SETTLEMENT AND RELEASE
AGREEMENT
THIS SETTLEMENT
AND RELEASE AGREEMENT (this “ Agreement ”) is
made and entered into as of December 31, 2008, by and between
Catalyst Paper (Snowflake) Inc., a Delaware corporation (“
Landlord ”) and indirect wholly-owned subsidiary of
Catalyst Paper Corporation, a Canadian corporation, and Snowflake
White Mountain Power, LLC, and Arizona limited liability company
(“ Tenant ”).
A. Landlord
and Tenant have entered into that certain Lease Agreement, dated as
of September 14, 2005 (as amended, amended and restated,
supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof, including pursuant to the
Amendment No. 4 to Lease (as defined below), the “
Lease ”). Capitalized terms used herein but not
defined herein have the meaning given in the Lease.
B. A dispute
has arisen concerning the payment of the monthly invoices submitted
to Tenant under 7.1.3 of the Operations Provisions of the Lease for
the period May 1, 2008 through September 30, 2008 with respect
to Operational Costs and reimbursement or others costs payable by
Tenant to Landlord pursuant to Sections 4.5, 4.6 or 4.7 of the
Lease (the “ Disputed Costs ”).
C. Tenant has
previously made certain payments to Landlord with respect to the
Disputed Costs.
D. The
parties desire to settle and resolve their differences with respect
to any balance due from Tenant to Landlord with respect to the
Disputed Costs on the terms set forth herein.
E. Concurrently
with the execution and delivery of this Agreement, Landlord and
Tenant are entering into that certain Amendment No. 4 to Lease
Agreement to amend certain provisions in the Lease (the “
Amendment No. 4 to Lease ”).
NOW THEREFORE, in
consideration of the foregoing, the parties hereby agree as
follows:
1.
Incorporation by Reference . All Recitals set forth above
are hereby incorporated by reference into this Section 1 as if
they were set forth in full herein.
2.
Settlement and Payment of Disputed Costs .
a.
The parties agree and acknowledge that the balance due from Tenant
to Landlord for Disputed Costs for each of the monthly periods
occurring between May 1, 2008 and September 30, 2008
shall be as set forth on Exhibit A hereto.
b.
Within thirty (30) days of the execution hereof, Tenant shall
pay to Landlord the sum of Three Hundred Ninety-Six Thousand, Nine
Hundred Sixty-Three and 83/100 Dollars ($396,963.83), in full
satisfaction of Tenant’s obligation for the Disputed Costs
for each of the monthly periods occurring between May 1, 2008
and September 30, 2008.
3.
Release by Landlord . Landlord and its directors, officers,
shareholders, affiliates and other agents each hereby release
Tenant (including its members and managers) and their respective
successors, assigns, affiliates and agents, from and against any
and all claims, demands, debts, liabilities, obligations, accounts,
costs, expenses, liens, actions and causes of action, of every kind
and nature whatsoever, whether now known or unknown, suspected or
unsuspected, direct or derivative, presently accrued or not
accrued, whether arising out of tort, contract, statute, or any
other legal theories, which such releasing pa
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