EX 2.5
AMENDED AND RESTATED INDEMNITY AGREEMENT
AMENDED AND RESTATED INDEMNITY AGREEMENT (the
"Agreement"), dated as of November 12, 1999, between
WISCONSIN TISSUE XXXXX INC., a Delaware corporation and
wholly owned subsidiary of Chesapeake Corporation ("WISCO"
or the "Indemnitor"), and GEORGIA-PACIFIC CORPORATION, a
Georgia corporation ("G-P"). Capitalized terms used but not
otherwise defined herein shall have the respective meanings
given to such terms in the Joint Venture Agreement or the
Operating Agreement, each referred to below.
W I T N E S S E T H:
WHEREAS, Chesapeake Corporation, WISCO, G-P and Georgia
Pacific Tissue, LLC, a Delaware limited liability company
(the "Company"), are parties to a Joint Venture Agreement,
dated as of October 4, 1999 (the "Joint Venture Agreement");
WHEREAS, WISCO and G-P are parties to the Operating
Agreement of the Company, dated as of October 4, 1999 (the
"Operating Agreement");
WHEREAS, the Company is a party to a Credit Facility,
dated as of October 4, 1999, among the Company and Bank of
America, N.A. (the "First Lender") (as amended, supplemented
or otherwise modified from time to time in accordance with
the Operating Agreement, the "Credit Agreement"), pursuant to
which the First Lender made a loan to the Company in the
amount of $755.2 million (the "First Company Debt");
WHEREAS, the Company has executed a promissory note,
dated as of October 4, 1999, evidencing the First Company
Debt;
WHEREAS, G-P has provided to the First Lender a full and
unconditional guaranty of payment of the First Company Debt
pursuant to a Guaranty Agreement, dated as of October 4, 1999
(the "First G-P Guaranty");
WHEREAS, pursuant to an Indemnity Agreement, dated as of
October 4, 1999, the Indemnitor has agreed to indemnify G-P
against amounts that may be actually paid by G-P to the First
Lender under the G-P Guaranty for the original principal
amount of the First Company Debt, subject to the terms and
limitations set forth therein;
WHEREAS, Section 3.17 of Operating Agreement provides
for the Company to refinance the First Company Debt with
Permanent Company Debt, and the Company desires to effect a
partial refinancing of the First Company Debt with
$491,415,000 of Permanent Company Debt in the form of the
Second Company Debt (as defined below);
WHEREAS, Georgia-Pacific Finance LLC, a Delaware limited
liability company (the "Second Lender" and together with the
First Lender, the "Lenders"), is a wholly-owned subsidiary of
Georgia-Pacific West, Inc., an Oregon corporation, which in
turn is a wholly-owned subsidiary of G-P;
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WHEREAS, the Second Lender intends to lend to the
Company, and the Company intends to borrow from the Second
Lender, $491,415,000 (the "Second Company Debt") pursuant to
a promissory note in the form attached hereto as Exhibit A
(the "Note"), in order for the Company to refinance an equal
amount of the First Company Debt;
WHEREAS, G-P has provided to the Second Lender a full
and unconditional guaranty of payment of the Second Company
Debt pursuant to a Guaranty Agreement, dated as of November
12, 1999 (the "Second G-P Guaranty"), a copy of which is
attached hereto as Exhibit B;
WHEREAS, the First Company Debt and the Second Company
Debt are referred to herein collectively as the "Company
Debt";
WHEREAS, the First G-P Guaranty and the Second G-P
Guaranty are referred to herein collectively as the "G-P
Guaranties";
WHEREAS, the Company shall use, and G-P shall cause the
Company to use, all the proceeds of the Second Company Debt
to repay $491,415,000 of the principal amount of the First
Company Debt, such repayment be effected by the wire transfer
of funds directly from the Second Lender (on behalf of the
Company) to the First Lender;
WHEREAS, after such repayment of $491,415,000 of the
principal amount of the First Company Debt, the principal
amount of the Company Debt shall be $755.2 million;
WHEREAS, the Indemnitor has agreed to indemnify G-P
against amounts that may be actually paid by G-P to the
Second Lender under the Second G-P Guaranty for the original
principal amount of the Second Company Debt, subject to the
terms and limitations set forth herein;
WHEREAS, pursuant to Sections 3.15(b) and 3.17 of the
Operating Agreement, the Indemnitor is to continue to "bear
the economic risk of loss" (within the meaning of Section
1.752-2 of the Regulations) for $755.2 million of the Company
Debt;
WHEREAS, assuming the validity and enforceability of the
G-P Guaranties, the Note, the Credit Agreement and the
promissory note relating thereto, the Indemnitor has
determined that, upon the duly authorized execution and
delivery of this Agreement and consummation of the partial
refinancing of the First Company Debt as contemplated herein,
the Indemnitor will "bear the economic risk of loss" within
the contemplation of Sections 3.15(b) and 3.17 of the
Operating Agreement; and
WHEREAS, the parties hereto desire to amend and restate
the Indemnity Agreement, dated as of October 4, 1999, in this
Agreement, in order to set forth the Indemnitor's agreement
to indemnify G-P with respect to the Second G-P Guaranty and
the original principal amount of the Second Company Debt and
the continuation of the Indemnitor's agreement to indemnify G-
P with respect to the First G-P Guaranty and the original
principal amount of the First Company Debt (reduced by the
amount of the Second Company Debt).
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NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Indemnity. Subject to Sections 3 and 4
hereof, the Indemnitor unconditionally agrees to indemnify G-
P as follows for payments of the original principal amount of
the Company Debt that G-P may make under either of the G-P
Guaranties: If (i) G-P shall have made a payment of
principal (excluding any accrued and unpaid interest that may
be added to principal) of the Company Debt to either of the
Lenders under either of the G-P Guaranties, (ii) G-P shall
have exhausted all of its rights (whether by subrogation or
otherwise) to reimbursement or recovery from the Company or
the Company's assets, and (iii) G-P shall have demanded
reimbursement from the Indemnitor within 120 days after G-P
exhausts such rights, the Indemnitor shall reimburse G-P upon
demand for the amount of such payment in excess of the amount
so recovered from or reimbursed by the Company or its assets.
SECTION 2. Subrogation/Acquisition of Interest.
(a) Upon such reimbursement by the Indemnitor pursuant
to Section 1 hereof, the Indemnitor shall (i) be subrogated
to the remaining rights of G-P against the Company to the
extent of such reimbursement and (ii) at the Indemnitor's
option, obtain an Interest or (if the Indemnitor is then a
Member) an increased Interest in the Company in satisfaction
of such rights. To exercise the option to obtain an Interest
or increased Interest, the Indemnitor shall give G-P notice
of exercise within 30 days after the payment of such
reimbursement. Such Interest or increase in Interest shall
consist of (i) a Capital Account, or increase in Capital
Account, equal to the amount of such reimbursement and (ii) a
Percentage Interest, or increase in Percentage Interest,
equal to the ratio of (A) the amount of such reimbursement to
(B) the sum of the total of all Capital Accounts immediately
before the payment of the reimbursement plus the amount of
such reimbursement. For this purpose, the amount of Capital
Accounts immediately before the payment of the reimbursement
shall take into account the revaluation of Capital Accounts,
pursuant to the Regulations under Section 704(b) of the Code,
occasioned by the Indemnitor's acquisition of the Interest or
increased Interest pursuant to this paragraph. G-P shall,
either directly or through any of its Affiliates that is then
a Member, cause the Company to issue to the Indemnitor the
appropriate number of Units to represent such Interest or
increase in Interest.
(b) Notwithstanding any other provision of this
Agreement or of applicable Law to the contrary, the
Indemnitor hereby waives any and all claims and other rights
(whether legal or equitable) that it may now have or
hereafter acquire against G-P, any other Member, or any other
person (other than the Company) by reason of making a payment
pursuant to Section 1 hereof, including, without limitation,
any right of indemnification, subrogation, reimbursement,
exoneration, or contribution or any right to participate in
any claim or remedy of either of the Lenders or G-P against
any person (other than the Company).
SECTION 3. Limitation on Amount of Indemnity.
Notwithstanding any provision of this Agreement to the
contrary, the aggregate obligation of the Indemnitor
hereunder shall in no event exceed the amount of the Special
Distribution (that is, $755.2 million).
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SECTION 4. Termination. Except as otherwise provided
in this Section 4, this Agreement shall survive and be in
full force and effect so long as any of the original
principal amount of the Company Debt is outstanding and has
not been paid in full. On the third anniversary and on each
subsequent anniversary of October 4, 1999, the Indemnitor may
terminate this Agreement by giving written notice of such
termination (the "Termination Notice") to G-P at least 15
days and not more than 30 days before the anniversary date on
which such termination is to take effect (the "Termination
Date"), provided that (i) no Default (as defined in the
Credit Agreement or the Note) relating to the nonpayment of
principal or interest or Event of Default (as defined in the
Credit Agreement) is pending under the Credit Agreement on
the date of the Termination Notice, and (ii) either (A)
neither WISCO nor any Affiliate of WISCO owns any Interest on
the Termination Date, or (B) notice of exercise of an Option
Right with respect to all Units owned by WISCO and any
Affiliate of WISCO is given under the Operating Agreement on
or before the Termination Date. In addition, this Agreement
shall terminate on the first date (the "Cessation Date") that
both of the following circumstances exist: (x) neither WISCO
nor any Affiliate of WISCO owns any Interest, if WISCO (or
such Affiliate) ceases to own its Interest as a result of the
exercise of the G-P Call or G-P's option under Section 8.5(b)
of the Operating Agreement; and (y) no Default (as defined in
the Credit Agreement or the Note) relating to the nonpayment
of principal or interest or Event of Default (as defined in
the Credit Agreement) is pending under the Credit Agreement.
As of the Termination Date or the Cessation Date, as
applicable, the Indemnitor shall be released from any and all
liabilities hereunder; provided, however, that the Indemnitor
shall not be released from any unpaid liability of the
Indemnitor for which G-P has made or is then entitled to make
a demand pursuant to Section 1 hereof, or for which G-P then
would be so entitled to make a demand upon exhaustion of its
rights to reimbursement or recovery from the Company or the
Company's assets.
SECTION 5. No Third Party Reliance. Nothing in this
Agreement, expressed or implied, is intended to confer upon
any person other than the parties hereto and their respective
permitted successors and assigns any rights or remedies under
or by reason of this Agreement. Without limiting the
foregoing, it is expressly understood that the Lenders shall
have no rights (either jointly or severally) against the
Indemnitor hereunder.
SECTION 6. Governing Law. This agreement shall be
governed by, and construed in accordance with, the laws of
the State of Virginia.
SECTION 7. No Waiver; Amendment.
(a) No failure on the part of the Indemnitor or G-P to
exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or
remedy by the Indemnitor or G-P preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law. Neither the
Indemnitor nor G-P shall be deemed to have waived any rights
hereunder unless such waiver shall be in writing and signed
by such parties.
(b) Neither this Agreement nor any provision hereof may
be waived, amended or modified except pursuant to a written
agreement entered into between all of the parties hereto.
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SECTION 8. Notices. All communications and notices
hereunder between and among the parties hereto shall be in
writing and given as provided in the Operating Agreement and
addressed as specified therein.
SECTION 9. Binding Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the permitted successors
and assigns of such party; and all covenants, promises and
agreements by or on behalf of the parties that are contained
in this Agreement shall bind and inure to the benefit of
their respective permitted successors and assigns. No party
hereto may assign or transfer any of its rights or
obligations hereunder (and any such attempted assignment or
transfer shall be void) without the prior written consent of
the other party hereto.
SECTION 10. Severability. In case any one or more of
the provisions contained in this Agreement should be held
invalid, illegal or unenforceable in any respect, no party
hereto shall be required to comply with such provision for so
long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability
of the remaining provisions contained herein shall not in any
way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 11. Counterparts; Effectiveness; Execution.
This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of
which shall constitute an original, but all of which when
taken together shall constitute a single contract. Delivery
of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually
signed counterpart of this Agreement.
SECTION 12. Rules of Interpretation. The rules of
interpretation specified in Section 1.2 of the Operating
Agreement shall be applicable to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their duly
authorized officers as of the date first appearing above.
WISCONSIN TISSUE XXXXX INC.
By: /s/ X.X. Xxxxxx Xx.
X. X. Xxxxxx Xx.
Secretary
GEORGIA-PACIFIC CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Vice President, Deputy
General Counsel and Secretary
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