Document:

Exhibit
10.8

 

BLUE RIDGE PAPER PRODUCTS

EMPLOYEE STOCK OWNERSHIP PLAN

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1
  GENERAL

  	
   

  
	
  1.1

  	
  Purpose and Effective Date

  	
   

  
	
  1.2

  	
  Employers and Related Companies

  	
   

  
	
  1.3

  	
  Trust Agreement and Plan
  Administration

  	
   

  
	
  1.4

  	
  Plan Year

  	
   

  
	
  1.5

  	
  Accounting Date

  	
   

  
	
  1.6

  	
  Applicable Laws

  	
   

  
	
  1.7

  	
  Gender and Number

  	
   

  
	
  1.8

  	
  Notices

  	
   

  
	
  1.9

  	
  Evidence

  	
   

  
	
  1.10

  	
  Action By Employer

  	
   

  
	
  1.11

  	
  No Reversion to
  Employers

  	
   

  
	
  1.12

  	
  Highly Compensated
  Employees

  	
   

  
	
  1.13

  	
  Investment of Trust
  Assets

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2
  PLAN PARTICIPATION

  	
   

  
	
  2.1

  	
  Entry Date

  	
   

  
	
  2.2

  	
  Eligibility for
  Participation

  	
   

  
	
  2.3

  	
  Participation
  Not Guarantee of Employment

  	
   

  
	
  2.4

  	
  Restricted Participation

  	
   

  
	
  2.5

  	
  Leased Employees

  	
   

  
	
  2.6

  	
  Military Service

  	
   

  
	
  2.7

  	
  Omission of Eligible Employee

  	
   

  
	
  2.8

  	
  Inclusion of Ineligible Employee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3
  [RESERVED]

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4
  PLAN CONTRIBUTIONS

  	
   

  
	
  4.1

  	
  Annual Employer
  ESOP Contributions

  	
   

  
	
  4.2

  	
  Specific Implementation

  	
   

  
	
  4.3

  	
  Company Stock

  	
   

  
	
  4.4

  	
  Acquisition Loans

  	
   

  
	
  4.5

  	
  No Participant
  Contributions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5
  PLAN ACCOUNTING

  	
   

  
	
  5.1

  	
  Participants’ Accounts

  	
   

  
	
  5.2

  	
  Adjustment of
  ESOP Stock Accounts

  	
   

  
	
  5.3

  	
  Adjustment of ESOP
  Cash Accounts

  	
   

  
	
  5.4

  	
  Allocation
  and Crediting of Company ESOP Contributions

  	
   

  
	
  5.5

  	
  Limitation
  on Allocations to Participants

  	
   

  
	
  5.6

  	
  Statement of Plan
  Interest

  	
   

  
	
  5.7

  	
  Compensation
  and Section 415 Compensation

  	
   

  
	
  5.8

  	
  Overflow Plan

  	
   

  

 

i

 

	
  ARTICLE 6
  TERMINATION DATE

  	
   

  
	
  6.1

  	
  Overview on Distributions

  	
   

  
	
  6.2

  	
  Termination Date

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7
  DISTRIBUTIONS

  	
   

  
	
  7.1

  	
  Distributions
  on Account of Termination of Employment

  	
   

  
	
  7.2

  	
  Manner of Distributions

  	
   

  
	
  7.3

  	
  Form of Distributions

  	
   

  
	
  7.4

  	
  Time of Distribution

  	
   

  
	
  7.5

  	
  Distribution
  to Participant’s Beneficiary Upon Death

  	
   

  
	
  7.6

  	
  Facility of Payment

  	
   

  
	
  7.7

  	
  Interests Not
  Transferable

  	
   

  
	
  7.8

  	
  Absence of Guaranty

  	
   

  
	
  7.9

  	
  Designation of
  Beneficiary

  	
   

  
	
  7.10

  	
  Missing
  Participants or Beneficiaries

  	
   

  
	
  7.11

  	
  Qualified
  Domestic Relations Order

  	
   

  
	
  7.12

  	
  Pre-Retirement
  Diversification Rights

  	
   

  
	
  7.13

  	
  Direct Rollovers

  	
   

  
	
  7.14

  	
  Account
  Forfeiture for Probationary Employees

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8
  VOTING AND TENDERING OF COMPANY STOCK

  	
   

  
	
  8.1

  	
  Voting

  	
   

  
	
  8.2

  	
  Tender

  	
   

  
	
  8.3

  	
  Fiduciary
  Responsibilities

  	
   

  
	
  8.4

  	
  Procedures for
  Voting and Tender

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9
  RIGHTS, RESTRICTIONS AND OPTIONS ON COMPANY STOCK

  	
   

  
	
  9.1

  	
  Right of First Refusal

  	
   

  
	
  9.2

  	
  Put Option

  	
   

  
	
  9.3

  	
  Publicly Traded
  Company Stock

  	
   

  
	
  9.4

  	
  Share Legend

  	
   

  
	
  9.5

  	
  Nonterminable Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 DIVIDENDS

  	
   

  
	
  10.1

  	
  Dividends
  Credited to ESOP Cash Accounts

  	
   

  
	
  10.2

  	
  Dividends Paid to
  Participants

  	
   

  
	
  10.3

  	
  Dividends
  Used to Repay Acquisition Loan

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 PLAN ADMINISTRATION

  	
   

  
	
  11.1

  	
  Membership and Authority

  	
   

  
	
  11.2

  	
  Delegation By Committee

  	
   

  
	
  11.3

  	
  Uniform Rules

  	
   

  
	
  11.4

  	
  Information
  to be Furnished to Committee

  	
   

  
	
  11.5

  	
  Exercise of
  Committee’s Duties

  	
   

  
	
  11.6

  	
  Scope
  of Authority of Committee; Operation of Committee

  	
   

  
	
  11.7

  	
  Plan Interpretation

  	
   

  

 

ii

 

	
  11.8

  	
  Plan Expenses

  	
   

  
	
  11.9

  	
  Meetings and Voting

  	
   

  
	
  11.10

  	
  Compensation

  	
   

  
	
  11.11

  	
  Claims Procedures

  	
   

  
	
  11.12

  	
  Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 AMENDMENTS

  	
   

  
	
  12.1

  	
  Right to Amend

  	
   

  
	
  12.2

  	
  Amendment by Committee

  	
   

  
	
  12.3

  	
  Plan Merger and
  Asset Transfers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 TERMINATION

  	
   

  
	
  13.1

  	
  Right to Terminate

  	
   

  
	
  13.2

  	
  Effect of Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14 TOP-HEAVY PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15 SPECIAL PROVISIONS FOR
  MORRISTOWN FACILITY

  	
   

  
	
  15.1

  	
  Scope

  	
   

  
	
  15.2

  	
  Time of Distributions

  	
   

  
	
  15.3

  	
  Mandatory
  Small Benefit Distribution

  	
   

  

 

iii

 

BLUE RIDGE PAPER PRODUCTS

EMPLOYEE STOCK OWNERSHIP PLAN

 

ARTICLE 1

 

GENERAL

 

1.1                                 Purpose and Effective Date. Effective as
of May 14, 1999 (the “Effective Date”), BLUE RIDGE HOLDING CORP., a
Delaware corporation (the “Company”), established the BLUE RIDGE PAPER PRODUCTS
EMPLOYEE STOCK OWNERSHIP PLAN (the “Plan”) to enable the employees of the
Company and its subsidiaries (including Blue Ridge Paper Products Inc.) to
participate in the equity ownership of the Company. The Plan is intended to be
an employee stock ownership plan within the meaning of Section 4975(e)(7)
of the Internal Revenue Code of 1986, as amended (the “Code”). The Plan is
intended to be a money purchase and stock bonus plan, both of which are
intended to qualify under Section 401(a) of the Code. All contributions to
the trust (the “Trust”) which implements and forms a part of the Plan, not in
excess of 15% of the aggregate compensation of participants under the Plan
shall be made to the money purchase component of the plan and any contributions
above such amount shall be made to the stock bonus component of the Plan.

 

1.2                                 Employers
and Related
Companies. The Company, Blue
Ridge Paper Products Inc., and each Related Company which, with the Company’s
consent, adopts the Plan are referred to below collectively as the “Employers”
and individually as an “Employer.” The term “Related Company” means any
corporation, trade or business during any period in which it is, along with the
Company, a member of a controlled group of corporations, a group of trades or
businesses under common control or an affiliated service group, as described in
Sections 414(b), 414(c), 414(m), respectively, of the Code or as described in
regulations issued by the Secretary of the Treasury or his delegate pursuant to
Section 414(o) of the Code.

 

1.3                                 Trust
Agreement and Plan
Administration. All
contributions made under the Plan will be held, managed and controlled by the
U.S. Trust Company (the “Trustee”) acting as trustee of a Trust. The terms of
the trust are set forth in a trust agreement known as the TRUST AGREEMENT FOR
THE BLUE RIDGE PAPER PRODUCTS EMPLOYEE STOCK OWNERSHIP PLAN (the “Trust
Agreement”). The Company shall be the administrator of the Plan (the “Plan
Administrator”) and shall have the rights, duties and obligations of an
“administrator” as that term is defined in Section 3(16)(A) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and of a
“plan administrator” as that term is defined in Section 414(g) of the
Code. The Company has delegated certain duties relating to the operation and
administration of the Plan to a Committee, as described in Article 11.

 

1.4                                 Plan
Year. The term “Plan Year” means the calendar
year.

 

 

1.5                                 Accounting
Date. The term “Accounting Date” means the last
day of each Plan Year and/or an Accounting Date as may be determined by the
Committee in a uniform and nondiscriminatory manner.

 

1.6                                 Applicable
Laws. The Plan shall be construed and
administered according to the laws of the State of North Carolina to the extent
that such laws are not preempted by the laws of the United States of America.

 

1.7                                 Gender and Number. Where the context admits, words in any
gender shall include any other gender, words in the singular shall include the
plural, and the plural shall include the singular.

 

1.8                                 Notices.
Any notice or document required to be filed with the Trustee under the Plan
will be properly filed if delivered or mailed by registered mail, postage
prepaid, to the Trustee, U.S. Trust Company, N.A., 1300 Eye Street, N.W., Suite
280 East, Washington, DC, 20005-3314 (and, for periods on and after
August 1, 2002, to the Trustee, GreatBanc Trust Company, 1301 W. 22nd
Street, Suite 702, Oak Brook, IL 60523) and to the ESOP Committee, Blue Ridge
Paper Products Inc., 41 Main Street, Canton, NC 28716. Any notice required
under the Plan may be waived by the person entitled to notice.

 

1.9                                 Evidence.
Evidence required of anyone under the Plan may be by certificates, affidavit,
document or other information which the person acting on it considers pertinent
and reliable, and signed, made or presented by the proper party or parties.

 

1.10                           Action By Employer. Any action required or permitted to be
taken by an Employer under the Plan shall be by resolution of its Board of
Directors, or by a person or persons authorized by the Board of Directors.
References in this Plan to an Employer’s “Board of Directors” shall be
understood to include the Executive Committee, if any, of such Board of
Directors.

 

1.11                           No Reversion to Employers. No
part of the corpus or income of the Trust Fund shall revert to any Employer or
be used for, or diverted to, purposes other than for the exclusive benefit of
Participants and other persons entitled to benefits under the Plan, except as
follows:

 

1.11.1                  Mistake of Fact. Notwithstanding any other provision herein
contained, if any contribution is made due to a mistake of fact, such
contribution shall, upon the direction of the Committee, which shall be given
in conformity with the provisions of ERISA, be returned to the Employer or the
party who made it, as directed by the Employer, without liability to any person
(including, but not limited to, Participants and Beneficiaries) no later than
one year after the date of such contribution.

 

1.11.2                  Qualification of Plan. Notwithstanding any other provisions herein
contained, the Trust Agreement is entered into on the condition that the

 

 

Plan
and the Trust Agreement, as initially established, shall be approved by the
Internal Revenue Service (the “IRS”) as a qualified and exempt plan and trust
under the provisions of the Code and the Treasury Regulations. If such approval
should be denied for any reason (including failure to comply with any
conditions for such approval imposed by the IRS), contributions made on or
after the execution of the Trust Agreement and prior to such denial shall, upon
the direction of the Committee, which shall be given in conformity with the
provisions of ERISA, be returned to the Employer or the party who made it, as
directed by the Employer, without any liability to any person, within one year
after the date of denial of such approval and all remaining assets in the Trust
shall be returned to the Employers.

 

1.11.3                  Deductibility of Contributions. Notwithstanding any other provisions herein
contained, all contributions made under the Plan are hereby expressly
conditioned upon their deductibility under Section 404 of the Code and the
Treasury Regulations thereunder, as amended from time to time, and if the
deduction for any contribution is disallowed in whole or in part, then such
contribution (to the extent the deduction is disallowed) shall, upon the
direction of the Committee, which shall be given in conformity with the
provisions of ERISA, be returned to the Employer or the party who made it
without liability to any person.

 

1.12                           Highly Compensated Employees.
The term “Highly Compensated Employee” means any employee who:

 

1.12.1                  was, at any time during the relevant Plan
Year or the preceding Plan Year, a 5% owner (as defined in Section 416(I)
of the Code) of any Employer; or

 

1.12.2                  for the preceding year:

 

(a)                                  received compensation from any Employer in
excess of $80,000, and

 

(b)                                 if the Company elects, was in the top-paid
(as defined in Code Section 414(q)) group of employees for such preceding
year.

 

A
former employee will be considered a member of the Highly Compensated Group if
such former employee was a Highly Compensated Employee either when he separated
from service with the Employers or at any time after he attained age 55. The
determination of whether an employee is a Highly Compensated Employee will be
made with reference to the definitions provided in Section 414(q) of the
Code and any regulations issued by the Secretary of the Treasury thereunder
(including any cost-of-living adjustments to the dollar figure above).
Compensation for purposes of this Section shall be compensation within the
meaning of Code Section 415(c)(3), including, to the extent permitted
under Code Section 414(q), elective contributions to a Code
Section 125 plan, a cash or deferred plan or a tax deferred annuity, if
applicable, and, effective January 1, 2001, amounts not includible in the
gross income of the Participant by reason of Section 132(f)(4) of the
Code.

 

 

1.13                          Investment of Trust Assets.
Except as otherwise required by ERISA, the Trustee shall invest the assets of
the Trust at all times in securities of the Company and its affiliates which
constitute “qualifying employer securities” within the meaning of
Section 407(d)(5) of ERISA and shall primarily invest the assets of the
Trust at all times in “employer securities” within the meaning of
Section 409(1) of the Code.

 

ARTICLE 2

 

PLAN PARTICIPATION

 

2.1                                 Entry
Date. In the case of each individual who is first
employed by an Employer on or after August 15, 1999, “Entry Date” means
the start date of his employment with that Employer. In the case of each
individual who (i) was continuously employed by that Employer for the 60 days
ending May 14, 1999 and (ii) remains continuously employed by that
Employer for the period from May 14, 1999 through August 15, 1999,
“Entry Date” means May 14, 1999. In the case of each individual who (i) is
first employed by the Employer on or after May 14, 1999, but prior to
August 15, 1999, and (ii) remains continuously employed by that Employer
from the start date of his employment through August 15, 1999, “Entry
Date” means the start date of his employment with that Employer. For purposes
of this Section 2.1, employment with Champion International, Inc. prior to
May 14, 1999 shall be considered to be employment with an Employer.

 

2.2                                 Eligibility for Participation.
Each employee of an Employer who is (i) employed by the Company or (ii)
otherwise employed by an Employer at a location or facility acquired pursuant
to that Asset Purchase Agreement among Champion International Corporation,
Carolina Paper Products Holding Corp. and Carolina Paper Company, dated as of
March 29, 1999 (or who was so employed at such a location or facility and
is thereafter transferred to employment at some other location or facility of
the Employer), shall automatically become a “Participant” in the Plan on his
Entry Date if he is still an employee on that date; provided, that if he is a
member of a group whose terms and conditions of employment are covered by a
collective bargaining agreement, he shall be eligible to participate only if
the collective bargaining agreement so provides. No other employee shall become
a Participant in the Plan.

 

2.3                                 Participation Not Guarantee of Employment. Participation in the Plan does not
constitute a guarantee or contract of employment and will not give any employee
the right to be retained in the employ of the Employers or Related Companies
nor any right or claim to any benefit under the terms of the Plan unless such
right or claim has specifically accrued under the terms of the Plan.

 

2.4                                 Restricted
Participation. Subject to the terms and conditions of the
Plan, when distribution of the benefits to which a Participant is entitled
under the Plan is deferred beyond or cannot be made until after his Termination
Date (as described in Article 6) and during any period that a Participant
is a member of a group or class of employees not covered by the Plan or
employed by a Related Company, the Participant, or in the event of the
Participant’s death, the Beneficiary (as defined in Section 7.9) of the

 

 

Participant,
will be considered and treated as a Participant for all purposes of the Plan,
except as follows:

 

2.4.1                        the Participant will not share in Employer
contributions (as described in Article 4); and

 

2.4.2                        the Beneficiary of a deceased Participant
cannot designate a Beneficiary under Section 7.9.

 

2.5                                 Leased Employees. For all purposes of the plan, an individual
shall be an “employee” of or be “employed” by an employer for any Plan Year only
if such individual is treated by the employer for purposes of employment taxes
and wage withholding for federal income taxes, regardless of any subsequent
reclassification by the employer, any governmental agency or court. A leased
employee (as defined below) shall not be eligible to participate in the Plan. A
“leased employee” means any person defined in Code Section 414(n), which
includes any person who is not an employee of an Employer, but who has provided
services to an Employer, which services are performed under the primary
direction or control of the Employer, on a substantially full-time basis for a
period of at least one year, pursuant to an agreement between the Employer and
a leasing organization. If a leased employee is subsequently employed by an
Employer, the period during which a leased employee performs services for an
Employer shall be taken into account for purposes of Sections 2.2 and 7.12 of
the Plan.

 

2.6                                 Military
Service. Notwithstanding any provision of this Plan
to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Code
Section 414(u). A Participant returning from employment after serving in
the uniformed services is treated as not having incurred a break in service
during the period of qualified military service, as defined herein. Each period
of qualified military service is considered under the Plan to be service with
the Employer for the purposes of Section 7.12 of the Plan.

 

2.7                                 Omission
of Eligible
Employee. If, in any Plan
Year, any employee who should be included as a Participant in the Plan is
erroneously omitted, and discovery of such omission is not made until after a
contribution by the Employer for the Plan Year has been made, the Employer
shall make a subsequent contribution with respect to the omitted employee in
the amount which the Company would have contributed if he or she had not been
omitted. Such contribution shall be made regardless of whether or not it is
deductible in who or in part in any taxable year under applicable provisions of
the Code.

 

2.8                                  Inclusion
of Ineligible
Employee. If, in any Plan
Year, any employee who should not have been included as a Participant in the
Plan is erroneously included, and discovery of such incorrect inclusion is not
made until after a contribution by the Company for the Plan Year has been made,
the Company shall not be entitled to recover the contribution made with respect
to the ineligible employee regardless of whether a deduction is allowable with
respect to such contribution. In such event, the

 

 

amount
contributed with respect to the ineligible employee shall constitute a
forfeiture for the Plan Year in which the discovery is made.

 

ARTICLE 3

 

[RESERVED]

 

ARTICLE 4

 

PLAN CONTRIBUTIONS

 

4.1                                  Annual Employer ESOP Contributions.

 

4.1.1                        In General. Subject to the conditions and limitations of the Plan, for each Plan
Year each Employer will contribute to the Trust, cash or Company Stock in such
amount, if any, as the Board of Directors of that Employer shall determine by
resolution; provided, however, that for each Plan Year, the
Employers shall jointly contribute an amount in cash not less than the amount
required to enable the Trustee to discharge any Acquisition Loan indebtedness
(as described in Section 4.4) that is due for such year. Employer
contributions otherwise required in cash may be made by forgiveness of
indebtedness that is owing to the Company by the ESOP, pursuant to a written
certificate of the Company describing the indebtedness that is forgiven, the
date of forgiveness, and the principal and interest portions thereof, in which
event the forgiven amount shall be treated as if a cash contribution. The
Trustee shall apply any cash Employer ESOP Contribution under this
Section 4.1 for any Plan Year first to pay the amount due during or prior
to that Plan Year with respect to any Acquisition Loan. If any part of an
Employer’s ESOP Contribution under this Section 4.1 for any Plan Year is
in cash in an amount exceeding the amount needed to pay the amount due during
or prior to that Plan Year with respect to an Acquisition Loan, such cash may
(after allocation to ESOP Cash Accounts) be applied by the Trustee to either
the purchase of Company Stock or to repay an Acquisition Loan.

 

4.1.2                        In no event will an Employer’s contribution
under this Section 4.1 for any Plan Year exceed the lesser of:

 

(a)                                  the maximum amount deductible by that
Employer as an expense for Federal income tax purposes; or

 

(b)                                 the maximum amount which, together with the amount
of the Employer’s contributions which are to be credited to the Accounts of
Participants from a suspense account permitted under Code Section 415 for
that year, can be credited for that year in accordance with the contribution
limitation provisions of Section 5.5.

 

4.1.3                        An Employer’s ESOP Contribution under this
Section 4.1 for any Plan Year shall be due no later than the last day of
the Plan

 

 

Year
and, if not paid on that date, shall be payable to the Trustee as soon
thereafter as practicable, but not later than the time prescribed for filing
the Employer’s Federal income tax return for that Plan Year, including any
extensions of time, without interest; provided, however, that in the event that
an Acquisition Loan is outstanding, such contribution shall be payable to the
Trustee not later than the principal and interest payment date.

 

4.2                                 Specific Implementation. It
is presently expected that the Company will transfer 40% ownership of the
Company to the Participants, through allocations under this ESOP (including the
Overflow Plan described in Section 5.8), over seven years following the
Effective Date, tied to a seven year labor contract. Assuming the labor
contract is in effect for the seven year period beginning on the Effective
Date, it is expected that approximately 5.7% of ownership of the Company will
be allocated to Participants each Plan Year, except the first and last years,
illustrated as follows:

 

	
  Year

  	
   

  	
  Approximate

  Ownership of

  Blue Ridge(1)/

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1999 (7 months)

  	
   

  	
  3.33

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2000

  	
   

  	
  5.7

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2001

  	
   

  	
  5.7

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2002

  	
   

  	
  5.7

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2003

  	
   

  	
  5.7

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2004

  	
   

  	
  5.7

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2005

  	
   

  	
  5.7

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2006 (5 months)

  	
   

  	
  2.47

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  40

  	
  %

  

 

The
pace of contributions shall be subject to change pursuant to collective
bargaining as described in Section 12.1.

 

(1)               These
ownership percentages refer to the Plan’s anticipated ownership of the
Company’s total authorized common stock as of May 14, 1999. These
ownership percentages will be appropriately adjusted to reflect any issuance,
repurchase or reclassification of the Company’s common stock after that date.

 

 

4.3                                  Company
Stock. For purposes of the Plan, the term “Company
Stock” shall mean common stock issued by the Company that is readily tradable
on an established securities market; provided, however, if the
Company’s common stock is not readily tradable on an established securities
market, the term “Company Stock” shall mean common stock issued by the Company
having a combination of voting power and dividend rates equal to or in excess
of (a) that class of common stock of the Company having the greatest voting
power and (b) that class of common stock of the Company having the greatest
dividend rights. Non-callable preferred stock shall be treated as Company Stock
for purposes of the Plan if such stock is convertible at any time into stock
that is readily tradable on an established securities market (or, if
applicable, that meets the requirements of (a) and (b) next above) and if such
conversion is at a conversion price that, as of the date of the acquisition by
the Plan, is reasonable. For purposes of the immediately preceding sentence,
preferred stock shall be treated as non-callable if, after the call, there will
be a reasonable opportunity for a conversion that meets the requirements of the
immediately preceding sentence. Company stock shall be held under the Trust
only if such stock satisfies the requirements of Section 407(d)(5) of
ERISA.

 

4.4                                  Acquisition Loans. An installment obligation incurred by the
Trustee, in accordance with the Trust, in connection with the purchase of
Company Stock shall constitute an Acquisition Loan. The Trustee may incur
Acquisition Loans, in accordance with the Trust, from time to time, to finance
(I) the acquisition for the Trust of Company Stock which are newly issued
shares, outstanding shares held by the Company, or outstanding shares held by a
shareholder, or (ii) the repayment of a prior Acquisition Loan. An Acquisition
Loan shall be for a specific term, shall bear a reasonable rate of interest,
and shall not be payable on demand except in the event of default. If the
lender with respect to an Acquisition Loan is a Disqualified Person, the
Acquisition Loan must provide that Trust assets will be transferred upon
default only upon and to the extent of the failure of the Plan to meet the
repayment schedule of the Acquisition Loan.

 

4.4.1                        Financed Shares. Shares of Company Stock acquired by the
Trustee with the proceeds of an Acquisition Loan shall be described as
“Financed Shares.” Except as provided in Section 409(1) of the Code or
Treas. Reg. § 54.4975-7(b)(9) and (10), or as otherwise provided by
applicable law, no shares acquired by the Trustee with the proceeds of an
Acquisition Loan may be subject to a put, call or other option or buy-sell or
similar arrangement while held by and when distributed from the Plan.

 

4.4.2                        Collateral.   An Acquisition Loan may be
secured by a collateral pledge of the Financed Shares so acquired and any other
Plan assets which are a permissible security within the provisions of Treas. Reg.
§ 54.4975-7(b). No other assets of the Plan or Trust may be pledged as
collateral for an Acquisition Loan, and no lender shall have recourse against
any other Plan assets.

 

 

4.4.3                        Loan Payment. 
Repayment of principal and interest on any Acquisition Loan shall be
made by the Trustee from annual Employer ESOP contributions made pursuant to
Section 4.1 above and, may also be made from the following sources
pursuant to the provisions of Section 10.3:

 

(a)                                  Cash dividends on Financed Shares which are
allocated to Participants’ ESOP Stock Accounts and earnings, if any, on such
dividends; and

 

(b)                                 Cash dividends on Financed Shares held in the
Loan Suspense Account (as defined below) and earnings, if any, thereon.

 

Payments shall be applied first to pay interest, and
then to pay principal obligations under the Acquisition Loan.

 

4.4.4                        Release of Financed Shares. Financed Shares shall initially be credited
to a “Loan Suspense Account” and shall be transferred for allocation to the
ESOP Stock Accounts of Participants as payments of principal and interest are
made on the Acquisition Loan by the Trustee, and any pledge of Financed Shares
must, and shall be deemed to, provide for the release of shares so pledged on a
consistent basis.

 

The number of Financed Shares to be released from
the Loan Suspense Account for allocation to Participants’ ESOP Stock Accounts
as of each Accounting Date shall equal the number of Financed Shares held in
the Loan Suspense Account immediately prior to such Accounting Date multiplied
by a fraction, the numerator of which is equal to the payments of principal and
interest on the Acquisition Loan for the year ending on such date, and the
denominator of which is equal to the sum of the numerator plus the total
projected payments of principal and interest on the Acquisition Loan over the
duration of the Acquisition Loan repayment period, subject to the provisions of
Section 5.5.

 

4.4.5                        Allocation of Financed Shares. The released Financed Shares shall be
allocated to Participants’ ESOP Stock Accounts in accordance with the
provisions of Section 5.4.

 

4.5                                 No Participant Contributions.
Contributions by Participants are neither required nor permitted.

 

ARTICLE 5

 

PLAN ACCOUNTING

 

5.1                                 Participants’ Accounts. On and after the Effective Date, the Committee
shall maintain the following accounts:

 

 

5.1.1                        An “ESOP Stock Account” in the name of each
Participant, which will reflect his share of Employer ESOP Contributions made
in Company Stock or cash that is used to purchase Company Stock, his allocable
share of Financed Shares and any shares of Company Stock received as earnings
on such shares. The ESOP Stock Account shall be adjusted as described in
Section 5.2.

 

5.1.2                        An “ESOP Cash Account” in the name of each
Participant, which will reflect his share of Employer ESOP Contributions made
in cash, any cash dividends on Company Stock allocated and credited to his ESOP
Stock Account (other than currently distributable dividends) and any income,
gains, losses, appreciation or depreciation attributable thereto. The ESOP Cash
Account shall be adjusted as described in Section 5.3.

 

Reference
to a Participant’s “Accounts” means his ESOP Stock Account and his ESOP Cash
Account.

 

5.2                                 Adjustment of ESOP Stock Accounts. As of each Accounting Date, the Committee
shall:

 

5.2.1                        First, charge to the Accounts of each Participant all distributions and
payments made to him, or on his account, since the last preceding Accounting
Date that have not been charged previously;

 

5.2.2                        Next, credit to each Participant’s ESOP Stock Account the shares of Company
Stock, if any, that have been purchased with amounts from his ESOP Cash Account
since the last preceding Accounting Date and adjust such ESOP Cash Account in
accordance with the provisions of Section 5.3;

 

5.2.3                        Finally, allocate and credit to each Participant’s ESOP Stock Account the
shares of Company Stock, if any, representing each Employer’s ESOP
Contributions, if any, that are to be allocated and credited as of that date in
accordance with the provisions of Section 5.4.

 

5.3                                 Adjustment of ESOP Cash Accounts. 
Upon the purchase of Company Stock with cash from a Participant’s ESOP
Cash Account, such shares shall be credited to the Participant’s ESOP Stock
Account, and the Participant’s ESOP Cash Account shall be charged by the amount
of the cash used to buy such Company Stock. Subject to Article 10, the
ESOP Cash Account of each applicable Participant shall be credited with any
cash dividends paid on shares of Company Stock held in that Participant’s ESOP
Stock Account as of the record date for such cash dividends. If applicable,
cash dividends credited to a Participant’s ESOP Cash Account may be applied to
the repayment of any outstanding Acquisition Loan, and the Participant’s ESOP
Cash Account shall then be charged by the amount of cash used to purchase such
Company Stock for his Account. As of each Accounting Date, before the
allocation of any cash contributions as of such date, any appreciation,
depreciation, gains or losses in the value of the Trust (exclusive of Company Stock)
shall be allocated among and credited to the

 

 

ESOP
Cash Accounts of Participants, pro rata, according to the balance of each ESOP
Cash Account as of the immediately preceding Accounting Date, reduced by the
amount of any charge to or distribution from said Account since the next
preceding Accounting Date.

 

5.4                                 Allocation and Crediting of Company ESOP
Contributions.

 

5.4.1                        Allocation to ESOP Stock Accounts. As of the last day of each Plan Year, all
shares of Company Stock transferred by the Employers to the Trustee for that
Plan Year and shares of Company Stock released from the Suspense Account during
that period shall be allocated among and credited to the ESOP Stock Accounts of
Participants who were employed during the Plan Year, pro  rata,
according to their Compensation (as defined in Section 5.7) paid to them,
by the Employers for that Plan Year. For purposes of determining the number of
shares of Company Stock allocated to Participants with respect to 1999, (i)
compensation paid to Participants prior to the Effective Date shall not be
counted toward a Participant’s pro rata share and (ii) no shares of Common
Stock shall be allocated among and credited with respect to those Participants
who terminate employment with the Company, for any reason, on or before
August 15, 1999. Participants described in the foregoing clause (ii) shall
be disregarded in determining the number of shares of Common Stock to be
allocated among, and credited with respect to, all other Participants for 1999.

 

5.4.2                        Allocation to ESOP Cash Accounts. As of the last day of each Plan Year,
Employer ESOP Contributions made in cash for that period, and cash dividends
paid on Financed Shares held in the Loan Suspense Account and not used to repay
an Acquisition Loan shall be allocated to the ESOP Cash Account of each
Participant in the same manner as Company Stock is allocated to the ESOP Stock
Accounts under the provisions of Subsection 5.4.1.

 

5.4.3                        Allocation of Remaining Amounts. If after the allocations under Subsections
5.4.1 and 5.4.2 any portion of such amount remains unallocated because of the
limitations of Section 5.5, then, to the extent permitted by the
contribution limitation provisions of Section 5.5, such shares and amount
shall be allocated and reallocated among and credited to the Accounts of the
remaining Participants entitled to share in such allocations for that year, pro
rata, in the same manner as Company Stock is allocated to the ESOP Stock
Accounts under the provisions of Subsection 5.4.1 above. If, after this allocation
any portion of such amount to be otherwise allocated still remains unallocated,
such portion shall be credited to and held in a 415 Suspense Account to the
extent that it does not exceed the amount contributed by the Employer for that
Plan Year as a result of a reasonable error in estimating Participants’
Compensation or as a result of such other circumstances as the Commissioner of
Internal Revenue may determine. For purposes of the Plan, amounts credited to a
415 Suspense Account for any Plan Year shall be treated as an Employer ESOP
Contribution under the provisions of Section 4.1 for the subsequent Plan
Year or Plan Years until all amounts so held have been credited to the Accounts
of Participants.

 

 

5.5                                 Limitation on Allocations to Participants. Notwithstanding any other provisions of the
Plan, the Annual Additions (as defined below) credited to a Participant’s
Accounts in accordance with the provisions of this Article 5 for any Plan
Year shall not exceed an amount equal to the lesser of:

 

5.5.1                        $40,000, adjusted for each Plan Year to take
into account any cost-of-living increase adjustment provided for that year in
accordance with regulations promulgated by the Secretary of the Treasury under
Section 415(d) of the Code; or

 

5.5.2                        100 percent of the Section 415
Compensation paid to the Participant in that Plan Year.

 

In
the event a Participant herein is also a Participant at any time in a Related
Defined Contribution Plan (as defined below) maintained by an Employer or
Related Company, the sum of Annual Additions under the Plan and the Related
Defined Contribution Plan in any Plan Year shall not exceed the limitations
described in 5.5.1 or 5.5.2. To the extent a Participant’s Annual Additions
would exceed these limits, these limitations shall first be applied to reduce
allocations under other plans, other than salary reduction and matching
contributions under 401(k) plans; second, to matching contributions under
401(k) plans; and third, to salary reduction contributions under 401(k) plans;
and finally, to allocations under this plan.

 

Effective
for Plan Years beginning before January 1, 2000, if a Participant in this
Plan also is a participant in any Related Defined Benefit Plan (as defined
below), the aggregate benefits payable to, or on account of, him under both
plans will be determined in a manner consistent with Section 415 of the
Code. Accordingly, there will be determined with respect to the Participant a
defined contribution plan fraction and a defined benefit plan fraction in accordance
with Code Section 415. The benefits provided for the Participant under
this Plan and each Related Defined Benefit Plan will be adjusted to the extent
necessary so that the sum of such fractions determined with respect to the
Participant does not exceed 1.0, with all adjustments being made in this Plan
prior to any adjustment in the Related Defined Benefit Plan.

 

The
term “Related Defined Benefit Plan” means any defined benefit plan (as defined
in Code Section 414(j)) maintained or previously maintained by the Company
or a Related Company. The term “Related Defined Contribution Plan” means any
defined contribution plan (as defined in Code section 414(I)) maintained
by the Employer or a Related Company. The term “Annual Additions” means the
total amount of employer contributions and voluntary employee contributions
allocated to the Accounts of a Participant under this Plan and any Related
Defined Contribution Plan for a Plan Year, except that if, during any Plan
Year, no more than one-third of the Employer ESOP Contributions which are
deductible under Code section 404(a)(9) are allocated to the Accounts of
Highly Compensated Employees (as defined in Section 1.12) during the Plan
Year, then any ESOP Contributions which are applied by the Trustee to pay
interest on an Acquisition Loan, shall not be included in computing Annual
Additions. Allocations to Highly Compensated Employees may be reduced pro rata
according to the Compensation

 

 

of
each Highly Compensated Employee to the extent necessary to prevent the allocations
to Highly Compensated Employees from exceeding one-third of the Employer ESOP
Contribution deductible under Code Section 404(a)(9). For purposes of this
Section, shares of Company Stock that are released from the Suspense Account
and credited to a Participant’s ESOP Stock Account during any Plan Year shall
be valued at the lesser of: (i) the Participant’s allocable share of Employer
contributions for that year that are used to repay the Acquisition Loan; or
(ii) the fair market value of the Company Stock that is allocated to the
Participant’s ESOP Stock Account. If shares of Company Stock are sold out of
the Loan Suspense Account, the gain on the sale shall be considered earnings,
not Annual Additions, and will be allocated as such.

 

5.6                                 Statement of Plan Interest.
The Trustee shall, as of each Accounting Date, make a good faith determination
of the “fair market value” of the Company Stock by obtaining the advice of an
experienced “Independent Appraiser,” as defined in Section 401(a)(28) of
the Code and in regulations issued pursuant to Section 3(18) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The
Trustee shall promptly notify the Committee as to the valuation of the Company
Stock.

 

5.7                                 Compensation and Section 415 Compensation. The term “Compensation” and
“Section 415 Compensation” means a Participant’s wages, salaries, fees for
professional services, and other amounts received (without regard to whether or
not an amount is paid in cash) for personal services actually rendered in the
course of employment with the Employer or any Related Employer to the extent
that the amounts are includible in gross income (including but not limited to
commissions paid to salespeople, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and bonuses,
fringe benefits, reimbursements, or other expense allowances; but excluding
long term disability payments and reimbursements for or regarding relocation
policy or program costs), plus amounts deferred under salary deferral
agreements with the Employers under Section 125 or 401(k) plans, amounts
not includible in the gross income of the Participant by reason of
Section 132(f)(4) of the Code and disability payments received if the
Participant was on an approved leave of absence for disability. A Participant’s
Compensation in excess of $200,000 (adjusted each Plan Year to take into
account any applicable cost-of-living adjustment provided for that year
pursuant to regulations promulgated under Section 401(a)(17)(B) of the
Code) shall be disregarded. The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (a “determination period”) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the annual
Compensation limit will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the denominator of which
is 12. “Compensation” shall exclude:

 

5.7.1                        contributions made by the Employer to a plan
of deferred compensation to the extent that before the application of Code
Section 415 limitations to the plan, the contributions are not includible
in the

 

 

gross
income of the Participant for the taxable year in which contributed.
Additionally, any distributions from a plan of deferred compensation are not
considered as Compensation regardless of whether such amounts are includible in
the gross income of the Participant when distributed;

 

5.7.2                        amounts realized from the exercise of
nonqualified stock option, or when restricted stock (or property) held by a
Participant becomes freely transferable or is not longer subject to substantial
risk of forfeiture (within the meaning of Code Section 83 and the
regulations thereunder);

 

5.7.3                        amounts realized from the sale, exchange, or
other disposition of stock acquired under a qualified stock option; and

 

5.7.4                        other amounts which receive special tax
benefits such as premiums for group term life insurance (but only to the extent
that the premiums are not includible in the gross income of the Participant).

 

5.8                                 Overflow
Plan. To the extent that, for any Plan Year,
shares of Company Stock cannot be allocated to a Participant’s account by
reason of any Code limitations, including Code section 401(a)(17), Code
section 415 and Code section 401(a)(4), appropriate credits will be
made to the accounts of the affected Participants under a non-qualified
Overflow Plan to be established by the Company if and to the extent necessary
to protect the expectations of Participants as described in Section 4.2;
provided, however, that if any such unallocable shares are Financed Shares,
such Financed Shares shall, to the maximum extent permitted under the Code, be
credited to a 415 Suspense Account in the manner set forth in
Section 5.4.3. Special terms of the Overflow Plan may be established by
the Company’s Board of Directors, including provisions that would disregard
some Compensation over the Code section 401(a)(17) limit in allocating
credits under the Overflow Plan. Without limiting Board’s powers pursuant to
the foregoing, unless and until the Company’s Board of Directors shall
otherwise resolve, the Overflow Plan shall not take into consideration for any
Plan Year Compensation in excess of the Code section 401(a)(17) limit.

 

ARTICLE 6

 

TERMINATION DATE

 

6.1                                 Overview on Distributions.
Under this Plan, distributions shall not be made to a Participant who is
actively employed. Distributions shall only be made following the Participant’s
termination of employment. This Article 6 provides details about the
relevant Termination Date and Article 7 of this Plan provides details
about distributions.

 

6.2                                 Termination Date. A Participant’s “Termination Date” will be
the date on which his employment with the Company and all Related Companies is
terminated because of the first to occur of the following events:

 

 

6.2.1                        Normal or Late Retirement. The Participant retires or is retired from the employ of the
Employers and all Related Companies on or after the date on which he attains
age 55 and has completed at least 10 years of service (including employment
prior to May 14, 1999 at Champion International, Inc.) (the “Normal
Retirement Date” or “Normal Retirement Age”). “Years of service” shall be
defined for purposes of this Plan as defined in the collectively bargained
defined benefit plan of the Company. A Participant’s right to the balances in
his ESOP Accounts shall be nonforfeitable at all times.

 

6.2.2                        Death. The Participant’s death.

 

6.2.3                        Disability. The Participant is retired from the employ of the Employers and all
Related Companies at any age because of a physical or mental disability, as
determined by the Committee upon the basis of a written certificate of a
physician acceptable to the Committee.

 

6.2.4                        Resignation or Dismissal. The Participant resigns or is dismissed
from the employ of the Employers and all Related Companies other than in
accordance with paragraphs 6.2.1 or 6.2.3 and prior to death.

 

ARTICLE 7

 

DISTRIBUTIONS

 

7.1                                 Distributions on Account of Termination of
Employment. Subject to the following provisions of this
Article 7, a Participant (or, in the case of a Participant’s death, his
Beneficiary) shall become eligible to receive a distribution of a Participant’s
ESOP Stock Account and ESOP Cash Account (collectively, the “ESOP Accounts”)
following the Participant’s Termination Date, in accordance with the provisions
of this Article 7.

 

7.2                                 Manner of Distributions.
Distribution of the Participant’s Account Balance shall be made by payment in a
series of five substantially equal annual installments, provided, however, that
(i) a distribution pursuant to the second sentence of subsection 7.4.2 (or
pursuant to subsection 7.4.5) shall instead be made in the form of a
single payment, and (ii) a distribution to a Beneficiary (or, in certain cases,
following the death of a Beneficiary) pursuant to subsection 7.4.1 shall
instead be in the form of a single payment, to the extent so provided in
accordance with subsection 7.4.1..

 

7.3                                 Form of Distributions.

 

7.3.1                        Distribution of a Participant’s ESOP Stock
Account will be made by distributing shares of Company Stock; provided, that
the Participant or, in the case of a Participant’s death, his Beneficiary may
request a cash distribution by asking the Trustee to exercise his Put Option as
described in Section 9.2; provided further that the Trustee may use cash
to purchase Company Stock distributed or otherwise distributable. For purposes
of the applying the

 

 

provisions
of the foregoing sentence, each Participant (or Beneficiary, in the case of the
Participant’s death) subject to the provisions of the second sentence of
Section 7.4.1 or Section 7.4.5 shall be automatically deemed to have
requested such a cash distribution (and shall be further automatically deemed
to have asked the Trustee to exercise his aforementioned Put Option), unless
the Participant or, in the case of a Participant’s death, his Beneficiary
instead elects, in accordance with such uniform and nondiscriminatory rules as
shall be adopted by the Committee, to have the distribution of his ESOP Stock
Account made by distributing shares of Company Stock.

 

7.3.2                        Notwithstanding the previous subsection, if
the charter or by-laws of the Company restrict the ownership of substantially
all outstanding Company Stock to employees or a trust defined in Code
Section 401 (a), or in the case of a Subchapter-S corporation, the entire
distribution will be made in cash, or the Company will make the entire
distribution in the form of Company Stock subject to the requirement that the
Company Stock be immediately put to the Company as provided in
Section 9.2. If a Participant’s ESOP Stock Account is to be distributed in
the form of cash, the Participant shall receive cash equal to the amount of the
“fair market value” of the Company Stock as of the immediately preceding
Accounting Date.

 

7.3.3                        With respect to a Participant’s ESOP Cash
Account, the Committee may direct the Trustee to make a distribution in cash or
in the form of Company Stock, or partly in each, provided such Company Stock is
distributed at its “fair market value” as of the immediately preceding
Accounting Date; provided, however, that such distribution shall be made in the
form of Company Stock if the Participant, or, in case of a Participant’s death,
his Beneficiary so directs the Trustee.

 

7.3.4                        The Company shall have a right of first
refusal in the event that a Participant or Beneficiary wants to sell
distributed shares of Company Stock to a third party, except if Company Stock
becomes publicly traded, in which case the Company shall not have a right of
first refusal, as provided in Article 9.

 

7.4                                 Time of Distribution.

 

7.4.1                        If a Participant’s employment has terminated
due to Normal Retirement or Disability as described in Sections 6.2.1 and
6.2.3, distribution of the Participant’s Account Balance begins, if the
distributee so elects, as soon as practicable after the year in which the
Participant’s Termination Date occurs, provided, however, that no distributions
shall be made prior to June 30, 2000. If a Participant’s employment has
terminated due to death, distribution of the Participant’s Account Balance
shall, as soon as practicable after the year in which the Participant’s
Termination Date occurs, and as elected by the Beneficiary in accordance with
such uniform and nondiscriminatory rules as shall be adopted by the Committee,
either: (i) begin to be paid in five substantially

 

 

equal
annual installments, or (ii) be paid in the form of a single payment; provided,
however, that, in the absence of a timely Beneficiary election (as determined
in accordance with such aforementioned uniform and nondiscriminatory rules),
such distribution shall automatically be made in the form of a single payment.
If distribution to the Participant has begun pursuant to the first sentence of
this Section 7.4.1 and the Participant dies prior to the payment to the
Participant of the final annual installment, distribution of the remaining
portion of the Participant’s Account Balance shall, as soon as practicable
following the Participant’s death, and as elected by the Beneficiary in
accordance with such uniform and nondiscriminatory rules as shall be adopted by
the Committee, either: (i) begin to be paid in that number of substantially
equal annual installments equal to five minus the number of installments in
fact paid to the Participant, or (ii) be paid in the form of a single payment;
provided, however, that, in the absence of a timely Beneficiary election (as
determined in accordance with such aforementioned uniform and nondiscriminatory
rules), such distribution shall automatically be made in the form of a single
payment; and further provided, however, that payment to the Beneficiary shall
in no event occur (or commence, as the case may be) any earlier than the year
next following the year in which the last such installment payment was made to
the Participant. Each Beneficiary shall have the right to make only a single
election under this subsection 7.4.1 with respect to any Participant, and
any election so made by the Beneficiary shall be irrevocable. If benefits are
being paid to a Beneficiary in installments pursuant to any of the foregoing
provisions of this subsection 7.4.1 and the Beneficiary dies prior to the
receipt of the final such installment payment, the remaining portion of the
Participant’s Account Balance will be distributed in a single lump sum payment;
provided, however, that such lump sum payment shall in no event occur any
earlier than the year next following the year in which the last such
installment payment was made to the Beneficiary.

 

7.4.2                        If a Participant’s employment has terminated
due to other than Normal Retirement, Death or Disability as described in
Sections 6.2.1, 6.2.2, and 6.2.3, a distribution of the Participant’s Account
Balance shall begin, if the distributee so elects, in the sixth calendar year
starting after the year in which the Participant’s Termination Date occurs.
Notwithstanding the foregoing, a Participant otherwise described in the immediately
preceding sentence, whose Termination Date occurs prior to January 1,
2001, may elect, in accordance with such uniform and nondiscriminatory rules as
shall be adopted by the Committee, to instead have the distribution of the
portion of the Participant’s Account Balance attributable to amounts allocated
to the Participant’s ESOP Accounts as of December 31, 1999 made as soon as
practicable after the date, following such Termination Date, on which the
Participant shall make such election. If the Participant attains Normal
Retirement Age before the sixth calendar year starting after the year in which
the Participant’s Termination Date occurs, the Participant’s Account Balance
(or the remaining portion thereof, if any, in the event that the Participant makes
the election described in the preceding sentence) will be distributed according
to subsection 7.4.1. If the Participant dies before the sixth calendar
year starting after the year in which the Participant’s

 

 

Termination
Date occurs, the Participant’s Account Balance (or the remaining portion
thereof, if any, in the event that the Participant makes the election described
in the second preceding sentence) will be distributed in either five
substantially equal annual installments or in a single lump sum payment, as
determined in accordance with the second sentence of subsection 7.4.1. If
the Participant has begun to receive substantially equal annual installments,
pursuant to the first sentence of this subsection 7.4.2 and dies prior to
the payment to the Participant of the final annual installment, the remaining
portion of the Participant’s Account Balance will be distributed in either
substantially equal annual installments or in a single lump sum payment, as
determined in accordance with the third sentence of subsection7.4.1.

 

7.4.3                        Distribution of a Participant’s benefits will
normally be made not later than the 60th day next following the close of the
Plan Year during which the Participant attains Normal Retirement Age or, if
later, during which his Termination Date occurs, except as otherwise permitted
under circumstances described in Treas. Reg. § 1.401(a)-14(d). Such
distribution may not, however, be made later than the Participant’s required
beginning date. The term “required beginning date” means (A) April 1 of
the calendar year following the later of (i) the calendar year in which the
Participant attains age 701/2, or (ii) the calendar year in which the Participant terminates
employment; or (B) in the case of a Participant who is a “five-percent owner”
(as that term is defined in Section 416(I)(1)(B)(I) of the Code),
April 1st of the calendar year immediately following the calendar year in
which he attains age 701/2.

 

7.4.4                        Subject to the limitations below, but
notwithstanding any other provision to the contrary, the distribution of his
ESOP Accounts will commence, unless a Participant elects a later date, not
later than one year after the end of the Plan Year:

 

7.4.4.1               during which the Participant retires at or
after Normal Retirement Age, becomes Disabled, or dies;

 

7.4.4.2               which is the fifth Plan Year following the
Plan Year during which the Participant’s employment is terminated under
paragraph 6.2.4, unless the Participant is reemployed by an Employer or Related
Company before such year.

 

7.4.5                        Notwithstanding any other provision to the
contrary, other than the foregoing Section 7.4.4, if the “fair market
value” of the Participant’s ESOP Accounts, determined as of the Accounting Date
coincident with or next preceding the Participant’s Termination Date is not
more than $5,000, a distribution of the Participant’s entire Account Balance
shall automatically be made as soon as practicable following the Participant’s
Termination Date.

 

 

7.5                                 Distribution to Participant’s Beneficiary
Upon Death. Distribution of a Participant’s Accounts
will be made to or for the benefit of a Beneficiary upon the Participant’s
death, whether before or after commencement of payment in accordance with
Section 7.4.

 

Furthermore,
under regulations prescribed by the Secretary of the Treasury pursuant to
Section 401(a)(9) of the Code, any amount paid to a child of a deceased
Participant shall be treated as if it has been paid to the surviving spouse of
the Participant if such amount will become payable to the surviving spouse upon
such child reaching the age of majority (or other designated event permitted
under said regulations).

 

7.6                                 Facility of Payment. Notwithstanding the provisions of this
Article 7, if, in the Committee’s opinion, a Participant or other person
entitled to benefits under the Plan is under a legal disability or is in any
way incapacitated so as to be unable to manage his financial affairs, the
Committee may, until a claim is made by a conservator or other person legally
charged with the care of his person or of his estate, make payment to a
relative or friend of such person for his benefit. Thereafter, any benefits
under the Plan to which such Participant or other person is entitled shall be
paid to such conservator or other person legally charged with the care of his
person or his estate.

 

7.7                                 Interests Not Transferable.
The interests of Participants and other persons entitled to benefits under the
Plan are not subject to the claims of their creditors and may not be
voluntarily or involuntarily assigned, alienated or encumbered, except as
provided in Section 7.9.

 

7.8                                 Absence of Guaranty. The Committee, the Trustee, the Plan
Administrator and the Employers in no event guarantee the Trust from loss or
depreciation. The Employers do not guarantee any payment to any person. The
liability of the Trustee to make any payment is limited to the available assets
of the Trust.

 

7.9                                 Designation of Beneficiary.
In the event of the death of a married Participant, the Participant’s entire
account balances will be paid to his surviving spouse, except as otherwise
provided below. Each Participant from time to time, by signing a form furnished
by the Plan Administrator, may designate any legal or natural person or persons
(who may be designated contingently or successively) to whom his benefits are
to be paid if he dies before he receives all his benefits; provided, however,
if a married Participant designates a Beneficiary other than his spouse, his
spouse must consent in writing to such designation and must acknowledge in
writing the effect of such designation and such consent and acknowledgment must
be witnessed by the Plan Administrator or a notary public. Each such
designation by an unmarried Participant shall be rendered ineffective by any
subsequent marriage and any consent of a spouse shall be effective only as to
that spouse. A designation of Beneficiary will be effective only when filed
with the Plan Administrator while the Participant is alive and will cancel all
previous designations. If a deceased Participant failed to designate a
Beneficiary as provided above, or if the Designated Beneficiary of a deceased
Participant dies before

 

 

him
or before complete payment of the Participant’s benefits, the Committee shall
direct the Trustee to pay the Participant’s benefits to the Participant’s
estate.

 

The
term “Designated Beneficiary” as used in the Plan means the person or persons
designated by a Participant as his Designated Beneficiary in the last effective
designation filed with the Plan Administrator under this Section 7.9 and
to whom a deceased Participant’s benefits are payable under the Plan. The term
“Beneficiary” as used in the Plan means the person or persons to whom a
deceased Participant’s benefits are payable under this Section.

 

7.10                           Missing Participants or Beneficiaries. Each Participant and each Designated
Beneficiary must file with the Plan Administrator from time to time in writing
his post office address and each change of post office address. Any
communication, statement or notice addressed to a Participant or Designated
Beneficiary at his last post office address filed with the Plan Administrator,
or if no address is filed with the Plan Administrator then, in the case of a
Participant, at his last post office address as shown on the Employers’
records, will be binding on the Participant and his Designated Beneficiary for
all purposes of the Plan. Notwithstanding the foregoing, the Plan Administrator
will use reasonable efforts to search for or locate a Participant or Designated
Beneficiary.

 

7.11                           Qualified Domestic Relations Order. In addition to payments made under this
Article 7 on account of a Participant’s Termination Date, payments may be
made to an Alternate Payee (as defined below) by the Trustee on the earliest
date specified in a Qualified Domestic Relations Order, without regard to
whether such distribution is made or commences prior to the participant’s
earliest retirement age (as defined in Section 414(p)(4)(B) of the Code)
or the earliest date that the participant could commence receiving benefits
under the Plan. The term “Qualified Domestic Relations Order” means any
judgment, decree or order (including approval of a property settlement
agreement) as defined in Section 414(p) of the Code.

 

The
Committee shall establish reasonable procedures to determine the qualified
status of domestic relations orders and to administer distributions under such
qualified orders, including, in its sole discretion, the maintenance of
separate bookkeeping accounts for Alternate Payees. The term “Alternate Payee”
means any spouse, former spouse, child or other dependent of a Participant who
is recognized by a Qualified Domestic Relations Order as having a right to
receive all, or a portion of, the benefits payable under the Plan with respect
to the Participant.

 

7.12                           Pre-Retirement Diversification Rights. If a Participant attains age 55 and has
reached the tenth anniversary of his Entry Date without having a Termination
Date (hereinafter referred to as a “Qualified Participant”), the Committee
shall offer such Participant during the 90-day period following the close of
each Plan Year during the Election Period (as defined below) the right to
elect, as determined by the Committee, a distribution, or a transfer to a
qualified trust described in Section 401(a) of the Code forming a part of
a defined contribution plan maintained by the Company, of the value (determined
as of the last preceding Accounting Date) of at least 25% of the number of

 

 

shares
of Company Stock credited to his ESOP Stock Account. If the Qualified Participant
elects such a distribution or transfer, the distribution or transfer will be
made within 90 days after the election is made. The “Election Period” means a
period of 6 Plan Years beginning with the first Plan Year that the Participant
becomes a Qualified Participant. The amount which may be distributed or
transferred to a Qualified Participant upon future elections during such 6 year
period, after the Qualified Participant’s initial Election Period, shall be
determined by multiplying the number of shares of Company Stock credited to
such Participant’s ESOP Stock Accounts (including shares of Company Stock the
value of which has been previously distributed or transferred pursuant to this
Section), by 25% or, with respect to a Participant’s final election, 50%,
reduced by the amount of any prior distributions received by or transfers made
to such Participant pursuant to this Section 7.12. Notwithstanding the
foregoing, if the fair market value of the Company Stock allocated to the ESOP
Account of a Qualified Participant is $500 or less as of the Accounting Date
immediately preceding the first day of the Election Period, then such Qualified
Participant shall not be entitled to an election under this Section 7.12
for that Election Period.

 

7.13                           Direct Rollovers.

 

7.13.1                  Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a Distributee’s (as defined below)
election under this Section 7.13, a distributee may elect, at the time and
in the manner prescribed by the Committee, to have any portion of an eligible
rollover distribution (as defined below) that is $200 or greater paid directly
to an eligible retirement plan (as defined below) specified by the Distributee
in a Direct Rollover (as defined below). In addition, if the amount of the
eligible rollover distribution is greater than $500, the distributee may elect
to have a portion of such total amount paid directly to an eligible retirement
plan with the balance paid to the distributee, provided that the portion
transferred to the eligible retirement plan is an amount not less than $500.

 

7.13.2                  The following are definitions for purposes of
this Section 7.13:

 

(a)                                  Eligible rollover distribution:  An
eligible rollover distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of the series of
substantially equal periodic payments (not less frequently than annually) made
for a period of 10 years or longer or over the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the distributee
and the distributee’s designated beneficiary; any distribution to the extent
such distribution is required under Section 401(a)(9) of the Code; the
portion of any distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
Employer securities); in the event the Plan permits hardship withdrawals, any
amount that is distributed on account of hardship shall not be an eligible
rollover distribution and the distributee may not elect to have any portion of
such a distribution paid directly to an eligible retirement plan; and any other
distribution which

 

 

the
Secretary of the Treasury (or his delegate) provides in regulations or rulings
of general applicability.

 

(b)                                 Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an annuity
plan described in Section 403(a) of the Code, a qualified trust described
in Section 401(a) of the Code or an annuity contract described in
Section 403(b) of the Code that accepts the distributee’s eligible
rollover distribution, or an eligible plan under Section 457(b) of the
Code which is maintained by a state, political subdivision of a state, or any
agency or instrumentality of a state or political subdivision of a state and
which agrees to separately account for amounts transferred into such plan from
the Plan. The definition of eligible retirement plan shall also apply in the
case of a distribution to a surviving spouse, or to a spouse or former spouse
who is the alternate payee under a qualified domestic relation order, as
defined in Section 414(p) of the Code.

 

(c)                                  Distributee: A Distributee includes an Employee or former Employee. In addition,
the Employee’s or former Employee’s surviving spouse and the Employee’s or former
Employee’s spouse or former spouse who is the alternate payee under a Qualified
Domestic Relations Order are Distributees with regard to the interest of the
spouse or former spouse.

 

(d)                                 Direct rollover: A Direct Rollover is a payment by the Plan
to the eligible retirement plan specified by the Distributee.

 

7.13.3                  If a distribution is one to which Sections
401(a)(11) and 417 of the Code do not apply, such distribution may commence
less than 30 days after the notice required under Section 1.41 l(a)-11(c)
of the Income Tax Regulations is given, provided that:

 

(a)                                  the Plan Administrator clearly informs the
Participant that the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether or not to elect
a distribution (and, if applicable, a particular distribution option), and

 

(b)                                 the Participant, after receiving the notice,
affirmatively elects a distribution.

 

7.14                           Account Forfeiture for Probationary Employees. If a Participant’s employment terminates
for any reason during the 60 days starting on the first day of his employment
with the Company, any allocation to which he is otherwise entitled under the
Plan shall be irrevocably forfeited. Notwithstanding the foregoing, if an
individual who has incurred a forfeiture shall return to employment with the
Company within 60 months of his termination of employment, such forfeited
amount shall be restored to his account provided that (i) he was actively
employed by the Company on the date as of which the forfeited allocation was
made and (ii) he completes at least 87 days of work for which he is paid in the
twelve-month period commencing on the date of his return to employment

 

 

(including
any days with respect to which backpay is awarded, or agreed to, by the Company
with respect to such period, but only to the extent that such award or
agreement is intended to compensate him for days during which he would have
been engaged in the performance of duties for the Company) or during any
succeeding twelve-month commencing on the anniversary of such date of return to
employment. For purposes of this Section 2.1, employment with Champion
International, Inc. prior to May 14, 1999 shall not be considered to be
employment with the Company. The provisions of this Section 7.14 shall
apply notwithstanding any other provision of the Plan to the contrary.

 

ARTICLE 8

 

VOTING AND TENDERING OF COMPANY STOCK

 

8.1                                 Voting.

 

8.1.1                        All shares of Company Stock held in the Trust
shall be voted by the Trustee.

 

8.1.2                        Each Participant shall be entitled to one
vote with respect to the approval or disapproval of any corporate merger or
consolidation, recapitalization, reclassification, liquidation, dissolution, or
sale of substantially all assets of the Company’s business or any other
decision on which shareholders of the Company are entitled to vote. The Trustee
shall vote the shares of Company Stock held in the Trust in the proportion
determined after application of the preceding sentence.

 

8.1.3                        With respect to unallocated Company Stock,
and allocated Company Stock as to which no voting direction is timely received,
the Trustee shall, in the case of those matters described in
Section 8.1.2, vote such shares in proportion to the directions received
from Participants under Section 8.1.2 above.

 

8.1.4                        In the case of any election of the members of
the board of directors of the Company, the Trustee shall vote all shares of
allocated and unallocated Company Stock in such manner as shall be determined
by the Trustee, in its sole discretion.

 

8.1.5                        In exercising its powers with respect to
Sections 8.1.2 and 8.1.4, the Committee and the Trustee, as applicable, shall
comply with their fiduciary duties as required by ERISA.

 

8.2                                 Tender.

 

8.2.1                        The Trustee shall not sell, alienate,
encumber, pledge, transfer or otherwise dispose of any Company Stock; except
(I) as specifically provided for in the Plan or Trust Agreement, or (ii) in the
case of a “tender or exchange offer,” as set forth in Section 8.2.2.

 

 

For
purposes of this Article 8, the term “tender or exchange offer” shall
mean: (A) any offer for, or request for or invitation for tenders or exchanges
of, or offers to purchase or acquire any shares of Company Stock that is
directed generally to shareholders of the Company, or (B) any transaction
involving Company Stock which may be defined as a “tender offer” under proposed
or final rules or regulations promulgated by the Securities and Exchange
Commission.

 

8.2.2                        (a)                                  In the event of a tender or exchange offer,
each Participant or, if the Participant is not alive, his Beneficiary, shall
have the right to determine confidentially whether to tender or exchange any
whole and fractional shares of Company Stock allocated to his Account and shall
be entitled to instruct the Trustee as to the tender of such shares. Upon
receipt of such instructions, the Trustee shall act with respect to such
Company Stock as instructed. With respect to Company Stock as to which no
instruction is timely received, the Trustee shall tender such shares in
proportion to the response received from Participants and Beneficiaries as to
allocated shares of Company Stock. In exercising its powers, the Trustee shall
comply with the fiduciary requirements of ERISA.

 

(b)                                 All shares of Company Stock held in the Fund
and not tendered pursuant to Section 8.2.2(a), shall continue to be held
by the Trustee.

 

(c)                                  Any shares of Company Stock not tendered by a
Participant or Beneficiary pursuant to Section 8.2.2(a) shall continue to
be held by the Trustee in such Participant’s or Beneficiary’s Account. The
Account of each Participant or Beneficiary tendering shares of Company Stock
pursuant to Section 8.2.2(a) shall be credited with the cash received by
the Trustee in exchange for the shares tendered from such Participant’s or
Beneficiary’s Account.

 

8.3                                 Fiduciary Responsibilities.

 

Each
Participant shall be a “named fiduciary,” within the meaning of ERISA
Section 402(a), with respect to the voting and tender of Company Stock
pursuant to Sections 8.1 and 8.2 of the Plan to the fullest extent permitted by
law.

 

8.4                                 Procedures for Voting and Tender.

 

8.4.1                        The Committee shall establish and maintain
procedures by which Participants and Beneficiaries shall be (i) timely notified
of their right to direct the voting and tender of Company Stock allocated to
their Accounts and the manner in which any such directions are to be conveyed
to the Trustee, and (ii) given information relevant to making such decisions.
No directions shall be honored by the Trustee unless timely and properly
conveyed in accordance with such procedures.

 

8.4.2                        Voting instructions received from
Participants and Beneficiaries shall be held in confidence by the Trustee or
its delegate for this

 

 

purpose
and shall not be divulged to the Company or to any officer or employee of the Company
or to any other person.

 

ARTICLE 9

 

RIGHTS, RESTRICTIONS AND OPTIONS ON COMPANY STOCK

 

9.1                                 Right of First Refusal. Subject to the provisions of the last
sentence of this Section 9.1, shares of the Company Stock distributed by
the Trustee shall be subject to a “Right of First Refusal.” The Right of First
Refusal shall provide that, prior to any subsequent transfer, such Company
Stock must first be offered in writing to the Company and, if then refused by
the Company, to the Trust, at the then fair market value, as determined by an
Independent Appraiser (as defined in Section 401(a)(28) of the Code). A
bona fide written offer from an independent prospective buyer shall be deemed
to be the fair market value of such Company Stock for this purpose unless the
value per share, as determined by the Independent Appraiser as of the most
recent Accounting Date, is greater. The Company and the Trustee (as directed by
the Committee) shall have a total of 14 days (from the date the Trust receives
the offer) to exercise the Right of First Refusal on the same terms offered by
the prospective buyer. A Participant (or Beneficiary) entitled to a
distribution of Company Stock may be required to execute an appropriate stock
transfer agreement (evidencing the Right of First Refusal) prior to receiving a
certificate for Company Stock. No Right of First Refusal shall be exercisable
by reason of each and any of the following transfers:

 

9.1.1                        the transfer by a Participant or Beneficiary
in accordance with the Put Option pursuant to Section 9.2 below; or

 

9.1.2                        the transfer while the Company Stock is
listed on a national securities exchange registered under Section 6 of the
Securities Exchange Act of 1934, or quoted on a system sponsored by a national
securities association registered under Section a(b) of the Securities
Exchange Act of 1934.

 

9.1.3                        the transfer upon disposition of any such
shares by any legal representative, heir or legatee shall remain subject to the
Right of First Refusal.

 

9.2                                 Put
Option. To the extent required by Code
Section 409(h)(1)(B) and subject to the provisions of Article 7, the
Company shall issue a “Put Option” to each Participant or Beneficiary receiving
a distribution of Company Stock from the Plan if, at the time of distribution,
the Company Stock is not then readily tradable on an established market, as
defined in Code Section 409(h) and Treasury Regulations thereunder. The
Put Option shall permit the Participant or Beneficiary to sell such Company
Stock to the Employer at its then Fair Market Value (as defined in
Section 5.6), to the Company, at any time during the 60 day period
commencing on the date the Company Stock was distributed to the recipient and,
if not exercised within that period, the Put Option will temporarily lapse. The
Put Option shall be exercisable only with respect to the entire distribution of
Company Stock received by a Participant or Beneficiary from the Trust.

 

 

Upon
the close of the Plan Year in which such temporary lapse of the Put Option
occurs, the Independent Appraiser shall determine the value of the Company
Stock, and the Committee shall notify each distributee who did not exercise the
initial Put Option prior to its temporary lapse in the preceding Plan Year of
the revised value of the Company Stock. The time during which the Put Option
may be exercised shall recommence on the date such notice or revaluation is
given and shall permanently terminate 60 days thereafter. The Trustee may be
permitted by the Company to purchase Company Stock put to the Company under a
Put Option. At the option of the Company or the Trustee (as directed by the
Committee), as the case may be, the payment for Company Stock sold pursuant to
a Put Option shall be made, as determined in the discretion of the Company or
the Trustee (as directed by the Committee), as the case may be, in the
following forms:

 

9.2.1                        if the Company Stock was distributed as part
of a total distribution (that is, a distribution within one taxable year of the
balance to the credit of his ESOP Accounts), then payment will be made with a
promissory note which provides for substantially equal annual installments
commencing within 30 days from the date of the exercise of the Put Option and
over a period not exceeding 5 years, with interest payable at a reasonable rate
(as determined by the Company) on any unpaid installment balance, with adequate
security provided, and without penalty for any prepayment of such installments;
or

 

9.2.2                        in a lump sum no later than 30 days after
such Participant exercises the Put Option.

 

At
the direction of the Committee, the Trustee on behalf of the Trust may offer to
purchase any shares of Company Stock (which are not sold pursuant to a Put
Option) from any former Participant or Beneficiary at any time in the future,
at their then fair market value.

 

9.3                                 Publicly Traded Company Stock.
If the Company becomes publicly traded, the Company will no longer have an
obligation to buy stock back from former Employees, because they will be able
to sell their shares on the open market.

 

9.4                                 Share
Legend. Shares of Company Stock held by the Trustee
may include such legend restrictions on transferability as the Company may
reasonably require in order to assure compliance with applicable Federal and
State securities laws.

 

9.5                                 Nonterminable Rights. The provisions of this Article 9 shall
continue to be applicable to shares of Company Stock even if the Plan ceases to
be an employee stock ownership plan within the meaning of
Section 4975(e)(7) of the Code.

 

ARTICLE 10

 

DIVIDENDS

 

10.1                           Dividends Credited to ESOP Cash Accounts. Any cash dividends paid with respect to
shares of Company Stock allocated to Participants’ ESOP Stock

 

 

Accounts
or held in the Loan Suspense Account may, as determined by the Committee, be
allocated among and credited to ESOP Cash Accounts of the Participants; provided,
however, that the dividends paid with respect to Company Stock held in
the Loan Suspense Account shall be allocated among and credited to ESOP Cash
Accounts according to the proportionate number of shares of Company Stock held
in the ESOP Stock Accounts on the date such dividends were declared by the
Company (the “Dividend Declaration Date”). Subject to the provisions of
Sections 10.2 and 10.3 below, the amounts credited to the ESOP Cash Accounts
may be reinvested in Company Stock as provided in Section 5.3.

 

10.2                           Dividends Paid to Participants.
Any cash dividends paid with respect to shares of Company Stock allocated to
Participants’ ESOP Stock Accounts may, as determined by the Committee, be
either paid by the Company directly in cash to Participants, or paid to the
Trustee and distributed by the Trustee to the Participant no later than 90 days
after the end of the Plan Year in which paid to the Trustee.

 

10.3                           Dividends Used to Repay Acquisition Loan. To the extent permitted by applicable law,
any cash dividends paid with respect to Financed Shares allocated to the
Participants’ ESOP Stock Accounts or held in the Loan Suspense Account may (as
required by applicable Acquisition Loan documentation or, if not so required,
as determined in the sole discretion of the Trustee) be used to repay the
principal balance of an outstanding Acquisition Loan or interest thereon in
whole or in part as provided in Section 4.4.3. Financed Shares released
from the Loan Suspense Account by reason of dividends paid with respect to such
Company Stock (and Employer contributions under Section 4.1, to the extent
necessary) shall be allocated to Participants’ ESOP Stock Accounts as follows:

 

10.3.1                  first, Financed Shares with a fair market
value at least equal to the dividends paid with respect to the Company Stock
allocated to the Participants’ ESOP Stock Accounts shall be allocated among and
credited to the ESOP Stock Accounts of such Participants, pro rata, according
to the number of shares of Company Stock held in such accounts on the Dividend
Declaration Date;

 

10.3.2                  then any remaining Financed Shares released
from the Loan Suspense Account shall be allocated among and credited to the
ESOP Stock Accounts of all Participants, in accordance with the provisions of
Section 5.4.

 

ARTICLE 11

 

PLAN ADMINISTRATION

 

11.1                           Membership and Authority.
The Committee referred to in Section 1.3 shall consist of a maximum of
eight individuals, four of which shall be appointed by the Board of Directors
of the Company and four of which shall be appointed by Smokey Mountain Local
507 of PACE (Paper, Allied-Industrial, Chemical

 

 

and
Energy Workers International Union) or such other collective bargaining agent
representing a majority of the participants (the “Union”); provided, however,
that each of the Company and the Union may, if so desired, appoint less than
the four individuals otherwise permitted to be appointed by such party; provided,
further, that if either the Company or the Union appoints less than four
individuals to the Committee, each individual appointed by the Company or
Union, as the case may be, shall have a number of votes equal to the quotient
of four (4) divided by the number of individuals so appointed by the Company or
the Union (as the case may be). If members of the Committee resign or are
removed, the Union shall appoint successors of Union-appointed members and the
Company shall appoint successors of Company-appointed members. The Committee
shall have sole responsibility for the general administration of this Plan and
for the investment policies of the Plan, for the selection of the Plan’s
investment funds pursuant to the Plan, and for the appointment and removal of
any Investment Manager. The initial Trustee shall be U.S. Trust Company,
National Association. The Company shall have the power to appoint a successor
trustee or trustees subject to approval by the Union, such approval not to be
unreasonably withheld. Subject to the provisions of the Plan and the Trust
Agreement, the Trustee shall have sole responsibility for the administration of
the Trust and the management of the assets held in the Trust, as set forth in
the Plan and the Trust Agreement. The members of the Committee shall be the
“named fiduciaries” (as described in Section 402 of ERISA) under the Plan.
In controlling and managing the operation and administration of the Plan, the
Committee shall act by the concurrence of the majority by meeting or by writing
without a meeting. The Committee, by unanimous written consent, may authorize any
one of its members to execute any document, instrument or direction on its
behalf. A written statement by a majority of the Committee members or by an
authorized Committee member shall be conclusive in favor of any person
(including the Trustee) acting in reliance thereon.

 

Except
as otherwise specifically provided in this Article 11, the Committee shall
have the following powers, rights and duties in addition to those vested in it
elsewhere in the Plan:

 

11.1.1                  To require any person to furnish such information
as it requests for the purpose of the proper administration of the Plan;

 

11.1.2                  To make and enforce such rules and
regulations and prescribe the use of such forms as it deems necessary for the
efficient administration of the Plan;

 

11.1.3                  To construe and interpret the Plan, including
the right to determine eligibility for participation, eligibility for payment,
the amount of benefits payable, the timing of distributions and all other
issues arising under the Plan as well as the right to remedy possible
ambiguities, inconsistencies or omissions; provided, however, that all such
interpretations and decisions shall be applied in a uniform manner to all
similarly situated Participants and Beneficiaries;

 

 

11.1.4                  To employ and rely upon such advisors (including
attorneys, independent public accountants, investment advisors and enrolled
actuaries) as it deems appropriate or helpful in connection with the operation
and administration of the Plan;

 

11.1.5                  To maintain complete records of the
administration of the Plan;

 

11.1.6                  To prepare and file with the appropriate
governmental agencies such reports as required from time to time with respect
to the Plan under ERISA, the Code, or other laws and regulations governing the
administration of the Plan;

 

11.1.7                  To furnish or disclose to Participants,
Employees who may become Participants, and Beneficiaries information about the
Plan and statements of accrued benefits under the Plan, in accordance with
ERISA, the Code, or other laws and regulations governing the administration of
the Plan;

 

11.1.8                  To determine, pursuant to procedures adopted
by it, whether a state domestic relations order served upon the Plan is a
“qualified domestic relations order” (as defined in Code Section 414(p));
to place in escrow any benefits payable in the period during which the
Committee determines the status of an order; and to take any necessary action
to administer distributions under the terms of a “qualified domestic relations
order”;

 

11.1.9                  To discharge any responsibilities which are
allocated to the Committee elsewhere in this Plan.

 

All
decisions and interpretations of the Committee shall be binding and shall be
entitled to the maximum deference permitted under the law.

 

11.2                           Delegation By Committee. The
Committee may establish procedures for allocation of fiduciary responsibilities
and delegation of fiduciary responsibilities to persons other than named
fiduciaries; however, the delegation of the power to manage or control Plan
assets may only be delegated to an Investment Manager, as defined in
Section 3(38) of ERISA, or to the Trustee. In exercising its authority to
control and manage the operation and administration of the Plan, the Committee
may employ agents and counsel (who may also be employed by or represent any
Employer or the Union) and to delegate to them such powers as the Committee
deems desirable. Any such delegation or appointment shall be in writing. The
writing contemplated by the foregoing sentence shall fully describe the advice
to be rendered or the functions and duties to be performed by the delegate.

 

11.3                           Uniform
Rules. In managing the Plan, the Plan
Administrator will uniformly apply rules and regulations.

 

 

11.4                           Information to be Furnished to Committee. The Employers shall furnish the Committee
such data and information as may be required. The Plan Administrator shall be
entitled to rely on any information furnished by the Company that is needed for
calculation of benefits due under the Plan, or any matters relating to
administration of the Plan.

 

11.5                           Exercise of Committee’s Duties.
Notwithstanding any other provisions of the Plan, the Committee shall discharge
its duties hereunder solely in the interests of the Participants and other
persons entitled to benefits under the Plan, and:

 

11.5.1                  for the exclusive purpose of providing
benefits to Participants and other persons entitled to benefits under the Plan;

 

11.5.2                  with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; and

 

11.5.3                  in accordance with the documents and
instruments governing the Plan insofar as they are consistent with ERISA.

 

11.6                          Scope of Authority of Committee; Operation of
Committee.

 

11.6.1                  Authority of Committee. A decision of the Committee shall not have
the effect of denying anyone affected by such decision the ability to obtain a
judicial review of the decision.

 

11.6.2                  Majority Action: Breaking of Deadlocks. The Committee shall act by majority vote.
In the event of a deadlock of the Committee, the resolution procedures set
forth in Appendix A hereto shall apply.

 

11.6.3                  Review of Administrative Actions. The Committee shall have the right to meet
periodically for the purpose of discussing any administrative decisions or
interpretations and, subject to Section 11.6, if it disagrees with any
such decision or interpretation, to exercise its authority under
Section 11.1 to review and, if necessary, alter such decision or
interpretation.

 

11.7                           Plan Interpretation. Subject to Section 11.6, any decision
or action of the Committee shall be conclusive and binding upon the Employer,
the affected Participant, the Union and any other person or entity having any
claim under the Plan. All deference permitted by law shall be given to such
constructions, interpretations and determinations. The Trustee and other
interested parties may act and rely upon all information reported to them
hereunder and need not inquire into the accuracy thereof, nor be charged with
any notice to the contrary.

 

 

11.8                           Plan
Expenses. The Company shall pay all reasonable
expenses authorized and incurred by the Committee, subject to receipt of
documentation that the expenses were properly incurred.

 

11.9                           Meetings and Voting. The Committee shall act by a majority vote
of its respective members at a meeting or, by written consent of a majority of
its members, without a meeting. The Committee shall hold meetings, as deemed
necessary by them, although any member may call a special meeting of the
Committee by giving reasonable notice to the other members. The Secretary of
the Committee shall have authority to give certified notice in writing of any
action taken by his committee.

 

11.10                     Compensation. The members of the Committee, if Employees shall serve without
compensation by the Plan. The Company and the Union have agreed, by way of
separate agreement, that, if an individual serving on the Committee is an
hourly-paid employee of an Employer and attending meetings of the Committee
causes him to miss his normal duties, he shall be paid by such Employer as if
he had been working during the time spent at such meetings.

 

11.11                     Claims Procedures.

 

11.11.1            Any Participant or Beneficiary (“Claimant”)
may file a written claim for a benefit under the Plan with the Committee or
with a person named by the Committee to receive such claims;

 

11.11.2            In the event of a denial or limitation of any
benefit or payment due or requested by any Claimant, such Claimant shall be
given a written notification containing specific reasons for the denial or
limitation of his benefit. The written notification shall contain specific
reference to the pertinent Plan provisions on which the denial or limitation is
based. In addition, it shall contain a description of any additional material
or information necessary for the Claimant to perfect a claim and an explanation
of why such material or information is necessary. Further, the notification
shall provide appropriate information as to the steps to be taken if the
Claimant wishes to submit his claim for review. This written notification shall
be given to a Claimant within ninety (90) days after receipt of his claim by
the Committee (or its delegatee to receive such claims), unless special
circumstances require an extension of time for processing the claim. If such an
extension of time is required, written notice of the extension shall be
furnished to the Claimant prior to the termination of the ninety-day period and
such notice shall indicate the special circumstances which make the
postponement appropriate;

 

11.11.3            In the event of a denial or limitation of
benefits, the Claimant or his duly authorized representative shall be permitted
to review pertinent documents and to submit issues and comments in writing to
the Administrative Committee. In addition, the Claimant or his duly authorized
representative may make a written request for a full and fair review of his
claim and its denial by the Committee; provided, however, that such written
request

 

 

must
be received by the Committee (or its delegatee to receive such requests) within
sixty (60) days after receipt by the Claimant of written notification of the
denial or limitation. The sixty-day requirement may be waived by the Committee
in appropriate cases; and

 

11.11.4            (a)                                  A decision shall be rendered by the Committee
within sixty days after the receipt of the request for review; provided,
however, that where special circumstances require an extension of time for
processing the decision, it may be postponed, on written notice to the Claimant
(prior to the expiration of the initial sixty-day period) for an additional
sixty (60) days, but in no event shall the decision be rendered more than one
hundred and twenty (120) days after the receipt of such request for review.

 

(b)                                 Notwithstanding Subsection 11.11.4(a),
if the Committee holds regularly scheduled meetings at least quarterly to
review such appeals, a Claimant’s request for review shall be acted upon at the
meeting immediately following the receipt of the Claimant’s request unless such
request is filed within thirty (30) days preceding such meeting. In such
instance, the decision shall be made no later than the date of the second
meeting following the receipt of such request by the Committee (or its
delegatee to receive such requests). If special circumstances require a further
extension of time for processing a request, a decision shall be rendered not
later than the third meeting of the Committee following the receipt of such
request for review, and written notice of the extension shall be furnished to
the Claimant prior to the commencement of the extension.

 

(c)                                  Any decision by the Committee shall be
furnished to the Claimant in writing and in a manner calculated to be
understood by the Claimant and shall set forth the specific reason(s) for the
decision and the specific Plan provision(s) on which the decision is based.

 

11.12                     Liabilities.   The Committee, each member
or former member of such Committee, shall be indemnified and held harmless by
the Company, to the fullest extent permitted by ERISA, other applicable laws,
and the charter and By-laws of the Company.

 

ARTICLE 12

 

AMENDMENTS

 

12.1                           Right
to Amend.  
Except as otherwise set forth in this Article 12, as may be
required by law or requested by the IRS, the Company reserves the right to
amend the Plan at any time and in any manner by written resolution of the Board
of Directors adopted at a duly convened meeting of the Board of Directors in
accordance with the By-Laws of the Company and the laws of North Carolina. If
not required by law or requested by the IRS, amendments may be made by the
Company solely with the concurrence of the Committee and the consent of the
Union, established through collective bargaining. To the extent required by the
Code or ERISA, no amendment to the

 

 

Plan
shall decrease a Participant’s benefit or eliminate an optional form of
distribution. No amendment shall make it possible for any assets of the Plan to
be used for or diverted to any purposes other than for the exclusive benefit of
Participants and Beneficiaries.

 

12.2                           Amendment by Committee.  
The Committee may adopt any ministerial and nonsubstantive amendment it
deems necessary or appropriate to (a) facilitate the administration, management
and interpretation of the Plan, (b) conform the Plan to current practice, or
(c) cause the Plan and its related Trust to qualify under Code Sections
401(a)(1), 501(a) and 4975(e)(7) or to comply with ERISA or any other
applicable laws; provided that such amendment does not have any material effect
on the estimated cost to the Company of maintaining the Plan.

 

12.3                           Plan Merger and Asset Transfers.   No
assets of the Trust shall be merged or consolidated with, nor shall any assets
or liabilities be transferred to any other plan, unless the benefits payable to
each Participant or Beneficiary, if this Plan were terminated immediately after
such action, would be equal to or greater than the benefits such individuals
would have been entitled to receive if this Plan had been terminated
immediately before such action.

 

ARTICLE 13

 

TERMINATION

 

13.1                           Right to Terminate.  
While the Company intends the Plan to be permanent, the Company reserves
the right to terminate the Plan at any time with the concurrence of the
Committee and with the consent of the Union by written resolution of the Board
of Directors adopted at a duly convened meeting of the Board of Directors in
accordance with the By-laws of the Company and the laws of the State of
Delaware.

 

13.2                           Effect of Termination.   If
the Plan is terminated, contributions shall cease, and the assets remaining in
the Trust, after payment of any expenses, including expenses of administration
or liquidation, shall be retained in the Trust for distribution in accordance
with the terms of the Plan. Upon termination (including a partial termination),
or upon the complete discontinuance of contributions by the Company, all
Participants shall be 100 percent vested in their Accounts.

 

ARTICLE 14

 

TOP-HEAVY PROVISIONS

 

The
Plan will be a “top-heavy plan,” if, as of the day next preceding the beginning
of any Plan Year (the “Determination Date”), and determined in accordance with
the provisions of Section 416(g) of the Code the aggregate present value
of the accrued benefits and the account balances of all “Key Employees” and
their Beneficiaries exceeds sixty percent (60%) of the aggregate present value
of the accrued benefits and account balances of all Participants and
Beneficiaries. This calculation is made in

 

 

accordance
with Section 416(g) of the Code, taking into consideration plans which are
considered part of the Aggregation Group.

 

For
purposes of the first sentence of the preceding paragraph, (i) the accrued
benefits and accounts of any individual who has not performed services for any
Employer during the 1-year period ending on the determination date shall not be
taken into account and (ii) the present values of accrued benefits and the
amounts of account balances of an employee as of the determination date shall
be increased by the distributions made with respect to the employee under the
Plan and any plan aggregated with the Plan under Section 416(g)(2) of the
Code during the 1-year period ending on the determination date. The first
sentence of the preceding paragraph shall also apply to distributions under a
terminated plan which, had it not been terminated, would have been aggregated
with the Plan under Section 416(g)(2)(A)(i) of the Code. In the case of a
distribution made for a reason other than separation from service, death, or
disability, this provision shall be applied by substituting “5-year period” for
“1-year period.”

 

For
purposes of this Article 14: (i) the term “Aggregation Group” shall
include each plan of an Employer or Related Company which includes a Key
Employee and each plan of the Employer or Related Company which allows the Plan
to meet the requirements of Sections 401(a)(4) or 410 of the Code and may
include any other plan of an Employer or Related Company, if the Aggregation
Group would continue to meet the requirements of Sections 401(a)(4) and 410 of
the Code; and (ii) the term “Key Employee” shall mean any employee or former
employee (including any deceased employee) who at any time during the Plan Year
that includes the Determination Date was an officer of any Employer having
annual compensation greater than $130,000 (as adjusted under
Section 416(i)(1) of the Code for Plan Years beginning after
December 31, 2002), a 5-percent owner of an Employer, or a 1-percent owner
of an Employer having annual compensation of more than $150,000. For this
purpose, annual compensation means compensation within the meaning of
Section 5.7 of the Plan. The determination of who is a Key Employee will
be made in accordance with Section 416(i)(1) of the Code and the applicable
regulations and other guidance of general applicability issued thereunder.

 

If
the Plan is a top-heavy plan, Article 5 will automatically be amended
effective as of the first day of the Plan Year to provide that the aggregate
amount of Employer Contributions allocated in each Plan Year to the Accounts of
each Participant under this Plan or any Related Defined Contribution Plan who
is not a Key Employee (within the meaning of Section 416(i) of the Code)
and who is employed by the Employer as of the last day of the Plan Year,
regardless of the number of Hours of Service which he completes during such
Plan Year, may not be less than the lesser of:

 

(a)                                  Three percent of his Compensation for the
Plan Year; or

 

(b)                                 A percentage of his Compensation equal to the
largest percentage obtained by dividing the sum of the amount credited to the
Accounts of any Key Employee by that Key Employee’s Compensation.

 

 

The
preceding provision will remain in effect for the period in which the Plan is
top-heavy. If, for any particular years thereafter, the Plan is no longer
top-heavy, the Company may amend or delete such provision from the Plan.

 

Notwithstanding
the foregoing, in the case of each Participant who (i) is not a “Key Employee”
and (ii) is also a participant (or eligible to become a participant) under any
other defined benefit plan or defined contribution plan, qualified under
Section 401 of the Code and which is part of the “Aggregate Group”, the
provisions of this Article 14 shall not apply and the minimum benefit
otherwise required under Section 416 of the Code shall instead be provided
such other plans, in accordance with the terms thereof.

 

ARTICLE 15

 

SPECIAL PROVISIONS FOR MORRISTOWN FACILITY

 

15.1                           Scope.
The provisions of this Article 15 shall apply only with respect to any
Participant who (i) on or after January 1, 2003, is employed at that
facility maintained by Blue Ridge Paper Products Inc. on January 1, 2003
in Morristown, New Jersey, (ii) was last employed at such facility at the time
that such person terminates employment, for any reason whatsoever, other than
due to Death, with the Employers and all Related Companies and (iii) so
terminates such employment no later than December 31, 2004 (hereafter, a
“Morristown Participant”). The provisions of this Article 15 shall apply
notwithstanding any other provision of the Plan (including, but not limited to,
Section 7.4.5) to the contrary. To the extent not modified by the
following provisions of this Article 15, all other provisions of the Plan
shall continue to apply with respect to each Morristown Participant (as well as
with respect to each such person’s Beneficiary). While the Company intends the
Plan to be

 

15.2                           Time of Distributions.

 

15.2.1                  If a Morristown Participant terminates
employment with the Employers and all Related Companies during calendar year
2003, such person shall, for purposes of applying the provisions of
Section 7.4, be treated as if such person’s employment has then terminated
due to Normal Retirement.

 

15.2.2                  If a Morristown Participant has not
terminated employment with the Employers and all Related Companies during
calendar year 2003, (i) such person shall, for purposes of applying the
provisions of Section 7.4, nevertheless be treated as if such person’s
employment terminated on December 31, 2003 due to Normal Retirement and
(ii) subject to the provisions of Section 15.3.2, the distribution of such
person’s ESOP Accounts may commence to occur, in installments, prior to the
crediting to such person’s ESOP Accounts of the amounts otherwise required to
be so allocated on account of employment with the Employers and all Related
Companies during calendar year 2004 (the “2004 Allocation”). In the event that
the distribution of such person’s ESOP Accounts

 

 

in
fact commences to occur in installments prior to the crediting to such person’s
ESOP Accounts of the 2004 Allocation, the 2004 Allocation shall, subject to the
provisions of Section 15.3.1, be distributed, in substantially equal
annual installments, over the remaining installment period.

 

15.3                           Mandatory Small Benefit Distribution.

 

15.3.1                  If (i) the distribution of benefits under the
Plan to, or in respect of, any Morristown Participant has commenced to occur in
installments and (ii) at any time after the commencement of such installments,
the “fair market value” of such Participant’s ESOP Accounts is not more than
$5,000, a distribution of such Participant’s entire then remaining Account
Balance shall automatically be made in a single distribution (and in place of
any future remaining installment payments) as soon as practicable after such
“fair market value” is determined by the Plan Administrator to not so exceed
$5,000, and with all other provisions of the Plan applying to such distribution
to the same extent as if it were a distribution made pursuant to the provisions
of Section 7.4.5.

 

15.3.2                  In the case of any Morristown Participant who
has not terminated employment with the Employers and all Related Companies
during calendar year 2003, if the “fair market value” of such Participant’s
ESOP Accounts, determined after taking into account all amounts required to be
allocated to such person’s ESOP Accounts on account of employment with the
Employers and all Related Companies during 2003 (the “2003 Allocation”), but
before taking into account the 2004 Allocation, is not more than $5,000, a
distribution of such Participant’s then entire Account Balance (determined
after taking into account the 2003 Allocation) shall automatically be made in a
single distribution as soon as practicable during calendar year 2004, but
following the crediting to such Participant’s ESOP Accounts of the 2003
Allocation. All other provisions of the Plan shall apply to such distribution,
to the same extent as if each such distribution was made pursuant to the
provisions of Section 7.4.5

 

15.3.3                  In the case of any Morristown Participant
with respect to whom an automatic distribution is made pursuant to the
provisions of the foregoing Section 15.3.2, in the event that the “fair
market value” of the amounts thereafter credited to the Participant’s ESOP
Accounts on account of the 2004 Allocation is not more than $5,000, a
distribution of such entire amount so credited shall automatically be made in a
single distribution as soon as practicable following the crediting of such amounts.
All other provisions of the Plan shall apply to such distribution, to the same
extent as if each such distribution was made pursuant to the provisions of
Section 7.4.5.

 

 

APPENDIX A

Breaking of Deadlocks

 

1.               When a deadlock occurs among members of the
Administrative Committee on an issue, notice of the failure of the
Administrative Committee to resolve the issue shall be given to appropriate
parties within a reasonable period of time.

 

2.               Within thirty (30) days after the occurrence
of a deadlock, the members of the Administrative Committee shall confer to
select a neutral party to sit as a member of the Administrative Committee at an
executive session of the Administrative Committee for consideration and
disposition of the deadlocked issue under the standard rules and procedures of
the Administrative Committee. Any determination of a deadlocked issued reached
at such executive session shall be final and binding upon the Employer, the
Unions, any affected Participant and any other person or entity having any
interest or claim under the Plan. If no agreement for selection is made, the
Administrative Committee shall petition the National Mediation Board for the
appointment of a neutral arbitrator.

 

3.               Upon appointment of a neutral arbitrator, the
Administrative Committee members shall agree upon a date for a hearing and
shall issue notice thereof to appropriate parties. Any such hearings shall be
held in the city where the Plan records are maintained unless a different
location is agreed upon by the Administrative Committee. During the pendency of
the deadlock, the neutral arbitrator shall preside at all hearings and
executive sessions of the Administrative Committee concerning the deadlocked
issue. The determination of the neutral arbitrator, whether reached in
executive session of the Administrative Committee or pursuant to a hearing,
shall be final and binding upon the Employer, any affected Participant and any
other person or entity having any interest or claim under the Plan.

 

4.               The Employer shall pay the expenses and
compensation of the neutral arbitrator together with expenses of reporting and
transcription.

 

5.               The Administrative Committee shall maintain a
complete record of all matters submitted to it for consideration and of all
findings and decision made by it.

 

6.               All notice in writing shall be served by use
of certified mail, return receipt requested.

 

When
a deadlock occurs among members of the Administrative Committee on an issue,
notice of failure by the Administrative Committee to resolve the dispute shall
be served

 

37

 

by
mail upon a directly affected Participant, if any, within thirty (30) days from
the date on which deadlock occurs. If such dispute affects a group of
Participants of the Plan, service by mail of such notice upon the Union or the
Employer within the above time limits shall constitute service upon all
affected Participants in this Plan in such group.

 

7.               Within thirty (30) days after issuance of
notice as set forth above, the Members of the Administrative Committee shall
confer to select an impartial neutral third party to sit as
an arbitrator and fifth Member of the Administrative Committee at a hearing for
consideration and disposition of the dispute. If no agreement for selection is
made, the Administrative Committee shall petition the National Mediation Board
for the appointment of a neutral arbitrator.

 

8.               Upon selection of appointment of a neutral
arbitrator, the Employer and Administrative Committee Members in coordination
with such arbitrator shall agree upon a date for hearing and shall issue notice
thereof to the affected Participant in this Plan. Hearings shall be held in the
city where the Plan records are maintained unless a different location is
agreed upon by the Administrative Committee.

 

9.               The neutral arbitrator shall preside at all
hearings and executive sessions of the Administrative Committee concerning the
dispute. It shall be the arbitrator’s responsibility to guide the parties in
the presentation of testimony, exhibits and argument and to rule upon the
admissibility of evidence, to the end that a fair, prompt and orderly hearing
of the dispute is afforded.

 

10.         The
determination of the Administrative Committee constituting the arbitration body
shall be final and binding upon the Employer, any affected Participant in this
Plan and any other person or entity having any interest or claim under this
Plan.

 

38Exhibit
10.9

 

 

BLUE RIDGE HOLDING CORP.

 

 

STOCKHOLDERS’
AGREEMENT

 

 

Dated
as of May 14, 1999

 

 

 

Table
of Contents

 

	
  SECTION 1.

  	
  Certain Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  Corporate Governance

  	
   

  
	
  SECTION 2.1

  	
  Board of Directors

  	
   

  
	
  SECTION 2.2

  	
  Vacancies

  	
   

  
	
  SECTION 2.3

  	
  Covenant to Vote

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  Transfers of Common Stock

  	
   

  
	
  SECTION 3.1

  	
  Restrictions on Transfer

  	
   

  
	
  SECTION 3.2

  	
  Exceptions to Restrictions

  	
   

  
	
  SECTION 3.3

  	
  Endorsement of Certificates

  	
   

  
	
  SECTION 3.4

  	
  Improper Transfer

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  Rights of First Refusal; Tag Along Sales;
  New Securities

  	
   

  
	
  SECTION 4.1

  	
  Transfers By Certain Shareholders

  	
   

  
	
  SECTION
  4.2

  	
  Transfer
  of Offered Securities to Third Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.3

  	
  Purchase of Offered Securities

  	
   

  
	
  SECTION
  4.4

  	
  Waiting
  Period with Respect to Subsequent Transfers

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.5

  	
  Tag-Along Rights

  	
   

  
	
  SECTION
  4.6

  	
  Right
  of First Refusal for New Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.7

  	
  Drag-Along Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  Registration Rights

  	
   

  
	
  SECTION 5.1

  	
  Piggyback Registrations

  	
   

  
	
  SECTION 5.2

  	
  Demand Registrations

  	
   

  
	
  SECTION 5.3

  	
  Registration Procedures

  	
   

  
	
  SECTION 5.4

  	
  Indemnification

  	
   

  
	
  SECTION 5.5

  	
  Contribution

  	
   

  
	
  SECTION 5.6

  	
  Rule 144

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  Miscellaneous

  	
   

  
	
  SECTION 7.1

  	
  GECC Additional Rights

  	
   

  
	
  SECTION 7.2

  	
  Delivery Expenses

  	
   

  
	
  SECTION 7.3

  	
  Replacement of Instruments

  	
   

  
	
  SECTION 7.4

  	
  Successors and Assigns

  	
   

  
	
  SECTION
  7.5

  	
  Amendment
  and Modification; Waiver of Compliance; Conflicts

  	
   

  

 

 

	
  SECTION 7.6

  	
  Notices

  	
   

  
	
  SECTION 7.7

  	
  Entire Agreement; Governing Law.

  	
   

  
	
  SECTION 7.8

  	
  Injunctive Relief

  	
   

  
	
  SECTION 7.9

  	
  Availability of Agreements

  	
   

  
	
  SECTION 7.10

  	
  Headings

  	
   

  
	
  SECTION 7.11

  	
  Counterparts

  	
   

  

 

 

STOCKHOLDERS’
AGREEMENT

 

STOCKHOLDERS’ AGREEMENT, dated as of
May 14, 1999 (“Agreement”), among BLUE RIDGE HOLDING CORP., a Delaware
corporation (the “Company”), KPS SPECIAL SITUATIONS FUND, L.P., a Delaware
limited partnership (“SSF”), KPS SUPPLEMENTAL FUND, L.P., a Delaware limited
partnership (“SF”, and together with SSF, the “KPS Funds”), GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation (“GECC”), and Gordon Jones
(“Jones”).  SSF, SF, GECC and Jones are
collectively referred to herein as the Shareholders.

 

W  I  T  N
E  S  S  E  T  H:

 

WHEREAS, on the date hereof, the Company is
authorized by its Certificate of Incorporation to issue capital stock
consisting of (i) 12,600,000 shares of Common Stock, and (ii) 3,500 shares of
Preferred Stock;

 

WHEREAS, as of the date hereof, the
Shareholders beneficially own the shares of Common Stock and Preferred Stock
set forth in the Shareholder Schedule (the “Shareholder Schedule”) attached
hereto;

 

WHEREAS, the parties hereto deem it in their
best interests and in the best interests of the Company to provide consistent
and uniform management for the Company and desire to enter into this Agreement
in order to effectuate that purpose and to set forth their respective rights
and obligations in connection with their investment in the Company; and

 

WHEREAS, the parties hereto also desire to
restrict the sale, assignment, transfer, encumbrance or other disposition of
the shares of Capital Stock of the Company, including shares of Common Stock that
may be issued hereafter, and also including all options, warrants, conversion
rights or other rights to subscribe for, purchase or acquire shares of Common
Stock, and to provide for certain rights and obligations in respect thereto as
hereinafter provided;

 

NOW, THEREFORE, in consideration of the
mutual agreements and understandings set forth herein, the parties hereto
hereby agree as follows:

 

SECTION 1.   Certain
Definitions. 
As used in this Agreement, the following terms shall have the following
respective meanings:

 

“Acquiror” shall have the meaning specified
in Section 5.7(a).

 

“Affiliate” means as to any Person (a) any
Person which directly or indirectly controls, is controlled by, or is under
common control with such Person, and (b) any Person who is a director, officer,
partner or principal of such Person or of any Person which directly or
indirectly controls, is controlled by, or is under common control with such
Person.  For purposes of this
definition, “control” of a Person shall mean the power, direct or indirect, (i)
to vote or direct the voting of 10% or more of the Voting Stock of

 

 

such Person, or (ii) to direct
or cause the direction of the management and policies of such Person whether by
ownership of Capital Stock, by contract or otherwise.

 

“Agreement” means this Agreement as in effect
on the date hereof and as hereafter from time to time amended, modified or
supplemented in accordance with the terms hereof.

 

“Board of Directors” shall mean the Board of
Directors of the Company as from time to time hereafter constituted.

 

“By-Laws” means the By-Laws of the Company as
amended and in effect on the date hereof.

 

“Capital Stock” means collectively, the
Common Stock and the Preferred Stock.

 

“Certificate of Incorporation” means the
Restated Certificate of Incorporation of the Company as in effect on the date
hereof.

 

“Commission” shall mean the Securities and
Exchange Commission and any successor commission or agency having similar
powers.

 

“Common Pro Rata Share” means, with reference
to any Shareholder at any time, a fraction, the numerator of which is the
number of shares of Common Stock then held by such Shareholder plus any shares
of Common Stock which such Shareholder then has a right to purchase pursuant to
any Contingent Right which is then exercisable, and the denominator of which is
the aggregate number of shares of Common Stock held by, or purchasable under
any then exercisable Contingent Right held by, all of the Shareholders taken
together.

 

“Common Stock” shall mean shares of common
stock, par value $.01 per share, of the Company, as adjusted to reflect any
merger, consolidation, recapitalization, reclassification, split-up, stock
dividend, rights offering, reverse stock split or other similar action made,
declared or effected with respect to the Common Stock.

 

“Contingent Right” means any option, warrant,
conversion right or other right to subscribe for, purchase or acquire Common
Stock.

 

“Credit Agreement” means the Credit
Agreement, dated as of the date hereof, among the Operating Company, the other
credit parties signatory thereto (including the Company), the lenders signatory
thereto, GECC Capital Markets Group, Inc., as syndication agent and arranger,
GECC, as agent, PNC Capital Markets Inc., as arranger, Wachovia Bank, N.A., as
arranger and lender, and Bank of Montreal, as arranger and lender, or any
amendment, restatement, refinancing or replacement thereof.

 

“Drag-Along Notice” shall have the meaning
specified in Section 4.7(b).

 

“Drag-Along Right” shall have the meaning specified
in Section 4.7(a).

 

 

“ERISA” shall mean the Employee Retirement
Income Security Act of 1974, as amended.

 

“ESOP” shall mean the Blue Ridge Paper
Products employee stock ownership plan or any supplemental stock plan.

 

“ESOP Securities” shall mean Common Stock
held under the ESOP.

 

“ESOP Trustee” shall mean the trustee of the
ESOP.

 

“Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended.

 

“First Offer Price” shall have the meaning
specified in Section 4.1(a).

 

“Fully Diluted Common Stock” shall mean at
any time, all shares of Common Stock then issued and outstanding and all shares
of Common Stock issuable upon the exercise of any then outstanding Contingent
Right, whether or not such Contingent Right is at the time exercisable.

 

“GAAP” means generally accepted accounting
principles in the United States of America in effect from time to time, applied
on a consistent basis both as to classification of items and amounts.

 

“Initial Public Offering” shall mean a Public
Offering of Common Stock of the Company pursuant to the initial registration
thereof under the Securities Act.

 

“Investor Group” shall mean collectively, the
KPS Funds, GECC and Jones.

 

“KPS Sale” shall have the meaning specified
in Section 4.7(a).

 

“NASD” means the National Association of
Securities Dealers, Inc. and its successors and assigns.

 

“New Issue Notice” shall have the meaning
specified in Section 4.6(c).

 

“New Securities” shall have the meaning
specified in Section 4.6(b).

 

“Notice of Exercise” shall have the meaning
specified in Section 4.1(b).

 

“Notice of Intention” shall have the meaning
specified in Section 4.1(a).

 

“Offered Securities” shall have the meaning
specified in Section 5.1(a).

 

“Operating Company” means Blue Ridge Paper
Products Inc., a Delaware corporation and wholly owned subsidiary of the
Company.

 

“Permitted Transferee” shall mean a
Shareholder Permitted Transferee or an Individual Permitted Transferee.

 

 

“Person” shall mean an individual or a
corporation, association, partnership, limited liability company, joint
venture, organization, business, trust, or any other entity or organization,
including a government or any subdivision or agency thereof.

 

“Preferred Pro Rata Share” means, with
reference to any Shareholder at any time, a fraction, the numerator of which is
the number of shares of Preferred Stock then held by such Shareholder, and the
denominator of which is the aggregate number of shares of Preferred Stock held
by all of the Shareholders taken together.

 

“Preferred Stock” shall mean shares of Series
A Preferred Stock, par value $.01 per share, of the Company.

 

“Proposed Purchaser” shall have the meaning
specified in Section 4.5(b).

 

“Pro Rata Share” means the applicable Common
Pro Rata Share or Preferred Pro Rata Share.

 

“Public Offering” shall mean an underwritten
public offering and sale of equity securities of the Company pursuant to an
effective registration statement under the Securities Act.

 

“Purchase Offer” shall have the meaning
specified in Section 4.5(b).

 

“Qualified Public Offering” shall mean a
Public Offering of Common Stock, at the conclusion of which the aggregate
number of shares of Common Stock that have been sold to the public in one or
more Public Offerings equals at least 25% of the Fully Diluted Common Stock
after giving effect to such sale.

 

“Registrable Securities” shall mean the
shares of Common Stock outstanding on the date hereof and now or hereafter
owned of record or beneficially by the Shareholders, including any shares of
Common Stock issued to the Shareholders upon the exercise of any Contingent
Right.

 

As to any particular Registrable Securities
that have been issued, such securities shall cease to be Registrable Securities
when (i) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of under such registration statement, (ii) they shall have
been sold in a “brokers transaction” pursuant to Rule 144, (iii) they
shall have been otherwise transferred or disposed of, and new certificates
therefor not bearing a legend restricting further transfer shall have been
delivered by the Company, and subsequent transfer or disposition of them shall
not require their registration under the Securities Act, or (iv) they shall
have ceased to be outstanding.

 

“Registration Expenses” shall mean any and
all out-of-pocket expenses incident to the Company’s performance of or
compliance with Section 6 hereof, including, without limitation, all
Commission, stock exchange and NASD registration, listing and filing fees, all
fees and expenses of complying with securities and blue sky laws (including the
reasonable fees and disbursements of underwriters’ counsel in connection

 

 

with blue sky qualifications
and NASD filings), all fees and expenses of the transfer agent and registrar
for the Registrable Securities, all printing expenses, the fees, disbursements
and expenses of counsel for the Company and of its independent public
accountants, including the expenses of any special audits and/or “cold comfort”
letters required by or incident to such performance and compliance, and the
reasonable fees and disbursements of a counsel representing all the selling
Shareholders but excluding underwriting discounts and commissions and applicable
transfer and documentary stamp taxes, if any, which shall be borne by the
seller of Registrable Securities in all cases.

 

“Requesting Party” shall have the meaning
specified in Section 5.2(a).

 

“Salaried Employees” means employees of the
Company not subject to a collective bargaining agreement (other than the
executive officers of the Company).

 

“Sale Proposal” shall have the meaning
specified in Section 4.1(a).

 

“Securities Act” shall mean, as of any date,
the Securities Act of 1933, as amended.

 

“Selling Shareholder” shall have the meaning
specified in Section 4.1(a).

 

“Shareholders” shall have the meaning
specified in the Preamble.

 

“Subsidiary” shall mean as to any Person, a
Person having voting power to elect a majority of the Board of Directors of
another Person.

 

“Underwritten Offering” shall have the
meaning given to it in Section 5.1(a).

 

“Unions” means Paper, Allied Industrial,
Allied Chemical and Energy Workers International Union, AFL-CIO, CLC and
International Union, United Automobile, Aereospace and Agricultural Implement
Workers of America, AFL-CIO.

 

“Voting Stock” means Common Stock of the
Company or any class or classes of capital stock the holders of which are
ordinarily entitled to vote for the election of corporate directors (or Persons
performing similar functions).

 

“Voting Stockholder” shall mean any
Shareholder who holds Voting Stock.

 

“Wholly-owned Subsidiary” shall mean, with
respect to any Person, any Subsidiary of such Person all of the capital stock
(and all options, warrants, conversion rights and other rights to subscribe
for, purchase or acquire such Capital Stock) of which, are owned, beneficially
and of record, by such Person and/or one or more Wholly-owned Subsidiaries of
such Person.

 

SECTION 2.   Corporate
Governance.

 

SECTION 2.1  Board of Directors.  The Shareholders hereby agree that at all
times after the date of this Agreement, (a) the
Board of Directors shall consist of eleven

 

 

members, and (b) the Shareholders shall take all actions necessary to
elect, or to cause the Board of Directors to approve and appoint, when
designated, the designees described below to be members of the Board of
Directors:

 

(i)  three individuals designated by SSF;

 

(ii)  three individuals designated by SF;

 

(iii)  three individuals designated by the Unions;

 

(iv)  one individual designated by the Salaried
Employees in accordance with the procedures to be reasonably determined by the
Board of Directors; and

 

(v)  the Chief Executive Officer of the Operating
Company.

 

Any individual designated as a member of the
Board of Directors by the Persons specified in clauses (i) through (iv) above,
respectively, may be removed at any time, with or without cause, by the Person
or Persons so designating that individual.

 

SECTION 2.2 
Vacancies.  In the event that a vacancy is created on the Board of Directors
at any time by the death, disability, retirement, resignation or removal of any
member of the Board of Directors, or for any other reason there shall exist or
occur any vacancy on the Board of Directors, each Voting Stockholder hereby
agrees to take such actions as will result in the election or appointment as a
director of an individual designated or elected to fill such vacancy and serve
as a director by the Shareholders that had designated or elected (pursuant to
Section 2.1) the director whose death, disability, retirement, resignation or
removal resulted in such vacancy on the Board of Directors (in the manner set
forth in Section 2.1).

 

SECTION 2.3 
Covenant to Vote.  Each Voting Stockholder hereby agrees to
take all actions necessary to call, or cause the Company and the appropriate
officers and directors of the Company to call, an annual meeting (and when
circumstances so require, a special meeting) of the stockholders of the Company
and to vote all shares of Voting Stock owned or held of record by such Voting
Stockholder at any such meeting and at any other annual or special meeting of
stockholders in favor of, or take all actions by written consent in lieu of any
such meeting as may be necessary to cause, the election as members of the Board
of Directors of those individuals so designated in accordance with, and to
otherwise effect the intent of, this Section 2.  In addition, each Voting Stockholder agrees to vote the shares of
Voting Stock owned by such Voting Stockholder upon any other matter arising
under this Agreement submitted to a vote of the stockholders in such a manner
as to implement the terms of this Agreement.

 

SECTION
3   Transfers of Common Stock.

 

SECTION 3.1  Restrictions on Transfer.  Each Shareholder agrees that such
Shareholder will not, directly or indirectly, offer, sell, exchange, pledge,
hypothecate, encumber, transfer, assign or otherwise dispose of (collectively,
for purposes of Sections 3 and 4

 

 

hereof only, a “transfer”) any
of its Capital Stock, except as provided in Section 3.2 or in accordance with
Section 4.  In addition to the other
restrictions noted in this Section 3.1, each Shareholder agrees that it will
not, directly or indirectly, transfer any of its Capital Stock (or Contingent
Rights), except as permitted under the Securities Act and other applicable
federal or state securities laws.

 

SECTION 3.2  Exceptions to Restrictions.  The provisions of Section 3.1, Sections
4.1 through 4.5, inclusive, and Section 4.7 shall not apply to any of the
following transfers:

 

(a)                                  from any Shareholder
of the Company, to any other Shareholder, or to any Affiliate of any
Shareholder (each a “Shareholder Permitted Transferee”), provided that
each such Shareholder Permitted Transferee shall execute a Transferee Agreement
in the form of Exhibit C hereto (a “Transferee Agreement”) pursuant to which
such Shareholder Permitted Transferee shall agree to comply with the terms of
this Agreement and shall become bound by the terms of this Agreement;

 

(b)                                 if the Shareholder is
an individual, to a member of such Shareholder’s immediate family, which shall
include such Shareholder’s parents, spouse, siblings, children or grandchildren
and their respective lineal descendants (“Family Members”) or a trust,
corporation or limited liability company or partnership, all of the beneficial
interests in which shall be held by the Shareholder or one or more Family
Members and upon the death of such Shareholder, through testamentary or intestate
disposition (in each case, an “Individual Permitted Transferee”);

 

(c)                                  pursuant to a Public
Offering; or

 

(d)                                 pursuant to a merger,
consolidation or other business combination involving the Company or any of its
Subsidiaries, or a sale of all or substantially all of the outstanding shares
of Common Stock with a third party not an Affiliate of the Company or any one
or more of the Shareholders.

 

SECTION 3.3  Endorsement of Certificates.

 

(a)                                  Upon the execution of
this Agreement, in addition to any other legend which the Company may deem
advisable under the Securities Act and certain state securities laws, all
certificates representing shares of issued and outstanding Common Stock and
Preferred Stock shall be endorsed at all times prior to any Qualified Public
Offering as follows:

 

THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON
COMPLIANCE WITH, THE PROVISIONS OF A STOCKHOLDERS’ AGREEMENT, AMONG THE COMPANY
AND ITS STOCKHOLDERS.  A COPY OF THE
ABOVE-REFERENCED AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.

 

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION, UNDER SAID
ACT.

 

(b)                                 Except as otherwise
expressly provided in this Agreement, all certificates or other instruments
representing shares of Common Stock or Preferred Stock hereafter issued to or
acquired by any of the Shareholders or their successors, assigns or transferees
(including, without limitation, all certificates representing shares of Common
Stock hereafter issued upon the exercise of any Contingent Right) shall bear
the legends set forth above (unless the Company’s counsel advises that the
legend relating to the Securities Act is not required), and the shares of
Common Stock or Preferred Stock represented by such certificates or instruments
shall be subject to the applicable provisions of this Agreement.  The obligations of each party hereto shall
be binding upon each transferee to whom shares of Common Stock or Preferred
Stock are transferred by any party hereto, whether or not such transfer is
permitted under the terms of this Agreement, except for transfers pursuant to a
Public Offering.  Prior to consummation
of any transfer, except for transfers pursuant to a Public Offering, such party
shall cause the transferee to execute a Transferee Agreement pursuant to which
such transferee shall agree to comply with the terms of this Agreement and
shall become bound by this Agreement. 
Prompt notice shall be given to the Company and each Shareholder by the
transferor of any transfer (whether or not to a Permitted Transferee) of any
Common Stock or Preferred Stock.

 

(c)                                  Whenever the
restrictions imposed by this Agreement shall terminate as to any particular
shares of Common Stock or Preferred Stock (including pursuant to Section 6
hereof), the holder thereof shall be entitled to receive from the Company,
without expense, upon delivery to the Company of the existing certificate
representing shares of Common Stock or Preferred Stock, a new certificate not
bearing the respective legends otherwise required pursuant to this Section 3.3.

 

SECTION 3.4 
Improper Transfer.  Any attempt to transfer or encumber any
shares of Common Stock or Preferred Stock other than in accordance with the
terms of this Agreement shall be null and void and neither the Company nor any
transfer agent of such securities shall give any effect to such attempted
transfer or encumbrance in its stock records.

 

SECTION
4.   Rights of First Refusal; Tag Along Sales; New
Securities.

 

SECTION 4.1  Transfers By Certain Shareholders.

 

(a)                                  Except in the case of
(i) transfers to a Permitted Transferee, (ii) transactions which are
otherwise permitted by Section 3.2, (iii) transactions which are subject
to Sections 4.5, 4.7, 5.1 and 5.2, if at any time prior to the seventh
anniversary of

 

 

the date hereof, any
Shareholder (other than the KPS Funds) shall desire to sell or otherwise
transfer any Common Stock or Preferred Stock owned by it and shall receive a
purchase offer therefor from a bona fide third party (such Shareholder desiring
to sell or transfer shares of such Common Stock or Preferred Stock being
referred to herein as a “Selling Shareholder”), then such Selling Shareholder
shall promptly deliver written notice of its intention to sell or transfer such
Capital Stock (a “Notice of Intention”), accompanied by a copy of the purchase
offer relating to such proposed sale (the “Sale Proposal”), to the KPS Funds
and to the Company, setting forth such Selling Shareholder’s desire to make
such sale, the number and class of shares of Common Stock or Preferred Stock
proposed to be transferred (the “Offered Securities”), and offering the price
of the Offered Securities (the “First Offer Price”) and other terms applicable
thereto.  In addition, the Selling
Shareholder shall not sell, transfer or assign the Offered Securities under
this Section 4.1(a) without the prior written consent of the KPS Funds, which
consent shall not be unreasonably withheld or delayed (it being understood that
the Selling Shareholder may seek to obtain such consent from the KPS Funds
before seeking to sell or otherwise transfer Common Stock or Preferred Stock
under this Section 4.1(a)).

 

(b)                                 Except in the case of
(i) transfers to a Permitted Transferee, (ii) transactions which are
otherwise permitted by Section 3.2, (iii) transactions which are subject
to Sections 4.5, 4.7, 5.1 and 5.2, if at any time subsequent to the seventh anniversary
of the date hereof, any Selling Shareholder shall desire to sell or otherwise
transfer any Offered Securities, then such Selling Shareholder shall promptly
deliver a Notice of Intention, accompanied by a copy of the Sale Proposal, to
the KPS Funds and to the Company, setting forth such Selling Shareholder’s
desire to make such sale, the number and class of shares of Offered Securities,
and the First Offer Price and other terms applicable thereto.

 

(c)                                  Upon receipt of a
Notice of Intention, the Company and the KPS Funds shall then have the right to
elect to purchase at the First Offer Price and on the other terms specified in
the Sale Proposal, all of the Offered Securities in the following order of
priority:  First, the KPS Funds
shall have the right to purchase the Offered Securities (unless such Offered
Securities are ESOP Securities, in which case, the Company shall have the right
to purchase such ESOP Securities), and thereafter, the Company shall
have the right to purchase the Offered Securities.  The rights of the KPS Funds and the Company pursuant to this
Section 4.1(c) shall be exercisable by the delivery of notice to the Selling
Shareholder (the “Notice of Exercise”), within 15 calendar days from the date
of delivery of the Notice of Intention or such shorter period as may be
required by law.  A copy of such Notice
of Exercise shall also be delivered by the KPS Funds (or the Company, as the
case may be) to the other Shareholders. 
The rights of the KPS Funds and the Company pursuant to this
Section 4.1(c) shall terminate if unexercised 15 calendar days after the
date of delivery of the Notice of Intention.

 

(d)                                 In the event that the
KPS Funds or the Company exercise their respective rights to purchase all of
the Offered Securities in accordance with Section 4.1(c), then the Selling
Shareholder must sell such Offered Securities to the KPS Funds (or, as the case
may be, the Company), and the KPS Funds (or, as the case may be, the Company)
shall purchase such Offered Securities, within 30 calendar days after the date

 

 

of delivery of the Notice of
Exercise received by the Selling Shareholder, at the First Offer Price in cash
and on the other terms specified in the Sale Proposal; provided,
however, that such 30 day period may be extended for a reasonable time not to
exceed 60 days to the extent reasonably necessary to comply with any filing
requirements under Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended (the “HSR Act”) or to obtain any necessary consents.  To the extent that the First Offer Price was
to be paid in the form of consideration other than cash, the Board of Directors
shall in good faith determine the fair market value of such consideration at
the time of the Sale Proposal.

 

(e)                                  For purposes of this
Section 4.1, any Person who has failed to give notice of the election of an
option hereunder within the specified time period will be deemed to have waived
its rights with respect thereto on the day immediately following the last day
of such period.

 

SECTION 4.2  Transfer of Offered Securities to Third
Parties. 
If all notices required to be given pursuant to Section 4.1 have been
duly given and the KPS Funds and/or the Company do not exercise their
respective options to purchase all of the Offered Securities, then the Selling
Shareholder shall have the right, subject to compliance by the Selling
Shareholder with the provisions of Section 3.3(b) hereof for a period of 90
calendar days from the earlier of (i) the
expiration of the option period pursuant to Section 4.1 with respect to such
Sale Proposal or (ii) the date on which such
Selling Shareholder receives notice from the KPS Funds and/or the Company that
they will not exercise in whole the options granted pursuant to
Section 4.1, to sell the Offered Securities to such third party at a price
of not less than the First Offer Price, and on the other terms specified in the
Sale Proposal.  Notwithstanding the
foregoing, no Selling Shareholder may transfer Offered Securities under this
Section 4.2 prior to the seventh anniversary of the date hereof unless it has
complied with Section 4.1(a).

 

SECTION 4.3  Purchase of Offered Securities.  Prior to the consummation of any sale
pursuant to Section 4.2, the Selling Shareholder shall comply with Section
3.3(b) hereof.  Upon the consummation of
any such purchase and sale, the Selling Shareholder shall deliver certificates
evidencing the Offered Securities sold, duly endorsed, or accompanied by
written instruments of transfer in form satisfactory to the purchaser duly
executed by the Selling Shareholder free and clear of any liens, against
delivery of the First Offer Price by certified or bank check.

 

SECTION 4.4  Waiting Period with Respect to Subsequent
Transfers. 
In the event that the KPS Funds and/or the Company do not exercise their
options to purchase all of the Offered Securities, and the Selling Shareholder
shall not have sold the Offered Securities to a third party for any reason
before the expiration, of the 90-day period described in Section 4.2, then such
Selling Shareholder shall not give another Notice of Intention pursuant to
Section 4.1 until the expiration of a period of 180 calendar days after the
last day of such 90-day period.

 

SECTION 4.5 
Tag-Along Rights.  (a) 
Except in the case of transfers to a Permitted Transferee or which are
otherwise permitted by Section 3.2, if the KPS Funds acting individually or in
concert (the “Selling Funds”) sells or otherwise transfers Capital

 

 

Stock (other than transfers to
a Permitted Transferee pursuant to Section 3.2) in an amount equal to or
greater than $2,000,000, in any one transaction or series of related
transactions, then the Selling Funds shall refrain from effecting such
transaction unless, prior to the consummation thereof, each other Shareholder
shall have been afforded the opportunity to join in such sale as hereinafter
provided in this Section 4.5.

 

(b)                                 Prior to consummation
of any such sale, disposition or transfer of shares of Capital Stock described
in Section 4.5(a), the Selling Funds shall cause the Person or group that
proposes to acquire such shares (the “Proposed Purchaser”) to offer in writing
(“Purchase Offer”) to each other Shareholder to purchase shares of Common Stock
or Preferred Stock, as the case may be, owned by such Shareholder, such that
the number of shares of Common Stock or Preferred Stock, as the case may be, so
offered to be purchased from such Shareholder shall be equal to the product
obtained by multiplying the aggregate number of shares of Common Stock or
Preferred Stock, as the case may be, proposed to be purchased by the Proposed
Purchaser by such Shareholder’s applicable Pro Rata Share.  If the Purchase Offer is accepted by one or
more of such Shareholders, then the number of shares of Common Stock or
Preferred Stock, as the case may be, to be sold to the Proposed Purchaser by
the Selling Funds shall be reduced by the aggregate number of shares of Common
Stock or Preferred Stock, as the case may be, to be purchased by the Proposed
Purchaser from such other Shareholders pursuant thereto.  Such purchase shall be made at the highest
price per share and otherwise on the same terms and conditions as the Proposed
Purchaser shall have offered to purchase shares of Common Stock or Preferred
Stock, as the case may be, to be sold by the Selling Funds.  The Purchase Offer shall set forth such
terms and conditions and identify the Proposed Purchaser and any Person that
controls the Proposed Purchaser.  Each
Shareholder shall have 15 calendar days from the date of receipt of the Purchase
Offer in which to accept such Purchase Offer (and, in the case of any such
Shareholder holding Contingent Rights, to exercise such Contingent Rights and
receive the shares of Common Stock which it is entitled to purchase upon such
exercise, in order to participate in such Purchase Offer), and such acceptance
shall be binding and irrevocable.  The
closing of such purchase shall occur not later than 30 days after such
acceptance; provided, however, that such 30 calendar day period may be extended
for a reasonable time not to exceed 60 days to the extent reasonably necessary
to comply with any filing requirements under the HSR Act or to obtain any
necessary consents.  In the event that a
sale or other transfer subject to this Section 4.5 is to be made to a Proposed
Purchaser who is not a Shareholder, the Selling Funds shall notify the Proposed
Purchaser that the sale or other transfer is subject to Section 3.3 and this
Section 4.5 and shall ensure that no sale or other transfer is consummated
without the Proposed Purchaser first complying with this Section 4.5.

 

SECTION 4.6  Right of First Refusal for New Securities.  (a)  The
Company hereby grants to each of the Shareholders a right of first refusal to
purchase any New Securities (as defined below) which the Company may, from time
to time, propose to issue and sell. 
Such right of first refusal shall allow each Shareholder to purchase its
Common Pro Rata Share (determined immediately prior to such issuance and sale
of New Securities) of the New Securities proposed to be issued.  In the event a Shareholder does not purchase
any or all of its Common Pro Rata Share of New Securities, each of the

 

 

remaining Shareholders shall
have the right to purchase its Common Pro Rata Share (determined at such
time) of such unpurchased New Securities until all of the New Securities are
purchased or until no other Shareholder desires to purchase any additional New
Securities.  The right of first refusal
granted hereunder shall terminate if unexercised within 15 calendar days after
receipt of the notice described in Section 4.6(c) below.

 

(b)                                 “New Securities” shall
mean any authorized but unissued shares, and any treasury shares, of Common
Stock or any other capital stock of the Company and all rights, options or
warrants to purchase Common Stock or any other capital stock, and securities of
any type whatsoever that are, or may become, convertible into Common Stock or
any other capital stock; provided, however, that the term “New
Securities” does not include (i) any securities
outstanding on the date hereof which have not been subsequently repurchased,
redeemed or otherwise reacquired by the Company; (ii) the
issuance of any shares of Common Stock upon the exercise of any outstanding
Contingent Right; (iii) employee stock
ownership plans, stock options, or other rights to purchase or acquire shares
of Common Stock, or “phantom” stock or stock appreciation rights, granted
pursuant to any stock option plan or other plan adopted for the benefit of
officers, directors and employees of the Company and its Subsidiaries, and shares
of Common Stock issued upon the exercise of such options or rights or otherwise
issued pursuant to any such plan; (iv) securities
issued pursuant to any acquisition of another Person, business or line or
operating unit of any business by the Company or its Subsidiaries by merger,
consideration, stock purchase, purchase of assets or other transaction; (v) shares of Common Stock issued pursuant to any
stock split or stock dividend; and (vi) shares
of Common Stock issued pursuant to any Public Offering.

 

(c)                                  In the event that the
Company proposes to undertake an issuance of New Securities, it shall give each
Shareholder written notice of its intention (“New Issue Notice”), describing
the class and number of shares of Common Stock it intends to issue as New
Securities, the purchase price therefor (which shall be payable solely in
cash), the terms upon which the Company proposes to issue the same, including
the current fair market value of each share of Common Stock on the date such
New Issue Notice is given.  Each
Shareholder shall have 15 calendar days from the date the New Issue Notice is
received by it to determine whether to purchase all or any portion of the
Shareholder’s Common Pro Rata Share of such New Securities for the purchase
price and upon the terms specified in the New Issue Notice by giving written
notice to the Company, stating therein the quantity of New Securities to be
purchased, including the amount of New Securities in excess of its Common Pro
Rata Share it is willing to purchase in the event the other Shareholders elect
to purchase less than their Common Pro Rata Share.  A Shareholder’s election to purchase New Securities shall be
binding and irrevocable.

 

SECTION 4.7 
Drag-Along Rights.  (a) 
If the KPS Funds desire to sell or transfer more than 10% of the Common
Stock or Preferred Stock held by the KPS Funds (the “KPS Sale”) to a third
party (“Acquiror”) not an Affiliate of the KPS Funds, or to effect a sale of
all or substantially all of the assets of the Company and its subsidiaries on a
consolidated basis, then the KPS Funds shall have the right, subject to all of
the provisions of this Section 4.7 (“Drag-Along Right”) and to the extent
permitted by

 

 

applicable law, to require each
of the other Shareholders to (a) if such KPS Sale is structured as a sale
of Capital Stock, sell, transfer and deliver or cause to be sold, transferred
and delivered to such Acquiror the same percentage of Common Stock or Preferred
Stock owned by such Shareholders, or (b) if such KPS Sale is structured as
a merger, consolidation, sale of all or substantially all assets or other
transaction requiring the consent or approval of the Company’s stockholders,
vote such Shareholder’s shares of Voting Stock in favor thereof, and otherwise
consent to and raise no objection to such transaction, and waive any
dissenters’ rights, appraisal rights or similar rights which such Shareholder
may have in connection therewith; and, in any such event, subject to the
provisions of subsection (c) of this Section 4.7, each such other Shareholder
shall agree to and shall be bound by the same terms, provisions and conditions
in respect of the KPS Sale as are applicable to the Shareholders.  The provisions of Sections 4.1 through
4.5, inclusive, shall not apply to any transaction to which this Section 4.7
applies to the extent the KPS Funds shall have in fact exercised their
“Drag-Along Right” under this Section 4.7.

 

(b)                                 If the KPS Funds
desire to exercise their Drag-Along Rights, they shall give written notice to
the other Shareholders (“Drag-Along Notice”) of the KPS Sale, setting forth the
name and address of the Acquiror, the date on which such transaction is
proposed to be consummated (which shall be not less than 15 calendar days after
the date such Drag-Along Notice is given) and the proposed amount of
consideration and copies of any form of agreement proposed to be included by
the KPS Funds and the other Shareholders. 
The KPS Funds shall not be entitled to exercise their Drag-Along Rights
under this Section 4.7 unless all of the consideration to be paid to the other
Shareholders is in the form of cash or readily marketable securities or as the
other Shareholders shall reasonably agree.

 

(c)                                  The obligations of
the Shareholders in respect of a KPS Sale under this Section 4.7 are subject to
the satisfaction of the following conditions:  (i) upon the consummation of the
KPS Sale, each Shareholder shall have the right to receive the same form of
consideration and the Pro Rata Share of consideration paid to each respective
class of Capital Stock in the transaction; (ii) if
any Shareholder is given an option as to the form and amount of consideration
to be received, each other Shareholder will be given the same option with
respect to its applicable Pro Rata Share; and (iii) each
holder of then currently exercisable Contingent Rights will be given a
reasonable opportunity to exercise such Contingent Rights prior to the
consummation of the KPS Sale and thereby to participate in the KPS Sale as a
holder of Capital Stock.

 

SECTION 5.   Registration
Rights.

 

SECTION 5.1  Piggyback Registrations.

 

(a)                                  If the Company at any
time proposes to register any of its equity securities under the Securities Act
(other than a registration on Form S-4 or S-8 or any successor or similar
forms thereto), whether or not for sale for its own account, on a form and in a
manner that would permit registration of Registrable Securities for sale to the
public under the Securities Act, it will give written notice to all the holders
of

 

 

Registrable Securities promptly
of its intention to do so, describing such securities and specifying the form
and manner and the other relevant facts involved in such proposed registration,
including, without limitation, (x) the intended method of disposition of
the securities offered, including whether or not such registration will be
effected by means of a firm commitment underwriting through a nationally
recognized underwriter (an “Underwritten Offering”) or on a “best efforts”
basis, and, in any case, the identity of the managing underwriter, if any, and
(y) the public offering price at which the Registrable Securities are
reasonably expected to be sold.  Upon
the written request of any such holder of Registrable Securities delivered to
the Company within 30 calendar days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such holder), the Company will use its best efforts to effect the registration
under the Securities Act of all of the Registrable Securities that the Company
has been so requested to register; provided, however, that:

 

(i)  if, at any time after giving such written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register such securities, the
Company may, at its election, give written notice of such determination to each
holder of Registrable Securities who shall have made a request for registration
as hereinabove provided and thereupon the Company shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith); and

 

(ii)  if such registration involves an
Underwritten Offering, all holders of Registrable Securities requesting to be
included in the Company’s registration must sell their Registrable Securities
to the underwriters selected by the Company on the same terms and conditions as
apply to the Company except as otherwise specifically provided in this Section
5.

 

(b)                                 The Company shall not
be obligated to effect any registration of Registrable Securities under this
Section 5.1 incidental to the registration of any of its securities in
connection with mergers, acquisitions, convertible securities, exchange offers,
dividend reinvestment plans, employee stock ownership plans or stock option or
other employee benefit plans.

 

(c)                                  If a registration
pursuant to this Section 5.1 involves an Underwritten Offering and the
managing underwriter advises the issuer that, in its opinion, the number of
securities proposed to be included in such registration should be limited due
to market conditions, then the Company will include in such registration
(i) first, the securities the Company proposes to sell and
(ii) second, the number of Registrable Securities requested by holders
thereof to be included in such registration that, in the opinion of such
managing underwriter, can be sold, such amount to be allocated among all such
holders of Registrable Securities pro rata on the basis of the respective
number of Registrable Securities each such holder has requested to be included
in such registration.

 

 

(d)                                 In connection with any
Underwritten Offering with respect to which holders of Registrable Securities
shall have requested registration pursuant to this Section 5.1, the
Company shall have the right to select the managing underwriter with respect to
the offering; provided that such managing underwriter shall be
reasonably acceptable to the KPS Funds.

 

(e)                                  The Company will pay
all Registration Expenses incurred in connection with each of the registrations
of Registrable Securities effected by it pursuant to this Section 6.1.

 

SECTION 5.2  Demand Registrations.

 

(a)                                  Request.  At any time after the earlier of (i) the
180th day following an Initial Public Offering and (ii) the second anniversary
hereof, the KPS Funds (the “Requesting Party”) shall have the right to make
three written requests that the Company effect the registration under the
Securities Act of all or part of their Registrable Securities.  Subject to Sections 5.2(g) and (h), the
Company will promptly (and in any event within 10 business days) give written
notice of such requested registration to all other Shareholders holding
Registrable Securities and offer such other Shareholders the opportunity to
register such amount of their Registrable Securities as such Shareholders may
request.  The Company will thereupon
file a registration statement with respect to, and use its best efforts to make
effective, at the earliest possible date, the registration under the Securities
Act, including, without limitation, by means of a shelf registration pursuant
to Rule 415 under the Securities Act if so requested in such request (but
only if the Company is then eligible to use such a shelf registration), of:

 

(i)                                     the
Registrable Securities which the Company has been so requested to register by
the Requesting Party, and

 

(ii)                                  all
other Registrable Securities which the Company has been requested to register
by the other Shareholders holding Registrable Securities (such Shareholders
together with the Requesting Party hereinafter are referred to as the “Selling
Shareholders”) by written request given to the Company within 10 business days
after the giving of such written notice by the Company, all to the extent
requisite to permit the disposition of the Registrable Securities so to be
registered.

 

(b)                                 Registration of
Other Securities.  Whenever the
Company shall effect a registration pursuant to this Section 5.2, it may
elect to include unissued shares of Common Stock.

 

(c)                                  Registration
Statement Form.  Registrations under
this Section 5.2 shall be on such appropriate registration form of the Commission
as shall be reasonably selected by the KPS Funds.

 

(d)                                 Effective
Registration Statement.  A
registration requested pursuant to this Section 5.2 shall not be deemed to have
been effected (i) unless a registration statement with respect thereto has
become effective and remained effective in

 

 

compliance with the provisions
of the Securities Act with respect to the disposition of all Registrable
Securities covered by such registration statement until such time as all of
such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such registration statement (unless the failure to so dispose of such
Registrable Securities shall be caused solely by reason of a failure on the
part of the Selling Shareholders); provided, that, except with respect
to any registration statement filed pursuant to Rule 415 under the Securities
Act, such period need not exceed nine months, (ii) if after it has become
effective, such registration is interfered with by any stop order, injunction
or other order or requirement of the Commission or other governmental agency or
court for any reason not attributable solely to the Selling Shareholders and
has not thereafter become effective, or (iii) if the conditions to closing
specified in the underwriting agreement, if any, entered into in connection
with such registration are not satisfied or waived, other than solely by reason
of a failure on the part of the Selling Shareholders.

 

(e)                                  Selection of
Underwriters.  If the Company or the
Requesting Party desire to engage an underwriter or underwriters with respect
to an offering of the Registrable Securities so to be registered, such
underwriter shall be selected by the KPS Funds and shall be reasonably
acceptable to the Company.

 

(f)                                    Priority in
Requested Registration. If the managing underwriter of any underwritten
offering shall advise the Company (and the Company shall so advise each Selling
Shareholder of such advice) that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering; then the Company will include in such registration, to
the extent of the number of Registrable Securities which the Company is so advised
can be sold in (or during the time of) such offering at a price reasonably
acceptable to the KPS Funds (i) first, the number of Registrable
Securities requested to be registered by the Investor Group allocated pro rata
on the basis of the respective number of Registrable Securities each such
holder has requested to be included in such registration and (ii) second,
the Registrable Securities the Company proposes to sell.

 

(g)                                 Limitations on
Registration on Request. In no event shall the KPS Funds collectively, have
the right to request registration pursuant to Section 6.2 more than three
times and the KPS Funds shall not have the right to request registration
pursuant to this Section 5.2 within 180 days following the effective date
of a registration statement filed by the Company.

 

(h)                                 Company Delay.  Notwithstanding anything herein to the
contrary, if, after a Requesting Party has given a written request under
Section 5.2(a), the Board of Directors of the Company shall determine in
its good faith judgment that the filing or continued effectiveness of such
registration statement would be undesirable and would interfere with any
material financing, investment, acquisition or other transaction then under
consideration or would reasonably in the judgment of the Board of Directors of
the Company adversely affect the interests of the Company, the Company may
decide to delay or discontinue, as the case may be, the registration of such
Registrable Securities, and if the Board of Directors of the Company makes such
determination, the

 

 

Company shall give written
notice of such determination to each Selling Shareholder.  Such delay or discontinuance shall be for
the period the Company determines on the basis provided above in good faith is
necessary or desirable, but in no event greater than six months in any
12 calendar month period.  The
Company shall notify the Requesting Party of the expiration of the period of
delay or discontinuance.  Following such
delay or discontinuance, the Company shall promptly cause the Registrable
Securities to be registered unless, within 15 days of receipt of notice
from the Company, the Requesting Party withdraws its written request made
pursuant to Section 5.2(a), in which case, such written request will not
be considered a request for registration for the purposes of
Section 5.2(g).

 

(i)                                     Expenses.  The Company will pay all Registration
Expenses incurred in connection with any registration of Registrable Securities
effected pursuant to this Section 5.2.

 

(j)                                     Holdback
Agreements.  Each Shareholder
agrees, if so required by the managing underwriter for any Public Offering
pursuant to this Agreement, not to effect any sale or distribution of any
equity securities of the Company or securities convertible into or exchangeable
or exercisable for equity securities of the Company issued after the date
hereof, including any sale under Rule 144 under the Securities Act, during
the 15 days prior to the date on which such Public Offering becomes effective
and until 180 days after the effective date of such Public Offering, except as
part of such Public Offering, or to the extent that such Shareholder is
prohibited by applicable law from agreeing to withhold securities from sale or
is acting in its capacity as a fiduciary or an investment adviser.  Without limiting the scope of the term
“fiduciary,” a Shareholder shall be deemed to be acting as a fiduciary or an
investment adviser if its actions or the securities proposed to be sold are
subject to the Employee Retirement Income Security Act of 1974, as amended, the
Investment Company Act of 1940, as amended, or the Investment Advisers Act of
1940, as amended, or if such securities are held in a separate account under
applicable insurance law or regulation.

 

The Company agrees (i) not to effect any
Public Offering or distribution of any equity securities of the Company or
securities convertible into or exchangeable or exercisable for equity
securities of the Company, during the 15 days prior to the date on which any
Public Offering pursuant to Sections 5.1(a) or 5.2(a) hereof has become
effective and until 180 days after the effective date of such Public Offering,
except as part of such Public Offering, and (ii) to cause each holder of
any equity securities, or securities convertible into or exchangeable or
exercisable for equity securities, in each case, acquired from the Company at
any time on or after the date of this Agreement (other than in a Public
Offering), to agree not to effect any Public Offering or distribution of such
securities during such period.

 

SECTION 5.3  Registration Procedures.

 

(a)                                  If and whenever the
Company is required to use its best efforts to effect or cause the registration
of any Registrable Securities under the Securities

 

 

Act as provided in
Section 5.1 or Section 5.2 the Company will, as expeditiously as possible:

 

(i)  prepare and, in any event within
120 calendar days after the end of the period within which requests for
registration may be given to the Company, file with the Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statements to become and remain
effective; provided that as far in advance as practical before filing
such registration statement or any amendment thereto, the Company will furnish
to the Shareholders that (whether pursuant to Section 5.1 or 5.2) have
requested to have Registrable Securities included in such registration
(“Requesting Shareholders”) copies of reasonably complete drafts of all such
documents proposed to be filed (including exhibits), and any such holder shall
have the opportunity to object to any information pertaining solely to such
holder that is contained therein and the Company will make the corrections
reasonably requested by such holder with respect to such information prior to
filing any such registration statement or amendment and, provided, further
that the Company may discontinue any registration of its securities that is
being effected pursuant to Section 5.1 at any time prior to the effective date
of the registration statement relating thereto;

 

(ii)  prepare and file with the Commission such
amendments (including post-effective amendments) and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective for such period as
may be requested by the holders of Registrable Securities being registered
thereby, but not exceeding nine months except with respect to any registration
filed under Section 5.2 pursuant to Rule 415 under the Securities
Act, and to comply with the provisions of the Securities Act with respect to
the disposition of all Common Stock covered by such registration statement
during such period in accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such registration statement;

 

(iii)  furnish to each holder of Registrable
Securities covered by the registration statement and to each underwriter, if
any, of such Registrable Securities, such number of copies of a prospectus and
preliminary prospectus for delivery in conformity with the requirements of the
Securities Act, and such other documents, as such Person may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Securities;

 

(iv)  use its best efforts to register or qualify
such Registrable Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each holder of
Registrable Securities shall reasonably request, and do any and all other acts
and things which may be reasonably necessary or advisable to enable such holder
of Registrable Securities to consummate the disposition of the Registrable
Securities owned by such holder of Registrable Securities in such
jurisdictions, except that the

 

 

Company shall not for any such purpose be required (A) to qualify
to do business as a foreign corporation in any jurisdiction where, but for the
requirements of this Section 5.3(a)(iv), it is not then so qualified, or
(B) to subject itself to taxation in any such jurisdiction, or (C) to
take any action which would subject it to general or unlimited service of
process in any such jurisdiction where it is not then so subject;

 

(v)  use its best efforts to cause such
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the holders of Registrable Securities to consummate the
disposition of such Registrable Securities;

 

(vi)  immediately notify each seller of
Registrable Securities covered by such registration statement, at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act within the appropriate period mentioned in Section 5.3(a)(ii), if the
Company becomes aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the circumstances
then existing, and, at the request of any such seller, deliver a reasonable
number of copies of an amended or supplemental prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;

 

(vii)  otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission and make generally
available to its security holders, in each case as soon as practicable, but not
later than 60 calendar days after the close of the period covered thereby
(90 calendar days in case the period covered corresponds to a fiscal year
of the Company), an earnings statement of the Company which will satisfy the
provisions of Section 11(a) of the Securities Act;

 

(viii)  use its best efforts in cooperation with the
underwriters to list such Registrable Securities on each securities exchange as
they may reasonably designate;

 

(ix)  provide a transfer agent and registrar for
all such Registrable Securities not later than the effective date of such
registration statement;

 

(x)  in the event such registration is effected
through an Underwritten Offering, use its best efforts to obtain a “cold
comfort” letter from the independent public accountants for the Company in
customary form and

 

 

covering such matters of the type customarily covered by such letters
as the holders of Registrable Securities requesting registration may reasonably
request in order to effect an underwritten public offering of such Registrable
Securities;

 

(xi)  execute and deliver all instruments and
documents (including in an Underwritten Offering an underwriting agreement in
customary form) and take such other actions and obtain such certificates and
opinions as the holders of Registrable Securities requesting registration may
reasonably request in order to effect an underwritten public offering of such
Registrable Securities;

 

(xii)  promptly notify each Requesting Shareholder
and the underwriter or underwriters, if any:

 

(A)                              when such registration
statement or any prospectus used in connection therewith, or any amendment or
supplement thereto, has been filed and, with respect to such registration
statement or any post-effective amendment thereto, when the same has become
effective;

 

(B)                                of any written comments
from the Commission with respect to any filing referred to in clause (A)
and of any written request by the Commission for amendments or supplements to
such registration statement or prospectus;

 

(C)                                of the notification to
the Company by the Commission of its initiation of any proceeding with respect
to the issuance by the Commission of, or of the issuance by the Commission of,
any stop order suspending the effectiveness of such registration statement; and

 

(D)                               of the receipt by the
Company of any notification with respect to the suspension of the qualification
of any Registrable Securities for sale under the applicable securities or blue
sky laws of any jurisdiction;

 

(xiii)  furnish to each Requesting Shareholder a
signed counterpart, addressed to such holder (and the underwriters, if any), of
an opinion of counsel for the Company, dated the effective date of such
registration statement (or, if such registration includes an underwritten
Public Offering, dated the date of any closing under the underwriting
agreement), covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) as are customarily
covered in opinions of issuer’s counsel delivered to the underwriters in
underwritten Public Offerings of securities; and

 

(xiv)  make available for inspection by the
Requesting Shareholder, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter (collectively, the
“Inspectors”), all financial and other

 

 

records, pertinent corporate documents and properties of the Company
(collectively, the “Records”) as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and cause the Company’s
officers, directors and employees to supply all information reasonably
requested by any such Inspector in connection with such registration statement,
and permit the Inspectors to participate in the preparation of such
registration statement and any prospectus contained therein and any amendment
or supplement thereto to the extent they reasonably request.  The seller of Registrable Securities agrees
by acquisition of such Registrable Securities that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at the Company’s expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential.

 

(b)                                 It shall be a
condition precedent to the obligation of the Company to take any action
pursuant to this Section 5 in respect of Registrable Securities that each
holder requesting registration thereof shall furnish to the Company such
information regarding the Registrable Securities held by such holder and the
intended method of disposition thereof as the Company shall reasonably request
and as shall be required in connection with the action taken by the Company.

 

(c)                                  Each holder of
Registrable Securities will, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5.3(a)(vi),
forthwith discontinue disposition of the Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such holder’s
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 5.3(a)(vi).

 

(d)                                 If a registration
pursuant to Section 5.1 or Section 5.2 involves an Underwritten
Offering, each holder of Registrable Securities agrees, whether or not such
holders’ Registrable Securities are included in such registration, not to
effect any public sale or distribution, including any sale pursuant to
Rule 144 under the Securities Act, of any Registrable Securities, or of
any security convertible into or exchangeable or exercisable for any
Registrable Securities (other than as part of such Underwritten Offering),
without the consent of the managing underwriter, during a period commencing
seven calendar days before and ending 180 calendar days (or such lesser
number as the managing underwriter shall designate) after the effective date of
such registration.

 

(e)                                  If a registration
pursuant to Section 5.1 or Section 5.2 involves an Underwritten
Offering, the Company agrees, if so required by the managing underwriter, not
to effect any public sale or distribution of any of its equity or debt
securities, as the case may be, or securities convertible into or exchangeable
or exercisable for any of such equity or debt securities, as the case may be,
during a period commencing seven calendar days before and ending
180 calendar days after the effective date of such registration, except
for such Underwritten Offering or except in connection with a stock option
plan, stock purchase plan, employee stock ownership plan, savings or similar
plan, or an acquisition, merger or exchange offer.

 

 

(f)                                    If a registration
pursuant to Section 5.1 or Section 5.2 involves an Underwritten
Offering, any holder of Registrable Securities requesting to be included in
such registration may elect, in writing, prior to the effective date of the
registration statement filed in connection with such registration, not to
register such securities in connection with such registration, unless such
holder has agreed with the Company or the managing underwriter to limit its
rights under this Section 5.3.

 

(g)                                 It is understood that
in any Underwritten Offering in addition to any shares of Common Stock (the
“initial shares”) the underwriters have committed to purchase, the underwriting
agreement may grant the underwriters an option to purchase up to a number of
additional authorized but unissued shares of Common Stock (the “option shares”)
equal to 15% of the initial shares (or such other maximum amount as the NASD
may then permit), solely to cover over-allotments.  Shares of Common Stock proposed to be sold by the Company and the
other sellers shall be allocated between initial shares and option shares as
agreed or, in the absence of agreement, pursuant to Section 5.1(c) and
5.2(f), as the case may be.

 

SECTION 5.4  Indemnification.  (a)   In the event of any registration of any
securities under the Securities Act pursuant to Section 5.1 or
Section 5.2 hereof, the Company will, and it hereby agrees to, indemnify
and hold harmless, to the extent permitted by law, each seller of any
Registrable Securities covered by such registration statement, its directors,
officers, employees, limited partners, partners and agents, each Person who participates
as an underwriter in the offering or sale of such securities and each other
Person, if any, who controls such seller or underwriter within the meaning of
the Securities Act, as follows:

 

(i)  against any and all loss, liability, claim,
damage or expense whatsoever arising out of or based upon an untrue statement
or alleged untrue statement of a material fact contained in any registration
statement (or any amendment or supplement thereto), including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arising out of an untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein not misleading;

 

(ii)  against any and all loss, liability, claim,
damage and expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with the
written consent of the Company; and

 

(iii)  against any and all expense reasonably
incurred by them in connection with investigating, preparing or defending
against any

 

 

litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under clauses (i) or (ii)
above;

 

provided,
however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any such seller or underwriter expressly for use in the preparation
of any registration statement (or any amendment thereto) or any preliminary
prospectus or prospectus (or any amendment or supplement thereto); and provided,
further, that the Company will not be liable to any Person who
participates as an underwriter in the offering or sale of Registrable Securities
or any other Person, if any, who controls such underwriter within the meaning
of the Securities Act, under the indemnity agreement in this
Section 5.4(a) with respect to any preliminary prospectus or final
prospectus or final prospectus as amended or supplemented, as the case may be,
to the extent that any such loss, claim, damage or liability of such
underwriter or controlling Person results from the fact that such underwriter
sold Registrable Securities to a Person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the final
prospectus or of the final prospectus as then amended or supplemented,
whichever is most recent, if the Company has previously furnished copies
thereof to such underwriter.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller, director, officer, employee, agent,
underwriter or controlling Person, and shall survive the transfer of such
securities by such seller.

 

(b)                                 The Company may
require, as a condition to including any Registrable Securities in any
registration statement filed in accordance with Section 5.1 or
Section 5.2 hereof, that the Company shall have received an undertaking
reasonably satisfactory to it from the prospective seller of such Registrable
Securities or any underwriter, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in Section 5.4(a) hereof) the
Company and its directors and officers and each other Person, if any, who
controls the Company within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus contained therein,
or any such amendment or supplement, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such seller or
underwriter specifically stating that it is for use in the preparation of such
registration statement, preliminary, final or summary prospectus or amendment
or supplement.  Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling Person and
shall survive the transfer of such securities by such seller.  In that event, the obligations of the
Company and such sellers pursuant to this Section 5.4 are to be several and
not joint; provided, however, that, with respect to each claim
pursuant to this Section 5.4, the Company shall be liable for the full
amount of such claim, and each such seller’s liability under this
Section 5.4 shall be limited to an amount equal to the net proceeds (after
deducting the

 

 

underwriters’ discount and
expenses) received by such seller from the sale of Registrable Securities held
by such seller pursuant to this Section 5.4.

 

(c)                                  Promptly after
receipt by an indemnified party hereunder of written notice of the commencement
of any action or proceeding involving a claim referred to in this
Section 5.4, such indemnified party will, if a claim in respect thereof is
to be made against an indemnifying party, give written notice to such indemnifying
party of the commencement of such action; provided, however, that
the failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under this
Section 5.4, except to the extent (not including any such notice of an
underwriter) that the indemnifying party is actually prejudiced by such failure
to give notice.  In case any such action
is brought against an indemnified party, unless in such indemnified party’s
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim (in which case the
indemnifying party shall not be liable for the fees and expenses of more than
one counsel for the sellers of Registrable Securities or for more than one
counsel for the underwriters in connection with any one action or separate but
similar or related actions), the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof.

 

(d)                                 The Company and each
seller of Registrable Securities shall provide for the foregoing indemnity
(with appropriate modifications) in any underwriting agreement with respect to
any required registration or other qualification of securities under any
federal or state law or regulation of any governmental authority.

 

(e)                                  Notwithstanding anything
herein to the contrary, the rights and obligations contained in this
Section 5.4 shall survive any termination of this Agreement.

 

SECTION 5.5  Contribution.  In order to provide for just and equitable
contribution in circumstances under which the indemnity contemplated by
Section 5.4 hereof is for any reason not available, the parties required
to indemnify by the terms thereof shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such indemnity
agreement (collectively, “Losses”) incurred by the Company, any seller of
Registrable Securities and one or more of the underwriters, except to the
extent that contribution is not permitted under Section 11(f) of the
Securities Act.  In determining the amounts
which the respective parties shall contribute, there shall be considered the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other hand in connection with statements or omissions which
resulted in such Losses, as well as any other relevant equitable
considerations.  The relative fault
shall be determined by reference to, among other things, the parties’ relative
knowledge and access to information concerning the matter

 

 

with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or omission
and any other equitable considerations appropriate under the
circumstances.  The Company and each
Person selling securities agree with each other that no seller of Registrable
Securities shall be required to contribute any amount in excess of the amount
such seller would have been required to pay to an indemnified party if the
indemnity under Section 5.4 hereof were available.  The Company and each such seller agree with
each other and the underwriters of the Registrable Securities, if requested by
such underwriters, that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
underwriters were treated as one entity for such purpose) or for the
underwriters’ portion of such contribution to exceed the percentage that the
underwriting discount bears to the initial public offering price of the
Registrable Securities.  For purposes of
this Section 5.5, each Person, if any, who controls an underwriter within
the meaning of the Securities Act shall have the same rights to contribution as
such underwriter, and each director and each officer of the Company who signed
the registration statement, and each Person, if any, who controls the Company
or a seller of Registrable Securities, shall have the same rights to
contribution as the Company or a seller or Registrable Securities, as the case
may be.  Notwithstanding anything herein
the contrary, the rights and obligations contained in this Section 5.5
shall survive any termination of this Agreement.

 

SECTION 5.6  Rule 144.  If the Company shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, the Company covenants that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available other information), and it will
take such further action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or
(ii) any similar rule or regulation hereafter adopted by the
Commission.  Upon the request of any
holder of Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such requirements.

 

SECTION 6.  Termination. (a) The provisions
of Sections 2, 3 (other than the last sentence of Section 3.1 and Section 3.3)
and 4 shall terminate on the date on which any of the following events first
occurs:  (i) a Qualified Public Offering
or (ii) any sale or other disposition of outstanding Common Stock by way
of merger, consolidation or reorganization involving the Company, or sale of
all or substantially all of the assets of the Company or its subsidiaries, in
each case where immediately after giving effect to such transaction the
Investor Group owns less than 15% of the outstanding shares of Common Stock, on
a fully diluted basis, of the surviving, resulting, successor or purchasing
corporation (as the case may be).

 

 

(b)                                 Notwithstanding
the foregoing or any other provision of this Agreement (other than the last
sentence of Section 5.4), this Agreement shall in any event terminate with
respect to (i) any Shareholder when such Shareholder no longer owns any shares
of Common Stock, Preferred Stock or Contingent Right, and (ii) any particular
shares of Common Stock sold in a Public Offering.

 

SECTION 7.   Miscellaneous.

 

SECTION 7.1  GECC Additional Rights.
At such time as GECC is no longer a lender under the Credit Agreement, but remains
a Shareholder, GECC shall have the right, (i) upon reasonable prior notice to
the Company, to have a representative attend all meetings of the Board of
Directors as a nonparticipating observer, (ii) to receive, on a confidential
basis, all Board of Director materials prior to any such meeting, (iii) to
receive, on a confidential basis, within 45 days after the end of each fiscal
quarter of the Company, unaudited financial statements of the Company and (iv)
to receive, on a confidential basis, within 90 days after the end of each
fiscal year of the Company, audited financial statements of the Company.

 

SECTION 7.2  Delivery Expenses.  If any Shareholder surrenders any
certificate for shares of Common Stock, Preferred Stock or Contingent Rights to
the Company or a transfer agent of the Company for exchange for instruments of
other denominations or registered in another name or names, the Company shall
cause such new instruments to be issued and shall pay the cost of delivering to
or from the office of such Shareholder from or to the Company or its transfer
agent, duly insured, the surrendered instrument and any new instruments issued
in substitution or replacement for the surrendered instruments.

 

SECTION 7.3  Replacement of Instruments.  Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate or instrument evidencing any
shares of Common Stock, Preferred Stock or Contingent Rights and

 

(a)                                  in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to it (provided
that, if the owner of the same is an institutional lender or investor, its own
agreement of indemnity shall be deemed to be satisfactory), or

 

(b)                                 in the case of
mutilation, upon surrender or cancellation thereof,

 

the
Company, as its expense, shall execute, register and deliver, in lieu thereof,
a new certificate or instrument for (or covering the purchase of) an equal
number of shares of Common Stock, Preferred Stock or Contingent Rights.

 

SECTION 7.4  Successors and Assigns.  Except as otherwise provided herein, all of
the terms and provisions of this Agreement shall be binding upon, shall inure
to the benefit of and shall be enforceable by the respective successors and
assigns of the parties hereto.  No
Shareholder may assign any of its rights hereunder to any Person other than a
transferee that has complied in all respects with the requirements of this
Agreement

 

 

(including, without limitation,
Section 3.3 hereof).  If any
transferee of any Shareholder shall acquire any shares of Common Stock in any
manner, whether by operation of law or otherwise, such shares shall be held
subject to all of the terms of this Agreement, and by taking and holding such
shares such Person shall be entitled to receive the benefits of and be
conclusively deemed to have agreed to be bound by and to comply with all of the
terms and provisions of this Agreement.

 

SECTION 7.5  Amendment and Modification; Waiver of
Compliance; Conflicts.

 

(a)                                  This Agreement may be
amended only by a written instrument duly executed by (i) SSF,
(ii) SF and (iii) the holders of a majority of the shares of Capital
Stock not held by the KPS Funds (including, for such purposes, shares of Common
Stock issuable upon the exercise of Contingent Rights); provided, however, that
any amendment that has a material adverse effect on any right of a Shareholder
granted hereunder shall not be effective against such Shareholder without the
approval of such Shareholder.  In the
event of the amendment or modification of this Agreement in accordance with its
terms, the Shareholders shall cause the Board of Directors of the Company to
meet within 30 calendar days following such amendment or modification or
as soon thereafter as is practicable for the purpose of adopting any amendment
to the Certificate of Incorporation and By-Laws of the Company that may be
required as a result of such amendment or modification to this Agreement, and,
if required, proposing such amendments to the Shareholders entitled to vote
thereon, and the Shareholders agree to vote in favor of such amendments.

 

(b)                                 Except as otherwise
provided in this Agreement, any failure of any of the parties to comply with
any obligation, covenant, agreement or condition herein may be waived by the
party entitled to the benefits thereof only by a written instrument signed by
the party granting such waiver, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.

 

(c)                                  In the event of any
conflict between the provisions of this Agreement and the provisions of any
other agreement, the provisions of this Agreement shall govern and prevail.

 

(d)                                 The parties shall use
their reasonable best efforts to cause the ESOP Trustee to enter into and
become a Shareholder under this Agreement or be bound by the provisions hereof
to the extent permitted under applicable law. 
In connection therewith, the Shareholders hereby agree to make
reasonable modifications to this Agreement from time to time to the extent
required for the Company to comply with applicable law.  Notwithstanding the foregoing, the ESOP
Trustee shall not be obligated to vote the ESOP Securities or otherwise to use
its best efforts to accomplish the foregoing if and to the extent that in the
ESOP Trustee’s reasonable judgment that doing so would violate its fiduciary
obligations under ERISA or other applicable law.

 

SECTION 7.6  Notices.  All notices and other communications
provided for hereunder shall be in writing and delivered by hand or sent by
first class mail or sent by

 

 

telecopy (with such telecopy to
be confirmed promptly in writing sent by first class mail), sent as follows:

 

Notices to the Company:

 

Blue Ridge Holdings Corp.

c/o KPS Special Situations Fund, L.P.

200 Park Avenue

New York, New York

Attention:  Eugene Keilin

 

Notices to Jones:

 

The most recent address set forth

in the personnel records of the Company

 

Notices to KPS:

 

KPS Special Situations Fund, L.P.

KPS Supplemental Fund, L.P.

200 Park Avenue

New York, New York

Attention:  Eugene Keilin

 

Notices to GECC:

 

General Electric Capital Corporation

201 High Ridge Road

Stamford, CT  06927

Attn:  James Hogan

 

with a copy to:

 

Paul, Weiss, Rifkind, Wharton & Garrison

1285 Avenue of the Americas

New York, NY  10019-6064

Telephone:  212-373-3000

Telecopy:    212-757-3990

Attention:  Carl L.
Reisner, Esq.

 

(i)  If to any Shareholder other than any of the
foregoing Persons, to the address of such Shareholder set forth in the stock
records of the Company maintained for such purpose; or to such other address or
addresses or telecopy number or numbers as any such party may most recently
have designated in writing to the other parties hereto by such notice.  All such communications shall be deemed to
have been given or made when so delivered by hand or sent by telecopy, or three
business days after being mailed.

 

 

SECTION 7.7  Entire Agreement; Governing Law.

 

(a)                                  This Agreement and
the other writings referred to herein or delivered pursuant hereto which form a
part hereof contain the entire agreement among the parties hereto with respect
to the subject transactions contemplated hereby and supersede all prior oral
and written agreements and memoranda and undertakings among the parties hereto
with regard to this subject matter.  The
Company represents to the Shareholders that the rights granted to the holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted or obligations accepted under any other agreement (including the
Certificate of Incorporation) to which the Company is a party.

 

(b)                                 THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE (WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF).

 

SECTION 7.8 
Injunctive Relief.  The Shareholders acknowledge and agree that
a violation of any of the terms of this Agreement will cause the Shareholders
irreparable injury for which an adequate remedy at law is not available.  Therefore, the Shareholders agree that each
Shareholder shall be entitled to an injunction, restraining order or other
equitable relief from any court of competent jurisdiction, restraining the
Company or any Shareholder from committing any violations of the provisions of
this Agreement.

 

SECTION 7.9  Availability of Agreements.  For so long as this Agreement shall be in
effect, this Agreement shall be made available for inspection by any
Shareholder upon request at the principal executive offices of the Company.

 

SECTION 7.10  Headings.  The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.

 

SECTION 7.11  Counterparts.   This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

 

IN WITNESS WHEREOF, the parties instrument to
be duly executed as of the date first above written.

 

	
   

  	
  BLUE RIDGE HOLDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen Presser

  	
   

  
	
   

  	
   

  	
  Name:  Stephen Presser

  
	
   

  	
   

  	
  Title:    Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KPS SPECIAL SITUATIONS FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  KPS Investors, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P. Shapiro

  	
   

  
	
   

  	
   

  	
  Name:  David P. Shapiro

  
	
   

  	
   

  	
  Title:    Principal

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KPS SUPPLEMENTAL FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  KPS Investors, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P. Shapiro

  	
   

  
	
   

  	
   

  	
  Name:  David P. Shapiro

  
	
   

  	
   

  	
  Title:    Principal

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James F. Hogan

  	
   

  
	
   

  	
   

  	
  Name:  James F. Hogan

  
	
   

  	
   

  	
  Title:  Duly Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GORDON JONES

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Gordon Jones

  	
   

  
							

 

 

Shareholder Schedule

 

	
  Shareholder

  	
   

  	
  Number of

  Shares of

  Common Stock

  	
   

  	
  Number of

  Shares of

  Preferred Stock

  	
   

  
	
  KPS Special Situations Fund, L.P.

  	
   

  	
  4,620,750

  	
   

  	
  2333.712

  	
   

  
	
  KPS Supplemental Fund, L.P.

  	
   

  	
  1,500,000

  	
   

  	
  757.576

  	
   

  
	
  General Electric Capital Corporation

  	
   

  	
  683,250

  	
   

  	
  345.076

  	
   

  
	
  Gordon Jones

  	
   

  	
  126,000

  	
   

  	
  63.636

  	
   

  

 

 

EXHIBIT C

 

 

FORM OF TRANSFEREE AGREEMENT

 

This Transferee Agreement (“Agreement”) is
executed by the transferee whose signature appears below (“Transferee”)
pursuant to the terms of the Shareholders Agreement (the “Shareholders
Agreement”) dated as of May     , 1999 by and among
Blue Ridge Holding Corp., a Delaware corporation (the “Company”) and certain of
its stockholders, a copy of which Shareholders Agreement is attached hereto and
is incorporated herein by reference.  By
execution of this Agreement, Transferee hereby agrees as follows:

 

1.                                       Acknowledgment.  Transferee acknowledges (a) that
Transferee is acquiring certain shares of the common stock or preferred stock
of the Company from
[                     ]
(as defined in the Shareholders Agreement) subject to the terms and conditions
of the Shareholders Agreement and (b) that Transferee is an assignee of
[                                   ].

 

2.                                       Agreement.  Transferee (a) agrees that such shares
of common stock or preferred stock of the Company to be acquired by Transferee
shall be bound by and subject to the terms of the Shareholders Agreement
pursuant to the terms thereof and (b) hereby adopts the Shareholders Agreement
with the same force and effect as if [he/she/it] was originally a party
thereto.

 

3.                                       Notice.  Any notice required by the Shareholders Agreement
shall be given to Transferee at the address listed below Transferee’s signature
below.

 

EXECUTED AND DATED this the
          day of
              ,
         .

 

	
   

  	
  TRANSFEREE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

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