Document:

Guaranty dated December 27, 2010

 Exhibit 10.5 
 GUARANTY 
 THIS GUARANTY is made, executed and delivered this 27th day of
December, 2010 (the “Guaranty”) by CELLU TISSUE HOLDINGS, INC., a Delaware corporation (the “Guarantor”) in favor of ASSOCIATED BANK, NATIONAL ASSOCIATION, a national banking association with an office at 740 Marquette Avenue,
Minneapolis, MN 55402 (the “Bank”). 
 RECITALS 

A. Cellu Tissue-CityForest LLC, a Minnesota limited liability company (the “Borrower”), and the Bank are the parties to that
certain Amended and Restated Reimbursement Agreement dated as of March 21, 2007, as amended by that certain First Amendment to Amended and Restated Reimbursement Agreement dated as of December 3, 2009 and by that certain Second Amendment
to Amended and Restated Reimbursement Agreement dated as of December 9, 2010 (as so amended, the “Original Reimbursement Agreement”). 
 B. On the date hereof, the Guarantor merged with Sand Dollar Acquisition Corporation, a Delaware corporation (the “Clearwater Merger Sub”) and a wholly-owned subsidiary of Clearwater Paper
Corporation, a Delaware corporation (“Clearwater”) pursuant to that certain Merger Agreement dated as of September 15, 2010, by and among the Guarantor, Clearwater Merger Sub and Clearwater (the “Clearwater Merger”) with the
Guarantor continuing as a surviving corporation in the Clearwater Merger. 
 C. The Borrower has requested that the Bank consent
to the Clearwater Merger and amend certain provisions of the Original Reimbursement Agreement as amended and restated in that certain Second Amended and Restated Reimbursement Agreement dated as of December 27, 2010 (the Second Amended and
Restated Reimbursement Agreement as it may be amended, modified, supplemented, increased, restated, or replaced from time to time being the “Reimbursement Agreement”; capitalized terms not otherwise defined herein being used herein as
defined therein) between the Borrower and the Bank. 
 D. As a condition to the “Effective Date” of the Reimbursement
Agreement, the Bank has required that the Guarantor execute and deliver this Guaranty. 
 E. The Guarantor has determined that
the execution, delivery and performance of this Guaranty are in the Guarantor’s best business and pecuniary interest. 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties
hereto, and in order to induce the Bank to amend and restate the Original Reimbursement Agreement pursuant to the Reimbursement Agreement, the Guarantor hereby agrees with the Bank as follows: 

1. Guaranty of Payment. The Guarantor hereby unconditionally guarantee(s) the full and prompt payment when due, whether by acceleration or
otherwise, and at all times thereafter, of all obligations of the Borrower to the Bank, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, or now or hereafter existing, or due or to become due, including,
without limitation, all Obligations of the Borrower to the Bank arising under the Reimbursement Agreement or any other Loan Document (all such obligations being hereinafter 

 
collectively called the “Guaranteed Obligations”) and the Guarantor further agrees to pay all reasonable expenses, including reasonable fees of attorneys (who may be employees of the
Bank) and legal expenses, paid or incurred by the Bank in endeavoring to collect the Guaranteed Obligations, or any part thereof, and in enforcing this Guaranty. 
 2. Representations and Warranties. The Guarantor represents and warrants to the Bank that: 
 (a) Existence, Etc. The Guarantor is a corporation duly incorporated and validly existing under the laws of the State of Delaware. The Guarantor has all power and authority to do business in, and
is in good standing in, all other jurisdictions where the nature of its business or the nature of the property owned or leased by it makes such qualification necessary, except where the failure to effect such qualification could not reasonably be
expected to cause a Material Adverse Occurrence. The Guarantor has all power and authority to own its properties. 
 (b) Due
Authorization, No Breach, No Liens. The execution, delivery and performance by the Guarantor of this Guaranty and each other Transaction Document to which the Guarantor is a party are within the Guarantor’s powers, have been duly authorized
by all necessary action by the board of directors of the Guarantor, and do not contravene (a) the Guarantor’s articles of incorporation or bylaws, (b) any Governmental Rule or (c) any indenture, loan or credit agreement or any
other material agreement, lease or instrument to which the Guarantor is a party or by which it or any of its properties may be bound including, without limitation, the Clearwater Credit Facility Loan Documents and the Clearwater Senior Notes Loan
Documents; and such execution, delivery and performance do not result in or require the creation of any Lien upon or with respect to any of the Guarantor’s properties. The Guarantor is not in default under or in violation of any such law,
statute, rule or regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, loan or credit agreement or other material agreement, lease or instrument in any case in which the consequences of such default or
violation could reasonably be expected to cause a Material Adverse Occurrence. 
 (c) Governmental Approvals. No
Governmental Approval is required for the due execution, delivery and performance by the Guarantor of this Guaranty or any other Transaction Document to which it is a party, other than those already obtained and those not yet required but obtainable
in the ordinary course as and when required. 
 (d) Transaction Documents. This Guaranty and the other Transaction
Documents to which the Guarantor is a party are the valid and binding obligations of the Guarantor enforceable against the Guarantor in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights or by general principles of equity limiting the availability of equitable remedies. This Guaranty is in full
force and effect in all material respects and no default under this Guaranty has occurred and is continuing. To the knowledge of the Guarantor, the other Transaction Documents to which the Guarantor is a party are in full force and effect in all
material respects and no default under any such other Transaction Document to which the Guarantor is party has occurred and is continuing. 
 (e) Financial Condition. 

 (i) The Guarantor has heretofore furnished to the Bank its consolidated balance sheet and
statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended February 28, 2010 reported on by PricewaterhouseCoopers LLP, independent public accountants, and (ii) as of and for the fiscal
quarter ended August 26, 2010 and for the six months ending August 26, 2010, certified by the chief financial officer of the Guarantor. Such financial statements present fairly, in all material respects, the financial position and results
of operations and cash flows of the Guarantor and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred
to in clause (ii) above. 
 (ii) No event, change or condition has occurred that has resulted in, or could reasonably be
expected to result, in a Material Adverse Occurrence since August 26, 2010. 
 (f) Disclosure. No exhibit, schedule,
report or other information (unless superseded by’ a subsequently provided, corrected exhibit, schedule or report or by corrected information) provided by the Guarantor or any of its Affiliates or their respective agents to the Bank in
connection with the negotiation and execution of the Transaction Documents to which the Guarantor is party and otherwise in connection with the transactions contemplated thereby contains any material misstatement of fact or omits to state a material
fact necessary to make the statements contained therein taken as a whole not misleading, as of the date provided. 
 (g)
Margin Stock. The Guarantor is not engaged in the business of extending credit for the purpose of buying or carrying margin stock (within the meaning of Regulation U issued by the Federal Reserve Board). 

(h) Incorporation of Representations and Warranties. Each of the representations and warranties of the Guarantor or pertaining to
the Guarantor or any of its properties in the Clearwater Merger Agreement were true and correct when made and if any such representation and warranty is a continuing representation and warranty under the relevant Clearwater Merger Agreement as of
the Effective Date, then such continuing representation and warranty is true and correct as of the Effective Date. The Guarantor has no knowledge that any of the representations and warranties made in the Transaction Documents by or on behalf of any
party thereto other than the Guarantor is untrue or incorrect in any material respect. 
 (i) Status. The Guarantor is not
an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or an “investment advisor” within the meaning of the
Investment Company Act of 1940, as amended. 
 (j) Broker’s Fees. The Guarantor has not dealt with any Person who may
be entitled to any finder’s fee, brokerage commission, loan commission or other sum in connection with the transactions contemplated by the Loan Documents. The Guarantor hereby agrees to indemnify, defend and hold harmless the Bank against any
and all loss, liability, cost or expense, including reasonable attorneys’ fees, that such parties may suffer or sustain 

 
with respect to any finder’s fee, brokerage commission or other sum due in connection with the Reimbursement Agreement, the other Loan Documents or any other Transaction Document.

 (k) Solvency. The Guarantor is Solvent after giving effect to the issuance of the Bonds Letter of Credit, the
incurrence of the Indebtedness under the Clearwater Senior Notes Loan Documents, and the incurrence of Indebtedness under the full amount of the “Commitments” available under the Clearwater Credit Facility. 

(l) Trading with the Enemy Act. The execution of this Guaranty does not violate the Trading with the Enemy Act of 1917, as amended,
nor any of the foreign assets control regulations promulgated thereunder or the under the International Emergency Economic Powers Act or the U.N. Participation Act of 1945. Neither the Guarantor nor any person who owns a controlling interest in or
otherwise controls the Guarantor or any Subsidiary of the Guarantor is listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department
of the Treasury or included in any Executive Orders. 
 (m) Survival of Representations. All representations and
warranties contained in this Section 2 shall survive the delivery of this Guaranty, the issuance of the Bonds Letter of Credit and any investigation at any time made by or on behalf of the Bank shall not diminish the Bank’s rights to rely
thereon. 
 3. Affirmative Covenants. From the date of this Guaranty and thereafter until this Guaranty is either terminated or
performed, unless the Bank shall otherwise expressly consent in writing, the Guarantor will do all of the following: 
 (a)
Financial Statements and Reports. Furnish to the Bank: 
 (i) within 90 days after the end of each fiscal year of
Clearwater, Clearwater’s audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by KPMG LLP or other nationally recognized auditors (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Clearwater and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, accompanied by any management letter prepared by said accountants; 
 (ii) within 45 days after the end of each of the
first three fiscal quarters of Clearwater, Clearwater’s consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of Clearwater’s Financial
Officers as presenting fairly in all material respects the financial condition and results of operations of Clearwater 

 
and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes; 

(iii) within five (5) Business Days following the Bank’s request, copies of all publicly available periodic and other reports,
proxy statements and other materials filed by Clearwater or any of its Subsidiaries with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national
securities exchange; and 
 (iv) promptly following any request therefor, such other information regarding the operations,
business affairs and financial condition of the Guarantor or any of its Subsidiaries, or compliance with the terms of any Loan Document, as the Bank may reasonably request. 
 (b) Notices of Material Events. Furnish to the Bank prompt written notice of the following: 
 (i) the occurrence of any Default or Event of Default; 
 (ii) the proposed
consummation of any event described in clause (a) of the definition of “Clearwater Prepayment Event” in the Reimbursement Agreement, where such notice shall be delivered by no later than five (5) Business Days prior to the date
of consummation and shall be accompanied by copies of the relevant documentation governing such event; or 
 (iii) any other
development that results in, or could reasonably be expected to result in, a Material Adverse Occurrence. 
 (c) Corporate
Existence. Except as provided by Section 4(a), maintain its corporate existence and good standing under the laws of its jurisdiction of incorporation and its qualification to transact business in each jurisdiction in which the character of
the properties owned, leased or operated by it or the business conducted by it makes such qualification necessary and where the failure to so qualify results in, or could reasonably be expected to result in, a Material Adverse Occurrence.

 4. Negative Covenants. From the date of this Guaranty and thereafter until this Guaranty is either terminated or performed, unless the
Bank shall otherwise expressly consent in writing, the Guarantor will not do any of the following: 
 (a) Merger.
Liquidate or dissolve, or merge into or consolidate with or into, any Person; provided that the Guarantor may enter into any merger, consolidation, or other transaction permitted by Section 5.01 of the Clearwater Senior Notes Indenture
so long as: (i) the resulting, surviving or transferee entity (if not the Guarantor) shall assume the obligations of the Guarantor under this Guaranty pursuant to a written instrument of assumption that is reasonably satisfactory to the Bank;
and (ii) no Change of Control has resulted from such transaction. 

 (b) Restricted Agreement. Directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon: 
 (i) the ability of the
Borrower to create, incur or permit to exist any Lien in favor of the Bank upon any of the Borrower’s property or assets; 

(ii) the Bank’s right to prohibit, restrict or impose conditions upon the Borrower’s ability to pay dividends or distributions
with respect to its Equity Interests or to repay loans or advances made to the Borrower by the Guarantor; provided that: 
 A.
the foregoing shall not apply to: 
 (1) restrictions and conditions imposed by law or by any Loan Document; 

(2) restrictions and conditions existing on the date hereof identified on Schedule 9.13 attached to the Reimbursement Agreement
including the Clearwater Senior Notes Indenture and the Clearwater Bank of America Loan Agreement; provided further, that in no event shall any such restriction or condition be breached or violated by: (a) the Borrower’s incurrence of the
Indebtedness under the Reimbursement Agreement and the grant of Liens in its property pursuant to the Loan Documents; or (b) the Borrower’s performance of its obligations under the Loan Documents; or (c) the Borrower’s incurrence
of any Indebtedness to refinance the Indebtedness incurred under the Reimbursement Agreement so long as: (i) the terms of such re-refinancing Indebtedness comply with any requirement then imposed by the Clearwater Senior Notes Loan Documents
and the Clearwater Credit Facility Loan Documents for permitted re-financing Indebtedness; (ii) with respect to all Letter of Credit Obligations, the Liens securing such re-financing Indebtedness shall be substantially the same as those created
by the Security Documents; and (3) the applicable restrictions described in Section 9.13(b) of the Reimbursement Agreement in the documentation for the re-financing Indebtedness are not materially more restrictive, when taken as a whole,
than the applicable restrictions in the Reimbursement Agreement; and 
 (3) customary restrictions and conditions contained in
agreements relating to the sale of the Borrower pending such sale; and 
 B. clause (b)(i) of the foregoing shall not apply to:
(I) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only 

 
to the property or assets securing such Indebtedness; and (II) customary provisions in leases and other contracts restricting the assignment thereof. 

5. Continuing Guaranty. This Guaranty shall in all respects be a continuing, absolute and unconditional Guaranty, and shall remain in full force
and effect (notwithstanding, without limitation, the dissolution of the Guarantor or that no Guaranteed Obligations may exist from time to time) until payment in full of the Guaranteed Obligations; subject, however, to reinstatement pursuant to the
Section 6 hereof. 
 6. Rescission or Return of Payment on Guaranteed Obligations. The Guarantor further agrees that, if at any time
all or any part of any payment theretofore applied by the Bank to any of the Guaranteed Obligations is or must be rescinded or returned by such Person for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of the Borrower), such Guaranteed Obligations shall, for the purposes of this Guaranty, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence, notwithstanding such application by
the Bank, and this Guaranty shall continue to be effective or be reinstated, as the case may be, as to such Guaranteed Obligations, all as though such application by such Person had not been made. 

7. Bank Permitted to Take Certain Actions. The Bank may, from time to time (but shall not be obligated to), whether before or after any
discontinuance of this Guaranty, at its sole discretion and without notice to the Guarantor, take any or all of the following actions: (a) retain or obtain a security interest in any property to secure any of the Obligations or any obligation
hereunder; (b) retain or obtain the primary or secondary obligation of any obligor or obligors, in addition to the Guarantor, with respect to any of the Obligations; (c) increase any of the Obligations or extend or renew for one or more
periods (whether or not longer than the original period), alter or exchange any of the Obligations, or release or compromise any obligation of any nature of any other obligor with respect to any of the Obligations; (d) release its security
interest in, or surrender, release or permit any substitution or exchange for, all or any part of any property securing any of the Obligations or any obligation hereunder, or extend or renew for one or more periods (whether Or not longer than the
original period) or release, compromise, alter or exchange, any Obligations of any nature of any obligor with respect to any such property; and (e) resort to the Guarantor for payment of any of the Guaranteed Obligations, whether or not the
Bank: (i) shall have resorted to any property securing any of the Obligations or any obligation hereunder or (ii) shall have proceeded against any other obligor primarily or secondarily obligated with respect to any of the Obligations (all
of the actions referred to in preceding clauses (i) and (ii) being hereby expressly waived by the Guarantor). 
 8.
Subrogation. The Guarantor hereby waives, until payment in full of the Guaranteed Obligations, any claim, right or remedy which the Guarantor may now have or hereafter acquire against the Borrower that arises hereunder and/or from the
performance by the Guarantor hereunder, including, without limitation, any claim, remedy or right of subrogation, reimbursement, exoneration, contribution, indemnification, or participation in any claim, right or remedy of the Bank against the
Borrower or any security which the Bank now has or hereafter acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law, or otherwise. 
 9. Waiver of Notice and Other Matters. The Guarantor hereby expressly waives: (a) notice of the acceptance by the Bank of this Guaranty; (b) notice of the existence or creation or
non-

 
payment of all or any of the Guaranteed Obligations; (c) presentment, demand, notice of dishonor, protest, and all other notices whatsoever; and (d) all diligence in collection or
protection of or realization upon the Obligations or any thereof, any obligation hereunder, or any security for or guaranty of any of the foregoing. 
 10. Additional Obligations of the Borrower Permitted. The creation or existence from time to time of Obligations in excess of the Guaranteed Obligations is hereby authorized, without notice to the
Guarantor, and shall in no way affect or impair the rights of the Bank and the obligations of the Guarantor under this Guaranty. 
 11.
Assignment of Guaranteed Obligations. The Bank may, from time to time, whether before or after any discontinuance of this Guaranty, with notice to the Guarantor, and only in connection with an assignment by the Bank of its rights and
obligations in accordance with Section 11.4 of the Reimbursement Agreement, assign or transfer any or all of the Guaranteed Obligations owed to it or any interest therein; and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Guaranteed Obligations shall be and remain Guaranteed Obligations for the purposes of this Guaranty, and each and every immediate and successive assignee or transferee of any of the Guaranteed Obligations or of
any interest therein shall, to the extent of the interest of such assignee or transferee in the Guaranteed Obligations, be entitled to the benefits of this Guaranty to the same extent as if such assignee or transferee were the assigning or
transferring Bank. 
 12. Information Concerning Borrower. The Guarantor hereby warrants to the Bank that the Guarantor now has and will
continue to have independent means of obtaining information concerning the affairs, financial condition and business of the Borrower. The Bank shall not have any duty or responsibility to provide the Guarantor with any credit or other information
concerning the affairs, financial condition or business of the Borrower which may come into the Bank’s possession. 
 13. Waiver and
Modifications. No delay on the part of the Bank in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Bank of any right or remedy shall preclude other or further exercise thereof or
the exercise of any other right or remedy; nor shall any modification or waiver of any of the provisions of this Guaranty be binding upon the Bank except as expressly set forth in a writing duly signed and delivered on behalf of the Bank.

 14. Obligations Under Guaranty. No action of the Bank permitted hereunder shall in any way affect or impair the rights of the Bank or
the obligations of the Guarantor under this Guaranty. The obligations of the Guarantor under this Guaranty shall be absolute and unconditional irrespective of any circumstance whatsoever which might constitute a legal or equitable discharge or
defense of the Borrower or the Guarantor. The Guarantor hereby acknowledges that there are no conditions to the effectiveness of this Guaranty. 

15. Successors. This Guaranty shall be binding upon the parties, and upon the successors and assigns of the parties. 

16. Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS GUARANTY SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES 

 
THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS. Wherever possible each provision of this Guaranty shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Guaranty. 
 17. Consent to Jurisdiction. AT THE OPTION OF THE BANK, THIS GUARANTY
MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND GUARANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT.
IN THE EVENT GUARANTOR COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS GUARANTY, THE BANK, AT ITS OPTION, SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE. 
 18. WAIVER OF JURY TRIAL. GUARANTOR AND THE BANK WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS GUARANTY OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR (b) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 
 19. Captions. Section captions used in this Guaranty are for convenience only,
and shall not affect the construction of this Guaranty. 
 20. Recitals. The recitals to this Guaranty are incorporated herein by
reference. 
 [Remainder of page intentionally left blank.] 

 IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the date first above
written. 
  

					
	GUARANTOR:
	
	CELLU TISSUE HOLDINGS, INC.
		
	By:	 	 /s/ Linda K. Massman

		 	Name:	 	Linda K. Massman
		 	Title:	 	 Vice President, Finance and

Chief Financial Officer

		
	Address:	 	
	
	601 W. Riverside, Suite 1100
	Spokane, WA 99201
	Attn: Michael S. Gadd
	Telephone: (509) 344-5920
	Facsimile: (509) 835-1561

 BANK:
(solely with respect to Section 18 hereof) 
 ASSOCIATED BANK, NATIONAL ASSOCIATION 

 

			
	By:	 	 /s/ Paul E. Way

	Name: Paul E. Way
	Title: Senior Vice PresidentTaylor Separation Agreement dated as of December 27, 2010

 Exhibit 10.6 
 Clearwater Paper Corporation 
 601 West Riverside Ave., Suite 1100 

Spokane, WA 99201 

December 27, 2010 

Mr. Russell C. Taylor 
 Cellu Tissue
Holdings, Inc. 
 1855 Lockeway Dr., Suite 501 
 Alpharetta, GA 30004 
 Re: Separation Agreement 

Dear Russ: 
 This letter
constitutes the agreement (“Agreement”) between you and Clearwater Paper Corporation, including any and all of its past and present affiliated companies (including, but not limited to, Cellu Tissue Holdings, Inc.), divisions, subdivisions,
parent companies, successors, assigns, officers, directors, employees and contractors (collectively referred to hereinafter as “Clearwater Paper” or “Company”), with respect to your release and waiver of claims against Clearwater
Paper. This Agreement is entered into in connection with your termination of employment with Cellu Tissue Holdings, Inc. (“Cellu Tissue”) on December 27, 2010, in connection with the closing of the transaction outlined in the
Agreement and Plan of Merger by and among Clearwater Paper Corporation, Sand Dollar Acquisition Corporation and Cellu Tissue, dated as of September 15, 2010. 
 PLEASE READ THIS AGREEMENT CAREFULLY 
 Should you agree to the terms and
conditions set forth herein, please sign this Agreement and return it to me. You are afforded at least twenty-one (21) days from the date of your receipt of this letter to consider this Agreement. This should provide you with adequate time to
review the terms and conditions of this Agreement and to consult with an attorney, which you are hereby advised to do. If you determine that you do not need the entire twenty-one (21) days to consider the Agreement, you may sign this Agreement
and return it to me before the end of the 21-day period, but you should not sign and return this Agreement earlier than December 27, 2010. Upon your execution of this Agreement, you will have seven (7) days from the date of your signature
to revoke the Agreement (“Revocation Period”). The provisions of this Agreement will not take effect until after the seven (7) day period has expired. Any revocation must be received by me in writing no later than the close of
business on the seventh day. Thereafter, this Agreement is final and may not be revoked or modified. 

  
 1 

 1. SEVERANCE BENEFITS AND OTHER CONSIDERATION. Under Section 5(e) of your
Employment Agreement with Cellu Tissue, dated May 8, 2006, and subsequently amended on January 18, 2010, September 15, 2010 and November 18, 2010 (the “Employment Agreement”), you are entitled to receive certain
severance benefits (the “Severance Benefits”) upon your termination of employment with Cellu Tissue for Good Reason (as such term is defined in Section 5(e) of your Employment Agreement). Clearwater Paper will treat your resignation
as of December 27, 2010 as satisfying all of the requirements for a resignation for Good Reason under your Employment Agreement. 
 As provided under Section 5(e) of your Employment Agreement, payment of the Severance Benefits is conditioned on your execution and delivery of this Agreement, such that the Agreement becomes
irrevocable (as described above) before the end of the sixty (60) day period which starts on the date of your termination from employment. This means that you will need to sign and deliver this Agreement no later than February 17, 2011,
and not revoke this Agreement during the Revocation Period, in order to receive the Severance Benefits. 
 You understand that
your failure to execute and deliver this Agreement to me by February 17, 2011, or your revocation of this Agreement during the Revocation Period, will completely release and discharge Clearwater Paper from any and all obligations to provide the
Severance Benefits. 
 2. ADEQUATE CONSIDERATION. You agree that the Severance Benefits are adequate and valid
consideration for your promises and the releases contained in this Agreement, and that no further payments or benefits are due you except those otherwise provided for under the Employment Agreement. 

3. RELEASE AND WAIVER. In consideration of the Severance Benefits, you agree, except as may be necessary to enforce the
provisions of the Employment Agreement, not to make any claims of any kind against Clearwater Paper, before any agency, court of other forum and to release Clearwater Paper, from any claim, known or unknown, arising in any way from any actions taken
by Clearwater Paper up to the date of the signing of this Agreement including, without limitation, any claim for wrongful discharge, breach of contract or other common law claims, or any claims arising under the Age Discrimination in Employment Act
of 1967, as amended by the Older Workers Benefit Protection Act of 1990, the Occupational Safety and Health Act of 1970, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, Title VII of the Civil Rights Act of
1964, as amended, the Workers Adjustment and Retraining Notification Act of 1988, the Connecticut Fair Employment Practices Act, or any other federal, state, or local statute or regulation dealing with discrimination on any bases, including sex,
race, national origin, marital status, religion, disability, sexual orientation, or age, and any claims for attorney’s fees, expenses or costs. This paragraph does not restrict your right to file a charge of discrimination with the EEOC or to
assist the EEOC in any investigation, however, by executing this Agreement, you waive any right that you may have to receive of any monetary award resulting from any action 

  
 2 

 
brought against Clearwater Paper by the EEOC or any other agency, person or entity and you expressly waive any right to bring a lawsuit or other action in your name. 

THIS MEANS THAT, BY SIGNING THIS AGREEMENT, YOU WAIVE ANY AND ALL RIGHTS YOU MAY HAVE TO BRING A LAWSUIT OR MAKE ANY CLAIM OF ANY KIND
WHATSOEVER AGAINST CLEARWATER PAPER, OR ITS PAST AND PRESENT, AFFILIATES, DIVISIONS, SUBDIVISIONS, TRUSTEES, OFFICIALS, OFFICERS, DIRECTORS, AGENTS, CONTRACTORS, ATTORNEYS OR EMPLOYEES, PERSONALLY OR IN THEIR OFFICIAL CAPACITY, BASED ON ANY ACTION,
EVENT OR CONDUCT OCCURRING PRIOR TO THE DATE OF YOUR SIGNING OF THIS AGREEMENT. 
 Further, this Agreement shall inure to
the benefit of and be binding upon you, your heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of and be binding upon Clearwater Paper, it successors and assigns. 

4. CONFIDENTIALITY; INTELLECTUAL PROPERTY; RESTRICTED ACTIVITIES. In consideration of the Severance Benefits, you
also agree that the terms, provisions and restrictions set forth in Sections 7, 8, 9 and 10 of the Employment Agreement survive the termination of the Employment Agreement, and are incorporated into this Agreement as though fully set forth herein
and remain fully enforceable by the Company. 
 5. NO MODIFICATION WITHOUT WRITING. The terms of this Agreement
cannot be changed or modified in any respect except in writing signed by you and Clearwater Paper. 
 6. FULL AND ENTIRE
AGREEMENT. This Agreement and the Employment Agreement represent the full and entire agreement between you and Clearwater Paper regarding the subject matter hereof, and supersede all prior understandings, agreements and obligations between
you and Clearwater Paper. In the event that any provision of this Agreement is held to be void or unenforceable by a court of competent jurisdiction, the remaining provisions of the Agreement shall nevertheless be binding upon the parties with the
same effect as though the void or unenforceable part had been severed and deleted. 
 7. SURRENDER OF MATERIALS.
You acknowledge that you have returned all Clearwater Paper related reports, files, memoranda, notes, records, and other documents (whether stored electronically or otherwise) as well as door and file keys, and any other property that you received
or prepared or helped to prepare in connection with your employment. You also agree that your expense account and use of Company credit and telephone cards will cease immediately and you will promptly return such cards or other similar Company
property in your possession and submit your final expense account, including an accounting for any advances. You further acknowledge that you have not and will not retain any copies or excerpts of the materials described above, and

  
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that you will not attempt to retrieve or recreate any of the materials described above after the termination of your employment. 

8. RELATIONSHIP WITH CLEARWATER PAPER. You acknowledge that you have no right to rehire into any job with Clearwater Paper
at any time in the future. You also agree that this Agreement is sufficient reason for Clearwater Paper to reject any application you might make for future employment. 
 9. FURTHER ACKNOWLEDGMENT. You acknowledge that you have read this Agreement carefully, and fully understand its terms. You have been advised to seek counsel and have had an opportunity to
do so and you are executing this Agreement knowingly and voluntarily. You fully understand that by signing this Agreement, you waive all claims of any kind whatsoever against Clearwater Paper, whether known or unknown, asserted or unasserted,
suspected or unsuspected, including all claims for attorneys’ fees, and expenses based upon any actions taken by Clearwater Paper up to the date of the signing of this Agreement. 

Remainder of Page Left Intentionally Blank 

  
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 If you agree with the terms and conditions as set forth herein, you must sign this Agreement
in the space provided below and return the original to me. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. 

 

	
	Sincerely,
	
	/s/ Thomas H. Carter
	
	Thomas H. Carter
	Vice President, Human Resources

 Voluntarily accepted and
agreed to on this, the      of             , 20    . 

 

	
	  

	Russell C. Taylor

  
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