Exhibit 10.6
Table of Defined Terms
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Paragraph Page
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Acceptable Protection Coverage 6.1.5.1 25
Acquisition Debt 6.1.5.2 25
Affiliate 1.1 2
Aggregate Indemnification Payments 2 3
API Introduction 1
API Purchase Introduction 1
AWA Introduction 1
Base Debt Period 6.1.5.3 25
Buyers Introduction 1
Change of Control 6.1.5.4 26
Claim Notice 5.2.1 17
Claims 5.2.2 18
Closing Date High Yield Note 6.1.5.3 26
Costs and Expenses 1.2 2
Deed 10.3 34
Designated Debt Arbiter 6.1.5.5 26
Designated Fox River Arbiter 6.1.5.6 26
Excess Cost Due Date 4.1.1.1 6
Excess Costs 5.2.5 20
Excess Coverage 6.1.3 25
Excess Projected Amount 6.1.5.7 27
Extended Debt Period 6.1.5.8 27
Extended Debt Period Prerequisites 6.1.5.9 27
Fox River Payments 6.1.1 23
Indemnification Notice 4.1.1.1 5
Initial Indemnification Payment 4.1.1.2 6
Insolvency Event 4.2.3 10
Later Period Coverage 6.1.2 24
Loan Amount 4.1.2 7
Table of Defined Terms
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(continued)
Paragraph Page
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Loans 4.1.2 7
Member of the Buyers' Group 1.3 2
New Appleton Introduction 1
Observing Buyers 5.2.8 21
PDC Introduction 1
PDC Agreement Introduction 1
Purchase Agreement Introduction 1
Recoveries 1.4 2
Refinancing 6.1.5.10 28
Relief 1.5 3
Scheduled Base Period Expiration Date 6.1.5.3 26
Security Agreement 6.2 30
Substitute High Yield Note 6.1.5.3 26
Tax 1.6 3
Tax Benefit Amount 5.1.1.1 12
Tax Contest 5.1.5.2 16
Tax Designee 5.1.5.1 15
Tax Notice 5.1.5.1 15
Tax Relief Notice 5.1.4.1 14
Tax Relief Response Notice 5.1.4.2 14
Taxation 1.6 3
ii
FOX RIVER AWA ENVIRONMENTAL INDEMNITY AGREEMENT
THIS AGREEMENT is made on the 9/th/ day of November, 2001 by and among
PAPERWEIGHT DEVELOPMENT CORP. ("PDC"), a Wisconsin corporation, NEW APPLETON
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LLC, a Wisconsin limited liability company ("New Appleton" and, together with
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PDC, "Buyers"), APPLETON PAPERS INC., a Delaware corporation ("API"), and ARJO
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WIGGINS APPLETON p.l.c., a corporation incorporated in England and Wales with
company number 2454830 ("AWA").
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WHEREAS, pursuant to a Purchase Agreement dated as of July 5, 2001 (the
"Purchase Agreement"), Buyers have indirectly purchased one hundred percent
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(100%) of the outstanding capital stock of API from the Sellers, as defined
therein (the "API Purchase"); and
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WHEREAS, Buyers have agreed, pursuant to the Fox River PDC
Environmental Indemnity Agreement (the "PDC Agreement") of even date herewith,
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and in reliance on this Agreement, to indemnify API in respect of the Excess
Costs;
WHEREAS, in connection with the API Purchase, AWA has agreed to
indemnify Buyers against all costs incurred by Buyers in connection with their
indemnification obligations under the PDC Agreement; and Buyers and API have
agreed jointly and severally to indemnify AWA against the API Excess Costs; and
WHEREAS, capitalized terms used herein without definition shall have
the meaning ascribed to them in the PDC Agreement.
NOW, THEREFORE, the parties hereto have agreed to the following:
1. INTERPRETATION
In this Agreement, unless the context otherwise requires:
1.1 "Affiliate" means a person or entity included within the definition
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of "affiliate" set forth in United States Securities and Exchange Commission
Rule 405, as amended from time to time.
1.2 "Costs and Expenses" means reasonable out-of-pocket expenses
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properly incurred (i) in connection with a Tax Contest, (ii) in pursuing or
asserting any rights of Recovery, or (iii) in connection with the defense of
Claims. For the purposes hereof, all costs incurred by employees of API, Buyers
or any other Member of the Buyers' Group who assist AWA pursuant to Section 5.2
below shall be included as Costs and Expenses at the rate per hour specified in
Schedule 1.2 hereto
1.3 "Member of the Buyers' Group" means API (whether or not it is at
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any relevant time still an Affiliate of Buyers), Buyers and its and their
respective present or future Affiliates, officers, employees, agents, directors,
stockholders, partners and other holders of equity securities.
1.4 "Recoveries" means any amounts which are received by API or any
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other Member of the Buyers' Group from any third party in respect of Excess
Costs (but, for the avoidance of doubt, not including any Tax Benefit Amount as
defined in Section 5.1.1.1.), including without
limitation (i) pursuant to the NCR Agreements, (ii) pursuant to insurance
policies, and (iii) from other third parties or otherwise. For the avoidance of
doubt, Recoveries will not include (x) any payments by NCR to third parties or
(y) payments by NCR to API which API combines with its own funds to make a
payment to a third party on behalf of both API and NCR; and Recoveries will
include any amounts paid by NCR to API under the NCR Agreements in reimbursement
of amounts previously paid by API to third parties on behalf of NCR, but only
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to the extent that API had included such previously paid amounts as Excess Costs
under the PDC Agreement.
1.5 "Relief" means any loss, allowance, credit, deduction or set-off
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for Tax purposes benefiting any Member of the Buyers' Group arising as a result
of (i) its or any other Member of the Buyers' Group's incurring of or paying
Excess Costs, (ii) any indemnification payment by Buyers under the PDC
Agreement, or (iii) its or any other Member of the Buyers' Group's incurring of
or paying Costs and Expenses. For the avoidance of doubt, Relief shall include
any benefit described above obtained by any shareholder of a Member of the
Buyers' Group by virtue of such Member of the Buyers' Group being a so-called
"pass-through" entity for United States tax purposes.
1.6 "Tax" or "Taxation" means all federal, state, provincial, local,
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territorial and foreign income, profits, franchise, gross receipts, payroll,
sales, employment, use, property, real estate, excise, value added, estimated,
stamp, alternative or add-on minimum, environmental, withholding and any other
taxes, duties or assessments together with all penalties, interest and additions
imposed with respect to such tax amounts.
2. INDEMNIFICATION BY AWA
Subject to the provisions of this Agreement, AWA hereby covenants to
indemnify and hold harmless Buyers or, where applicable, any other Member of the
Buyers' Group, in respect of the following (the "Aggregate Indemnification
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Payments"):
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2.1 all amounts for which Buyers become responsible in satisfaction of
their indemnification obligations under the PDC Agreement, reduced by the sum of
(i) any Tax Benefit Amounts, and (ii) any Recoveries received by any Members of
the Buyers' Group;
2.2 any Tax Benefit Amount in the event, and only to the extent that,
any such Tax Benefit Amount is not finally allowed by the applicable Tax
authority after having been taken into account as a repayment of a Loan pursuant
to Section 4.1.2.2(ii), along with any interest and penalties paid (net of Tax
effect) in respect of any such disallowance;
2.3 any Recoveries in the event, and only to the extent that, any such
Recoveries are not finally received (or must be returned) by any Members of the
Buyers' Group after having been taken into account as a repayment of a Loan
pursuant to Section 4.1.2.2(i).; and
2.4 any Costs and Expenses incurred by Buyers, but only to the extent
not explicitly the responsibility of the Buyers by operation of Section 5.1.5.3
or Section 5.2.8 below.
3. INDEMNIFICATION BY API AND BUYERS
API and Buyers hereby acknowledge (i) that they are and shall remain,
as between the parties hereto, solely responsible for the satisfaction of the
API Excess Costs, and nothing contained herein or in the PDC Agreement shall
transfer any such liability to AWA or constitute AWA's agreement to assume any
such liability, and (ii) that the indemnity provided by AWA pursuant to Article
2 shall not apply to the API Excess Costs. In accordance with the foregoing, API
and Buyers hereby jointly and severally covenant to indemnify, hold harmless and
pay to AWA an amount equal to any API Excess Costs that AWA actually incurs or
otherwise pays on behalf of API, either Buyer or any other Member of the Buyers'
Group.
4. SATISFACTION OF AWA INDEMNIFICATION
4.1 The parties hereby acknowledge that while API may be legally responsible, as
a matter of law, for satisfying the Indemnified Excess Costs, and while AWA's
indemnification obligation hereunder in respect of the Indemnified Excess Costs
relates to Buyers' obligation to indemnify API, it is the agreement of the
parties that, as set forth in Section 4.1.3, by operation
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of this Agreement and AWA's indemnification obligations hereunder, AWA shall,
upon Buyers' request but subject to the terms and conditions set forth herein,
pay (or cause to be paid) to API on behalf of Buyers or Buyers (or, where
applicable, Members of the Buyers' Group) the amount of the Indemnified Excess
Costs prior to such time that API (or either Buyer (or, where applicable, a
Member of the Buyers' Group)) becomes legally obligated to pay such Indemnified
Excess Costs so that neither Buyer (nor API, nor, where applicable, any other
Member of the Buyers' Group) is effectively ever out of pocket in respect
thereof; provided that in furtherance of the foregoing, AWA may in its
discretion make such payments directly to the applicable obligee in respect
thereof, in which latter case AWA shall provide notice to Buyers and API of such
direct payment. Further, except as set forth in Section 4.1.3, and consistent
with the foregoing, AWA shall pay the Indemnified Excess Costs initially without
giving effect to the deductions therefrom set forth in Sections 2.1(i) and (ii)
above. The following sets forth the procedures under which AWA shall pay the
Indemnified Excess Costs; provided, however, that nothing contained below is
intended to limit AWA's rights of control as set forth in Section 5 below.; and
provided, further, that the parties acknowledge that they may from time to time
agree to informal procedures to supplement the following, although neither party
is under any obligation to agree to any such informal procedures:
4.1.1 AWA shall initially satisfy the amount of Indemnified Excess
Costs as follows:
4.1.1.1 Buyers (or API on behalf of Buyers) shall provide notice (the
"Indemnification Notice") to AWA, setting forth the amount of any
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Indemnified Excess Costs which the Buyers are required to pay to API under
the terms of the PDC Agreement for which Buyers seek indemnification
hereunder, notwithstanding that
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neither the Buyers nor API have paid such costs in advance of issuing such
Indemnification Notice. The Indemnification Notice shall set forth the amount of
the applicable Indemnified Excess Costs, together with documentary support in
respect thereof (setting forth all of the circumstances thereof), and, if
payment thereof has not yet been made, the date by which such payment is legally
due from Buyers (the "Excess Cost Due Date").
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4.1.1.2 AWA shall, and notwithstanding that it may be contesting its
obligation to make such payment in accordance with Section 7, pay to Buyers or
Members of the Buyers' Group (or, pursuant to Sections 4.1 and 4.1.3, the
applicable obligee or API) the amount of the Indemnified Excess Costs set forth
in each Indemnification Notice (the "Initial Indemnification Payment") not later
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than the later of (i) ten (10) days after delivery of the Indemnification Notice
or (ii) seven (7) days prior to the Excess Cost Due Date or (iii) if AWA makes
such payment to the applicable obligee or to API, on the due date therefor as
set forth in the PDC Agreement; provided that AWA shall be entitled to reduce
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any Initial Indemnification Payment by any amounts owed to AWA under this
Agreement, including without limitation (x) indemnification payments pursuant to
Section 3, (y) any Recoveries (whether or not in respect of such Initial
Indemnification Payment) not previously paid to AWA or otherwise applied against
AWA's obligations hereunder, and (z) any Tax Benefit Amount not previously paid
to AWA or otherwise applied against AWA's obligations hereunder. If AWA shall
not make any Initial Indemnification Payment when the same shall be due, the
amount of such past due payment shall be payable by AWA on demand by API,
together with interest at the rate of ten percent (10%) per annum from the date
such payment was due.
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In the event that AWA shall at any time contest or dispute its
obligation to make an Initial Indemnification Payment, AWA shall submit
such dispute for resolution pursuant to Section 7 below; and if, as a
result thereof, API is obligated to reimburse AWA it shall do so upon
demand, together with interest at the rate of ten percent (10%) per
annum from the date AWA made such payment.
4.1.2 The Initial Indemnification Payments hereunder shall
initially be characterized as loans ("Loans" and the amounts
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outstanding from time to time in respect of the Loans, the "Loan
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Amount") from AWA to Buyers, as follows:
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4.1.2.1 Each Loan shall be interest free and without
recourse to Buyers, API or any other Member of the Buyers' Group, such
that neither Buyers, API, nor any other Member of the Buyers' Group
shall under any circumstances be obligated to make repayment thereof
other, than as set forth in Section 4.1.2.2 or otherwise below.
4.1.2.2 The Loan Amount shall be repaid, or deemed
repaid, as follows:
(i) in any and all events (and regardless of
whether there are then outstanding Loan Amounts), Buyers shall pay to AWA all
Recoveries within ten (10) days following actual receipt thereof by API or any
other Member of the Buyers' Group. Any such payments shall constitute payments
of outstanding Loan Amounts or, if no Loan Amounts are then outstanding,
prepayments in respect of future Loan Amounts;
(ii) on March 15 of each year (or, by
operation of Section 5.1.4 below, as soon as possible thereafter), Buyers shall
repay any outstanding Loan Amount to the extent of the Tax Benefit Amount in
respect of the prior calendar year; provided that, in lieu of making any such
cash payment, Buyers may elect to permit AWA to reduce its next payment
obligations to Buyers hereunder by such amount;
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(iii) if upon final calculation of the Tax
Benefit Amount for a calendar year the amount thereof is different than the
amount utilized in the calculation described in (ii) above, the parties hereto
shall make an appropriate reconciling payment, i.e. if the Tax Benefit Amount is
greater than utilized, the Buyers shall pay such excess amount in cash to AWA
(subject to the proviso at the end of subsection 4.1.2.2(ii) above); and if the
Tax Benefit Amount is less than utilized, AWA shall pay such lesser amount in
cash to Buyers; and
(iv) the outstanding Loan Amount in respect
of each year shall be deemed repaid, and Buyers shall have no further
obligations in respect thereof, after giving effect to the repayments set forth
in (i) through (iii) above. Any amounts deemed repaid, as aforesaid, shall
therefore be treated as Aggregate Indemnification Payments in accordance
herewith, i.e. to the extent of the original Loan Amount for such year reduced
by the payments made in respect of Recoveries and the Tax Benefit Amount.
4.1.3 In recognition of Buyers' obligations under the PDC
Agreement and of the fact that API shall be responsible in the first
instance to satisfy the Indemnified Excess Costs, Buyers hereby direct
AWA to make all payments hereunder directly to the applicable obligee
or, if applicable, to API; provided, however, that such direct payments
shall nonetheless be treated as a matter of law as being in
satisfaction of AWA's obligations hereunder.
4.2 At any time that (i) an Insolvency Event has occurred with
respect to Buyers, API or any other Member of the Buyers' Group or (ii) Buyers,
API or any other Member of the Buyers' Group have failed to pay or satisfy any
portion of the API Excess Costs when due, and such failure shall have continued
for thirty (30) days after written notice thereof shall have been given by AWA
to the defaulting party; (provided that such notice and cure period shall not
apply
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if any such extended period would have a material adverse effect on AWA; and
further provided that Buyers' failure to make any indemnification payment to API
or AWA by reason of AWA's failure to make an indemnification payment to Buyers
pursuant to this Agreement shall not be deemed to be a default hereunder), the
following shall thereafter apply:
4.2.1 AWA shall be entitled, in lieu of the procedures set forth
in Section 4.1, to make payments as otherwise determined in accordance
with Section 4.1.1.2 equal to the amount of Indemnified Excess Costs,
net of AWA's good faith estimate of the Tax Benefit Amount and
Recoveries to be obtained by API or another Member of Buyers' Group
relating to such Indemnified Excess Costs. Any such payment shall be
deemed to constitute a Loan hereunder and the amount thereof shall
constitute a portion of the Loan Amount; provided that in such case
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any Tax Benefit Amount or Recoveries, when received, relating to such
Indemnified Excess Costs up to the amount of such estimate thereof
shall be the property of Buyers. If, upon final determination of Tax
Benefit Amount and Recoveries, the amount paid by AWA pursuant to
Section 4.1.3 on account of Indemnified Excess Costs is inaccurate,
then, as applicable, either (x) AWA shall pay Buyers in cash the
amount of any deficiency or (y) Buyers shall pay AWA in cash the
amount of any overpayment, (subject to the proviso at the end of
Section 4.1.2.2(ii)).
4.2.2 In any event, and without affecting the limitations set
forth in the definition of Indemnified Excess Costs as set forth in
the PDC Agreement applicable upon an Insolvency Event, AWA's
indemnification obligations hereunder, and its obligation to make
Loans hereunder, shall not in any year exceed the amount of
Indemnified Excess Costs for which the Buyers and/or API would have
become responsible in that year absent such Insolvency Event. For the
avoidance of doubt,
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therefore, if by reason of an Insolvency Event, the obligations of the
Buyers and/or API in respect of Indemnified Excess Costs are accelerated,
liquidated or otherwise established at a specific sum representing, for
example, the then current value of the future obligations, AWA's
responsibility hereunder shall not apply to such liquidated amount, but
instead shall be limited such that AWA's obligations hereunder shall be
calculated and paid each year on the basis of the Indemnified Excess Costs
that would have been paid by API during that year had there been no such
acceleration or liquidation.
4.2.3 For the purposes hereof, an "Insolvency Event" shall occur in
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relation to a person if:
(i) it admits in writing its inability to pay its debts as
they fall due;
(ii) it voluntarily commences an action for its liquidation
or winding up otherwise than purely for the purposes of a solvent reconstruction
or amalgamation;
(iii) it consents to the appointment of a receiver (including
an administrative receiver or receiver and manager) over the whole or any
material part of its assets or undertaking, or, after a 60 day period, is unable
to discharge or stay an involuntary action for such appointment;
(iv) it makes a general assignment for the benefit of its
creditors;
(v) a voluntary or involuntary petition has been filed by or
against it pursuant to any bankruptcy or insolvency law (as from time to time
amended, re-
10
enacted or replaced); provided, however, that in the case of an involuntary
petition, such petition is not discharged or stayed within 60 days after its
filing; or
(vi) any matter similar or analogous to any of those described
above occurs in relation to it under the laws of any relevant jurisdiction.
4.3 The Aggregate Indemnification Payments made by AWA pursuant to this
Section 4, after giving effect to the Tax Benefit Amount and Recoveries, if
applicable, shall constitute reductions to the Purchase Price paid by Buyers in
respect of the API Purchase.
4.4 Buyers and API acknowledge that AWA's combined maximum aggregate
liability to Buyers and API hereunder or otherwise in respect of Excess Costs
shall not exceed the Excess Costs paid (or otherwise incurred) by API, Buyers or
any other Members of the Buyers' Group and constituting Indemnified Excess
Costs, net of any Recoveries and any Tax Benefit Amounts.
4.5 Notwithstanding any provision of this Agreement to the contrary,
AWA is not assuming any liability of Buyers or API to third parties in respect
of Excess Costs pursuant to this Agreement; instead AWA is only indemnifying
Buyers or any other Member of the Buyers' Group in respect thereof. Further, no
person or entity, other than the parties to this Agreement and the other Members
of the Buyers' Group, shall have any rights or obligations under or by reason of
this Agreement, including but not limited to any third party beneficiary rights,
nor any right of direct action to enforce this Agreement.
4.6 Further, for purposes of determining whether Buyers have satisfied
the First Tier Indemnification Amount (and the point at which API becomes
responsible for the API Excess Costs), the Indemnified Excess Costs shall be
deemed to include (i) any payments made by AWA which would have constituted
Excess Costs if they had been incurred by API or would
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have been subject to indemnification hereunder if incurred by Buyers, and (ii)
all Costs and Expenses incurred by AWA.
5. TAX BENEFITS; RECOVERIES
5.1 Buyers and API hereby agree that they shall use their best efforts to
seek and obtain Relief on account of the payment of Excess Costs or, as the case
may be, indemnification payments by Buyers to API, in any such case for the
benefit of any Member of the Buyers' Group, as expeditiously and as diligently
as practicable. If, and to the extent any Member of the Buyers' Group obtains
any such Relief, the amount thereof shall be a deduction from AWA's
indemnification obligations (i.e. as a Tax Benefit Amount, as set forth in
Section 2.1(i) above).
5.1.1 For the purposes hereof,
5.1.1.1 the "Tax Benefit Amount" shall mean the actual benefit,
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stated in dollars, obtained by any Member of the Buyers' Group on account of
Relief. For the purposes of calculating the Tax Benefit Amount, (i) the
applicable Relief shall be determined by reference to the average Tax rates
applicable to such Member of the Buyers' Group in the year in which such
determination is being made, (ii) such calculation shall be based upon claims
for Relief made against Tax either by way of deduction against taxable profits
or otherwise, i.e. when Tax would otherwise have become payable but for Relief,
and (iii) the Tax Benefit Amount shall be reduced by any Tax (also determined
based upon the average rates of such Member of the Buyers' Group) arising by
reason of the deemed repayment or satisfaction of a Loan or otherwise by reason
of the structure of the arrangement set forth herein; and if the Tax calculated
pursuant to the subsection (iii) exceeds the Tax Benefit Amount, the amount of
such excess shall be paid in cash by AWA to Buyers.
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5.1.1.2 the Buyers shall provide AWA with copies of all tax returns
(and underlying work papers in connection therewith) reflecting the calculation
of the Tax Benefit Amount. Upon AWA's request, the Buyers shall provide AWA with
access to all such information and to those professional advisers who assisted
in the preparation thereof; provided, however, the disclosure of such tax
returns and other information to AWA shall be subject to the terms of Section
9.2 of the Purchase Agreement.
5.1.2 In the event Buyers or API fail to comply fully with their
obligations under this Section 5.1 (and in accordance with Section 5.1.4 source
not found.) to claim Relief or fail to utilize such Relief as soon as practical
and otherwise as aforesaid, Buyers shall be obligated to repay in cash (subject
to the proviso at the end of Section 4.1.2.2(ii)),, at the time when a Tax
Benefit Amount would otherwise have been paid pursuant to Section 4.1.2.2, that
portion of the Loan Amount equal to the aggregate Tax Benefit Amount that would
have been realized by Buyers, API or any other Member of the Buyers' Group had
it acted in accordance with its obligations under this Agreement.
5.1.3 In the event that a Loan Amount is deemed repaid by reason of
a Tax Benefit Amount (or cash is actually paid to AWA in respect of a Tax
Benefit Amount) and the Internal Revenue Service or other Tax authority
subsequently seeks to deny part or all of such Tax Benefit Amount or such Tax
Benefit Amount is otherwise decreased by any such Tax authority, AWA shall
immediately re-loan to Buyers the amount of any Tax and deficiency interest that
is required to be paid by any Member of the Buyers' Group either (i) as a result
of a settlement or the decision of an applicable Tax authority or judicial body
following a determination not to pursue any appeal thereof, or (ii) to pursue
the claim, either in a different forum, or to contest a state determination, or
otherwise.
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Any such re-loan shall be made immediately upon, or concurrently with, any such
payment required to be made by any Member of the Buyers' Group. Any amount
re-loaned pursuant to this Section 5.1.3 will be repaid in cash forthwith by
Buyers to AWA (or applied against AWA's indemnification obligations hereunder)
but only if and to the extent that the entitlement to a Tax Benefit Amount in
respect of which an amount is re-loaned hereunder is finally established and a
Tax Benefit Amount obtained, failing which such re-loaned sum will become part
of the Aggregate Indemnification Amounts pursuant to Section 2 above and shall
be deemed repaid in accordance with Section 4.1.2.2
5.1.4 The following provisions shall apply in respect of the process
under which Members of the Buyers' Group shall determine the extent to which
they shall claim Relief with respect to each year.
5.1.4.1 On or before March 15 during each year API shall deliver
to AWA written notice (the "Tax Relief Notice") setting forth the Relief that it
intends to claim with respect to the prior year, and shall thereafter provide
AWA with any further information that AWA requests that AWA deems relevant to
its review of such Tax Relief Notice.
5.1.4.2 AWA shall provide API with written notice (the "Tax
Relief Response Notice") within 30 days following delivery of the Tax Relief
Notice, either approving or contesting the Tax Relief Notice; provided that such
30 day period shall be extended, as reasonably necessary, to give effect to
requests for further information that are made by AWA pursuant to Section
5.1.4.1 AWA shall be deemed to have approved the Tax Relief Notice if it shall
not deliver a timely Tax Relief Response Notice.
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5.1.4.3 If AWA contests the Tax Relief Notice, as aforesaid, the
parties shall resolve the resulting dispute in accordance with the provisions of
Article 7 below; provided, however, (i) the arbitrator shall in all events be a
firm of recognized national expertise in Tax matters, and (ii) the time frames
set forth within Article 7 shall be accelerated, as necessary, in order to
assure that the Members of the Buyers' Group comply with their Tax reporting
requirements.
5.1.5 The following further provisions shall apply in respect of the
conduct of the Tax affairs of the Members of the Buyers' Group in order to give
effect to the provisions of Section 5.1.
5.1.5.1 Buyers shall keep AWA or its designee for tax matters
(its "Tax Designee") informed of the progress of the Tax affairs of Buyers and
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the Members of the Buyers' Group to the extent they are relevant to Relief
claimed by Buyers or a Member of the Buyers' Group and will provide copies of
all correspondence and transcripts or summaries of all meetings with the
Internal Revenue Service or other Tax authority relevant to the Relief claimed
subject to the terms of Section 9.2 of the Purchase Agreement. Without limiting
the foregoing, Buyers shall promptly notify AWA or its Tax Designee in writing
(a "Tax Notice") following receipt by any Member of the Buyers' Group of any
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notice of any proposed, pending or threatened Tax audit or examination of or
assessment against any Member of the Buyers' Group relating to Relief claimed.
5.1.5.2 AWA or its Tax Designee shall have the right (but not the
obligation) to represent Buyers and the other Members of the Buyers' Group in an
examination, in an administrative appeal and/or in litigation in connection with
any Tax
15
Notice or otherwise in any contest to the extent relating to Relief claimed
(collectively, a "Tax Contest") and to employ counsel at AWA's expense for such
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purpose (and any such expense shall not be deemed be to an Aggregate
Indemnification Payment hereunder). AWA or its Tax Designee may exercise this
right by written notice to Buyers at any time following receipt of any Tax
Notice relating to a Tax Contest. If, and following the date that, AWA exercises
this right, (i) AWA or its Tax Designee shall have the unlimited right to
control all aspects of any such Tax Contest, and (ii) Buyers and the other
Members of the Buyers' Group shall be required to cooperate fully with AWA or
its Tax Designee and its counsel, including the grant of all necessary powers of
attorney.
5.1.5.3 The personnel of Buyers and the other Members of the Buyers'
Group shall have the right of observation at Buyers' expense in any Tax Contest
in which AWA or its Tax Designee exercises its rights to represent a Member of
the Buyers' Group.
5.1.5.4 If AWA or its Tax Designee does not exercise, or until it
exercises, its right to represent Buyers or another Member of the Buyers' Group
in connection with a Tax Contest as aforesaid, Buyers and the other Members of
the Buyers' Group shall consult with and take into account any reasonable
submissions made by AWA or its Tax Designee in respect of such Tax Contest.
5.1.5.5 If AWA or its Tax Designee does not exercise, or until it
exercises, its right to represent Buyers or another Member of the Buyers' Group
as aforesaid, no settlement, compromise or agreement in respect of any Tax
Contest or other disallowance of Relief in respect of Excess Costs shall be made
without the consent of AWA or its Tax Designee, unless AWA or its Tax Designee
fails to respond to a request
16
for consent within thirty (30) days after the delivery thereof, in
which case the matter may be settled without the consent of AWA or its
Tax Designee.
5.1.5.6 Upon settlement, compromise or agreement in respect of
any Tax Contest or other disallowance of Relief, or upon entry of
decision in litigation from which no appeal is taken, and provided that
the provisions of this Section 5.1.4 shall have been complied with, AWA
shall indemnify, hold harmless and pay to Buyers and the other Members
of the Buyers' Group in respect thereof pursuant to Section 2.2 hereof
to the extent the amount thereof had not been re-loaned pursuant to
Section 5.1.3 above
5.1.5.7 The Buyers may elect at any time to assume control
over any Tax Contest that AWA had otherwise elected to control
hereunder, in which case, as between AWA and the Buyers hereunder and
irrespective of the actual conclusion to the Tax Contest, the
applicable Relief will be deemed unchanged from that reflected by the
Tax filings that are the subject of the audit, examination or
assessment.
5.2 Buyers and API hereby agree that they shall use their best
efforts to seek to minimize the amount of the Excess Costs and to seek to obtain
Recoveries as soon as practicable for the benefit of AWA in accordance with the
further provisions of this Section5.2; provided, however, that nothing contained
in this introduction to Section 5.2 shall limit AWA's rights of control as set
forth below.
5.2.1 Buyers shall promptly notify AWA in writing (a "Claim
-----
Notice") following receipt by Buyers or any Member of the Buyers' Group
------
of any written or oral actual or potential claim that could give rise
to an Excess Cost or a Recovery. Buyers and API shall, at all times,
keep AWA fully informed of all claims. Notwithstanding the foregoing,
AWA's obligations hereunder shall not be limited by reason of Buyers'
failure
17
to comply with the requirements of this Section 5.2.1 except to the
extent that such failure has an adverse effect on AWA (including by
ultimately increasing the amount of such Excess Cost or reducing the
amount of any Recovery).
5.2.2 It is the intent of the parties that AWA shall have the
exclusive right (but not the obligation) to carry out or direct, in the
name and on behalf of the Members of the Buyers' Group, the defense of
all claims and proceedings, whether presently existing or hereafter
arising, that could potentially give rise to a claim for
indemnification by API pursuant to the PDC Agreement or by Buyers
hereunder ("Claims") and to carry out or direct all claims for
------
Recoveries in connection therewith. Accordingly, (i) as between AWA and
the Members of the Buyers' Group, AWA shall have the exclusive right to
select counsel to conduct the defense of all such Claims and to pursue
all such Recoveries at AWA's expense, and, subject to Section 5.2.4,
shall have the exclusive right to direct the conduct and settlement
thereof, (ii) Buyers and the other Members of the Buyers' Group shall
cooperate fully with AWA or its designee and its counsel, including by
granting all necessary powers of attorney, (iii) AWA shall have the
right to require the Members of the Buyers' Group to do any of the
foregoing in accordance with AWA's instructions, and (iv) Buyers and
the other Members of the Buyers' Group shall not take any action, nor
make any statement, regarding Claims or Recoveries unless directed to
do so by AWA, or otherwise as consistent with strategies and policies
previously approved by AWA.
5.2.3 In furtherance of the foregoing, API shall, upon AWA's
request, (i) appoint AWA's designee as the Authorization Administrator
to act on behalf of API pursuant to the Settlement Agreement and to
approve the incurrence and payment of all
18
defense and other costs payable by API pursuant to the NCR Agreements and
(ii) assign to AWA (or its designee(s)) all of API's rights to any or all
Recoveries, whether under agreements with third parties, insurance
contracts or otherwise; provided that if any such assignment jeopardizes
API's rights to any such Recoveries or contravenes the express terms of any
agreements, instruments or other arrangements providing API with a right to
Recovery, API shall, to the extent reasonably practicable, take such
alternative actions as may be required by AWA in order to obtain the
equivalent result.
5.2.4 AWA is hereby authorized to consent to a settlement of, or the
entry of any judgment arising from, any Claim or in connection with any
Recovery without the prior written consent of Buyers, Members of the
Buyers' Group or API, where applicable, unless (a) such settlement or
judgment would result in the payment by any Member of the Buyers' Group of
$50,000 or more and such payment is not subject to indemnification
hereunder or (b) any such settlement, compromise or judgment contains an
admission of responsibility or liability by Buyers, API and/or any other
Member of the Buyers' Group that (i) would result in the payment by any
Member of the Buyers' Group of $50,000 or more and such payment would not
be subject to indemnification hereunder, or (ii) if the Claim involves
non-monetary damages or liability, would otherwise result in a material
adverse effect on any Member of the Buyers' Group not covered by AWA's
indemnity hereunder, in any which case (x) AWA shall consult with and give
due consideration to API's position with respect to any such settlement or
judgment, and (y) AWA will not complete such settlement without the prior
written consent of API, which consent shall not be unreasonably withheld.
Buyers, API and each other Member of the Buyers' Group shall, and shall
cause each of its Affiliates, officers, employees,
19
consultants and agents to, provide reasonable cooperation with AWA in the
defense of all Claims and prosecution of Recoveries. If AWA does not
exercise its rights of control set forth in Section 5.2.2 hereof, neither
API, either Buyer or any other Member of the Buyers' Group shall make any
waiver, settlement or admission or modify in any respect any oral or
written agreement with NCR or any other person in respect of any Claim or
any potential Recoveries without the express prior written approval of AWA,
which approval shall not be unreasonably withheld.
5.2.5 Without limiting the generality of the foregoing, neither API
nor any other Member of the Buyers' Group shall:
5.2.5.1 take or fail to take any actions in contravention of
written directives of AWA or in contravention of, or inconsistent with,
strategies or polices previously established by AWA which in any such case
could have the effect of (i) incurring or increasing the aggregate amount
of Excess Costs, or (ii) diminishing potential Recoveries, or (iii)
resulting in or expanding liabilities of API which could become Excess
Costs under the PDC Agreement, without in any such case obtaining the prior
approval of AWA; or
5.2.5.2 accept or assume any responsibility for Excess Costs,
and shall not acknowledge responsibility therefor, by way of settlement or
otherwise, without first obtaining the consent of AWA.
Any obligations voluntarily incurred or payments voluntarily made by
API in contravention of this Section 5.2.5 shall not constitute "Excess Costs"
for the purposes of this Agreement if (x) any such single obligation or payment
involves more than $50,000 or (y) the
20
aggregate of such obligations or payments exceed $500,000 or (z) any such
obligation or payment otherwise results in a material detriment to the interests
of AWA.
5.2.6 API hereby agrees to, and Buyers shall ensure that API shall,
use its reasonable best efforts to comply fully with the terms and
conditions of any insurance policies or agreements with third parties which
may provide for the payment of Excess Costs, and shall further comply with
such reasonable written instructions as AWA or its designee may make
relating to the foregoing.
5.2.7 Buyers and API shall make its employees and consultants
(including, without limitation, Doug Buth, Paul Karch, Dick Wehrel, Dennis
Hultgren, Bill VanDenBrandt and Tami Van Straten as long as each is
employed by API or its Affiliates) available to AWA upon reasonable
request, whether in connection with its pursuit of Recoveries and Relief,
the defense of Claims or other matters relating to the substance of this
Agreement.
5.2.8 The personnel of Buyers and other Members of the Buyers' Group
("Observing Buyers") shall have the right of observation at Buyers' expense
----------------
in any Claim or Recovery in which AWA exercises its right of control herein
so long as any such observation does not interfere with AWA's conduct of
such Claim or Recovery; AWA shall use reasonable efforts to coordinate with
the Observing Buyers the exercise of such observation rights and, if
requested by Buyers, AWA shall keep Buyers appraised of the status of any
such Claim or Recovery.
5.3 Neither API nor Buyers shall transfer or assign any interest of any
kind or nature that either possesses in respect of the PDC Agreement without the
prior written approval of AWA, and shall not consent to any amendment to, or
waiver of rights under, or other
21
modification of the rights or obligations or undertakings of any party under,
the PDC Agreement. Buyers shall ensure that API fully performs its obligations
under the PDC Agreement and shall seek to enforce its rights thereunder to the
fullest extent permitted by law.
5.4 Notwithstanding anything contained herein to the contrary, if AWA shall
fail to comply with its material obligations under this Agreement including,
without limitation, those obligations set forth in Sections 2, 4.1 and 6.1, 7.1
and all subsections relating thereto within 45 days after having received notice
of such failure (provided that such cure period shall be reduced to no less than
20 days if any such additional time would result in a material adverse effect to
API, the Buyers or any other Member of the Buyers' Group), AWA's rights of
control under this Section 5 shall be suspended until such time as it shall have
remedied any such failure; and until such time Buyers shall have the right to
retain control of the matters set forth herein, subject to AWA's rights of
observation and to information disclosure as otherwise available to Buyers
hereunder,
5.5 AWA hereby grants to PDC the right to set off against the Value Amount
under the Deferred Payment (as each is defined in the Purchase Agreement) any
obligations of AWA that are not satisfied when due (it being understood,
however, that the within right of set-off shall not constitute Buyers' sole
recourse against AWA in the case of any such failure).
6. SECURITY
6.1 As assurances for AWA's obligations under this Agreement the following
provisions shall apply:
6.1.1 At a time when the sum of (a) the indemnification payments made
by AWA hereunder, (b) all Costs and Expenses incurred by AWA, and (c) any
other payments made by AWA which would have been indemnifiable hereunder if
they had
22
been incurred by API or Buyers (together, the "Fox River Payments"), is
------------------
less than $75,000,000, if the consolidated "tangible net assets" of AWA and
its subsidiaries and its share of joint ventures and associates ("tangible
net assets" being "net assets," adjusted to remove "intangible assets,"
"deferred tax assets" and "deferred tax liabilities," in each case as
calculated on the same basis and using the same methodology employed in the
preparation of AWA's statutory accounts or, if such accounts are no longer
prepared, on the basis that would be used in preparing such accounts in
accordance with English law and UK GAAP) shall, as determined at the end of
any fiscal quarter, have (i) remained below (Pounds)500 million for two (2)
consecutive fiscal quarters for any reason or (ii) fallen below (Pounds)500
million in whole or in part as a result of (x) a sale of assets outside of
the ordinary course of business, (y) a sale to a third party of stock or
other ownership interests of any direct or indirect operating subsidiary of
AWA or (z) any other discrete transaction outside the ordinary course of
business, the following shall apply:
6.1.1.1 AWA shall deliver into escrow, pursuant to an Escrow
Agreement substantially in the form of Exhibit A hereto with a mutually
---------
agreed upon commercial bank as escrow agent, an amount equal to the excess
of (1) $75,000,000 over (2) the Fox River Payments made to the date on
which the escrow deposit is required. Such escrow deposit shall be made
immediately following the determination that such deposit is required to
made pursuant hereto, but in any event not later than ten (10) days after
delivery of a certification pursuant to Section 6.1.1.3 that reflects AWA's
obligation to make such escrow deposit. Notwithstanding the foregoing, AWA
shall have no obligation to make the payments into escrow required
hereunder for so long as AWA is providing the Acceptable Protection
Coverage described in Section 6.1.3. At such time
23
that AWA shall no longer be providing the Excess Coverage, AWA shall be
required, as a condition to the termination of such Excess Coverage, to
deposit into escrow the amount which is required pursuant to Section
6.1.1.2;
6.1.1.2 The amount to be retained in escrow pursuant to Section
6.1.1.1 above shall at all times equal the excess of (1) $75,000,000 over
(2) the sum of the Fox River Payments made to the applicable date.
Accordingly, any amounts held in escrow pursuant to the Escrow Agreement
which are greater than the amount of such required amount at any time shall
promptly be distributed to AWA free of escrow;
6.1.1.3 For so long as AWA's obligations under this Section
6.1.1 above apply, AWA shall provide Buyers with a quarterly certificate,
signed by an officer of AWA, by the 30/th/ day of the month following each
fiscal quarter, setting forth AWA's consolidated tangible net assets as of
the last day of the previous fiscal quarter, as above; provided that AWA
shall be required to provide Buyers with immediate written notice of any
event described in Section 6.1.1(ii), and
6.1.2 AWA shall keep and maintain, or cause to be kept and maintained,
Acceptable Protection Coverage pursuant to which the specified amounts
described in Schedule 6.1.2-1 hereof are available to satisfy Aggregate
Indemnification Payments in the years set forth therein (the "Later Period
------------
Coverage"); provided, however, once the cumulative Fox River Payments made
--------
by AWA hereunder exceed $75,000,000, the annual amounts available for
payment under the Later Period Coverage may from time to time be reduced in
accordance with the formula attached hereto as Schedule 6.1.2-2; and
provided, further, AWA need not obtain or maintain the Later Period
Coverage for so
24
long as the Excess Coverage remains in effect, it being understood that, at
AWA's option, it may continue the Excess Coverage in place beyond the Base
Debt Period.
6.1.3 During the Base Debt Period, AWA shall keep and maintain, or
cause to be kept and maintained, Acceptable Protection Coverage pursuant to
which the specified amounts described in Schedule 6.1.3 hereof are
available to satisfy Aggregate Indemnification Payments in the years set
forth therein (the "Excess Coverage").
---------------
6.1.4 During the Extended Debt Period, AWA shall keep and maintain, or
cause to be kept and maintained, Acceptable Protection Coverage as follows:
6.1.4.1 On the first day of the Extended Debt Period, the
Acceptable Protection Coverage must be equal to the lesser of (i) two (2)
times the Excess Projected Amount, or (ii) $250,000 reduced by the amount
of Fox River Payments made to such date.
6.1.4.2 Thereafter during the Extended Debt Period, the
Acceptable Protection Coverage must be equal at all times to the amount
described in Section 6.1.4.1 above reduced by the amount of Fox River
Payments made during the Extended Debt Period to the date of calculation.
6.1.5 For the purposes of this Section 6, the following definitions
shall apply:
6.1.5.1 "Acceptable Protection Coverage" means the credit
------------------------------
enhancement in the form attached hereto as Schedule 6.1.5.1.
6.1.5.2 "Acquisition Debt" means all obligations, including,
----------------
without limitation, principal, interest, fees, costs and expenses, payable
by Members of the Buyers' Group under those debt facilities described on
Schedule 6.1.5.2 hereof.
6.1.5.3 "Base Debt Period" means from the date hereof until the
----------------
earliest to occur of (i) the later of (A) November 8, 2008 and (B) if,
pursuant to Section 5 of the
25
Appleton Papers Inc. Senior Subordinated Note issued on the date hereof
(the "Closing Date High Yield Note"), API issues debt securities the
----------------------------
proceeds of which are used to redeem such Closing Date High Yield Note (the
"Substitute High Yield Note"), the seventh anniversary of the issuance date
--------------------------
of such securities (such later date being the "Scheduled Base Period
---------------------
Expiration Date"), and (ii) the occurrence of a Change of Control, and
---------------
(iii) the date on which the Acquisition Debt is in fact fully repaid other
than through a Refinancing.
6.1.5.4 "Change of Control" means the occurrence of all of the
-----------------
following: (i) a change of control as defined in the Closing Date High
Yield Note, (ii) full satisfaction of the repurchase and/or repayment
obligations contained in the Acquisition Debt, including any notice, offer,
repurchase or repayment obligations contained in the Closing Date High
Yield Note or the Substitute High Yield Notes arising from such change of
control, and (iii) the absence of the continuation of a default or event of
default under any of the Acquisition Debt by reason of such change of
control.
6.1.5.5 "Designated Debt Arbiter" means a firm of recognized
-----------------------
national standing mutually acceptable to the Buyers and AWA with the
necessary financial skills to make the determinations described in
6.1.5.9(i) below. In the event that the Buyers and AWA are unable to agree
on the identity of such Designated Debt Arbiter, it shall be determined
pursuant to Section 7.1 below.
6.1.5.6 "Designated Fox River Arbiter" means a firm of recognized
----------------------------
standing mutually acceptable to the Buyers and AWA with the necessary
skills and experience to make the determinations described in 6.1.5.9(iii)
below. In the event that
26
the Buyers and AWA are unable to agree on the identity of such Designated
Fox River Arbiter, it shall be determined pursuant to Section 7.1 below.
6.1.5.7 "Excess Projected Amount" means the sum of the remaining
-----------------------
Aggregate Indemnification Payments during the entire Extended Debt Period
as determined by the Designated Fox River Arbiter over (i) the aggregate
amounts available in cash during the entire Extended Debt Period from the
escrow described in Section 6.1 above, if any (determined on the basis of
the required amount of escrow on the first day of the Extended Debt
Period), and (ii) the Later Period Coverage.
6.1.5.8 "Extended Debt Period" means (a) subject to (b) below,
--------------------
the period following the Scheduled Base Period Expiration Date through
November 8, 2011, and (b) if there exists an Extended Debt Period by reason
of the existence of an Extended Debt Period Prerequisite set forth in
Section 6.1.5.9(ii) below, the period following the Scheduled Base Period
Expiration Date November 8, 2011; provided, however, that (i) in any and
all events there shall be no Extended Debt Period unless the Extended Debt
Period Prerequisites shall have been satisfied and (ii) the Extended Debt
Period shall be terminated upon the occurrence of a Change of Control; and
provided, further, that there shall automatically be an Extended Debt
Period if AWA does not invoke the provisions of Section 6.1.6.1. If AWA
does invoke the provisions of Section 6.1.6.1, there shall be an Extended
Debt Period if it shall be determined pursuant to Section 6.1.6 that the
Extended Debt Period Prerequisites shall have been met.
6.1.5.9 "Extended Debt Period Prerequisites" means that the
----------------------------------
Acquisition Debt shall not have been repaid in full (other than through a
Refinancing), and any one or more of the following shall have occurred:
27
(i) A Designated Debt Arbiter shall not have
determined that API and its Subsidiaries will have sufficient internal cash
(i.e. not obtained through financings (other than normal course equipment or
real estate financings or normal course working capital financings, in any such
case in respect of existing loan facilities; provided that the proceeds of such
working capital financings may not be applied to repay the Acquisition Debt) and
after giving effect to required operating requirements and planned payments and
expenditures) to be able to repay the Acquisition Debt prior to the Scheduled
Base Period Expiration Date; provided, however, if the Designated Debt Arbiter
does make a determination that there exists such sufficient internal cash, the
Extended Debt Period Prerequisite shall nonetheless be deemed to have occurred
pursuant to this subsection (i) unless within thirty (30) days following such
determination either (x) the Acquisition Debt is repaid in full or (y) an amount
equal to the then outstanding Acquisition Debt shall have been irrevocably
deposited for payment on the due date thereof; or
(ii) AWA shall have committed a payment default
hereunder in excess of $1 million prior to the Scheduled Base Period Expiration
Date and shall not have cured such default within 60 days following written
notice thereof; provided that such cure period shall be reduced to no less than
30 days if any such additional time would result in a material adverse effect on
API, the Buyers or any other Member of the Buyers' Group; or
(iii) the Designated Fox River Arbiter has determined
that there is an Excess Projected Amount.
6.1.5.10 "Refinancing" means that the Acquisition Debt shall
-----------
have been repaid in whole or in part through borrowings other than from the
original holders of the Acquisition Debt.
28
6.1.6 In order to allow the determinations to be made pursuant
to Section 6.1.5.9(i) and (iii)above, the following shall apply:
6.1.6.1 If AWA wishes to request a determination as to
the requirement for an Extended Debt Period by requesting determinations
pursuant to Sections 6.1.5.9(i) it must give notice thereof to the Buyers in
writing not later than that date which is 365 days prior to the Scheduled
Base Period Expiration Date.
6.1.6.2 The Designated Debt Arbiter and the Designated
Fox River Arbiter, respectively, shall be identified, including if necessary
by an acceleration of the procedures described in Section 7 below not later
than the dates which are 180 days and 270 days, respectively, prior to the
Scheduled Base Period Expiration Date.
6.1.6.3 Buyers and AWA shall provide the Designated Debt
Arbiter and the Designated Fox River Arbiter with such information and
further assistance as each may require in order to make its required
determinations, but subject in all cases to such limitations as may be
deemed reasonably necessary by Buyers or AWA in order to satisfy
requirements for confidentiality.
6.1.6.4 The Designated Debt Arbiter and the Designated
Fox River Arbiter shall be directed to make their final determinations not
later than the date which is 30 days prior to the Scheduled Base Period
Expiration Date.
6.1.6.5 The determinations of the Designated Debt Arbiter
and the Designated Fox River Arbiter shall be binding and enforceable on the
Buyers and AWA.
6.1.6.6 The cost of the Designated Debt Arbiter and the
Designated Fox River Arbiter shall be borne equally by the Buyers, on the
one hand, and AWA, on the other hand.
29
6.2 As security for its obligations under this Agreement, API and
Buyers shall execute and deliver a Security Agreement (the "Security Agreement")
------------------
substantially in the form of Exhibit B hereto, pursuant to which API and Buyers
---------
shall grant AWA a continuing security interest in the Recoveries and the
proceeds thereof and Buyers' rights under the PDC Agreement.
7. DISPUTES; ARBITRATION
7.1 Buyers and API, on the one hand, and AWA, on the other hand,
shall attempt in good faith to resolve any dispute or difference between or
among the parties arising out of or relating to this Agreement promptly by
negotiation between executives of the relevant parties who have authority to
settle the controversy within fifteen (15) days after delivery of a notice of a
dispute by one or more parties to the others. All negotiations pursuant to this
Section 7.1 are confidential and shall be treated as compromise and settlement
negotiations for purposes of applicable rules of evidence.
7.2 Any dispute or difference between or among the parties arising
out of or relating to this Agreement which has not been resolved by negotiation
pursuant to Section 7.1 shall be settled by arbitration in accordance with the
CPR Rules for Non Administered Arbitration in effect on the date of this
Agreement, by a mutually acceptable single arbitrator designated by the
respective parties. If the parties are unable to agree on an arbitrator within
fifteen (15) days following the expiration of the negotiation period described
in Section 7.1 an arbitrator shall be selected by the Center for Public
Resources pursuant to the procedures set forth in its Rule 6.4.b or by such
other procedures as the parties may elect. In order to expedite the process of
selecting an arbitrator, the parties shall use their best efforts to agree upon
a standby arbitrator and an alternate within thirty (30) days following the
effective date of this Agreement, and within thirty (30) days following the
resignation or inability of any such standby arbitrator or alternate to
30
serve. The arbitration shall be governed by the Federal Arbitration Act, 9
U.S.C.(S)(S)1-16, and judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The place of arbitration shall
be New York, New York. The language of the arbitration shall be English. The
arbitration shall be governed by the law of the State of New York. The
arbitrator is not empowered to award damages in excess of compensatory damages
and each party expressly waives and foregoes any right to punitive, exemplary or
similar damages less a statute requires that compensatory damages be increased
in a specified manner. Following the final arbitration hearings, which shall be
completed within thirty (30) days following the later of (i) the designation of
the arbitrator and (ii) the expiration of the negotiation period described in
Section 7.1 unless otherwise mutually agreed by the parties to the dispute, the
arbitrator shall promptly deliver a written decision with respect to the dispute
to each of the parties, who shall promptly act in accordance therewith. Each
party agrees that any decision of the arbitrator shall be final, conclusive and
binding and that they will not contest any action by any other party thereto in
accordance with a decision of the arbitrator. It is specifically understood and
agreed that any party may enforce any award rendered pursuant to the arbitration
provisions of this Section 7.2 by bringing suit in any court of competent
jurisdiction.
7.3 All reasonable fees, costs and expenses (including attorneys'
fees and expenses) incurred by the party that prevails in any such arbitration
commenced pursuant to Section 7.2 or any judicial action or proceeding seeking
to enforce the agreement to arbitrate disputes as set forth in Section 7.2 or
seeking to enforce any order or award of any arbitration commenced pursuant to
this Section 7.2 may be assessed (in whole or in part) against the party or
parties that do not prevail in such arbitration in such manner as the arbitrator
or the court in such judicial action, as the case may be, may determine to be
appropriate under the circumstances. All costs
31
and expenses attributable to the arbitrator shall be allocated among the parties
to the arbitration in such manner as the arbitrator shall determine to be
appropriate under the circumstances.
7.4 The parties hereto shall take all required steps in order to
avoid any inconsistencies between the resolutions of disputes hereunder and
resolutions of disputes under the PDC Agreement including, without limitation,
the consolidation of any dispute resolution procedures. Notwithstanding anything
to the contrary in this Agreement or in the PDC Agreement, AWA shall not be
bound, nor shall its rights and obligations under this Agreement be determined,
by any arbitration or judicial proceeding conducted pursuant to the PDC
Agreement unless either (i) AWA is a party to such proceeding, or (ii) such
proceeding has been consolidated with such a proceeding hereunder.
7.5 In the event any party fails to make a payment when due
hereunder, interest shall thereafter accrue on the amount due until paid at the
rate of ten percent (10%) per annum.
8. ACCESS TO INFORMATION; SETOFF
8.1 Buyers and API hereby agree to provide AWA or its designee with
unlimited access, upon request and during normal business hours, to all of their
books and records relating to the matters giving rise to Excess Costs and any
information that might reasonably be thought relevant to Excess Costs and
Recoveries in order to permit AWA or its designee to confirm the amount of
Aggregate Indemnification Payments and Buyers' rights thereto and to permit AWA
or its designees to properly manage Excess Costs and Recoveries.
8.2 In the event that it is determined that, for any reason, AWA has
made payments to Buyers in excess of amounts ultimately determined to be owing
hereunder, AWA shall have the right to set-off any such excess payments against
amounts subsequently owing from it to Buyers hereunder or otherwise.
32
9. API GUARANTEE; RIGHTS OF API
9.1 API hereby unconditionally and absolutely guarantees to AWA the
prompt and full payment and performance of all covenants, agreements and other
obligations of Buyers hereunder. The foregoing guarantee shall be direct,
absolute, irrevocable and unconditional and shall not be impaired irrespective
of any modification, release, supplement, extension or other change in the terms
of all or any of the obligations of Buyers hereunder or for any other reason
whatsoever. API hereby waives any requirement of promptness, diligence or notice
with respect to the foregoing guaranty and any requirement that Buyers exhaust
any right or take any action against Buyers in respect of any of their
obligations hereunder.
9.2 AWA hereby agrees, on behalf of itself and its Affiliates,
successors and assigns, that it will not claim or assert that the PDC Agreement
is not enforceable, valid or binding on any of the parties thereto, and hereby
waives any right it has now or may have in the future, to make any claim or
assertion, whether at law or in equity, with respect to such enforceability,
validity or binding effect. The parties hereto acknowledge and agree that this
Agreement and the indemnity obligations of AWA hereunder have the effect of
benefiting API, the Buyers, and the other Members of the Buyers' Group and no
claim shall be made or defense asserted by AWA which would have the effect of
denying API the benefits of this Agreement or the PDC Agreement; provided
nothing contained herein is intended to expand AWA's obligations beyond those
explicitly set forth herein or to deny AWA any other rights or defenses to which
it is entitled hereunder.
10. ASSIGNMENT AND SUCCESSION
10.1 Subject to 10.3 this Agreement may not be amended, modified or
assigned except as agreed in writing by the parties hereto.
33
10.2 This Agreement shall bind API's, Buyers' and AWA's successors and
assigns.
10.3 Notwithstanding the foregoing, API and the Buyers (in respect of
themselves and on behalf of all other Members of the Buyers' Group) and AWA
hereby agree that AWA shall be entitled to enter into the Assignment and
Assumption Deed attached hereto as Exhibit C (the "Deed"); and to hold the
--------- ----
benefits under clause 3(a) of such Deed and to receive any payments made by Arjo
Wiggins Appleton (Bermuda) Limited on account of the Assumed Liabilities
described in clause 1(a)(i) of such Deed in trust for the benefit of the Buyers,
API, and, where applicable, any other Members of the Buyers' Group and will
promptly remit such amounts to the Buyers, API and, where applicable, any other
Members of the Buyers' Group pursuant to the terms hereof, and that such entry
into the Deed by AWA shall not constitute a breach of Section 10.1. For
avoidance of doubt any payment received by the Buyers, API and/or the other
Members of the Buyers' Group from Arjo Wiggins Appleton (Bermuda) Limited
pursuant to the terms of the Deed shall be treated as reducing the corresponding
amount owed by AWA to the Buyers, API and/or the other Members of the Buyers'
Group under this Agreement.
11. GOVERNING LAW; CONSENT TO JURISDICTION
THIS AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. FOR
THE LIMITED PURPOSE OF ENFORCEMENT OF AN ARBITRAL JUDGMENT IN ACCORDANCE WITH
SECTION 7.2 EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENTS
TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK OR THE
COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF NEW YORK FOR ANY
ACTIONS, SUITS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND
THE
34
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING
ARISING OUT OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN THE
COURTS OF THE STATE OF NEW YORK OR THE COURTS OF THE UNITED STATES OF AMERICA
LOCATED IN THE STATE OF NEW YORK AND HEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
12. NOTICES
12.1 All communications provided for hereunder shall be in writing and
shall be deemed to be given when delivered in person or by private courier with
receipt, when telefaxed and received, and,
If to either Buyer:
Appleton Papers Inc.
825 E. Wisconsin Avenue
P.O. Box 359
Appleton, WI 54912-0359
Facsimile: (920) 991-7256
Attention: Paul Karch,
Vice President, Law and
Public Affairs and
General Counsel
35
with copies to:
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, WI 53202
Facsimile: (414) 273-5198
Attention: Christopher B. Noyes
State Street Bank and Trust Company
Trustee of the ESOP Component of the
Appleton Papers Retirement Saving Plan
Two International Place
Boston, MA 02110
Facsimile: (617)
Attention: Kelly G. Driscoll
Jones Day Reavis & Pogue
77 West Wacker
Suite 3500
Chicago, IL 60601-1692
Facsimile: (312) 782-8585
Attention: Ronald S. Rizzo
If to Seller Parent or either Seller:
Arjo Wiggins Appleton p.l.c.
St. Clement House
Alencon Link
Basingstoke
Hampshire RG21
ENGLAND
Facsimile: 011-44-1256-796075
Attention: Company Secretary
and
Arjo Wiggins
Washington Plaza
29 Rue de Berri
75408 Paris
Cedex 08
FRANCE
Facsimile: 011-33-1-5669-3963
Attention: Director of Legal Services
36
with a copy to:
McDermott, Will & Emery
50 Rockefeller Plaza
New York, NY 10020
Facsimile: 212-547-5444
Attention: C. David Goldman
or to such other address as any such party shall designate by written notice to
the other parties hereto.
12.2 Without limiting the generality of Section 12.1 PDC, New Appleton
and API hereby agree that any notices given or received by the party identified
above on behalf of them shall be deemed given and received by each of them and
that, pursuant thereto, AWA may rely upon the applicability of any such notice
as being binding upon, and applicable to each of them.
13. PRESERVATION OF CONFIDENCES/PRIVILEGES
AWA, Buyers and API shall use their reasonable best efforts to take all
reasonable actions necessary to preserve all available privileges and
protections and to ensure against disclosure of information to third parties
when undertaking the coordination of legal activities covered by this Agreement,
including, where appropriate, entering in to joint defense agreements; provided,
however, that nothing contained herein shall limit AWA's rights and entitlements
hereunder.
14. BUYER'S RESPONSIBILITY FOR OTHERS
This Agreement purports on many occasions to impose specified obligations
on Members of the Buyers' Group (other than the Buyers and API) even though such
other Members of the Buyers' Group are not parties hereto. In recognition
thereof, Buyers and API hereby agree (i) they shall be responsible for causing
the other Members of the Buyers' Group to comply with
37
any such obligations, and (ii) they shall be responsible for any failure by the
other Members of the Buyers' Group to so comply.
38
IN WITNESS WHEREOF, the parties have caused this Environmental
Indemnity Agreement to be duly executed as of the date first above written.
PAPERWEIGHT DEVELOPMENT CORP.
By: /s/ Doug Buth
Name: Douglas P. Buth
Title: President and Chief Executive Officer
NEW APPLETON LLC
By: /s/ Doug Buth
Name: Douglas P. Buth
Title: President of Paperweight Development
Corp., sole member of New Appleton
LLC
APPLETON PAPERS, INC.
By: /s/ Paul Karch
Name: Paul Karch
Title: Vice President
ARJO WIGGINS APPLETON p.l.c.
By: /s/ Luca Paveri-Fontana
Name: Luca Paveri-Fontana
Title: Director
39
Schedule 6.1.2-1
----------------
Acceptable Protection Coverage Amounts
--------------------------------------
1. SCHEDULE OF CUMULATIVE LIMITS:
-------------------------------------------------------
Annual Period beginning Reduced Cumulative
November 9 Limits
-------------------------------------------------------
2001 0
-------------------------------------------------------
2002 0
-------------------------------------------------------
2003 0
-------------------------------------------------------
2004 0
-------------------------------------------------------
2005 0
-------------------------------------------------------
2006 0
-------------------------------------------------------
2007 0
-------------------------------------------------------
2008 0
-------------------------------------------------------
2009 974,542
-------------------------------------------------------
2010 3,896,702
-------------------------------------------------------
2011 6,881,895
-------------------------------------------------------
2012 9,125,116
-------------------------------------------------------
2013 16,287,666
-------------------------------------------------------
2014 23,527,511
-------------------------------------------------------
2015 34,453,450
-------------------------------------------------------
2016 44,718,431
-------------------------------------------------------
2017 51,807,787
-------------------------------------------------------
2018 57,709,883
-------------------------------------------------------
2019 63,704,440
-------------------------------------------------------
2020 76,385,890
-------------------------------------------------------
2021 88,220,707
-------------------------------------------------------
2022 100,440,156
-------------------------------------------------------
2023 113,056,736
-------------------------------------------------------
2024 126,083,355
-------------------------------------------------------
2025 139,533,340
-------------------------------------------------------
2026 153,420,449
-------------------------------------------------------
2027 167,000,000
-------------------------------------------------------
Schedule 6.1.2-2
----------------
Late Period Coverage Reduction Formula
--------------------------------------
1. If AWA elects to obtain and maintain the Later Period Coverage, i.e. in
lieu of the Excess Coverage (a "Conversion"), and the aggregate
indemnification payments made hereunder by (or on behalf of) AWA prior to
such Conversion exceed $75m, each of the annual amounts available for
payment under the Later Period Coverage may be reduced by
(X-75million)/167million, expressed as a percentage, where "X" is the
aggregate amount of indemnification payments made hereunder by (or on
behalf of) AWA prior to the Conversion.
2
Schedule 6.1.3
--------------
Excess Coverage
---------------
1. Excess coverage is $250,000
3
Schedule 6.1.5.1
----------------
Acceptable Protection
---------------------
Coverage
--------
COMMERCE & INDUSTRY INSURANCE COMPANY
Arjo Wiggins Appleton (Bermuda) Limited
Indemnity Claim Insurance
Policy no: 529 5316
Words and phrases that appear in bold herein have the meanings set forth in
SECTION IV - DEFINITIONS. When the context so indicates or so requires, each
defined word or phrase stated in the singular includes the plural and each
defined word or phrase stated in the plural includes the singular.
SECTION I - INSURING AGREEMENTS
Subject to the terms and conditions of this policy, the Insurer will pay:
1. on behalf of the Policyholder, during the Period of Insurance, any and all
Ultimate Net Loss in excess of the Self-Insured Retention. The total amount
the Insurer will pay for Ultimate Net Loss is limited as described in
SECTION II - LIMIT OF INSURANCE.
2. to the Policyholder, upon election of "Reduced Cumulative Limits" pursuant
to CONDITION 7 - ELECTION OF CUMULATIVE LIMITS, the amount therein
specified.
SECTION II - LIMIT OF INSURANCE
1. The Limit of Insurance is the maximum in the aggregate the Insurer will pay
for Ultimate Net Loss, in accordance with CONDITION 7 - ELECTION OF
CUMULATIVE LIMITS.
2. For each Annual Period and until commutation or exhaustion of the Limit of
Insurance, the amount of Ultimate Net Loss payable by the Insurer shall not
exceed the corresponding Cumulative Limit shown in Endorsement 1.
3. If the Ultimate Net Loss exceeds the Cumulative Limit during any Annual
Period, such excess shall be carded forward to subsequent Annual Periods
until paid by the Insurer, subject to the Limit of Insurance.
SECTION III - CONDITIONS
1. Premium Payment Terms
The Premium shall be due and payable on November 9, 2001.
If the Policyholder fails to pay the Premium in full and by such date, this
policy shall not come into effect and shall not in any way bind the Insurer.
The Insurer shall acknowledge receipt of the Premium in writing.
2. Policyholder's Handling of Indemnity Claims
a. The Policyholder shall have full, exclusive and absolute authority,
discretion and control over the administration, defense and
disposition (including but not limited to settlement) of all
Indemnity Claims, with the exception of the appointment of one or
more Project Managers, which shall be handled as specified in the
definition of "Project Manager." Such authority, discretion and
control shall be exercised in a businesslike manner in the spirit of
good faith and fair dealing, having regard to the legitimate
interests of the parties to this policy.
b. The Policyholder agrees to provide or cause to be provided to the
Insurer Invoice Approval Packages for Indemnity Claims.
c. During the Period of Insurance, the Insurer has the right to
reasonably audit or inspect and, if appropriate, to copy at its own
expense, the books, records, documents and control systems of the
Policyholder and its Project Manager that relate to the subject
matter of this policy. The Policyholder shall ensure that each
Project Manager provides the Insurer with such information and
copies of documents as the Insurer may reasonably require from time
to time.
d. The Policyholder will make no Indemnity Claim under this policy
after the Period of Insurance.
3. Payment of Indemnity Claims
a. The parties agree that with regard to the payment of Indemnity
Claims, time is of the essence.
b. Within fifteen (15) days of receipt of an Invoice Approval Package,
the Insurer shall pay on behalf of the Policyholder the Indemnity
Claims reported therein, subject to SECTION II - LIMIT OF INSURANCE.
c. Subject to the Cumulative Limits, the Insurer shall not withhold
payment of reported Indemnity Claims, or any portion thereof, for
any reason including breach by the Policyholder of its obligations
hereunder. The Insurer's payment of reported Indemnity Claims shall
not, however, constitute a waiver of its rights to dispute such
payment, in whole or in part, as provided in CONDITION 4 -ANNUAL
ACCOUNTING, including its right to dispute whether such reported
costs constitute Indemnity Claims.
2
d. The Insurer's payment of Indemnity Claims pursuant to
subparagraph b, above, shall be credited against Daily Balance
One, Daily Balance Two, or Daily Balance Three in the
following order of priority:
1. All Indemnity Claims will be paid from Daily Balance
One until such time, if ever, as Daily Balance One
equals zero.
2. Thereafter, all Indemnity Claims will be paid from
Daily Balance Two until such time, if ever, as Daily
Balance Two equals zero.
3. Thereafter, all Indemnity Claims will be paid from
Daily Balance Three until such time, if ever, as
Daily Balance Three equals zero.
e. Nothing in subparagraph d, above, shall be construed as
reducing or limiting the Limit of Insurance or the Cumulative
Limits available under the policy, or the Insurer's
obligations hereunder.
4. Annual Accounting
a. On the Annual Accounting Date, the Policyholder shall provide
the Insurer with a written report, summarizing the Indemnity
Claims the Insurer has paid during the Annual Period ending
one month prior to the Annual Accounting Date. Such report
shall be substantially in the form shown in Attachment A.
b. Within thirty (30) days of receipt of such report, the Insurer
shall notify the Policyholder of any amount it disputes as
Ultimate Net Loss.
c. The parties shall use best efforts in good faith to resolve
any dispute raised under subparagraph 4.b above as soon as
reasonably practicable. The parties agree that such efforts
shall not include the termination, cancellation or
modification of this policy or the reduction of the Limits of
Insurance or Cumulative Limits.
d. If a dispute has not been resolved within thirty (30) days of
the Insurer's notice under subparagraph 4.b above, the Insurer
may submit the dispute to arbitration under CONDITION 5 -
ARBITRATION.
e. Except in the instance of fraud, Ultimate Net Loss shall be
fixed and can no longer be disputed, if:
1. not disputed within thirty (30) days pursuant to
subparagraph 4.b above; or
2. if so disputed, resolved as a result of good faith
efforts pursuant to subparagraph 4.c above; or
3. if not so resolved, determined pursuant to
arbitration as described in subparagraph 4.d above.
3
5. Arbitration
Any dispute, controversy or claim arising out of or relating to this policy or
the breach, termination or invalidity hereof shall be finally and fully
determined by a binding arbitration, commenced no more frequently than annually.
Such arbitration shall be fully resolved no more than sixty (60) days after
submission of the dispute to arbitration. The parties agree that they will
adhere to the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards. The parties further expressly agree to be bound by the results of the
arbitration and not to contest any award thereunder in any court of law.
Arbitration pursuant to this section shall be conducted in accordance with
Attachment B, except as otherwise agreed in writing by the parties. The parties
further agree that awards under these arbitration provisions shall not include
termination, cancellation or modification of this policy or the reduction of the
Limits of Insurance or Cumulative Limits.
6. Commutation by the Policyholder
On the fifth and subsequent anniversaries of the Inception Date, the
Policyholder may elect to commute this contract. Such election shall be in
writing, in a form substantially identical to the form attached hereto as
Attachment C. If the Policyholder so elects, the Insurer will pay the
Policyholder an amount equal to 100% of the Commutation Amount in return for a
complete release of liability under this contract, whether known or unknown.
Such release shall be substantially identical to the form attached hereto as
Attachment D.
7. Election of Cumulative Limits
a. Attached hereto as Endorsement 1 is a list of two cumulative
limits. Upon inception, the Limit of Insurance shall be [*],
with those cumulative limits listed as "Initial Cumulative
Limits."
b. The Policyholder shall have the right, in its sole discretion,
later to elect "Reduced Cumulative Limits," in a writing
substantially identical to the form attached hereto as
Attachment E. The Policyholder shall have this right only when
Daily Balance Two is greater than zero. The Policyholder's
election under this paragraph will reduce the Limit of
Insurance. Such election shall constitute a claim by the
Policyholder pursuant to SECTION I - INSURING AGREEMENT, P. 2.
Within fifteen (15) days of such claim, the Insurer shall pay
the Policyholder the sum of Daily Balance One (if any) plus
Daily Balance Two (if any).
c. Upon any election under this CONDITION 7 - ELECTION OF
CUMULATIVE LIMITS, the Insurer shall endorse the policy to
specify which limits are operable.
4
8. Confidentiality
The parties shall treat, and shall cause each of their respective agents,
representatives and employees to treat as confidential all information exchanged
hereunder.
9. Right to Insure the Self-Insured Retention
All or any part of the Self-Insured Retention may be insured, without prejudice
to or invalidation of coverage under this policy. Any part of the Self-Insured
Retention actually funded by such insurance, whether such Insurance was obtained
on, before, or after the Inception Date shall be part of, and not in addition
to, the Self-Insured Retention. Insolvency of any insurer of the Self-Insured
Retention shall not reduce the Self-Insured Retention.
10. Insolvency
The insolvency of the Policyholder or any other person whatsoever and any act or
omission of any receiver, conservator, liquidator, trustee, rehabilitator,
administrator or similar person administering the Policyholder's estate will not
relieve, delay, increase, accelerate, decrease, or decelerate the Insurer's
obligation under this policy.
11. Other Insurance
The existence of other insurance that covers Indemnity Claims, whether or not
valid or collectible, shall not cause any increase, acceleration, relief, delay,
decrease, or deceleration of payment by the Insurer.
If other insurance is available to pay Indemnity Claims other than insurance
that is specifically in excess of this policy, the insurance provided by this
policy, in the Policyholder's sole discretion, shall be excess of and shall not
contribute with such other insurance.
12. Arm's Length
The Insurer and Policyholder agree that this policy was jointly drafted after
arm's length negotiations. The purpose of the policy is to provide coverage for
Ultimate Net Loss in accordance with the policy's terms and conditions. All
provisions of the policy will be construed to give effect to that purpose.
13. Choice of Law
This policy and any arbitration hereunder shall be governed by, construed, and
applied pursuant to the law of Wisconsin.
5
14. Recoveries
The Policyholder shall have the sole and exclusive right, but not the
obligation, to recover from any person or organization all or part of any
payment made by it or others on its behalf, or payable by it or by others on its
behalf in respect of Indemnity Claims.
15. Transferability
This policy and all of the rights, powers, or obligations (other than the
payment of Premium) of the Policyholder under it may be transferred or assigned
to an entity controlling, controlled by, or under common control with the
Policyholder. The Policyholder will notify the Insurer of such transfer in a
writing substantially identical to the form attached hereto as Attachment F. In
no event will such transfer or assignment increase or decrease the Limit of
Insurance hereunder or increase, accelerate, relieve, decrease, or decelerate
the Insurer's obligations hereunder.
16. Currency
The Limit of Insurance, Commutation Amount, Cumulative Limits, Daily Balance
One, Daily Balance Two, Daily Balance Three, Premium, Self-insured Retention,
and Ultimate Net Loss and under this policy are expressed and shall be paid in
United States Dollars.
17. Endorsement
This policy may be amended only by written agreement between the Policyholder
and the Insurer. The Policyholder's agreement shall be substantially identical
to the form attached hereto as Attachment G.
18. Notice
a. Any notice or other information required or authorized by this
policy to be given by either party to the other may be given
by:
i. delivery by hand; or
ii. sending it by prepaid recorded or registered post
(or equivalent) air mail if international;
to the Policyholder at: to the Insurer at:
AWA Group Services SAS Vice President, Division Counsel
Washington Plaza AIG Environmental
29 Rue de Berri 175 Water Street, 12th Floor
75408 Paris New York, New York 10038
Cedex 08 Attention: Karl M. Swanson, Esq.
FRANCE Facsimile: (212) 458-6280
Facsimile: 011-33-1-5669-3963
6
Attention: Director of Legal Affairs
Invoice Approval Packages to:
with copies to:
AIG Consultants
McDermott, Will & Emery 175 Water Street, 12th Floor
28 State Street New York, New York 10038
Boston, Massachusetts 02109 Attention: Mr. Venkat Puranapanda
Attention: Jeffrey C. Bates, Esq. Facsimile: (212) 458-6280
Facsimile: (617) 535-3800
Appleton Papers Inc.
825 E. Wisconsin Avenue
P.O. Box 359
Appleton, Wisconsin 54912
Attention: Paul J. Karch, Esq.
Facsimile: (920) 991-7256
b. Either party may change the address for service referred to in
subparagraph a. above by sending notice to the other party in
the manner provided for by this section to the last address
notified for the purpose of this clause by the other party.
19. Merger Clause
This policy supersedes any previous agreements or arrangements between the
parties in respect of the subject matter hereof and any previous agreements or
arrangements between the parties are merged into this policy.
20. Release
Upon exhaustion of the Limit of Insurance the Insurer shall be released from any
and all further liability and obligations under this policy.
21. Headings
The headings in this policy are for convenience only and shall not affect the
interpretation or construction of this policy.
22. Cancellation
The parties agree that the Insurer shall have no right to cancel this policy.
7
SECTION IV - DEFINITIONS
1. Actually Paid
"Actually Paid" means actually paid or due and payable.
2. Annual Accounting Date
"Annual Accounting Date" means thirty days after the first anniversary of the
Inception Date, i.e., November 9, 2001, and the twelve-month anniversary of such
date for each subsequent year during the Period of Insurance and the year
immediately following the Period of Insurance.
3. Annual Period
"Annual Period" means the twelve-month period beginning on the Inception Date
and ending on the first anniversary of the Inception Date, i.e., November 9,
2001, and each twelve-month period thereafter.
4. Applicable Rate
"Applicable Rate" shall mean a rate equal to the asking yield to maturity of the
one year Constant Maturity Treasury ("CMT") rate prevailing on the first day of
each Annual Period, as published electronically by Bloomberg L.P. or in any
successor form thereto, for the close of the first business day following the
beginning of such Annual Period, subject to any applicable usury laws. In the
event Bloomberg L.P. ceases to provide such information, the Policyholder and
the Insured shall select a comparable source for such information.
5. Commutation Amount
"Commutation Amount" means the sum of Daily Balance One (if any) plus Daily
Balance Two (if any) plus Daily Balance Three (if any).
6. Cumulative Limit
"Cumulative Limit" means the amounts shown in Endorsement 1, as elected by the
Policyholder pursuant to CONDITION 7 - ELECTION OF CUMULATIVE LIMITS.
7. Daily Balance One
a. As of the Inception Date, "Daily Balance One" means sixty eight
million, three hundred eighty thousand, six hundred and seventeen
dollars ($68,380,617).
b. For each day other than the Inception Date, "Daily Balance One" means
Daily Balance One from the immediately preceding day, plus the product
of Daily Balance One multiplied by the Applicable Rate, minus any
Indemnity Claims the Insurer properly pays in fact on such day from
Daily Balance One, in accordance with CONDITION 3 - PAYMENT OF
INDEMNITY CLAIMS, P. d,
8
i.e., Daily Balance One\new\ = Daily Balance One\old\ + (Daily Balance
One\old\ X Applicable Rate) - Indemnity Claims.
8. Daily Balance Two
a. As of the Inception Date, "Daily Balance Two" means fifty four
million, seventy nine thousand, three hundred and forty two dollars
($54,079,342).
b. For each day other than the Inception Date, "Daily Balance Two" means
Daily Balance Two from the immediately preceding day minus any
Indemnity Claims the Insurer properly pays in fact on such day from
Daily Balance Two, in accordance with CONDITION 3 - PAYMENT OF
INDEMNITY CLAIMS, P. d, i.e., Daily Balance Two\new\ = Daily Balance
Two\old\ - Indemnity Claims.
9. Daily Balance Three
a. As of the Inception Date, "Daily Balance Three" means forty one
million, ninety three thousand, eight hundred and thirty nine dollars
($41,093,839).
b. For each day other than the Inception Date, "Daily Balance Three"
means Daily Balance Three from the immediately preceding day, plus the
product of Daily Balance Three multiplied by the Applicable Rate,
minus any Indemnity Claims the Insurer properly pays in fact on such
day from Daily Balance Three, in accordance with CONDITION 3 - PAYMENT
OF INDEMNITY CLAIMS, P. d, i.e., Daily Balance Three\new\ = Daily
Balance Three\old\ + (Daily Balance Three\old\ X Applicable Rate) -
Indemnity Claims.
10. Inception Date
"Inception Date" means 12:01 a.m. November 9, 2001.
11. Indemnity Claim
"Indemnity Claim" means any demand made on the Policyholder under the Assignment
and Assumption Deed, attached hereto as Attachment H. Indemnity Claim shall not
include costs associated with any work performed outside the Period of
Insurance.
12. Indemnity Costs
"Indemnity Costs" means the sum of the "Indemnified Excess Costs" and the "API
Excess Costs" (as those terms are defined in the Fox River PDC Environmental
Indemnity Agreement (the "PDC Indemnity") attached hereto as an exhibit to
Attachment H) paid pursuant to the PDC Indemnity since the Inception Date.
13. Insurer
"Insurer" means Commerce & Industry Insurance Company.
9
14. Invoice Approval Package
"Invoice Approval Package" means documents that evidence Indemnity Costs
Actually Paid pursuant to any procedures adopted by the Project Manager. Such
Invoice Approval Package shall be submitted by the Project Manager quarterly
when Indemnity Costs are within the Self-insured Retention and no more
frequently than bi-weekly during all other times of the Period of Insurance, on
a form substantially similar to the form attached hereto as Attachment I.
15. Period of Insurance
"Period of Insurance" means November 9, 2001 to November 9, 2028, or until the
exhaustion of the Limit of Insurance or the commutation of this policy,
whichever occurs first.
If, on November 9, 2028, there exists a positive Commutation Amount, such amount
shall remain available to the Policyholder until exhausted or commuted.
16. Policyholder
"Policyholder" means Arjo Wiggins Appleton (Bermuda) Limited, or any transferee
or assignee under CONDITION 15 - TRANSFERABILITY. For avoidance of doubt, only
the Policyholder shall be entitled to claim hereunder.
17. Premium
"Premium" means one hundred and eighty five million, eighteen thousand, nine
hundred and eighty one dollars ($185,018,981).
18. Project Manager
"Project Manager" means the Policyholder, Arjo Wiggins Appleton, p.l.c., Project
Control Companies, Inc. or any other person or entity selected by the
Policyholder and agreed to by the Insurer, whose consent shall not be
unreasonably withheld.
19. Self-Insured Retention
"Self-Insured Retention" means
a. if the applicable Cumulative Limits are "Initial Cumulative Limits" as
specified in Endorsement 1, $0 in Indemnity Costs up to $75,000,000 in
the aggregate, and thereafter $25,000,000.
b. if the applicable Cumulative Limits are "Reduced Cumulative Limits,"
as specified in Endorsement 1, $100,000,000 in Indemnity Costs.
10
20. Ultimate Net Loss
"Ultimate Net Loss" means all sums paid in fact during the Period of Insurance
for Indemnity Claims, up to and including the Limit of Insurance.
IN WITNESS WHEREOF, the Insurer has caused this Indemnity Claim Insurance Policy
to be executed by its duly authorized representative as of the date first above
written.
COMMERCE & INDUSTRY INSURANCE COMPANY
By: /s/ Michael P. Giese
-----------------------------------
Name: Michael P. Giese
Title: Assistant Vice President
11
ENDORSEMENT 1 - SCHEDULE OF CUMULATIVE LIMITS
- -------------------------------------------------------------------------------------------------------------
Annual Period beginning Initial Cumulative Limits Reduced Cumulative Limits
November 9
- -------------------------------------------------------------------------------------------------------------
2001 75,000,000 0
- -------------------------------------------------------------------------------------------------------------
2002 100,000,000 0
- -------------------------------------------------------------------------------------------------------------
2003 125,000,000 0
- -------------------------------------------------------------------------------------------------------------
2004 150,000,000 0
- -------------------------------------------------------------------------------------------------------------
2005 175,000,000 0
- -------------------------------------------------------------------------------------------------------------
2006 200,000,000 0
- -------------------------------------------------------------------------------------------------------------
2007 250,000,000 0
- -------------------------------------------------------------------------------------------------------------
2008 250,000,000 0
- -------------------------------------------------------------------------------------------------------------
2009 250,000,000 974,542
- -------------------------------------------------------------------------------------------------------------
2010 250,000,000 3,896,702
- -------------------------------------------------------------------------------------------------------------
2011 250,000,000 6,881,895
- -------------------------------------------------------------------------------------------------------------
2012 250,000,000 9,125,116
- -------------------------------------------------------------------------------------------------------------
2013 250,000,000 16,287,666
- -------------------------------------------------------------------------------------------------------------
2014 250,000,000 23,527,511
- -------------------------------------------------------------------------------------------------------------
2015 250,000,000 34,453,450
- -------------------------------------------------------------------------------------------------------------
2016 250,000,000 44,718,431
- -------------------------------------------------------------------------------------------------------------
2017 250,000,000 51,807,787
- -------------------------------------------------------------------------------------------------------------
2018 250,000,000 57,709,883
- -------------------------------------------------------------------------------------------------------------
2019 250,000,000 63,704,440
- -------------------------------------------------------------------------------------------------------------
2020 250,000,000 76,385,890
- -------------------------------------------------------------------------------------------------------------
2021 250,000,000 88,220,707
- -------------------------------------------------------------------------------------------------------------
2022 250,000,000 100,440,156
- -------------------------------------------------------------------------------------------------------------
2023 250,000,000 113,056,736
- -------------------------------------------------------------------------------------------------------------
2024 250,000,000 126,083,355
- -------------------------------------------------------------------------------------------------------------
2025 250,000,000 139,533,340
- -------------------------------------------------------------------------------------------------------------
2026 250,000,000 153,420,449
- -------------------------------------------------------------------------------------------------------------
2027 250,000,000 167,000,000
- -------------------------------------------------------------------------------------------------------------
IN WITNESS WHEREOF, the Insurer has caused this Indemnity Claim Insurance Policy
to be executed by its duly authorized representative as of the date first above
written.
COMMERCE & INDUSTRY INSURANCE COMPANY
By: /s/ Michael P. Giese
-----------------------------------
Name: Michael P. Giese
Title: Assistant Vice President
ATTACHMENT A - ANNUAL ACCOUNTING FORM
Lower Fox River Site
Annual Summary of Costs to Insurance Carrier
- ------------------------------------------------------------------------------------------------------------------------------
Invoice Date Paid by
Date Invoice # Contractor Type of Expense Total Amount AWA Check #
- ------------------------------------------------------------------------------------------------------------------------------
Construct
7/1/2006 20535 Contractor # 1 dewatering works $ 172,615.00 8/15/2006 5268
- ------------------------------------------------------------------------------------------------------------------------------
7/5/2006 562810 Contractor # 2 Debris Removal $ 283,347.00 7/10/2006 5302
- -----------------------------------------------------------------------------------------------------------------------------
7/31/2006 620135 Contractor # 3 Install Pipeline $ 500,000.00 9/10/2006 5399
- ------------------------------------------------------------------------------------------------------------------------------
8/7/2006 20542 Contractor # 1 Mobilization $ 122,615.00 9/10/2006 5425
- ------------------------------------------------------------------------------------------------------------------------------
Construct
9/1/2006 20575 Contractor # 1 dewatering works $ 172,615.00 10/15/2006 5500
- ------------------------------------------------------------------------------------------------------------------------------
10/15/2006 562998 Contractor # 2 Debris Removal $ 283,347.00 11/30/2006 5632
- ------------------------------------------------------------------------------------------------------------------------------
1/1/2007 620558 Contractor # 3 Install Pipeline $ 500,000.00 2/10/2007 5705
- ------------------------------------------------------------------------------------------------------------------------------
4/10/2007 20623 Contractor # 1 Demobilization $ 283,348.00 5/25/2007 5810
- ------------------------------------------------------------------------------------------------------------------------------
6/30/2007 39232 Contractor # 2 Debris Removal $ 222,613.00 6/30/2007 5985
- ------------------------------------------------------------------------------------------------------------------------------
Total Payable $ 2,540,500.00
- ------------------------------------------------------------------- ----------------------------------------------------
SIR Depletion Insurance Claim Amount
- ------------- ----------------------
CTD prior to 7/1/06 $ 97,500,000.00 CTD prior to 7/1/06 $ 0.00
Amt allocated from 7/1/06-6/30/07 $ 2,540,500.00 Amt allocated from 7/1/06-6/30/07 $ 40,500.00
---------------
Total amount booked against SIR $100,040,500.00 Maximum allowable amt for 7/1/06-
SIR Maximum $100,000,000.00 6/30/07 (including carry overs) $ 100,000.00
---------------
Amount remaining to carry over
Variance to SIR $ 40,500.00 or commutate $ 59,500.00
=============== ============
- ------------------------------------------------------------------- ----------------------------------------------------
ATTACHMENT B - ARBITRATION PROVISIONS
Any arbitration pursuant to CONDITION 5 - ARBITRATION shall be conducted in
accordance with the CPR Rules for Non-Administered Arbitration in effect on the
Inception Date, by one arbitrator agreed to by the parties, which agreement
shall not be unreasonably withheld. The arbitration shall be governed by the
Federal Arbitration Act, 9 U.S.C. (S)(S) 1-16, and judgment upon the award
rendered by the arbitrator may be entered by any court having jurisdiction
thereof.
The place of arbitration shall be New York, New York. The language of the
arbitration shall be English. The arbitration shall be governed by the law of
the State of Wisconsin.
The arbitrator is not empowered to terminate, cancel, or modify the policy or to
reduce the Limits of Insurance or Cumulative Limits. The arbitrator is further
not empowered to award damages in excess of compensatory damages and each party
expressly waives and foregoes any right to punitive, exemplary or similar
damages unless a statute requires that compensatory damages be increased in a
specified manner.
Following the final arbitration hearing, the arbitrator shall promptly deliver a
written decision with respect to the dispute to each of the parties, who shall
promptly act in accordance therewith. Each party agrees that any decision of the
arbitrator shall be final, conclusive and binding and that they will not contest
any action by any other party thereto in accordance with a decision of the
arbitrator. It is specifically understood and agreed that any party may enforce
any award rendered pursuant to the arbitration provisions of CONDITION 5 -
ARBITRATION and this ATTACHMENT B by bringing suit in any court of competent
jurisdiction.
ATTACHMENT C - WRITTEN DEMAND FOR COMMUTATION
Vice President, Division Counsel
AIG Environmental
175 Water Street, 12th Floor
New York, New York 10038
Attention: Karl M. Swanson, Esq.
Dear Mr. Swanson:
Pursuant to Condition 6 - Commutation by the Policyholder, as contained in
Indemnity Claim Insurance Policy No. 529 5316, your Policyholder hereby elects
to commute the policy.
Attached hereto please find certificates from the Administrative Agent and the
Trustee (as each such term is defined in the Relationship Agreement, dated as of
November 9, 2001, to which your Policyholder is a party) concerning the
discharge of certain indebtedness. I certify that these certificates are true
and correct copies of same.
Please remit the Commutation Amount, as that term is defined in the policy.
Very truly yours,
Director/Officer of Policyholder
Copies to:
McDermott, Will & Emery Godfrey & Kahn, S.C.
28 State Street 780 N. Water Street
Boston, Massachusetts 02109 Milwaukee, Wisconsin 53202
Attention: Jeffrey C. Bates, Esq. Attention: Christopher B. Noyes, Esq.
Facsimile No.: 617-535-3800 Facsimile: (414) 273-5198
Appleton Papers Inc.
825 E. Wisconsin Avenue
P.O. Box 359
Appleton, Wisconsin 54912
Attention: Paul J. Karch, Esq.
Facsimile: (920) 991-7256
ATTACHMENT D - INSURER'S RELEASE
TERMINATION AGREEMENT AND RELEASE
TERMINATION AGREEMENT AND RELEASE made effective as of ___________ (the
"EFFECTIVE DATE") by and between Commerce & Industry Insurance Company, a New
York corporation (hereinafter called the "COMPANY") and Arjo Wiggins Appleton
(Bermuda) Limited (hereinafter called "AWA BERMUDA").
WHEREAS, the COMPANY issued AWA BERMUDA an Indemnity Claim Insurance
Policy effective as of November 9, 2001 (the "POLICY"), a copy of which is
attached hereto, whereby the COMPANY agreed to reimburse AWA BERMUDA for
ULTIMATE NET LOSS arising under the POLICY (the "LOSSES'); and
WHEREAS, pursuant to Condition 6 of the POLICY, the COMPANY and AWA
BERMUDA have agreed to terminate the POLICY via commutation and to terminate all
of the COMPANY'S obligations relating to the LOSSES, and AWA BERMUDA has agreed
to release the COMPANY from any and all obligations and LOSSES under the POLICY.
NOW THEREFORE, in consideration of the COMPANY paying AWA BERMUDA the
sum of ___________________ dollars (US$___________, an amount that was
calculated in accordance with the terms of the POLICY) (the "PAYMENT"), which
payment shall be made within two (2) business days by the COMPANY after the
execution and delivery of this TERMINATION AGREEMENT AND RELEASE to the COMPANY
by AWA BERMUDA, AWA BERMUDA and the COMPANY do hereby agree as follows:
1. To the extent capitalized terms are used in this TERMINATION AGREEMENT
AND RELEASE but not specifically defined herein, such terms shall have
the same meaning as in the POLICY.
2. AWA BERMUDA does hereby release and forever discharge the COMPANY, its
successors and assigns, of and from all causes of action, suits, claims
for sums of money, contracts, controversies, agreements, costs, damages
(whether direct or consequential), judgments and demands whatsoever in
law or equity which AWA BERMUDA and its successors and assigns now
have, claim to have, or may have in the future against the COMPANY
under the terms, provisions, endorsements, addenda and conditions of
the POLICY covering the LOSSES.
3. AWA BERMUDA does hereby release and forever discharge the COMPANY, its
successors and assigns, of and from all causes of action, suits, claims
for sums of money, contracts, controversies, agreements, costs, damages
(whether direct or consequential), judgments and demands whatsoever in
law or equity which AWA BERMUDA and its successors and assigns now
have, claim to have, or may have in the future against the COMPANY
arising out of the negotiation of the POLICY, the calculation of any
DAILY BALANCE, or any other matter regarding the POLICY.
4. The COMPANY does hereby release and forever discharge AWA BERMUDA, its
successors and assigns, of and from all causes of action, suits, claims
for sums of money, contracts, controversies, agreements, costs,
damages, judgments and demands whatsoever in law or equity which the
COMPANY and its successors and assigns now have, claim to have, or may
have in the future against AWA BERMUDA under the terms, provisions,
endorsements, addenda and conditions of the POLICY covering the LOSSES.
5. The COMPANY does hereby release and forever discharge AWA BERMUDA, its
successors and assigns, of and from all causes of action, suits, claims
for sums of money, contracts, controversies, agreements, costs, damages
(whether direct or consequential), judgments and demands whatsoever in
law or equity which the COMPANY and its successors and assigns now
have, claim to have, or may have in the future against AWA BERMUDA
arising out of the negotiation of the POLICY, the calculation of any
DAILY BALANCE, or any other matter regarding the POLICY.
6. AWA BERMUDA covenants and agrees that the PAYMENT represents fall and
final payment by the COMPANY for reimbursement under the POLICY for the
LOSSES incurred or to be incurred by AWA BERMUDA. AWA BERMUDA agrees to
indemnify and hold the COMPANY harmless from and against any and all
liability, loss, damage or expense, including without limitation,
reasonable attorney's fees, arising from all manner of action, actions,
suits, claims for sums of money, contracts, controversies, agreements,
costs, damages, judgments and demands brought or made against the
COMPANY for any LOSSES under the POLICY.
7. The COMPANY agrees to effect or cause to be made payment of the PAYMENT
within two (2) business days of its execution and delivery of this
TERMINATION AGREEMENT AND RELEASE.
8. This TERMINATION AGREEMENT AND RELEASE shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties
hereto.
9. This TERMINATION AGREEMENT AND RELEASE contains the full and complete
understanding and agreement between the parties hereto with respect to
the subject matter hereof, and the parties acknowledge that neither is
entering into this TERMINATION AGREEMENT AND RELEASE in reliance upon
any term, condition, representation or warranty not stated herein and
that this TERMINATION AGREEMENT AND RELEASE replaces any and all prior
agreements whether oral or written, pertaining to the subject matter
hereof.
10. Whenever the text hereof requires the use of a singular term, it shall
include the appropriate plural term as the text of the instrument
requires.
11. All changes to this TERMINATION AGREEMENT AND RELEASE must be in
writing and agreed to by the Parties.
2
12. This TERMINATION AGREEMENT AND RELEASE shall be governed by the laws of
the State of New York and the parties hereto do irrevocably submit to
the non-exclusive jurisdiction of the Courts in the State of New York
and to the extent permitted by law the parties expressly waive all
rights to challenge or otherwise limit such jurisdiction.
13. No failure or delay by a party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.
14. This TERMINATION AGREEMENT AND RELEASE may be executed in counterparts,
all of which when taken together shall constitute one and the same
instrument, and any party hereto may execute this TERMINATION AGREEMENT
AND RELEASE by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this TERMINATION AGREEMENT
AND RELEASE to be executed by their duly authorized representatives as of the
date first above written.
COMMERCE & INDUSTRY INSURANCE ARJO WIGGINS APPLETON (BERMUDA)
COMPANY LIMITED
By:________________________________ By:_______________________________
Name: Name:
____________________________________ __________________________________
Title: Title:
_____________________________________ __________________________________
3
ATTACHMENT E - WRITTEN DEMAND FOR REDUCED CUMULATIVE LIMITS
Vice President, Division Counsel
AIG Environmental
175 Water Street, 12th Floor
New York, New York 10038
Attention: Karl M. Swanson, Esq.
Dear Mr. Swanson:
Pursuant to Condition 7(b) - Election of Cumulative Limits, as contained in
Indemnity Claim Insurance Policy No. 529 5316, your Policyholder hereby elects
Reduced Cumulative Limits.
Attached hereto please find certificates from the Administrative Agent and the
Trustee (as each such term is defined in the Relationship Agreement, dated as of
November 9, 2001, to which your Policyholder is a party) concerning the
discharge of certain indebtedness. I certify that these certificates are true
and correct copies of same.
This letter constitutes formal notice of a claim under Section I - Insuring
Agreements, paragraph 2. Pursuant to Condition 7(b), please remit the sum of
Daily Balance One plus Daily Balance Two, as those terms are defined in the
policy.
Very truly yours,
Director/Officer of Policyholder
Copies to:
McDermott, Will & Emery Godfrey & Kahn, S.C.
28 State Street 780 N. Water Street
Boston, Massachusetts 02109 Milwaukee, Wisconsin 53202
Attention: Jeffrey C. Bates, Esq. Attention: Christopher B. Noyes, Esq.
Facsimile No.: 617-535-3800 Facsimile: (414) 273-5198
Appleton Papers Inc.
825 E. Wisconsin Avenue
P.O. Box 359
Appleton, Wisconsin 54912
Attention: Paul J. Karch, Esq.
Facsimile: (920) 991-7256
ATTACHMENT F - POLICYHOLDER'S NOTICE OF TRANSFER
Vice President, Division Counsel
AIG Environmental
175 Water Street, 12th Floor
New York, New York 10038
Attention: Karl M. Swanson, Esq.
Dear Mr. Swanson:
Pursuant to Condition 15 - Transferability, as contained in Indemnity Claim
Insurance Policy No. 529 5316, your Policyholder hereby notifies you that it has
transferred its rights, powers, and/or obligations under the policy as follows:
[SPECIFICS:]
Attached hereto please find certificates from the Administrative Agent and the
Trustee (as each such term is defined in the Relationship Agreement, dated as of
November 9, 2001, to which your Policyholder is a party) consenting to this
transfer, or indicating their agreement that their consent is not required to
such transfer. I certify that these certificates are true and correct copies of
same.
Very truly yours,
Director/Officer of Policyholder
Copies to:
McDermott, Will & Emery Godfrey & Kahn, S.C.
28 State Street 780 N. Water Street
Boston, Massachusetts 02109 Milwaukee, Wisconsin 53202
Attention: Jeffrey C. Bates, Esq. Attention: Christopher B. Noyes, Esq.
Facsimile No.: 617-535-3800 Facsimile: (414) 273-5198
Appleton Papers Inc.
825 E. Wisconsin Avenue
P.O. Box 359
Appleton, Wisconsin 54912
Attention: Paul J. Karch, Esq.
Facsimile: (920) 991-7256
ATTACHMENT G - POLICYHOLDER'S AGREEMENT FOR ENDORSEMENT
Vice President, Division Counsel
AIG Environmental
175 Water Street, 12th Floor
New York, New York 10038
Attention: Karl M. Swanson, Esq.
Dear Mr. Swanson
Pursuant to Condition 17 - Endorsement, as contained in Indemnity Claim
Insurance Policy No. 529 5316, your Policyholder hereby provides its agreement
to the endorsement we have discussed.
Attached hereto please find certificates from the Administrative Agent and the
Trustee (as each such term is defined in the Relationship Agreement, dated as of
November 9, 2001, to which your Policyholder is a party) consenting to this
endorsement, or indicating their agreement that their consent is not required. I
certify that these certificates are true and correct copies of same.
Please issue an endorsement forthwith.
Very truly yours,
Director/Officer of Policyholder
Copies to:
McDermott, Will & Emery Godfrey & Kahn, S.C.
28 State Street 780 N. Water Street
Boston, Massachusetts 02109 Milwaukee, Wisconsin 53202
Attention: Jeffrey C. Bates, Esq. Attention: Christopher B. Noyes, Esq.
Facsimile No.: 617-535-3800 Facsimile: (414) 273-5198
Appleton Papers Inc.
825 E. Wisconsin Avenue
P.O. Box 359
Appleton, Wisconsin 54912
Attention: Paul J. Karch, Esq.
Facsimile: (920) 991-7256
ATTACHMENT H
1. Assignment and Assumption Deed
2. Fox River AWA Environmental Indemnity Agreement
3. Fox River PDC Environmental Indemnity Agreement
4. a. 2/12/98 NCR Settlement Agreement
b. 7/1/98 Joint Defense & Representation Agreement
c. 2/12/98 Subsequent Allocation Agreement
d. 1978 NCR Purchase Agreement
2
Schedule 6.1.5.2
----------------
Debt Facilities
---------------
1. Credit Agreement dated as of November 8, 2001 by and among PDC, API, the
several lenders party thereto, the several banks and other financial
institutions or entities from time to time parties thereto, Bear Stearns &
Co., Inc., as sole lead arranger and sole bookrunner, Bear Stearns
Corporate Lending Inc., as syndication agent, U.S. Bank National
Association d/b/a Firstar Bank N.A. and LaSalle Bank National Association,
each as documentation agent, M&I Marshal & Ilsley Bank, as managing agent,
Associated Bank N.A., as co-agent, and Toronto Dominion (Texas), Inc., as
the administrative agent, providing for a senior secured credit facility
for up to $340.0 million consisting of a $75.0 million four-year revolving
credit facility, a $115.0 million four-year term loan A and a $150.0
million five-year term loan B including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and, in each case as amended, modified, renewed, refunded,
replaced or refinanced, whether by the same lender or any other lender or
group of lenders, from time to time.
2. Closing Date High Yield Note is the $250,000,000 of senior subordinated
note issued by API on November 9, 2001, together with the Note Purchase
Agreement and the Registration Rights Agreement providing for the purchase
thereof by AWA.
3. Substitute High Yield Note is debt security or arrangement the proceeds of
which are used to redeem in full the Closing Date High Yield Note on or
before November 8, 2002.