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bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principals of equity.

6.2

PBGC hereby represents and warrants to Wausau and Affiliates that each of the following is true and correct as of the Effective Date:

(a)

PBGC is a wholly-owned United States government corporation established under Title IV of ERISA.  PBGC has full power and authority to enter into and perform its obligations under this Agreement and to carry out and consummate the transactions contemplated by this Agreement.

(b)

PBGC’s execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate action and are within PBGC’s statutory authority.

(c)

PBGC’s execution and delivery of this Agreement, PBGC’s performance of its obligations hereunder, PBGC’s consummation of the transactions contemplated hereby and PBGC’s compliance with the terms and provisions hereof will not violate any law applicable to PBGC.

(d)

This Agreement has been duly executed by an authorized officer or other authorized representative of PBGC.  This Agreement constitutes a legal, valid, and binding contract and agreement of PBGC enforceable against PBGC in accordance with its terms.

(e)

PBGC has concluded that this Agreement adequately addresses its concerns regarding long run loss in connection with the Transaction.

Article 7:  Events of Default; Remedies.

7.1

Events of Default.  Each of the following will constitute an “Event of Default” under this Agreement:

(a)

Wausau fails to timely pay any Excess Contribution.

(b)

Wausau fails to timely make any Required Contribution. 

(c)

Wausau makes an Election.

(d)

Wausau fails to timely comply with Section 1.3.

(e)

An event of default occurs under any other PBGC Settlement Document, whether defined therein as a “Default”, “Event of Default” or otherwise.

(f)

Wausau or an Affiliate (1) materially breaches any other covenant, term or condition of this Agreement or (2) fails to perform or observe any other covenant or agreement (not otherwise specified in this Section 7.1) contained in any PBGC Settlement Document on its 

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part to be performed or observed, and, if curable, fails to cure such breach or failure as applicable within 30 days after such breach or failure.

(g)

Any representation or warranty by Wausau or an Affiliate in Section 6.1 is materially false or misleading as of the Effective Date.

(h)

Wausau and Affiliates (1) become insolvent; or (2) are unable, or admit in writing their inability to pay debts as they generally mature; or (3) make a general assignment for the benefit of creditors or to an agent authorized to liquidate any material amount of their property; or (4) make or send notice of a bulk transfer; or (5) file or, consent to the filing against them, of a petition or other papers commencing a proceeding under Title 11 of the United States Code or any similar type of insolvency proceeding (an “Insolvency Proceeding”); or (6) have an Insolvency Proceeding filed or instituted against them which has not been dismissed within 30 days after its commencement, or in which an order for relief has been entered against it, or (7) apply to a court for appointment of a receiver, trustee, or custodian for any of their assets; or (8) have a receiver, trustee, or custodian appointed for any of their assets (with or without its consent).

(i)

Wausau and Affiliates dissolve, suspend operations, or discontinue doing business.

(j)

An “Event of Default” (as defined in the Refinancing Agreements) occurs, which default continues for more than any applicable cure period (without any extensions thereof). 

(k)

PBGC receives a notice of intent to terminate any Plan in a distress termination pursuant to 29 U.S.C. § 1341(c).

(l)

Except as provided in Section 4.1, PBGC determines under 29 U.S.C. § 1342(a) that any Plan must or should be terminated. 

7.2

Wausau or Affiliates shall immediately give written notice to PBGC upon the occurrence of any Event of Default, except one under Subsections 7.1 (l) or (m).

7.3

Subject to the terms of the Intercreditor Agreement, if any Event of Default occurs, PBGC’s remedies will include, in addition to enforcing the PBGC Lien against any or all PBGC Collateral, declaring the amount of all unpaid Excess Contributions immediately due and payable (provided, that, upon the occurrence of an Event of Default under Subsection 7.1(h), all unpaid Excess Contributions shall automatically become immediately due and payable), whereupon (a) such amount shall be immediately due and payable without presentment, demand, protest, or other formalities of any kind, all of which Wausau and Affiliates hereby waive, and (b) such amount shall accrue interest at the rate provided in 29 C.F.R. § 4062.7(c) (compounded daily, as provided therein), from the date of such Event of Default until the total of such amount and all interest thereon is paid in full.

7.4

No remedy described herein is intended to be exclusive of any other right, power or remedy, and any other such right, power or remedy will, to the extent permitted by law, be 

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cumulative and in addition to every other right, power and remedy given hereunder, or now or hereafter existing at law or in equity or otherwise.  The assertion or exercise of any right, power or remedy hereunder, or otherwise, will not prevent the concurrent or subsequent assertion or exercise of any other appropriate right, power or remedy.

7.5

Subject to Section 3.2, no delay or omission of PBGC to exercise any right, power or remedy will impair any such right, power or remedy or constitute a waiver of any such right, power or remedy or an acquiescence in or waiver of any Event of Default.  Every right, power and remedy given by any PBGC Settlement Document or by law or equity to PBGC may be exercised from time to time, and as often as may be deemed expedient, by PBGC. 

Article 8: General Provisions.

8.1

This Agreement is intended to be and is for the sole and exclusive benefit of the Parties and the Parties’ respective successors and permitted assigns.  Wausau and Affiliates may neither assign their rights under this Agreement in whole or in part, nor delegate any of their duties hereunder, without the express prior written consent of PBGC.  Any such assignment or delegation made without PBGC’s prior written consent will automatically be null and void ab initio.  Nothing expressed or mentioned in or to be implied from this Agreement gives any person or entity other than Wausau and Affiliates, any other members of Wausau’s controlled group (as defined in 29 U.S.C. § 1301(a)(14) (but only with respect to Section 4.1), and PBGC any legal or equitable right, remedy, or claim against the Parties under or with respect to this Agreement. 

8.2

If any provision in this Agreement is determined to be invalid, inoperative or unenforceable, the remaining provisions of this Agreement remain in effect if both the economic and legal substance of the transactions contemplated hereby are not materially affected in any manner adverse to any Party or the Plan.  Otherwise, the Parties shall negotiate in good faith to rewrite any such provision so as to, as nearly and fairly as possible, approach the economic and legal substance originally intended.

8.3

All notices, demands, instructions, and other communications required or permitted under this Agreement to either Party must be in writing and must be personally delivered or sent by facsimile or pre-paid recognized overnight delivery service with confirmed receipt, and will be deemed to be given for purposes of this Agreement on the date the writing is received by the intended recipient.  Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 8.3, all such notices, demands, instructions and other communications must be addressed to the Parties as indicated below:

To Wausau and Affiliates:

Wausau Paper Corp.

100 Paper Place

Mosinee, WI  54455

Attn:  Sherri L. Lemmer

Telephone:  (715) 693-4470

Facsimile:  (715) 692-2083

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With a copy to:

Mary Ellen Schill, Esq.

Ruder Ware, L.L.S.C.

P.O. Box 8050

Wausau, WI  54402-8050

Telephone:  (715) 845-4336

Facsimile:  (715) 845-2718

  

To PBGC:

Director

Corporate Finance and Restructuring Department

Pension Benefit Guaranty Corporation

1200 K Street, N.W., Ste. 270

Washington, D.C. 20005-4026

Telephone: (202) 326-4070

Facsimile: (202) 842-2643

with a copy to:

Chief Counsel

Pension Benefit Guaranty Corporation

1200 K Street, N.W.

Washington, D.C. 20005-4026

Telephone: (202) 326-4020

Facsimile: (202) 326-4112

8.4

If the last date for performing any act (other than making a Required Contribution) or exercising any right provided for in the Agreement falls on a Saturday, Sunday, or federal holiday, such act may be performed or the right exercised on the next day that is not a Saturday, Sunday, or federal holiday with the same force and effect as if done on the date otherwise provided in this Agreement.

8.5

This Agreement may be executed in one or more counterparts and by different Parties on separate counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.  Delivery of an executed counterpart of this Agreement by facsimile or emailed PDF file (to meschill@ruderware.com for Wausau and Affiliates; to Caverly.Cassandra@pbgc.gov for PBGC) will be equally as effective as delivery of an original executed counterpart of this Agreement. 

8.6

Except to the extent of references herein to any other PBGC Settlement Document, this Agreement contains the complete and exclusive statement of the agreement and understanding by and among the Parties.  This Agreement supersedes all prior agreements, understandings, commitments, representations, communications, and proposals, oral or written, between the Parties relating to the subject matter hereof.  This Agreement may not be amended, modified, or supplemented except by an instrument in writing executed by both Parties.

8.7

This Agreement is not and shall not be construed as or deemed to be an admission or concession by or on the part of any Party of any liability or non-liability in connection with any matter described in the Agreement.  The basis for this Agreement is the desire of the Parties to resolve the controversy between them without litigation.

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8.8

The failure of any Party to enforce any provision of this Agreement will not constitute a waiver of such Party’s right to enforce that provision of this Agreement.

8.9

In this Agreement, unless specifically otherwise provided or the context otherwise requires, the singular includes the plural and the plural the singular; the word “or” is deemed to include “and/or”, the words “including”, “includes” and “include” are deemed to be followed by the words “without limitation”; and references to articles, sections, clauses or exhibits are to those of this Agreement.  Headings in this Agreement are included for convenience of reference only and do not constitute a part of this Agreement for any other purpose.  A reference herein to any statute is deemed also to refer to all rules and regulations promulgated under the statute, unless the context requires otherwise.

8.10

Except to any extent preempted by federal law, the laws of the State of Wisconsin (without regard to its conflicts of laws rules) will govern all matters relating to this Agreement.  Except with respect to any action to enforce a mortgage, each Party (a) consents to the exclusive jurisdiction of the U.S. District Court for the District of Columbia and its appellate courts for all matters relating to any PBGC Settlement Document, (b) consents that any action or proceeding relating to any PBGC Settlement Document may be brought in any such court, and (c) waives any objection that it may now or hereafter have to the venue of any such action or proceeding in such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same.

8.11

The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction will be applied against any Party.  Nor will any rule of construction that favors a non-draftsman be applied.

8.12

This Agreement is not a document or instrument governing any Plan, nor does anything in this Agreement amend, supplement, or derogate from the documents and instruments governing any Plan.  Further, except to any extent that the Election prohibition under Section 1.2 may be construed as doing such, nothing in this Agreement alters, amends, or otherwise modifies the operation or administration of any Plan.

8.13

Except to any extent expressly stated herein, nothing in this Agreement restricts the authority of any Plan’s fiduciaries to invest such Plan’s assets, or restricts the authority of Wausau, as such Plan’s sponsor, to amend, merge, or terminate such Plan, or to transfer assets and liabilities between such Plan and another pension plan.  

* * * *

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IN WITNESS WHEREOF, the Parties have executed this Agreement below.

WAUSAU PAPER CORP. 

PENSION BENEFIT GUARANTY

            CORPORATION

By:    /s/ SHERRI L. LEMMER

By:  /s/ DANA CANN

Sherri L. Lemmer

Senior Vice President and

Name:  Dana Cann

Chief Financial Officer

Title:  Director-Corporate Finance & 

Restructuring Department

WAUSAU PAPER MILLS, LLC

By:    /s/ SHERRI L. LEMMER

Sherri L. Lemmer

Senior Vice President and Chief Financial Officer

WAUSAU PAPER TOWEL & TISSUE, LLC

By:    /s/ SHERRI L. LEMMER

Sherri L. Lemmer

Senior Vice President and Chief Financial Officer

WAUSAU TIMBERLANDS COMPANY, LLC

By:    /s/ SHERRI L. LEMMER

Sherri L. Lemmer

Senior Vice President and Chief Financial Officer

THE SORG PAPER COMPANY

By:    /s/ SHERRI L. LEMMER

Sherri L. Lemmer

Senior Vice President and Chief Financial Officer

THE MIDDLETOWN HYDRAULIC COMPANY

By:    /s/ SHERRI L. LEMMER

Sherri L. Lemmer

Senior Vice President and Chief Financial OfficerEX-10.1

 Exhibit 10.1 

OYSTER POINT MARINA PLAZA 

First Amendment to Office Lease 
 THIS FIRST
AMENDMENT TO OFFICE LEASE (the “First Amendment”) is made and entered into as of June 3, 2014, by and between KASHIWA FUDOSAN AMERICA, INC., a California corporation (“Landlord”) and SUNESIS PHARMACEUTICALS,
INC., a Delaware corporation (“Tenant”). 
 Recitals 

A. Landlord or its predecessor and Tenant or its predecessor have heretofore entered into that certain lease dated August 1, 2013 (the
“Lease”) for premises described as Suite 400 (the “Premises”), initially containing approximately 15,378 rentable square feet, in the building located at 395 Oyster Point Boulevard, South San Francisco, California (the
“Building”), which forms part of the office building complex commonly known as Oyster Point Marina Plaza (the “Complex”). 

B. The Lease has not heretofore been amended or assigned. 

C. The parties mutually desire to amend the terms of the Lease to expand the Premises, extend its Term, and effect certain other related
changes, all on and subject to the terms and conditions hereof. 
 Agreement 

Now, therefore, in consideration of the mutual terms and conditions herein contained and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows: 
 1 EFFECT OF
AMENDMENT. Landlord and Tenant agree that, notwithstanding anything contained in the Lease to the contrary, the provisions set forth below will be deemed to be part of the Lease and shall supersede, to the extent they differ, any
contrary provisions in the Lease. Terms defined in the Lease shall have the same meanings in this First Amendment, unless a different definition is set forth in this First Amendment. A true, complete, and correct copy of the Lease is attached hereto
as Exhibit A and incorporated herein by reference. 
 2 EFFECTIVE DATE. The amendments and changes
specified in this First Amendment shall become effective on July 1, 2014 (the “Effective Date”). Notwithstanding the foregoing, this First Amendment shall constitute the fully-binding
agreement and contract of the parties from and after the date of the parties’ execution and delivery of this First Amendment to each other. 
 3
SUMMARY TABLE. The Table set forth in § 1.2 of the Lease as heretofore amended is hereby superseded and replaced in its entirety by the following table, which shall constitute the Table under
§ 1.2 of the Lease for all purposes from and after the Effective Date of this First Amendment: 
  

																													
	 PERIODS
	  	SUITE
NO.	 	  	RSF	 	  	USF	 	  	MONTHLY
BASE RENT	 	  	TENANT’S
SHARE
BLDG	 	 	TENANT’S
SHARE
COMPLEX	 	 	BASE
YEAR	 
	 Expansion Space Commencement Date through April 30, 2015
	  	 	400	  	  	 	15,378	  	  	 	13,372	  	  	$	28,449.30	  	  	 	6.635	% 	 	 	3.311	% 	 	 	2014	  
	  	 	300	  	  	 	6,105	  	  	 	5,231	  	  	$	11,904.75	  	  	 	2.623	% 	 	 	1.314	% 	 	 	2014	  
	 May 1, 2015 through June 30, 2015
	  	 	400	  	  	 	15,378	  	  	 	13,372	  	  	$	30,756.00	  	  	 	6.635	% 	 	 	3.311	% 	 	 	2014	  
	  	 	300	  	  	 	6,105	  	  	 	5,231	  	  	$	12,210.00	  	  	 	2.623	% 	 	 	1.314	% 	 	 	2014	  

 In the event of any conflict between the terms contained in the Table and the terms contained in subsequent paragraphs of this
First Amendment, the terms of the Table shall control, except as may be expressly varied in any subsequent paragraph of this First Amendment. 

  
 Oyster Point Marina
Plaza First Amendment to Office Lease 
 Kashiwa Fudosan America, Inc. :: Sunesis Pharmaceuticals, Inc. 

page 1 of 5 

 4 EXTENSION OF LEASE TERM. The Term of the
Lease specified in § 1.4 of the Lease as heretofore amended is hereby extended for an additional period of two (2) months commencing on Expansion Space Commencement Date, and the Expiration Date of the Lease is hereby amended
accordingly to June 30, 2015. 
 4.1 Option to Renew. Tenant is hereby granted one (1) option to extend (the “Extension
Option”) the Term of the Lease with respect to the entire Premises for one (1) additional period of six (6) months (the “Extension Period”). The Extension Period term shall begin the first day following the Expiration Date
and shall take effect on the same terms and conditions as are in effect under the Lease immediately prior to the first Extension Period, including the Base Rent specified as to each suite comprising the Premises in the Table above. 

(a) Exercise of Option. The Extension Option may be exercised only by (i) delivering in person to Landlord’s Building Manager
in the Building Office written notice of Tenant’s irrevocable election to exercise no earlier than ten (10) months and no later than six (6) months prior to the commencement of the Extension Period, and (ii) collecting and
retaining in exchange for such notice of exercise an original written receipt therefor signed and dated by Landlord’s Building Manager. Tenant’s exercise of its Extension Option shall not be effective or valid if there is any deviation in
the timing or manner of exercise prescribed herein. 
 (b) Failure to Exercise. If Tenant shall fail validly and timely to exercise
the Option herein granted, said Option shall terminate and shall be null and void and of no further force and effect. 
 (c) Default.
Tenant’s exercise of the Option shall, at Landlord’s election, be null and void if Tenant is in Default on the date of Tenant’s notice of exercise or at any time thereafter and prior to commencement of the Extension Period.
Tenant’s exercise of the Extension Option shall not operate to cure any Default by Tenant nor to extinguish or impair any rights or remedies of Landlord arising by virtue of such Default. If the Lease or Tenant’s right to possession of the
Premises shall terminate before Tenant shall have exercised the Extension Option, then immediately upon such termination the Extension Option shall simultaneously terminate and become null and void. 

(d) Time. Time is of the essence of the Extension Option granted hereunder. 

5 EXTENSION TERM BASE YEAR. As specified in the Table above, the Base Year for the purposes
calculating Tenant’s Share of Increased Operating Expenses and Increased Taxes under Article 4 of the Lease as heretofore amended shall be calendar year 2014 from and after the Effective Date. 

6 EXTENSION TERM BASE RENT. The Base Rent for the Premises specified in § 1.5 of
the Lease as heretofore amended shall be the amounts specified as Monthly Base Rent in the Table above for the various periods and spaces set forth in the Table from and after the Effective Date. 

7 EXPANSION OF PREMISES. On July 1, 2014 (the “Expansion Space Commencement Date”),
the Premises shall be expanded by the addition thereto of approximately 6,105 rentable square feet of space known as Suite 300 in the Building (“Suite 300” or the “Expansion Space”) for all purposes under the Lease. All
references in the Lease to the “Premises” shall refer to Premises as so augmented by the addition of Suite 300 from and after the Expansion Space Commencement Date. The floor plan and location of Suite 300 is shown on the space
plan attached hereto as Exhibit B and incorporated herein by reference (the “Space Plan”). From and after Expansion Space Commencement Date, Suite 300 shall become the Premises pursuant to the basic terms specified
in the Table above regarding Term, Base Rent, Tenant’s Share of increases in Operating Expenses and Taxes, and the Base Year for the purposes of calculating Additional Rentable payable with respect to Suite 300. 

  
 Oyster Point Marina
Plaza First Amendment to Office Lease 
 Kashiwa Fudosan America, Inc. :: Sunesis Pharmaceuticals, Inc. 

page 2 of 5 

 8 USE OF FURNITURE. Tenant shall
have the right to use some or all of the existing furniture in the Premises (the “Furniture”) under license from Landlord throughout the Term of the Lease as the same may be extended without cost or charge. On or before June 13, 2014,
Tenant shall identify by written notice to Landlord those elements of the Furniture it would like to utilize in the Premises. Landlord shall remove those elements of the Furniture that Tenant does not wish to utilize before the Expansion Space
Commencement Date. Landlord shall retain ownership of the Furniture, and Tenant shall return the Furniture to Landlord on the Expiration Date, as the same may be extended hereunder, in the same condition as that in which received, normal wear and
tear and casualty damage excepted. Tenant agrees to accept the Furniture in “as-is, where-is” condition, and Landlord makes no warranty as to the condition or
serviceability of the Furniture for Tenant’s purposes. Tenant shall have the right to reconfigure the Furniture to conform to Tenant’s office layout. 

9 CONDITION OF PREMISES. Except as otherwise expressly provided in this ¶ 9 with respect to
Landlord’s preparation of the Expansion Space for Tenant’s occupancy, Tenant shall accept the Expansion Space, any existing Improvements in the Expansion Space, and the Systems and Equipment serving the same in an
“as is” condition on the Expansion Space Commencement Date, and Landlord shall have no obligation to improve, alter, remodel, or otherwise modify the Expansion Space in connection with Tenant’s occupancy of the Premises as
expanded by the Expansion Space from and after the Expansion Space Commencement Date. 
 9.1 Landlord’s Preparation.
Landlord shall use reasonable diligence in completing and preparing the Expansion Space for Tenant’s occupancy on or before the Expansion Space Commencement Date. The facilities, materials, and work to be furnished, installed, and performed in
the Expansion Space by Landlord are referred to as the “Work.” Any other installations, materials, and work which may be undertaken by or for the account of Tenant to prepare, equip, decorate, and furnish the Expansion Space for
Tenant’s occupancy are referred to as the “Tenant’s Work,” which shall include the connection and/or rewiring of Tenant’s telephone and data lines. The parties agree that Landlord’s Work, to be completed at
Landlord’s sole cost and expense, shall consist of the following items only: 
 (i) professional shampooing of the existing carpet
throughout the Expansion Space; 
 (ii) application of Building-standard new paint throughout the
Expansion Space. 
 (iii) delivery of the Expansion Space with all Systems and Equipment serving the same in good working order. 

9.1.1 Readiness for Occupancy. The Expansion Space shall be deemed ready for occupancy on the earliest date on which all of the
following conditions (the “Occupancy Conditions”) have first been met: 
 (a) Substantial Completion of Work. The
Work has been substantially completed; and it shall be so deemed notwithstanding the fact that minor or insubstantial details of construction, mechanical adjustment, or decoration remain to be performed, the noncompletion of which does not
materially interfere with Tenant’s beneficial use of the Expansion Space for its intended purposes; 
 (b) Access and
Services. Reasonable means of access and facilities necessary to Tenant’s use and occupancy of the Expansion Space, including corridors, elevators, stairways, heating, ventilating,
air-conditioning, sanitary, water, and electrical facilities (but exclusive of parking facilities) have been installed and are in reasonably good operating order and available to Tenant; and 

(c) Certificate of Occupancy or Completion. A certificate of occupancy, certificate of completion, final inspection card, or
similar required governmental approval (temporary or final) has been issued by the City of South San Francisco permitting use of the Expansion Space for office purposes. 

  
 Oyster Point Marina
Plaza First Amendment to Office Lease 
 Kashiwa Fudosan America, Inc. :: Sunesis Pharmaceuticals, Inc. 

page 3 of 5 

 9.2 Notice of Defects. It shall be conclusively presumed upon Tenant’s taking
actual possession of the Expansion Space that the same were in satisfactory condition (except for latent defects) as of the date of such taking of possession, unless within thirty (30) days after the Expansion Space Commencement Date Tenant
shall give Landlord notice in writing specifying the respects in which the Expansion Space was not in satisfactory condition. 
 10
SECURITY DEPOSIT. Tenant’s Security Deposit specified in § 5.1 of the Lease as heretofore amended shall be increased in consequence of the parties’ execution and delivery of this First Amendment
to each other from its current level to Forty Thousand Four Hundred Forty-Nine Dollars and Thirty Cents ($40,449.30). Tenant shall pay the increase in the Security Deposit to Landlord upon Tenant’s execution and delivery of this First
Amendment to Landlord. 
 11 PARKING. The number of parking spaces specified in § 28.1 of the
Lease as heretofore amended as available for Tenant’s use is hereby amended to Seventy-Five (75). 
 12 ACCESS
INSPECTION DISCLOSURE. Pursuant to California Civil Code § 1938, Landlord hereby notifies Tenant that, as of the date of this First Amendment, the Premises have not undergone inspection by a
“Certified Access Specialist” to determine whether the Premises meet all applicable construction-related accessibility standards under California Civil Code § 55.53, and the Premises have
not been determined to meet all applicable construction-related accessibility standards pursuant to Civil Code § 55.53. 
 13 NO
DISCLOSURE. Tenant agrees that it shall not disclose any of the matters set forth in this First Amendment or disseminate or distribute any information concerning the terms, details, or conditions
hereof to any person, firm, or entity without obtaining the express written approval of Landlord. 
 14 DEFINED
TERMS. Terms used herein that are defined in the Lease shall have the meanings therein defined, unless a different definition is set forth in this First Amendment. In the event of any conflict between
the provisions of the Lease, and this First Amendment, the terms of this First Amendment shall prevail. 
 15
SURVIVAL. Warranties, representations, agreements, and obligations contained in this First Amendment shall survive the execution and delivery of this First Amendment and shall survive any and all
performances in accordance with this First Amendment. 
 16 COUNTERPARTS. This First Amendment may be
executed in any number of counterparts, which each severally and all together shall constitute one and the same First Amendment. 
 17
ATTORNEYS’ FEES. If any party obtains a judgement against any other party or parties by reason of breach of this First Amendment, reasonable attorneys’ fees and costs as fixed
by the court shall be included in such judgement against the losing party or parties. 
 18 CORPORATE REVIEW
FEES. Notwithstanding anything to the contrary in the Lease as heretofore amended, Tenant agrees to reimburse Landlord for its reasonable attorneys’ fees incurred in the review of (i) any
transaction with respect to which Tenant is required to give notice under § 17.13 of the Lease and/or (ii) any other change of name, registration, corporate status or merger, acquisition, consolidation, transfer, or other matter
related to Tenant’s legal or corporate status requiring Landlord’s attention and legal advice. 
 19
SUCCESSORS. This First Amendment and the terms and provisions hereof shall inure to the benefit of and be binding upon the heirs, successors, and assigns of the parties. 

20 AUTHORITY. Each of the individuals executing this First Amendment represents and warrants that he or she
is authorized to execute this First Amendment on behalf of the party for whom he or she is executing this First Amendment and that by his or her signature such party is legally bound by the terms, covenants, and conditions of this First Amendment.

 21 GOVERNING LAW. This First Amendment shall be construed and enforced in accordance
with the laws of the State of California. 
 22 CONTINUING VALIDITY OF
LEASE. Except as expressly modified herein, the Lease remains in full force and effect. 

  
 Oyster Point Marina
Plaza First Amendment to Office Lease 
 Kashiwa Fudosan America, Inc. :: Sunesis Pharmaceuticals, Inc. 

page 4 of 5 

 23 CONFLICTS. In the event of any conflict between the provisions of the Lease and those of
this First Amendment, the terms and provisions of this First Amendment shall control. 
 24 LANDLORD’S
REPRESENTATIVE. Tenant acknowledges and agrees that, in executing this First Amendment, TAK Development, Inc., a California corporation, is acting solely in its capacity as Landlord’s authorized attorney-in-fact. TAK
Development, Inc. is not acquiring or assuming any legal liability or obligation to any other party executing this First Amendment, and any claim or demand of any such other party arising under or with respect to this First Amendment shall be made
and enforced solely against Landlord. 
 25 EXHIBITS. The following exhibits have been attached to this First Amendment by the parties
prior to their execution and deliver of the same to each other, which are incorporated herein by reference: 
 Exhibit A—The Lease

 Exhibit B—Space Plan 
 26
WHOLE AGREEMENT. The mutual obligations of the parties as provided herein are the sole consideration for this First Amendment, and no representations, promises, or inducements have been made by the parties other
than as appear in this First Amendment, which supersedes any previous negotiations. There have been no representations made by the Landlord or understandings made between the parties other than those set forth in this First Amendment. This First
Amendment may not be amended except in writing signed by all the parties. 
 In witness whereof, the parties have executed this First
Amendment as of the date first above written. 
  

															
	Landlord:	 		 	Tenant:
			
	KASHIWA FUDOSAN AMERICA, INC., a California corporation	 		 	SUNESIS PHARMACEUTICALS, INC., a Delaware corporation
							
		 	By:	 	 TAK Development, Inc.,

a California corporation
	 		 		 	By:	 	 /s/ Eric Bjerkholt

		 		 	 		 		 		 	 Eric Bjerkholt

		 	Its:	 	Attorney-in-Fact	 		 		 		 	[name typed]
								
		 		 		 		 		 		 	Its:	 	 EVP Corp Dev and Finance, CFO

								
		 		 	By:	 	 /s/ Yujin Yamaai
	 		 		 		 	
		 		 		 	Yujin Yamaai, Vice President	 		 		 		 	

  
 Oyster Point Marina
Plaza First Amendment to Office Lease 
 Kashiwa Fudosan America, Inc. :: Sunesis Pharmaceuticals, Inc. 

page 5 of 5

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