Document:

Exhibit 10.4

 

ASSET PURCHASE AGREEMENT

 

AMONG

 

NEENAH
PAPER COMPANY OF CANADA

 

As
Seller

 

and

 

NORTHERN
PULP NOVA SCOTIA CORPORATION

 

As
Purchaser

 

MADE AS
OF

 

June 24,
2008

 

 

PICTOU
PULP MILL AND WOODLANDS OPERATIONS

 

 

 

TABLE OF CONTENTS

 

	
  Article 1 – INTERPRETATION

  	
  1

  
	
   

  	
   

  
	
   

  	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
  1.2

  	
  Headings

  	
  10

  
	
   

  	
  1.3

  	
  Extended Meanings

  	
  10

  
	
   

  	
  1.4

  	
  Statutory References

  	
  10

  
	
   

  	
  1.5

  	
  Accounting Principles

  	
  10

  
	
   

  	
  1.6

  	
  Currency, Prices and Values

  	
  10

  
	
   

  	
  1.7

  	
  Schedules

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 2 – SALE AND PURCHASE

  	
  12

  
	
   

  	
   

  
	
   

  	
  2.1

  	
  Assets to be Sold and Purchased

  	
  12

  
	
   

  	
  2.2

  	
  Retained Assets

  	
  14

  
	
   

  	
  2.3

  	
  Liabilities of Seller Assumed by Purchaser

  	
  15

  
	
   

  	
  2.4

  	
  Retained Liabilities

  	
  16

  
	
   

  	
  2.5

  	
  Non-Assignable Contracts or Licenses/Shared Contracts

  	
  17

  
	
   

  	
  2.6

  	
  Purchase Price

  	
  19

  
	
   

  	
  2.7

  	
  Purchase Price Adjustment

  	
  19

  
	
   

  	
  2.8

  	
  Allocation of Purchase Price; Taxes

  	
  23

  
	
   

  	
  2.9

  	
  Section 167 Elections

  	
  23

  
	
   

  	
  2.10

  	
  Section 85 Elections

  	
  23

  
	
   

  	
  2.11

  	
  Instruments of Conveyance and Assumption

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 3 – REPRESENTATIONS AND WARRANTIES

  	
  24

  
	
   

  	
   

  
	
   

  	
  3.1

  	
  Seller’s Representations and Warranties

  	
  24

  
	
   

  	
  3.2

  	
  Survival of Seller’s Representations, Warranties and
  Covenants

  	
  40

  
	
   

  	
  3.3

  	
  Purchaser’s Representations and Warranties

  	
  41

  
	
   

  	
  3.4

  	
  Survival of Purchaser’s Representations, Warranties and
  Covenants

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 4 – COVENANTS

  	
  43

  
	
   

  	
   

  
	
   

  	
  4.1

  	
  Governmental Filings

  	
  43

  
	
   

  	
  4.2

  	
  Expenses

  	
  43

  
	
   

  	
  4.3

  	
  Indemnification for Brokerage Commissions

  	
  43

  
	
   

  	
  4.4

  	
  Access to Records

  	
  44

  
	
   

  	
  4.5

  	
  Affiliation with Seller

  	
  44

  
	
   

  	
  4.6

  	
  Further Assurances

  	
  44

  
	
   

  	
  4.7

  	
  Mail and Money Received After Closing

  	
  45

  
	
   

  	
  4.8

  	
  Delivery of Books and Records

  	
  45

  
	
   

  	
  4.9

  	
  Use of Seller’s Trade Name

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 5 – EMPLOYMENT AND BENEFIT PLAN ARRANGEMENTS

  	
  45

  
	
   

  	
   

  
	
   

  	
  5.1

  	
  Employees

  	
  45

  

 

 

	
   

  	
  5.2

  	
  Pension and Retirement Plans and Benefit Plans

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 6 – CLOSING ARRANGEMENTS

  	
  46

  
	
   

  	
   

  
	
   

  	
  6.1

  	
  Closing

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 7 – GENERAL

  	
  47

  
	
   

  	
   

  
	
   

  	
  7.1

  	
  Time of the Essence

  	
  47

  
	
   

  	
  7.2

  	
  Public Announcements

  	
  47

  
	
   

  	
  7.3

  	
  Benefit of the Agreement

  	
  47

  
	
   

  	
  7.4

  	
  Third Party Beneficiaries

  	
  47

  
	
   

  	
  7.5

  	
  Entire Agreement

  	
  47

  
	
   

  	
  7.6

  	
  Amendments and Waivers

  	
  47

  
	
   

  	
  7.7

  	
  Assignment

  	
  48

  
	
   

  	
  7.8

  	
  Notices

  	
  48

  
	
   

  	
  7.9

  	
  Remedies Cumulative

  	
  49

  
	
   

  	
  7.10

  	
  Governing Law

  	
  49

  
	
   

  	
  7.11

  	
  Attornment

  	
  49

  
	
   

  	
  7.12

  	
  Counterparts

  	
  49

  

 

 

ASSET PURCHASE AGREEMENT

 

THIS AGREEMENT is made as of June       ,
2008, between NEENAH PAPER COMPANY OF CANADA, an unlimited company incorporated
under the laws of Nova Scotia (“Seller”) and
NORTHERN PULP NOVA SCOTIA CORPORATION, an unlimited company incorporated under
the laws of Nova Scotia (“Purchaser”).

 

PRELIMINARY STATEMENT

 

Seller desires to
sell, on a going concern basis, substantially all of the assets and properties
owned by Seller, other than the Retained Assets (as defined herein), which are
used exclusively by or in connection with (i) the business conducted by
Seller at and only with respect to its Pictou County, Nova Scotia pulp mill
(the “Pictou Pulp Mill” or the “Pulp Business”) and (ii) the business conducted by
Seller in respect of its timberland properties in Nova Scotia (specifically
excluding the Woodlands (as defined herein)), including the Debert Nursery (as
defined herein) (the “Woodlands Business”,
and collectively with the Pulp Business, the “Purchased
Businesses”), and Purchaser desires to purchase the Purchased
Businesses and assume substantially all of the related liabilities, other than
the Retained Liabilities (as defined herein), for the consideration set forth
below, subject to the terms and conditions of this Agreement.

 

NOW
THEREFORE, in consideration of the premises and the covenants
and agreements herein contained, the parties hereto agree as follows:

 

ARTICLE 1 – INTERPRETATION

 

1.1                               Definitions

 

In this
Agreement, unless something in the subject matter or context is inconsistent
therewith, the following terms shall have the respective meanings set out below
and grammatical variations of such terms shall have corresponding meanings:

 

“Affiliate” means, with respect to any
Person, any other Person directly or indirectly controlling, controlled by or
under common control with, such Person, and for these purposes “control” is the
power whether by contract or ownership of equity interests or otherwise to
select a majority of the board of directors or other supervisory management
authority of an Entity, whether directly or indirectly through a chain of
Entities that are “controlled” within the foregoing meaning; provided, however,
that for purposes of this Agreement, Seller and Purchaser shall be deemed not
to be Affiliates of each other;

 

“Agreement” means this asset purchase
agreement including the Preliminary Statement and Schedules to this agreement,
as amended, supplemented or restated from time to time;

 

“Ancillary Agreements” means any written
agreement to which Seller is or becomes a party in connection with the
execution and delivery by Seller of, and as contemplated in any of, this
Agreement, the Finance Purchase Agreement or the Share Purchase Agreement;

 

1

 

“Applicable Law” means any applicable
domestic or foreign, federal, provincial or local law, including any statute or
subordinate legislation or treaty and any applicable rule, regulation,
ordinance, requirement, order, Permit, judgment, injunction, award or decree or
other binding requirement of a Governmental Authority having the force of law;

 

“Assets” has the meaning set out in Section 2.1;

 

“Assumed Contracts” has the meaning set
forth in Section 2.1(f);

 

“Assumed Liabilities” has the meaning
set forth in Section 2.3;

 

“Benefit Plans”  means
all plans, arrangements, agreements, programs, policies, practices or
undertakings, whether oral or written, formal or informal, funded or unfunded,
insured or uninsured, registered or unregistered, to which Seller is a party or
bound or in which the Employees participate or under which Seller has, or will
have, any liability or contingent liability or pursuant to which payments are
made or benefits are provided, or an entitlement to payments or benefits may
arise with respect to any of the Employees, Former Employees, Retired
Employees, directors or officers, individuals working on contract with Seller
or other individuals providing services to Seller of a kind normally provided
by employees (or any spouses, dependants, survivors or beneficiaries of any
such Persons), in each case relating to the Purchased Businesses, including the
Pension and Retirement Plans but excluding Statutory Plans, Multi-Employer
Plans and stock-based compensation plans;

 

“Boat Harbour Documents” has the meaning
set out in Section 2.3(b);

 

“Business Day” means a day other than a
Saturday, Sunday or statutory holiday in New York, New York, Atlanta, Georgia
or Halifax, Nova Scotia;

 

“Capital Projects” means the planned
capital expenditures program associated with the annual maintenance down for
the Pictou Mill scheduled to occur in April and May 2008, as set
forth on Schedule 1.1(f);

 

“Canso” means Canso Chemicals Limited, a
corporation incorporated under the laws of the Province of Nova Scotia;

 

“Closing” means the closing of the
transactions contemplated hereby;

 

“Closing Date” means the date hereof;

 

“Collective Agreement” has the meaning
set out in Section 3.1(l)(i);

 

“Contract” means any agreement,
indenture, contract, lease, deed of trust, licence, option, instrument or other
commitment, whether written or oral;

 

“Debert Nursery” means the Debert
Nursery office, storage buildings, greenhouses and seed orchards located at 381
Plains Road, Debert, Colchester County, Nova Scotia;

 

“Deeds and Assignments” has the meaning
set out in Section 2.11(a)(iv);

 

2

 

“Distribution Agreement” means the
Distribution Agreement dated as of November 30, 2004 between
Kimberly-Clark Corporation and NPI;

 

“Down” means the annual maintenance down
at the Pictou Mill scheduled to occur in April and May 2008 as
described in Schedule 1.1(g);

 

“Effluent Treatment System” means all or
any portion of any system that transports, mixes, stabilizes, treats (actively
or passively), conveys or discharges the effluent from the Pictou Pulp Mill,
including (i) the under river pipeline, settling ponds, aerated
stabilization basin and Boat Harbour and (ii) all man-made and natural
drainage systems and appurtenances that connect or are otherwise related to
such systems;

 

“Employees” means all individuals who
immediately prior to the Time of Closing are employed by, or engaged on
contract to provide employment services, or sales or other agents or
representatives of Seller in connection with the Pulp Business or the Woodlands
Business, whether on a regular full-time, part-time, casual or temporary basis
(including surge hires) in those operations being sold to Purchaser, including
any Inactive Employees, but excluding any employees of Seller in respect of the
Terrace Bay, Ontario pulp mill or any other business or operation of Seller
who, immediately prior to the Time of Closing, are not employed by Seller in
connection with either of the Purchased Businesses;

 

“Entity” means a Person other than an
individual;

 

“Environmental Law” means any Applicable
Law or rule of common law in existence on the date of this Agreement or
the Closing Date relating to the environment, the protection of the natural
environment, human health or both, including those pertaining to (i) reporting,
licensing, permitting, investigating, remediating and cleaning up any Release
of Hazardous Substances or (ii) the manufacture, processing, distribution,
use, treatment, storage, disposal, transport and handling of Hazardous
Substances (provided that only for the purposes of the definition of “Environmental
Liabilities” below, “Environmental Law” shall include changes to such
Environmental Laws after the Closing Date);

 

“Environmental Liabilities” means all
liabilities, obligations, claims, damages, responsibilities, costs and expenses
(including legal costs, engineering, consulting and laboratory fees and
expenses, capital expenditures, fines, penalties, financial responsibility for
cleanup costs, corrective action, removal, remedial actions and response
actions, and any other compliance, corrective, investigative or remedial
measures required by any Environmental Law or as a result of any third party
claims, judgments or settlements) existing on, or incurred or arising from and
after, the Closing Date as a result of or in connection with:

 

(a)                                  the
violation of any Environmental Law resulting from or in connection with the
operation, use or ownership of the Assets (A) on or before the Closing
Date, by Seller or, to the extent of Seller’s obligations on a several basis
under the Distribution Agreement in respect of the Assets, by the predecessor
owner thereof, or (B) after the Closing Date, by Purchaser; or

 

(b)                                 any
order, written claim or demand, action, citation, fine or other proceeding by
any Governmental Authority or by any non-governmental third party, actual, 

 

3

 

pending or
threatened, pursuant to any Environmental Law with respect to or in connection
with:

 

(i)    the operation, use or
ownership of the Assets (A) on or before the Closing Date by Seller or, to
the extent of Seller’s obligations on a several basis under the Distribution
Agreement in respect of the Assets, by the predecessor owner thereof, or (B) after
the Closing Date, by Purchaser;

 

(ii)   the ownership or operation
of the Real Property or the facilities or activities thereon or thereabout (A) on
or before the Closing Date by Seller or, to the extent of Seller’s obligations
on a several basis under the Distribution Agreement in respect of the Real
Property, by the predecessor owner thereof, or (B) after the Closing Date,
by Purchaser; or

 

(iii)  the installation, use,
operation or closure of, or in any way related to, any Effluent Treatment
System, or any part thereof, including any receiving water of the Effluent
Treatment System (A) on or before the Closing Date by Seller or, to the
extent of Seller’s obligations on a several basis under the Distribution
Agreement in respect of the Effluent Treatment System, by the predecessor owner
thereof, or (B) after the Closing Date, by Purchaser;

 

“ETA” has the meaning set out in Section 2.9;

 

“Excluded Forest Licenses” has the
meaning set out in Section 3.1(s)(ii);

 

“Finance Purchase Agreement” means the
asset purchase agreement dated as of the date hereof between Seller and Azure
Mountain Capital Financial Corporation;

 

“Financial Statements” means the Year
End Financial Statements and the Interim Financial Statements;

 

“Forest Licenses” has the meaning set
out in Section 3.1(s)(i);

 

“Former Employees” has the same extended
and comprehensive meaning as “Employees”
except that it refers to those individuals previously employed or engaged on
contract by Seller but not employed or engaged on contract by Seller at the
Time of Closing, excluding any former employees of the Terrace Bay, Ontario
pulp mill or any other business or operation of Seller;

 

“GAAP” has the meaning set out in Section 1.5;

 

“Governmental Authority” means any
domestic or foreign, federal, provincial, municipal, local or other
governmental, quasi-governmental, legislative, executive, judicial or
administrative body or person having jurisdiction in the relevant
circumstances, including any governmental ministry, agency, branch, department,
commission, board, tribunal, bureau or arbitrator;

 

“Hazardous Substance” means any
substance or material that is prohibited, controlled or regulated by any
Governmental Authority pursuant to Environmental Laws including pollutants, 

 

4

 

contaminants, dangerous goods or substances, controlled products, toxic
or hazardous substances or materials or hazardous wastes, all as defined in or
pursuant to any Environmental Law;

 

“Inactive Employee” means an Employee
who, immediately prior to the Time of Closing, is: (i) receiving WCB
disability benefits, (ii) on leave or off work due to disability, whether
paid or unpaid, including any such Employee who is receiving weekly indemnity,
short-term or long-term disability wage replacement payments, or (iii) on
strike, lock-out, lay-off or leave of absence, including pregnancy and parental
leave;

 

“Instruments of Assumption” has the
meaning set out in Section 2.11(b)(ii);

 

“Intellectual Property” means trade or
brand names, business names, trade-marks (including logos), trade-mark
registrations and applications, service marks, service mark registrations and
applications, copyrights, copyright registrations and applications, issued patents
and pending applications and other patent rights, industrial design
registrations, pending applications and other industrial design rights, trade
secrets, proprietary information and know-how, equipment and parts lists and
descriptions, instruction manuals, inventions, inventors’ notes, research data,
blue prints, drawings and designs, formulae, processes, technology and other
intellectual property, together with all rights under licences, registered user
agreements, technology transfer agreements and other agreements or instruments
relating to any of the foregoing, in each case relating to either of the
Purchased Businesses and not comprising a Retained Asset as of the Closing Date
or the date hereof and expressly excludes “Neenah Paper Company of Canada”, “NPCC”,
“Neenah Paper”, “NP”, “NPI” and any variations thereof;

 

“Interim Financial Statements” means the
financial statements of the Purchased Businesses as of and for the periods
ended January 31, 2008, February 29, 2008 and March 31, 2008
presented in accordance with GAAP with the exception of the exclusion of the
statement of cash flows, the statement of equity and the notes thereto and the
exclusion from the income statement of pulp and currency hedging, miscellaneous
transaction charges and corporate overhead allocations, a copy of which is
annexed hereto as Schedule 1.1(a);

 

“Inventory” has the meaning set out in Section 2.1(d)(i);

 

“Issued Shares” has the meaning set out
in Section 2.6(b);

 

“ITA” has the meaning set out in Section 2.10;

 

“K-C Global” means Kimberly-Clark Global
Sales, Inc. and its successors and assigns;

 

“knowledge”, with respect to Seller,
means the actual knowledge, after due enquiry, of any of the Persons listed on
Schedule 1.1(b);

 

“Landlord Real Property Leases” has the
meaning set out in Section 3.1(i)(ii);

 

“Leased Real Property” means the land,
buildings and other improvements covered by the Tenant Real Property Leases;

 

5

 

“lien or other encumbrance” or “Encumbrance” means any lien, pledge, hypothec, mortgage,
security interest of any nature, adverse claim, reservation, easement, title
retention agreement, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction or limitation whatsoever, or
any Contract to create any of the foregoing;

 

“Losses” means all fines, losses,
liabilities, damages, deficiencies, costs or expenses (including interest,
legal fees and disbursements of legal counsel) arising directly or indirectly
as a consequence of such matter;

 

“Material Adverse Change” and “Material Adverse Effect” mean any event, change or effect
that, when taken individually or together with all other adverse effects, will
or is reasonably likely to have a materially adverse effect on the business,
affairs, capitalization, assets, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Pulp Business or the Woodlands
Business, in each case taken as a whole; provided, however, that effects or
changes relating to:

 

(a)                                  changes
in general political and economic conditions and changes affecting generally
the industries and markets in which the Pulp Business or the Woodlands Business
is conducted that, in any of the foregoing cases, do not affect the Pulp
Business or the Woodlands Business, in each case taken as a whole, in a
disproportionate manner relative to other participants in the same industry as
the Pulp Business or the Woodlands Business;

 

(b)                                 the
effect of any changes in applicable laws, regulations or accounting rules; and

 

(c)                                  the
fact of the pendency of the transactions contemplated by this Agreement and the
identity of Purchaser;

 

are not Material Adverse Changes or Material Adverse Effects and are
not to be taken into account in determining whether a Material Adverse Change
or a Material Adverse Effect has occurred;

 

“Mill Accounts Receivables” means the
trade receivables of the Pulp Business as reflected in Seller’s general ledger
accounts numbers 000-0321 and 000-0321-100;

 

“Mill Inventories” means the hardwood
pulp inventory and the softwood pulp inventory of the Pulp Business as
reflected in Seller’s general ledger accounts numbers 000-0631 and 000-0633,
respectively;

 

“MOU” has the meaning set out in Section 2.3(b);

 

“Multi-Employer Plans” means plans,
arrangements, agreements, programs, policies, practices or undertakings whether
funded or unfunded, insured or uninsured, registered or unregistered, to which
Seller is a party or bound or in which the Employees participate or under which
Seller has, or will have, any liability or contingent liability, or pursuant to
which payments are made, or benefits are provided to, or an entitlement to
payments or benefits may arise with respect to any of its Employees, Former
Employees or Retired Employees (or any spouses, dependants, 

 

6

 

survivors or beneficiaries of any such Persons) and to which Seller is
required to contribute and which are not maintained or administered by Seller
or any of its Affiliates;

 

“Non-Assigned Contract” has the meaning
set out in Section 2.5(b);

 

“Nova Scotia Forest Acts” means the Crown Lands Act (Nova Scotia), the Forests Act
(Nova Scotia) and the Scott Maritimes Limited
Agreement (1965) Act (Nova Scotia) in effect on the date hereof and
all amendments and supplements thereto and all regulations and rules made
pursuant thereto and all policy statements, guidelines, orders and decisions
relating thereto;

 

“NPI” means Neenah Paper, Inc., a
corporation incorporated under the laws of Delaware;

 

“OPEBs” means every benefit plan,
program, agreement or arrangement maintained or contributed to or provided by
Seller for the benefit of any Retired Employee or their respective dependents
or beneficiaries other than Pension Plans or the SERP;

 

“Owned Real Property” has the meaning
set out in Section 3.1(h)(i);

 

“Pension and Retirement Plans” means,
collectively, the Pension Plans, the OPEBs and the SERP;

 

“Pension Plans” means the Neenah Paper
Canada Nova Scotia Hourly Pension Plan and the Neenah Paper Canada Nova Scotia
Salaried Pension Plan;

 

“Permits” means all permits, consents,
waivers, licences, certificates, approvals, authorizations, registrations,
franchises, rights, privileges and exemptions or any item with a similar effect
as the foregoing issued or granted by any Governmental Authority, other than
the Forest Licenses;

 

“Permitted Encumbrances” means:

 

(a)                                  the
reservations in any original grants from the Crown of any Real Property or
interest therein which do not materially detract from the value of the Real
Property concerned or materially impair its use in the operation of the
Purchased Businesses;

 

(b)                                 undetermined
or inchoate liens, charges and privileges incidental to current construction or
current operations and statutory liens, charges, adverse claims, security
interests or encumbrances of any nature whatsoever claimed or held by any
Governmental Authority which have not at the time been filed or registered
against the title to an Asset or served upon Seller pursuant to law or which
relate to obligations not due or delinquent;

 

(c)                                  liens
for taxes, assessments and governmental charges that are due but are being
contested in good faith and diligently by appropriate proceedings and for the
payment of which adequate provision has been made in the Interim Financial
Statements;

 

7

 

(d)                                 servitudes,
easements, restrictions, rights-of-way and other similar rights in the Real
Property or any interest therein, provided the same are not of such nature as
to materially adversely affect the use or value of the property subject
thereto;

 

(e)                                  security
given in the ordinary course of the Purchased Businesses to any public utility,
municipality or Governmental Authority or to any statutory or public authority
in connection with the operations of the Purchased Businesses, other than
security for borrowed money;

 

(f)                                    carriers’,
mechanics’, warehousemen’s, suppliers’, repairers’, storers’ or similar
possessory liens or encumbrances arising in the ordinary course of business of
the Purchased Businesses in respect of Assumed Liabilities; and

 

(g)                                 the
Encumbrances described in Schedule 1.1(c);

 

“Person” means any individual,
corporation, company, unlimited company, limited liability company,
partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Authority or other legal or business
entity however designated or constituted;

 

“Pictou Pulp Mill” has the meaning set
out in the Preliminary Statement;

 

“PLFN” means the Pictou Landing First
Nation;

 

“Project Wahoo Data Site” means the
online data site for Project Wahoo hosted by Merrill Corporation’s DataSite
that contains due diligence materials made available by Seller relating to the
Pulp Business;

 

“Pulp Business” has the meaning set out
in the Preliminary Statement;

 

“Purchase Price” has the meaning set out
in Section 2.6;

 

“Purchased Businesses” has the meaning
set out in the Preliminary Statement;

 

“Purchaser” has the meaning set out on Page 1;

 

“Purchaser Required Consents” means the
consents and approvals listed in Schedule 1.1(d);

 

“Real Property” means collectively the
Owned Real Property and the Leased Real Property;

 

“Real Property Leases” means the Tenant
Real Property Leases and the Landlord Real Property Leases;

 

“Release” means any release or discharge
of any Hazardous Substance into the environment including any discharge, spray
injection, inoculation, abandonment, deposit, spillage, leakage, seepage,
pouring, emission, emptying, throwing, dumping, placing, exhausting, escape,
leach, migration, dispersal, dispensing or disposal;

 

“Retained Assets” has the meaning set
out in Section 2.2;

 

8

 

“Retained Liabilities” has the meaning
set out in Section 2.4;

 

“Retained Litigation” has the meaning
set out in Section 2.2(i);

 

“Retired Employee” means any Employee
who retires at (or who was retired before) the Time of Closing or who has by
that time confirmed to Seller, orally or in writing, that he or she intends to
retire;

 

“Seller” has the meaning set out on Page 1;

 

“SERP” means the Supplemental Retirement
Benefit Plan for Neenah Paper Company of Canada, as applicable to the Employees
or Retired Employees;

 

“Share Purchase Agreement” means the
amended and restated share purchase agreement dated the date hereof between,
among others, Seller, Northern Pulp NS LP and Azure Mountain Capital Financial
LP;

 

“Shared Contract” has the meaning set
out in Section 2.5(c);

 

“Statutory Plans” means statutory
benefit plans that Seller is required to participate in or comply with,
including the Canada and Québec Pension Plans and plans administered pursuant
to applicable health tax, workers’ compensation insurance and employment
insurance legislation;

 

“Taxes” means any federal, provincial,
local or foreign, income, capital, branch, goods and services, value added,
harmonized sales, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, imposed by any Governmental Authority;
provided, however, that in no event shall Taxes be deemed to include any
transfer tax or capital gains tax payable in connection with the purchase and
sale of the Assets;

 

“Tenant Real Property Leases” has the
meaning set out in Section 3.1(i)(i);

 

“Time of Closing” means 10:00 a.m.
in Nova Scotia on the Closing Date, with an effective Time of Closing for
accounting purposes of 12:01 a.m. in Nova Scotia on the Closing Date;

 

“WCB” means the Workers Compensation
Board (Nova Scotia);

 

“Woodlands” has the meaning set out in Section 2.2(g);

 

“Woodlands Business” has the meaning set
out in the Preliminary Statement;

 

“Working Capital” means the current
working capital assets of Seller relating to the Purchased Businesses other
than the Mill Accounts Receivables, the Mill Inventories and cash and cash
equivalents; and

 

“Year End Financial Statements” means
the financial statements of the Purchased Businesses as of and for the years
ended December 31, 2005, 2006 and 2007 presented in accordance with 

 

9

 

GAAP with the exception of the exclusion of the statement of cash
flows, the statement of equity and notes thereto and the exclusion from the
income statement of pulp and currency hedging, miscellaneous transaction
charges and corporate overhead allocations, a copy of which is annexed hereto
as Schedule 1.1(e).

 

1.2                               Headings

 

The division of
this Agreement into articles and sections and the insertion of a table of
contents and headings are for convenience of reference only and are not to
affect the construction or interpretation of this Agreement.  The terms “hereof”, “hereunder” and similar
expressions refer to this Agreement and not to any particular Article, Section or
other portion hereof.  Unless something
in the subject matter or context is inconsistent therewith, references herein
to Articles and Sections are to Articles and Sections of this Agreement.

 

1.3                               Extended
Meanings

 

In this Agreement
words importing the singular number only include the plural and vice versa and words importing any gender include all
genders.  Unless something in the subject
matter or context is inconsistent therewith, the term “including” means “including
without limiting the generality of the foregoing”.

 

1.4                               Statutory
References

 

Unless something
in the subject matter or context is inconsistent therewith and except with
respect to Environmental Laws, each reference to any statute refers to that
statute and to the regulations made under that statute, as now enacted or as
the same may from time to time be amended, re-enacted or replaced.

 

1.5                               Accounting
Principles

 

Wherever in this
Agreement reference is made to a calculation to be made or an action to be
taken in accordance with generally accepted accounting principles, such
reference will be deemed to be to the generally accepted accounting principles
in the United States from time to time (“GAAP”),
applicable as at the date on which such calculation or action is made or taken
or required to be made or taken.

 

1.6                               Currency,
Prices and Values

 

All references to
currency, prices and values (monetary, accounting, financial or otherwise)
herein are to lawful currency of Canada unless otherwise specified.

 

1.7                               Schedules

 

(a)                                  The following
Schedules are attached to and form part of this Agreement*:

 

	
  Schedule

  	
   

  	
   

  	
  Contents

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1.1(a)

  	
   

  	
  -

  	
  Interim
  Financial Statements

  
	
  Schedule 1.1(b)

  	
   

  	
  -

  	
  Knowledge of
  Certain Persons

  

 

10

 

	
  Schedule

  	
   

  	
   

  	
  Contents

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1.1(c)

  	
   

  	
  -

  	
  List of
  Permitted Encumbrances

  
	
  Schedule 1.1(d)

  	
   

  	
  -

  	
  List of
  Purchaser Required Consents

  
	
  Schedule 1.1(e)

  	
   

  	
  -

  	
  Year End
  Financial Statements

  
	
  Schedule 1.1(f)

  	
   

  	
  -

  	
  List of Capital
  Projects

  
	
  Schedule 1.1(g)

  	
   

  	
  -

  	
  Description of
  Annual Maintenance Down

  
	
  Schedule
  2.1(d)(ii)

  	
   

  	
  -

  	
  Part A:
  List of Machinery, Equipment and Furniture; 

  
	
   

  	
   

  	
   

  	
  Part B:
  List of Owned and Leased Vehicles

  
	
  Schedule 2.1(f)

  	
   

  	
  -

  	
  List of Assumed
  Contracts

  
	
  Schedule 2.1(k)

  	
   

  	
  -

  	
  List of Permits
  and Certificates of Approval

  
	
  Schedule 2.1(m)

  	
   

  	
  -

  	
  List of
  Trademarks, Patents, Industrial Designs, 

  
	
   

  	
   

  	
   

  	
  Licenses and
  Agreements

  
	
  Schedule 2.2(d)

  	
   

  	
  -

  	
  List of
  Retained Contracts

  
	
  Schedule 2.2(g)

  	
   

  	
  -

  	
  Woodlands
  Parcel Identification Numbers

  
	
  Schedule 2.2(i)

  	
   

  	
  -

  	
  Retained
  Litigation

  
	
  Schedule 2.3(b)

  	
   

  	
  -

  	
  List of Boat
  Harbour Documents

  
	
  Schedule 2.4(b)

  	
   

  	
  -

  	
  List of
  Retained Liabilities in respect of Employees, 

  
	
   

  	
   

  	
   

  	
  Former
  Employees and Retired Employees

  
	
  Schedule 2.5(b)

  	
   

  	
  -

  	
  List of
  Non-Assigned Contracts

  
	
  Schedule 2.8

  	
   

  	
  -

  	
  Allocation of
  Purchase Price

  
	
  Schedule 2.10

  	
   

  	
  -

  	
  Section 85(1) Tax
  Election Amounts

  
	
  Schedule 3.1(c)

  	
   

  	
  -

  	
  Ordinary
  Course; No Material Adverse Change

  
	
  Schedule 3.1(d)

  	
   

  	
  -

  	
  Compliance with
  Laws; Permits

  
	
  Schedule
  3.1(d)(iii)

  	
   

  	
  -

  	
  List of
  Material Permits

  
	
  Schedule 3.1(f)

  	
   

  	
  -

  	
  Actions and
  Proceedings

  
	
  Schedule 3.1(g)

  	
   

  	
  -

  	
  List of
  Consents, Approvals, Actions, Filings and Notices

  
	
  Schedule
  3.1(h)(i)

  	
   

  	
  -

  	
  Legal
  Description of Owned Real Property

  
	
  Schedule
  3.1(i)(i)

  	
   

  	
  -

  	
  List of Tenant
  Real Property Leases

  
	
  Schedule
  3.1(i)(ii)

  	
   

  	
  -

  	
  List of
  Landlord Real Property Leases

  
	
  Schedule
  3.1(i)(iii)

  	
   

  	
  -

  	
  Compliance with
  Real Property Leases

  
	
  Schedule 3.1(l)

  	
   

  	
  -

  	
  List of
  Collective Agreements

  
	
  Schedule
  3.1(l)(v)

  	
   

  	
  -

  	
  List of
  Employment Contracts ($100,000 or more)

  
	
  Schedule
  3.1(l)(vii)

  	
   

  	
  -

  	
  Changes in
  Workers Compensation Rating Assessment

  
	
  Schedule
  3.1(m)(i)

  	
   

  	
  -

  	
  List of Benefit
  Plans

  
	
  Schedule
  3.1(m)(ii)

  	
   

  	
  -

  	
  List of Actions
  and Claims under Benefit Plans

  
	
  Schedule
  3.1(m)(v)

  	
   

  	
  -

  	
  Pension Plan
  Wind-up Amounts (Distribution of Assets Pending)

  
	
  Schedule
  3.1(m)(ix)

  	
   

  	
  -

  	
  List of OPEBs
  under Benefit Plans

  
	
  Schedule
  3.1(m)(xiii)

  	
   

  	
  -

  	
  List of
  Amendments and Proposed Amendments to Benefit Plans

  
	
  Schedule 3.1(o)

  	
   

  	
  -

  	
  Location of
  Assets

  
	
  Schedule 3.1(p)

  	
   

  	
  -

  	
  Operations -
  Exceptions

  
	
  Schedule 3.1(q)

  	
   

  	
  -

  	
  Contracts -
  Exceptions

  
	
  Schedule
  3.1(s)(i)

  	
   

  	
  -

  	
  List of Forest
  Licenses

  
	
  Schedule
  3.1(s)(ii)

  	
   

  	
  -

  	
  List of
  Excluded Forest Licenses

  

 

11

 

	
  Schedule

  	
   

  	
   

  	
  Contents

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 3.1(u)

  	
   

  	
  -

  	
  Insurance
  Policies

  
	
  Schedule 3.1(v)

  	
   

  	
  -

  	
  Other Boat
  Harbour and Effluent Treatment System Documents

  
	
  Schedule
  3.1(aa)(i)

  	
   

  	
  -

  	
  Changes in
  Customer Relationships

  
	
  Schedule
  3.1(bb)(i)

  	
   

  	
  -

  	
  Compliance with
  Environmental Laws

  
	
  Schedule
  3.1(bb)(ii)

  	
   

  	
  -

  	
  List of
  Environmental Permits

  
	
  Schedule
  3.1(bb)(iv)

  	
   

  	
  -

  	
  Hazardous
  Substances

  
	
  Schedule
  3.1(bb)(v)

  	
   

  	
  -

  	
  Written Notices
  of Non-Compliance with Environmental Laws

  

 

* The schedules listed above have been omitted in accordance with Item
601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish
to the Securities and Exchange Commission a copy of any omitted exhibits or
schedules upon supplemental request.

 

(b)           Any matter disclosed on any
of the Schedules hereto shall be deemed to be disclosed on each other Schedule
hereto relating to such matters.

 

ARTICLE 2 – SALE AND PURCHASE

 

2.1          Assets to be Sold and
Purchased

 

Seller hereby
sells, assigns, transfers, conveys and delivers to Purchaser, as of the Time of
Closing, all of the properties, assets and other claims, rights and interests
of Seller and its Affiliates relating to the Purchased Businesses, other than
the Retained Assets, including:

 

(a)           all
of the property and assets owned or used by Seller in connection with or
otherwise relating to the Purchased Businesses on the Closing Date, whether
real or personal, tangible or intangible, of every kind and description
wheresoever situate, as a going concern (subject to transactions and
adjustments in the ordinary course of business, consistent with past practice,
from the date of this Agreement to the Closing Date);

 

(b)           all
of the Owned Real Property;

 

(c)           the
shares of Canso owned by Seller;

 

(d)           all
of Seller’s tangible personal property relating primarily to the Purchased
Businesses on the Closing Date, including:

 

(i)    inventories of the Purchased
Businesses consisting of raw materials, work-in-process, chemicals, maintenance
and finishing supplies, packaging materials, stores, spare parts and similar
items of inventory and, in respect 

 

12

 

of the Woodlands
Business (but not the Pulp Business), the other current working capital assets
of Seller relating thereto (including finished goods inventories and all
accounts receivable, book debts and other debts due or accruing due to Seller
in connection with the Woodlands Business) (collectively, the “Inventory”); and

 

(ii)   machinery, equipment,
furniture, fixtures, furnishings, parts, tooling molds, dies, jigs or patterns
and other fixed assets, including the machinery, equipment and furniture
described in Part A of Schedule 2.1(d)(ii) and all trucks, cars and
other vehicles (whether owned or leased) described in Part B of
Schedule 2.1(d)(ii);

 

(e)           the
Working Capital;

 

(f)            subject
to Section 2.5, all of Seller’s rights, title and interest under all
agreements, Contracts or commitments to which Seller is entitled in connection
with the Purchased Businesses, including all unfilled purchase orders received
by, and all forward commitments for supplies or materials made to, Seller in
the usual and ordinary course of business for the Purchased Businesses, all
consultant Contracts or commitments relating to the Collective Agreement, and
the Benefit Plans (but excluding any stock-based compensation plans), in each
case whether written or oral (collectively, the “Assumed
Contracts”), including those described in Schedule 2.1(f);

 

(g)           all
books and records (other than accounting, tax or similar records required for
Seller’s tax audit purposes, copies of which will be provided to Purchaser) of
Seller relating primarily to the Purchased Businesses, including all files,
documents, sales and other records, customer and supplier lists, price lists,
advertising materials, manufacturing data, production records, inventory
records, computer files and programs, operating data, environmental studies and
plans (including such studies and plans relating to the Pictou Pulp Mill, the
Effluent Treatment System and Boat Harbour), maintenance records, personnel
records, WCB files and all other employee or employment records, specifically
including those relevant to the administration or wind-up of the Pension and
Retirement Plans or Benefit Plans, insurance records, forest management
planning records and associated computer records, and operational manuals
(subject to the right of Seller to make copies of such books and records to the
extent they relate to any business of Seller not being acquired by Purchaser
hereunder or which Seller requires for purposes of complying with Applicable
Law and to have future reasonable access to said books and records to the
extent reasonably necessary);

 

(h)           all
rights of Seller under or pursuant to all warranties, representations and
guarantees made by suppliers, manufacturers and contractors in connection with
the Assets;

 

(i)            subject
to Section 2.5, all of Seller’s right, title and interest under the Real
Property Leases;

 

13

 

(j)            subject to Section 2.5,
all of Seller’s right, title and interest under the Forest Licenses, other than
the Excluded Forest Licenses;

 

(k)           subject to Section 2.5,
all Permits and certificates of approval relating to the Purchased Businesses
listed in Schedule 2.1(k);

 

(l)            the goodwill of
the Purchased Businesses, including the right of Purchaser to represent itself
as carrying on the Purchased Businesses in continuation of and in succession to
Seller, but excluding any right to use the name “Neenah Paper”, “Neenah Paper
Company of Canada”, “NP” and “NPCC” and any variants thereof except as
contemplated in Section 4.9 or as otherwise agreed to by the parties in
writing; and

 

(m)          the trademarks,
patents and patent licence agreements described in Schedule 2.1(m) and any
trade secrets, know-how or other Intellectual Property used primarily in the
Purchased Businesses, but excluding any right to use the name “Neenah Paper”, “Neenah
Paper Company of Canada”, “NP” and “NPCC” and any variants thereof except as
contemplated in Section 4.9 or as otherwise agreed to by the parties in
writing.

 

All of the
foregoing assets and properties being sold, assigned, transferred, conveyed and
delivered to Purchaser hereunder (other than the Retained Assets) are
hereinafter referred to as the “Assets”.

 

2.2          Retained Assets

 

Anything in Section 2.1
to the contrary notwithstanding, there shall be excluded from the Assets being
sold, assigned, transferred and conveyed to Purchaser hereunder and not
included within the meaning of the term “Assets” (such excluded assets being
referred to as the “Retained Assets”):

 

(a)           all
rights of Seller under this Agreement, the Finance Purchase Agreement, the Share
Purchase Agreement and the Ancillary Agreements;

 

(b)           all
rights of Seller to refunds, rebates or credits of any Taxes relating to the
Purchased Businesses for all periods (or partial periods) ending on or prior to
the Closing Date, all refunds or returns of any overpayment or erroneous
payment of Taxes by Seller prior to the Closing Date and all prepayments of
Taxes by Seller for any period, whether ending prior to, on or after the
Closing Date;

 

(c)           any
insurance policies in respect of the Assets and prepayments in respect thereof,
and all rights to refunds, rebates or credits under such policies;

 

(d)           the
Contracts listed in Schedule 2.2(d) and all rights of Seller thereunder;

 

(e)           all
minute books and stock ledgers of Seller;

 

(f)            all
indebtedness to Seller of any Affiliate of Seller;

 

14

 

(g)           Seller’s
right, title and interest in the timberlands owned by Seller in Nova Scotia,
including those that have the parcel identification numbers and descriptions set
out on Schedule 2.2(g) (the “Woodlands”);

 

(h)           the
Mill Accounts Receivables, the Mill Inventories and cash and cash equivalents
of the Purchased Businesses;

 

(i)            proceeds
of any litigation in respect of the Pictou Pulp Mill or the functioning, use or
condition of the Assets prior to the Closing Date described in Schedule 2.2(i) (the
“Retained Litigation”); and

 

(j)            except
for the shares of Canso, the shares in the capital of or other equity or
proprietary interests in any Person.

 

2.3          Liabilities of Seller
Assumed by Purchaser

 

Purchaser hereby
assumes, as of the Time of Closing, and agrees to hereafter perform or satisfy
all liabilities and other obligations of Seller arising in respect of the
operations of the Purchased Businesses or from the functioning, use and
condition of the Assets before, on or after the Closing Date, other than those
which constitute Retained Liabilities under this Agreement, including:

 

(a)           all
liabilities and obligations of Seller under the Assumed Contracts, the Real
Property Leases, the Permitted Encumbrances, the transferable Permits and the
Forest Licenses, other than the Excluded Forest Licenses;

 

(b)           all
Environmental Liabilities of Seller, including those arising under the
Memorandum of Understanding dated September 27, 2001, between the PLFN and
Kimberly-Clark Inc., as amended and assigned to Seller (the “MOU”), the Lease Agreement, the License Agreement, the
Indemnity Agreement and the Water Supply Agreement in connection with the
Memorandum of Understanding dated December 1, 1995 between Her Majesty The
Queen in Right of the Province of Nova Scotia and Scott Maritimes Limited
(predecessor-in-interest of Seller), and the other material letters and
agreements relating to any of the foregoing documents listed in Schedule 2.3(b) (collectively,
the “Boat Harbour Documents”);

 

(c)           any
liability or obligation with respect to Taxes applicable to the Assets for any
period (or partial period) beginning at or after the Closing Date;

 

(d)           the
employment and Benefit Plan obligations and liabilities for the Employees of
Seller and the Pension and Retirement Plans related obligations and liabilities
of the Retired Employees and the Former Employees of Seller as set out in
Sections 5.1 and 5.2(b); and

 

(e)           any
and all obligations and liabilities of Seller, NPI and their Affiliates arising
from and after the Time of Closing under that certain Amended and Restated Pulp

 

15

 

Supply Agreement
dated as of November 30, 2004 by and between NPI and K-C Global.

 

All of the
foregoing liabilities and obligations of Seller being assumed by Purchaser
hereunder are hereinafter referred to as the “Assumed
Liabilities”.

 

2.4          Retained Liabilities

 

Notwithstanding
anything to the contrary contained herein, Purchaser shall not hereby assume,
or in any way be liable or responsible for, and Seller shall perform or
satisfy:

 

(a)           any
liability or obligation with respect to Taxes applicable to the Assets or the
Purchased Businesses for any period (or partial period) ending prior to the
Closing Date, whether or not due and payable prior to or after such time;

 

(b)           all
liabilities and obligations of Seller to pay any amount to any Employee, Former
Employee, Retired Employee or any other Person in connection with the sale of
the Terrace Bay, Ontario pulp mill business or the sale or proposed sale
of the Woodlands as described in Schedule 2.4(b);

 

(c)           the
liabilities referred to in Section 5.2(a) as Retained Liabilities;

 

(d)           any
liability or obligation of Seller under the MOU to transfer any real property
to or for the benefit of the PLFN;

 

(e)           any
liability or obligation of Seller for any amounts or costs paid or payable,
including any Benefit Plan costs resulting from an order of a Governmental
Authority, as a result of the termination of an employee of either of the
Purchased Businesses by Seller during the period beginning on or after the date
of the Share Purchase Agreement and ending immediately prior to the Closing;

 

(f)            all
liabilities and obligations relating to the Retained Litigation; and

 

(g)           any
liability or obligation of Seller:

 

(i)      based upon or
arising under this Agreement, the Finance Purchase Agreement, the Share
Purchase Agreement or the Ancillary Agreements;

 

(ii)     relating to or
arising under or in respect of the Retained Assets, Seller’s operations and
businesses (including its Terrace Bay, Ontario pulp mill business) not
comprising part of the Purchased Businesses; and

 

(iii)    with respect to any lien or
other encumbrance in respect of any of the Assets other than Permitted
Encumbrances.

 

All of the
foregoing liabilities and obligations of Seller not being assumed by Purchaser
hereunder are hereinafter sometimes collectively referred to as the “Retained Liabilities”.

 

16

 

2.5          Non-Assignable
Contracts or Licenses/Shared Contracts

 

(a)           To
the extent that:

 

(i)      assignment
hereunder by Seller to Purchaser of any Real Property Lease, Assumed Contract,
Permit or Forest License (but only to the extent such Forest License is not
issued by or entered into with a Governmental Authority whose consent to
assignment is required by Applicable Law) or

 

(ii)     transfer
hereunder of books and records,

 

is not permitted or is not permitted
without the consent of a third party, this Agreement shall not be deemed to
constitute an undertaking to assign or transfer the same, as applicable, if
such consent has not been given, is not hereafter given or if such an
undertaking otherwise would constitute a breach of or cause a loss of benefits
thereunder.  From and after the Closing,
Seller shall use all commercially reasonable efforts (other than the payment of
money or the deposit of funds by Seller on behalf of Purchaser) to obtain any
and all such third party consents, and Purchaser shall reasonably cooperate
with Seller in such efforts.

 

(b)           To
the extent that Seller has been unable to obtain any required third party
consent in respect of a Real Property Lease, Assumed Contract, Permit or Forest
License (but only to the extent such Forest License is not issued by or entered
into with a Governmental Authority whose consent to assignment is required by
Applicable Law) as contemplated by Section 2.5(a) (each such Real
Property Lease, Assumed Contract, Permit or Forest License is referred to as a “Non-Assigned Contract”), Seller shall continue to be bound
by any such Non-Assigned Contract.  In
such event, to the maximum extent permitted by Applicable Law and the terms of
the Non-Assigned Contract, from and after the Closing:

 

(i)      Seller
shall make the benefit of such Non-Assigned Contract available to Purchaser
with the intent that Purchaser will be in the same economic position as if such
Non-Assigned Contract had been transferred to it, including holding any such
Non-Assigned Contract in trust for Purchaser or acting as agent for Purchaser
or entering into back to back arrangements with Purchaser in respect of such
Non-Assigned Contract; and

 

(ii)     the
assignment provisions contemplated in this Agreement shall operate to the
extent permitted by Applicable Law and the applicable Non-Assigned Contract to
create a subcontract, sublease or sublicense with Purchaser whereby Purchaser
will perform each relevant Non-Assigned Contract and be entitled to receive all
related benefits, in accordance with its terms. 
To the extent such subcontract, sublease or sublicense is created:

 

(A)          Purchaser
shall pay, perform and discharge fully all obligations of Seller under any such
Non-Assigned Contract from and after the Closing Date and shall indemnify
Seller against any Losses 

 

17

 

incurred by
Seller arising from Purchaser’s failure to pay, perform and discharge fully
such obligations;

 

(B)           Seller
shall, without further consideration therefor, pay and remit to Purchaser
promptly any monies, rights and other consideration received by it in respect
of the performance of such Non-Assigned Contract; and

 

(C)           Seller
shall exercise or exploit its rights and options under all such Non-Assigned
Contracts only as directed by Purchaser and at Purchaser’s expense and shall
indemnify Purchaser against any Losses incurred by Purchaser arising from
Seller’s failure to act in accordance with such directions.

 

(c)           With
respect to liabilities pursuant to, arising under or relating to any Contract
which is not intended to be assigned to Purchaser but under which Purchaser
receives a benefit (a “Shared Contract”),
such liabilities shall be allocated between Seller, on the one hand, and
Purchaser on the other hand, as follows:

 

(i)      first,
if a liability cannot be so allocated in respect of a benefit received by one
party, the party receiving such benefit shall be responsible for such
liability; and

 

(ii)     second,
if a liability cannot be so allocated under Section 2.5(c)(i), such
liability shall be allocated between the parties based on the relative
proportions of total benefit received (over the term of the Shared Contract,
measured as of the date of the allocation) under the relevant Shared
Contract.  Notwithstanding the foregoing,
each party shall be responsible for any and all liabilities arising out of or
resulting from its breach of the relevant Shared Contract.

 

If Seller, on the one hand, or Purchaser,
on the other hand, receives any benefit or payment under any Shared Contract
that was intended for the other party, the party receiving such benefit or
payment will use commercially reasonable efforts to promptly deliver, transfer
or otherwise afford such benefit or payment to the other party.

 

(d)           Seller
shall not amend, modify or terminate any Non-Assigned Contract without
Purchaser’s prior written consent.  If
and when any third party consent contemplated by Section 2.5(a) shall
be obtained or any such Non-Assigned Contract shall otherwise become
assignable, Seller shall promptly assign all of its rights and obligations
thereunder or in connection therewith to Purchaser without payment of further
consideration therefor, and Purchaser shall assume such rights and obligations.

 

(e)           To
the extent any Permit or Forest License is not assignable, either by its terms
or as a matter of law, Purchaser shall prepare and submit, and Seller shall use
all reasonable efforts to cooperate with and assist Purchaser in preparing and 

 

18

 

submitting, any information,
applications or filings required in connection with the reissuance to Purchaser
of any such Permit.

 

(f)            The
provisions of this Section 2.5 shall apply to Affiliates of Seller in the
same manner as to Seller.

 

2.6          Purchase Price

 

Subject to the
adjustments contemplated in Sections 2.7 and 2.8, the aggregate purchase price
(the “Purchase Price”) payable by Purchaser
to Seller for the Assets shall be $75,894,503, which shall be satisfied as
follows:

 

(a)           Purchaser
hereby assumes the Assumed Liabilities in accordance with Section 2.3;

 

(b)           the
issuance by Purchaser to Seller of 57,474,073 no par value common shares of
Purchaser (the “Issued Shares”) represented by
share certificate no. 3
registered in the name of Seller, the receipt of which is hereby acknowledged
by Seller; and

 

(c)           all
purchase price adjustments pursuant to Section 2.7 shall be satisfied by
the payment of cash as specified in Section 2.7.

 

2.7          Purchase Price
Adjustment

 

(a)

 

(i)      The
Purchase Price shall be adjusted as set forth in this Section 2.7,
provided that if the difference between the Net Working Capital Deficiency and
the Final Net Working Capital is equal to or less than $250,000, no adjustment
will be made, and adjustments will only be made in respect of the amount of the
difference that is greater than $250,000.

 

(ii)     For
purposes of this Section 2.7:

 

(A)          net
working capital (“Net Working Capital”)
shall be the difference between (x) the value of the Working Capital
purchased pursuant to Section 2.1(e), and (y) the aggregate value of
the Assumed Liabilities which are current liabilities for balance sheet
purposes excluding liabilities that are Down Costs;

 

(B)           “Down Non-Capital Costs” are costs of the Down (exclusive of
the costs of the Capital Projects) incurred prior to the Closing Date;

 

(C)           the
Down Non-Capital Costs that have been paid by Seller prior to the Closing Date
are “Paid Down Non-Capital Costs”;

 

19

 

(D)          the
costs of the Capital Projects incurred prior to the Closing Date are “Down Capital Costs”;

 

(E)           the
Down Capital Costs that have been paid by Seller prior to the Closing Date are “Paid Down Capital Costs”; and

 

(F)           the
sum of Down Capital Costs and Down Non-Capital Costs is “Down Costs”.

 

(b)           Immediately following the
Closing, Seller shall provide to Purchaser the following estimates, each of
which will have been made no earlier than three Business Days prior to the
Closing Date, and each of which shall represent Seller’s reasonable and good
faith estimate as at the time the estimate is made:

 

(i)      an
estimate of the Down Non-Capital Costs (the “Down
Non-Capital Costs Estimate”), which costs are estimated for this
paragraph to be $8,846,092, and an estimate of the Paid Down Non-Capital Costs
(the “Paid Down Non-Capital Costs Estimate”);

 

(ii)     an
estimate of the Down Capital Costs (the “Down Capital Costs
Estimate”) and an estimate of the Paid Down Capital Costs (the “Paid Down Capital Costs Estimate”); and

 

(iii)  an
estimate of the Net Working Capital (the “Estimated Working Capital”).

 

(c)           The Purchase Price shall be
adjusted by the amount that is equal to (x) the product of the Down
Non-Capital Costs Estimate multiplied by 50% minus (y) the Paid Down
Non-Capital Costs Estimate, and:

 

(i)      if
the result is a positive number (the “Purchase Price Down
Non-Capital Costs Reduction Amount”), Seller shall on the Closing
Date remit to Purchaser the Purchase Price Down Non-Capital Costs Reduction
Amount in immediately available funds; and

 

(ii)     if
the result is a negative number (the “Purchase Price Down
Non-Capital Costs Increase Amount”), Purchaser shall on the Closing
Date remit to Seller the Purchase Price Down Non-Capital Costs Increase Amount
in immediately available funds.

 

(d)           The Purchase Price shall be
increased by the amount of the Paid Down Capital Costs Estimate, and Purchaser
shall on the Closing Date pay to Seller in immediately available funds the
amount of the Paid Down Capital Costs Estimate.

 

(e)

 

(i)      If
the Estimated Working Capital is a working capital deficiency that is greater
than $(1,894,000) (the “Net Working Capital
Deficiency”), the 

 

20

 

Purchase Price
shall be decreased by an amount (the “Purchase Price Net Working
Capital Reduction Amount”) equal to (x) the Estimated Working
Capital minus (y) the Net Working Capital Deficiency, and Seller shall pay
the Purchase Price Net Working Capital Reduction Amount to Purchaser in
immediately available funds on the Closing Date.

 

(ii)     If
the Estimated Working Capital is not a deficiency or is a deficiency that is
smaller than the Net Working Capital Deficiency, the Purchase Price shall be
increased by an amount (the “Purchase Price Net Working
Capital Increase Amount”) equal to (x) the Estimated Working
Capital minus (y) the Net Working Capital Deficiency, and Purchaser shall
issue to Seller a non-interest bearing promissory note in the amount of the
Purchase Price Net Working Capital Increase Amount, which note shall be payable
in immediately available funds on the Closing Date.

 

(f)            Not later than 30 calendar
days following the Closing Date, Purchaser shall deliver to Seller a
calculation of the Net Working Capital of Purchaser as of the Closing Date,
which shall exclude all liabilities that are Down Costs (the “Final Net Working Capital”), prepared in accordance with
GAAP applied in a manner consistent with Seller’s historic practices, together
with calculations of the final determination of the actual Down Capital Costs,
Paid Down Capital Costs, Down Non-Capital Costs and Paid Down Non-Capital
Costs.

 

(i)    If the Final Net Working
Capital is a working capital deficiency that is more than $250,000 greater than
the Estimated Working Capital, the Purchase Price shall be decreased by an
amount (the “Purchase Price Reduction Amount”)
equal to (x) the Final Net Working Capital minus (y) the Estimated
Working Capital minus (z) $250,000, and Seller shall on the Final
Determination Date pay to Purchaser in immediately available funds the Purchase
Price Reduction Amount.  For greater
certainty, the $250,000 amount referred to in this Section 2.7(f)(i) is
intended by the parties to function as a deductible against amounts otherwise
payable.

 

(ii)   If the Final Net Working
Capital is not a deficiency or is a deficiency that is more than $250,000
smaller than the Estimated Working Capital, the Purchase Price shall be
increased by an amount (the “Purchase Price Increase
Amount”) equal to (x) the Final Net Working Capital minus (y) the
Estimated Working Capital minus (z) $250,000, and Purchaser shall pay to
Seller in immediately available funds on or before the Final Determination Date
the Purchase Price Increase Amount.  For
greater certainty, the $250,000 amount referred to in this Section 2.7(f)(ii) is
intended by the parties to function as a deductible against amounts otherwise
payable.

 

(iii)  If the Down Non-Capital
Costs exceed $8,846,092, Seller shall remit 50% of such excess to
Purchaser.  If the Down Non-Capital Costs
are less than $8,846,092, Purchaser shall remit 50% of such difference to
Seller.

 

21

 

(iv)  If
the Paid Down Non-Capital Costs finally determined are greater than the Paid
Down Non-Capital Costs Estimate, Purchaser shall on the Final Determination
Date remit the difference to Seller, and if the Paid Down Non-Capital Costs
finally determined are less than the Paid Down Non-Capital Costs Estimate,
Seller shall on the Final Determination Date remit the difference to Purchaser
and the Purchase Price shall be adjusted accordingly.

 

(v)   If
the Paid Down Capital Costs finally determined are greater than the Paid Down
Capital Costs Estimate, Purchaser shall on the Final Determination Date remit
the difference to Seller and if the Paid Down Capital Costs finally determined
are less than the Paid Down Capital Costs Estimate, Seller shall on the Final
Determination Date remit the difference to Purchaser and the Purchase Price
shall be adjusted accordingly.

 

(vi)  For
the purposes of this Section 2.7, “Final Determination Date”
means the date that is two Business Days after the Final Net Working Capital
calculation is either deemed under Section 2.7(g) to be approved
unless the calculation is disputed in accordance with Section 2.7(g), in
which case Final Determination Date means within two Business Days of the date
that the Final Net Working Capital is finally determined pursuant to Section 2.7(g)(ii).

 

(g)           Seller shall have a period
of five calendar days from the date it receives the Final Net Working Capital
calculation, the final Down Non-Capital Costs calculation and the final Down
Capital Costs calculation in which to review the same.  For the purpose of such review, Purchaser
agrees to cause its auditors to permit Seller and its authorized
representatives to examine all working papers, schedules and other
documentation used or prepared by Seller’s auditors.  If no objection to the final calculations is
given by Seller to Purchaser within such five-day period, the calculations
shall be deemed to have been approved as of the last day of such five-day
period.

 

(i)    If
Seller objects to any of the calculations within such five-day period by giving
notice to Purchaser setting out in reasonable detail the nature of such
objection, the parties agree to attempt to resolve the matters in dispute
within 10 days from the date Seller gives such notice to Purchaser.  If all matters in dispute are resolved by the
parties, the relevant calculation shall be modified to the extent required to
give effect to such resolution and shall be deemed to have been approved as of
the date of such resolution.

 

(ii)   If the parties cannot
resolve all matters in dispute within such 10-day period, all unresolved
matters shall be submitted to the Canadian national office of Ernst &
Young (the “Arbitrator”) for resolution, and
the Arbitrator shall be given access to all materials and information
reasonably requested by it for such purpose. 
The rules and procedures to be followed in the arbitration
proceedings shall be determined by the 

 

22

 

Arbitrator in its
discretion.  The Arbitrator’s
determination of all such matters shall be final and binding on both parties
and shall not be subject to appeal by either party.  The fees and expenses of the Arbitrator shall
be borne equally by the parties unless the Arbitrator determines that the
overall position taken by one of the parties was unreasonable and without
material merit, in which case the Arbitrator may require such party to pay all
of the costs of the arbitration.  The
final calculations shall be modified to the extent required to give effect to
the Arbitrator’s determination and shall be deemed to have been approved as of
the date of such determination.

 

2.8          Allocation of
Purchase Price; Taxes

 

(a)           The
Purchase Price will be allocated in accordance with Schedule 2.8, which
Schedule shall be modified as appropriate to reflect the adjustments to the
Purchase Price contemplated in Sections 2.7 and 2.8.

 

(b)           Seller
and Purchaser, in filing their respective income tax returns, will use the
allocations of the Purchase Price as set forth in Schedule 2.8.

 

(c)           Purchaser
and Seller shall file all applicable transfer tax forms and declarations in
connection with the transactions contemplated hereby.  All Taxes applicable to the Assets for
periods beginning before and ending after the Closing Date, and any other
charges which are appropriate subjects for proration, shall be prorated on a
daily basis as of 12:01 a.m. (Nova Scotia time) on the Closing Date
between Seller and Purchaser; provided, however, that all 2008 property, ad valorem or similar Taxes shall be allocated to Seller for
the period (or partial periods) ending on the Closing Date based on a daily
proration of the most recent (as of the Closing Date) ascertainable property, ad valorem or similar Taxes to be prorated.  Any amount of 2008 property, ad valorem or similar Taxes not allocated to Seller shall be
allocated to Purchaser.  Any refund of
2008 property, ad valorem or similar Taxes (net
of costs incurred to recover same) shall be prorated between Seller and
Purchaser in the same proportion.

 

2.9          Section 167
Elections

 

Seller and
Purchaser shall jointly make such election or elections, in prescribed form and
containing the prescribed information, to have subsection 167(1.1) of the Excise Tax Act (Canada) (the “ETA”)
apply to the sale and purchase of the relevant Assets thereunder so that no Tax
is payable in respect of such sale and purchase under Part IX of the
ETA.  Purchaser shall file each such
election in the manner provided and within the time prescribed by the ETA.

 

2.10        Section 85
Elections

 

Seller and
Purchaser shall jointly elect under subsection 85(1) of the Income Tax Act (Canada) (the “ITA”),
in prescribed form and within the time provided in subsection 85(6) of the
ITA, that Seller’s proceeds of disposition and Purchaser’s cost of each asset
transferred be such 

 

23

 

amounts as are
set out in Schedule 2.10, which Schedule shall be modified as appropriate to reflect
the adjustments to the Purchase Price contemplated in Sections 2.7 and 2.8.

 

2.11        Instruments of
Conveyance and Assumption

 

(a)           In
order to effectuate the sale, assignment, transfer and conveyance of the
Assets, Seller has, or has caused its Affiliates to, execute and deliver to
Purchaser at the Time of Closing:

 

(i)      one
or more deeds or other instruments of conveyance conveying the right, title and
interest of Seller in and to the Real Property;

 

(ii)     transfers
and assignments to Purchaser of the transferable Permits and the Forest
Licenses, and in the case of the Forest Licenses and Permits (including Crown
leases, land use permits or licenses of occupation) which may be incapable of
transfer or assignment, Seller shall surrender the same to the Crown (in order
to permit Purchaser’s application for similar entitlements) and provide proof
of said surrender to Purchaser;

 

(iii)    one
or more bills of sale; and

 

(iv)    such
other instruments of conveyance and other documents as Purchaser has reasonably
deemed necessary or appropriate to vest in, or confirm to, Purchaser title to
all of the Assets as contemplated by this Agreement (collectively with clauses (i) -
(iii) above, the “Deeds and Assignments”).

 

(b)           In
order to effectuate the assumption of the Assumed Liabilities, Purchaser has
executed and delivered to Seller at the Time of Closing:

 

(i)      one
or more instruments of assumption; and

 

(ii)     such
other documents as Seller has reasonably deemed necessary or appropriate to
confirm Purchaser’s assumption of the Assumed Liabilities (collectively, with
clause (i) above, the “Instruments of Assumption”).

 

ARTICLE 3 – REPRESENTATIONS AND WARRANTIES

 

3.1          Seller’s
Representations and Warranties

 

Seller represents
and warrants to Purchaser as follows and acknowledges that Purchaser is relying
on such representations and warranties in connection with its consummation of
the transactions contemplated hereby:

 

(a)           Due
Incorporation and Authority

 

Seller is an
unlimited company duly incorporated, validly existing and in good standing with
respect to filing its annual returns under the laws of the Province of Nova
Scotia and has all 

 

24

 

requisite
corporate power and capacity to own, lease and operate its assets, properties
and business and to carry on its business as currently conducted.

 

(b)           Authority
to Execute and Perform Agreement

 

Seller has all
requisite corporate power and capacity to enter into, execute and deliver this
Agreement and to perform its obligations hereunder.  This Agreement, the Ancillary Agreements and
the other documents and agreements being delivered by Seller and its Affiliates
hereunder or thereunder have been duly authorized, executed and delivered by
each such party, and (assuming the due authorization, execution and delivery of
this Agreement and the Ancillary Agreements and the documents and agreements to
be delivered by Seller or its Affiliates hereunder or thereunder by the other
parties thereto and the validity and binding effect hereof and thereof on such
other parties) are valid and binding obligations of Seller or its Affiliates,
as applicable, enforceable against such entities in accordance with their
terms.

 

(c)           No
Material Adverse Change

 

Except as set
forth on Schedule 3.1(c), since December 31, 2007 the Purchased Businesses
have been carried on in the usual and ordinary course, there has been no
Material Adverse Change, and Seller has no knowledge of any such change which
is threatened; nor to the knowledge of Seller has there been any material
damage, destruction or loss to any of the Assets.

 

(d)           Compliance
with Laws; Permits

 

(i)      Except
as set forth on Schedule 3.1(d), there are no current material violations of
any Applicable Law relating to the Purchased Businesses or the Assets.

 

(ii)     Except
as set forth on Schedule 3.1(d):

 

(A)          all
Permits are valid, subsisting and in good standing and Seller is not in default
or breach of any Permit that is material to the Pulp Business or the Woodlands
Business; and

 

(B)           there
are no proceedings pending or other circumstances outside the ordinary course
of business, which could reasonably be expected to result in the revocation,
cancellation, limitation, amendment or suspension of any Permit that is
material to the Pulp Business or the Woodlands Business; and

 

(iii)    the
Permits listed in Schedule 3.1(d)(iii) include all of the Permits that are
material to each of the Pulp Business and the Woodlands Business for purposes
of carrying on such businesses as they are currently carried on or owning or
leasing the Assets.

 

25

 

(e)           No
Breach

 

Except for the
Purchaser Required Consents, each of which will have been obtained on the
Closing Date, the execution, delivery and performance by Seller and its
Affiliates of this Agreement, the Ancillary Agreements and the other agreements
and documents required to be delivered hereunder or thereunder to which they
are parties, and the consummation by Seller and its Affiliates of the
transactions contemplated hereby and thereby, will not:

 

(i)      violate
or result in the breach of any provision of the constating documents of Seller
or such Affiliates or any resolution of the board of directors (or any
committee thereof) or shareholders of Seller or such Affiliates;

 

(ii)     violate,
result in the breach of, or default (or an event which, with notice or lapse of
time or both, would constitute a default) under, any Real Property Lease,
material Assumed Contract, Permit that is material to the Pulp Business or the
Woodlands Business, Collective Agreement or Forest License;

 

(iii)    result
in the creation or imposition of any lien or other encumbrance upon the Assets
or any of them (other than any liens or encumbrances created by Purchaser); or

 

(iv)    violate
any Applicable Law in Canada applicable to Seller or such Affiliates, the
Purchased Businesses or the Assets or any of them.

 

(f)            Actions
and Proceedings

 

Except as set
forth on Schedule 3.1(f):

 

(i)      there
are no outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or other Governmental Authority against Seller or any of its
Affiliates in respect of any of the Assets or the Purchased Businesses; and

 

(ii)     there
are no actions, litigation or suits or legal, administrative or arbitral
proceedings pending or, to the knowledge of Seller, threatened against or
affecting Seller or any of its Affiliates in respect of any of the Assets, the
Pulp Business or the Woodlands Business, at law or in equity or before any
federal, provincial, municipal or other Governmental Authority, domestic or
foreign, which could reasonably be expected to have a Material Adverse Effect
on the Pulp Business, the Woodlands Business or the Assets.

 

(g)           Consents
and Approvals

 

The execution and
delivery by Seller of this Agreement and the execution and delivery by Seller
or its Affiliates of the Ancillary Agreements and the other agreements and
documents required to be delivered hereunder or thereunder to which each of
them is a party, and the 

 

26

 

performance by Seller or its Affiliates of their respective obligations
hereunder and thereunder, do not require Seller or its Affiliates to obtain any
consent, approval or action of, or make any filing with or give any notice to,
any Governmental Authority or any other Person, except for those consents,
approvals, actions, filings and notices described in Schedule 3.1(g) which
are required under any Real Property Lease, Assumed Contract, Permit,
Collective Agreement or Forest License other than those comprising the
Non-Assigned Contracts, each of which material consent, approval, action,
filing and notice has been obtained, made or given, as applicable.

 

(h)                                 Owned
Real Property

 

(i)             Owned
Real Property

 

Schedule 3.1(h)(i) contains a legal
description of all of the real property used in connection with the Purchased
Businesses (specifically excluding any and all timberland real property owned
by Seller) and owned by Seller in the Province of Nova Scotia (the “Owned Real Property”).

 

Seller has the exclusive right to possess,
use and occupy, and at the Time of Closing Seller will have good and marketable
title in fee simple to, all the Owned Real Property, free and clear of all
Encumbrances, easements or other restrictions of any kind other than Permitted
Encumbrances.

 

(ii)          The Owned Real
Property, the current uses thereof and the conduct of the Purchased Businesses
comply in all material respects with all regulations, statutes, enactments,
laws and by-laws, including those dealing with zoning, parking, access, loading
facilities, landscaped areas, building construction, fire and public health and
safety and Environmental Laws.

 

(iii)       Except as may be
contemplated by the Capital Projects, no alteration, repair, improvement or
other work has been ordered, directed or requested in writing to be done or
performed to or in respect of the Owned Real Property or to any of the
plumbing, heating, elevating, water, drainage or electrical systems, fixtures
or works by any municipal, provincial or other competent Governmental
Authority, which alteration, repair, improvement or other work has not been
completed, and Seller knows of no written notification having been given to it
of any such outstanding work being ordered, directed or requested, other than
those which have been complied with.

 

(iv)      As of the Time of
Closing, the Permitted Encumbrances will constitute all of the material
Encumbrances, agreements, indentures and other matters which affect the Owned
Real Property.

 

(i)                                     Leased
Real Property

 

Seller is not a
party to any lease or agreement to lease in respect of any real property,
whether as lessor or lessee, other than the Real Property Leases.

 

27

 

(i)             Tenant Real
Property Leases

 

Schedule 3.1(i)(i) sets forth a true
and complete list of all leases, subleases, licenses and other similar real
estate agreements other than the Forest Licenses under which Seller uses or
occupies or has the right to use or occupy, now or in the future, any real
property in connection with the Purchased Businesses, and all amendments and
modifications thereto (the “Tenant Real Property
Leases”).  Seller has the
exclusive right to occupy and use the real property to which the Tenant Real
Property Leases relate, subject to the terms and conditions of such Tenant Real
Property Leases.

 

(ii)          Landlord Real
Property Leases

 

Schedule 3.1(i)(ii) sets forth a true
and complete list of all leases, subleases, licenses and other similar
agreements other than the Forest Licenses under which Seller has granted rights
of possession, use, occupancy or enjoyment of any Owned Real Property or Leased
Real Property to any other Person in connection with the Purchased Businesses
and all amendments and modifications thereto (the “Landlord
Real Property Leases”).

 

(iii)       Compliance with
Real Property Leases

 

Except as set forth in Schedule
3.1(i)(iii), neither Seller nor to Seller’s knowledge any other party to any
Real Property Lease, is in default in any material respect under the Real
Property Leases and no written claim of any default thereunder has been
received or delivered by Seller which has not been cured and all rent and other
sums and charges currently due from Seller under each of the Tenant Real
Property Leases have been paid.  Except
as set forth in Schedule 3.1(i)(iii), the Real Property Leases have not been
amended and are in full force and effect.

 

(iv)      The Leased Real
Property, the current uses thereof and the conduct of the Purchased Businesses
comply in all material respects with all regulations, statutes, enactments,
laws and by-laws, including those dealing with zoning, parking, access, loading
facilities, landscaped areas, building construction, fire and public health and
safety and Environmental Laws.

 

(v)         As of the Time of
Closing, the Permitted Encumbrances and the Real Property Leases will
constitute all of the material Encumbrances, agreements, indentures and other
matters which affect the Leased Real Property.

 

28

 

(j)                                     Expropriation

 

No part of the
Assets has been taken or expropriated by any Governmental Authority, nor, to
Seller’s knowledge, are there any proposals to give any notice of or to
commence any proceedings for expropriation or taking.

 

(k)                                  Title
to Tangible Assets

 

As of the Time of
Closing, Seller will have title to all of the owned tangible Assets (other than
the Real Property, title to which is described in Section 3.1(h)), free
and clear of any lien or other encumbrance except for Permitted Encumbrances.

 

(l)                                     Employees

 

(i)                           Seller
is not bound by or a party to any collective bargaining agreement relating to
the Purchased Businesses nor has Seller made any material commitments to any
labour union or employee association with respect to any future agreements
except the collective agreements and related documents, letters of
understanding and letters of intent incorporated into and forming part thereof,
each of which is listed in Schedule 3.1(l) (collectively, the “Collective Agreement”).

 

(ii)                        Except
for performance reviews and salary adjustments or other changes in the ordinary
course of business, as required by Applicable Law or the Collective Agreement
and consistent with Seller’s past practices, there have been no material
changes in the terms and conditions of employment of any Employees of the
Purchased Businesses.

 

(iii)                   Seller
has not experienced any work slowdowns, stoppages or strikes (legal or
otherwise) since December 1, 2004.

 

(iv)                    Seller has
provided to Purchaser complete and accurate lists of the Employees as of May 8,
2008, specifying the length of hire for full-time Employees, job title or
classification and rate of salary or hourly pay for each such Employee and a
list of Inactive Employees stating whether such Inactive Employee is on
short-term or long-term disability (if applicable).

 

(v)                       Other
than as set out in Schedule 3.1(l)(v), Seller has not entered into any
employment or consulting Contract or other Contract with any officer, Employee
or consultant providing for annual compensation (including salary or hourly
pay) of $100,000 or more.

 

(vi)                    Seller has
provided to Purchaser a complete and accurate list of the Former Employees who
terminated employment on or after December 1, 2004.  As of the Time of Closing, none of such
Former Employees has any entitlements under the Benefit Plans.  Seller has provided to Purchaser a complete
and accurate list of the Retired Employees who have 

 

29

 

entitlements under the
Benefit Plans as of the Time of Closing, in each case specifying their
entitlements under such Benefit Plans.

 

(vii)               Seller
is currently in rate group 2711 (Pulp Industry) for the Employees of the
Purchased Businesses other than the Debert Nursery and rate group 0162
(Greenhouse Production Tree Industry Workers) for the Employees of the Debert
Nursery for workers’ compensation purposes and during the past five years there
has been no change in the rating assessment applicable to rate group 2711 or
rate group 0162 under Applicable Laws, except as described in Schedule
3.1(l)(vii).  Seller’s workers’
compensation accounts are in good standing.

 

(viii)            All
accruals for unpaid vacation pay, premiums and contributions for Statutory
Plans, accrued wages, salaries and commissions and Benefit Plan payments have
been reflected in the books and records of Seller.

 

(ix)                    Except
as set out in Schedule 3.1(f), Seller is in compliance with all Applicable Laws
relating to employment, and there are no complaints, claims, charges, levies,
assessments or penalties outstanding or, to Seller’s knowledge, anticipated,
nor are there any orders, decisions or convictions currently registered or
outstanding by any tribunal or agency against or in respect of Seller under any
Applicable Laws relating to employment.

 

(m)                               Benefit
Plans

 

(i)                         Schedule
3.1(m)(i) identifies each Benefit Plan.

 

(ii)                      Except
as set forth on Schedule 3.1(m)(ii) and Schedule 3.1(f), there are no
actions, suits, claims (other than routine claims for payment
of benefits in the ordinary course), trials, demands, investigations,
grievances, arbitrations or other proceedings pending or threatened in respect
of any of the Benefit Plans or their assets, and to Seller’s knowledge there
exists no state of facts which after notice or lapse of time or both could
reasonably be expected to give rise to any such action, suit, claim, trial,
demand, investigation, grievance, arbitration or other proceeding.

 

(iii)                   Current
and
complete copies of all written Benefit Plans as amended to date or where oral,
written summaries of the terms thereof, and all currently available booklets
and communications concerning the Benefit Plans that have been provided to
Employees, Retired Employees or Former Employees or other Persons entitled to
benefits under the Benefit Plans have been delivered or made available to
Purchaser together with current and complete copies of all documents relating
to the Benefit Plans, including, as applicable, all trust agreements, funding
agreements, insurance contracts and policies, investment management agreements,
financial statements, actuarial valuations, subscription and participation
agreements and any administration contracts.

 

30

 

(iv)                    All of the
Benefit Plans are and have been established, registered, amended, invested and
administered, in all material respects in accordance with all Applicable Laws,
regulations, orders, or other legislative, administrative or judicial
proclamations applicable to the Benefit Plans and in accordance with the
Collective Agreement, with the terms of such Benefit Plans and the terms of
agreements, written or oral, between Seller and its Employees, Retired
Employees or Former Employees who continue to have any entitlement under any of
the Benefit Plans as of the Time of Closing.

 

(v)                       No
step has been
taken, no event has occurred and no condition or circumstance exists that has
resulted in or could be reasonably expected to result in any Benefit Plan being
ordered or required to be terminated or wound up in whole or in part or having
its registration under Applicable Laws refused or revoked, or being placed
under the administration of any trustee or receiver or Governmental Authority
or being required to pay any material amount of Taxes, fees, penalties or
levies under Applicable Laws.  Where any
Pension Plan has been partially or fully terminated or wound up, all assets,
including any surplus, attributable to such partial or full termination or
wind-up has been fully distributed in accordance with all Applicable Laws or
where such distribution of assets is pending, the amount of surplus
attributable to such partial or full termination or wind-up together with the
date as of which such amount is determined is disclosed in Schedule 3.1(m)(v).

 

(vi)                    Each Benefit Plan
(other than a Pension Plan) that is subject to insurance or funding
requirements is fully insured or funded in accordance with the
applicable plan or policy and in good standing with Governmental Authorities
and no notice of under funding, non-compliance, failure to be in good standing
or otherwise has been received by Seller from any such Governmental
Authorities.  Each Pension Plan is funded
(both on a going concern and solvency basis) in accordance with the assumptions
disclosed in the most recent actuarial reports filed with the Governmental
Authorities and all contributions required pursuant to such reports have been
made, or will be made, for the period up to the Closing Date, and no notice of
under funding, non-compliance, failure to be in good standing or otherwise has
been received by Seller from any such Governmental Authorities.

 

(vii)                 No insurance policy
or any other Contract or agreement affecting any Benefit Plan requires or
permits a retroactive increase in premiums or payments due thereunder, or
requires additional premiums or payments on termination of the Benefit Plan or
any insurance policy, Contract or agreement relating thereto.

 

(viii)              No employment, severance or
termination agreement, other compensation arrangement or Benefit Plan provides
for payment of any amount or 

 

31

 

benefit, the increase of an
amount or benefit, forgiveness of indebtedness, the acceleration of
contributions or funding, the payment of a contingent benefit or the
acceleration of the payment or vesting of a benefit by reason of the execution
of this Agreement or the consummation of the transactions contemplated by this
Agreement.

 

(ix)                    The
only OPEBs under any of the Benefit Plans are set out in
Schedule 3.1(m)(ix).

 

(x)                       All
liabilities of Seller (whether accrued, absolute, contingent or otherwise)
related to the Benefit Plans have been reported in accordance with GAAP in the
Financial Statements or otherwise disclosed in the most recent actuarial
valuation reports for the Pension and Retirement Plans.  No changes have occurred or are expected to
occur to any Benefit Plan that would materially affect the most recent
actuarial report prepared in respect of the applicable Benefit Plan.

 

(xi)                    All
employer or employee payments, contributions or premiums required to be
remitted or paid in respect of each Benefit Plan, the Collective Agreement, or
by Applicable Laws have been made in a timely fashion in accordance with
Applicable Laws, the Collective Agreement and the terms of the Benefit Plans.

 

(xii)      There have been no
improper withdrawals, applications or transfers of assets from any Benefit Plan
or the trusts or other funding media relating thereto that remain outstanding
and unremedied, and neither Seller nor to Seller’s knowledge any of its agents
is or since December 1, 2004 has been in breach of any fiduciary
obligation with respect to the funding or administration of the Benefit Plans.

 

(xiii)     Other than as set out
in Schedule 3.1(m)(xiii), since December 1, 2004, no material amendments
have been made to any Benefit Plan and no commitments to improve or amend or
create any Benefit Plan has been made, or promised by Seller, nor has any
intention or commitment to do any of the foregoing been communicated to any
Employee, Former Employee or Retired Employee.

 

(xiv)    Seller does not
contribute to or participate in a Multi-Employer Plan.

 

(xv)                There
is no Entity other than Seller participating in the Benefit Plans.

 

(xvi)    All Employee, Retired
Employee and Former Employee data reasonably necessary to administer each
Benefit Plan is in the possession of Seller or its agents and is in a form
which is sufficient for the proper administration of the Benefit Plan in
accordance with its term and all Applicable Laws and such data is complete and
correct in all material respects.

 

32

 

(n)                                 Taxes

 

(i)                           Seller
has duly filed on a timely basis all tax returns required to be filed by it,
has duly, completely and correctly reported all revenue and other amounts and
information required to be reported thereon in all material respects and has
paid or remitted (in the case of goods and services tax, harmonized sales tax
or other sales tax) all Taxes which are due and payable, and all assessments,
reassessments, governmental charges, penalties, interest and fines due and
payable by it.  Seller has made adequate
provision for Taxes payable for the current period and any previous period for
which tax returns are not yet required to be filed.  There are no actions, suits, proceedings,
investigations or claims pending or, to the knowledge of Seller, threatened
against Seller in respect of Taxes, governmental charges or assessments, nor
are any material matters under discussion with any Governmental Authority
relating to Taxes, governmental charges or assessments asserted by any such
authority.  Seller has withheld from each
payment made to any of its past or present employees, officers or directors,
and to any non-resident of Canada, the amount of all Taxes and other deductions
required to be withheld therefrom, and has paid the same to the proper Tax or
other receiving officers within the time required under any applicable
legislation.

 

(ii)                        Seller
is a registrant for purposes of the ETA whose registration number is
856512272RT0002.

 

(iii)                     Seller is not a
non-resident of Canada for the purposes of the ITA.

 

(o)                                 Location
of Assets

 

With the
exception of inventory in transit and with the exception of certain equipment
such as personal computers and vehicles that may be under the physical control
of certain of Seller’s Employees, all the tangible assets of the Purchased
Businesses comprising the Assets are situate at the locations set out in
Schedule 3.1(o).

 

(p)                                 Operations

 

Except as disclosed on Schedule 3.1(p), since December 31,
2007, each of the Pulp Business and the Woodlands Business has been carried on
only in the ordinary and normal course consistent with past practice and there
has not been:

 

(i)                         any
Material Adverse Change;

 

(ii)                      any
material damage, destruction or loss (whether or not covered by insurance)
affecting the Assets;

 

(iii)                   any
obligation or liability (whether absolute, accrued, contingent or otherwise,
and whether due or to become due) incurred by Seller in connection with the
Pulp Business or the Woodlands Business other than 

 

33

 

in the ordinary and normal
course of the Pulp Business or the Woodlands Business and consistent with past
practice;

 

(iv)                  any
payment, discharge or satisfaction of any Encumbrance, liability or obligation
of Seller in relation to the Pulp Business, the Woodlands Business or the
Assets (whether absolute, accrued, contingent or otherwise, and whether due or
to become due) other than payment of accounts payable and tax liabilities
incurred in the ordinary and normal course of business consistent with past
practice;

 

(v)                     any
strikes, work stoppages or work slowdowns adversely affecting the Pulp
Business, the Woodlands Business or the Assets;

 

(vi)                  any
licence, sale, assignment, transfer, disposition, pledge, mortgage or granting
of a security interest or other Encumbrance on or over any Assets, other than
sales of inventory to customers in the ordinary and normal course of the Pulp
Business or the Woodlands Business;

 

(vii)     any write-down of the
value of any inventory or any write-off as uncollectible of any accounts or
notes receivable or any portion thereof relating to the Pulp Business or the
Woodlands Business in amounts exceeding $500,000 in each instance or $1,000,000
in the aggregate (excluding any write-down or write-off associated with the
MacTara Limited accounts and notes receivable, the material details of which
Seller has provided to Purchaser);

 

(viii)    any cancellation of any
debts or claims owing to, or any amendment, termination or waiver of any rights
of value to, the Pulp Business or the Woodlands Business in amounts exceeding
$500,000 in each instance or $1,000,000 in the aggregate (excluding any
cancellation of debts or satisfaction of claims associated with the MacTara
Limited accounts and notes receivable, the material details of which Seller has
provided to Purchaser);

 

(ix)       except as contemplated
in the Collective Agreement and except for salary adjustments or other changes
in the ordinary course of business (as required by law or the Collective
Agreements or consistent with Seller’s past practices), (A) any general
increase in the compensation of Employees (including any increase pursuant to
any Benefit Plan or commitment), or any increase in any such compensation or
bonus payable to any officer, Employee, consultant or agent of Seller, or the
making of any loan to, or engagement in any transaction with, any Employee,
officer or director of Seller in relation to the Pulp Business, the Woodlands
Business or any other business of Seller; or (B) any material changes in
the terms and conditions of employment of any Employees of the Pulp Business or
the Woodlands Business;

 

34

 

(x)                       except
as contemplated by the Capital Projects, any capital expenditures or capital
commitments relating to the Pulp Business, the Woodlands Business or Assets in
excess of $500,000 in the aggregate;

 

(xi)                    any
forward purchase commitments, other than those made in the ordinary and normal
course of the Pulp Business or the Woodlands Business pursuant to any Contract
or other arrangements in effect as of December 31, 2007;

 

(xii)                 any
forward sales commitments, other than those made in the ordinary and normal
course of the Pulp Business or the Woodlands Business pursuant to any Contract
or other arrangements in effect as of December 31, 2007;

 

(xiii)              any
change in the accounting or tax practices followed by Seller;

 

(xiv)             any change
adopted by Seller in its depreciation or amortization policies or rates; or

 

(xv)                any
change in the credit terms offered to customers of, or by suppliers to, the
Pulp Business or the Woodlands Business.

 

(q)                                 Contracts

 

Except as set
forth on Schedule 3.1(q):

 

(i)                           each
of the Real Property Leases, Assumed Contracts, Collective Agreements, Forest
Licenses and Permits is in full force and effect and is binding upon Seller
and, to the knowledge of Seller, the other parties thereto;

 

(ii)                        neither
Seller nor, to the knowledge of Seller, any of the other contracting parties is
in breach or default (whether with notice or lapse of time or both) under any
such Contract or Permit referred to in clause (i) above;

 

(iii)                     Seller has
provided to Purchaser or made available to Purchaser on the Project Wahoo Data
Site a true, correct and complete copy of each such (A) Contract which
involves a price, consideration or financial obligation of more than $50,000 in
the aggregate on an annual basis and is for a term of more than one year and (B) Permit
that is material to the Pulp Business or the Woodlands Business, in each case
including all amendments thereto, waivers thereunder and any material written
correspondence with the other parties thereto that clarifies or confirms, or
proposes to clarify or confirm, a party’s understanding of the terms thereof,
referred to in clause (i) above; and

 

(iv)                    Seller has
provided to Purchaser a complete list of current purchase orders that are
material to either of the Purchased Businesses.

 

35

 

(r)                                    Intellectual
Property

 

Schedule 2.1(m) sets
out all registered or pending patents or trademarks (including certain
particulars of registrations or applications for registration) and all patent
licence agreements which comprise or relate to Intellectual Property.  Seller is, or at the Time of Closing will be,
the beneficial owner of the Intellectual Property, free and clear of all
Encumbrances, and is not a party to or bound by any Contract or any other
obligation whatsoever that limits or impairs its ability to sell, transfer,
assign or convey, or that otherwise affects, the Intellectual Property.  Seller has not granted to any Person any
interest in or right to use all or any portion of the Intellectual
Property.  Seller’s conduct of the
Purchased Businesses does not infringe upon the industrial or intellectual
property rights, domestic or foreign, of any other Person.  Seller has no knowledge of any claim of
infringement or breach of any industrial or intellectual property rights of any
other Person, nor has Seller received any notice that the conduct of the
Purchased Businesses, including the use of the Intellectual Property, infringes
upon or breaches any industrial or intellectual property rights of any other
Person, or the trade secrets, know-how or confidential or proprietary
information of any other Person, and Seller has no knowledge of any
infringement or violation of any of its rights in the Intellectual
Property.  Seller is not aware of any
state of facts which casts doubt on the validity or enforceability of any of
the Intellectual Property.  Seller has
provided to Purchaser a true and complete copy of all Contracts and amendments
thereto identified in Schedule 2.1(m).

 

(s)                                  Forestry
Representations

 

(i)                           Schedule
3.1(s)(i) sets out all of the registrations, approvals, licenses, permits
and Contracts made pursuant to or related to the Nova Scotia Forest Acts, to
which Seller is a party or the beneficiary in respect of the Purchased
Businesses, issued by or registered or entered into with:

 

(A)                              the
Department of Natural Resources (Nova Scotia) or the Minister thereof; or

 

(B)                                one
or more third parties pursuant to directions or directives of the Department of
Natural Resources (Nova Scotia) or the Minister thereof

 

(collectively the “Forest
Licenses”).

 

(ii)                        Schedule
3.1(s)(ii) sets out those Forest Licenses which by their terms are not
transferable to Purchaser and will not be so transferred as part of the
transactions contemplated hereby (the “Excluded Forest Licenses”).

 

(iii)                     Seller has
observed and performed all material covenants, agreements and obligations on
its part to be observed or performed under the provisions of each of the Forest
Licenses, the Nova Scotia Forest Acts and all other applicable forestry
legislation.

 

(iv)                    Seller has not
received any notice of breach by Seller of any of the Forest Licenses or any of
the timber cutting rights or permits or operating or 

 

36

 

development plans
issued or filed pursuant to any of the Forest Licenses which has not been
remedied by Seller or abandoned by the Person alleging such breach.

 

(t)                                    Inventories

 

Since December 31,
2007, the Inventories have been maintained and accounted for in the ordinary
course of business consistent with past practice and GAAP.

 

(u)                                 Insurance

 

Schedule 3.1(u) sets
out all insurance policies (specifying the insurer, the amount of the coverage,
the type of insurance and the policy number) maintained by Seller on the Assets
as of the date hereof.

 

(v)                                 Boat Harbour
Documents

 

(i)                           Each
of the Boat Harbour Documents is in full force and effect and is a legal, valid
and binding obligation of the parties thereto, enforceable against such parties
by the other parties thereto.  Neither
Seller nor, to the knowledge of Seller, any other party to a Boat Harbour
Document is in default of any of its obligations under any of the Boat Harbour
Documents.  All payments required to be
made and all actions required to be taken under the Boat Harbour Documents have
been made and taken by Seller and, to the knowledge of Seller, the other
parties thereto in accordance with the terms thereof.

 

(ii)                        Seller
has the full benefit of all rights granted to any predecessor or predecessor-in-interest
of Seller under the Boat Harbour Documents. 
Seller has the right to use the lands of her Majesty the Queen in Right
of the Province of Nova Scotia in connection with the operation of the Effluent
Treatment System, as currently conducted.

 

(iii)                     The MOU is the
only material Contract that Seller is party to with the PLFN relating to the
use of Boat Harbour or the operation of the Effluent Treatment System in
connection with the operation of the Pulp Business.

 

(iv)                    Except for the
Boat Harbour Documents and the documents listed in Schedule 3.1(v), there are
no material documents relating to (A) the past, present or future use of
Boat Harbour or the operation of the Effluent Treatment System by or in
connection with the Pulp Business and in respect of which Seller continues to
have any liabilities or obligations, or (B) engineering and environmental
studies and reports relating thereto which have been commissioned by or made
available to the Pulp Business with respect to Boat Harbour.  Seller has provided to Purchaser a true,
correct and complete copy of all of the Boat Harbour Documents and the material
amendments thereto and each of the documents listed on Schedule 3.1(v).

 

37

 

 

(w)                               Financial Statements

 

The Financial
Statements have been prepared in accordance with GAAP (with the exception of
the exclusion of the Statement of Cash Flows and the Statement of Equity and
the notes thereto and the exclusion from the Income Statement of pulp and
currency hedging, miscellaneous transaction charges and corporate overhead
allocations) applied on a basis consistent with prior periods and present
fairly the assets, liabilities (whether accrued, absolute, contingent or
otherwise) and financial condition of Seller as at their respective dates and
the sales, earnings and results of operations of Seller for the respective
periods covered by them.  Seller has
provided true and complete copies of the Financial Statements to Purchaser.

 

(x)                                   Books and Records

 

The books and
records of Seller present fairly, in accordance with GAAP, the financial
position of Seller as at the date such books and records were prepared, and all
financial transactions of Seller relating to the Purchased Businesses have been
accurately recorded in such books and records.

 

(y)                                 Closing Balance
Sheet

 

When prepared,
the Closing Balance Sheet for the Purchased Businesses will be prepared in
accordance with GAAP applied on a basis consistent with those used in the
preparation of the Year End Financial Statements and will present fairly the
Assets and Assumed Liabilities as at the close of business on the Closing Date.

 

(z)                                   Non-Arm’s
Length Transactions

 

(i)            With
respect to the Purchased Businesses, except for Contracts of employment and any
Benefit Plan, Pension and Retirement Plan, Statutory Plan or similar plan,
Seller is not a party to any Contract with any officer, director, employee,
shareholder or any other Person not dealing at arm’s length with Seller or any
Affiliate or family member of any of the foregoing.

 

(ii)         No
officer, director or shareholder of Seller and no Affiliate or family member of
one or more of such individuals, owns, directly or indirectly, in whole or in
part, any assets that Seller uses in the operations of the Purchased Businesses,
except for any or all of the Retained Assets.

 

(aa)                            Customers and
Suppliers

 

(i)             Except
as set out in Schedule 3.1(aa)(i), there has been no termination or
cancellation of, and no material modification or change in, Seller’s business
relationship with any major customer (being a customer of the Pulp Business or
the Woodlands Business accounting for more than 10% of sales for the year
ending December 31, 2007), except as set forth in the Contract related to
such customer, true, correct and complete copies of which have been provided to
Purchaser.

 

38

 

(ii)          Seller
has not been certified by any agent other than the Central Wood Suppliers
Division to negotiate for primary forest products from woodlot owners pursuant
to the Primary Forest Products Marketing Act
(Nova Scotia).   Seller is in compliance
with its obligations under such Act.

 

(bb)                          Environmental

 

(i)             Except
as specifically described in Schedule 3.1(bb)(i), Seller (in respect of the
Purchased Businesses and the Assets) and the Owned Real Property and the Leased
Real Property and all operations thereon have been and are in material
compliance with all applicable Environmental Laws.

 

(ii)          Seller
has all Permits required under Environmental Laws that are material to the
Purchased Businesses and to own, use and operate the Assets (the “Environmental Permits”), all of which are described in
Schedule 3.1(bb)(ii).  Each Environmental
Permit is valid, subsisting and in good standing, and Seller is not in default
or breach of any Environmental Permit, and, to Seller’s knowledge, no
proceeding is pending or threatened and no grounds exist to revoke or limit any
Environmental Permit. Seller has provided a copy of each Environmental Permit
to Purchaser.

 

(iii)       Seller,
in respect of the Purchased Businesses, has not used or permitted to be used,
except in material compliance with all Environmental Laws, the Assets, the
Owned Real Property or the Leased Real Property in conjunction with the
Release, generation, manufacture, process, distribution, use, treatment,
storage, transportation or handling of any Hazardous Substance.

 

(iv)      Except
as disclosed on Schedule 3.1(bb)(iv) or in material compliance with
Environmental Laws, there are no Hazardous Substances located on, in, under or
from the Owned Real Property or the Leased Property and all Hazardous
Substances relating in any way to the Purchased Businesses (including any
Hazardous Substances treated in any manner by or resulting from the Effluent
Treatment System) have been disposed of, treated and stored in material
compliance with all Environmental Laws and in such manner that there is no
actual, alleged, nor (to the knowledge of Seller) potential, material liability
of Seller for such Hazardous Substances.

 

(v)         Except
as disclosed in Schedule 3.1(bb)(v), Seller (in respect of the Purchased
Businesses and the Assets) has not received any written notice of, or has it
been prosecuted for, any actual or alleged non-compliance with any
Environmental Laws, nor has Seller settled any allegation of non-compliance
prior to prosecution, in each case since December 1, 2004.  Except as disclosed in Schedule 3.1(bb)(v),
there are no actions, proceedings, notices, orders, written demands or
directions relating to environmental matters requiring, or notifying Seller
that it is or may be 

 

39

 

responsible for,
any investigation, containment, clean-up, remediation or other corrective
action or any work, repairs, construction or capital expenditures to be made
under Environmental Laws with respect to the Purchased Businesses or the
Assets.

 

(vi)      Seller
has delivered to Purchaser or made available to Purchaser on the Project Wahoo
Data Site true and complete copies of all material environmental reports,
audits, evaluations, assessments, studies or tests relating to the Purchased
Businesses, the Assets, the Owned Real Property or the Leased Real Property and
their use that are under, or with reasonable effort could be brought under, the
possession or control of Seller.

 

(cc)                            Canso

 

(i)             Seller
is the registered and beneficial owner of one-third of the issued and
outstanding shares of Canso (the “Canso Shares”),
all of which are fully paid and non-assessable and freely transferable except as
contemplated in the shareholders’ agreement dated as of January 1, 1985
(the “Canso Shareholders’ Agreement”).

 

(ii)         Other
than the Canso Shareholders’ Agreement, there are no other material Contracts
to which the holder of the Canso Shares, in such capacity, is bound.

 

(iii)      Canso
does not own and does not have any Contract to acquire, directly or indirectly,
any shares in the capital or other equity or proprietary interests in any
Entity.

 

(iv)     To
Seller’s knowledge, there are no current material violations of any Applicable
Law relating to Canso’s assets or its business as currently conducted.

 

(v)        To
Seller’s knowledge, all material facts relating to the business, assets and
liabilities of Canso and to the Canso Shares have been disclosed to Purchaser.

 

3.2                               Survival of Seller’s Representations, Warranties and Covenants

 

The
representations and warranties and, to the extent they have not been fully
performed at or prior to the Time of Closing, the covenants of Seller contained
in this Agreement and any agreement, instrument, certificate or other document
executed or delivered pursuant hereto, shall survive the Closing for a period
of 18 months from and after the Closing Date and, notwithstanding such closing
or any investigation made by or on behalf of Purchaser, shall continue in full
force and effect for the benefit of Purchaser during such period, except that:

 

40

 

(i)            the
representations and warranties set out in Sections 3.1(h)(i) and 3.1(k) shall
survive and continue in full force and effect without limitation of time;

 

(ii)         the
representations and warranties set out in Section 3.1(n) shall
survive and continue in full force and effect until 90 days after the
expiration of the period, if any, during which an assessment, reassessment or
other form of recognized written demand assessing liability for tax, interest
or penalties under applicable tax legislation in respect of any taxation year
to which such representations and warranties extend could be issued under such
tax legislation;

 

(iii)      the
representations and warranties set out in Section 3.1(bb)  shall survive and continue in full force and effect until
the second anniversary of the Closing Date; and

 

(iv)     a
claim for any breach of any of the representations and warranties contained in
this Agreement or in any agreement, instrument, certificate or other document
executed or delivered pursuant hereto involving fraud or fraudulent
misrepresentation may be made at any time following the Time of Closing, subject
only to applicable limitation periods imposed by law.

 

3.3                               Purchaser’s Representations and Warranties

 

Purchaser
represents and warrants to Seller as follows and acknowledges that Seller is
relying on such representations and warranties in connection with its
consummation of the transactions contemplated hereby:

 

(a)                                  Due Incorporation
and Authority

 

Purchaser is duly
incorporated, validly existing and in good standing with respect to filing its
annual returns under the laws of the Province of Nova Scotia and has all
requisite corporate power and capacity to own, lease and operate its assets,
properties and business and to carry on its business as currently conducted.

 

(b)                                 Authority to
Execute and Perform Agreement

 

Purchaser has all
requisite corporate power and capacity to enter into, execute and deliver this
Agreement and to perform fully its obligations hereunder.  This Agreement, the Ancillary Agreements to
which Purchaser is a party and the Instruments of Assumption being delivered by
Purchaser hereunder have been duly authorized, executed and delivered by
Purchaser and (assuming the due authorization, execution and delivery of this
Agreement and the Ancillary Agreements by Seller or its Affiliates and the
validity and binding effect hereof and thereof on Seller and its Affiliates)
are the valid and binding obligation of Purchaser enforceable against Purchaser
in accordance with their terms.

 

41

 

(c)                                  No Breach

 

The execution,
delivery and performance by Purchaser of this Agreement, the Ancillary
Agreements to which Purchaser is a party and the Instruments of Assumption, and
the consummation by Purchaser of the transactions contemplated hereby and
thereby, will not

 

(i)             violate
or result in the breach of any provision of the constating documents of
Purchaser;

 

(ii)          violate,
result in the breach of, or default (or an event which, with notice or lapse of
time or both, would constitute a default) under, any material contract to which
Purchaser is a party or to which Purchaser or any of its assets or properties
may be bound; or

 

(iii)       to
Purchaser’s knowledge, violate any statute, law or regulation of any
jurisdiction, which violation, individually or in the aggregate, could have a
material adverse effect on Purchaser’s ability to consummate the transactions
contemplated herein or the performance of its obligations hereunder.

 

(d)                                 Consents and
Approvals

 

The execution and
delivery by Purchaser of this Agreement, the Ancillary Agreements to which
Purchaser is a party and the Instruments of Assumption and the performance by
Purchaser of its obligations hereunder and thereunder do not require Purchaser
to obtain any consents, approvals, authorizations, licenses, permits or other
actions of, or make any filings with, any Governmental Authority or any other
Person.

 

(e)                                  Actions and
Proceedings

 

There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or other Governmental Authority against Purchaser, and there are no
actions, litigation or suits or legal, administrative or arbitral proceedings
of any type whatsoever pending, or to the knowledge of Purchaser, threatened,
against Purchaser which individually or in the aggregate could reasonably be
expected to adversely affect Purchaser’s ability to consummate the transactions
contemplated herein or the performance of its obligations hereunder.

 

(f)                                    Issued Shares

 

The issuance of
the Issued Shares has been duly authorized and approved by all requisite
corporate, regulatory and other action, and the Issued Shares are validly
issued as fully paid common shares of Purchaser.

 

(g)                                 ETA
Registration

 

Purchaser is a
registrant for purposes of the ETA whose registration number is 80788 9019
RT0001.

 

42

 

3.4                               Survival of Purchaser’s Representations, Warranties and Covenants

 

The
representations, warranties and, to the extent they have not been fully
performed at or prior to the Time of Closing, the covenants of Purchaser set
forth in this Agreement will survive the Closing for a period of 18 months from
and after the Closing Date.

 

ARTICLE 4 — COVENANTS

 

The parties
hereto covenant and agree as follows:

 

4.1                               Governmental Filings

 

As soon as
practicable after the execution of this Agreement, Seller and Purchaser shall
cooperate with each other and with their respective Affiliates and shall make
any and all filings and submissions to any Governmental Authority which are
required to be made in connection with the transactions contemplated hereby (including
all notices, filings and submissions required for the transfer of or
application for all necessary Permits and Forest Licenses).  Notwithstanding the foregoing, Purchaser (at
Purchaser’s cost) shall be responsible for making all filings necessary to transfer
and obtain all Permits and Forest Licenses necessary for the operation of the
Purchased Businesses on and after the Closing Date.  Seller shall furnish to Purchaser and its
Affiliates and Purchaser shall furnish to Seller and its Affiliates such information
and assistance as the other parties may reasonably request in connection with
the preparation of any such notices, filings or submissions.  Each party hereto agrees to give the other
parties hereto prompt written notice of any notification that it receives from
any Governmental Authority in connection with the transactions contemplated
hereby.

 

4.2                               Expenses

 

The parties to
this Agreement shall bear their own respective expenses incurred in connection
with the preparation, execution and performance of this Agreement, including
all fees and expenses of agents, representatives, counsel and accountants.  Purchaser shall bear the costs and expenses
associated with (a) obtaining any surveys not already in the possession of
Seller and any title insurance policies and endorsements, (b) any sales or
use taxes, federal taxes and any other taxes or duties payable by either party
as a result of the transactions contemplated hereby (excluding any gains
taxes), (c) any recording costs or transfer taxes (including real property
transfer or documentary stamp taxes) resulting or arising from the transactions
contemplated herein, and (d) any fees, costs, legal fees or expenses
required in connection with filings with Governmental Authorities, in each case
relating to the Assets and the transactions contemplated hereby.

 

4.3                               Indemnification for Brokerage Commissions

 

(a)                                  Seller
represents and warrants to Purchaser that there are no brokerage commissions,
finder’s fees or similar fees or commissions payable in connection herewith on
account of Seller’s actions or the actions of any of its Affiliates.  Seller agrees to indemnify and save Purchaser
harmless from any claim or demand for commission or other compensation by any
broker, finder, agent or 

 

43

 

similar
intermediary claiming to have been employed by or on behalf of Seller, NPI or
any of their respective Affiliates, and to bear the cost of any legal expenses
incurred by Purchaser in defending against any such claim.

 

(b)                                 Purchaser
represents and warrants to Seller that there are no brokerage commissions,
finders’ fees or similar fees or commissions payable in connection herewith on
account of Purchaser’s actions or the actions of its Affiliates.  Purchaser agrees to indemnify and save Seller
and its Affiliates harmless from any claim or demand for commission or other
compensation by any broker, finder, agent or similar intermediary claiming to
have been employed by or on behalf of Purchaser or any of its Affiliates and to
bear the cost of any legal expenses incurred by Seller or any of its Affiliates
in defending against any such claim.

 

4.4                               Access to Records

 

After the Closing
Date, Purchaser and Seller shall afford to each other and their respective
representatives the opportunity, upon reasonable request, to examine and make
copies of the books and records of the Purchased Businesses sold to Purchaser
or of the books and records of the Purchased Businesses retained by Seller, as
the case may be, relating to periods prior to the Time of Closing and to
consult with their respective officers, employees, accountants and other
representatives, in connection with any bona fide
business purpose, including the preparation of tax and financial reports and
the conducting of any audits or disputes with respect thereto, the
administration of Seller’s Benefit Plans, the review of any materials, books,
records or circumstances relating to such party’s ongoing obligations under
this Agreement, the Ancillary Agreements, the Deeds and Assignments or the
Instruments of Assumption.  Purchaser and
Seller shall each maintain all such books and records and shall not destroy or
dispose of any such books and records without the prior written consent of the
other for a period of six years following the Closing Date.  Notwithstanding the foregoing, Purchaser or
Seller may at any time notify the others that they desire to dispose of
identified books and records, in which event the party receiving such notice may,
at its own cost and expense, take delivery of some or all of such books and
records, failing which the party giving such notice may dispose of such books
and records without further liability to the other parties.

 

4.5                               Affiliation with Seller

 

Purchaser and its
Affiliates shall not represent to any third party that Purchaser, its
Affiliates or the Purchased Businesses are in any way affiliated or associated
with, or owned or operated by, Seller or its Affiliates except to the extent
required by or permitted under any of the Ancillary Agreements and Section 4.9.

 

4.6                               Further Assurances

 

Seller and
Purchaser will from time to time execute and deliver all such further documents
and instruments and do all acts and things as the other party may, either
before or after the Closing Date, reasonably require to effectively carry out
or better evidence or perfect the full intent and meaning of this Agreement.

 

44

 

4.7                               Mail and Money Received After Closing

 

(a)                                  On or after the
Closing Date, Purchaser may receive and open all mail addressed to Seller, the
Pulp Business or the Woodlands Business and, to the extent that such mail and
the contents thereof relate to the Pulp Business, the Woodlands Business, the
Assets or any of the Assumed Liabilities, deal with the contents thereof in its
discretion.  Purchaser agrees to deliver
or to cause to be delivered promptly to Seller all other mail (including any
mail that relates to Retained Assets or Retained Liabilities) received which is
addressed to Seller, the Pulp Business or the Woodlands Business.  In the event that Seller receives mail on or
after the Closing Date addressed to Seller, the Pulp Business or the Woodlands
Business that relates to the operations of the Pulp Business, the Woodlands
Business or the Assets, Seller shall deliver or cause to be delivered promptly
to Purchaser such mail.

 

(b)                                 If, at any time
from and after the Closing, Seller receives any payment or other money
comprising or relating to the Assets that Seller is not otherwise entitled to
hereunder, Seller shall be deemed to be holding such funds in trust for
Purchaser and shall promptly upon receipt of such funds deliver the same to
Purchaser without deduction, set-off, counterclaim or offset.

 

4.8                               Delivery of Books and Records

 

Notwithstanding
any provision of this Agreement to the contrary, Purchaser and Seller
acknowledge and agree that any books and records constituting Assets which are
not physically located at the Pictou Pulp Mill shall be delivered by Seller to
Purchaser on the Closing Date or as soon as practicable thereafter, but in no
event later than ten days thereafter.

 

4.9                               Use of Seller’s Trade Name

 

Purchaser shall
be entitled to use existing sales literature, inventories, packaging, office
supplies, and such other items bearing any of the trade names and trademarks of
Seller which are included in the Assets for a period of nine months from and
after the Closing Date.  Purchaser agrees
to cease using or delete such trade names and trademarks from such items as
soon as reasonably practicable after the Closing Date but in any event within
such nine-month period.

 

ARTICLE 5 — EMPLOYMENT AND BENEFIT PLAN ARRANGEMENTS

 

5.1                               Employees

 

Purchaser shall,
effective as of the Time of Closing:

 

(a)                                  employ
on and after the Closing Date all of the Employees who are employed in the Pulp
Business or the Woodlands Business who are not covered by a Collective
Agreement on terms and conditions of employment (excluding any stock-based
compensation) no less favourable in the aggregate than those in effect
immediately prior to the Closing Date, provided that nothing herein shall
guarantee continued employment to any particular Employee from and after the
Closing Date or prevent the termination of employment of any Employee within
such period; and

 

45

 

(b)                                 employ
on and after the Closing Date all of the Employees who are employed by Seller
in the Pulp Business or the Woodlands Business and who are covered by a
Collective Agreement.

 

5.2                               Pension and Retirement Plans and Benefit Plans

 

(a)                                  Prior to the Time
of Closing, Seller shall have (i) transferred from the Benefit Plans to
other benefit plans of Seller any obligations, liabilities or funds relating to
benefits for employees, inactive employees, former employees and retired
employees of Seller in respect of the Terrace Bay, Ontario pulp mill or any
other business or operation of Seller other than the Purchased Businesses (all
of which shall be Retained Liabilities for all purposes of this Agreement), and
(ii) amended the Benefit Plans to reflect any such transfer.

 

(b)                                 Effective as of
the Time of Closing, Seller hereby assigns to Purchaser, and Purchaser hereby
assumes from Seller, the Benefit Plans relating to the Employees of the
Purchased Businesses and the Pension and Retirement Plans relating to Retired
Employees and Former Employees of the Purchased Businesses.

 

(c)                                  Effective as of
the Time of Closing, Purchaser shall execute and file with the appropriate
Governmental Authorities an amendment to the Pension Plans which shall provide
for Purchaser to become an administrator and sponsor of the Pension Plans.

 

(d)                                 Written
confirmation of any and all regulatory approvals shall be forwarded by each
party to the other forthwith upon receipt.

 

(e)                                  Seller shall provide
to Purchaser such information in respect of Employees, Retired Employees and
Former Employees of the Purchased Businesses as is reasonably required by
Purchaser, as the case may be, or their respective agents to properly
administer the Benefit Plans and that is in the possession or control of
Seller, as the case may be.

 

ARTICLE 6 — CLOSING ARRANGEMENTS

 

6.1                               Closing

 

The sale and
purchase of the Assets will be completed at the Time of Closing on the Closing
Date at:

 

Stewart McKelvey Stirling Scales

Purdy’s Wharf Tower One

1959 Upper Water Street

Suite 900

Halifax, Nova Scotia  B3J 2X2

Canada

 

46

 

ARTICLE 7— GENERAL

 

7.1                               Time of the Essence

 

Time is of the
essence of this Agreement.

 

7.2                               Public Announcements

 

Neither Seller
nor Purchaser shall make any publicity release or announcement concerning this
Agreement, or make any disclosure with respect to the consideration paid
pursuant to this Agreement, or the transactions contemplated hereby without the
prior written approval thereof by Purchaser or Seller, as the case may be,
except as required by Applicable Law, in which case the party issuing the
release or making such disclosure shall so advise the other party in writing in
advance of such issuance or disclosure.

 

7.3                               Benefit of the Agreement

 

This Agreement
will inure to the benefit of and be binding upon the respective heirs,
executors, administrators, successors and permitted assigns of the parties
hereto.

 

7.4                               Third Party Beneficiaries

 

The provisions of
this Agreement are solely for the benefit of the parties hereto and their
respective Affiliates, successors and permitted assigns and shall not confer
upon any third Person any remedy, claim, liability, reimbursement or other
right in excess of those existing without reference to this Agreement.  Nothing in this Agreement shall obligate
Seller or its Affiliates or Purchaser to assist any Employee, Retired Employee
or Former Employee to enforce any rights such Employee, Retired Employee or
Former Employee may have with respect to any of the Benefit Plans or other
employment-related benefits referred to in this Agreement.

 

7.5                               Entire Agreement

 

This Agreement
and the Ancillary Agreements referred to herein (including the Schedules
hereto) constitute the entire agreement between the parties hereto with respect
to the subject matter hereof and cancel and supersede any prior understandings
and agreements between the parties hereto with respect thereto.  There are no representations, warranties,
terms, conditions, undertakings or collateral agreements, express, implied or
statutory, between the parties other than as expressly set forth in this
Agreement and the Ancillary Agreements.

 

7.6                               Amendments and Waivers

 

No amendment to
this Agreement will be valid or binding unless set forth in writing and duly
executed by each of the parties hereto. 
No waiver of any breach of any provision of this Agreement will be
effective or binding unless made in writing and signed by the party purporting
to give the same and, unless otherwise provided, will be limited to the
specific breach waived.

 

47

 

7.7                               Assignment

 

This Agreement
may not be assigned by any party hereto without the written consent of the
other parties hereto.

 

7.8                               Notices

 

Any demand,
notice or other communication to be given in connection with this Agreement
will be given in writing and will be given by personal delivery or by facsimile
communication addressed to the recipient as follows:

 

(i)             to
Seller:

 

Neenah Paper Company of Canada

3460 Preston Ridge Road, Suite 600

Alpharetta, Georgia  30005

 

Attention:                                         Steven S. Heinrichs

Senior Vice President, General Counsel and Secretary

 

Facsimile:                                            678-518-3283

 

(ii)          to
Purchaser:

 

Northern Pulp Nova Scotia Corporation

260 Granton Abercrombie Branch Road

Abercrombie, Nova Scotia  B2H 5C6

 

or by mail to

 

Northern Pulp Nova Scotia Corporation

P.O. Box 549, Station Main

New Glasgow, Pictou County, Nova Scotia 
B2H 5E8

Attention:                                         General Manager

Fax:                                                                           (902) 752-5404

in either case with a copy to:

Atlas Holdings, LLC

One Sound Shore Drive

Suite 302

Greenwich, Connecticut  06830

 

Attention:                                         Tim Fazio

 

Facsimile:                                            203-622-0151

 

48

 

or
to such other address, individual or electronic communication number as may be
designated by notice given by either party to the other.  Any demand, notice or other communication
given by personal delivery will be conclusively deemed to have been given on
the day of actual delivery thereof and, if given by facsimile communication, on
the day of transmittal thereof if given during the normal business hours of the
recipient and on the Business Day during which such normal business hours next
occur if not given during such hours on any day if receipt of such facsimile
communication is confirmed.

 

7.9                               Remedies Cumulative

 

The rights and
remedies of the parties hereunder are cumulative and are in addition to, and
not in substitution for, any other rights and remedies available at law or in
equity or otherwise.  No single or
partial exercise by a party of any right or remedy precludes or otherwise
affects the exercise of any other right or remedy to which that party may be
entitled.

 

7.10                        Governing Law

 

This Agreement is
governed by and will be construed in accordance with the laws of the Province
of Nova Scotia and the federal laws of Canada applicable therein.

 

7.11                        Attornment

 

For the purpose
of all legal proceedings, this Agreement will be deemed to have been performed
in the Province of Nova Scotia and the courts of the Province of Nova Scotia
(and all courts competent to hear appeals therefrom) will have exclusive
jurisdiction to entertain any action arising under this Agreement.  Seller and Purchaser each hereby attorns to
the jurisdiction of the courts of the Province of Nova Scotia and all courts
competent to hear appeals therefrom.

 

7.12                        Counterparts

 

This Agreement
and any amendment, supplement, restatement or termination of any provision of
this Agreement may be executed and delivered in any number of counterparts,
each of which when executed and delivered is an original but all of which taken
together constitute one and the same instrument.

 

[The next page is the signature page.]

 

49

 

IN
WITNESS WHEREOF the parties have executed this Agreement.

 

 

	
  AS SELLER

  	
   

  	
  NEENAH PAPER COMPANY OF CANADA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
   

  	
    Name:Sean Erwin

  
	
   

  	
   

  	
   

  	
    Title:President and Chief Executive
  Officer

  

 

 

	
  AS PURCHASER

  	
   

  	
  NORTHERN PULP NOVA SCOTIA CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
   

  	
    Name:Sean Erwin

  
	
   

  	
   

  	
   

  	
    Title:President and Chief Executive
  Officer

  

 

Signature page for
Mill and Woodlands Asset Purchase AgreementExhibit 10.5

 

STUMPAGE
AGREEMENT

 

Between

 

NEENAH
PAPER COMPANY OF CANADA

 

and

 

NORTHERN
PULP NOVA SCOTIA CORPORATION

 

 

STUMPAGE
AGREEMENT

 

This Agreement is made as of June 24, 2008 (the “Effective Date”)
by and between Neenah Paper Company of Canada, a Nova Scotia unlimited
liability company, located at 3460 Preston Ridge Road, Suite 600,
Alpharetta, GA 30005 (“Neenah”) and Northern Pulp Nova Scotia Corporation, a
Nova Scotia unlimited liability company, located at 260 Abercrombie Granton
Branch Road, New Glasgow, Nova Scotia 
B2H 5E8 (“NPNS”).

 

Recitals

 

A.            Neenah
desires to sell and NPNS desires to purchase, on the terms and conditions
hereinafter set forth, certain quantities and types of wood fibre located on
the timberlands owned by Neenah in Nova Scotia, Canada.

 

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

 

Agreement

 

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

 

1.1                               “AAC” or “Annual Allowable Cut”  [REDACTED]

 

 

1.2                               “Actual Designated Tracts” shall have the meaning set forth
in Section 3.1(b)(ii).

 

1.3                               “Affected Party” shall have the meaning set forth in Section 7.5.

 

1.4                               “Affiliate” shall mean with respect to any Person, any Person
Controlling, Controlled by, or under common Control with, such Person.

 

1.5                               “Agreement” means this stumpage agreement, including all
of the Exhibits attached hereto which are hereby specifically incorporated
herein, as this Agreement may be amended, supplemented or restated from time to
time;

 

1.6                               “Annual Harvest Notice” shall mean the annual notice provided
by NPNS to Neenah in accordance with the provisions of Section 3.1(c)(i).

 

 

1.7                               “Annual Purchase Amount” shall mean (a) for each of 2008
and 2009, the Softwood Volume and the associated Residual Qualifying Stumpage Volume
set out in Exhibit C; and (b) for each Harvesting Year beginning January 1,
2010 through the remainder of the Term, the Softwood Volume and the associated 

 

1

 

Residual
Qualifying Stumpage Volume (prorated for any partial year during the
Term).

 

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

 

1.9                               “Base
Price” shall mean the initial price for Qualifying Stumpage as more
particularly described in Exhibit B attached hereto, as annually
adjusted pursuant to the terms and conditions described in Exhibit B.

 

1.10                        “Business Day” shall mean any day other than a Saturday,
Sunday, or other day on which banks are authorized to be closed in the Province
of Nova Scotia, Canada or the State of New York, United States of America.

 

 

1.11                        [REDACTED]

 

 

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

 

1.13                        “Dispute” shall have the meaning set forth in Section 10(b)(i).

 

 

1.14                        “Effective
Date” has the meaning set forth on page 1.

 

1.15                        “Event of Default” shall have the meaning set forth in Section 8.2.

 

1.16                        “Force
Majeure Event” shall mean any act, omission or circumstance occasioned by
or resulting from any acts of God, acts of the public enemy, wars, blockades,
insurrections, riots, parasitic infestation, hurricanes, epidemics, landslides,
lightning, earthquakes, tornadoes, windstorms, volcanoes, fires, storms,
floods, disasters, civil disturbances, explosions, sabotage, endangered species
habitation, change in Applicable Laws that materially impairs the ability of
either party to comply with the terms of the Agreement, as well as disasters,
explosions, strikes, energy supply failures or organized labour disputes that
materially disrupt any of NPNS’s operations that results in a temporary or permanent
shutdown of the Mill; provided, however, that “Force Majeure Event” shall not
include (i) a party’s financial inability to perform other than as
specifically described in this Agreement, or (ii) an act, omission or
circumstance arising from the gross negligence or willful misconduct of the
party claiming that a Force Majeure Event has occurred.

 

1.17                        “Governmental Authority” shall mean any federal, provincial,
local or foreign government, political subdivision, agency, board, court,
regulatory body or commission, any arbitrator with authority to bind a party at
law, or any Person 

 

2

 

acting
lawfully on behalf of any of the foregoing.

 

1.18                        “Hardwood Pulpwood” shall mean hardwood trees meeting the
applicable specifications set forth in Exhibit A attached hereto.

 

 

1.19                        “Hardwood Pulpwood Price” shall initially mean the price set
forth on Exhibit B, as such price will be reset every January 1
during the Term as described in Exhibit B.

 

 

1.20                        “Hardwood Qualifying Stumpage” shall mean standing Timber
which meets or exceeds the specifications for Hardwood Pulpwood or Hardwood
Sawlogs set forth in Exhibit A to this Agreement.

 

 

1.21                        “Hardwood Sawlogs” shall mean hardwood trees meeting the
applicable specifications set forth in Exhibit A attached hereto.

 

 

1.22                        “Hardwood Sawlogs Price” shall mean the price set forth on Exhibit B
attached hereto (as such price will be reset every January 1 during the
Term) as described in Exhibit B, the “Hardwood Sawlog Base Price”
adjusted up or down on a quarterly basis on each Price Adjustment Date by the
Stumpage Price Index.

 

1.23                        “Harvest Plan” shall have the meaning set forth in Section 3.1(c)(ii).

 

1.24                        “Harvesting Year” shall mean the period from January 1
through December 31 of each year during the Term.

 

 

1.25                        “Initiating Party” shall have the meaning set forth in Section 10(b)(iv).

 

1.26                        “Mediation Notice” shall have the meaning set forth in Section 10(b)(iv).

 

1.27                        “Mill” shall mean NPNS’s pulp mill located in Pictou County
in the Province of Nova Scotia, Canada.

 

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

 

1.29                        “Price
Adjustment Date” shall mean the first day of each April, July and September during
the Term.

 

1.30                        “Province” has the meaning set out in the definition in Section 1.11.

 

1.31                        “Qualifying Stumpage” shall mean collectively Hardwood
Qualifying Stumpage and Softwood Qualifying Stumpage.

 

1.32                        “Qualifying Stumpage Price” shall mean, as applicable,
the Hardwood Pulpwood Price for all Hardwood Pulpwood; the Hardwood Sawlogs
Price for all 

 

3

 

Hardwood Sawlogs; the Softwood Pulpwood Price
for all Softwood Pulpwood; the Softwood Sawlog Price for all Softwood Sawlogs;
and the Softwood Studwood Price for all Softwood Studwood.

 

1.33                        “Recipient Party” shall have the meaning set forth in Section 10(b)(iv).

 

1.34                        “Reduction
Amount” shall have the meaning set forth in Section 7.5.

 

1.35                        “Residual
Qualifying Stumpage Volume” means the Hardwood Sawlog and Hardwood
Pulpwood volumes to be harvested from the Actual Designated Tracts that are
within the Actual Allowable Cut.

 

1.36                        “SFI®
Certification” means the Sustainable Forestry Initiative Certification
received by Neenah for the Timberlands in October of 2007.

 

1.37                        “SMZ’s” shall mean Special Management Zones, environmentally
protected zones designated as such by the mutual consent of Neenah and NPNS
during the Term and in compliance with all Applicable Laws or as necessary to
maintain SFI® Certification.

 

1.38                        “Short Harvesting Year” shall mean the period from the
Effective Date through December 31, 2008.

 

1.39                        “Softwood Pulpwood” shall mean softwood trees meeting the
applicable specifications set forth in Exhibit A attached hereto.

 

1.40                        “Softwood Pulpwood Price” shall mean the price set forth on Exhibit B
attached hereto (the “Softwood Pulpwood Base Price”) adjusted up or down on a
quarterly basis on each Price Adjustment Date by the Stumpage Price Index.
The Softwood Pulpwood Base Price shall be reset every January 1 during the
Term of the Agreement in accordance with the terms of Exhibit B.

 

1.41                        “Softwood Qualifying Stumpage” shall mean standing Timber
which meets or exceeds the specifications for Softwood Sawlogs, Softwood
Studwood and Softwood Pulpwood set forth in Exhibit A to this
Agreement.

 

1.42                        “Softwood
Sawables” means, collectively, the Softwood Sawlogs and Softwood Studwood.

 

1.43                        “Softwood Sawlogs” shall mean softwood trees meeting the
applicable specifications set forth in Exhibit A attached hereto.

 

1.44                        “Softwood Sawlogs Price” shall mean the price set forth on Exhibit B
attached hereto (the “Softwood Sawlogs Base Price”) adjusted up or down on a
quarterly basis on each Price Adjustment Date by the Stumpage Price Index.
The Softwood Sawlog Base Price shall be reset every January 1 during the
Term of the Agreement in accordance with the terms of Exhibit B.

 

4

 

1.45                        “Softwood Studwood” shall mean softwood trees meeting the
applicable specifications set forth in Exhibit A attached hereto.

 

1.46                        “Softwood Studwood Price” shall mean the price set forth on Exhibit B
attached hereto (the “Softwood Studwood Base Price”) adjusted up or down on a
quarterly basis on each Price Adjustment Date by the Stumpage Price Index,
as such price will be reset every January 1 during the Term in accordance
with the terms of Exhibit B.

 

1.47                        “Softwood Volume”  shall mean the
AAC measured in metric tons per year of Softwood Sawables and Softwood Pulpwood
during the Term, as further described in Exhibit D.

 

1.48                        “Stumpage Price Index” [REDACTED]

 

1.49                        “Term” shall mean the term of this Agreement, namely the
period from the Effective Date through May 15, 2018, unless sooner
terminated in accordance with the provisions of Section 8.2 or 8.3 or
extended in accordance with Section 8.4.

 

1.50                        “Timber” shall mean the following types of standing timber
now or hereafter located on the Timberlands: Hardwood Pulpwood, Hardwood
Sawlogs, Softwood Pulpwood, Softwood Sawlogs and Softwood Studwood.

 

1.51                        “Timberlands” shall mean those certain tracts of real property
as described in Exhibit F.

 

1.52                        “Tracts” shall have the meaning set forth in Section 3.1.

 

1.53                        “Valuation Consultant” shall mean J.W. Sewall Company or a
mutually agreed to alternative.

 

2.             Agreement
to Sell and Purchase.

 

2.1          Quantities to be
Harvested.  Subject to and in
accordance with  the terms of this
Agreement, Neenah agrees to sell to NPNS and NPNS agrees to purchase from
Neenah for each Harvesting Year during the Term the Annual Purchase Amount
applicable to such Harvesting Year.

 

3.             Designation of Tracts and
Determination of Volumes.

 

3.1          Designation of Tracts
to Be Harvested.  During the
Term, NPNS shall designate the portions of the Timberlands (the “Tracts”) which
NPNS shall harvest during each Harvesting Year. 
A sufficient number of Tracts shall be identified so as to satisfy the
Annual Purchase Amount.  NPNS shall
follow the procedure for designating such Tracts hereinafter set forth in this Section 3.

 

5

 

(a)          Certification
of Tracts.  NPNS and
Neenah  hereby acknowledge and agree that
the Timberlands will, at all times during the Term, be owned, managed and
operated in a manner consistent with and necessary to maintain the Timberlands’
SFI® Certification and that both parties will have responsibilities for
maintaining such certification. 
Notwithstanding the foregoing, NPNS shall be fully and solely
responsible for maintaining the Timberlands’ SFI® Certification, provided that
Neenah shall reasonably cooperate with NPNS with respect to the registration
and maintenance of such certification. 
Failure to perform its obligations under this Section 3.1 relating
to the maintenance of  the Timberlands’
SFI® Certification shall be deemed a material breach of this Agreement.

 

(b)         Designation
of Tracts to be Harvested in 2008 and Estimated Volumes for 2009.  Exhibit C attached hereto sets
forth the portions of the Timberlands which NPNS shall harvest for the Short
Harvesting Year and for the Harvesting Year commencing January 1, 2009 for
the Annual Purchase Amount situated thereon in accordance with the terms of
this Agreement.

 

(c)          Subsequent
Designation of Tracts to be Harvested.  For the Harvesting Year commencing January 1,
2010, and for all subsequent Harvesting Years during the Term, the portions of
the Timberlands which NPNS shall harvest shall be determined in accordance with
the following procedure:

 

(i)             Designation
of Potential Harvesting Areas. 
On or before the first Business Day following October 1 prior to
each applicable Harvesting Year except the Short Harvesting Year, NPNS shall
designate in a written notice (the “Annual Harvest Notice”) to Neenah all of
those portions of the Timberlands which it proposes to harvest during the
subsequent Harvesting Year  including the
estimated Qualifying Stumpage volumes thereon sufficient to satisfy the
Annual Purchase Amount and the proposed route of access from a public road to
the property boundary of each Tract.

 

(ii)          Selection
of Actual Harvesting Areas. 
During the 45-day period following receipt by Neenah of the applicable
Annual Harvest Notice, Neenah shall review and provide to NPNS in writing, its
consent or reasonable objection (including reasons therefor) to the proposed
harvest plan.  To the extent there is a
dispute regarding the volumes or the Tracts included in the proposed harvest
plan, such dispute shall be subject to the dispute resolution process described
in Article 10 of this Agreement. 
The approved harvest plan (the “Harvest Plan”) shall identify each of
the Tracts designated for harvest during the following year (the “Actual
Designated Tracts”).  NPNS shall be
entitled to amend a Harvest Plan to take into account market conditions arising
or occurring after such Harvest Plan has been initially approved, or the
occurrence of events other than Force Majeure Events, from time to time upon
written notice to Neenah, subject to Neenah’s consent thereto, such consent not
to be unreasonably withheld.

 

6

 

3.2          Boundary and Timber
Markings.  Prior to the scheduled
commencement of harvesting activities on each applicable Actual Designated
Tract as set forth in the harvesting schedule described below in Section 4.1,
NPNS shall designate on the ground (using accepted local practices for marking
boundary and cut lines) the boundary lines of such Actual Designated
Tract.  The boundary lines shall clearly
delineate the boundaries of the Actual Designated Tract from the boundaries of
adjacent land not owned by Neenah, and from the boundaries of other Timberlands
not constituting Actual Designated Tracts for such Harvesting Year.  Subject to Neenah’s reasonable acceptance and
approval, NPNS, or NPNS’s third party contractor, shall designate on the ground
(using accepted local practices for marking boundary and cut lines) all SMZ’s
within the Actual Designated Tracts and any Qualifying Stumpage to be
removed from such designated SMZ’s.

 

3.3          Harvesting of
Hardwood Qualifying Stumpage. 
During the Term, NPNS shall have the right, but not the obligation, as
determined in its sole discretion, to harvest the annual AAC for Hardwood
Qualifying Stumpage as set out in the Wood Stock Model.  This right is in addition to the Residual
Qualifying Stumpage NPNS is committing to harvest pursuant to the
harvesting procedures detailed in Article 4 of this Agreement.  All additional Hardwood Qualifying Stumpage shall
be identified pursuant to Article 3 hereof.

 

4.             Harvesting Procedures.

 

4.1          Harvesting Schedule.  Following determination of the Actual
Designated Tracts, NPNS shall provide a harvesting schedule to Neenah setting
forth approximate start and completion dates relating to harvesting Qualifying
Stumpage within each of the Actual Designated Tracts.  Neenah shall modify said harvesting schedule
based upon any reasonable objections raised by Neenah with respect to any of
said harvesting dates.  Notwithstanding
the foregoing, NPNS shall harvest the Actual Designated Tracts on the basis of
the quarterly harvesting notices provided by NPNS to Neenah every three (3) months
during the Term of this Agreement, subject to the occurrence of a Force Majeure
Event, and subject to the provisions of Section 4.3 below.

 

4.2          Timber Roads.  NPNS shall construct, or cause to be
constructed, at NPNS’s sole cost and expense, haul roads to the Actual
Designated Tracts necessary to provide NPNS with proper access to such Actual
Designated Tracts for its harvesting operations.  Construction of such roads shall be
accomplished in a good and workmanlike manner in compliance with the
specifications set forth in Exhibit E.  Following the construction of said roads and
continuing until the completion of harvesting operations on the Actual
Designated Tract associated with such roads and the removal of all equipment
and vehicles associated with such harvesting operations, NPNS shall at its sole
cost and expense maintain and repair said roads.  Neenah shall be responsible for all haul
roads which are not necessary for NPNS’s harvesting or access to tracts for
silviculture, long-term placing or other related harvesting operations, and
shall maintain and repair such roads at its sole cost and expense.  All such road construction, maintenance and
repair shall be performed in a manner so as:

 

(i)             not to violate any
Applicable Laws;

 

7

 

(ii)          to maintain SFI®
Certification; and

 

(iii)       so as not to interfere with
NPNS’s operations.

 

Any Timber damaged or destroyed during the course of NPNS’ road
construction shall be treated for purpose of this Agreement as if harvested by
NPNS as part of harvesting operations on the associated Actual Designated
Tract.

 

4.3          Timber Harvesting.  Subject to any amendment to the Harvest Plan,
NPNS shall harvest (i.e., cut and
remove) within each Harvesting Year all Qualifying Stumpage located on the
Actual Designated Tracts for such Harvesting Year, or such smaller volume of
Qualifying Stumpage as mutually agreed upon by Neenah and NPNS in writing,
subject to the occurrence of a Force Majeure Event.  NPNS may identify in writing to Neenah prior
to harvesting activities predominately hardwood stands or Tracts that contain
in excess of 50% hardwood stands within any of the Actual Designated Tracts and
“walk around” such stands.  All
harvesting operations shall be conducted in accordance with all Applicable
Laws, in a manner consistent with established industry logging practices or as
necessary for the Timberlands to maintain SFI® Certification.  Upon severance of any portion of the Timber
on the Timberlands by NPNS or its logging contractors, risk of loss, title to
and ownership of such Timber shall pass to NPNS.  NPNS shall repair all fences or structures
damaged by its harvesting operations and shall leave all roads, fire breaks,
property lines, lakes, streams, and drainage ditches clear of logs, timber,
limbs or other debris deposited there as a result of NPNS’s operations (as
opposed to third party actions or naturally occurring events).  All oil drums, cans, bottles, cartons,
delimbing bars, loading decks, abandoned equipment and other debris resulting
from NPNS’ operations shall be removed from the applicable portions of the
Timberlands upon completion of the harvesting operations at NPNS’s expense in
accordance with Applicable Laws.  NPNS
shall not bury any material underground or discharge, release or otherwise
cause the Timberlands or any portion thereof to be affected by hazardous wastes
or hazardous substances.  NPNS shall use
normal and customary care while conducting its harvesting operations so as not
to materially damage the Timberlands. 
NPNS acknowledges that under SFI Standards a higher degree of care is
required when the site is abnormally wet and that such circumstances may
require NPNS to alter harvesting activities to accommodate the ground
conditions; however, NPNS shall not be liable for any damage to the Timberlands
caused by anyone other than NPNS or NPNS’s contractors engaged in harvesting,
trucking or road construction on the portion of the Timberlands impacted by
such damage.  In addition, Neenah shall
retain all Carbon Credits related to or in any way associated with the
Qualifying Stumpage pursuant to this Agreement.  For purposes of this Agreement “Carbon
Credits” shall mean any calculable carbon offset or credit that could be
generated from the Timberlands as such credits are available through the
Chicago Climate Exchange or a similar market for carbon reduction or
sequestration.

 

4.4          Unauthorized Cutting.  Neenah shall be entitled to seek all remedies
available at law for timber trespass if NPNS or its contractors harvest or
destroy any Timber that is outside an Actual Designated Tract; however, NPNS
shall not be liable for any such damage to the Timberlands caused by anyone
other than NPNS or contractors acting on NPNS’s behalf.

 

4.5          Access Rights.  Neenah hereby grants to NPNS the rights to
ingress and egress over (i) the Tracts designated on Exhibit D during
the Term for the sole purposes of 

 

8

 

harvesting Qualifying Stumpage on the Actual Designated Tracts for
a given Harvesting Year and all reasonable activities associated therewith, (ii) on
all such other portions of the Timberlands as required to conduct its
silviculture and SFI Certification obligations hereunder, and (iii) on all
other Tracts comprising the Timberlands in order for NPNS to inspect and
monitor existing timber plantations and continue collecting data for ongoing
research and analysis.  If Neenah has
provided NPNS with access to an Actual Designated Tract (through easement or
otherwise), but NPNS prefers to enter upon lands not owned or subject to
easement by Neenah, NPNS shall be solely responsible for securing permission to
do so.

 

4.6          Silviculture.  NPNS shall carry out and pay for all
silviculture work necessary to produce sufficient Silviculture Credits (as that
term is referenced in the Forest Sustainability
Regulations under the Forests Act
(Nova Scotia)) to satisfy its operational requirements (including maintaining
the AAC as detailed in Exhibit D). 
NPNS shall have the right to all the “Silviculture Credits” created by
the silviculture activities carried out on the Timberlands by NPNS during the
Term and those Silviculture Credits created by the silviculture activities
carried out on the Timberlands by Neenah in 2008, which credits Neenah shall assign
to NPNS on the Effective Date.  NPNS
shall provide Neenah with a silviculture plan (the “Silviculture Plan”) on an
annual basis during the Term and copies of all silviculture activities filed
with Nova Scotia Department of Natural Resources.  The annual Silviculture Plans shall be
subject to Owner’s approval, which shall not be unreasonably withheld or
delayed if the Silviculture Plan produces sufficient Silviculture Credits (as
that term is referenced in the Forest Sustainability
Regulations under the Forests Act (Nova
Scotia) to satisfy its operational requirements (including maintaining the AAC
as detailed in Exhibit D.  If NPNS
fails to conduct silviculture work then Neenah shall have the right to include
the per ton cost of Silviculture Credits in the calculation of the price for
Qualifying Stumpage.

 

4.7          Timberland Management.  The parties shall enter into an
administrative services agreement pursuant to which NPNS shall provide
day-to-day administrative services for the Timberlands, including the ongoing
migration of the Timberlands to convert title to Nova Scotia’s registration
system.

 

5.             Prices and Payments.

 

5.1          Time of Payment.  All Qualifying Stumpage harvested and
removed by NPNS from the Timberlands shall have an accompanying trip
ticket.  All Qualifying Stumpage shall
be weighed after harvest in a manner consistent with established industry
logging practices.  Volumes will be based
on volumes by product class shown on mill scale or load tickets. NPNS shall
cause all logging contractors to maintain written log books of all loads or
partial loads of Qualifying Stumpage cut and removed from the Timberlands
and to (i) identify in such log books each load removed from the
Timberlands; (ii) record in such log books the load ticket numbers for
each load delivered to the Mill; (iii) deliver such log book for
inspection by Neenah, as requested; and (iv) clearly tag, by adhering to
guidelines reasonably required by Neenah, each load coming from the Timberlands
before such load is removed from the Timberlands.  NPNS shall provide Neenah on a weekly basis
with a list of scale tickets, a settlement statements, and any other supporting
documentation reasonably requested by Neenah and shall remit payment to the
Neenah within thirty (30) days of delivery of said settlement statement the
total Qualifying

 

9

 

Stumpage Price for all Qualifying Stumpage weighed-in during
such week, except as otherwise detailed in Section 5.3 below.

 

5.2          Price Changes and
Stumpage True-up.

 

Beginning in 2010, on each Price Adjustment Date, the Qualifying Stumpage Price
for any product class of Qualifying Stumpage shall be adjusted upward or
downward, as the case may be, as described in Article 1 of this Agreement.

 

5.3          [REDACTED]

 

6.             Indemnity.

 

6.1          Indemnification by
Neenah.  Neenah shall defend,
indemnify and hold NPNS harmless from and against any and all claims,
liabilities, costs or damages (including without limitation reasonable
attorneys’ fees and expenses and court costs through all appeals):

 

(i)             arising out of the
performance or non-performance by Neenah of its covenants and obligations
hereunder; or

 

(ii)          relating to the
Timberlands, except for those claims, liabilities, costs or damages in respect
of which NPNS has pursuant to Section 6.2 indemnified Neenah.

 

6.2          Indemnification by
NPNS .  NPNS shall defend,
indemnify and hold Neenah harmless from and against any and all claims,
liabilities, costs or damages (including without limitation reasonable
attorneys’ fees and expenses and court costs through all appeals) arising out
of:

 

(i)             personal injury,
death or property damage resulting from NPNS’ harvesting and silviculture
operations, or NPNS’ access rights pursuant to Section 4.5, on the
Timberlands or the presence of employees, agents or other invitees of NPNS on
the Timberlands; and

 

(ii)          the performance or
non-performance by NPNS of its covenants and obligations hereunder.

 

7.             Force Majeure.

 

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

 

10

 

7.2          Mitigation and Notice.  The occurrence of a Force Majeure Event shall
not relieve a party of its obligations and liability hereunder to the extent
such party fails to use commercially reasonable efforts to 

 

remove the cause and remedy or mitigate the effects of the Force
Majeure Event if, with commercially reasonable efforts, such party could have
removed such cause or remedied or mitigated such effects.  In addition, no Force Majeure Event shall
relieve a party of its obligations or liability hereunder unless such party
shall give notice (including a reasonable description of such Force Majeure
Event) to the other party as soon as reasonably possible and in any event
within twenty (20) days of the occurrence of such Force Majeure Event. Upon
request, the party whose obligations were suspended shall provide the other
party with a plan for remedying the effects of such Force Majeure Event.

 

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

 

7.4          Force Majeure Event
Affecting Actual Designated Tracts. 
If a Force Majeure Event makes a portion of any Actual Designated Tract
unavailable or commercially impracticable for harvesting by NPNS in accordance
with the harvesting schedule contemplated by the parties or if the Qualifying
Stumpage is materially damaged by the Force Majeure Event, then NPNS shall
promptly designate and Neenah shall approve and make available for harvesting
such other portions of the Timberlands as shall be necessary to satisfy its
obligations under this Agreement.

 

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

 

(a)           the Non-Affected Party shall not enter into
any contract for any such sale or purchase for a term longer than 12
consecutive months;

 

(b)           the Non-Affected Party shall give the
Affected Party written notice of each such contract, including the volume sold
or purchased hereunder and the term thereof;

 

(c)           the annual volume commitment of the
Non-Affected Party for Qualifying Stumpage as specified herein shall be
reduced by such volume sold or purchased under such contract for the duration
thereof; and

 

(d)           any other plan of action  mutually agreed to by both parties.

 

11

 

8.             Term and Termination.

 

8.1          Term.  This Agreement shall expire on June 24,
2018, unless (i) this Agreement is terminated prior to such date for cause
pursuant to Section 8.2 hereof or pursuant to Section 8.3 [REDACTED], or (ii) the term of this Agreement is
extended by NPNS in accordance with Section 8.4.

 

8.2          Termination for Cause.  This Agreement shall immediately terminate if
any one of the following events (each, a “default”) has occurred and is
continuing on the tenth (10th) day after receipt of notice of an intent to
cancel by reason of such default (each, an “Event of Default”);

 

(a)           failure to make any payment required
hereunder when due which failure is not cured within ten (10) Business
Days after receipt of written notice thereof; or

 

(b)           breach of any other material term of this
Agreement, which breach is not cured within thirty (30) Business Days after
receipt of written notice thereof; or

 

(c)           insolvency or the filing by or against NPNS
or Neenah of a petition in bankruptcy (which, in the event of an involuntary
bankruptcy, is not dismissed within ninety (90) days from the date of its commencement),
or appointment by a court of a temporary or permanent receiver, trustee or
custodian, but only if NPNS or Neenah, as applicable, is in breach of its
obligations hereunder.

 

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

 

8.3          [REDACTED]

 

8.4          Extension of Term.  NPNS shall have the option to extend the Term
an additional period to expire on July 31, 2021 (the “Renewal Term”) by
providing written notice thereof to Neenah not later than November 30,
2017.  The Renewal Term shall be upon the
same terms and conditions as the last five years of the original Term.

 

9.             Governing Law.
This Agreement shall be governed by and construed in accordance with the
domestic laws of the Province of Nova Scotia, Canada and the federal laws of
Canada applicable therein as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies (without
giving effect to any choice or conflict of law provision or rule).

 

10.          Dispute Resolution.

 

(a)           Consultation by Responsible Executives.

 

If there is any dispute, controversy or claim
arising out of or relating to this Agreement, that the personnel designated by
Neenah and NPNS respectively, with 

 

12

 

operational responsibility for implementing this Agreement are unable
to resolve, each of the parties will cause its chief officer in charge of
managing the Timberlands (or the chief operating officer of any manager of the
Timberlands, as the case may be), to consult with each other promptly and in
good faith to endeavor to resolve such dispute, controversy or claim before
seeking mediation as provided in Section 10(b), but failure to do so shall
not limit the right of either party to submit the issue to such.

 

(b)           Mediation.

 

(i)            In the event of any dispute, controversy or
claim arising out of or relating to this Agreement or the breach, termination,
or validity thereof, except for disputes in respect of which equitable relief
is sought and except for any matter in respect of which this Agreement
specifies a resolution mechanism, (a “Dispute”), the parties shall make a good
faith attempt to settle the Dispute by mediation pursuant to the provisions of
this Section 10(b).

 

(ii)           Unless the parties agree otherwise, the
mediation shall be conducted in Halifax, Nova Scotia, in accordance with the
National Mediation Rules of the ADR Institute of Canada, Inc. by a
mediator who has the qualifications and experience set forth in paragraph (iv) of
this Section 10(b) and is selected as provided in paragraph (iv) of
this Section 10(b).

 

(iii)          Unless the parties agree otherwise, the
mediator shall be an individual of recognized expertise and experience in the
timber market in the general operating range of the Timberlands who has
mediated cases involving similar transactions for the federal or provincial
courts or for a reputable commercial alternative dispute resolution (“ADR”)
firm or not-for-profit ADR organization.

 

(iv)          Either party (the “Initiating Party”) may
initiate mediation of the Dispute by giving the other party (the “Recipient
Party”) written notice (a “Mediation Notice”) setting forth a list of the names
and resumes of qualifications and experience of three (3) impartial
persons who the Initiating Party believes would be qualified as a mediator
pursuant to the provisions of paragraph (iii) hereof.  Within seven (7) days after the delivery
of the Mediation Notice, the Recipient Party shall give a counter-notice (the “Counter-Notice”)
to the Initiating Party in which the Recipient Party may designate a person to
serve as the mediator from among the three (3) persons listed by the
Initiating Party in the Mediation Notice (in which event such designated person
shall be the mediator).  If none of the
persons listed in the Mediation Notice is designated by the Recipient Party to
serve as the mediator, the Counter-Notice shall set forth a list of the names
and resumes of three (3) impartial persons who the Recipient Party
believes would be qualified as a mediator pursuant to the provisions of
paragraph (iii) hereof.  Within
seven (7) days after the delivery of the Counter-Notice, the Initiating
Party may designate a person to serve as the mediator from among the three (3) persons
listed by the Recipient Party in the Counter-Notice (in which event such
designated person shall be the mediator). 
If the parties cannot agree 

 

13

 

on a mediator from the three (3) impartial nominees submitted by
each party, each party shall strike two (2) names from the other party’s
list, and the two (2) remaining persons on both lists will jointly select
as the mediator any person who has the qualifications and experience set forth
in paragraph (iii) hereof.  If they
are unable to agree, then the mediator will be selected by the ADR Institute of
Canada, Inc.

 

(v)           If the Dispute cannot be settled within
thirty (30) days after the mediator has been selected as provided above, either
party may give the other and the mediator a written notice declaring the
mediation process at an end, in which event either party may pursue any
remedies available at law or in equity to resolve the Dispute.

 

(vi)          All conferences and discussions which occur
in connection with mediation conducted pursuant to this Agreement shall be
deemed settlement discussions, and nothing said or disclosed, nor any document
produced which is not otherwise independently discoverable, shall be offered or
received as evidence or used for impeachment or for any other purpose in any
current or future arbitration or litigation.

 

(vii)         Each party shall bear its own costs and
expenses with respect to mediation; provided that the costs of the mediator
shall be shared equally between the parties.

 

11.          Assignment.

 

11.1        Assignment by Neenah.

 

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

 

(b)           Notwithstanding any other provision of this
Agreement to the contrary, NPNS and Neenah acknowledge and agree that Neenah
shall not be prohibited from selling all or any portion of the Timberlands;
provided, however, that each such purchaser thereof shall agree to be bound by
the terms of hereof with respect to the relevant Timberlands and the applicable
portion of Qualifying Stumpage volumes required hereunder pursuant to a
written instrument in form and in substance reasonably acceptable to NPNS, and
no such sale shall give rise to any additional obligations on the part of NPNS
to any such purchaser, or all of them in the aggregate, with respect to the
subject matter of this Agreement or otherwise reduce NPNS’s rights as
contemplated by 

 

14

 

this Agreement.  At the request
of Neenah, upon any such sale, NPNS shall execute an amendment to this
Agreement acknowledging the foregoing.

 

11.2        Assignment by NPNS .  Except as provided in this Section 11.2,
this Agreement may not be assigned by NPNS in whole or in part.  Notwithstanding the foregoing, upon prior
written notice to Neenah, NPNS may assign this Agreement (i) to any Person
that is and at all times remains an Affiliate of NPNS or that merges or
consolidates with or into NPNS or that acquires all or substantially all of the
assets or stock of  NPNS, (ii) to
any Person that purchases or leases the Mill or assumes responsibility for
operating the Mill and assumes NPNS’s liabilities and obligations hereunder, or
(iii) to any lender or lenders as security for obligations to such lender
or lenders in respect of the financing arrangements of NPNS or any Affiliate
thereof with such lender or lenders.

 

12.          Publicity.  This Agreement is confidential and neither
party shall issue a press release or engage in other types of publicity of any
nature dealing with the commercial and legal details of this Agreement without
the other party’s prior written approval. 
However, approval of such disclosure shall be deemed to be given to the
extent such disclosure is required to comply with Applicable Laws. In such
event, the publishing party shall furnish, in advance, a copy of such proposed
disclosure, to the other party.

 

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

 

14.          Notices.  All notices, requests, demands and other
communications provided for hereunder shall be in writing and personally
delivered or sent by regular U.S.P.S. or Canada Post certified mail, facsimile
or similar type of overnight courier to the applicable party at the address
indicated below:

 

If to Neenah, to:

 

If to NPNS:

 

or by mail to

 

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

 

15.          Partial Illegality.  If any provision, or part of a provision, of
this Agreement is held to be invalid or unenforceable under any Applicable Law,
then the parties shall use all commercially reasonable efforts to replace the
invalid or unenforceable provision by a provision that, to the extent permitted
by Applicable Law, achieves the purposes intended under the original provision
and to allow the parties to have the intended benefit of their bargain.  If it 

 

15

 

cannot be so reformed, it shall be omitted.  The balance of this Agreement shall remain
valid and unchanged and in full force and effect.

 

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

 

17.          Amendments and Waivers.  This Agreement may not be terminated,
amended, supplemented, waived or modified orally, but only by a document in
writing signed by the party against which the enforcement of such termination,
amendment, supplement, waiver or modification is sought.  No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any such prior or subsequent
occurrence.

 

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

 

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

 

20.          Submission To
Jurisdiction.  Without limiting
the parties’ agreement to submit any and all disputes to mediation and
arbitration as herein provided, if, notwithstanding said section, any party
shall have the right to seek recourse to a court with respect to any dispute
arising out of or related to this Agreement or the transactions contained in or
contemplated by this Agreement, whether in tort or contract or at law or in
equity, then any action or proceeding in respect of any such dispute shall be
brought exclusively in any Superior Court in the Province of Nova Scotia (the “chosen
courts”) and with respect to any such action each party (i) irrevocably
submits to the exclusive jurisdiction of the chosen courts for such purposes, (ii) waives
any objection to laying venue in any such action or proceeding in the chosen
courts, (iii) waives any objection that the chosen courts are an
inconvenient forum or do not have jurisdiction over any party hereto, and (iv) agrees
that service of process upon such party in any such action or proceeding shall
be effective if notice is given in accordance with Section 14 of this
Agreement.  Each party agrees that a
final judgment in any action or proceeding so brought shall be conclusive and
may be enforced by suit on the judgment or in any other manner provided by 

 

16

 

law or at equity.  Each party
also agrees not to bring any action or proceeding arising out of or relating to
this Agreement in any other court.

 

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

 

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

 

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

 

24.          Insurance.
NPNS, or in the event that NPNS retains any third-party contractor to conduct
harvesting operations on the Timberlands, NPNS or said third-party contractor
shall, before conducting any operations, obtain and maintain the following
types of insurance and be duly registered with the Nova Scotia Workers
Compensation Board, in addition to any other insurance required by law:  (a) Worker’s Compensation and Employer’s
Liability Insurance fully covering all operations; (b) Comprehensive
Vehicle Liability Insurance, including owned, hired and non-owned vehicles,
with limits of not less than $2,000,000 single occurrence and $2,000,000
cumulative bodily injury liability; and (c) Comprehensive or Commercial
General Liability Insurance, including all contractual liability hereunder,
with limits of not less than $2,000,000 single occurrence and $2,000,000
cumulative bodily injury liability. 
Prior to the beginning of any harvesting operations hereunder, evidence
of all such insurance and registration shall be furnished to Neenah if
requested in writing.

 

25.          Construction and
Enforcement.  In construing
and enforcing this Agreement, the following rules shall be followed:

 

25.1        Control of Drafting.  Each provision of this Agreement shall be
construed simply according to its fair meaning and not strictly for or against
any party to this Agreement.  No
consideration shall be given to the fact or presumption that any party to this
Agreement had a greater or lesser hand in drafting this Agreement.

 

25.2        Captions.  Except for the boldfaced defined terms used
in Section 1, in construing and enforcing this Agreement, no consideration
shall be given to the captions of the articles, sections, subsections, and
clauses of this Agreement, which are inserted for convenience in organizing and
locating the provisions of this Agreement, not as an aid in its construction.

 

17

 

25.3        Plural and Singular
Forms.  Plural words shall be
understood to include their singular forms and vice versa.

 

25.4        Including.  The word “include” and its syntactical forms
mean “include, but are not limited to,” and corresponding syntactical
forms.  The principle of ejusdem generis shall not be used to limit the scope of the
category of things illustrated by the items mentioned in a clause introduced by
the word “including.”

 

25.5        Definitions.  A defined term has its defined meaning
throughout this Agreement, regardless of where in this Agreement the term is
defined.

 

25.6        Internal
Cross-References.  Except as
otherwise provided in this Agreement, a reference to an Article, Section, or
clause means an article, section, or clause of this Agreement and may be
understood to mean, for example, “Section 5.1 of this Agreement” or “Section 5.1
hereof.”  The term “Section” is used
variously to identify entire Sections (as in “Section 3.1”), subsections
(as in “Section 3.1(b)”), and clauses (as in “Section 3.1(b)(i)”).

 

25.7        Currency.  Unless otherwise specifically indicated
herein all dollar amounts listed or described in this Agreement are expressed
in lawful currency of Canada.                   .  

 

18

 

Executed as of the date first set forth above.

 

 

	
   

  	
  NEENAH:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  NEENAH PAPER COMPANY OF CANADA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Sean Erwin

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: President and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature page for Stumpage Agreement

  

 

19

 

	
   

  	
  NPNS:

  
	
   

  	
   

  
	
   

  	
  NORTHERN PULP NOVA SCOTIA CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:  Sean Erwin

  
	
   

  	
   

  
	
   

  	
  Title:   President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
  Signature page for Stumpage Agreement

  
				

 

 

EXHIBIT A

 

Qualifying Stumpage Specifications

 

	
  “Softwood Sawlogs” shall mean:

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Length

  	
  12,14, and 16 foot

  
	
  (b)

  	
  Trim

  	
  2” to 8”

  
	
  (c)

  	
  Minimum top diameter

  	
  4” outside bark

  
	
  (d)

  	
  Maximum diameter

  	
  28” outside bark

  
	
  (e)

  	
  Acceptable species

  	
  All Spruces & Jack Pine

  
	
  (f)

  	
  Dead wood

  	
  White, sound, dead wood is acceptable – provided
  no sap rot

  
	
   

  	
   

  	
   

  
	
  (g)

  	
  Burned wood

  	
  No burned or charred wood

  
	
  (h)

  	
  Rot

  	
  Not acceptable

  
	
  (i)

  	
  Stain

  	
  Solid hard red stain acceptable (growth rings
  must be visible)

  
	
  (j)

  	
  Sweep (& other)

  	
  1/2 top diameter maximum sweep (e.g., less than
  3” sweep on a 6” diameter bolt); no seams or forked pieces

  
	
  (k)

  	
  Limbs

  	
  Must be cut flush with bole.

  
	
  (l)

  	
  Butt Flare

  	
  No excessive butt flare

  
	
   

  	
   

  	
   

  
	
  “Softwood Studwood”
  shall mean:

  	
   

  
	
  (a)

  	
  Length

  	
  8, 9 or 10 foot

  
	
  (b)

  	
  Trim

  	
  2” to 8”

  
	
  (c)

  	
  Minimum top diameter

  	
  3.6 inches outside bark

  
	
  (d)

  	
  Maximum top diameter

  	
  12.0” outside bark

  
	
  (e)

  	
  Acceptable species

  	
  All Spruces, Balsam Fir & Jack Pine

  
	
  (f)

  	
  Loads

  	
  Mixed species loads

  
	
  (g)

  	
  Dead wood

  	
  White, sound, dead wood is acceptable – provided
  no sap rot

  
	
   

  	
   

  	
   

  
	
  (h)

  	
  Burned wood

  	
  No burned or charred wood

  
	
  (i)

  	
  Rot

  	
  Not Acceptable

  
	
  (j)

  	
  Stain

  	
  Solid hard red Stain acceptable (growth rings
  must be visible)

  
	
  (k)

  	
  Sweep (& other)

  	
  1/2 top diameter maximum sweep (e.g., less than
  3” sweep on a 6” diameter bolt); no seams or forked pieces

  
	
  (l)

  	
  Limbs

  	
  Must be cut flush with bole.

  
	
  (m)

  	
  Butt Flare

  	
  No excessive butt flare

  
	
   

  	
   

  	
   

  
	
  “Softwood Pulpwood”
  shall mean :

  	
   

  
	
  (a)

  	
  Length

  	
  8 foot

  
	
  (b)

  	
  Trim

  	
  2 to 8 inches

  
	
  (c)

  	
  Minimum top diameter

  	
  2.5” outside bark for sawmill delivered
  timber or 1” outside bark for full tree roadside flail chipper timber

  
	
  (d)

  	
  Maximum top diameter

  	
  13.0” outside bark

  
	
  (e)

  	
  Acceptable species

  	
  All softwood species

  
	
  (f)

  	
  Loads

  	
  Mixed species loads permitted unless notified
  in writing that species segregation is required (spruce/fir segregated from
  other softwood species)

  
	
  (g)

  	
  Dead wood

  	
  White, sound, dead wood is acceptable

  

 

 

	
  (h)

  	
  Rot

  	
  Maximum 1⁄2 diameter (60% of end area) is
  acceptable

  
	
  (j)

  	
  Burn/charred wood

  	
  Unacceptable

  
	
  (j)

  	
  Sweep (& other)

  	
  12” maximum sweep; no forked pieces

  
	
  (k)

  	
  Limbs

  	
  Must be cut flush with bole.

  
	
   

  	
   

  	
   

  
	
  “Hardwood Sawlogs”
  shall mean:

  	
   

  
	
  (a)

  	
  Length

  	
  7 or 8 foot

  
	
  (b)

  	
  Trim

  	
  2 to 8 inches

  
	
  (c)

  	
  Minimum top diameter

  	
  7.0 inches outside bark

  
	
  (d)

  	
  Maximum diameter

  	
  36.0 inches outside bark

  
	
  (e)

  	
  Acceptable species

  	
  sugar maple, red maple, yellow birch, white
  birch, oak, ash, beech

  
	
  (f)

  	
  Clear faces

  	
  minimum 2 clear faces

  
	
  (g)

  	
  Heart

  	
  sugar & red maple – 1⁄2

  
	
  (h)

  	
  Stain

  	
  no stain

  
	
  (i)

  	
  Rot

  	
  red maple, beech no rot; all other species
  over 10 inches top diameter with 3 clear faces up to 30% rot

  
	
  (j)

  	
  Burn/charred wood

  	
  Unacceptable

  
	
  (k)

  	
  Sweep (& other)

  	
  less 10 inches top diameter straight; less
  than 3 inches over 10 inch top; no forks

  
	
  (l)

  	
  Limbs

  	
  Must be cut flush with bole.

  
	
  (m)

  	
  Loads

  	
  Mixed species loads acceptable

  
	
   

  	
   

  	
   

  
	
  “Hardwood Pulpwood”
  shall mean:

  	
   

  
	
  (a)

  	
  Length

  	
  8 foot or 12 to 18 feet

  
	
  (b)

  	
  Minimum top diameter

  	
  3.0 inches outside bark

  
	
  (c)

  	
  Maximum diameter

  	
  18.0 inches outside bark

  
	
  (d)

  	
  Acceptable species

  	
  All hardwood species except poplar

  
	
  (e)

  	
  Rot

  	
  Sound and cut from living trees unless
  specific market has tolerance for rot.

  
	
  (f)

  	
  Burn/charred wood

  	
  Unacceptable

  
	
  (g)

  	
  Sweep (& other)

  	
  Less than 6 inches; no forks; cut square at
  ends

  
	
  (h)

  	
  Limbs

  	
  Must be cut flush with bole.

  
	
  (i)

  	
  Butt Flare

  	
  Butt flare and scarf removed

  

 

 

EXHIBIT B

 

Base Stumpage Prices

 

2008:                                                                     As
described in Section 5.3 of the Agreement.

 

2009:                                                                     As
described in Section 5.3 of the Agreement.

 

Remainder Of
Term:                                       [REDACTED]

 

 

EXHIBIT C

 

2008 AND
2009 HARVEST PLANS

 

[REDACTED]

 

 

EXHIBIT D

 

AAC FOR
SOFTWOOD VOLUME AND SILVICULTURE

 

[REDACTED]

 

 

EXHIBIT E

 

Road Specification

 

NPNS will improve or build temporary haul roads for the removal of
Qualifying Stumpage as set forth in Section 4.2 under the following
conditions:

 

1.               To the extent
possible NPNS will use or improve existing haul roads.

 

2.               It is NPNS’s intent
that construction of new haul roads will be held to the minimum necessary to
remove the Qualifying Stumpage.

 

3.               Haul roads will be
improved or designed for one lane traffic capable of accommodating standard 18
wheel tractor-trailer log trucks.  The
road width will normally be 5.0 to 5.5 meters or less, unless terrain
features require additional width.

 

4.               Roads will be
designed to minimize the number of stream crossings.

 

5.               NPNS will be
responsible for road construction cost. 
However, if changes are made in the roads location or design solely for
the benefit of Neenah, than the additional cost of those changes will be the
responsibility of Neenah.

 

6.               The construction,
maintenance, and use of haul roads will comply with all Applicable Laws and
requirements necessary to maintain SFI ® Certification for the Timberlands.

 

7.               Following the
completion of harvesting operations roads will be left in as good or better
condition as existed prior to the harvesting. 
Temporary stream crossing will be removed, and where necessary water control
structures will be constructed.

 

8.               NPNS will notify
Neenah of completion of the harvest operation and final road maintenance, after
which responsibility for the road reverts to Neenah.

 

 

EXHIBIT F

 

Timberland Properties

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