Exhibit 10.3

 

 

ABITIBI-CONSOLIDATED COMPANY OF CANADA

AND EACH OF THE GUARANTORS PARTY HERETO

15.5% SENIOR NOTES DUE 2010

 

 

INDENTURE

Dated as of April 1, 2008

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

Trustee

 

 

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CROSS-REFERENCE TABLE*

 

Trust Indenture

Act Section

   Indenture Section 310   (a)(1)    7.10   (a)(2)    7.10   (a)(3)    N.A.  
(a)(4)    N.A.   (a)(5)    7.10   (b)    7.10   (c)    N.A. 311   (a)    7.11  
(b)    7.11   (c)    N.A. 312   (a)    2.05   (b)    12.03   (c)    12.03 313  
(a)    7.06   (b)(2)    7.06; 7.07   (c)    7.06;12.02   (d)    7.06 314   (a)
   4.03;12.02; 12.05   (c)(1)    12.04   (c)(2)    12.04   (c)(3)    N.A.   (e)
   12.05   (f)    N.A. 315   (a)    7.01   (b)    7.05; 12.02   (c)    7.01  
(d)    7.01   (e)    6.11 316   (a) (last sentence)    2.09   (a)(1)(A)    6.05
  (a)(1)(B)    6.04   (a)(2)    N.A.   (b)    6.07   (c)    2.12 317   (a)(1)   
6.08   (a)(2)    6.09   (b)    2.04 318   (a)    12.01   (b)    N.A.   (c)   
12.01

N.A. means not applicable.

* This Cross Reference Table is not part of the Indenture.

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TABLE OF CONTENTS

 

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ARTICLE 1

DEFINITIONS AND INCORPORATION

BY REFERENCE

               Section 1.01    Definitions.    1 Section 1.02    Other
Definitions.    29 Section 1.03    Incorporation by Reference of Trust Indenture
Act.    29 Section 1.04    Rules of Construction.    30   

ARTICLE 2

THE NOTES

         Section 2.01    Form and Dating.    30 Section 2.02    Execution and
Authentication.    31 Section 2.03    Registrar and Paying Agent.    31 Section
2.04    Paying Agent to Hold Money in Trust.    31 Section 2.05    Holder Lists.
   32 Section 2.06    Transfer and Exchange.    32 Section 2.07    Replacement
Notes.    44 Section 2.08    Outstanding Notes.    44 Section 2.09    Treasury
Notes.    44 Section 2.10    Temporary Notes.    45 Section 2.11   
Cancellation.    45 Section 2.12    Defaulted Interest.    45   

ARTICLE 3

REDEMPTION AND PREPAYMENT

         Section 3.01    Notices to Trustee.    45 Section 3.02    Notice of
Redemption.    46 Section 3.03    Effect of Notice of Redemption.    46 Section
3.04    Deposit of Redemption or Purchase Price.    46 Section 3.05    Tax
Redemption.    47 Section 3.06    Mandatory Redemption.    48 Section 3.07   
Offer to Purchase by Application of Excess Proceeds.    48   

ARTICLE 4

COVENANTS

         Section 4.01    Payment of Notes.    49 Section 4.02    Maintenance of
Office or Agency.    50 Section 4.03    Reports.    50 Section 4.04   
Compliance Certificate.    51 Section 4.05    Taxes.    52 Section 4.06    Stay,
Extension and Usury Laws.    52 Section 4.07    Restricted Payments.    52
Section 4.08    Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.    56 Section 4.09    Incurrence of Indebtedness and Issuance of
Preferred Stock.    58 Section 4.10    Asset Sales.    63 Section 4.11   
Transactions with Affiliates.    65

 

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          Page Section 4.12    Liens.    67 Section 4.13    Business Activities.
   67 Section 4.14    Corporate Existence.    67 Section 4.15    Offer to
Repurchase Upon Change of Control.    67 Section 4.16    Limitation on Sale and
Leaseback Transactions.    69 Section 4.17    Limitation on Issuances and Sales
of Equity Interests in Wholly-Owned Restricted Subsidiaries.    69 Section 4.18
   Payments for Consent.    70 Section 4.19    Additional Note Guarantees.    70
Section 4.20    Designation of Restricted and Unrestricted Subsidiaries.    70
Section 4.21    Additional Amounts.    71 Section 4.22    Secured Notes Exchange
Offer to Exchange Notes for Secured Notes.    72 Section 4.23    Augusta
Newsprint    73   

ARTICLE 5

SUCCESSORS

         Section 5.01    Merger, Consolidation, or Sale of Assets.    73 Section
5.02    Successor Corporation Substituted.    75   

ARTICLE 6

DEFAULTS AND REMEDIES

         Section 6.01    Events of Default.    75 Section 6.02    Acceleration.
   77 Section 6.03    Other Remedies.    77 Section 6.04    Waiver of Past
Defaults.    78 Section 6.05    Control by Majority.    78 Section 6.06   
Limitation on Suits.    78 Section 6.07    Rights of Holders of Notes to Receive
Payment.    79 Section 6.08    Collection Suit by Trustee.    79 Section 6.09   
Trustee May File Proofs of Claim.    79 Section 6.10    Priorities.    79
Section 6.11    Undertaking for Costs.    80   

ARTICLE 7

TRUSTEE

         Section 7.01    Duties of Trustee.    80 Section 7.02    Rights of
Trustee.    81 Section 7.03    Individual Rights of Trustee.    82 Section 7.04
   Trustee’s Disclaimer.    82 Section 7.05    Notice of Defaults.    82 Section
7.06    Reports by Trustee to Holders of the Notes.    82 Section 7.07   
Compensation and Indemnity.    82 Section 7.08    Replacement of Trustee.    83
Section 7.09    Successor Trustee by Merger, etc.    84 Section 7.10   
Eligibility; Disqualification.    84 Section 7.11    Preferential Collection of
Claims Against the Issuer. .    84   

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

         Section 8.01    Option to Effect Legal Defeasance or Covenant
Defeasance.    85 Section 8.02    Legal Defeasance and Discharge.    85

 

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          Page Section 8.03    Covenant Defeasance.    85 Section 8.04   
Conditions to Legal or Covenant Defeasance.    86 Section 8.05    Deposited
Money and Government Securities to be Held in Trust; Other Miscellaneous
Provisions.    87 Section 8.06    Repayment to Issuer.    87 Section 8.07   
Reinstatement.    88   

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

         Section 9.01    Without Consent of Holders of Notes.    88 Section 9.02
   With Consent of Holders of Notes.    89 Section 9.03    Compliance with Trust
Indenture Act.    90 Section 9.04    Revocation and Effect of Consents.    90
Section 9.05    Notation on or Exchange of Notes.    90 Section 9.06    Trustee
to Sign Amendments, etc.    91   

ARTICLE 10

NOTE GUARANTEES

         Section 10.01    Guarantee.    91 Section 10.02    Limitation on
Guarantor Liability.    92 Section 10.03    Execution and Delivery of Note
Guarantee.    92 Section 10.04    Guarantors May Consolidate, etc., on Certain
Terms.    93 Section 10.05    Releases.    93   

ARTICLE 11

SATISFACTION AND DISCHARGE

         Section 11.01    Satisfaction and Discharge.    94 Section 11.02   
Application of Trust Money.    95   

ARTICLE 12

MISCELLANEOUS

         Section 12.01    Trust Indenture Act Controls.    96 Section 12.02   
Notices.    96 Section 12.03    Communication by Holders of Notes with Other
Holders of Notes.    97 Section 12.04    Certificate and Opinion as to
Conditions Precedent.    97 Section 12.05    Statements Required in Certificate
or Opinion.    97 Section 12.06    Rules by Trustee and Agents.    98 Section
12.07    No Personal Liability of Directors, Officers, Employees and
Stockholders.    98 Section 12.08    Governing Law.    98 Section 12.09    No
Adverse Interpretation of Other Agreements.    98 Section 12.10    Successors.
   98 Section 12.11    Severability.    98 Section 12.12    Counterpart
Originals.    98 Section 12.13    Table of Contents, Headings, etc.    99
Section 12.14    Interest Act (Canada).    99 Section 12.15    Conversion of
Currency.    99 Section 12.16    Joint and Several Obligations.    99 Section
12.17    Jurisdiction; Consent to Service of Process.    99

 

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EXHIBITS

 

          

Page

Exhibit A1

   FORM OF NOTE    A-1 Exhibit B    FORM OF CERTIFICATE OF TRANSFER    B-1
Exhibit C    FORM OF CERTIFICATE OF EXCHANGE    C-1 Exhibit D    FORM OF
CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR    D-1 Exhibit E   
FORM OF NOTATION OF GUARANTEE    E-1 Exhibit F    FORM OF SUPPLEMENTAL INDENTURE
   F-1

 

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INDENTURE dated as of April 1, 2008 among Abitibi-Consolidated Company of
Canada, a company amalgamated under the laws of the province of Quebec, Canada
(the “Issuer”), Abitibi-Consolidated Inc., a company amalgamated under the laws
of Canada (the “Company”), the other Guarantors (as defined herein) and Wells
Fargo Bank, National Association, as trustee (the “Trustee”).

In this Indenture, except where otherwise indicated, all references to “dollars”
and “$” are to the lawful currency of the United States.

The Issuer, the Guarantors and the Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders (as defined) of
the 15.5% Senior Notes due 2010 (the “Notes”):

ARTICLE 1

DEFINITIONS AND INCORPORATION

BY REFERENCE

Section 1.01 Definitions.

“144A Global Note” means a Global Note substantially in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.

“AbitibiBowater Inc.” means AbitibiBowater Inc., a Delaware corporation.

“Abitibi-Consolidated Finance L.P.” means Abitibi-Consolidated Finance L.P., a
Delaware limited partnership.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is
consolidated, amalgamated or merged with or into or became a Subsidiary of such
specified Person (or, if the specified Person is the Issuer and Donohue Corp.
is, at such time, a Guarantor, of Donohue Corp. or any of its Subsidiaries),
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person consolidating, amalgamating or merging with
or into, or becoming a Restricted Subsidiary of, such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.

“Additional Notes” means additional Notes (other than the Initial Notes) issued
under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part
of the same series as the Initial Notes.

“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, “control,”
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise. For purposes of this definition, the terms
“controlling,” “controlled by” and “under common control with” have correlative
meanings. No Person (other than the Company or any Subsidiary of the Company or,
if Donohue Corp. is, at such time, a Guarantor, Donohue Corp. or any Subsidiary
of Donohue Corp.) in whom a Receivables Entity makes an

 

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Investment in connection with a Qualified Receivables Transaction will be deemed
to be an Affiliate of the Company or any of its Subsidiaries or, if Donohue
Corp. is, at such time, a Guarantor, Donohue Corp. or any Subsidiary of Donohue
Corp. solely by reason of such Investment.

“Agent” means any Registrar, co-registrar, Paying Agent or additional paying
agent.

“Applicable Procedures” means, with respect to any transfer or exchange of or
for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

“Asset Sale” means:

(1) the sale, lease, conveyance or other disposition of any assets or rights;
provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole will be governed by the provisions of the Indenture described
under Section 4.15 hereof and/or the provisions described under Section 5.01
hereof and not by the provisions of Section 4.10 hereof; and

(2) the issuance of Equity Interests by any of the Company’s Restricted
Subsidiaries or the sale of Equity Interests in any of the Company’s
Subsidiaries, including, if Donohue Corp. is, at such time, a Guarantor, Donohue
Corp. and its Subsidiaries (other than directors’ qualifying Equity Interests or
Equity Interests required by applicable law to be held by a Person other than
the Company or one of its Restricted Subsidiaries).

Notwithstanding the preceding, none of the following items will be deemed to be
an Asset Sale:

(1) any single transaction or series of related transactions that involves
assets having a Fair Market Value of less than $10.0 million;

(2) a transfer of assets between or among the Company and Restricted
Subsidiaries;

(3) an issuance of Equity Interests by a Restricted Subsidiary of the Company to
the Company or to a Restricted Subsidiary of the Company;

(4) the sale or lease of products, services or accounts receivable in the
ordinary course of business and any sale or other disposition of damaged,
worn-out or obsolete assets in the ordinary course of business;

(5) the sale or other disposition of Cash Equivalents;

(6) sales of accounts receivable and related assets to a Receivables Entity in
connection with a Qualified Receivables Transaction;

(7) the Donohue Sale and the other Permitted Reorganization Transactions;

(8) the Joint Venture Transactions;

(9) a Restricted Payment that does not violate Section 4.07 hereof or a
Permitted Investment;

 

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(10) the licensing of intellectual property or other general intangibles to
third persons on customary terms in the ordinary course of business;

(11) the sale, lease, sub-lease, license, sub-license, consignment, conveyance
or other disposition of inventory in the ordinary course of business, including
leases with respect to facilities that are temporarily not in use or pending
their disposition, or accounts receivable in connection with the compromise,
settlement or collection thereof; and

(12) the creation of a Lien to the extent that the granting of such Lien was not
in violation of Section 4.12 hereof.

“Attributable Debt” in respect of a sale and leaseback transaction means, at the
time of determination, the present value of the obligation of the lessee for net
rental payments during the remaining term of the lease included in such sale and
leaseback transaction including any period for which such lease has been
extended or may, at the option of the lessor, be extended. Such present value
shall be calculated using a discount rate equal to the rate of interest implicit
in such transaction, determined in accordance with GAAP; provided, however, that
if such sale and leaseback transaction results in a Capital Lease Obligation,
the amount of Indebtedness represented thereby will be determined in accordance
with the definition of “Capital Lease Obligation.”

“Bankruptcy Law” means Title 11, U.S. Code, the BIA, the CCAA, the WURA, the
Insolvency Act or any similar federal, provincial, or state law for the relief
or bankruptcy of debtors.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular “person” (as that term is used in Section 13(d)(3)
of the Exchange Act), such “person” will be deemed to have beneficial ownership
of all securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms “Beneficially Owns” and
“Beneficially Owned” have a corresponding meaning.

“BIA” means the Bankruptcy and Insolvency Act (Canada).

“Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation or
any committee thereof duly authorized to act on behalf of such board;

(2) with respect to a partnership, the Board of Directors of the general partner
of the partnership;

(3) with respect to a limited liability company, the managing member or members
or any controlling committee of managing members thereof; and

(4) with respect to any other Person, the board or committee of such Person
serving a similar function.

“Borrowing Base” means, as of any date, an amount equal to:

(1) 85% of the face amount of all accounts receivable owned by the Company and
its Restricted Subsidiaries as of the end of the most recent fiscal quarter
preceding such date that were not more than 180 days past due; plus

 

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(2) 75% of the book value of all inventory, net of reserves, owned by the
Company and its Restricted Subsidiaries as of the end of the most recent fiscal
quarter preceding such date;

provided that any accounts receivable or inventory that are utilized in
connection with a Qualified Receivables Transaction will be excluded from the
Borrowing Base to the extent of the Indebtedness outstanding with respect to
such Qualified Receivables Transaction.

“Bowater Incorporated” means Bowater Incorporated, a Delaware corporation.

“Broker-Dealer” has the meaning set forth in the Registration Rights Agreement.

“Business Day” means any day other than a Legal Holiday.

“Canadian Subsidiary” means with respect to any Person, any Subsidiary of such
Person that is organized or existing under the laws of Canada or any province or
territory thereof.

“Capital Lease Obligation” means, at the time any determination is to be made,
the amount of the liability in respect of a capital lease that would at that
time be required to be capitalized on a balance sheet prepared in accordance
with GAAP, and the Stated Maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be prepaid by the lessee without payment of a penalty.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock;

(3) in the case of a partnership or limited liability company, partnership
interests (whether general or limited) or membership interests; and

(4) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person, but excluding from all of the foregoing any debt securities
convertible into Capital Stock, whether or not such debt securities include any
right of participation with Capital Stock.

“Cash Equivalents” means:

(1) United States dollars and Canadian dollars;

(2) securities issued or directly and fully guaranteed or insured by the
Canadian or United States government or any agency or instrumentality of the
Canadian or United States government (provided that the full faith and credit of
Canada or United States is pledged in support of those securities) having
maturities of not more than six months from the date of acquisition;

(3) certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers’ acceptances with
maturities not exceeding six months and overnight bank deposits, in each case,
with any lender party to the Term Loan Facility or with any Canadian or United
States commercial bank having capital and surplus in excess of $500.0 million
and a Thomson Bank Watch Rating of “B” or better;

 

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(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications specified
in clause (3) above;

(5) commercial paper having one of the two highest ratings obtainable from
Moody’s Investors Service, Inc. or Standard & Poor’s Rating Services and, in
each case, maturing within nine months after the date of acquisition;

(6) securities issued by any state of the United States of America, any province
of Canada or any political subdivision or any public instrumentality of any such
state or province maturing within one year from the date of acquisition thereof
and at the time of acquisition thereof, having one of the two highest ratings
obtainable from either Standard & Poor’s or Moody’s;

(7) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (6) of this
definition; and

(8) local currencies held by the Company or any of its Restricted Subsidiaries,
from time to time in the ordinary course of business and consistent with past
practice.

“CCAA” means the Companies’ Creditors Arrangement Act (Canada).

“Change of Control” means the occurrence of any of the following:

(1) the direct or indirect sale, lease, transfer, conveyance or other
disposition (other than by way of merger, amalgamation or consolidation), in one
or a series of related transactions, of all or substantially all of the
properties or assets of the Company and its Subsidiaries (including if Donohue
Corp. is, at such time, a Restricted Subsidiary of the Company, Donohue Corp.
and its Subsidiaries) taken as a whole to any “person” (as that term is used in
Section 13(d)(3) of the Exchange Act) other than AbitibiBowater Inc., a
Wholly-Owned Subsidiary of AbitibiBowater Inc. or a Permitted Holder;

(2) the adoption of a plan relating to the liquidation or dissolution of the
Company or AbitibiBowater Inc. (other than a plan of liquidation of the Company
that is a liquidation for tax purposes only);

(3) the consummation of any transaction (including, without limitation, any
merger, amalgamation or consolidation), the result of which is that any “person”
(as defined above) other than the Permitted Holders, becomes the Beneficial
Owner, directly or indirectly, of more than 50% of the Voting Stock of
AbitibiBowater Inc., measured by voting power rather than number of shares;

(4) AbitibiBowater Inc. consolidates, amalgamates or merges with or into, any
Person, or any Person consolidates, amalgamates, or merges with or into,
AbitibiBowater Inc., in any such event pursuant to a transaction in which any of
the outstanding Voting Stock of AbitibiBowater Inc. or such other Person is
converted into or exchanged for cash, securities or other property, other than
any such transaction where the Voting Stock of AbitibiBowater Inc. outstanding
immediately prior to such transaction constitutes or is converted into or
exchanged for a majority of the outstanding shares of the Voting Stock of such
surviving or transferee Person (immediately after giving effect to such
transaction);

 

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(5) the first day on which the Company ceases to be a Wholly-Owned Subsidiary of
AbitibiBowater Inc.;

(6) the first day on which the Issuer ceases to be a Wholly-Owned Subsidiary of
the Company; or

(7) the first day on which a majority of the members of the Board of Directors
of AbitibiBowater Inc. are not Continuing Directors;

provided that for purposes of this definition, the exchangeable shares issued by
AbitibiBowater Canada Inc. (f/k/a as Bowater Canada, Inc.) outstanding on the
date of the Indenture shall be deemed to have been exchanged for shares of
Capital Stock of AbitibiBowater Inc.

“Clearstream” means Clearstream Banking, S.A.

“Collateral Trust Agreement” means that certain collateral trust agreement,
dated the date of this Indenture, among the Issuer, the Company, other
Guarantors from time to time party thereto, the Trustee and the collateral
trustee, to secure the Secured Notes and future Fixed Asset Debt, as amended,
supplemented, restated, modified, renewed or replaced (whether upon or after
termination or otherwise), in whole or in part from time to time, or any other
successor agreement and whether among the same or any other parties.

“collateral trustee” means Wells Fargo Bank, National Association, in its
capacity as collateral trustee under the Collateral Trust Agreement, together
with its successors in such capacity.

“Company” means Abitibi-Consolidated Inc., and any and all successors thereto.

“Consolidated Cash Flow” means, with respect to any specified Person for any
period, the Consolidated Net Income of such Person for such period plus, without
duplication:

(1) an amount equal to any extraordinary loss plus any net loss realized by such
Person or any of its Restricted Subsidiaries in connection with an Asset Sale,
to the extent such losses were deducted in computing such Consolidated Net
Income; plus

(2) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision for
taxes was deducted in computing such Consolidated Net Income; plus

(3) the Fixed Charges of such Person and its Restricted Subsidiaries for such
period, to the extent that such Fixed Charges were deducted in computing such
Consolidated Net Income; plus

(4) depreciation, amortization (including amortization of intangibles, deferred
financing fees, debt incurrence costs, commissions, fees and expenses, but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses or charges (including any write-offs of debt
issuance or deferred financing costs or fees and impairment charges and the
impact on depreciation and amortization of purchase accounting), but excluding
any such non-cash expense to the extent that it represents an accrual

 

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of or reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Person and its
Restricted Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses or charges were deducted in computing
such Consolidated Net Income; minus

(5) nonrecurring charges or expenses made or incurred in connection with any
restructuring, and transaction costs incurred in connection with any
acquisition, in each case to the extent deducted in computing such Consolidated
Net Income; minus

(6) non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business,

in each case, on a consolidated basis and determined in accordance with GAAP;
provided that for so long as Donohue Corp. and its Restricted Subsidiaries that
are required to do so under the indenture continue to provide Note Guarantees,
Consolidated Cash Flow will be determined on a consolidated combined basis
(including Donohue Corp. and its Restricted Subsidiaries as if they were
actually Subsidiaries of the Company).

Notwithstanding the preceding, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash expenses
of, a Restricted Subsidiary of the Company (other than Donohue Corp. and its
Restricted Subsidiaries) will be added to Consolidated Net Income to compute
Consolidated Cash Flow of the Company only to the extent that a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior governmental approval (that
has not been obtained), and without direct or indirect restriction pursuant to
the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.

“Consolidated Net Income” means, with respect to any specified Person for any
period, the aggregate of the net income (loss) of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis determined in accordance
with GAAP and without any reduction in respect of preferred stock dividends;
provided that:

(1) all extraordinary gains and losses and all gains and losses realized in
connection with any Asset Sale or the disposition of securities or the early
extinguishment of Indebtedness, together with any related provision for taxes on
any such gain, will be excluded;

(2) the net income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting will be
included only to the extent of the amount of dividends or similar distributions
paid in cash to the specified Person or a Restricted Subsidiary of the Person;

(3) the net income (but not loss) of any Restricted Subsidiary will be excluded
to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that net income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders;

(4) the cumulative effect of a change in accounting principles will be excluded;

 

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(5) notwithstanding clause (1) above, the net income of any Unrestricted
Subsidiary will be excluded, whether or not distributed to the specified Person
or one of its Subsidiaries; and

(6) for so long as Donohue Corp. and its Restricted Subsidiaries that are
required to do so under the indenture continue to provide Note Guarantees,
Consolidated Net Income will be determined on a consolidated combined basis
(including Donohue Corp. and its Restricted Subsidiaries as if they were
actually Subsidiaries of the Company).

“Consolidated Net Tangible Assets” means the total amount of assets of any
Person and its Restricted Subsidiaries on a consolidated basis, including
deferred pension costs, after deducting therefrom:

(1) all current liabilities (excluding any indebtedness classified as a current
liability);

(2) all goodwill, tradenames, trademarks, patents, unamortized debt discount and
financing costs and all similar intangible assets;

(3) appropriate adjustments on account of minority interests of other Persons
holding shares of the Restricted Subsidiaries of such Person;

(4) so long as Donohue Corp. and its Restricted Subsidiaries that are required
to do so under the indenture continue to provide Note Guarantees, Consolidated
Net Income will be determined on a consolidated combined basis (including
Donohue Corp. and its Restricted Subsidiaries as if they were actually
Subsidiaries of the Company);

all as set forth in the most recent consolidated (and, in the case of clause
(4) above, combined) balance sheet of such Person and its Restricted
Subsidiaries (but, in any event as of a date within 150 days of the date of
determination), determined on a consolidated basis in accordance with GAAP.

“Continuing Directors” means, as of any date of determination, any member of the
Board of Directors of AbitibiBowater Inc. who:

(1) was a member of such Board of Directors on the date of this Indenture; or

(2) was nominated for election or elected to such Board of Directors with the
approval of a majority of the Continuing Directors who were members of such
Board of Directors at the time of such nomination or election.

“Convertible Notes” means the 8.0% convertible debentures due 2013 issued by
AbitibiBowater Inc. on the date of this Indenture.

“Corporate Trust Office of the Trustee” will be at the address of the Trustee
specified in Section 12.02 hereof or such other address as to which the Trustee
may give notice to the Issuer.

“Credit Facilities” means, one or more debt facilities (including, without
limitation, the Term Loan Facility) or commercial paper facilities, in each
case, with banks or other lenders or credit providers or a trustee providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables), bankers acceptances, letters
of credit or issuances of senior secured notes, including any related notes,
guarantees, collateral documents, instruments, documents and agreements

 

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executed in connection therewith and in each case, as amended, restated,
modified, renewed, refunded, replaced in any manner (whether upon or after
termination or otherwise) or refinanced (including by means of sales of debt
securities to institutional investors) in whole or in part from time to time.

“Current Debt” means Indebtedness and other Obligations under the Term Loan
Facility and any other Credit Facility (including letters of credit and
reimbursement obligations with respect thereto) incurred pursuant to clauses
(1), (3) or (21) of the definition of “Permitted Debt.”

“Custodian” means the Trustee, as custodian with respect to the Notes in global
form, or any successor entity thereto.

“Default” means any event that is, or with the passage of time or the giving of
notice or both would be, an Event of Default.

“Definitive Note” means a certificated Note registered in the name of the Holder
thereof and issued in accordance with Section 2.06 hereof, substantially in the
form of Exhibit A1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the “Schedule of Exchanges of Interests in the Global
Note” attached thereto.

“Depositary” means, with respect to the Notes issuable or issued in whole or in
part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

“Designated Non-cash Consideration” means the Fair Market Value of non-cash
consideration received by the Company or any of its Restricted Subsidiaries in
connection with an Asset Sale that is so designated as Designated Non-cash
Consideration pursuant to an Officers’ Certificate delivered to the Trustee,
setting forth the basis of such valuation.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms
of any security into which it is convertible, or for which it is exchangeable,
in each case, at the option of the holder of the Capital Stock), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
of the Capital Stock, in whole or in part, on or prior to the date that is 91
days after the date on which the Notes mature. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders of the Capital Stock have the right to require the Company
to repurchase such Capital Stock upon the occurrence of a change of control or
an asset sale will not constitute Disqualified Stock if the terms of such
Capital Stock provide that the Company may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with section 4.07 hereof; provided, further, that if the Capital Stock
is issued to any plan for the benefit of employees of the Company or its
Subsidiaries or, if Donohue Corp. is, at such time, a Guarantor, Donohue Corp.
or any of its Subsidiaries or by any such plan to those employees, that Capital
Stock shall not constitute Disqualified Stock solely because it may be required
to be repurchased by the Company in order to satisfy applicable statutory or
regulatory obligations. The amount of Disqualified Stock deemed to be
outstanding at any time for purposes of this Indenture will be the maximum
amount that the Company and its Restricted Subsidiaries may become obligated to
pay upon the maturity of, or pursuant to any mandatory redemption provisions of,
such Disqualified Stock, exclusive of accrued dividends.

“Donohue Corp.” means Donohue Corp., a Delaware corporation.

 

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“Donohue Sale” means (i) the recapitalization of certain of the preferred stock
of Donohue Corp. into common stock of Donohue Corp. and (ii) the sale by the
Issuer of all or a majority of the common stock of Donohue Corp. to
AbitibiBowater Inc. or a Subsidiary thereof in exchange for the assumption by
AbitibiBowater Inc. or such Subsidiary of approximately C$142.0 million of
indebtedness (and any accrued and unpaid interest thereon) owing by the Issuer
to Donohue Corp.

“Equity Interests” means Capital Stock and all warrants, options or other rights
to acquire Capital Stock (but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock).

“Euroclear” means Euroclear Bank, S.A./N.V., as operator of the Euroclear
system.

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

“Exchange Notes” means the Notes issued in the Exchange Offer pursuant to
Section 2.06(f) hereof.

“Exchange Offer” has the meaning set forth in the Registration Rights Agreement.

“Exchange Offer Registration Statement” has the meaning set forth in the
Registration Rights Agreement.

“Excluded Proceeds” means (a) the net proceeds from the sale by Abitibi
Consolidated Sales Corporation, a Delaware corporation, to Catalyst Paper
Corporation of (i) all of the capital stock of The Apache Railway Company and
(ii) certain assets related to the production of newsprint pursuant to the Asset
and Stock Purchase Agreement dated as of February 10, 2008 between such parties
and (b) the net proceeds received in connection with the Donohue Sale and the
other Permitted Reorganization Transactions.

“Existing Indebtedness” means all Indebtedness of the Company and its
Subsidiaries and Donohue Corp. and its Subsidiaries (other than Indebtedness
under the Term Loan Facility or under the Securitization Agreement) in existence
on the date of this Indenture, until such amounts are repaid.

“Fair Market Value” means the value that would be paid by a willing buyer to an
unaffiliated willing seller in a transaction not involving distress or necessity
of either party, determined in good faith by the Board of Directors of the
Company (unless otherwise provided in this Indenture).

“Fixed Asset Debt” means:

(1) the Secured Notes (including any related exchange notes) and the related
guarantees thereof, and all other Obligations of the Issuer or the Guarantors
under the indenture governing the Secured Notes and all related security
documents; and

(2) any other Indebtedness of the Issuer (including additional Secured Notes),
which may be guaranteed by the Guarantors, that is secured (equally and ratably
with the Secured Notes if any remain outstanding) by the Liens created pursuant
to the Collateral Trust Agreement; provided that:

(a) the net proceeds are used to refund, refinance, replace, defease, discharge
or otherwise acquire or retire other Fixed Asset Debt; or

 

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(b) on the date of incurrence of such Indebtedness, after giving pro forma
effect to the incurrence thereof and the application of the proceeds therefrom,
the aggregate principal amount of Fixed Asset Debt then outstanding would not
exceed 10% of the Consolidated Net Tangible Assets of the Company; and

(3) Hedging Obligations of the Company or any of its Restricted Subsidiaries
incurred in the ordinary course of business.

“Fixed Asset Debt Obligations” means Fixed Asset Debt and all other Obligations
in respect thereof.

“Fixed Charge Coverage Ratio” means with respect to any specified Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
specified Person or any of its Restricted Subsidiaries incurs, assumes,
guarantees, repays, repurchases, redeems, defeases or otherwise discharges any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge
Coverage Ratio will be calculated giving pro forma effect (in accordance with
Regulation S-X under the Securities Act) to such incurrence, assumption,
Guarantee, repayment, repurchase, redemption, defeasance or other discharge of
Indebtedness, or such issuance, repurchase or redemption of preferred stock, and
the use of the proceeds therefrom, as if the same had occurred at the beginning
of the applicable four-quarter reference period.

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

(1) acquisitions that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers or consolidations, or any
Person or any of its Restricted Subsidiaries acquired by the specified Person or
any of its Restricted Subsidiaries, and including all related financing
transactions and including increases in ownership of Restricted Subsidiaries,
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date, or that are to be made on the
Calculation Date, will be given pro forma effect (in accordance with Regulation
S-X under the Securities Act) as if they had occurred on the first day of the
four-quarter reference period;

(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses (and ownership
interests therein) disposed of prior to the Calculation Date, will be excluded;

(3) the Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses (and ownership interests
therein) disposed of prior to the Calculation Date, will be excluded, but only
to the extent that the obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted Subsidiaries
following the Calculation Date;

(4) any Person that is a Restricted Subsidiary on the Calculation Date will be
deemed to have been a Restricted Subsidiary at all times during such
four-quarter period;

(5) any Person that is not a Restricted Subsidiary on the Calculation Date will
be deemed not to have been a Restricted Subsidiary at any time during such
four-quarter period;

 

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(6) if any Indebtedness bears a floating rate of interest, the interest expense
on such Indebtedness will be calculated as if the rate in effect on the
Calculation Date had been the applicable rate for the entire period (taking into
account any Hedging Obligation applicable to such Indebtedness if such Hedging
Obligation has a remaining term as at the Calculation Date in excess of 12
months); and

(7) so long as Donohue Corp. and its Restricted Subsidiaries that are required
to do so under the indenture continue to provide Note Guarantees, Fixed Charges
will be determined on a consolidated combined basis (including Donohue Corp. and
its Restricted Subsidiaries as if they were actually Subsidiaries of the
Company).

“Fixed Charges” means, with respect to any specified Person for any period, the
sum, without duplication, of:

(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries (provided that, in the event Donohue Corp. and its Restricted
Subsidiaries that are required to do so under the indenture continue to provide
Note Guarantees but are no longer included in the Company’s consolidated
financial statements, consolidated interest expense will then be determined on a
consolidated combined basis (including Donohue Corp. and its consolidated
entities)) for such period, whether paid or accrued, including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers’ acceptance financings, commissions, discounts, yield and
other fees and charges (including interest) incurred in connection with any
Qualified Receivables Transaction or any other transaction pursuant to which the
Company or any of its Subsidiaries or, if Donohue Corp. is, at such time, a
Guarantor, Donohue Corp. or any of its Subsidiaries may sell, convey or
otherwise transfer or grant a security interest in any accounts receivable or
related assets of the type specified in the definition of “Qualified Receivables
Transaction,” and net of the effect of all payments made or received pursuant to
Hedging Obligations in respect of interest rates; plus

(2) the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus

(3) any interest on Indebtedness of another Person that is guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries, whether or not such Guarantee
or Lien is called upon; plus

(4) the product of (a) all dividends, whether paid or accrued and whether or not
in cash, on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividends on Equity Interests payable solely
in Equity Interests of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, determined on a consolidated basis in
accordance with GAAP; plus

(5) so long as Donohue Corp. and its Restricted Subsidiaries that are required
to do so under the indenture continue to provide Note Guarantees, consolidated
interest expense will be determined on a consolidated combined basis (including
Donohue Corp. and its Restricted Subsidiaries as if they were actually
Subsidiaries of the Company).

 

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“Foreign Subsidiary” means, with respect to any Person, any Restricted
Subsidiary of such Person that is not a Canadian Subsidiary or a U.S.
Subsidiary.

“GAAP” means generally accepted accounting principles set forth in the opinions
and pronouncements of the Canadian Institute of Chartered Accountants (“Canadian
GAAP”) which are in effect on the date of this Indenture; provided, that, if the
Issuer so elects upon notice to the Trustee, then for periods following the date
of such election, “GAAP” shall mean generally accepted accounting principles in
the United States (“U.S. GAAP”), as in effect upon the date of such election;
provided further, that any such election, once made, shall be irrevocable. If
(i) the Issuer elects to use U.S. GAAP, each provision of the covenant described
in Section 4.03 hereof that requires a “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” analysis including comparative
figures to be provided in respect of a previous period shall be deemed to
require comparative figures to be provided in respect of the previous two such
periods, with such figures being reconciled in accordance with U.S. GAAP.

“Global Note Legend” means the legend set forth in Section 2.06(g)(2) hereof,
which is required to be placed on all Global Notes issued under this Indenture.

“Global Notes” means, individually and collectively, each of the Restricted
Global Notes and the Unrestricted Global Notes deposited with or on behalf of
and registered in the name of the Depository or its nominee, substantially in
the form of Exhibit A1 hereto and that bears the Global Note Legend and that has
the “Schedule of Exchanges of Interests in the Global Note” attached thereto,
issued in accordance with Section 2.01, 2.06(b)(3), 2.06(b)(4), 2.06(d)(2) or
2.06(f) hereof.

“Government Securities” means direct obligations of, or obligations guaranteed
by, the United States of America, and the payment for which the United States
pledges its full faith and credit.

“Guarantee” means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take or pay or to maintain financial statement
conditions or otherwise).

“Guarantors” means the Company and any Restricted Subsidiary of the Company that
executes a Note Guarantee in accordance with the provisions of this Indenture,
and their respective successors and assigns, in each case, until the Note
Guarantee of such Person has been released in accordance with the provisions of
this Indenture.

“Hedging Obligations” means, with respect to any specified Person, the
obligations of such Person under:

(1) interest rate swap agreements (whether from fixed to floating or from
floating to fixed), interest rate cap agreements and interest rate collar
agreements;

(2) other agreements or arrangements designed to manage interest rates or
interest rate risk; and

(3) other agreements or arrangements designed to protect such Person against
fluctuations in currency exchange rates or commodity prices.

 

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“Holder” means a Person in whose name a Note is registered.

“IAI Global Note” means a Global Note substantially in the form of Exhibit A1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.

“Indebtedness” means, with respect to any specified Person, any indebtedness of
such Person (excluding accrued expenses and trade payables), whether or not
contingent:

(1) in respect of borrowed money;

(2) evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof);

(3) in respect of banker’s acceptances;

(4) representing Capital Lease Obligations or Attributable Debt in respect of
sale and leaseback transactions;

(5) representing the balance deferred and unpaid of the purchase price of any
property or services due more than six months after such property is acquired or
such services are completed but excluding other accrued liabilities being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted; or

(6) representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit,
Attributable Debt and Hedging Obligations) would appear as a liability upon a
balance sheet of the specified Person prepared in accordance with GAAP. In
addition, the term “Indebtedness” includes all Indebtedness of others secured by
a Lien on any asset of the specified Person (whether or not such Indebtedness is
assumed by the specified Person) and, to the extent not otherwise included, the
Guarantee by the specified Person of any Indebtedness of any other Person as
shall equal the lesser of (x) the Fair Market Value of such asset as of the date
of determination or (y) the amount of such Indebtedness and, to the extent not
otherwise included, the guarantee by the specified Person of any Indebtedness of
any other Person.

Notwithstanding the foregoing, in connection with the purchase by the Company or
of its Restricted Subsidiaries of any business, the term “Indebtedness” will
exclude post-closing payment adjustments to which the seller may become entitled
to the extent such payment is determined by a final closing balance sheet or
such payment depends on the performance of such business after the closing;
provided, however, that at the time of closing, the amount of any such payment
is not determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 30 days thereafter.

“Indenture” means this Indenture, as amended or supplemented from time to time.

“Indirect Participant” means a Person who holds a beneficial interest in a
Global Note through a Participant.

“Initial Notes” means the first $292,740,000 aggregate principal amount of Notes
issued under this Indenture on the date hereof.

 

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“Initial Purchasers” means Goldman, Sachs & Co. and J.P. Morgan Securities Inc.

“Insolvency Act” means the Insolvency Act 1986 of England and Wales (as amended
by the Enterprise Act 2002 of England and Wales).

“Institutional Accredited Investor” means an institution that is an “accredited
investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act, who are not also QIBs.

“Investments” means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding (i) commission, travel and similar advances to officers
and employees made in the ordinary course of business and (ii) extensions of
credit to customers or advances, deposits or payment to or with suppliers,
lessors or utilities or for workers’ compensation, in each case, that are
incurred in the ordinary course of business and recorded as accounts receivable,
prepaid expenses or deposits on the balance sheet of such Person prepared in
accordance with GAAP), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Company or any Restricted Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Restricted Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a Restricted Subsidiary of the
Company, the Company will be deemed to have made an Investment on the date of
any such sale or disposition equal to the Fair Market Value of the Company’s
Investments in such Restricted Subsidiary that were not sold or disposed of in
an amount determined as provided in the final paragraph of Section 4.07 hereof.
The acquisition by the Company or any Restricted Subsidiary of the Company of a
Person that holds an Investment in a third Person will be deemed to be an
Investment by the Company or such Restricted Subsidiary in such third Person in
an amount equal to the Fair Market Value of the Investments held by the acquired
Person in such third Person in an amount determined as provided in the final
paragraph of Section 4.07 hereof. Except as otherwise provided in this
Indenture, the amount of an Investment will be determined at the time the
Investment is made and without giving effect to subsequent changes in value but
giving effect (without duplication) to all subsequent reductions in the amount
of such Investment as a result of (x) the repayment or disposition thereof for
cash of (y) the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary (valued proportionately to the equity interest in such Unrestricted
Subsidiary of the Company or such Restricted Subsidiary owning such Unrestricted
Subsidiary at the time of such redesignation) at the Fair Market Value of the
net assets of such Unrestricted Subsidiary at the time of such redesignation, in
the case of clause (x) and (y), not to exceed the original amount, or Fair
Market Value, of such Investment.

“Issuer” means Abitibi-Consolidated Company of Canada, and any and all
successors.

“Joint Purchasing Agreements” means any agreement between or among the Company
and/or its Restricted Subsidiaries and Bowater Incorporated, a Delaware
corporation, or any of its Subsidiaries, whereby the parties thereto agree to
jointly purchase goods or services from third parties; provided that such
agreements result in the Company or the applicable Restricted Subsidiary
purchasing such goods or services on terms that are no worse than would have
been obtained by the Company or applicable Restricted Subsidiary in the absence
of such agreement.

“Joint Venture Transactions” means (a) transfer or conversion of the facilities
located in South Wirral, Cheshire, United Kingdom whether by (i) a sale by
Bridgewater Paper Company Limited (U.K.) (“Bridgewater”) of its Equity Interests
to a Person not an Affiliate of the Company; (ii) a transfer of the assets of
Bridgewater to a joint venture with a Person not an Affiliate of the Company; or
(iii) any other transaction having substantially the effect of the foregoing
and/or (b) the transfer to Produits Forestiers

 

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Mauricie L.P. of the Issuer’s Rivière-aux-Rats sawmill and the timber rights
previously held by Produits Forestiers La Tuque Inc., and the concurrent
issuance, directly or indirectly, of any limited or general partnership in such
limited partnership, or in any general partner of such limited partnership, in
exchange therefor or any other transaction having substantially the effect of
the foregoing.

“Legal Holiday” means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.

“Letter of Transmittal” means the letter of transmittal to be prepared by the
Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.

“Lien” means, with respect to any asset, any mortgage, hypothec, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in, except in connection with any Qualified Receivables Transaction.

“Net Proceeds” means the aggregate cash proceeds and Cash Equivalents received
by the Company or any of its Restricted Subsidiaries in respect of any Asset
Sale (including, without limitation, any cash or Cash Equivalents received upon
the sale or other disposition of any non-cash consideration received in any
Asset Sale), net of the direct costs relating to such Asset Sale, including,
without limitation, legal, accounting and investment banking fees, and sales
commissions, and any relocation expenses incurred as a result of the Asset Sale,
taxes paid or payable as a result of the Asset Sale, in each case, after taking
into account, without duplication, (1) any available tax credits or deductions
and any tax sharing arrangements, and amounts required to be applied to the
repayment of Indebtedness secured by a Permitted Lien on the asset or assets
that were the subject of such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP, (2) any reserve or payment with respect to liabilities associated with
such asset or assets and retained by the Company or any of its Restricted
Subsidiaries after such sale or other disposition thereof, including, without
limitation, severance costs, pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with such transaction, and (3) any cash
escrows in connection with purchase price adjustments, reserves or indemnities
(until released).

“Non-Recourse Debt” means Indebtedness:

(1) as to which neither the Company nor any of its Restricted Subsidiaries
(a) provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (b) is directly or indirectly
liable as a guarantor or otherwise, or (c) constitutes the lender;

(2) no default with respect to which (including any rights that the holders of
the Indebtedness may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of any
other Indebtedness of the Company or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment of the
Indebtedness to be accelerated or payable prior to its Stated Maturity; and

 

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(3) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries (other than the Equity Interests of an Unrestricted Subsidiary);

in each case, except to the extent permitted by Section 4.07 hereof; provided,
however, that Indebtedness shall not cease to be Non-Recourse Debt solely by
reason of pledge by the Company or any of its Restricted Subsidiaries of Equity
Interests of an Unrestricted Subsidiary of the Company or of a Person that is
not a Subsidiary of the Company or such Restricted Subsidiary if recourse is
limited to such Equity Interests.

“Non-U.S. Person” means a Person who is not a U.S. Person.

“Note Documents” means this Indenture and the Notes.

“Note Guarantee” means the Guarantee by each Guarantor of the Issuer’s
obligations under this Indenture and the Notes, executed pursuant to the
provisions of this Indenture.

“Notes” has the meaning assigned to it in the preamble to this Indenture. The
Initial Notes and the Additional Notes shall be treated as a single class for
all purposes under this Indenture, and unless the context otherwise requires,
all references to the Notes shall include the Initial Notes and any Additional
Notes.

“Obligations” means any principal, interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities payable under the documentation
governing any Indebtedness.

“Officer” means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.

“Officers’ Certificate” means a certificate signed on behalf of the Company by
two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Section 12.05
hereof.

“Opinion of Counsel” means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 12.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.

“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a
Person who has an account with the Depositary, Euroclear or Clearstream,
respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).

“Permitted Business” means any business engaged in by the Company or any of its
Restricted Subsidiaries on the date of this Indenture and any business or other
activities that are reasonably similar, ancillary, complementary or related to,
or a reasonable extension, development or expansion of, the businesses in which
the Company and its Restricted Subsidiaries are engaged on the date of this
Indenture.

“Permitted Holders” means Fairfax Financial Holdings Ltd. and its affiliated
investment partnerships.

 

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“Permitted Investments” means:

(1) any Investment in the Company, the Issuer or in any Guarantor;

(2) any Investment in Cash Equivalents;

(3) any Investment by the Company or any Restricted Subsidiary of the Company in
a Person, if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary of the Company and a Guarantor;
or

(b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Restricted Subsidiary of the Company;

(4) any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with Section 4.10
hereof or from a sale or other disposition of assets not constituting an Asset
Sale;

(5) any acquisition of assets or Capital Stock solely in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the Company or a
direct or indirect parent of the Company;

(6) any Investments received in compromise or resolution of (A) obligations of
trade creditors or customers that were incurred in the ordinary course of
business of the Company or any of its Restricted Subsidiaries, including
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of any trade creditor or customer; or (B) litigation,
arbitration or other disputes;

(7) Investments represented by Hedging Obligations;

(8) loans, guarantees of loans, advances, and other extensions of credit to or
on behalf of current and former officers, directors, employees, and consultants
of the Company, any of its Restricted Subsidiaries, or a direct or indirect
parent of the Company made in the ordinary course of business for the purpose of
permitting such Persons to purchase Capital Stock of the Company or any direct
or indirect parent of the Company or in connection with any relocation costs
related to the relocation of the corporate headquarters of the Company; provided
that the aggregate amount of such loans, guarantees of loans, advances, and
other extensions of credit and Indebtedness incurred pursuant to
Section 4.09(b)(17) may not exceed $5.0 million at any one time outstanding;

(9) the acquisition by a Receivables Entity in connection with a Qualified
Receivables Transaction of Equity Interests of a trust or other Person
established by such Receivables Entity to effect such Qualified Receivables
Transaction; and any other Investment by the Company or a Restricted Subsidiary
of the Company in a Receivables Entity or any Investment by a Receivables Entity
in any other Person in connection with a Qualified Receivables Transaction;

(10) repurchases of the Notes;

 

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(11) any Investment of the Company or any of its Restricted Subsidiaries
existing on the date of this Indenture, and any extension, modification or
renewal of such existing Investments, to the extent not involving any additional
Investment other than as the result of the accrual or accretion of interest or
original issue discount or the issuance of pay-in-kind securities, in each case,
pursuant to the terms of such Investments as in effect on the date of this
Indenture;

(12) guarantees otherwise permitted by the terms of this Indenture (other than
guarantees to or for the benefit of Affiliates of the Company);

(13) receivables owing to the Company or any of its Restricted Subsidiaries,
prepaid expenses, and lease, utility, workers’ compensation and other deposits,
if created, acquired or entered into in the ordinary course of business;

(14) payroll, business-related travel, and similar advances to cover matters
that are expected at the time of such advances to be ultimately treated as
expenses for accounting purposes and that are made in the ordinary course of
business;

(15) Investments resulting from the acquisition of a Person, otherwise permitted
by this Indenture, which Investments at the time of such acquisition were held
by the acquired Person and were not acquired in contemplation of the acquisition
of such Person;

(16) any Investment resulting from or arising out of the Joint Venture
Transactions or the Donohue Sale;

(17) any Investment resulting from a Lien which is permitted by clause (29) of
the definition of “Permitted Liens”;

(18) reclassification of any Investment initially made in (or reclassified as)
one form into another (such as from equity to loan or vice versa); provided in
each case that the amount of such Investment is not increased thereby;

(19) other Investments in any Person (other than an Affiliate of the Company
that is (a) not a Restricted Subsidiary of the Company, (b) or a Permitted Joint
Venture Partner of the Company or any Guarantor or (c) a Subsidiary of the
Company or any Guarantor) having an aggregate Fair Market Value (measured on the
date each such Investment was made and without giving effect to subsequent
changes in value), when taken together with all other Investments made pursuant
to this clause (19) that are at the time outstanding not to exceed the greater
of (i) $100.0 million or (ii) 2% of Total Assets; and

(20) Investments in Augusta Newsprint in an aggregate amount not to exceed
$100.0 million, the proceeds of which shall be used to finance the acquisition
of the entire interest of the Thompson Partner in Augusta Newsprint.

“Permitted Joint Venture Partner” means any Person (other than a Subsidiary of
the Company) that is an Affiliate of the Company solely because the Company
and/or its Restricted Subsidiaries own Equity Interests in such Person.

 

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“Permitted Liens” means:

(1) any Liens held by the collateral trustee equally and ratably securing
(a) the Secured Notes and the related guarantees (and the related exchange notes
and exchange note guarantees of the Secured Notes) and all future Fixed Asset
Debt that was permitted to be incurred under the terms of the covenant described
above under Section 4.09 hereof and (b) all related Fixed Asset Debt
Obligations;

(2) any Liens to secure (a) Current Debt that was permitted by this Indenture to
be incurred and (b) all related Obligations;

(3) Liens in favor of the Issuer or the Guarantors;

(4) Liens on property of a Person existing at the time such Person becomes a
Restricted Subsidiary of the Company or is merged with or into or consolidated
with the Company or any Restricted Subsidiary of the Company; provided that such
Liens were in existence prior to the contemplation of such Person becoming a
Restricted Subsidiary of the Company or such merger or consolidation and do not
extend to any assets other than those of the Person that becomes a Restricted
Subsidiary of the Company or is merged into or consolidated with the Company or
a Restricted Subsidiary of the Company;

(5) Liens on property (including Capital Stock) existing at the time of
acquisition of the property by the Company or any Restricted Subsidiary of the
Company; provided that such Liens were in existence prior to, such acquisition,
and not incurred in contemplation of, such acquisition;

(6) Liens to secure the performance of tenders, completion guarantees, statutory
obligations, surety, environmental or appeal bonds, bids, leases, government
contracts, performance bonds or other obligations of a like nature incurred in
the ordinary course of business;

(7) Liens to secure Indebtedness (including Capital Lease Obligations) or
Attributable Debt permitted by Section 4.09(b)(7) covering only the assets
acquired with or financed by such Indebtedness;

(8) Liens existing on the date of this Indenture;

(9) Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as is required in conformity with GAAP
has been made therefor;

(10) Liens consisting of carriers’, warehousemen’s, landlord’s and mechanics’,
suppliers, materialmen’s, repairmen’s and similar Liens not securing
Indebtedness or in favor of customs or revenue authorities or freight forwarders
or handlers to secure payment of custom duties, in each case, incurred in the
ordinary course of business;

(11) any state of facts an accurate survey would disclose, public and private
roads, timber cutting and hauling contracts, timber sales contracts,
prescriptive easements or adverse possession claims, minor encumbrances,
easements or reservations of, or rights of others for, pursuant to any leases,
licenses, rights-of-way or other similar agreements or arrangements,

 

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development, air or water rights, sewers, electric lines, telegraph and
telephone lines and other utility lines, pipelines, service lines, railroad
lines, improvements and structures located on, over or under any property,
drains, drainage ditches, culverts, electric power or gas generating or
co-generation, storage and transmission facilities and other similar purposes,
zoning or other restrictions as to the use of real property or minor defects in
title, which were not incurred to secure payment of Indebtedness and that do not
in the aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such Person;

(12) Liens created for the benefit of (or to secure) the Notes (or the Note
Guarantees), or the Exchange Notes or the Note Guarantees relating thereto;

(13) Liens to secure any Permitted Refinancing Indebtedness permitted to be
incurred under this Indenture (other than Current Debt or Fixed Asset Debt);
provided, however, that the new Lien is limited to all or part of the same
property and assets that secured or, under the written agreements pursuant to
which the original Lien arose, could secure the original Lien (plus improvements
and accessions to, such property or proceeds or distributions thereof);

(14) Liens on assets of the Issuer, the Company or a Receivables Entity incurred
in connection with a Qualified Receivables Transaction;

(15) Liens on real property consisting of public and private roads, timber
cutting and hauling contracts, timber sales contracts, prescriptive easements or
adverse possession claims, minor encumbrances, easements or reservations of, or
rights of others for, pursuant to any leases, licenses, rights-of-way or other
similar agreements or arrangements, development, air or water rights, sewers,
electric lines, telegraph and telephone lines and other utility lines,
pipelines, service lines, railroad lines, improvements and structures located
on, over or under any property, drains, drainage ditches, culverts, electric
power or gas generating or co-generation, storage and transmission facilities
and other similar purposes, zoning or other restrictions as to the use of real
property or minor defects in title, which were not incurred to secure payment of
Indebtedness and that do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of the Company and its Restricted Subsidiaries;

(16) Liens upon specific items of inventory or other goods and proceeds of any
Person securing such Person’s obligations in respect of bankers’ acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods;

(17) Liens incurred or pledges or deposits made in the ordinary course of
business in connection with workers’ compensation, unemployment insurance and
other types of social security and employee health and disability benefits, or
casualty—liability insurance or self insurance or securing letters of credit
issued in the ordinary course of business;

(18) judgment and attachment Liens not giving rise to an Event of Default and
notices of lis pendens and associated rights related to litigation being
contested in good faith by appropriate proceedings and for which adequate
reserves have been made in conformity with GAAP;

 

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(19) Liens securing Hedging Obligations incurred in the ordinary course of
business;

(20) any interest or title of a lessor, licensor or sublicense under any
operating lease, license or sublicense, as applicable;

(21) Liens on the Equity Interests of an Unrestricted Subsidiary of the Company
or of a Person that is not a Subsidiary of the Company securing Indebtedness of
such Unrestricted Subsidiary or other Person if recourse to the Company and its
Restricted Subsidiaries with respect to such Indebtedness is limited to such
Equity Interests;

(22) Liens in favor of collecting or payor banks having a right of setoff,
revocation, refund or chargeback with respect to money or instruments of the
Company or any Restricted Subsidiary thereof on deposit with or in possession of
such bank;

(23) any obligations or duties affecting any of the property of the Company or
any of its Restricted Subsidiaries to any municipality or public authority with
respect to any franchise, grant, license, or permit that do not impair the use
of such property for the purposes for which it is held;

(24) Liens on any property in favor of domestic or foreign governmental bodies
to secure partial, progress, advance or other payment pursuant to any contract
or statute, not yet due and payable;

(25) Liens with respect to so-called “greenbelt” or “buffer zone” properties;

(26) Leases and ground leases of underutilized or vacant properties of the
Company or any of its Restricted Subsidiaries to third parties with which the
Company or such Restricted Subsidiary has a production, co-production, operating
or other arrangement or to third party providers of energy, transportation
services or raw materials in the ordinary course of business, provided such
leases do not materially interfere with the operation of the business of the
Company or any of its Restricted Subsidiaries or secure any Indebtedness;

(27) Liens consisting of any law or governmental regulation or permit requiring
the Company or any of its Restricted Subsidiaries to maintain certain facilities
or perform certain acts as a condition of its occupancy of or interference with
any public lands or any river or stream or navigable waters;

(28) Liens on assets of Foreign Subsidiaries securing Indebtedness incurred
pursuant to Section 4.09(b)(20) hereof;

(29) Liens incurred in the ordinary course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that do not
exceed $20.0 million at any one time outstanding; and

(30) Liens on the unearned premiums under the insurance policies permitted by
clause (19) of the definition of “Permitted Debt” securing Indebtedness incurred
pursuant to clause (19) of the definition of “Permitted Debt.”

 

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“Permitted Payments to AbitibiBowater Inc.” means, without duplication as to
amounts:

(1) payments to AbitibiBowater Inc. to permit AbitibiBowater Inc. to pay its
reasonable accounting, legal and administrative expenses when due, in an
aggregate amount not to exceed 50% of such expenses incurred in any four-quarter
period;

(2) for so long as any Restricted Subsidiary is a member of a group filing a
consolidated or combined tax return with AbitibiBowater Inc., payments to
AbitibiBowater Inc. in respect of an allocable portion of the tax liabilities of
such group that is attributable to such Restricted Subsidiary and its
Subsidiaries (“Tax Payments”); provided that the Tax Payments shall not exceed
the lesser of (i) the amount of the relevant tax (including any penalties and
interest) that the Restricted Subsidiary would owe if the Restricted Subsidiary
were filing a separate tax return (or a separate consolidated or combined return
with its Subsidiaries that are members of the consolidated or combined group
with AbitibiBowater Inc.), taking into account any carryovers and carrybacks of
tax attributes (such as net operating losses) of the Restricted Subsidiary and
such Subsidiaries from other taxable years and (ii) the net amount of the
relevant tax that AbitibiBowater Inc. actually owes to the appropriate taxing
authority; provided further any Tax Payments received from the Restricted
Subsidiary shall be paid over to the appropriate taxing authority within 30 days
of AbitibiBowater Inc.’s receipt of such Tax Payments or refunded to the
Restricted Subsidiary; and

(3) payments to AbitibiBowater Inc. to permit AbitibiBowater Inc. to make cash
interest payments in an amount not to exceed 100% of the aggregate amount of
cash interest then due and payable on the Convertible Notes (plus any additional
Convertible Notes issued after the date of this Indenture as payment of interest
payments thereon); provided such payments are actually used by AbitibiBowater
Inc. to make payments of interest on such Convertible Notes.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Company or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to renew, refund, refinance, replace, defease or discharge
other Indebtedness of the Company or any of its Restricted Subsidiaries (other
than intercompany Indebtedness); provided that:

(1) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness renewed, refunded, refinanced,
replaced, defeased or discharged (plus all accrued interest on the Indebtedness
and the amount of all fees and expenses, including premiums, incurred in
connection therewith);

(2) such Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life to Maturity equal to
or greater than the Weighted Average Life to Maturity of, the Indebtedness being
renewed, refunded, refinanced, replaced, defeased or discharged;

(3) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased
or discharged is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness is subordinated in right of payment to the Notes on
terms at least as favorable to the holders of notes as those contained in the
documentation governing the Indebtedness being renewed, refunded, refinanced,
replaced, defeased or discharged; and

(4) such Indebtedness is incurred either by the Company or by its Restricted
Subsidiaries of the Company that was the obligor on the Indebtedness being
renewed, refunded, refinanced, replaced, defeased or discharged and is
guaranteed only by Persons who were obligors on the Indebtedness being renewed,
refunded, refinanced, replaced, defeased or discharged.

 

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“Permitted Reorganization Transactions” means the series of transactions
designed to move in a tax efficient manner, the ownership (a) of Donohue Corp.
from the Issuer and the Company to AbitibiBowater Inc. or one of its
Subsidiaries (other than Bowater Incorporated and its Subsidiaries) so that
Donohue Corp. can be included in the U.S. consolidated tax return of
AbitibiBowater Inc. and (b) possibly the ownership of the Company to
AbitibiBowater Canada Holdings, Inc., such transactions to consist of: (i) the
Donohue Sale; (ii) the transfer of the Excluded Proceeds from the sale of The
Apache Railway Company and the Snowflake Facility to AbitibiBowater Inc. or one
of its Subsidiaries, whether by means of a loan, dividend or equity redemption,
and simultaneously therewith, the use of such Excluded Proceeds to either
(1) pay principal or interest on any promissory note or other Indebtedness owing
to the Issuer by such recipient or (2) purchase from the Issuer or the Company
of additional shares of Equity Interests of Donohue Corp. by AbitibiBowater Inc.
or one of its Subsidiaries with the same Excluded Proceeds; (iii) the
acquisition of shares of Equity Interests of Donohue Corp. by AbitibiBowater
Inc. or one of its Subsidiaries in exchange for a promissory note; (iv) the
possible transfer by AbitibiBowater Inc. of all or a portion of the Equity
Interests of the Company to one or more Subsidiaries of AbitibiBowater Inc.;
(v) the possible continuance of the Company into a Nova Scotia limited liability
company; (vi) the possible redemption or repurchase by the Issuer of certain
shares of preferred stock of the Issuer held by the Company in exchange for
shares of Equity Interests of Donohue Corp.; (vii) the possible amalgamation of
the Company with a Nova Scotia limited liability company that is a Wholly Owned
Subsidiary of AbitibiBowater Inc.; and/or (viii) the possible redemption by the
Company of certain of its Equity Interests for consideration consisting
exclusively of Equity Interests of Donohue Corp.

“Person” means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

“Private Placement Legend” means the legend set forth in Section 2.06(g)(1)
hereof to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

“Qualified Proceeds” means any of the following or any combination of the
following:

(1) Cash Equivalents; and

(2) the Fair Market Value of the Capital Stock of any Person engaged primarily
in a Permitted Business if, in connection with the receipt by the Company or any
of its Restricted Subsidiaries of such Capital Stock, such Person becomes a
Restricted Subsidiary of the Company or such Person is merged or consolidated
into the Company or any of its Restricted Subsidiaries.

“Qualified Receivables Transaction” means any transaction or series of
transactions entered into by the Company, any of its Restricted Subsidiaries or
any of their respective Subsidiaries pursuant to which the Company, such
Restricted Subsidiaries or any of their respective Subsidiaries sells, conveys
or otherwise transfers to (i) a Receivables Entity (in the case of a transfer by
the Company, Restricted Subsidiaries or any such Subsidiary) and (ii) any other
Person (in the case of a transfer by a Receivables Entity), or grants a security
interest in, any accounts receivable (whether now existing or arising in the
future) of the Company, its Restricted Subsidiaries or any of their respective
Subsidiaries, and any assets related thereto including, without limitation, all
collateral securing such accounts receivable, all contracts

 

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and all guarantees or other obligations in respect of such accounts receivable,
proceeds of such accounts receivable and other assets which are customarily
transferred or in respect of which security interests are customarily granted in
connection with asset securitization transactions involving accounts receivable.

“Qualifying Equity Interests” means Equity Interests of the Company or, after
the Donohue Sale, so long as Donohue Corp. is a Restricted Subsidiary of the
Company, Donohue Corp., in each case, other than Disqualified Stock.

“Receivables Entity” means a Subsidiary of the Company or any Guarantor that
engages in no activities other than in connection with the financing of accounts
receivable and which is designated by the Board of Directors of the Company (as
provided below) as a Receivables Entity. Any such designation by the Board of
Directors of the Company will be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolution of the Board of Directors of the
Company giving effect to such designation and an Officers’ Certificate
certifying that such designation complied with the foregoing conditions;
provided, however, that as of the date of this Indenture, Abitibi-Consolidated
U.S. Funding Corp. shall be deemed to be so designated as a Receivables Entity.

“Registration Rights Agreement” means the Registration Rights Agreement, dated
as of April 1, 2008, among the Issuer, the Guarantors and the other parties
named on the signature pages thereof, as such agreement may be amended, modified
or supplemented from time to time and, with respect to any Additional Notes, one
or more registration rights agreements among the Issuer, the Guarantors and the
other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Issuer to the
purchasers of Additional Notes to register such Additional Notes under the
Securities Act.

“Regulation S” means Regulation S promulgated under the Securities Act.

“Regulation S Global Note” means a Global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of and registered in the name of the Depositary
or its nominee, issued in a denomination equal to the outstanding principal
amount of the Notes sold in reliance on Rule 903 of Regulation S.

“Responsible Officer,” when used with respect to the Trustee, means any officer
within the Corporate Trust Administration of the Trustee (or any successor group
of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.

“Restricted Definitive Note” means a Definitive Note bearing the Private
Placement Legend.

“Restricted Global Note” means a Global Note bearing the Private Placement
Legend.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person
that is not an Unrestricted Subsidiary; provided that each of Donohue Corp. and
its existing or future Restricted Subsidiaries will constitute Restricted
Subsidiaries of the Company (and it is intended that they be subject to all of
the covenants in the indenture applicable to any Restricted Subsidiaries of the
Company) if and for so long as Donohue Corp. and all of its Restricted
Subsidiaries that are required to do so under the indenture continue to provide
Note Guarantees.

 

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“Rule 144” means Rule 144 promulgated under the Securities Act.

“Rule 144A” means Rule 144A promulgated under the Securities Act.

“Rule 903” means Rule 903 promulgated under the Securities Act.

“Rule 904” means Rule 904 promulgated under the Securities Act.

“SEC” means the Securities and Exchange Commission.

“Secured Notes” means up to $413.0 million in aggregate principal amount of
senior secured notes due 2011 and the related guarantees thereof and the related
exchange notes and related guarantees thereof issued on the date of this
Indenture (or within ten business days of such date) and any additional senior
secured notes issued pursuant to Section 4.22 hereof and the related guarantees
thereof and the related exchange notes and related guarantees thereof.

“Securities Act” means the Securities Act of 1933, as amended.

“Securitization Agreement” means (i) the Amended and Restated Receivables
Purchase Agreement dated as of January 31, 2008 among Abitibi SPV, Eureka
Securitisation, PLC, Citibank, N.A., Citibank, N.A., London Branch, the
originators named therein, ACSC and Holdings, (ii) the Amended and Restated
Purchase and Contribution Agreement dated as of January 31, 2008 among Holdings,
ACSC and Abitibi SPV, and (iii) each other document executed in connection
therewith, as each such document may be amended, restated, modified, renewed,
refunded, replaced in any manner.

“Shelf Registration Statement” means the Shelf Registration Statement as defined
in the Registration Rights Agreement.

“Significant Subsidiary” means any Subsidiary (or, in the case of the Issuer, of
Donohue Corp. or any of its Subsidiaries) that would be a “significant
subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date of
this Indenture.

“Snowflake Facility” means the newsprint mill located in Snowflake, Arizona, and
certain related assets.

“Special Interest” has the meaning assigned to that term pursuant to the
Registration Rights Agreement.

“Stated Maturity” means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the documentation governing
such Indebtedness as of the date of this Indenture, and will not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.

“Subsidiary” means, with respect to any specified Person:

(1) any corporation, association or other business entity of which more than 50%
of the total voting power of shares of Capital Stock entitled (without regard to
the occurrence of any contingency and after giving effect to any voting
agreement or stockholders’ agreement that effectively transfers voting power) to
vote in the election of directors, managers or trustees

 

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of the corporation, association or other business entity is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and

(2) any partnership (a) the sole general partner or the managing general partner
of which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are that Person or one or more Subsidiaries of that Person (or
any combination thereof).

“Term Loan Facility” means that certain Credit and Guaranty Agreement, to be
dated as of the date of this Indenture, by and among the Issuer, the guarantors
party thereto, the lenders party thereto, Goldman Sachs Credit Partners L.P., as
Administrative Agent, Co-Lead Arranger, Co-Lead Bookrunner and Syndication
Agent, and Goldman Sachs Credit Partners L.P., as collateral agent, providing
for up to $400.0 million of term loan borrowings, including any related notes,
Guarantees, collateral documents, instruments and agreements executed in
connection therewith, and, in each case, as amended, restated, modified,
renewed, refunded, replaced in any manner (whether upon or after termination or
otherwise) or refinanced (including by means of sales of debt securities to
institutional investors) in whole or in part from time to time.

“TIA” means the Trust Indenture Act of 1939, as amended (15 U.S.C.
§§ 77aaa-77bbbb).

“Total Assets” means the total assets of the Company and its Restricted
Subsidiaries, as shown on the most recent internal balance sheet of the Company,
prepared on a consolidated basis (excluding Unrestricted Subsidiaries) in
accordance with GAAP; provided that for so long as Donohue Corp. and its
Restricted Subsidiaries that are required to do so under the indenture continue
to provide Note Guarantees, Total Assets will be determined on a consolidated
combined basis (including Donohue Corp. and its Restricted Subsidiaries as if
they were actually Subsidiaries of the Company).

“Trustee” means Wells Fargo Bank, National Association until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.

“UK Restricted Subsidiary” means any Restricted Subsidiary incorporated in
England and Wales.

“Unrestricted Definitive Note” means a Definitive Note that does not bear and is
not required to bear the Private Placement Legend.

“Unrestricted Global Note” means a Global Note that does not bear and is not
required to bear the Private Placement Legend.

“Unrestricted Subsidiary” means any Subsidiary of the Company (including Donohue
Corp or any of its Subsidiaries but not including the Issuer or any successor
thereto) that is designated by the Board of Directors of the Company as an
Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but
only to the extent that such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) except as permitted by Section 4.11 hereof is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company;

 

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(3) except as otherwise permitted by Section 4.07 hereof, is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any direct or indirect obligation (a) to subscribe for additional Equity
Interests or (b) to maintain or preserve such Person’s financial condition or to
cause such Person to achieve any specified levels of operating results; and

(4) except as otherwise permitted by Section 4.07 hereof, has not guaranteed or
otherwise provided credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries.

“U.S. Person” means a U.S. Person as defined in Rule 902(k) promulgated under
the Securities Act.

“U.S. Subsidiary” means, with respect to any Person, any Subsidiary of such
Person (or in the case of the Issuer, so long as Donohue Corp. is a Restricted
Subsidiary of the Company, of Donohue Corp. or any of its Subsidiaries) that is
organized or existing under the laws of the United States, any state thereof, or
the District of Columbia.

“Voting Stock” of any specified Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments
of principal, including payment at final maturity, in respect of the
Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment; by

(2) the then outstanding principal amount of such Indebtedness.

“Wholly-Owned Restricted Subsidiary” of any specified Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors’ qualifying shares) will at
the time be owned by such Person or by one or more Wholly-Owned Restricted
Subsidiaries of such Person; provided that each of Donohue Corp. and its
existing or future Wholly-Owned Subsidiaries will be deemed to constitute
Wholly-Owned Restricted Subsidiaries of the Company if and for so long as
(a) Donohue Corp. or such Restricted Subsidiary of Donohue Corp. is a direct or
indirect Subsidiary of AbitibiBowater Inc. and (b) such entity is not an
Unrestricted Subsidiary.

“Wholly-Owned Subsidiary” of any specified Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors’ qualifying shares) will at the time be owned by
such Person or by one or more Wholly-Owned Subsidiaries of such Person.

“WURA” means the Wind-Up and Restructuring Act (Canada).

 

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Section 1.02 Other Definitions.

 

Term

   Defined in
Section “Additional Amounts”    3.05

“Affiliate Transaction”

   4.11

“Augusta Newsprint”

   4.23

“Authentication Order”

   2.02

“Change of Control Offer”

   4.15

“Change of Control Payment”

   4.15

“Change of Control Payment Date”

   4.15

“Covenant Defeasance”

   8.03

“Definitive Registered Notes”

   4.21

“DTC”

   2.03

“Event of Default”

   6.01

“Excess Proceeds”

   4.10

“incur”

   4.09

“Indenture Currency”

   12.14

“Judgment Currency”

   12.14

“Legal Defeasance”

   8.02

“Offer Amount”

   3.07

“Other Taxes”

   4.21

“Net Proceeds Offer”

   3.07

“Offer Period”

   3.07

“Organizational Documents”

   4.14

“Paying Agent”

   2.03

“Payment Default”

   6.01

“Permitted Debt”

   4.09

“Process Agent”

   12.17

“Purchase Date”

   3.07

“Registrar”

   2.03

“Restricted Payments”

   4.07

“Secured Notes Exchange Offer”

   4.22

“Taxes”

   4.21

“Taxing Jurisdiction”

   4.21

“Thomson Partner Financing”

   4.22

Section 1.03 Incorporation by Reference of Trust Indenture Act.

Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.

The following TIA terms used in this Indenture have the following meanings:

“indenture securities” means the Notes;

“indenture security Holder” means a Holder of a Note;

“indenture to be qualified” means this Indenture;

“indenture trustee” or “institutional trustee” means the Trustee; and

 

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“obligor” on the Notes and the Note Guarantees means the Company and the
Guarantors, respectively, and any successor obligor upon the Notes and the Note
Guarantees, respectively.

All other terms used in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by SEC rule under the TIA have the
meanings so assigned to them.

Section 1.04 Rules of Construction.

Unless the context otherwise requires:

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;

(3) “or” is not exclusive;

(4) words in the singular include the plural, and in the plural include the
singular;

(5) “will” shall be interpreted to express a command;

(6) provisions apply to successive events and transactions; and

(7) references to sections of or rules under the Securities Act will be deemed
to include substitute, replacement of successor sections or rules adopted by the
SEC from time to time.

ARTICLE 2

THE NOTES

Section 2.01 Form and Dating.

(a) General. The Notes and the Trustee’s certificate of authentication will be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
will be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples of $1,000 in excess thereof.

The terms and provisions contained in the Notes will constitute, and are hereby
expressly made, a part of this Indenture and the Company, the Guarantors and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

(b) Global Notes. Notes issued in global form will be substantially in the form
of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule
of Exchanges of Interests in the Global Note” attached thereto). Notes issued in
definitive form will be substantially in the form of Exhibit A hereto (but
without the Global Note Legend thereon and without the “Schedule of Exchanges of
Interests in the Global Note” attached thereto). Each Global Note will represent
such of the outstanding Notes as will be specified therein and each shall
provide that it represents the aggregate principal amount of outstanding Notes
from time to time endorsed thereon and that the aggregate principal amount of
outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to

 

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reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby will be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.

Section 2.02 Execution and Authentication.

At least one Officer must sign the Notes for the Issuer by manual or facsimile
signature.

If an Officer whose signature is on a Note no longer holds that office at the
time a Note is authenticated, the Note will nevertheless be valid.

A Note will not be valid until authenticated by the manual signature of the
Trustee. The signature will be conclusive evidence that the Note has been
authenticated under this Indenture.

The Trustee will, upon receipt of a written order of the Issuer signed by an
Officer (an “Authentication Order”), authenticate Notes for original issue that
may be validly issued under this Indenture, including any Additional Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed the
aggregate principal amount of Notes authorized for issuance by the Issuer
pursuant to one or more Authentication Orders, except as provided in
Section 2.07 hereof.

The Trustee may appoint an authenticating agent acceptable to the Issuer to
authenticate Notes. An authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.

Section 2.03 Registrar and Paying Agent.

The Issuer will maintain an office or agency where Notes may be presented for
registration of transfer or for exchange (“Registrar”) and an office or agency
where Notes may be presented for payment (“Paying Agent”). The Registrar will
keep a register of the Notes and of their transfer and exchange. The Issuer may
appoint one or more co-registrars and one or more additional paying agents. The
term “Registrar” includes any co-registrar and the term “Paying Agent” includes
any additional paying agent. The Issuer may change any Paying Agent or Registrar
without notice to any Holder. The Issuer will notify the Trustee in writing of
the name and address of any Agent not a party to this Indenture. If the Issuer
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of its Subsidiaries may not act as
Paying Agent or Registrar.

The Issuer initially appoints The Depository Trust Company (“DTC”) to act as
Depositary with respect to the Global Notes.

The Issuer initially appoints the Trustee to act as the Registrar and Paying
Agent and to act as Custodian with respect to the Global Notes and the Trustee
hereby agrees so to initially act.

Section 2.04 Paying Agent to Hold Money in Trust.

The Issuer will require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent will hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of principal,
premium or Special Interest, if any, or interest on the Notes, and will notify
the Trustee of any default by the Issuer in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all money
held by it to the Trustee. The Issuer at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent will have no further liability for the money.

 

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Section 2.05 Holder Lists.

The Trustee will preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of all Holders and
shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar,
the Issuer will furnish to the Trustee at least seven Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Notes and the Company and
the Issuer shall otherwise comply with TIA § 312(a).

Section 2.06 Transfer and Exchange.

(a) Transfer and Exchange of Global Notes. A Global Note may not be transferred
except as a whole by the Depositary to a nominee of the Depositary, by a nominee
of the Depositary to the Depositary or to another nominee of the Depositary, or
by the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary. All Global Notes will be exchanged by the Company for
Definitive Notes if:

(1) the Issuer delivers to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Issuer within 120 days after the
date of such notice from the Depositary;

(2) the Issuer in its sole discretion determines that the Global Notes (in whole
but not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee; or

(3) there has occurred and is continuing an Event of Default with respect to the
Notes.

Upon the occurrence of either of the preceding events in (1) or (2) above,
Definitive Notes shall be issued in such names as the Depositary shall instruct
the Trustee in writing. Global Notes also may be exchanged or replaced, in whole
or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as provided
in this Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.

(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes will be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes will be subject to restrictions on transfer comparable to those set
forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also will require compliance with
either subparagraph (1) or (2) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:

(1) Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Restricted Global Note may be transferred to Persons who take
delivery thereof in the form

 

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of a beneficial interest in the same Restricted Global Note in accordance with
the transfer restrictions set forth in the Private Placement Legend; provided,
however, that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Regulation S Global Note may not be made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Beneficial interests in any Unrestricted Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note. No written orders or instructions shall
be required to be delivered to the Registrar to effect the transfers described
in this Section 2.06(b)(1).

(2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes.
In connection with all transfers and exchanges of beneficial interests that are
not subject to Section 2.06(b)(1) above, the transferor of such beneficial
interest must deliver to the Registrar either:

(A) both:

(i) a written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the Depositary
to credit or cause to be credited a beneficial interest in another Global Note
in an amount equal to the beneficial interest to be transferred or exchanged;
and

(ii) instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such increase;
or

(B) both:

(i) a written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the Depositary
to cause to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged; and

(ii) instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note shall be
registered to effect the transfer or exchange referred to in (1) above;

Upon consummation of an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(2) shall be
deemed to have been satisfied upon receipt by the Registrar of the instructions
contained in the Letter of Transmittal delivered by the Holder of such
beneficial interests in the Restricted Global Notes. Upon satisfaction of all of
the requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Indenture and the Notes or otherwise applicable under
the Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Note(s) pursuant to Section 2.06(h) hereof.

(3) Transfer of Beneficial Interests to Another Restricted Global Note. A
beneficial interest in any Restricted Global Note may be transferred to a Person
who takes delivery thereof in the form of a beneficial interest in another
Restricted Global Note if the transfer complies with the requirements of
Section 2.06(b)(2) above and the Registrar receives the following:

 

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(A) if the transferee will take delivery in the form of a beneficial interest in
the 144A Global Note, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (1) thereof;

(B) if the transferee will take delivery in the form of a beneficial interest in
the Regulation S Global Note, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in item (2) thereof;
and

(C) if the transferee will take delivery in the form of a beneficial interest in
the IAI Global Note, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable.

(4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note
for Beneficial Interests in an Unrestricted Global Note. A beneficial interest
in any Restricted Global Note may be exchanged by any holder thereof for a
beneficial interest in an Unrestricted Global Note or transferred to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.06(b)(2) above and:

(A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of the
beneficial interest to be transferred, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (i) a Broker-Dealer, (ii) a Person participating in
the distribution of the Exchange Notes or (iii) a Person who is an affiliate (as
defined in Rule 144) of the Issuer;

(B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;

(C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

(D) the Registrar receives the following:

(i) if the holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of Exhibit
C hereto, including the certifications in item (1)(a) thereof; or

(ii) if the holder of such beneficial interest in a Restricted Global Note
proposes to transfer such beneficial interest to a Person who shall take
delivery thereof in the form of a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.

 

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If any such transfer is effected pursuant to subparagraph (B) or (D) above at a
time when an Unrestricted Global Note has not yet been issued, the Company shall
issue and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or
(D) above.

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or
transferred to Persons who take delivery thereof in the form of, a beneficial
interest in a Restricted Global Note.

(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

(1) Beneficial Interests in Restricted Global Notes to Restricted Definitive
Notes. If any holder of a beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Restricted Definitive Note
or to transfer such beneficial interest to a Person who takes delivery thereof
in the form of a Restricted Definitive Note, then, upon receipt by the Registrar
of the following documentation:

(A) if the holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Restricted Definitive Note,
a certificate from such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;

(B) if such beneficial interest is being transferred to a QIB in accordance with
Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;

(C) if such beneficial interest is being transferred to a Non-U.S. Person in an
offshore transaction in accordance with Rule 903 or Rule 904, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in item
(2) thereof;

(D) if such beneficial interest is being transferred pursuant to an exemption
from the registration requirements of the Securities Act in accordance with Rule
144, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;

(E) if such beneficial interest is being transferred to an Institutional
Accredited Investor in reliance on an exemption from the registration
requirements of the Securities Act other than those listed in subparagraphs
(B) through (D) above, a certificate to the effect set forth in Exhibit B
hereto, including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;

(F) if such beneficial interest is being transferred to the Company or any of
its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or

(G) if such beneficial interest is being transferred pursuant to an effective
registration statement under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

 

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the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note issued
in exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(1) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.

(2) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive
Notes. A holder of a beneficial interest in a Restricted Global Note may
exchange such beneficial interest for an Unrestricted Definitive Note or may
transfer such beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:

(A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of such
beneficial interest, in the case of an exchange, or the transferee, in the case
of a transfer, certifies in the applicable Letter of Transmittal that it is not
(i) a Broker-Dealer, (ii) a Person participating in the distribution of the
Exchange Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of
the Company;

(B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;

(C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

(D) the Registrar receives the following:

(i) if the holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for an Unrestricted Definitive
Note, a certificate from such holder in the form of Exhibit C hereto, including
the certifications in item (1)(b) thereof; or

(ii) if the holder of such beneficial interest in a Restricted Global Note
proposes to transfer such beneficial interest to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive Note, a certificate
from such holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.

 

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(3) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive
Notes. If any holder of a beneficial interest in an Unrestricted Global Note
proposes to exchange such beneficial interest for a Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in the
form of a Definitive Note, then, upon satisfaction of the conditions set forth
in Section 2.06(b)(2) hereof, the Trustee will cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Company will execute and the Trustee will
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will
be registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest requests through
instructions to the Registrar from or through the Depositary and the Participant
or Indirect Participant. The Trustee will deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will
not bear the Private Placement Legend.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

(1) Restricted Definitive Notes to Beneficial Interests in Restricted Global
Notes. If any Holder of a Restricted Definitive Note proposes to exchange such
Note for a beneficial interest in a Restricted Global Note or to transfer such
Restricted Definitive Notes to a Person who takes delivery thereof in the form
of a beneficial interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such
Note for a beneficial interest in a Restricted Global Note, a certificate from
such Holder in the form of Exhibit C hereto, including the certifications in
item (2)(b) thereof;

(B) if such Restricted Definitive Note is being transferred to a QIB in
accordance with Rule 144A, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;

(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person
in an offshore transaction in accordance with Rule 903 or Rule 904, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;

(D) if such Restricted Definitive Note is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in accordance
with Rule 144, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;

(E) if such Restricted Definitive Note is being transferred to an Institutional
Accredited Investor in reliance on an exemption from the registration
requirements of the Securities Act other than those listed in subparagraphs
(B) through (D) above, a certificate to the effect set forth in Exhibit B
hereto, including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;

(F) if such Restricted Definitive Note is being transferred to the Company or
any of its Subsidiaries, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(b) thereof; or

 

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(G) if such Restricted Definitive Note is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(c) thereof,

the Trustee will cancel the Restricted Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of clause (B) above, the
144A Global Note, in the case of clause (C) above, the Regulation S Global Note,
and in all other cases, the IAI Global Note.

(2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global
Notes. A Holder of a Restricted Definitive Note may exchange such Note for a
beneficial interest in an Unrestricted Global Note or transfer such Restricted
Definitive Note to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note only if:

(A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a
Person participating in the distribution of the Exchange Notes or (iii) a Person
who is an affiliate (as defined in Rule 144) of the Company;

(B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;

(C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

(D) the Registrar receives the following:

(i) if the Holder of such Definitive Notes proposes to exchange such Notes for a
beneficial interest in the Unrestricted Global Note, a certificate from such
Holder in the form of Exhibit C hereto, including the certifications in item
(1)(c) thereof; or

(ii) if the Holder of such Definitive Notes proposes to transfer such Notes to a
Person who shall take delivery thereof in the form of a beneficial interest in
the Unrestricted Global Note, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.

Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or
cause to be increased the aggregate principal amount of the Unrestricted Global
Note.

 

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(3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global
Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a
beneficial interest in an Unrestricted Global Note or transfer such Definitive
Notes to a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note at any time. Upon receipt of a request
for such an exchange or transfer, the Trustee will cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the aggregate
principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from a Definitive Note to a beneficial interest
is effected pursuant to subparagraphs (2)(B), (2)(D) or (3) above at a time when
an Unrestricted Global Note has not yet been issued, the Company will issue and,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
the Trustee will authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of Definitive Notes so
transferred.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request
by a Holder of Definitive Notes and such Holder’s compliance with the provisions
of this Section 2.06(e), the Registrar will register the transfer or exchange of
Definitive Notes. Prior to such registration of transfer or exchange, the
requesting Holder must present or surrender to the Registrar the Definitive
Notes duly endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar duly executed by such Holder or by its attorney,
duly authorized in writing. In addition, the requesting Holder must provide any
additional certifications, documents and information, as applicable, required
pursuant to the following provisions of this Section 2.06(e).

(1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted
Definitive Note may be transferred to and registered in the name of Persons who
take delivery thereof in the form of a Restricted Definitive Note if the
Registrar receives the following:

(A) if the transfer will be made pursuant to Rule 144A, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;

(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the
transferor must deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (2) thereof; and

(C) if the transfer will be made pursuant to any other exemption from the
registration requirements of the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item
(3) thereof, if applicable.

(2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted
Definitive Note may be exchanged by the Holder thereof for an Unrestricted
Definitive Note or transferred to a Person or Persons who take delivery thereof
in the form of an Unrestricted Definitive Note if:

(A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a
Person participating in the distribution of the Exchange Notes or (iii) a Person
who is an affiliate (as defined in Rule 144) of the Company;

 

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(B) any such transfer is effected pursuant to the Shelf Registration Statement
in accordance with the Registration Rights Agreement;

(C) any such transfer is effected by a Broker-Dealer pursuant to the Exchange
Offer Registration Statement in accordance with the Registration Rights
Agreement; or

(D) the Registrar receives the following:

(i) if the Holder of such Restricted Definitive Notes proposes to exchange such
Notes for an Unrestricted Definitive Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item (1)(d) thereof;
or

(ii) if the Holder of such Restricted Definitive Notes proposes to transfer such
Notes to a Person who shall take delivery thereof in the form of an Unrestricted
Definitive Note, a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests, an Opinion of Counsel in form reasonably acceptable to the Registrar
to the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain compliance
with the Securities Act.

(3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of
Unrestricted Definitive Notes may transfer such Notes to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of
a request to register such a transfer, the Registrar shall register the
Unrestricted Definitive Notes pursuant to the instructions from the Holder
thereof.

(f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with
the Registration Rights Agreement, the Issuer will issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee will
authenticate:

(1) one or more Unrestricted Global Notes in an aggregate principal amount equal
to the principal amount of the beneficial interests in the Restricted Global
Notes accepted for exchange in the Exchange Offer by Persons that certify in the
applicable Letters of Transmittal that (A) they are not Broker-Dealers, (B) they
are not participating in a distribution of the Exchange Notes and (C) they are
not affiliates (as defined in Rule 144) of the Company; and

(2) Unrestricted Definitive Notes in an aggregate principal amount equal to the
principal amount of the Restricted Definitive Notes accepted for exchange in the
Exchange Offer by Persons that certify in the applicable Letters of Transmittal
that (A) they are not Broker-Dealers, (B) they are not participating in a
distribution of the Exchange Notes and (C) they are not affiliates (as defined
in Rule 144) of the Company.

 

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Concurrently with the issuance of such Notes, the Trustee will cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company will execute and the Trustee will
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Unrestricted Definitive Notes in the appropriate principal
amount.

(g) Legends. The following legends will appear on the face of all Global Notes
and Definitive Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture.

(1) Private Placement Legend.

(A) Except as permitted by subparagraph (B) below, each Global Note and each
Definitive Note (and all Notes issued in exchange therefor or substitution
thereof) shall bear the legend in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER:

(1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A “QIB”) (B) IT IS NOT A U.S. PERSON, IS
NOT ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION
S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR”
WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER REGULATION D OF THE
SECURITIES ACT (AN “INSTITUTIONAL ACCREDITED INVESTOR”),

(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE
144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES
ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE
TRANSFER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT
(A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE HOLDER
REASONABLY BELIEVES IS A QIB OR AN INSTITUTIONAL ACCREDITED INVESTOR PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB OR AN INSTITUTIONAL ACCREDITED
INVESTOR, RESPECTIVELY, IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE,
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND

(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN
INTEREST HEREIN IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
(2)(D) OR 2(E) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

 

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IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY OR ANY INTEREST HEREIN WITHIN
THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS “OFFSHORE
TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANINGS GIVEN TO THEM
BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.

IN CANADA, UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS
SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY
AFTER THE LATER OF (I) “THE SUBSCRIPTION DATE”, AND (II) THE DATE THE ISSUER
BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.

(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued
pursuant to subparagraphs (b)(4), (c)(2), (c)(3), (d)(2), (d)(3), (e)(2), (e)(3)
or (f) of this Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) will not bear the Private Placement Legend.

(2) Global Note Legend. Each Global Note will bear a legend in substantially the
following form:

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THIS INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THIS INDENTURE, (2) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THIS
INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THIS INDENTURE AND (4) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
ABITIBI-CONSOLIDATED COMPANY OF CANADA.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

 

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(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note will be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note will be
reduced accordingly and an endorsement will be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note will be increased accordingly and
an endorsement will be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

(i) General Provisions Relating to Transfers and Exchanges.

(1) To permit registrations of transfers and exchanges, the Issuer will execute
and the Trustee will authenticate Global Notes and Definitive Notes upon receipt
of an Authentication Order in accordance with Section 2.02 hereof or at the
Registrar’s request.

(2) No service charge will be made to a Holder of a beneficial interest in a
Global Note or to a Holder of a Definitive Note for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.04, 3.07, 4.10, 4.15 and 9.05
hereof).

(3) The Registrar will not be required to register the transfer of or exchange
of any Note selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.

(4) All Global Notes and Definitive Notes issued upon any registration of
transfer or exchange of Global Notes or Definitive Notes will be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Global Notes or Definitive Notes
surrendered upon such registration of transfer or exchange.

(5) Neither the Registrar nor the Company will be required:

(A) to issue, to register the transfer of or to exchange any Notes during a
period beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending at the
close of business on the day of selection;

(B) to register the transfer of or to exchange any Note selected for redemption
in whole or in part, except the unredeemed portion of any Note being redeemed in
part; or

(C) to register the transfer of or to exchange a Note between a record date and
the next succeeding interest payment date.

(6) Prior to due presentment for the registration of a transfer of any Note, the
Trustee, any Agent and the Company may deem and treat the Person in whose name
any Note is

 

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registered as the absolute owner of such Note for the purpose of receiving
payment of principal of and interest on such Notes and for all other purposes,
and none of the Trustee, any Agent or the Company shall be affected by notice to
the contrary.

(7) The Trustee will authenticate Global Notes and Definitive Notes in
accordance with the provisions of Section 2.02 hereof.

(8) All certifications, certificates and Opinions of Counsel required to be
submitted to the Registrar pursuant to this Section 2.06 to effect a
registration of transfer or exchange may be submitted by facsimile.

Section 2.07 Replacement Notes.

If any mutilated Note is surrendered to the Trustee or the Issuer and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Issuer will issue and the Trustee, upon receipt of an
Authentication Order, will authenticate a replacement Note if the Trustee’s
requirements are met. If required by the Trustee or the Issuer, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Issuer to protect the Issuer, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Issuer may charge for its expenses in replacing a Note.

Every replacement Note is an additional obligation of the Issuer and will be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.

Section 2.08 Outstanding Notes.

The Notes outstanding at any time are all the Notes authenticated by the Trustee
except for those canceled by it, those delivered to it for cancellation, those
reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section 2.08
as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note.

If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a protected purchaser.

If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.

If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any
thereof) holds, on a redemption date or maturity date, money sufficient to pay
Notes payable on that date, then on and after that date such Notes will be
deemed to be no longer outstanding and will cease to accrue interest.

Section 2.09 Treasury Notes.

In determining whether the Holders of the required principal amount of Notes
have concurred in any direction, waiver or consent, Notes owned by the Issuer or
any Guarantor, or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Issuer or any Guarantor,
will be considered as though not outstanding, except that for the purposes of
determining whether the Trustee will be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
will be so disregarded.

 

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Section 2.10 Temporary Notes.

Until certificates representing Notes are ready for delivery, the Issuer may
prepare and the Trustee, upon receipt of an Authentication Order, will
authenticate temporary Notes. Temporary Notes will be substantially in the form
of certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as may be reasonably acceptable to the
Trustee. Without unreasonable delay, the Issuer will prepare and the Trustee
will authenticate definitive Notes in exchange for temporary Notes.

Holders of temporary Notes will be entitled to all of the benefits of this
Indenture.

Section 2.11 Cancellation.

The Issuer at any time may deliver Notes to the Trustee for cancellation. The
Registrar and Paying Agent will forward to the Trustee any Notes surrendered to
them for registration of transfer, exchange or payment. The Trustee and no one
else will cancel all Notes surrendered for registration of transfer, exchange,
payment, replacement or cancellation and will destroy canceled Notes (subject to
the record retention requirement of the Exchange Act). Certification of the
destruction of all canceled Notes will be delivered to the Issuer. The Issuer
may not issue new Notes to replace Notes that it has paid or that have been
delivered to the Trustee for cancellation.

Section 2.12 Defaulted Interest.

If the Issuer defaults in a payment of interest on the Notes, it will pay the
defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Issuer will notify the Trustee in writing of the
amount of defaulted interest proposed to be paid on each Note and the date of
the proposed payment. The Issuer will fix or cause to be fixed each such special
record date and payment date; provided that no such special record date may be
less than 10 days prior to the related payment date for such defaulted interest.
At least 15 days before the special record date, the Issuer (or, upon the
written request of the Issuer, the Trustee in the name and at the expense of the
Issuer) will send or cause to be sent to Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.

ARTICLE 3

REDEMPTION AND PREPAYMENT

Section 3.01 Notices to Trustee.

If the Issuer elects to redeem Notes pursuant to the tax redemption provisions
of Section 3.05 hereof, it must furnish to the Trustee, not more than 60 nor
less than 30 days prior to the date fixed for such redemption, an Officers’
Certificate notifying the Trustee of such redemption and setting forth:

 

  (1) the clause of this Indenture pursuant to which the redemption shall occur;

 

  (2) the redemption date;

 

  (3) the principal amount of Notes to be redeemed; and

 

  (4) the redemption price.

 

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Section 3.02 Notice of Redemption.

Subject to the provisions of Section 3.07 hereof, at least 30 days but not more
than 60 days before a redemption date, the Issuer will send a notice of
redemption to each Holder whose Notes are to be redeemed at its registered
address, except that redemption notices may be sent more than 60 days prior to a
redemption date if the notice is issued in connection with a defeasance of the
Notes or a satisfaction and discharge of this Indenture pursuant to Articles 8
or 11 hereof.

The notice will identify the Notes to be redeemed and will state:

(1) the redemption date;

(2) the name and address of the Paying Agent;

(3) that Notes called for redemption must be surrendered to the Paying Agent to
collect the redemption price;

(4) that, unless the Issuer defaults in making such redemption payment, interest
on Notes called for redemption ceases to accrue on and after the redemption
date; and

(5) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Notes.

At the Issuer’s request, the Trustee will give the notice of redemption in the
Issuer’s name and at its expense; provided, however, that the Issuer has
delivered to the Trustee, at least 45 days prior to the redemption date, an
Officers’ Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.

Section 3.03 Effect of Notice of Redemption.

Once notice of redemption is sent in accordance with Section 3.03 hereof, Notes
called for redemption become irrevocably due and payable on the redemption date
at the redemption price. A notice of redemption may not be conditional, except
that a Change of Control Offer may be made in advance of a Change of Control,
conditional upon the consummation of such Change of Control, if a definitive
agreement is in place for the Change of Control at the time the Change of
Control Offer is made.

Section 3.04 Deposit of Redemption or Purchase Price.

One Business Day prior to the redemption or purchase date, the Issuer will
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption or purchase price of and accrued interest and Special Interest, if
any, on all Notes to be redeemed or purchased on that date. The Trustee or the
Paying Agent will promptly return to the Issuer any money deposited with the
Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to
pay the redemption or purchase price of, and accrued interest and Special
Interest, if any, on, all Notes to be redeemed or purchased.

If the Issuer complies with the provisions of the preceding paragraph, on and
after the redemption or purchase date, interest will cease to accrue on the
Notes or the portions of Notes called for redemption or purchase. If a Note is
redeemed or purchased on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for

 

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redemption or purchase is not so paid upon surrender for redemption or purchase
because of the failure of the Issuer to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption or purchase
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.

Section 3.05 Tax Redemption.

The Notes will be subject to redemption at any time, in whole but not in part,
at the option of the Issuer, at a redemption price equal to the principal amount
thereof, together with accrued and unpaid interest, including Special Interest,
if any, to the date fixed for redemption, upon the giving of a notice by the
Issuer as described below, if (1) the Issuer or a relevant Guarantor, as the
case may be, determines that (a) as a result of any change in or amendment to
the laws (or any regulations or rulings promulgated thereunder) of Canada (or
any political subdivision or taxing authority thereof or therein) or any other
jurisdiction in which the Issuer or any Guarantor (including successors) is
organized or otherwise resident for tax purposes or any jurisdiction from or
through which any payment hereunder or with respect to any note or Note
Guarantee is made (any of the foregoing, a “Taxing Jurisdiction”), or any change
in official position regarding application or interpretation of such laws,
regulations or rulings (including a holding by a court of competent
jurisdiction), which change or amendment is announced or becomes effective after
the date of this Indenture, the Issuer or the relevant Guarantor has or will
become obligated to pay, on the next scheduled interest payment date, Additional
Amounts with respect to the Notes or Note Guarantees as described under
Section 4.21 hereof or (b) after the date of this Indenture, any action has been
taken by any taxing authority of, or any decision has been rendered by a court
of competent jurisdiction in, any Taxing Jurisdiction, including any of those
actions specified in (a) above, whether or not such action was taken or decision
was rendered with respect to the Issuer or a Guarantor, or any change,
amendment, application or interpretation of the laws of the Taxing Jurisdiction
shall be officially proposed, which, in any such case, in the written Opinion of
Counsel to the Issuer or the relevant Guarantor of legal counsel of recognized
standing, will result in a material probability that the Issuer or the relevant
Guarantor will become obligated to pay, on the next scheduled interest payment
date, Additional Amounts with respect to any Note or Note Guarantee and (2) in
any such case the Issuer or the relevant Guarantor, as the case may be, in its
business judgment determines that such obligation cannot be avoided by the use
of reasonable measures available to the Issuer or the relevant Guarantor;
provided however, that (i) no such notice of redemption may be given earlier
than 90 or later than 30 days prior to the earliest date on which the Issuer or
the relevant Guarantor, as applicable, would be obligated to pay such Additional
Amounts were a payment in respect of the Notes then due, and (ii) at the time
such notice of redemption is given, such obligation to pay such Additional
Amounts remains in effect.

In the event that the Issuer elects to redeem the notes pursuant to the
provisions set forth in the preceding paragraph, the Issuer will deliver to the
Trustee:

(1) an Opinion of Counsel to the effect that the Issuer has or will become
obligated to pay Additional Amounts as a result of any such change or amendment
referred to in clause (1) of the preceding paragraph;

(2) an Officers’ Certificate stating that the conditions set forth in clause
(2) of the preceding paragraph have been met and that the Issuer is entitled to
redeem the Notes pursuant to their terms; and

(3) an Officers’ Certificate notifying the Trustee of such redemption and
setting forth the matters described in Section 3.01 hereof.

 

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Section 3.06 Mandatory Redemption.

The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.

Section 3.07 Offer to Purchase by Application of Excess Proceeds.

In the event that, pursuant to Section 4.10 hereof, the Issuer is required to
commence an offer to all Holders to purchase Notes (a “Net Proceeds Offer”), it
will follow the procedures specified below.

The Net Proceeds Offer shall be made to all Holders and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets. The Net Proceeds Offer will remain open
for a period of at least 20 Business Days following its commencement and not
more than 30 Business Days, except to the extent that a longer period is
required by applicable law (the “Offer Period”). No later than three Business
Days after the termination of the Offer Period (the “Purchase Date”), the Issuer
will apply all Excess Proceeds (the “Offer Amount”) to the purchase of Notes and
such other pari passu Indebtedness (on a pro rata basis, with such adjustments
as may be needed so that only Notes in minimum amounts of $1,000 and integral
multiples of $1,000 will be purchased) or, if less than the Offer Amount has
been tendered, all Notes and other Indebtedness tendered in response to the Net
Proceeds Offer. Payment for any Notes so purchased will be made in the same
manner as interest payments are made.

If the Purchase Date is on or after an interest record date and on or before the
related interest payment date, any accrued and unpaid interest and Special
Interest, if any, will be paid to the Person in whose name a Note is registered
at the close of business on such record date, and no additional interest will be
payable to Holders who tender Notes pursuant to the Net Proceeds Offer.

Upon the commencement of an Net Proceeds Offer, the Issuer will send a notice
thereof to each of the Holders, with a copy to the Trustee. The notice will
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Net Proceeds Offer. The notice, which will govern
the terms of the Net Proceeds Offer, will state:

(1) that the Net Proceeds Offer is being made pursuant to this Section 3.07 and
Section 4.10 hereof and the length of time the Net Proceeds Offer will remain
open;

(2) the Offer Amount, the purchase price and the Purchase Date;

(3) that any Note not tendered or accepted for payment will continue to accrue
interest;

(4) that, unless the Issuer defaults in making such payment, any Note accepted
for payment pursuant to the Net Proceeds Offer will cease to accrue interest on
and after the Purchase Date;

(5) that Holders electing to have a Note purchased pursuant to an Net Proceeds
Offer may elect to have Notes purchased in denominations of $1,000 or integral
multiples of $1,000 only;

(6) that Holders electing to have Notes purchased pursuant to any Net Proceeds
Offer will be required to surrender the Note, with the form entitled “Option of
Holder to Elect

 

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Purchase” attached to the Notes completed, or transfer by book-entry transfer,
to the Issuer, a Depositary, if appointed by the Issuer, or a Paying Agent at
the address specified in the notice at least three days before the Purchase
Date;

(7) that Holders will be entitled to withdraw their election if the Issuer, the
Depositary or the Paying Agent, as the case may be, receives, not later than the
expiration of the Offer Period, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;

(8) that, if the aggregate principal amount of Notes and other pari passu
Indebtedness surrendered by holders thereof exceeds the Offer Amount, the Issuer
will select the Notes and other pari passu Indebtedness to be purchased on a pro
rata basis based on the principal amount of Notes and such other pari passu
Indebtedness surrendered (with such adjustments as may be deemed appropriate by
the Issuer so that only Notes in denominations of $1,000 or integral multiples
of $1,000, will be purchased); and

(9) that Holders whose Notes were purchased only in part will be issued new
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).

On or before the Purchase Date, the Issuer will, to the extent lawful, accept
for payment, on a pro rata basis to the extent necessary, the Offer Amount of
Notes or portions thereof tendered pursuant to the Net Proceeds Offer, or if
less than the Offer Amount has been tendered, all Notes tendered, and will
deliver or cause to be delivered to the Trustee the Notes properly accepted
together with an Officers’ Certificate stating that such Notes or portions
thereof were accepted for payment by the Issuer in accordance with the terms of
this Section 3.07. The Issuer, the Depositary or the Paying Agent, as the case
may be, will promptly (but in any case not later than five days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal to the
purchase price of the Notes tendered by such Holder and accepted by the Issuer
for purchase, and the Issuer will promptly issue a new Note, and the Trustee,
upon written request from the Issuer, will authenticate and mail or deliver (or
cause to be transferred by book entry) such new Note to such Holder, in a
principal amount equal to any unpurchased portion of the Note surrendered. Any
Note not so accepted shall be promptly mailed or delivered by the Issuer to the
Holder thereof. The Issuer will publicly announce the results of the Net
Proceeds Offer on the Purchase Date.

Other than as specifically provided in this Section 3.07, any purchase pursuant
to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01
through 3.06 hereof.

ARTICLE 4

COVENANTS

Section 4.01 Payment of Notes.

The Issuer will pay or cause to be paid the principal of, premium, if any, and
interest and Special Interest, if any, on, the Notes on the dates and in the
manner provided in the Notes. Principal, premium, if any, and interest and
Special Interest, if any will be considered paid on the date due if the Paying
Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m.
Eastern Time on the due date money deposited by the Issuer in immediately
available funds and designated for and sufficient to pay all principal, premium,
if any, and interest then due. The Issuer will pay all Special Interest, if any,
in the same manner on the dates and in the amounts set forth in the Registration
Rights Agreement.

 

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The Issuer will pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum
in excess of the then applicable interest rate on the Notes to the extent
lawful; it will pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue installments of interest and Special
Interest (without regard to any applicable grace period) at the same rate to the
extent lawful.

Section 4.02 Maintenance of Office or Agency.

The Issuer will maintain an office or agency (which may be an office of the
Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes
may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Issuer fails to maintain any such required office or
agency or fails to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.

The Issuer may also from time to time designate one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations. The Issuer will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.

The Issuer hereby designates the Corporate Trust Office of the Trustee as one
such office or agency of the Issuer in accordance with Section 2.03 hereof.

Section 4.03 Reports.

(a) Whether or not required by the rules and regulations of the SEC, so long as
any Notes are outstanding, the Company will furnish to the Holders of Notes and
the Trustee, within the time periods specified in the SEC’s rules and
regulations:

(1) all quarterly and annual reports that would be required to be filed with the
SEC on Forms 20-F and 40-F (or Forms 10-K and 10-Q) if the Company were required
to file reports, including a “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and, with respect to the annual information
only, a report thereon by the Company’s certified independent accountants; and

(2) all current reports that would be required to be filed with the SEC on Form
6-K (or Form 8-K) if the Company were required to file such reports.

Notwithstanding the foregoing, the requirement to furnish current, quarterly and
annual reports to Holders of Notes will be deemed satisfied prior to the
commencement of the Exchange Offer or the effectiveness of a Shelf Registration
Statement contemplated by the Registration Rights Agreement if the information
that would have been contained in such reports is included in the Exchange Offer
Registration Statement relating to the Exchange Offer and/or the Shelf
Registration Statement, or any amendments thereto, and filed with the SEC within
the time periods contemplated above.

All such reports will be prepared in all material respects in accordance with
all of the rules and regulations applicable to such reports. Each annual report
on Form 40-F (or Form 10-K) will include a report on the Company’s consolidated
financial statements by the Company’s certified independent accountants;
provided that, in the event Donohue Corp. and its Subsidiaries that are required
to do so under this Indenture continue to provide Note Guarantees but are no
longer included in the Company’s

 

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consolidated financial statements, to the extent permitted by the SEC and the
Company’s certified independent accountants, each such annual report will also
include a report on the Company’s combined financial statements (including
Donohue Corp. and its consolidated Subsidiaries) by the Company’s certified
independent accountants.

In addition, following the consummation of the Exchange Offer contemplated by
the Registration Rights Agreement, the Company will file a copy of each of the
reports referred to in clauses (1) and (2) above with the SEC for public
availability within the time periods specified in the rules and regulations
applicable to such reports (unless the SEC will not accept such a filing) and
will post the reports on its website within those time periods. The Company will
at all times comply with TIA § 314(a).

If, at any time after consummation of the Exchange Offer contemplated by the
Registration Rights Agreement, the Company is no longer subject to the periodic
reporting requirements of the Exchange Act for any reason, the Company will
nevertheless continue filing the reports specified in the preceding paragraph
with the SEC within the time periods specified above unless the SEC will not
accept such a filing. The Company will not take any action for the purpose of
causing the SEC not to accept any such filings. If, notwithstanding the
foregoing, the SEC will not accept the Company’s filings for any reason, the
Company will post the reports referred to in the preceding paragraph on its
website within the time periods that would apply if the Company were required to
file those reports with the SEC.

(b) If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
paragraph (a) of this Section 4.03 will include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
thereto, and in Management’s Discussion and Analysis of Financial Condition and
Results of Operations, of the financial condition and results of operations of
the Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Company.

(c) For so long as any Notes remain outstanding, if at any time they are not
required to file with the SEC the reports required by paragraphs (a) and (b) of
this Section 4.03, the Issuer and the Guarantors will furnish to the Holders and
to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.

Section 4.04 Compliance Certificate.

(a) The Issuer and each Guarantor (to the extent that such Guarantor is so
required under the TIA) shall deliver to the Trustee, within 90 days after the
end of each fiscal year commencing with the fiscal year ending December 31,
2008, an Officers’ Certificate stating that a review of the activities of the
Company and its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
the Company has kept, observed, performed and fulfilled its obligations under
this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Issuer has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default has occurred, describing all such Defaults or Events of Default of which
he or she may have knowledge and what action the Issuer is taking or proposes to
take with respect thereto) and that to the best of his or her knowledge no event
has occurred and remains in existence by reason of which payments on account of
the principal of or interest, if any, on the Notes is prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.

 

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(b) So long as any of the Notes are outstanding, the Issuer will deliver to the
Trustee, forthwith upon any Officer becoming aware of any Default or Event of
Default, an Officers’ Certificate specifying such Default or Event of Default
and what action the Issuer is taking or proposes to take with respect thereto.

Section 4.05 Taxes.

The Company will pay, and will cause each of its Subsidiaries to pay, prior to
delinquency, all taxes, assessments, and governmental levies except such as are
contested in good faith and by appropriate proceedings or where the failure to
effect such payment is not adverse in any material respect to the Holders of the
Notes.

Section 4.06 Stay, Extension and Usury Laws.

The Issuer and each of the Guarantors covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law has been enacted. Without
limiting the generality of the foregoing, if any provision of this Indenture
would obligate the Issuer or any Guarantor to make any payment of interest or
other amount payable to the Trustee or any Holder in an amount or calculated at
a rate which would result in a receipt by such Person of interest at a criminal
rate (as such terms are construed under the Criminal Code (Canada)), then,
notwithstanding such provisions, such amount or rate shall be deemed to have
been adjusted with retroactive effect to the maximum amount or rate of interest,
as the case may be, as would not be so prohibited by law or so result in a
receipt by such Person of interest at a criminal rate, such adjustment to be
effected, to the extent necessary, as follows: (a) firstly, by reducing the
amount or rate of interest required to be paid to such Person under the Fixed
Asset Debt Documents, and (b) thereafter, by reducing any fees, commissions,
premiums and other amounts required to be paid to such Person which would
constitute “interest” for purposes of Section 347 of the Criminal Code (Canada).

Section 4.07 Restricted Payments.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution (a) on
account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company or any of its Restricted Subsidiaries) or
(b) to the direct or indirect holders of the Company’s or any of its Restricted
Subsidiaries’ Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
the Company);

(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of (a) the Company, (b) Donohue Corp. (provided
that Donohue Corp. is, at such time, a Restricted Subsidiary of the Company) or
(c) any direct or indirect parent of the Company;

 

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(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness of the Issuer or any
Guarantor that is contractually subordinated to the Notes or to any Note
Guarantee (excluding any intercompany Indebtedness between or among the Company
and any of its Restricted Subsidiaries), except (a) a payment of interest or
principal at the Stated Maturity thereof or (b) the purchase, repurchase or
other acquisition or retirement for value of any such Indebtedness in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case, due within one year of the date of such purchase,
repurchase or other acquisition or retirement for value; or

(4) make any Restricted Investment (all such payments and other actions set
forth in these clauses (1) through (4) above being collectively referred to as
“Restricted Payments”),

unless, at the time of and after giving effect to such Restricted Payment:

(1) no Default or Event of Default has occurred and is continuing or would occur
as a consequence of such Restricted Payment;

(2) the Issuer would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 4.09(a) hereof; and

(3) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by the Company and its Restricted Subsidiaries since
the date of this Indenture (excluding Restricted Payments permitted by clauses
(2), (3), (4), (5), (6), (7) and (8) of paragraph (b) of this Section 4.07), is
less than the sum, without duplication of:

(A) 50% of the Consolidated Net Income of the Company for the period (taken as
one accounting period) from the beginning of the first fiscal quarter commencing
after the date of this Indenture to the end of the Company’s most recently ended
fiscal quarter for which internal financial statements are available at the time
of such Restricted Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit); plus

(B) 100% of the aggregate net cash proceeds (other than Excluded Proceeds)
received by the Company since the date of this Indenture as a contribution to
its common equity capital or from the issue or sale of Qualifying Equity
Interests of the Company or from the issue or sale of convertible or
exchangeable Disqualified Stock of the Company or convertible or exchangeable
debt securities of the Company, in each case that have been converted into or
exchanged for Qualifying Equity Interests of the Company (other than Qualifying
Equity Interests and convertible or exchangeable Disqualified Stock or debt
securities sold to a Subsidiary of the Company); plus

(C) to the extent that any Restricted Investment that was made after the date of
this Indenture is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (i) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (ii) the initial amount of
such Restricted Investment; plus

(D) to the extent that any Unrestricted Subsidiary of the Company designated as
such after the date of this Indenture is redesignated as a Restricted Subsidiary
after the

 

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date of this Indenture, the lesser of (i) the Fair Market Value of the Company’s
Restricted Investment in such Restricted Subsidiary as of the date of such
redesignation or (ii) such Fair Market Value as of the date on which such
Restricted Subsidiary was originally designated as an Unrestricted Subsidiary
after the date of this Indenture; plus

(E) 50% of any dividends received by the Company or a Restricted Subsidiary of
the Company that is a Guarantor after the date of this Indenture from an
Unrestricted Subsidiary of the Company, to the extent that such dividends were
not otherwise included in the Consolidated Net Income of the Company for such
period.

(b) The provisions of Section 4.07(a) hereof will not prohibit:

(1) the payment of any dividend or distribution on account of Equity Interests
or the consummation of any redemption within 60 days after the date of
declaration of the dividend or distribution on account of Equity Interests or
giving of the redemption notice, as the case may be, if at the date of
declaration or notice, the dividend, distribution or redemption payment would
have complied with the provisions of this Indenture;

(2) the making of any Restricted Payment in exchange for, or out of or with the
net proceeds of the substantially concurrent sale (other than to a Subsidiary of
the Company) of, Equity Interests of the Company (other than Disqualified Stock)
or from the substantially concurrent contribution of common equity capital to
the Company; provided that the amount of any such net proceeds that are utilized
for any such Restricted Payment will not be considered to be net proceeds of
Qualifying Equity Interests for purposes of clause (3)(B) of Section 4.07(a)
hereof;

(3) the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value of Indebtedness of the Issuer or any Guarantor that is
contractually subordinated to the Notes or to any Note Guarantee in exchange
for, by conversion into or out of, or with the net cash proceeds from, a
substantially concurrent incurrence of Permitted Refinancing Indebtedness;

(4) the payment of any dividend (or, in the case of any partnership or limited
liability company, any similar distribution) by a Restricted Subsidiary of the
Company to the holders of its Equity Interests on a pro rata basis; provided
that this clause (4) shall not apply to any dividend or similar distribution by
any Restricted Subsidiary that is not a Subsidiary of the Company or a
Subsidiary of a Guarantor;

(5) so long as no Default or Event of Default has occurred and is continuing or
would be caused thereby, the payment of any dividend or the consummation of any
redemption; provided that either (a) such dividend or redemption is paid solely
in Equity Interests of Donohue Corp.; (b) all of the proceeds from such dividend
or redemption are simultaneously used by the recipient thereof to purchase
Equity Interests of Donohue Corp. held by the Company or any of the Guarantors
or (c) any combination of clauses (a) and (b);

(6) so long as no Default or Event of Default has occurred and is continuing,
the repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of AbitibiBowater Inc., the Company or any Restricted
Subsidiary of the Company held by any current or former officer, director or
employee of AbitibiBowater Inc., the Company or any of its Restricted
Subsidiaries pursuant to any equity subscription agreement, stock option
agreement, shareholders’ agreement or similar agreement; provided that the
aggregate price paid for all such

 

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repurchased, redeemed, acquired or retired Equity Interests may not exceed
$500,000 in any twelve-month period; provided, further, that such amount in any
twelve-month period may be increased by an amount not to exceed:

(a) the cash proceeds from the sale of Equity Interests (other than Disqualified
Stock) of the Company and, to the extent contributed to the Company as common
equity capital, the cash proceeds from the sale of Equity Interests of any of
the Company’s direct or indirect parent companies, in each case to members of
management, directors or consultants of the Company, any of its Subsidiaries,
Donohue Corp. or any of its Subsidiaries (provided that Donohue Corp. is, at
such time, a Restricted Subsidiary of the Company) or any of its direct or
indirect parent companies that occurs after the date of this Indenture to the
extent the cash proceeds from the sale of Qualifying Equity Interests have not
otherwise been applied to the making of Restricted Payments pursuant to clause
(3) of the preceding paragraph or clause (2) of this paragraph; plus

(b) the cash proceeds of key man life insurance policies received by the Company
or its Restricted Subsidiaries after the date of this Indenture; and

in addition, cancellation of Indebtedness owing to the Issuer or any Guarantor
from any current or former officer, director or employee (or any permitted
transferees thereof) of AbitibiBowater Inc., the Company or any of its
Restricted Subsidiaries (or any direct or indirect parent company thereof), in
connection with a repurchase of Equity Interests of AbitibiBowater Inc., the
Company or any of its Restricted Subsidiaries from such Persons will not be
deemed to constitute a Restricted Payment for purposes of this Section 4.07 or
any other provisions of this Indenture;

(7) the repurchase of Equity Interests deemed to occur upon the exercise of
stock options, warrants or similar rights to the extent such Equity Interests
represent a portion of the exercise price of those stock options, warrants or
similar rights or the payment of related withholding taxes;

(8) so long as no Default or Event of Default has occurred and is continuing,
the declaration and payment of regularly scheduled or accrued dividends to
holders of any class or series of Disqualified Stock of the Company or any
Restricted Subsidiary of the Company issued on or after the date of this
Indenture in accordance with the Fixed Charge Coverage test described in
Section 4.09 hereof;

(9) Permitted Payments to AbitibiBowater Inc.;

(10) the Donohue Sale and the other Permitted Reorganization Transactions;

(11) so long as no Default or Event of Default has occurred and is continuing,
any Restricted Investment occurring as part of the Joint Venture Transactions;

(12) so long as no Default or Event of Default has occurred and is continuing or
would be caused thereby, upon the occurrence of a Change of Control and within
60 days after completion of the offer to repurchase notes pursuant to
Section 4.15 hereof (including the purchase of all Notes tendered), any purchase
or redemption of Indebtedness of the Company that is contractually subordinated
to the Notes or any Note Guarantee that is required to be repurchased or
redeemed pursuant to the terms thereof as a result of such Change of Control, at
a purchase price not greater than 101% of the outstanding principal amount
thereof (plus accrued

 

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and unpaid interest); provided that, prior to such repayment or repurchase, the
Company shall have made the Change of Control Offer with respect to the Notes as
required by this Indenture, and the Company shall have repurchased all Notes
validly tendered for payment and not withdrawn in connection with such Change of
Control Offer;

(13) so long as no Default or Event of Default has occurred and is continuing or
would be caused thereby, after the completion of a Net Proceeds Offer pursuant
to Section 4.10 hereof (including the purchase of all Notes tendered), any
purchase or redemption of Indebtedness of the Company that is contractually
subordinated to the Notes or any Note Guarantee that is required to be
repurchased or redeemed pursuant to the terms thereof as a result of such Asset
Sale, at a purchase price not greater than 100% of the outstanding principal
amount thereof (plus accrued and unpaid interest) with any Excess Proceeds that
remain after consummation of a Net Proceeds Offer; provided that, prior to such
repayment or repurchase, the Company shall have made the Net Proceeds Offer with
respect to the Notes as required by this Indenture, and the Company shall have
repurchased all Notes validly tendered for payment and not withdrawn in
connection with such Net Proceeds Offer;

(14) any payment solely to reimburse AbitibiBowater Inc. or its Affiliates for
actual out-of-pocket expenses, not including fees paid directly or indirectly to
AbitibiBowater Inc. or its Affiliates, for the provision of third party services
to the Company and its Restricted Subsidiaries;

(15) the redemption, repurchase or other acquisition for value of any common
Equity Interests of any Foreign Subsidiary of the Company or any Foreign
Subsidiary of a Guarantor that are held by a Person that is not an Affiliate of
the Company or to the extent required to satisfy applicable laws, rules or
regulations in an aggregate amount since the date of this Indenture not to
exceed $5.0 million; provided that the consideration for such redemption,
repurchase or other acquisition is not in excess of either (i) the Fair Market
Value of such common Equity Interests or (ii) such amount required by applicable
laws, rules or regulations; and

(16) so long as no Default or Event of Default has occurred and is continuing,
other Restricted Payments in an aggregate amount not to exceed $5.0 million
since the date of this Indenture.

The amount of all Restricted Payments (other than cash) will be the Fair Market
Value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair
Market Value of any assets or securities that are required to be valued by this
Section 4.07 will be determined by the Company or, if such Fair Market Value is
in excess of $20.0 million, by the Board of Directors of the Company whose
resolution with respect thereto shall be delivered to the Trustee. The Board of
Directors’ determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
Fair Market Value exceeds $50.0 million.

Section 4.08 Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:

(1) pay dividends or make any other distributions on its Capital Stock to the
Company or any of its Restricted Subsidiaries or with respect to any other
interest or participation in, or measured by, its profits, or pay any
indebtedness owed to the Company;

 

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(2) make loans or advances to the Company; or

(3) sell, lease or transfer any of its properties or assets to the Company.

(b) The restrictions in Section 4.08(a) hereof will not apply to encumbrances or
restrictions existing under or by reason of:

(1) agreements governing Existing Indebtedness (including the Secured Notes and
the related indenture) and Credit Facilities or Receivables Facilities, in each
case, as in effect on the date of this Indenture and any amendments,
restatements, modifications, renewals, supplements, refundings, replacements or
refinancings of those agreements; provided that the amendments, restatements,
modifications, renewals, supplements, refundings, replacements or refinancings
are not, in the good faith judgment of the Board of Directors of the Company,
materially more restrictive, taken as a whole, with respect to such dividend and
other payment restrictions than those contained in those agreements on the date
of this Indenture;

(2) this Indenture, the Notes and the Note Guarantees, and the Exchange Notes
and the related Note Guarantees to be issued pursuant to the Registration Rights
Agreement;

(3) applicable law, rule, regulation, order, approval, license, permit or
similar restriction;

(4)(a) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness or Capital
Stock was incurred in connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property or
assets of the Person, so acquired; provided that, in the case of Indebtedness,
such Indebtedness was permitted by the terms of this Indenture to be incurred
and (b) any amendment, modification, replacement or refinancing thereof;
provided, however, that such encumbrances or restrictions are not, in the good
faith judgment of the Board of Directors of the Company, materially more
restrictive, taken as a whole, with respect to consensual encumbrances or
restrictions set forth in clauses (1), (2) or (3) of Section 4.08(a) hereof than
on such encumbrances or restrictions prior to such amendment, modification,
replacement or refinancing;

(5) customary non-assignment provisions in contracts and licenses entered into
in the ordinary course of business;

(6) purchase money obligations for property acquired in the ordinary course of
business and Capital Lease Obligations that impose restrictions on the property
purchased or leased of the nature described in clause (3) of Section 4.08(a)
hereof;

(7) any agreement for the sale or other disposition of the Capital Stock or
assets of a Restricted Subsidiary that restricts distributions by that
Restricted Subsidiary pending such sale or other disposition;

(8) Permitted Refinancing Indebtedness; provided that the restrictions contained
in the agreements governing such Permitted Refinancing Indebtedness are not, in
the good faith judgment of the Board of Directors of the Company, materially
more restrictive, taken as a whole, than those contained in the agreements
governing the Indebtedness being refinanced, extended, renewed, refunded,
replaced, defeased or discharged;

 

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(9) Liens permitted to be incurred under the provisions of Section 4.12 hereof
that limit the right of the debtor to dispose of the assets subject to such
Liens;

(10) Indebtedness or other contractual requirements of a Receivables Entity in
connection with a Qualified Receivables Transaction; provided that such
restrictions apply only to such Receivables Entity;

(11) provisions in agreements or instruments that prohibit the payment of
dividends or the making of other distributions with respect to the Capital Stock
of a Person other than on a pro rata basis;

(12) provisions limiting the disposition or distribution of assets or property
in joint venture agreements, asset sale agreements, sale-leaseback agreements,
stock sale agreements and other similar agreements entered into with the
approval of the Company’s Board of Directors, which limitation is applicable
only to the assets that are the subject of such agreements;

(13) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business;

(14) restrictions in other Indebtedness incurred in compliance with Section 4.09
hereof; provided that such restrictions, taken as a whole, are, in the good
faith judgment of the Company’s Board of Directors, no more materially
restrictive with respect to such encumbrances and restrictions than those
contained in the existing agreements referenced in clauses (1) and (2) of this
Section 4.08(b);

(15) encumbrances on property that exist at the time such property was acquired
by the Company or any Restricted Subsidiary;

(16) restrictions applicable to Foreign Subsidiaries of the Company or of any
Guarantor, arising under the documentation governing Indebtedness of Foreign
Subsidiaries incurred pursuant to clause (20) or (21) of the definition of
“Permitted Debt;” and

(17) contractual encumbrances or restrictions in effect on the date of this
Indenture, and any amendments, restatements, modifications, supplements,
renewals, extensions, refundings, replacements, or refinancings of those
agreements; provided that the amendments, restatements, modifications,
supplements, renewals, extensions, refundings, replacements, or refinancings are
not, in the good faith judgment of the Board of Directors of the Company,
materially more restrictive, taken as a whole, with respect to consensual
encumbrances or restrictions set forth in clauses (1), (2) or (3) of
Section 4.08(a) hereof than those contained in those agreements on the date of
this Indenture.

Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, “incur”) any Indebtedness (including Acquired Debt), and the
Company will not issue any Disqualified Stock and will not permit any of its
Restricted Subsidiaries to issue any shares of preferred stock; provided,
however, that the Issuer may incur Indebtedness (including Acquired Debt) or
issue Disqualified Stock, and the Guarantors may incur Indebtedness (including
Acquired Debt) or issue preferred stock, if the Fixed Charge Coverage Ratio for
the Company’s most recently ended four full fiscal quarters for which internal
financial statements are

 

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available immediately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock or preferred stock is issued, as the case
may be, would have been at least 2.0 to 1.0, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred or the Disqualified Stock or the
preferred stock had been issued, as the case may be, at the beginning of such
four-quarter period.

(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of
any of the following items of Indebtedness or the issuance of any of the
following Disqualified Stock (collectively, “Permitted Debt”):

(1) the incurrence by the Issuer and the guarantee thereof by the Guarantors of
Indebtedness and letters of credit (and reimbursement obligations with respect
thereto) under one or more Credit Facilities in an aggregate principal amount at
any one time outstanding under this Section 4.09(b)(1) (with letters of credit
being deemed to have a principal amount equal to the maximum remaining potential
liability of the Company and its Restricted Subsidiaries thereunder) not to
exceed the greater of:

(a) $500.0 million less the aggregate amount of all repayments, optional or
mandatory, of the principal of any term Indebtedness under a Credit Facility
(other than repayments that are concurrently refunded or refinanced) that have
been made by the Company or any of its Restricted Subsidiaries since the date of
this Indenture and less the aggregate amount of all commitment reductions with
respect to any revolving credit borrowings under a Credit Facility that have
been made by the Company or any of its Restricted Subsidiaries since the date of
this Indenture with the Net Proceeds of one or more Assets Sales or with the
Excluded Proceeds, plus the amount of any reasonable fees, underwriting
discounts, premiums, prepayment penalties and other costs and expenses incurred
in connection with extending, refinancing, renewing, replacing or refunding any
Credit Facility under which Indebtedness is incurred pursuant to this
Section 4.09(b)(1); or

(b) the amount of the Borrowing Base as of the date of such incurrence;

provided that the aggregate principal amount of Indebtedness permitted to be
incurred by the Issuer at any time pursuant to this clause (1) will be increased
by the amount of additional Indebtedness then permitted to be incurred by the
Issuer pursuant to clause (2) of this Section 4.09(b);

(2) Indebtedness incurred by a Receivables Entity in a Qualified Receivables
Transaction; provided that, after giving effect to any such incurrence, the
aggregate principal amount of Indebtedness at any one time outstanding under
this Section 4.09(b)(2) does not exceed $325.0 million; provided further, that
the aggregate principal amount of Indebtedness permitted to be incurred by any
Receivables Entity at any time pursuant to this Section 4.09(b)(2) will be
increased by the amount of additional Indebtedness then permitted to be incurred
by the Issuer pursuant to Section 4.09(b)(1);

(3) letters of credit issued in the ordinary course of business and
reimbursement obligations with respect thereto in an aggregate principal amount
(with letters of credit being deemed to have a principal amount equal to the
maximum remaining potential liability of the Company and its Restricted
Subsidiaries thereunder) not to exceed, as of any date of incurrence of
Indebtedness pursuant to this Section 4.09(b)(3), the greater of (i) $100.0
million or (ii) 2% of Total Assets;

 

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(4) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;

(5) the incurrence by the Issuer and the Guarantors of Indebtedness represented
by the Notes and the related Note Guarantees to be issued on the date of this
Indenture and the Exchange Notes and the related Note Guarantees to be issued
pursuant to the Registration Rights Agreement;

(6) the incurrence by the Issuer and the Guarantors of Indebtedness represented
by the Secured Notes and the related guarantees thereof to be issued on or about
the date of this Indenture and any additional Secured Notes issued pursuant to
Section 4.22 hereof and the related guarantees thereof and, in either case, the
related exchange notes and guarantees thereof to be issued pursuant to a
registration rights agreement related thereto;

(7) the incurrence by the Company or any of its Restricted Subsidiaries of
Attributable Debt in connection with a Sale/Leaseback Transaction or
Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case, incurred for the purpose of financing
all or any part of the purchase price or cost of design, development,
construction, installation, expansion, repair or improvement of property, plant
or equipment used in the business of the Company or any of its Restricted
Subsidiaries (in each case, whether through the direct purchase of such assets
or the purchase of Equity Interests of any Person owning such assets), in an
aggregate principal amount, including all Permitted Refinancing Indebtedness
incurred to renew, refund, refinance, replace, defease or discharge any
Indebtedness incurred pursuant to this Section 4.09(b)(7), not to exceed as of
any date of incurrence of Indebtedness pursuant to this Section 4.09(b)(7), the
greater of (i) $125.0 million or (ii) 2.5% of Total Assets;

(8) the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which
are used to extend, renew, refund, refinance, replace, defease or discharge
Indebtedness (other than intercompany Indebtedness) that was permitted by this
Indenture to be incurred under Section 4.09(a) hereof or clauses (4), (5), (6),
(7), (8), (20) or (21) of this Section 4.09(b);

(9) the incurrence by the Company or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Company and any of its Restricted
Subsidiaries; provided, however, that:

(A) if the Issuer or any Guarantor is the obligor on such Indebtedness and the
payee is not the Issuer or a Guarantor, such Indebtedness must be expressly
subordinated to the prior payment in full in cash of all Obligations then due
with respect to the Notes, in the case of the Issuer, or the Note Guarantee, in
the case of a Guarantor; and

(B) (1) any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than the Company or a
Restricted Subsidiary of the Company and (2) any sale or other transfer of any
such Indebtedness to a Person that is not either the Company or a Restricted
Subsidiary of the Company,

will be deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (9);

 

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(10) the issuance by any of the Company’s Restricted Subsidiaries to the Company
or to any of its Restricted Subsidiaries of shares of preferred stock; provided,
however, that:

(A) any subsequent issuance or transfer of Equity Interests that results in any
such preferred stock being held by a Person other than the Company or a
Restricted Subsidiary of the Company; and

(B) any sale or other transfer of any such preferred stock to a Person that is
not either the Company or a Restricted Subsidiary of the Company,

will be deemed, in each case, to constitute an issuance of such preferred stock
by such Restricted Subsidiary that was not permitted by this clause (10);

(11) the incurrence by the Company or any of its Restricted Subsidiaries of
Hedging Obligations in the ordinary course of business;

(12) the guarantee by the Issuer or any of the Guarantors of Indebtedness of the
Company or a Restricted Subsidiary of the Company that was permitted to be
incurred by another provision of this Section 4.09; provided that if the
Indebtedness being guaranteed is subordinated to or pari passu with the Notes,
then the Guarantee must be subordinated or pari passu, as applicable, to the
same extent as the Indebtedness guaranteed;

(13) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness in respect of workers’ compensation claims, unemployment or other
insurance or self-insurance obligations, bankers’ acceptances, performance,
completion and surety bonds, completion guarantees and similar obligations in
the ordinary course of business;

(14) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument inadvertently drawn against insufficient
funds, so long as such Indebtedness is covered within five Business Days;

(15) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness arising from agreements of the Company or such Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with the
sale or other disposition of any business, assets or Capital Stock of the
Company or any of its Restricted Subsidiaries, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Capital Stock; provided that (A) the maximum aggregate
liability in respect of all such Indebtedness shall at no time exceed the net
proceeds, whether or not cash, actually received by the Company and its
Restricted Subsidiaries in connection with such disposition and (B) such
Indebtedness is not reflected in the balance sheet of the Company or any of its
Restricted Subsidiaries (contingent obligations referred to in a footnote to
financial statements and not otherwise reflected on its balance sheet will not
be deemed to be reflected on such balance sheet for purposes of this clause
(15));

(16) the incurrence of contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in the
ordinary course of business;

(17) the incurrence of Indebtedness consisting of guarantees of loans or other
extensions of credit to or on behalf of current or former officers, directors,
employees, or

 

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consultants of the Company, any of its Restricted Subsidiaries, or any direct or
indirect parent of the Company for the purpose of permitting such Persons to
purchase Capital Stock of the Company or any direct or indirect parent of the
Company; provided that the aggregate amount of such Indebtedness and Investments
made pursuant to clause (8) of the definition of “Permitted Investments” may not
exceed $5.0 million at any one time outstanding;

(18) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness in connection with the acquisition by the Company or any of its
Restricted Subsidiaries of all of the Capital Stock of a Person that becomes a
Restricted Subsidiary of the Company or all or substantially all of the assets
of a Person, in each case, engaged in a Permitted Business; provided, that, on
the date of such transaction after giving pro forma effect thereto and any
related financing transactions as if the same had occurred at the beginning of
the applicable four-quarter period, the Company would have had a Fixed Charge
Coverage Ratio equal to or greater than the Fixed Charge Coverage Ratio of the
Company immediately prior to such transaction;

(19) the incurrence by the Company and/or any of its Restricted Subsidiaries of
Indebtedness solely in respect of premium financing or similar deferred payment
obligations with respect to insurance policies purchased in the ordinary course
of business;

(20) the incurrence by a Foreign Subsidiary of the Company or of any Guarantor
of additional Indebtedness in an aggregate principal amount, including all
Permitted Refinancing Indebtedness incurred to renew, refund, refinance,
replace, defease or discharge any Indebtedness incurred pursuant to this clause
(20), not to exceed $25.0 million at any time outstanding; and

(21) the incurrence by the Company or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to renew, refund, refinance, replace, defease or discharge
any Indebtedness incurred pursuant to this clause (21), not to exceed $150.0
million.

The Company will not incur, and will not permit the Issuer or any Guarantor to
incur, any Indebtedness (including Permitted Debt) that is contractually
subordinated in right of payment to any other Indebtedness of the Issuer or such
Guarantor unless such Indebtedness is also contractually subordinated in right
of payment to the Notes and the applicable Note Guarantee on substantially
identical terms; provided, however, that no Indebtedness shall be deemed to be
contractually subordinated in right of payment to any other Indebtedness of the
Issuer or a Guarantor solely by virtue of being unsecured or by virtue of being
secured on a junior priority basis.

For purposes of determining compliance with this Section 4.09, in the event that
an item of proposed Indebtedness or Disqualified Stock meets the criteria of
more than one of the categories of Permitted Debt described in clauses
(1) through (21) above or is entitled to be incurred pursuant to Section 4.09(a)
hereof, the Company will be permitted to classify all or a portion of such item
of Indebtedness or Disqualified Stock on the date of its incurrence, or later
reclassify all or a portion of such item of Indebtedness or Disqualified Stock,
in any manner that complies with this Section 4.09., except that Indebtedness
under Credit Facilities and under Receivables Facilities outstanding on the date
on which Notes are first issued and authenticated under this Indenture will
always be deemed to have been incurred on such date in reliance on the exception
provided by clauses (1) or (2) of the definition of Permitted Debt. The accrual
of interest, the accretion or amortization of original issue discount, the
payment of interest on any Indebtedness in the form of additional Indebtedness
with the same terms, the reclassification of preferred stock as Indebtedness due
to a change in accounting principles, and the

 

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payment of dividends on Disqualified Stock in the form of additional shares of
the same class of Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this
Section 4.09; provided, in each such case, that the amount of any such accrual,
accretion, or payment is included in Fixed Charges of the Company as accrued.
Notwithstanding any other provision of this Section 4.09, the maximum amount of
Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to
this Section 4.09 shall not be deemed to be exceeded solely as a result of
fluctuations in exchange rates or currency values.

The amount of any Indebtedness outstanding as of any date will be:

(1) the accreted value of the Indebtedness, in the case of any Indebtedness
issued with original issue discount;

(2) the principal amount of the Indebtedness, in the case of any other
Indebtedness; and

(3) in respect of Indebtedness of another Person secured by a Lien on the assets
of the specified Person, the lesser of:

(A) the Fair Market Value of such assets at the date of determination; and

(B) the amount of the Indebtedness of the other Person.

Section 4.10 Asset Sales.

The Company will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:

(1) the Company (or its Restricted Subsidiary, as the case may be) receives
consideration at the time of the Asset Sale at least equal to the Fair Market
Value of the assets or Equity Interests issued or sold or otherwise disposed of;

(2) at least 75% of the consideration received in the Asset Sale by the Company
or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For
purposes of this clause (2), each of the following shall be deemed to be cash:

(a) any liabilities, as shown on the Company’s most recent consolidated balance
sheet, of the Company or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the notes or
any Note Guarantee) that are assumed by the transferee of any such assets
pursuant to a customary assumption or similar agreement; provided that for so
long as Donohue Corp. and its Restricted Subsidiaries that are required to do so
under this Indenture continue to provide Note Guarantees, the Company’s balance
sheet will be determined on a consolidated combined basis (including Donohue
Corp. and its Restricted Subsidiaries as if they were actually Subsidiaries of
the Company);

(b) any securities, notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are converted by the
Company or such Restricted Subsidiary into cash or Cash Equivalents within 30
days of receipt thereof, to the extent of the cash or Cash Equivalents received
in that conversion;

 

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(c) any Designated Noncash Consideration received by the Company or any
Restricted Subsidiary thereof in such Asset Sale having a Fair Market Value,
taken together with all other Designated Noncash Consideration received pursuant
to this clause (c) that is at that time outstanding, not to exceed the greater
of (x) $50.0 million or (y) 1.0% of Total Assets at the time of receipt of such
Designated Noncash Consideration, with the Fair Market Value of each item of
Designated Noncash Consideration being measured at the time received without
giving effect to subsequent changes in value;

(d) any stock or assets of the kind referred to in clauses (2) or (4) of the
next following paragraph of this Section 4.10; and

(e) cash held in escrow as security for any purchase price settlement, for
damages in respect of a breach of representations and warranties or certain
covenants or for payment of other contingent obligations in connection with the
Asset Sale.

Within 360 days after the receipt of any Net Proceeds from an Asset Sale, other
than Excluded Proceeds, the Company (or the applicable Restricted Subsidiary, as
the case may be) may apply such Net Proceeds at its option:

(1) to repay Indebtedness and other Obligations that were secured by a Permitted
Lien and, if the Indebtedness repaid is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto;

(2) to acquire all or substantially all of the assets of, or any Capital Stock
of, another Permitted Business, if, after giving effect to any such acquisition
of Capital Stock, the Permitted Business is or becomes a Restricted Subsidiary
of the Company;

(3) to make a capital expenditure; and/or

(4) to acquire other assets that are used or useful in a Permitted Business.

Pending the final application of any Net Proceeds, the Company or the applicable
Restricted Subsidiary, as the case may be, may temporarily reduce revolving
credit borrowings or otherwise invest the Net Proceeds in any manner that is not
prohibited by this Indenture.

Any Net Proceeds from Asset Sales (but excluding Excluded Proceeds) that are not
applied or invested as provided in the second paragraph of this Section 4.10
will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds
exceeds $20.0 million, within 30 days thereof, the Issuer will make an offer (a
“Net Proceeds Offer”) to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets in accordance with Section 3.07 hereof to
purchase the maximum principal amount of Notes and such other Indebtedness (plus
all accrued interest on such Indebtedness and the amount of all fees and
expenses, including premiums, incurred in connection therewith) that may be
purchased out of the Excess Proceeds. The offer price in any Net Proceeds Offer
will be equal to 100% of the principal amount, plus accrued and unpaid interest
and Special Interest, if any, to the date of purchase, and will be payable in
cash. If any Excess Proceeds remain after consummation of a Net Proceeds Offer,
the Company may use those Excess Proceeds for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount of Notes and
other Indebtedness tendered into such Net Proceeds Offer exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes and the Issuer or agent for
such other Indebtedness will select such other

 

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Indebtedness to be purchased on a pro rata basis with such adjustments as may be
needed so that only notes in minimum amounts of $1,000 and integral multiples of
$1,000 will be purchased. Upon completion of each Net Proceeds Offer, the amount
of Excess Proceeds will be reset at zero.

The Issuer will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with each repurchase of Notes
pursuant to a Change of Control or a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
Section 3.07 hereof or this Section 4.10, the Issuer will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under Section 3.07 hereof or this Section 4.10 by
virtue of such compliance.

Section 4.11 Transactions with Affiliates.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate of the Company
(each an “Affiliate Transaction”), unless:

(1) the Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person; and

(2) the Company delivers to the Trustee:

(A) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $20.0 million, a
resolution of the Board of Directors of the Company set forth in an Officers’
Certificate certifying that such Affiliate Transaction complies with clause
(1) of this Section 4.11(a) and that such Affiliate Transaction has been
approved by a majority of the members of the Board of Directors of the Company;
and

(B) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $50.0 million, an
opinion as to the fairness to the Company or such Restricted Subsidiary of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.

(b) The following items will not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of Section 4.11(a) hereof:

(1) any consulting or employment agreement or arrangements, incentive
compensation plan, stock option or stock ownership plan, employee benefit plan,
severance arrangements, officer or director indemnification agreement or any
similar arrangement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business for the benefit of directors,
officers, employees and consultants of the Company or a direct or indirect
parent of the Company and payments and transactions pursuant thereto and
payments pursuant thereto;

(2) transactions between or among the Company and/or its Restricted
Subsidiaries;

 

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(3) transactions with a Person (other than an Unrestricted Subsidiary of the
Company) that is an Affiliate of the Company solely because the Company owns,
directly or through a Restricted Subsidiary, an Equity Interest in, or controls,
such Person;

(4) payment of reasonable directors’ fees;

(5) any issuance of Equity Interests (other than Disqualified Stock) of the
Company to Affiliates of the Company or any contribution of capital to the
Company;

(6) Restricted Payments that do not violate Section 4.07 hereof;

(7) Permitted Investments described in clauses (5), (6), (8) and (13) of the
definition thereof;

(8) transactions between or among the Company and its Subsidiaries and Donohue
Corp. and its Subsidiaries (to the extent Donohue Corp. is, at such time, a
Guarantor) or transactions between a Receivables Entity and any Person in which
the Receivables Entity has an Investment;

(9) loans or advances to employees in the ordinary course of business not to
exceed $5.0 million in the aggregate at any one time outstanding;

(10) Permitted Payments to AbitibiBowater Inc.;

(11) any Joint Purchasing Agreement;

(12) the Donohue Sale and the other Permitted Reorganization Transactions;

(13) the Joint Venture Transactions;

(14) purchase or sale of goods and/or services in the ordinary course of
business on terms that are no less favorable to the Company or the relevant
Restricted Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Restricted Subsidiary with an unrelated
Person;

(15) if such Affiliate Transaction is with an Affiliate in its capacity as a
holder of Indebtedness of the Company or any Restricted Subsidiary, a
transaction in which such Affiliate is treated no more favorably than the other
holders of Indebtedness of the Company or such Restricted Subsidiary;

(16) any capital contribution to any Affiliate otherwise permitted by this
Indenture;

(17) any payment solely to reimburse AbitibiBowater Inc. or its Affiliates for
actual out-of-pocket expenses, not including fees paid directly or indirectly to
AbitibiBowater Inc. or its Affiliates, for the provision of third party services
to the Company and its Restricted Subsidiaries;

(18) transactions with any joint venture engaged in a Permitted Business;
provided that all the outstanding ownership interests of such joint venture are
owned only by the Company, its Restricted Subsidiaries and Persons that are not
Affiliates of the Company; and

(19) any Investment of the Company or any of its Restricted Subsidiaries
existing on the date of this Indenture, and any extension, modification or
renewal of such existing

 

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Investments, to the extent not involving any additional Investment other than as
the result of the accrual or accretion of interest or original issue discount or
the issuance of pay-in-kind securities, in each case, pursuant to the terms of
such Investments as in effect on the date of this Indenture.

Section 4.12 Liens.

The Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly create, incur, assume or suffer to exist any Lien of any
kind securing Indebtedness, Attributable Debt or trade payables on any asset now
owned or hereafter acquired, except Permitted Liens.

Section 4.13 Business Activities.

The Company will not, and will not permit any of its Restricted Subsidiaries to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Restricted Subsidiaries taken as a
whole.

Section 4.14 Corporate Existence.

Subject to Article 5 hereof, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect:

(1) its corporate existence, and the corporate, partnership or other existence
of each of its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Subsidiary; and

(2) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries (other than the Issuer), if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.

Section 4.15 Offer to Repurchase Upon Change of Control.

(a) Upon the occurrence of a Change of Control, the Issuer will make an offer (a
“Change of Control Offer”) to each Holder to repurchase all or any part (equal
to $1,000 or an integral multiple of $1,000) of that Holder’s Notes at a
purchase price in cash equal to 101% of the aggregate principal amount of Notes
repurchased, plus accrued and unpaid interest and Special Interest, if any, on
the Notes repurchased to the date of purchase, subject to the rights of Holders
on the relevant record date to receive interest due on the relevant interest
payment date (the “Change of Control Payment”). Within 30 days following any
Change of Control, the Issuer will send a notice to each Holder with a copy to
the Trustee describing the transaction or transactions that constitute the
Change of Control and stating:

(1) that the Change of Control Offer is being made pursuant to this Section 4.15
and that all Notes tendered will be accepted for payment;

(2) the purchase price and the purchase date, which shall be no earlier than 30
days and no later than 60 days from the date such notice is sent (the “Change of
Control Payment Date”);

 

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(3) that any Note not tendered will continue to accrue interest;

(4) that, unless the Issuer defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
will cease to accrue interest on and after the Change of Control Payment Date;

(5) that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
“Option of Holder to Elect Purchase” attached to the Notes completed, or
transfer by book-entry transfer, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date;

(6) that Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing his election to
have the Notes purchased; and

(7) that Holders whose Notes are being purchased only in part will be issued new
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple of $1,000.

The Issuer will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with the repurchase of the
Notes as a result of a Change in Control. To the extent that the provisions of
any securities laws or regulations conflict with the provisions of Sections 3.07
or 4.15 hereof, the Issuer will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under
Section 3.07 hereof or this Section 4.15 by virtue of such compliance.

(b) On the Change of Control Payment Date, the Issuer will, to the extent
lawful:

(1) accept for payment all Notes or portions of Notes properly tendered pursuant
to the Change of Control Offer;

(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Notes or portions of Notes properly tendered; and

(3) deliver or cause to be delivered to the Trustee the Notes properly accepted
together with an Officers’ Certificate stating the aggregate principal amount of
Notes or portions of Notes being purchased by the Issuer.

The Paying Agent will promptly mail to each Holder of Notes properly tendered
the Change of Control Payment for such Notes as directed by the Issuer in
writing, and the Trustee will promptly authenticate upon an authentication order
from the Issuer and mail (or cause to be transferred by book entry) to each
Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any; provided that each new Note will be in denominations
of $1,000 and integral multiples of $1,000. The Issuer will publicly announce
the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.

 

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(c) Notwithstanding anything to the contrary in this Section 4.15, the Issuer
will not be required to make a Change of Control Offer upon a Change of Control
if a third party makes the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in this Section 4.15
and Section 3.07 hereof and purchases all Notes properly tendered and not
withdrawn under the Change of Control Offer.

Notwithstanding anything to the contrary contained herein, a Change of Control
Offer may be made in advance of a Change of Control, conditional upon the
consummation of such Change of Control, if a definitive agreement is in place
for the Change of Control at the time the Change of Control Offer is made.

Section 4.16 Limitation on Sale and Leaseback Transactions.

The Company will not, and will not permit any of its Restricted Subsidiaries to,
enter into any sale and leaseback transaction; provided that the Company or any
Restricted Subsidiary may enter into a sale and leaseback transaction if:

(1) the Company or such Restricted Subsidiary, as applicable, could have
(a) incurred Indebtedness in an amount equal to the Attributable Debt relating
to such sale and leaseback transaction under the Fixed Charge Coverage Ratio
test in Section 4.09(a) hereof and (b) incurred a Lien to secure such
Indebtedness pursuant to the provisions of Section 4.12 hereof;

(2) the gross cash proceeds of that sale and leaseback transaction are at least
equal to the Fair Market Value, as determined in good faith by the Board of
Directors of the Company and set forth in an Officers’ Certificate delivered to
the Trustee, of the property that is the subject of that sale and leaseback
transaction; and

(3) the transfer of assets in that sale and leaseback transaction is permitted
by, and the Company applies the proceeds of such transaction in compliance with,
Section 4.10 hereof.

Section 4.17 Limitation on Issuances and Sales of Equity Interests in
Wholly-Owned Restricted Subsidiaries.

The Company will not, and will not permit any of its Restricted Subsidiaries to,
transfer, convey, sell, lease or otherwise dispose of any Equity Interests in
any Wholly-Owned Restricted Subsidiary of the Company to any Person (other than
the Company or a Wholly-Owned Subsidiary of the Company), unless:

(1) such transfer, conveyance, sale, lease or other disposition is of all the
Equity Interests in such Wholly-Owned Restricted Subsidiary; and

(2) the Net Proceeds from such transfer, conveyance, sale, lease or other
disposition are, to the extent required, applied in accordance with Section 4.10
hereof.

In addition, the Company will not permit any Wholly-Owned Restricted Subsidiary
of the Company to issue any of its Equity Interests (other than, if necessary,
shares of its Capital Stock constituting directors’ qualifying shares) to any
Person other than to the Company or a Wholly-Owned Restricted Subsidiary of the
Company.

The following transactions will not be subject to the provisions of this
Section 4.17:

(1) the Donohue Sale and the other Permitted Reorganization Transactions; and

 

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(2) the Joint Venture Transactions.

Section 4.18 Payments for Consent.

The Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Notes
unless such consideration is offered to be paid and is paid to all Holders of
the Notes that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or agreement.

Section 4.19 Additional Note Guarantees.

If (a) the Company or any of its Restricted Subsidiaries acquires or creates
another Wholly-Owned Restricted Subsidiary after the date of this Indenture or
(b) any of the Company’s Restricted Subsidiaries that is not a Guarantor
guarantees any Indebtedness under the Term Loan Facility, then that newly
acquired or created Wholly-Owned Restricted Subsidiary or Restricted Subsidiary,
as applicable, will become a Guarantor of the Notes and execute a supplemental
indenture and deliver an Opinion of Counsel and an Officers’ Certificate as to
the authorization, execution, delivery and enforceability of such supplemental
indenture satisfactory to the Trustee within 20 business days of the date on
which it was acquired, created or guaranteed the Term Loan Facility. The form of
such Note Guarantee is attached as Exhibit E hereto.

Section 4.20 Designation of Restricted and Unrestricted Subsidiaries.

The Board of Directors of the Company may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if that designation would not cause a Default;
provided that in no event will the business currently operated by the Issuer be
transferred to or held by an Unrestricted Subsidiary. If a Restricted Subsidiary
is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of
all outstanding Investments owned by the Company and its Restricted Subsidiaries
in the Restricted Subsidiary designated as Unrestricted Subsidiary will be
deemed to be an Investment made as of the time of the designation and will
reduce the amount available for Restricted Payments under Section 4.07 hereof or
under one or more clauses of the definition of Permitted Investments, as
determined by the Company. That designation will only be permitted if the
Investment would be permitted at that time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. The Board of
Directors of the Company may redesignate any Unrestricted Subsidiary to be a
Restricted Subsidiary if that redesignation would not cause a Default.

Any designation of a Subsidiary of the Company, Donohue Corp. or a Subsidiary of
Donohue Corp. as an Unrestricted Subsidiary will be evidenced to the Trustee by
filing with the Trustee a certified copy of a resolution of the Board of
Directors giving effect to such designation and an Officers’ Certificate
certifying that such designation complied with the preceding conditions and was
permitted by Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary
would fail to meet the preceding requirements as an Unrestricted Subsidiary, it
will thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Unrestricted Subsidiary will be deemed to
be incurred by a Restricted Subsidiary of the Company as of such date and, if
such Indebtedness is not permitted to be incurred as of such date under
Section 4.09 hereof, the Company will be in default of such covenant. The Board
of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation will be
deemed to be an incurrence of

 

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Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary, and such designation will only be
permitted if (1) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and (2) no Default or Event of
Default would be in existence following such designation.

Section 4.21 Additional Amounts.

All payments by the Issuer in respect of the notes or any Guarantor under a Note
Guarantee, as the case may be, will be made free and clear of, and without
withholding or deduction for or on account of, any present or future tax, duty,
assessment or other governmental charge of whatever nature, including penalties,
interest and other liabilities related thereto, imposed, levied, collected,
withheld or assessed by or on behalf of any taxing jurisdiction in which the
Issuer or any Guarantor (including successor) is then incorporated or resident
for tax purposes, any taxing jurisdiction from or through which any payment in
respect of the Notes or under a Note Guarantee is made or any political
subdivision thereof or therein (hereafter “Taxes”), unless such withholding or
deduction is required by law. If any such withholding or deduction is required
by law, the Issuer or the relevant Guarantor, as the case may be, will pay such
additional amounts (“Additional Amounts”) as will result in receipt by the
holders of Notes of such amounts as would have been received by them had no such
withholding or deduction (including any deduction or withholding in respect of
payments of Additional Amounts) been required, except that no Additional Amounts
will be payable with respect to a payment made to a Holder or Beneficial Owner
of Notes for or in respect of:

(a) Taxes imposed as a result of any of the following circumstances:

(1) the existence of any present or former connection between such Holder or
Beneficial Owner of Notes and the jurisdiction imposing such tax (including
without limitation, by virtue of the holder or Beneficial Owner carrying on a
business or having a place of business in such jurisdiction), other than merely
holding or ownership of, or receiving payments under such Note or Note Guarantee
or exercising or enforcing any rights thereunder;

(2) if the Notes are held in definitive registered form (“Definitive Registered
Notes”) and the presentation of Definitive Registered Notes (where presentation
is required) for payment had occurred after 30 days after the date of such
payment was due and payable or was provided for, whichever is later, except for
Additional Amounts with respect to taxes that would have been imposed had the
Holder presented the Note for payment within such 30-day period;

(3) the Holder or Beneficial Owner of a Note not dealing at arm’s length, within
the meaning of the Income Tax Act (Canada), with the Issuer or a relevant
Guarantor at the relevant time;

(b) any estate, inheritance, gift, sales, transfer, personal property or similar
tax; or

(c) any Taxes, deduction or withholding imposed by reason of the failure of the
Holder or Beneficial Owner of a Note to comply with certification, information
or other reporting requirements after receiving a reasonable written advance
request from the Issuer or a relevant Guarantor to so comply, if such compliance
is required or imposed by a statute, treaty or regulation or administrative
practice of the taxing jurisdiction as a precondition to exemption from or
reduction in all or part of such Taxes, deduction or withholding, in each case
except where such Holder or Beneficial Owner is not legally able to so comply.

 

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The Issuer or relevant Guarantor will (1) make such withholding or deduction and
(2) remit the full amount deducted or withheld to the relevant authority in
accordance with applicable law. The Issuer or relevant Guarantor will make
reasonable efforts to obtain certified copies of tax receipts evidencing the
payment of any taxes so deducted or withheld from the relevant taxing authority.
The Issuer will furnish to the Holders of the Notes, within 60 days after the
date the payment of any Taxes so deducted or withheld is due pursuant to
applicable law, either certified copies of tax receipts evidencing such payment
or, if such receipts are not obtainable, other evidence of such payments.

In addition, the Issuer and the Guarantors will indemnify and hold harmless each
Holder and, upon written request of any Holder (subject to the exclusions set
forth in clauses (a) through (c) of this Section 4.21 and provided that
reasonable supporting documentation is provided), reimburse such holder for the
amount of (i) any such Taxes levied or imposed as a result of payments made
under or with respect to the Notes (including payments under this clause (i));
and (ii) any Taxes so levied or imposed with respect to any reimbursement under
the foregoing clause (i), so that the net amount received by such holder after
such reimbursement will not be less than the net amount such Holder would have
received if Taxes on such reimbursement had not been levied or imposed. Any
payment pursuant to this paragraph will be an Additional Amount.

At least 30 days prior to each date on which any payment under or with respect
to the Notes is due and payable, if the Issuer or relevant Guarantor will be
obligated to pay Additional Amounts with respect to such payment, the Issuer or
relevant Guarantor will deliver to the trustee an Officers’ Certificate stating
the fact that such Additional Amounts will be payable and the amounts so payable
and will set forth such other information necessary to enable the paying agent
to pay such Additional Amounts to the Holders on the payment date. Whenever in
this Indenture there is mentioned, in any context, the payment of amounts based
upon the principal of, premium, Special Interest, if any, interest or any other
amount payable under or with respect to any Note or Note Guarantee, such mention
will be deemed to include mention of the payment of Additional Amounts to the
extent that, in such context, Additional Amounts are, were or would be payable
in respect thereof.

In addition, the Issuer or relevant Guarantor will pay any stamp, issue,
registration, documentary, value added or other similar taxes and other duties
(including interest and penalties) (“Other Taxes”) with respect to enforcement
of or payments in respect of a Note Guarantee, in respect of the creation,
issue, offering, registration, execution or enforcement of the Notes, or any
documentation with respect thereto and the Issuer and each Guarantor will
indemnify the holders for any Other Taxes paid by such Holders.

The foregoing obligations shall survive any termination, defeasance or
satisfaction and discharge of the Notes.

Section 4.22 Secured Notes Exchange Offer to Exchange Notes for Secured Notes.

On April 30, 2009, if the Issuer’s audited financial statements for the fiscal
year ended December 31, 2008 establish that the Issuer (and the Guarantors)
would be permitted to issue to the Holders of Notes in excess of $50.0 million
of additional Secured Notes under the agreements governing all Indebtedness of
the Issuer and the Guarantors, as the same are in effect on the date of this
Indenture, the Issuer and the Guarantors will commence an offer (the “Secured
Notes Exchange Offer”) to the Holders of all Notes to exchange their Notes for
an equal principal amount of additional (and freely tradable) Secured Notes
(having the same guarantees, terms, covenants, interest rate and maturity as the
Secured Notes issued on or near the date of this Indenture), which Secured Notes
Exchange Offer will provide for accrued interest thereon; provided that the
aggregate principal amount of Secured Notes to be offered in such Secured Notes
Exchange Offer will equal the aggregate principal amount of additional Secured
Notes permitted to be issued on the date of commencement of the Secured Notes
Exchange Offer pursuant to the agreements

 

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governing all Indebtedness of the Issuer and the Guarantors, as the same are in
effect on the date of this Indenture (rounded down to the nearest $1.0 million).
The Issuer and the Guarantors will, within 30 business days of the commencement
of such Secured Notes Exchange Offer, or longer, if required by the applicable
securities laws, exchange tendered Notes for such Secured Notes; provided that,
if the aggregate principal amount of Notes tendered in the Secured Notes
Exchange Offer exceeds the aggregate principal amount of Secured Notes being
offered in the Secured Notes Exchange Offer, the Trustee will select the Notes
to be exchanged on a pro rata basis; provided further that only Notes in a
denomination of $2,000 and integral multiples of $1,000 in excess thereof will
be accepted for exchange and each Secured Note to be issued in the Secured Notes
Exchange Offer will be in a denomination of $2,000 and integral multiples of
$1,000 in excess thereof.

The Issuer will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with the Secured Notes
Exchange Offer. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.22, the Issuer will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 4.22 by virtue of
such compliance.

Section 4.23 Augusta Newsprint

In addition, so long as (a) Donohue Corp. is a Restricted Subsidiary of the
Company and (b) Augusta Newsprint Company, a Georgia corporation (“Augusta
Newsprint”), is an Unrestricted Subsidiary of Donohue Corp., (1) the Company
will not permit Augusta Newsprint to incur any Indebtedness other than
(i) Indebtedness that would be permitted to be incurred by Augusta Newsprint
under clauses (3), (4), (7), (8), (9) (10), (11), (13)-(16), (18) or (19) of
Section 4.09(b) hereof if Augusta Newsprint were a Restricted Subsidiary of the
Company and (ii) Indebtedness in an aggregate amount not to exceed at any time
$100.0 million, the proceeds of which shall be used to finance the acquisition
of the entire interest of the “Thomson Partner” (as defined in the Augusta
Newsprint partnership agreement) in Augusta Newsprint (such Indebtedness, the
“Thomson Partner Financing”); provided that such Indebtedness is not recourse to
the Company or any of its Restricted Subsidiaries; and (2) the Company will not
permit Augusta Newsprint to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind securing Indebtedness, Attributable Debt or
trade payables on any asset now or hereafter acquired, other than (i) Liens that
would constitute Permitted Liens under clauses (3)-(11), (13), (15), (16), (17),
(18), (19), (20), (22), (23), (24), (25), (26), (27) or (30) of the definition
of “Permitted Liens” if Augusta Newsprint were a Restricted Subsidiary of the
Company and (ii) Liens securing the Thomson Partner Financing; provided, any
such Lien pursuant to this clause (ii) shall encumber only the assets of Augusta
Newsprint.

ARTICLE 5

SUCCESSORS

Section 5.01 Merger, Consolidation, or Sale of Assets.

The Company and the Issuer shall not, directly or indirectly: (i) consolidate,
merge or amalgamate with or into another Person (whether or not the Company or
the Issuer is the surviving corporation); or (2) sell, assign, transfer, convey
or otherwise dispose of all or substantially all of the properties or assets of
the Company and its Restricted Subsidiaries taken as a whole, in one or more
related transactions, to another Person, unless:

(1) either:

 

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(A) the Company or the Issuer is the surviving corporation; or

(B) the Person formed by or surviving any such consolidation, merger or
amalgamation (if other than the Company or the Issuer) or to which such sale,
assignment, transfer, conveyance or other disposition has been made is a
organized or existing under the laws of Canada, or of any province of Canada,
the United States, any state of the United States or the District of Columbia
and is either (i) a corporation or (ii) a partnership or limited liability
company and is (or has previously been) joined by a corporation as a co-issuer
of the Notes;

(2) the Person formed by or surviving any such consolidation, merger or
amalgamation (if other than the Company or the Issuer) or the Person to which
such sale, assignment, transfer, conveyance or other disposition has been made
assumes all the obligations of the Company or the Issuer under the Notes, this
Indenture and the Registration Rights Agreement pursuant to a supplemental
indenture;

(3) immediately after such transaction, no Default or Event of Default exists;

(4) the Company, the Issuer or the Person formed by or surviving any such
consolidation, merger or amalgamation (if other than the Company or the Issuer),
or to which such sale, assignment, transfer, conveyance or other disposition has
been made would, on the date of such transaction after giving pro forma effect
thereto and any related financing transactions as if the same had occurred at
the beginning of the applicable four-quarter period, (i) be permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 4.09(a) hereof or (ii) have had a Fixed Charge
Coverage Ratio equal to or greater than the Fixed Charge Coverage Ratio of the
Company immediately prior to such transaction; and

(5) an Opinion of Counsel and Officers’ Certificate are delivered to the
Trustee.

In addition, each of the Company and the Issuer will not, directly or
indirectly, lease all or substantially all of its properties or assets of either
the Issuer or the Company and, in each case, their respective Restricted
Subsidiaries taken as a whole, in one or more related transactions, to any other
Person.

This Section 5.01 will not apply to:

(1) a merger, amalgamation or consolidation of the Company or the Issuer with an
Affiliate solely for the purpose of (a) reorganizing the Company or the Issuer
as a different type of entity; provided that in the case where the surviving
entity in such merger, amalgamation or consolidation is not a corporation, a
corporation becomes (or has previously become) a co-issuer of the Notes, or
(b) reincorporating or reorganizing the Company or the Issuer in another
jurisdiction, in each case in a transaction that complies with Section 5.01(1)
and (2) hereof; or

(2) any consolidation, merger or amalgamation, or any sale, assignment,
transfer, conveyance, lease or other disposition of assets between or among the
Company and its Restricted Subsidiaries.

 

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Section 5.02 Successor Corporation Substituted.

Upon any consolidation, amalgamation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the properties or assets of the Company or the Issuer in a transaction that is
subject to, and that complies with the provisions of, Section 5.01 hereof, the
successor Person formed by such consolidation or amalgamation or into or with
which the Company or the Issuer is merged or to which such sale, assignment,
transfer, lease, conveyance or other disposition is made shall succeed to, and
be substituted for (so that from and after the date of such consolidation,
amalgamation, merger, sale, assignment, transfer, lease, conveyance or other
disposition, the provisions of this Indenture referring to the “Company” or “the
Issuer” shall refer instead to the successor Person and not to the Company or
the Issuer), and may exercise every right and power of the Company or the Issuer
under this Indenture with the same effect as if such successor Person had been
named as the Company or the Issuer herein; provided, however, that the
predecessor Company or the Issuer shall not be relieved from the obligation to
pay the principal of and interest on the Notes except in the case of a sale of
all of the Company’s or the Issuer’s assets in a transaction that is subject to,
and that complies with the provisions of, Section 5.01 hereof.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01 Events of Default.

Each of the following is an “Event of Default”:

(1) default for 30 days in the payment when due of interest on, or Special
Interest or Additional Amounts, if any, with respect to, the Notes;

(2) default in the payment when due (at maturity, upon redemption or otherwise)
of the principal of, or premium, if any, on, the Notes;

(3) failure by the Company or any of its Restricted Subsidiaries for 30 days
after notice to the Issuer by the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding voting as a single
class to comply with the provisions of Sections 4.10, 4.15 or 5.01 hereof;

(4) failure by the Company or any of its Restricted Subsidiaries for 60 days
after notice to the Issuer by the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding voting as a single
class to comply with any of the other agreements in this Indenture;

(5) default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Restricted Subsidiaries),
whether such Indebtedness or Guarantee now exists, or is created after the date
of this Indenture, if that default:

(A) is caused by a failure to pay principal of, or interest or premium, if any,
on, such Indebtedness prior to the expiration of the grace period provided in
such Indebtedness on the date of such default (a “Payment Default”); or

 

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(B) results in the acceleration of such Indebtedness prior to its express
maturity,

and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$50.0 million or more;

(6) failure by the Company, any Restricted Subsidiary of the Company or any
group of Restricted Subsidiaries of the Company to pay final and non-appealable
judgments entered by a court or courts of competent jurisdiction aggregating in
excess of $25.0 million (net of any amounts covered by insurance or pursuant to
which the Company is indemnified to the extent that the third party under such
agreement acknowledges its obligations thereunder), which judgments are not
paid, discharged or stayed for a period of 60 days and, in the event such
judgment is covered by insurance, an enforcement proceeding has been commenced
by any creditor upon such judgment or decree that is not promptly stayed;

(7) the Company, the Issuer or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries of the Company
that, taken together, would constitute a Significant Subsidiary pursuant to or
within the meaning of Bankruptcy Law:

(A) commences a voluntary case, application, petition, compromise, voluntary
arrangement, scheme of arrangement, moratorium, liquidation, administration, or
receivership or other proceeding,

(B) consents to the entry of an order for relief against it in an involuntary
case, application, petition or other proceeding,

(C) consents to the appointment of a custodian, receiver, receiver-manager,
administrative receiver, administrator or liquidator of it or for all or
substantially all of its property,

(D) makes a general assignment for the benefit of its creditors, begins
negotiations with any creditor for the rescheduling or restructuring of any of
its debts, a moratorium is declared or instituted, or any step is taken with a
view to a moratorium or composition or similar arrangement with its creditors,

(E) generally is not paying its debts as they become due; or is unable or admits
in writing its inability, to pay its debts as such debts become due or is
otherwise insolvent or by reason of actual or anticipated financial
difficulties, suspends making payments on any of its debts, or announces an
intention to do so, or its shareholders, directors or other officers request the
appointment of, or give notice of their intention to appoint, a receiver,
receiver-manager, administrative receiver, administrator, liquidator or other
officer having similar powers over its property, or

(F) is deemed for the purposes of any applicable law to be unable to pay its
debts as they fall due, or is insolvent.

(8) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:

 

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(A) is for relief against the Company, the Issuer or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries of the Company that, taken together, would constitute a Significant
Subsidiary in an involuntary case, application, petition or other proceeding;

(B) appoints a custodian, receiver, receiver-manager, administrative receiver,
administrator, liquidator, or other similar officer of the Company, the Issuer
or any of its Restricted Subsidiaries that is a Significant Subsidiary or any
group of Restricted Subsidiaries of the Company that, taken together, would
constitute a Significant Subsidiary or for all or substantially all of the
property of the Company, the Issuer or any of its Restricted Subsidiaries that
is a Significant Subsidiary or any group of Restricted Subsidiaries of the
Company that, taken together, would constitute a Significant Subsidiary; or

(C) orders the liquidation, administration or receivership of the Company, the
Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or
any group of Restricted Subsidiaries of the Company that, taken together, would
constitute a Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 consecutive days
(other than in the case of any UK Restricted Subsidiaries where such order is
contested in good faith and with due diligence and discharged or struck out
within 21 days); or

(9) except as permitted by this Indenture, any Note Guarantee is held in any
judicial proceeding to be unenforceable or invalid or ceases for any reason to
be in full force and effect, or any Guarantor, or any Person acting on behalf of
any Guarantor, denies or disaffirms its obligations under its Note Guarantee.

Section 6.02 Acceleration.

In the case of an Event of Default specified in clause (7) or (8) of
Section 6.01 hereof, with respect to the Company, the Issuer, any Restricted
Subsidiary of the Company that is a Significant Subsidiary or any group of
Restricted Subsidiaries of the Company that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable
immediately without further action or notice. If any other Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes may declare all the
Notes to be due and payable immediately.

Upon any such declaration, the Notes shall become due and payable immediately.

The Holders of a majority in aggregate principal amount of the then outstanding
Notes by written notice to the Trustee may, on behalf of all of the Holders,
rescind an acceleration and its consequences, if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium or Special Interest, if
any, that has become due solely because of the acceleration) have been cured or
waived.

Section 6.03 Other Remedies.

If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium and Special
Interest, if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.

 

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The Trustee may maintain a proceeding even if it does not possess any of the
Notes or does not produce any of them in the proceeding. A delay or omission by
the Trustee or any Holder of a Note in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.

Section 6.04 Waiver of Past Defaults.

Holders of not less than a majority in aggregate principal amount of the then
outstanding Notes by notice to the Trustee may on behalf of the Holders of all
of the Notes waive an existing Default or Event of Default and its consequences
hereunder, except a continuing Default or Event of Default in the payment of the
principal of, premium and Special Interest, if any, or interest on, the Notes
(including in connection with an offer to purchase); provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

Section 6.05 Control by Majority.

Holders of a majority in aggregate principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.

Section 6.06 Limitation on Suits.

A Holder may pursue a remedy with respect to this Indenture or the Notes only
if:

(1) such Holder gives to the Trustee written notice that an Event of Default is
continuing;

(2) Holders of at least 25% in aggregate principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;

(3) such Holder or Holders offer and, if requested, provide to the Trustee
security or indemnity satisfactory to the Trustee against any loss, liability or
expense;

(4) the Trustee does not comply with the request within 60 days after receipt of
the request and the offer of security or indemnity; and

(5) during such 60-day period, Holders of a majority in aggregate principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with such request.

A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.

 

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Section 6.07 Rights of Holders of Notes to Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any Holder
of a Note to receive payment of principal, premium and Special Interest, if any,
and interest on the Note, on or after the respective due dates expressed in the
Note (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder.

Section 6.08 Collection Suit by Trustee.

If an Event of Default specified in Section 6.01(1) or (2) hereof occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company or the Issuer for the whole
amount of principal of, premium and Special Interest, if any, and interest
remaining unpaid on, the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.

Section 6.09 Trustee May File Proofs of Claim.

The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
or the Issuer (or any other obligor upon the Notes), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.

Section 6.10 Priorities.

If the Trustee collects any money or property pursuant to this Article 6, it
shall pay out the money or property in the following order:

First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expenses and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;

 

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Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Special Interest, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Notes for principal, premium and Special Interest, if any and interest,
respectively; and

Third: to the Company or the Issuer or to such party as a court of competent
jurisdiction shall direct.

The Trustee may fix a record date and payment date for any payment to Holders of
Notes pursuant to this Section 6.10.

Section 6.11 Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or
in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant
to Section 6.07 hereof, or a suit by Holders of more than 10% in aggregate
principal amount of the then outstanding Notes.

ARTICLE 7

TRUSTEE

Section 7.01 Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the Trustee will
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own
affairs.

(b) Except during the continuance of an Event of Default:

(1) the duties of the Trustee will be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties that
are specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and

(2) in the absence of bad faith on its part, the Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the form required by this Indenture. However, the Trustee will examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture. Delivery of reports, information and documents
to the Trustee is for informational purposes only and the Trustee’s receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company’s compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers’ Certificates).

(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

 

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(1) this paragraph does not limit the effect of paragraph (b) of this
Section 7.01;

(2) the Trustee will not be liable for any error of judgment made in good faith
by a Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and

(3) the Trustee will not be liable with respect to any action it takes or omits
to take in good faith in accordance with a direction received by it pursuant to
Section 6.05 hereof.

(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section 7.01.

(e) No provision of this Indenture will require the Trustee to expend or risk
its own funds or incur any liability. The Trustee will be under no obligation to
exercise any of its rights and powers under this Indenture at the request of any
Holders, unless such Holder has offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.

(f) The Trustee will not be liable for interest on any money received by it
except as the Trustee may agree in writing with the Issuer. Money held in trust
by the Trustee need not be segregated from other funds except to the extent
required by law.

Section 7.02 Rights of Trustee.

(a) The Trustee may conclusively rely upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel or both. The Trustee will not be liable for
any action it takes or omits to take in good faith in reliance on such Officers’
Certificate or Opinion of Counsel. The Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel will be full and
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.

(c) The Trustee may act through its attorneys and agents and will not be
responsible for the misconduct or negligence of any agent appointed with due
care.

(d) The Trustee will not be liable for any action it takes or omits to take in
good faith that it believes to be authorized or within the rights or powers
conferred upon it by this Indenture.

(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Issuer will be sufficient if signed by an
Officer of the Issuer.

(f) The Trustee will be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of the
Holders unless such Holders have offered to the Trustee indemnity or security
satisfactory to the Trustee against the losses, liabilities and expenses that
might be incurred by it in compliance with such request or direction.

 

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Section 7.03 Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company, the Issuer or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee (if this Indenture has been qualified under
the TIA) or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.

Section 7.04 Trustee’s Disclaimer.

The Trustee will not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be accountable
for the Issuer’s use of the proceeds from the Notes or any money paid to the
Issuer or upon the Issuer’s direction under any provision of this Indenture, it
will not be responsible for the use or application of any money received by any
Paying Agent other than the Trustee, and it will not be responsible for any
statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.

Section 7.05 Notice of Defaults.

If a Default or Event of Default occurs and is continuing and if it is known to
the Trustee, the Trustee will send to Holders of Notes a notice of the Default
or Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment of principal of, premium or Special
Interest, if any, or interest on, any Note, the Trustee may withhold the notice
if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of the
Notes.

Section 7.06 Reports by Trustee to Holders of the Notes.

(a) Within 60 days after each March 15 beginning with the March 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
will send to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA § 313(a) (but if no event described in TIA § 313(a)
has occurred within the twelve months preceding the reporting date, no report
need be transmitted). The Trustee also will comply with TIA § 313(b)(2). The
Trustee will also transmit by mail all reports as required by TIA § 313(c).

(b) A copy of each report at the time of its sending to the Holders of Notes
will be mailed by the Trustee to the Issuer and filed by the Trustee with the
SEC and each stock exchange on which the Notes are listed in accordance with TIA
§ 313(d). The Issuer will promptly notify the Trustee when the Notes are listed
on any stock exchange.

Section 7.07 Compensation and Indemnity.

(a) The Issuer will pay to the Trustee from time to time reasonable compensation
for its acceptance of this Indenture and services hereunder. The Trustee’s
compensation will not be limited by any law on compensation of a trustee of an
express trust. The Issuer will reimburse the Trustee promptly upon request for
all reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses will include the
reasonable compensation, disbursements and expenses of the Trustee’s agents and
counsel.

 

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(b) The Issuer and the Guarantors will indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the Issuer
and the Guarantors (including this Section 7.07) and defending itself against
any claim (whether asserted by the Issuer, the Guarantors, any Holder or any
other Person) or liability in connection with the exercise or performance of any
of its powers or duties hereunder, except to the extent any such loss, liability
or expense may be attributable to its negligence or bad faith. The Trustee will
notify the Issuer promptly of any claim for which it may seek indemnity. Failure
by the Trustee to so notify the Issuer will not relieve the Issuer or any of the
Guarantors of its/their obligations hereunder. The Issuer or such Guarantor will
defend the claim and the Trustee will cooperate in the defense. The Trustee may
have separate counsel and the Issuer will pay the reasonable fees and expenses
of such counsel. Neither the Issuer nor any Guarantor need pay for any
settlement made without its consent, which consent will not be unreasonably
withheld.

(c) The obligations of the Issuer and the Guarantors under this Section 7.07
will survive the satisfaction and discharge of this Indenture.

(d) To secure the Issuer’s and the Guarantors’ payment obligations in this
Section 7.07, the Trustee will have a Lien prior to the Lien (if any) securing
the Notes on all money or property held or collected by the Trustee, except that
held in trust to pay principal and interest on particular Notes. Such Lien will
survive the satisfaction and discharge of this Indenture.

(e) When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(7) or (8) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

(f) The Trustee will comply with the provisions of TIA § 313(b)(2) to the extent
applicable.

Section 7.08 Replacement of Trustee.

(a) A resignation or removal of the Trustee and appointment of a successor
Trustee will become effective only upon the successor Trustee’s acceptance of
appointment as provided in this Section 7.08.

(b) The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Issuer. The Holders of a majority in
aggregate principal amount of the then outstanding Notes may remove the Trustee
by so notifying the Trustee and the Issuer in writing. The Issuer may remove the
Trustee if:

(1) the Trustee fails to comply with Section 7.10 hereof;

(2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law;

(3) a custodian or public officer takes charge of the Trustee or its property;
or

(4) the Trustee becomes incapable of acting.

(c) If the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Issuer will promptly appoint a successor Trustee.
Within one year after the successor Trustee takes office, the Holders of a
majority in aggregate principal amount of the then outstanding Notes may appoint
a successor Trustee to replace the successor Trustee appointed by the Issuer.

 

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(d) If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer, or the
Holders of at least 10% in aggregate principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

(e) If the Trustee, after written request by any Holder who has been a Holder
for at least six months, fails to comply with Section 7.10 hereof, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.

(f) A successor Trustee will deliver a written acceptance of its appointment to
the retiring Trustee and to the Issuer. Thereupon, the resignation or removal of
the retiring Trustee will become effective, and the successor Trustee will have
all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee will mail a notice of its succession to Holders. The retiring
Trustee will promptly transfer all property held by it as Trustee to the
successor Trustee; provided all sums owing to the Trustee hereunder have been
paid and subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Issuer’s obligations under Section 7.07 hereof will continue for the benefit of
the retiring Trustee.

Section 7.09 Successor Trustee by Merger, etc.

If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act will be the successor Trustee.

Section 7.10 Eligibility; Disqualification.

There will at all times be a Trustee hereunder that is a corporation organized
and doing business under the laws of the United States of America or of any
state thereof that is authorized under such laws to exercise corporate trustee
power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100.0
million as set forth in its most recent published annual report of condition.

This Indenture will always have a Trustee who satisfies the requirements of TIA
§ 310(a)(1), (2) and (5). The Trustee is subject to TIA § 310(b).

Section 7.11 Preferential Collection of Claims Against the Issuer.

The Trustee is subject to TIA § 311(a), excluding any creditor relationship
listed in TIA § 311(b). A Trustee who has resigned or been removed shall be
subject to TIA § 311(a) to the extent indicated therein.

 

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ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.

The Issuer may at any time, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers’ Certificate, elect to have either
Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance
with the conditions set forth below in this Article 8.

Section 8.02 Legal Defeasance and Discharge.

Upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to
this Section 8.02, the Company and each of the Guarantors will, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its/their obligations with respect to all outstanding
Notes (including the Note Guarantees) on the date the conditions set forth below
are satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal
Defeasance means that the Issuer and the Guarantors will be deemed to have paid
and discharged the entire Indebtedness represented by the outstanding Notes
(including the Note Guarantees), which will thereafter be deemed to be
“outstanding” only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in clauses (1) and (2) below, and to have
satisfied all its/their other obligations under such Notes, the Note Guarantees
and this Indenture (and the Trustee, on demand of and at the expense of the
Issuer, shall execute proper instruments acknowledging the same), except for the
following provisions which will survive until otherwise terminated or discharged
hereunder:

(1) the rights of Holders of outstanding Notes to receive payments in respect of
the principal of, or interest or premium and Special Interest, if any, on, such
Notes when such payments are due from the trust referred to in Section 8.04
hereof;

(2) the Issuer’s obligations with respect to such Notes under Article 2 and
Section 4.02 hereof;

(3) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Issuer’s and the Guarantors’ obligations in connection therewith; and

(4) this Article 8.

Subject to compliance with this Article 8, the Issuer may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.

Section 8.03 Covenant Defeasance.

Upon the Issuer’s exercise under Section 8.01 hereof of the option applicable to
this Section 8.03, the Issuer and each of the Guarantors will, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from each of their/its obligations under the covenants contained in Sections
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16 hereof and clause (4) of
Section 5.01 hereof with respect to the outstanding Notes on and after the date
the conditions set forth in Section 8.04 hereof are satisfied (hereinafter,
“Covenant Defeasance”), and the Notes will thereafter be deemed not
“outstanding” for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but will continue to be deemed “outstanding” for all other purposes
hereunder (it being understood that such Notes will not be deemed outstanding
for accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Notes and

 

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Note Guarantees, the Issuer and the Guarantors may omit to comply with and will
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply will not constitute a Default or an Event of Default under
Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes and Note Guarantees will be unaffected thereby. In
addition, upon the Issuer’s exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, subject to the satisfaction of the conditions
set forth in Section 8.04 hereof, Sections 6.01(3) through 6.01(5) hereof will
not constitute Events of Default.

Section 8.04 Conditions to Legal or Covenant Defeasance.

In order to exercise either Legal Defeasance or Covenant Defeasance under either
Section 8.02 or 8.03 hereof:

(1) the Issuer must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized investment bank, appraisal firm, or firm
of independent public accountants, to pay the principal of, premium and Special
Interest, if any, and interest on, the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be, and
the Issuer must specify whether the Notes are being defeased to such stated date
for payment or to a particular redemption date;

(2) in the case of an election under Section 8.02 hereof, the Issuer must
deliver to the Trustee an Opinion of Counsel confirming that:

(A) the Issuer has received from, or there has been published by, the Internal
Revenue Service a ruling; or

(B) since the date of this Indenture, there has been a change in the applicable
federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;

(3) in the case of an election under Section 8.03 hereof, the Issuer must
deliver to the Trustee an Opinion of Counsel confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;

(4) no Default or Event of Default shall have occurred and be continuing on the
date of such deposit (other than a Default or Event of Default resulting from
the borrowing of funds to be applied to such deposit) and the deposit will not
result in a breach or violation of, or constitute a default under, any other
instrument to which the Issuer or any Guarantor is a party or by which the
Issuer or any Guarantor is bound;

 

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(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Issuer or any of its
Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is
bound;

(6) the Issuer must deliver to the Trustee an Officers’ Certificate stating that
the deposit was not made by the Issuer with the intent of preferring the Holders
of Notes over the other creditors of the Issuer with the intent of defeating,
hindering, delaying or defrauding any creditors of the Issuer or others; and

(7) the Issuer must deliver to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.

Section 8.05 Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.

Subject to Section 8.06 hereof, all money and non-callable Government Securities
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.05, the “Trustee”) pursuant
to Section 8.04 hereof in respect of the outstanding Notes will be held in trust
and applied by the Trustee, in accordance with the provisions of such Notes and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as Paying Agent) as the Trustee may determine, to
the Holders of such Notes of all sums due and to become due thereon in respect
of principal, premium and Special Interest, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.

The Issuer will pay and indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

Notwithstanding anything in this Article 8 to the contrary, the Trustee will
deliver or pay to the Issuer from time to time upon the request of the Issuer
any money or non-callable Government Securities held by it as provided in
Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under
Section 8.04(1) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

Section 8.06 Repayment to Issuer.

Subject to applicable law, any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of the principal
of, premium or Special Interest, if any, or interest on, any Note and remaining
unclaimed for two years after such principal, premium or Special Interest, if
any, or interest has become due and payable shall be paid to the Issuer on its
request or (if then held by the Issuer) will be discharged from such trust; and
the Holder of such Note will thereafter be permitted to look only to the Issuer
for payment thereof, and all liability and other obligations of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Issuer as trustee thereof, will thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuer cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which will not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Issuer.

 

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Section 8.07 Reinstatement.

If the Trustee or Paying Agent is unable to apply any U.S. dollars or
non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuer’s and the Guarantors’ obligations under this
Indenture and the Notes and the Note Guarantees will be revived and reinstated
as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if the Issuer makes any payment of principal of, premium or
Special Interest, if any, or interest on, any Note following the reinstatement
of its obligations, the Issuer will be subrogated to the rights of the Holders
of such Notes to receive such payment from the money held by the Trustee or
Paying Agent.

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders of Notes.

Notwithstanding Section 9.02 of this Indenture, the Issuer, the Guarantors and
the Trustee may amend or supplement this Indenture or the Notes or the Note
Guarantees without the consent of any Holder of Note:

(1) to cure any ambiguity, defect or inconsistency;

(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;

(3) to provide for the assumption of the Issuer’s or a Guarantor’s obligations
to the Holders of the Notes and Note Guarantees by a successor to the Issuer or
such Guarantor pursuant to Article 5 or Article 10 hereof;

(4) to make any change that would provide any additional rights or benefits to
the Holders of the Notes or that does not adversely affect the legal rights
hereunder of any Holder;

(5) to comply with requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the TIA;

(6) to conform the text of this Indenture or the Notes to any provision of the
“Description of Notes” section of the Issuer’s Offering Circular dated March 26,
2008, relating to the initial offering of the Notes, to the extent that such
provision in that “Description of Notes” was intended to be a verbatim
recitation of a provision of this Indenture, the Note Guarantees or the Notes
which intent shall be evidenced by an Officers’ Certificate of the Issuer to
that effect;

(7) to provide for the issuance of Additional Notes in accordance with the
limitations set forth in this Indenture as of the date hereof;

(8) to allow any Guarantor to execute a supplemental indenture and/or a Note
Guarantee with respect to the Notes; or

 

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(9) to comply with the rules of any applicable securities depository.

Upon the request of the Issuer accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee will join with the Issuer and the Guarantors in
the execution of any amended or supplemental indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee will not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.

Section 9.02 With Consent of Holders of Notes.

Except as provided below in this Section 9.02, the Issuer and the Trustee may
amend or supplement this Indenture (including, without limitation, Section 3.07,
4.10 and 4.15 hereof) and the Notes and the Note Guarantees with the consent of
the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes (including, without limitation, Additional Notes, if any)
voting as a single class (including, without limitation, consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium or Special Interest, if any, or interest on, the Notes,
except a payment default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture or the Notes or the Note
Guarantees may be waived with the consent of the Holders of a majority in
aggregate principal amount of the then outstanding Notes (including, without
limitation, Additional Notes, if any) voting as a single class (including,
without limitation, consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes).

Upon the request of the Issuer accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee will
join with the Company and the Guarantors in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture directly
affects the Trustee’s own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but will not be
obligated to, enter into such amended or supplemental Indenture.

It is not be necessary for the consent of the Holders of Notes under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it is sufficient if such consent approves the
substance thereof.

After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Issuer will mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuer to mail such notice, or any defect therein, will not, however, in any
way impair or affect the validity of any such amended or supplemental indenture
or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority
in aggregate principal amount of the Notes then outstanding voting as a single
class may waive compliance in a particular instance by the Issuer with any
provision of this Indenture or the Notes or the Note Guarantees. However,
without the consent of each Holder affected, an amendment, supplement or waiver
under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):

(1) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;

 

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(2) reduce the principal of or change the fixed maturity of any Note or alter or
waive any of the provisions with respect to the redemption of the Notes (except
as provided above with respect to Sections 3.07, 4.10 and 4.15 hereof);

(3) reduce the rate of or change the time for payment of interest, including
default interest, on any Note;

(4) waive a Default or Event of Default in the payment of principal of, or
premium or Special Interest, if any, or interest on, the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes and a waiver of the
payment default that resulted from such acceleration);

(5) make any Note payable in money other than that stated in the Notes;

(6) make any change in the provisions of this Indenture relating to waivers of
past Defaults or the rights of Holders of Notes to receive payments of principal
of, or interest or premium or Special Interest, if any, on, the Notes;

(7) waive a redemption payment with respect to any Note (other than a payment
required by Sections 3.07, 4.10 or 4.15 hereof);

(8) release any Guarantor from any of its obligations under its Note Guarantee
or this Indenture, except in accordance with the terms of this Indenture; or

(9) make any change in the preceding amendment and waiver provisions.

Section 9.03 Compliance with Trust Indenture Act.

Every amendment or supplement to this Indenture or the Notes will be set forth
in a amended or supplemental indenture that complies with the TIA as then in
effect.

Section 9.04 Revocation and Effect of Consents.

Until an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder’s Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.

Section 9.05 Notation on or Exchange of Notes.

The Trustee may place an appropriate notation about an amendment, supplement or
waiver on any Note thereafter authenticated. The Issuer in exchange for all
Notes may issue and the Trustee shall, upon receipt of an Authentication Order,
authenticate new Notes that reflect the amendment, supplement or waiver.

Failure to make the appropriate notation or issue a new Note will not affect the
validity and effect of such amendment, supplement or waiver.

 

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Section 9.06 Trustee to Sign Amendments, etc.

The Trustee will sign any amended or supplemental indenture authorized pursuant
to this Article 9 if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. The Issuer may not
sign an amended or supplemental indenture until the Board of Directors of the
Issuer approves it. In executing any amended or supplemental indenture, the
Trustee will be entitled to receive and (subject to Section 7.01 hereof) will be
fully protected in relying upon, in addition to the documents required by
Section 12.04 hereof, an Officers’ Certificate and an Opinion of Counsel stating
that the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.

ARTICLE 10

NOTE GUARANTEES

Section 10.01 Guarantee.

(a) Subject to this Article 10 and, in respect to those Guarantors created and
governed by The Company’s Act (Québec), to the maximum extent permitted by the
limitations set forth under s. 123.66 of The Companies Act (Québec), each of the
Guarantors hereby, jointly and severally, unconditionally guarantees to each
Holder of a Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
of this Indenture, the Notes or the obligations of the Issuer hereunder or
thereunder, that:

(1) the principal of, premium and Special Interest, if any, and interest on, the
Notes will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of
and interest on the Notes, if any, if lawful, and all other obligations of the
Issuer to the Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and

(2) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, that same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.

Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors will be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.

(b) The Guarantors hereby agree that their obligations hereunder are
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Issuer, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Issuer, any right to require a
proceeding first against the Issuer, protest, notice and all demands whatsoever
and covenant that this Note Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.

(c) If any Holder or the Trustee is required by any court or otherwise to return
to the Issuer, the Guarantors or any custodian, trustee, liquidator or other
similar official acting in relation to either the Company or the Guarantors, any
amount paid by either to the Trustee or such Holder, this Note Guarantee, to the
extent theretofore discharged, will be reinstated in full force and effect.

 

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(d) Each Guarantor agrees that it will not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (1) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (2) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) will forthwith become due and payable by the Guarantors for
the purpose of this Note Guarantee. The Guarantors will have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Note Guarantee.

Section 10.02 Limitation on Guarantor Liability.

Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms
that it is the intention of all such parties that the Note Guarantee of such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will be limited to the maximum amount that will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 10, result in the obligations of such Guarantor
under its Note Guarantee not constituting a fraudulent transfer or conveyance.

Section 10.03 Execution and Delivery of Note Guarantee.

To evidence its Note Guarantee set forth in Section 10.01 hereof, each Guarantor
hereby agrees that a notation of such Note Guarantee substantially in the form
attached as Exhibit E hereto will be endorsed by an Officer of such Guarantor on
each Note authenticated and delivered by the Trustee and that this Indenture
will be executed on behalf of such Guarantor by one of its Officers.

Each Guarantor hereby agrees that its Note Guarantee set forth in Section 10.01
hereof will remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Note Guarantee.

If an Officer whose signature is on this Indenture or on the Note Guarantee no
longer holds that office at the time the Trustee authenticates the Note on which
a Note Guarantee is endorsed, the Note Guarantee will be valid nevertheless.

The delivery of any Note by the Trustee, after the authentication thereof
hereunder, will constitute due delivery of the Note Guarantee set forth in this
Indenture on behalf of the Guarantors.

In the event that the Company or any of its Restricted Subsidiaries creates or
acquires any Wholly-Owned Restricted Subsidiary after the date of this Indenture
or if any of the Company’s Restricted Subsidiaries that is not a Guarantor
guarantees any Indebtedness under the Term Loan Facility, if required by
Section 4.19 hereof, the Company will cause such Wholly-Owned Restricted
Subsidiary or Restricted Subsidiary, as applicable, to comply with the
provisions of Section 4.19 hereof and this Article 10, to the extent applicable.

 

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Section 10.04 Guarantors May Consolidate, etc., on Certain Terms.

Except as otherwise provided in Section 10.05 hereof, no Guarantor (other than
the Company) may sell or otherwise dispose of all or substantially all of its
assets to, or consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person) another Person, other than the Issuer or
another Guarantor, unless:

(1) immediately after giving effect to such transaction, no Default or Event of
Default exists; and

(2) either:

(a) subject to Section 10.05 hereof, the Person acquiring the property in any
such sale or disposition or the Person formed by or surviving any such
consolidation, amalgamation or merger unconditionally assumes all the
obligations of that Guarantor under this Indenture, its Note Guarantee and the
Registration Rights Agreement on the terms set forth herein or therein, pursuant
to a supplemental indenture in form and substance satisfactory to the Trustee;
or

(b) the Net Proceeds of such sale or other disposition are applied in accordance
with the applicable provisions of this Indenture, including without limitation,
Section 4.10 hereof;

provided that this paragraph will not apply to the Donohue Sale, the other
Permitted Reorganization Transactions or the Joint Venture Transactions.

In case of any such consolidation, amalgamation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
Note Guarantee endorsed upon the Notes and the due and punctual performance of
all of the covenants and conditions of this Indenture to be performed by the
Guarantor, such successor Person will succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a Guarantor.
Such successor Person thereupon may cause to be signed any or all of the Note
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Issuer and delivered to the
Trustee. All the Note Guarantees so issued will in all respects have the same
legal rank and benefit under this Indenture as the Note Guarantees theretofore
and thereafter issued in accordance with the terms of this Indenture as though
all of such Note Guarantees had been issued at the date of the execution hereof.

Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses 2(a)
and (b) above, nothing contained in this Indenture or in any of the Notes will
prevent any consolidation, amalgamation or merger of a Guarantor with or into
the Issuer or another Guarantor, or will prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Issuer or another Guarantor.

Section 10.05 Releases.

(a) In the event of any sale or other disposition of all or substantially all of
the assets of any Guarantor, by way of merger, amalgamation, consolidation or
otherwise, or a sale or other disposition of all of the Capital Stock of any
Guarantor (other than the Company), in each case to a Person that is not (either
before or after giving effect to such transactions) the Company or an Affiliate
of the Company,

 

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then such Guarantor (in the event of a sale or other disposition, by way of
merger, amalgamation, consolidation or otherwise, of all of the Capital Stock of
such Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under its Note
Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.10 hereof and the Guarantor ceases to be
a Restricted Subsidiary of the Company as a result of the sale or other
disposition; provided that Donohue Corp. will only be released from its Note
Guarantee if the proceeds from the sale of its Capital Stock are contributed to
the Issuer as common equity (which contribution will be ignored for purposes of
Section 4.07 hereof. Upon delivery by the Issuer to the Trustee of an Officers’
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Issuer in accordance with the provisions of this
Indenture, including without limitation Section 4.10 hereof, the Trustee will
execute any documents reasonably required in order to evidence the release of
any Guarantor from its obligations under its Note Guarantee;

(b) Upon designation of any Guarantor as an Unrestricted Subsidiary in
accordance with the terms of this Indenture, such Guarantor will be released and
relieved of any obligations under its Note Guarantee;

(c) if a Guarantor ceases to be a Wholly-Owned Subsidiary of the Issuer as a
result of the Joint Venture Transactions; or

(d) Upon Legal Defeasance in accordance with Article 8 hereof or satisfaction
and discharge of this Indenture in accordance with Article 11 hereof, each
Guarantor will be released and relieved of any obligations under its Note
Guarantee.

The Note Guarantees of Donohue Corp. and its Restricted Subsidiaries will not be
released in connection with the Donohue Sale.

Any Guarantor not released from its obligations under its Note Guarantee as
provided in this Section 10.05 will remain liable for the full amount of
principal of and interest and premium and Special Interest, if any, on the Notes
and for the other obligations of any Guarantor under this Indenture as provided
in this Article 10.

ARTICLE 11

SATISFACTION AND DISCHARGE

Section 11.01 Satisfaction and Discharge.

This Indenture and Notes will be discharged and this Indenture will cease to be
of further effect as to all Notes issued hereunder, when:

(1) either:

(a) all Notes that have been authenticated, except lost, stolen or destroyed
Notes that have been replaced or paid and Notes for whose payment money has
theretofore been deposited in trust and thereafter repaid to the Issuer, have
been delivered to the Trustee for cancellation; or

(b) all Notes that have not been delivered to the Trustee for cancellation have
become due and payable by reason of the mailing of a notice of redemption or
otherwise or will

 

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become due and payable within one year and the Issuer or any Guarantor has
irrevocably deposited or caused to be deposited with the Trustee as trust funds
in trust solely for the benefit of the Holders, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, without consideration of any reinvestment of interest, to
pay and discharge the entire Indebtedness on the Notes not delivered to the
Trustee for cancellation for principal, premium and Special Interest, if any,
and accrued interest to the date of maturity or redemption;

(2) no Default or Event of Default has occurred and is continuing on the date of
such deposit (other than a Default or Event of Default resulting from the
borrowing of funds to be applied to such deposit) and the deposit will not
result in a breach or violation of, or constitute a default under, any other
instrument to which the Issuer or any Guarantor is a party or by which the
Issuer or any Guarantor is bound;

(3) the Issuer or any Guarantor has paid or caused to be paid all sums payable
by it under this Indenture; and

(4) the Issuer has delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of the Notes at
maturity or on the redemption date, as the case may be.

In addition, the Issuer must deliver an Officers’ Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.

Notwithstanding the satisfaction and discharge of this Indenture, if money has
been deposited with the Trustee pursuant to subclause (b) of clause (1) of this
Section 11.01, the provisions of Sections 11.02 and 8.06 hereof will survive. In
addition, nothing in this Section 11.01 will be deemed to discharge those
provisions of Section 7.07 hereof, that, by their terms, survive the
satisfaction and discharge of this Indenture.

Section 11.02 Application of Trust Money.

Subject to the provisions of Section 8.06 hereof, all money deposited with the
Trustee pursuant to Section 11.01 hereof shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Issuer
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium and Special Interest, if any)
and interest for whose payment such money has been deposited with the Trustee;
but such money need not be segregated from other funds except to the extent
required by law.

If the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 11.01 hereof by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Issuer’s and any Guarantor’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 11.01 hereof; provided that if the Issuer has made any payment of
principal of, premium or Special Interest, if any, or interest on, any Notes
because of the reinstatement of its obligations, the Issuer shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money or Government Securities held by the Trustee or Paying Agent.

 

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ARTICLE 12

MISCELLANEOUS

Section 12.01 Trust Indenture Act Controls.

If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA §318(c), the imposed duties will control.

Section 12.02 Notices.

Any notice or communication by the Issuer, any Guarantor or the Trustee to the
others is duly given if in writing and delivered in Person or by first class
mail (registered or certified, return receipt requested), facsimile transmission
or overnight air courier guaranteeing next day delivery, to the others’ address:

If to the Company and/or any Guarantor:

Abitibi-Consolidated Inc.

1155 Metcalfe Street, Suite 800

Montreal, Québec Canada H3B 5H2

Facsimile No.: (514) 394-3644

Attention: Chief Financial Officer

With a copy to:

Troutman Sanders LLP

600 Peachtree Street, NE

Suite 5200

Atlanta, Georgia 30308

Facsimile No.: (404) 962-6740

Attention: Marlon Starr, Esq.

If to the Trustee:

Wells Fargo Bank, National Association

Corporate Trust Services

213 Court Street, Suite 703

Middletown, CT 06457

Facsimile No.: (860) 704-6219

Attention: Corporate Trust Administration

The Company, any Guarantor or the Trustee, by notice to the others, may
designate additional or different addresses for subsequent notices or
communications.

All notices and communications (other than those sent to Holders) will be deemed
to have been duly given: at the time delivered by hand, if personally delivered;
five Business Days after being deposited in the mail, postage prepaid, if
mailed; when receipt acknowledged, if transmitted by facsimile; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.

Any notice or communication to a Holder will be mailed by first class mail,
certified or registered, return receipt requested, or by overnight air courier
guaranteeing next day delivery or by electronic means to its address shown on
the register kept by the Registrar. Any notice or communication

 

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will also be so sent to any Person described in TIA § 313(c), to the extent
required by the TIA. Failure to send a notice or communication to a Holder or
any defect in it will not affect its sufficiency with respect to other Holders.

If a notice or communication is sent in the manner provided above within the
time prescribed, it is duly given, whether or not the addressee receives it.

If the Issuer sends a notice or communication to Holders, it will mail a copy to
the Trustee and each Agent at the same time.

Section 12.03 Communication by Holders of Notes with Other Holders of Notes.

Holders may communicate pursuant to TIA § 312(b) with other Holders with respect
to their rights under this Indenture or the Notes. The Issuer, the Trustee, the
Registrar and anyone else shall have the protection of TIA § 312(c).

Section 12.04 Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Issuer to the Trustee to take any action
under this Indenture, the Issuer shall furnish to the Trustee:

(1) an Officers’ Certificate in form and substance reasonably satisfactory to
the Trustee (which must include the statements set forth in Section 12.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and

(2) an Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee (which must include the statements set forth in Section 12.05 hereof)
stating that, in the opinion of such counsel, all such conditions precedent and
covenants have been satisfied.

Section 12.05 Statements Required in Certificate or Opinion.

Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA § 314(a)(4)) must comply with the provisions of TIA § 314(e) and
must include:

(1) a statement that the Person making such certificate or opinion has read such
covenant or condition;

(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

(3) a statement that, in the opinion of such Person, he or she has made such
examination or investigation as is necessary to enable him or her to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and

(4) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.

 

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Section 12.06 Rules by Trustee and Agents.

The Trustee may make reasonable rules for action by or at a meeting of Holders.
The Registrar or Paying Agent may make reasonable rules and set reasonable
requirements for its functions.

Section 12.07 No Personal Liability of Directors, Officers, Employees and
Stockholders.

No past, present or future director, officer, employee, incorporator or
stockholder of the Issuer or any Guarantor, as such, will have any liability for
any obligations of the Issuer or the Guarantors under the Notes, this Indenture,
the Note Guarantees or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.

Section 12.08 Governing Law.

THIS INDENTURE, THE NOTE, AND THE NOTE GUARANTEES AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES INSOFAR AS SUCH PRINCIPLES
WOULD DEFER TO THE SUBSTANTIVE LAWS OF SOME OTHER JURISDICTION.

Section 12.09 No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Issuer, the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.

Section 12.10 Successors.

All agreements of the Issuer and the Company in this Indenture and the Notes
will bind its successors. All agreements of the Trustee in this Indenture will
bind its successors. All agreements of each Guarantor in this Indenture will
bind its successors, except as otherwise provided in Section 10.05 hereof.

Section 12.11 Severability.

In case any provision in this Indenture or in the Notes is invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired thereby.

Section 12.12 Counterpart Originals.

The parties may sign any number of copies of this Indenture. Each signed copy
will be an original, but all of them together represent the same agreement.

 

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Section 12.13 Table of Contents, Headings, etc.

The Table of Contents, Cross-Reference Table and Headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference only,
are not to be considered a part of this Indenture and will in no way modify or
restrict any of the terms or provisions hereof.

Section 12.14 Interest Act (Canada).

For purposes of disclosure pursuant to the Interest Act (Canada), the annual
rates of interest or fees to which the rates of interest or fees provided in
this Indenture and the other Note Documents (and stated herein or therein, as
applicable, to be computed on the basis of a 360-day year or any other period of
time less than a calendar year) are equivalent are the rates so determined
multiplied by the actual number of days in the applicable calendar year and
divided by 360 or such other period of time, respectively.

Section 12.15 Conversion of Currency.

If for the purposes of obtaining judgment in any court it is necessary to
convert a sum due hereunder in Dollars into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Trustee could purchase U.S. Dollars with such other currency at
the currency exchange rate on the Business Day preceding that on which final
judgment is given, for the purchase of U.S Dollars for delivery two Business
Days thereafter. The obligation of the Issuer in respect of any such sum due
from it to the Trustee or the Holders hereunder or under the other Note
Documents shall, notwithstanding any judgment in a currency (the “Judgment
Currency”) other than that in which such sum is denominated in accordance with
the applicable provisions of this Indenture (the “Indenture Currency”), be
discharged only to the extent that on the Business Day following receipt by the
Trustee of any sum adjudged to be so due in the Judgment Currency, the Trustee
may in accordance with normal banking procedures purchase the Indenture Currency
with the Judgment Currency. If the amount of the Indenture Currency so purchased
is less than the sum originally due to the Trustee in the Indenture Currency,
the Company agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Trustee or the Person to whom such obligation was
owing against such loss.

Section 12.16 Joint and Several Obligations.

Notwithstanding any other provision contained herein or in any other Note
Document, if a “secured creditor” (as that term is defined under the BIA) is
determined by a court of competent jurisdiction not to include a Person to whom
obligations are owed on a joint or joint and several basis, then the Issuer’s
Obligations under the Note Documents (and the Obligations of each other party
thereto), to the extent such Obligations are secured, only shall be several
obligations and not joint or joint and several obligations.

Section 12.17 Jurisdiction; Consent to Service of Process.

(a) Each party hereto irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any U.S. Federal or New York
State court sitting in the Borough of Manhattan, New York, New York in any
action or proceeding arising out of or relating to this Indenture, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may

 

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be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Indenture shall affect any right that
the Company or any Holder of Notes may otherwise have to bring any action or
proceeding relating to this Indenture against any party hereto or its properties
in the courts of any jurisdiction.

(b) Each party hereto hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Indenture in any court referred to in
paragraph (a) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

(c) The Company hereby irrevocably designates, appoints and empowers CT
Corporation System (the “Process Agent”), in the case of any suit, action or
proceeding brought in the United States of America as its designee, appointee
and agent to receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process, summons, notices
and documents that may be served in any action or proceeding arising out of or
in connection with this Indenture. Such service may be made by mailing (by
registered or certified mail, postage prepaid) or delivering a copy of such
process to the Company in care of the Process Agent at 111 Eighth Avenue, 13th
Floor, New York, New York 10011, and the Company hereby irrevocably authorizes
and directs the Process Agent to accept such service on its behalf. As an
alternative method of service, the Company irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing (by
registered or certified mail, postage prepaid) of copies of such process to the
Process Agent or the Company at its address specified in Section 12.02.

(d) To the extent permitted by law, each party to this Indenture hereby
irrevocably waives personal service of any and all process upon it and agrees
that all such service of process may be made by registered mail (return receipt
requested) directed to it at its address for notices as provided for in
Section 12.02. Nothing in this Indenture will affect the right of any party to
this Indenture to serve process in any other manner permitted by law.

[Signatures on following page]

 

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SIGNATURES

Dated as of April 1, 2008

 

Abitibi-Consolidated Company of Canada

Abitibi-Consolidated Inc.

Donohue Corp.

Les Explorations Terra Nova Ltee

The Jonquiere Pulp Company

The International Bridge and Terminal Company

Scramble Mining Ltd.

Abitibi-Consolidated Canadian Office Products Holdings Inc.

Abitibi Consolidated Sales Corporation

Abitibi-Consolidated Alabama Corporation

Alabama River Newsprint Company

Abitibi-Consolidated Corp.

Augusta Woodlands, LLC

3224112 Nova Scotia Limited

Donohue Recycling Inc.

Marketing Donohue Inc.

1508756 Ontario Inc.

6169678 Canada Incorporated

3834328 Canada Inc.

Abitibi-Consolidated Nova Scotia Incorporated

By:  

/s/ John W. Weaver

Name:   John W. Weaver Title:   Officer or authorized representative of each of
the above By:  

/s/ Jacques P. Vachon

Name:   Jacques P. Vachon Title:   Officer or authorized representative of each
of the above

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Bridgewater Paper Company Limited By:  

/s/ Jacques P. Vachon

Name:   Jacques P. Vachon Title:   Senior Vice President By:  

/s/ Robert Clarke

Name:   Robert Clarke Title:   Director Cheshire Recycling Ltd. By:  

/s/ Barry Benson

Name:   Barry Benson Title:   Controller By:  

/s/ Robert Clarke

Name:   Robert Clarke Title:   Director Saguenay Forest Products Inc. By:  

/s/ Allen Dea

Name:   Allen Dea Title:   Assistant Secretary

--------------------------------------------------------------------------------

Wells Fargo Bank, National Association, as Trustee By:  

/s/ Joseph P. O’Donnell

Name:

 

Joseph P. O’Donnell

Title:

 

Vice President

--------------------------------------------------------------------------------

[Face of Note]

 

CUSIP/CINS             

15.5% Senior Notes due 2010

 

No.        $                    

ABITIBI-CONSOLIDATED COMPANY OF CANADA

 

promises to pay to [            ] or registered assigns,

the principal sum of  

 

  DOLLARS on July 15, 2010. Interest Payment Dates: July 15 and January 15
Record Dates: July 1 and January 1 Dated:             , 200_

 

ABITIBI-CONSOLIDATED COMPANY OF CANADA

By:

 

 

Name:

 

Title:

 

This is one of the Notes referred to

in the within-mentioned Indenture:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

By:  

 

  Authorized Signatory

 

 

 

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[Back of Note]

15.5% Senior Notes due 2010

[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]

Capitalized terms used herein have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

(1) INTEREST. Abitibi-Consolidated Company of Canada, a company amalgamated
under the laws of the province of Quebec, Canada (the “Issuer”), promises to pay
interest on the principal amount of this Note at 15.5% per annum from
                    , 20     until maturity and shall pay the Special Interest,
if any, payable pursuant to Section 2 of the Registration Rights Agreement
referred to below. The Issuer will pay interest and Special Interest, if any,
semi-annually in arrears on July 15 and January 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each, an
“Interest Payment Date”). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided further that
the first Interest Payment Date shall be                     , 20    . The
Issuer will pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate that is 1% per annum in excess of the rate then in
effect to the extent lawful; it will pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Special Interest, if any, (without regard to any applicable grace
periods) from time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.

(2) METHOD OF PAYMENT. The Issuer will pay interest on the Notes (except
defaulted interest) and Special Interest, if any, to the Persons who are
registered Holders of Notes at the close of business on the July 1 or January 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. The Notes
will be payable as to principal, premium and Special Interest, if any, and
interest at the office or agency of the Issuer maintained for such purpose, or,
at the option of the Issuer, payment of interest and Special Interest, if any,
may be made by check mailed to the Holders at their addresses set forth in the
register of Holders; provided that payment by wire transfer of immediately
available funds will be required with respect to principal of and interest,
premium and Special Interest, if any, on, all Global Notes and all other Notes
the Holders of which will have provided wire transfer instructions to the Issuer
or the Paying Agent. Such payment will be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.

(3) PAYING AGENT AND REGISTRAR. Initially, Wells Fargo Bank, National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Issuer may change any Paying Agent or Registrar without notice to
any Holder. None of the Company nor any of its Affiliates may act in any such
capacity.

 

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(4) INDENTURE. The Issuer issued the Notes under an Indenture dated as of
April 1, 2008 (the “Indenture”) among Abitibi-Consolidated Inc., a company
amalgamated under the laws of Canada (the “Company”), the other Guarantors and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the TIA. The Notes are subject
to all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are unsecured obligations of the Company.
The Indenture does not limit the aggregate principal amount of Notes that may be
issued thereunder.

(5) TAX REDEMPTION. The Notes will be subject to redemption at any time, in
whole but not in part, at the option of the Issuer, at a redemption price equal
to the principal amount thereof, together with accrued and unpaid interest,
including Special Interest, if any, to the date fixed for redemption, upon the
giving of a notice by the Issuer as described below, if (1) the Issuer or a
relevant Guarantor, as the case may be, determines that (a) as a result of any
change in or amendment to the laws (or any regulations or rulings promulgated
thereunder) of Canada (or any political subdivision or taxing authority thereof
or therein) or any other jurisdiction in which the Issuer or any Guarantor
(including successors) is organized or otherwise resident for tax purposes or
any jurisdiction from or through which any payment hereunder or with respect to
any note or Note Guarantee is made (any of the foregoing, a “Taxing
Jurisdiction”), or any change in official position regarding application or
interpretation of such laws, regulations or rulings (including a holding by a
court of competent jurisdiction), which change or amendment is announced or
becomes effective after the date of the Indenture, the Issuer or the relevant
Guarantor has or will become obligated to pay, on the next scheduled interest
payment date, Additional Amounts with respect to the Notes or Note Guarantees as
described under Section 4.21 of the Indenture or (b) after the date of the
Indenture, any action has been taken by any taxing authority of, or any decision
has been rendered by a court of competent jurisdiction in, any Taxing
Jurisdiction, including any of those actions specified in (a) above, whether or
not such action was taken or decision was rendered with respect to the Issuer or
a Guarantor, or any change, amendment, application or interpretation of the laws
of the Taxing Jurisdiction shall be officially proposed, which, in any such
case, in the written Opinion of Counsel to the Issuer or the relevant Guarantor
of legal counsel of recognized standing, will result in a material probability
that the Issuer or the relevant Guarantor will become obligated to pay, on the
next scheduled interest payment date, Additional Amounts with respect to any
Note or Note Guarantee and (2) in any such case the Issuer or the relevant
Guarantor, as the case may be, in its business judgment determines that such
obligation cannot be avoided by the use of reasonable measures available to the
Issuer or the relevant Guarantor; provided however, that (i) no such notice of
redemption may be given earlier than 90 or later than 30 days prior to the
earliest date on which the Issuer or the relevant Guarantor, as applicable,
would be obligated to pay such Additional Amounts were a payment in respect of
the Notes then due, and (ii) at the time such notice of redemption is given,
such obligation to pay such Additional Amounts remains in effect.

In the event that the Issuer elects to redeem the notes pursuant to the
provisions set forth in the preceding paragraph, the Issuer will deliver to the
Trustee:

 

  (1) an Opinion of Counsel to the effect that the Issuer has or will become
obligated to pay Additional Amounts as a result of any such change or amendment
referred to in clause (1) of the preceding paragraph and

 

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  (2) an Officer’s Certificate stating that the conditions set forth in clause
(2) of the preceding paragraph have been met and that the Issuer is entitled to
redeem the Notes pursuant to their terms.

(6) MANDATORY REDEMPTION. The Issuer is not required to make mandatory
redemption or sinking fund payments with respect to the Notes.

(7) REPURCHASE AT THE OPTION OF HOLDER.

(a) If there is a Change of Control, the Issuer will be required to make an
offer (a “Change of Control Offer”) to each Holder to repurchase all or any part
(equal to $1,000 or integral multiples of $1,000) of each Holder’s Notes at a
purchase price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Special Interest, if any, thereon to the
date of purchase, subject to the rights of Holders on the relevant record date
to receive interest due on the relevant interest payment date (the “Change of
Control Payment”). Within 30 days following any Change of Control, the Issuer
will send a notice to each Holder setting forth the procedures governing the
Change of Control Offer as required by the Indenture.

(b) If the Company or a Restricted Subsidiary of the Company consummates any
Asset Sales, within 30 days of each date on which the aggregate amount of Excess
Proceeds exceeds $20.0 million, the Company will commence an offer to all
Holders of Notes and all holders of other Indebtedness that is pari passu with
the Notes containing provisions similar to those set forth in the Indenture with
respect to offers to purchase or redeem with the proceeds of sales of assets (a
“Net Proceeds Offer”) pursuant to Section 3.07 of the Indenture to purchase the
maximum principal amount of Notes (including any Additional Notes) and such
other Indebtedness (plus all accrued interest on such Indebtedness and the
amount of all fees and expenses, including premiums, incurred in connection
therewith) that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Special Interest, if any, thereon to the date of purchase,
in accordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Notes (including any Additional Notes) and other
Indebtedness tendered pursuant to a Net Proceeds Offer is less than the Excess
Proceeds, the Company (or such Restricted Subsidiary) may use such deficiency
for any purpose not otherwise prohibited by the Indenture. If the aggregate
principal amount of Notes and other Indebtedness tendered into such Net Proceeds
Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes
and the Issuer or Agent for such other Indebtedness will select such other
Indebtedness to be purchased on a pro rata basis with such adjustments as may be
needed so that only Notes in minimum amounts of $1,000 and integral multiples of
$1,000 will be purchased. Holders of Notes that are the subject of an offer to
purchase will receive a Net Proceeds Offer from the Company prior to any related
purchase date and may elect to have such Notes purchased by completing the form
entitled “Option of Holder to Elect Purchase” attached to the Notes.

(8) NOTICE OF REDEMPTION. Notice of redemption will be sent at least 30 days but
not more than 60 days before the redemption date to each Holder whose Notes are
to be redeemed at its registered address, except that redemption notices may be
mailed more than 60 days prior to a redemption date if the notice is issued in
connection with a defeasance of the Notes or a satisfaction or discharge of the
Indenture.

(9) DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without
coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The

 

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Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Issuer may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
The Issuer need not exchange or register the transfer of any Note or portion of
a Note selected for redemption, except for the unredeemed portion of any Note
being redeemed in part. Also, the Issuer need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.

(10) PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as
its owner for all purposes.

(11) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes or the Note Guarantees may be amended or supplemented
with the consent of the Holders of at least a majority in aggregate principal
amount of the then outstanding Notes including Additional Notes, if any, voting
as a single class, and any existing Default or Event or Default or compliance
with any provision of the Indenture or the Notes or the Note Guarantees may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the then outstanding Notes including Additional Notes, if any, voting
as a single class. Without the consent of any Holder of a Note, the Indenture or
the Notes or the Note Guarantees may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Issuer’s or a Guarantor’s obligations to Holders of the Notes and Note
Guarantees in case of a merger, amalgamation or consolidation, to make any
change that would provide any additional rights or benefits to the Holders of
the Notes or that does not adversely affect the legal rights under the Indenture
of any such Holder, to comply with the requirements of the SEC in order to
effect or maintain the qualification of the Indenture under the TIA, to conform
the text of the Indenture or the Notes to any provision of the “Description of
New Notes” section of the Issuer’s Offering Circular dated March 26, 2008,
relating to the initial offering of the Notes, to the extent that such provision
in that “Description of Notes” was intended to be a verbatim recitation of a
provision of the Indenture, the Note Guarantees or the Notes which intent shall
be evidenced by an Officers’ Certificate of the Issuer to that effect; to
provide for the issuance of Additional Notes in accordance with the limitations
set forth in the Indenture, to allow any Guarantor to execute a supplemental
indenture to the Indenture and/or a Note Guarantee with respect to the Notes or
to comply with the rules of any applicable securities depository.

(12) DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days
in the payment when due of interest on, or Special Interest of Additional
Amounts, if any, with respect to the Notes; (ii) default in the payment when due
of the principal of, or premium, if any, on, the Notes when the same becomes due
and payable at maturity, upon redemption (including in connection with an offer
to purchase) or otherwise, (iii) failure by the Company or any of its Restricted
Subsidiaries for 30 days after notice to the Issuer by the Trustee or Holders of
at least 25% in aggregate principal amount of the Notes then outstanding voting
as a single class to comply with Section 4.10, 4.15 or 5.01 of the Indenture;
(iv) failure by the Company or any of its Restricted Subsidiaries for 60 days
after notice to the Company by the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes including, Additional Notes, if any,
then outstanding voting as a single class to comply with any of the other
agreements in the Indenture or the Notes; (v) default under certain other
agreements relating to Indebtedness of the Company which default results in the
acceleration of such Indebtedness prior to its express maturity; (vi) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Restricted Subsidiaries that is a Significant Subsidiary
or any group of Restricted Subsidiaries

 

A-5

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that, taken together, would constitute a Significant Subsidiary; and
(viii) except as permitted by the Indenture, any Note Guarantee is held in any
judicial proceeding to be unenforceable or invalid or ceases for any reason to
be in full force and effect or any Guarantor or any Person acting on its behalf
denies or disaffirms its obligations under such Guarantor’s Note Guarantee. If
any Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in aggregate principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes will become due and payable
immediately without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest or premium or Special Interest, if any,) if
it determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by notice
to the Trustee may, on behalf of the Holders of all of the Notes, rescind an
acceleration or waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest or premium or Special Interest, if any, on, or the
principal of, the Notes. The Issuer is required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Issuer is
required, upon becoming aware of any Default or Event of Default, to deliver to
the Trustee a statement specifying such Default or Event of Default.

(13) TRUSTEE DEALINGS WITH ISSUER. The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Issuer or its
Affiliates, as if it were not the Trustee.

(14) NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or
stockholder of the Issuer or any of the Guarantors, as such, will not have any
liability for any obligations of the Company or the Guarantors under the Notes,
the Note Guarantees or the Indenture or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of the Notes.

(15) AUTHENTICATION. This Note will not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.

(16) ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).

(17) ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes will have all the rights set forth in the Registration Rights Agreement
dated as of April 1, 2008, among the Company, the Guarantors and the other
parties named on the signature pages thereof or, in the case of Additional
Notes, Holders of Restricted Global Notes and Restricted Definitive Notes will
have the rights set forth in one or more registration rights agreements, if any,
among the Company, the Guarantors and the other parties thereto, relating to
rights given by the Company and the Guarantors to the purchasers of any
Additional Notes (collectively, the “Registration Rights Agreement”).

 

A-6

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(18) CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers
to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption, and reliance may be placed only on the other
identification numbers placed thereon.

(19) GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE
USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

The Issuer will furnish to any Holder upon written request and without charge a
copy of the Indenture and/or the Registration Rights Agreement. Requests may be
made to:

Abitibi-Consolidated Inc.

1155 Metcalfe Street, Suite 800

Montreal, Québec Canada H3B 5H2

Attention: Investor Relations.

 

A-7

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ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:  

 

  (Insert assignee’s legal name)

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

(Print or type assignee’s name, address and zip code)

and irrevocably appoint  

 

to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date:                     

 

Your Signature:      
(Sign exactly as your name appears on the face of this Note)

 

Signature Guarantee*:    

 

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

 

A-8

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Option of Holder to Elect Purchase

If you want to elect to have this Note purchased by the Company or the Issuer
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:

 

  Section 4.10   Section 4.15  

If you want to elect to have only part of the Note purchased by the Company or
the Issuer pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:

$            

Date:                     

 

Your Signature:      
(Sign exactly as your name appears on the face of this Note)

Tax Identification No.:  

 

 

Signature Guarantee*:    

 

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

 

A-9

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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE *

The following exchanges of a part of this Global Note for an interest in another
Global Note or for a Definitive Note, or exchanges of a part of another Global
Note or Definitive Note for an interest in this Global Note, have been made:

 

Date of Exchange

  Amount of decrease in
Principal Amount
of
this Global Note   Amount of increase in
Principal Amount
of
this Global Note   Principal Amount
of this Global Note
following such
decrease
(or increase)   Signature of authorized
officer of Trustee or
Custodian                                                

 

* This schedule should be included only if the Note is issued in global form.

 

A-10

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EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

Abitibi-Consolidated Inc.

1155 Metcalfe Street, Suite 800

Montreal, Québec Canada H3B 5H2

Attention: Investor Relations

Wells Fargo Bank, National Association

Corporate Trust Services

213 Court Street, Suite 703

Middletown, CT 06457

 

  Re: 15.5% Senior Notes due 2010

Reference is hereby made to the Indenture, dated as of April 1, 2008 (the
“Indenture”), among Abitibi-Consolidated Company of Canada, as issuer (the
“Issuer”), the Guarantors party thereto and Wells Fargo Bank, National
Association, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.

                                             , (the “Transferor”) owns and
proposes to transfer the Note[s] or interest in such Note[s] specified in Annex
A hereto, in the principal amount of $             in such Note[s] or interests
(the “Transfer”), to                                      (the “Transferee”), as
further specified in Annex A hereto. In connection with the Transfer, the
Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1. ¨ Check if Transferee will take delivery of a beneficial interest in the 144A
Global Note or a Restricted Definitive Note pursuant to Rule 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the
Transferor hereby further certifies that the beneficial interest or Definitive
Note is being transferred to a Person that the Transferor reasonably believes is
purchasing the beneficial interest or Definitive Note for its own account, or
for one or more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a “qualified
institutional buyer” within the meaning of Rule 144A in a transaction meeting
the requirements of Rule 144A, and such Transfer is in compliance with any
applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the 144A Global Note and/or the Restricted Definitive Note and
in the Indenture and the Securities Act.

2. ¨ Check if Transferee will take delivery of a beneficial interest in the
Regulation S Global Note or a Restricted Definitive Note pursuant to Regulation
S. The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a Person in the
United States and (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act and, (iii) the transaction is
not part of a plan or scheme to evade the registration

 

B-1

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requirements of the Securities Act. Upon consummation of the proposed transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on Transfer
enumerated in the Private Placement Legend printed on the Regulation S Global
Note and/or the Restricted Definitive Note and in the Indenture and the
Securities Act.

3. ¨ Check and complete if Transferee will take delivery of a beneficial
interest in the IAI Global Note or a Restricted Definitive Note pursuant to any
provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):

(a) ¨ such Transfer is being effected pursuant to and in accordance with Rule
144 under the Securities Act;

or

(b) ¨ such Transfer is being effected to the Issuer, Company or a subsidiary
thereof;

or

(c) ¨ such Transfer is being effected pursuant to an effective registration
statement under the Securities Act and in compliance with the prospectus
delivery requirements of the Securities Act;

or

(d) ¨ such Transfer is being effected to an Institutional Accredited Investor
and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the
Transferor hereby further certifies that it has not engaged in any general
solicitation within the meaning of Regulation D under the Securities Act and the
Transfer complies with the transfer restrictions applicable to beneficial
interests in a Restricted Global Note or Restricted Definitive Notes and the
requirements of the exemption claimed, which certification is supported by (1) a
certificate executed by the Transferee in the form of Exhibit D to the Indenture
and (2) if such Transfer is in respect of a principal amount of Notes at the
time of transfer of less than $250,000, an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the IAI Global Note and/or the Restricted Definitive
Notes and in the Indenture and the Securities Act.

4. ¨ Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.

(a) ¨ Check if Transfer is pursuant to Rule 144. (i) The Transfer is being
effected pursuant to and in accordance with Rule 144 under the Securities Act
and in compliance with the transfer restrictions contained in the Indenture and
any applicable blue sky securities laws of any state of the United States and
(ii) the restrictions on transfer contained in the Indenture and the Private
Placement

 

B-2

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Legend are not required in order to maintain compliance with the Securities Act.
Upon consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will no longer
be subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Global Notes, on Restricted Definitive Notes
and in the Indenture.

(b) ¨ Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.

(c) ¨ Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is
being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.

This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer.

 

 

  [Insert Name of Transferor] By:  

 

Name:   Title:  

Dated:                     

 

B-3

--------------------------------------------------------------------------------

ANNEX A TO CERTIFICATE OF TRANSFER

 

  1. The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

(a) ¨ a beneficial interest in the:

 

  (i) ¨ 144A Global Note (CUSIP             ), or

 

  (ii) ¨ Regulation S Global Note (CUSIP             ), or

 

  (iii) ¨ IAI Global Note (CUSIP             ); or

(b) ¨ a Restricted Definitive Note.

 

  2. After the Transfer the Transferee will hold:

[CHECK ONE]

(a) ¨ a beneficial interest in the:

 

  (i) ¨ 144A Global Note (CUSIP             ), or

 

  (ii) ¨ Regulation S Global Note (CUSIP             ), or

 

  (iii) ¨ IAI Global Note (CUSIP             ); or

 

  (iv) ¨ Unrestricted Global Note (CUSIP             ); or

(b) ¨ a Restricted Definitive Note; or

(c) ¨ an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.

 

B-4

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EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Abitibi-Consolidated Inc.

1155 Metcalfe Street, Suite 800

Montreal, Québec Canada H3B 5H2

Attention: Investor Relations.

Wells Fargo Bank, National Association

Corporate Trust Services

213 Court Street, Suite 703

Middletown, CT 06457

 

  Re: 15.5% Senior Notes due 2010

(CUSIP                         )

Reference is hereby made to the Indenture, dated as of April 1, 2008 (the
“Indenture”), among Abitibi-Consolidated Company of Canada, as issuer (the
“Issuer”), the Guarantors party thereto and Wells Fargo Bank, National
Association, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.

                                                         , (the “Owner”) owns
and proposes to exchange the Note[s] or interest in such Note[s] specified
herein, in the principal amount of $             in such Note[s] or interests
(the “Exchange”). In connection with the Exchange, the Owner hereby certifies
that:

1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note

(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note
to beneficial interest in an Unrestricted Global Note. In connection with the
Exchange of the Owner’s beneficial interest in a Restricted Global Note for a
beneficial interest in an Unrestricted Global Note in an equal principal amount,
the Owner hereby certifies (i) the beneficial interest is being acquired for the
Owner’s own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with the Securities Act of 1933, as amended (the
“Securities Act”), (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest in an
Unrestricted Global Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

(b) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note
to Unrestricted Definitive Note. In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for an Unrestricted Definitive
Note, the Owner hereby certifies (i) the Definitive Note is being acquired for
the Owner’s own account without transfer, (ii) such Exchange has been effected
in compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

(c) ¨ Check if Exchange is from Restricted Definitive Note to beneficial
interest in an Unrestricted Global Note. In connection with the Owner’s Exchange
of a Restricted Definitive Note for

 

C-1

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a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies
(i) the beneficial interest is being acquired for the Owner’s own account
without transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and pursuant to
and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.

(d) ¨ Check if Exchange is from Restricted Definitive Note to Unrestricted
Definitive Note. In connection with the Owner’s Exchange of a Restricted
Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies
(i) the Unrestricted Definitive Note is being acquired for the Owner’s own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes for Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes

(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note
to Restricted Definitive Note. In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a Restricted Definitive Note
with an equal principal amount, the Owner hereby certifies that the Restricted
Definitive Note is being acquired for the Owner’s own account without transfer.
Upon consummation of the proposed Exchange in accordance with the terms of the
Indenture, the Restricted Definitive Note issued will continue to be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted Definitive Note and in the Indenture and the Securities Act.

(b) ¨ Check if Exchange is from Restricted Definitive Note to beneficial
interest in a Restricted Global Note. In connection with the Exchange of the
Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
¨ 144A Global Note, ¨ Regulation S Global Note, x IAI Global Note with an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner’s own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.

This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer.

 

 

 

  [Insert Name of Transferor] By:  

 

Name:   Title:  

Dated:                     

 

C-2

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EXHIBIT D

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Abitibi-Consolidated Inc.

1155 Metcalfe Street, Suite 800

Montreal, Québec Canada H3B 5H2

Facsimile No.: [(        )         -            ]

Attention: Investor Relations.

Wells Fargo Bank, National Association

Corporate Trust Services

213 Court Street, Suite 703

Middletown, CT 06457

 

  Re: 15.5% Senior Notes due 2010

Reference is hereby made to the Indenture, dated as of April 1, 2008 (the
“Indenture”), among Abitibi-Consolidated Company of Canada, as issuer (the
“Issuer”), the Guarantors party thereto and Wells Fargo Bank, National
Association, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.

In connection with our proposed purchase of $             aggregate principal
amount of:

(a) ¨ a beneficial interest in a Global Note, or

(b) ¨ a Definitive Note,

we confirm that:

1. We understand that any subsequent transfer of the Notes or any interest
therein is subject to certain restrictions and conditions set forth in the
Indenture and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Notes or any interest therein except in compliance
with, such restrictions and conditions and the Securities Act of 1933, as
amended (the “Securities Act”).

2. We understand that the offer and sale of the Notes have not been registered
under the Securities Act, and that the Notes and any interest therein may not be
offered or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell the Notes or any interest therein, we will do so
only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule
144A under the Securities Act to a “qualified institutional buyer” (as defined
therein), (C) to an institutional “accredited investor” (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you and to the Issuer a signed letter substantially in the
form of this letter and, if such transfer is in respect of a principal amount of
Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in
form reasonably acceptable to the Issuer to the effect that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
provisions of Rule 144(k) under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any Person purchasing the Definitive Note or beneficial interest
in a Global Note from us in a transaction meeting the requirements of clauses
(A) through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.

 

D-1

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3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Issuer such
certifications, legal opinions and other information as you and the Issuer may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.

4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Securities Act) and have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Notes, and we and any
accounts for which we are acting are each able to bear the economic risk of our
or its investment.

5. We are acquiring the Notes or beneficial interest therein purchased by us for
our own account or for one or more accounts (each of which is an institutional
“accredited investor”) as to each of which we exercise sole investment
discretion.

You and the Issuer are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.

 

 

 

[Insert Name of Accredited Investor]

By:

 

 

Name:

 

Title:

 

Dated:                     

 

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EXHIBIT E

FORM OF NOTATION OF GUARANTEE

For value received, each Guarantor (which term includes any successor Person
under the Indenture) has, jointly and severally, unconditionally guaranteed, to
the extent set forth in the Indenture and subject to the provisions in the
Indenture dated as of April 1, 2008 (the “Indenture”) among Abitibi-Consolidated
Company of Canada, (the “Issuer”), the Guarantors party thereto and Wells Fargo
Bank, National Association, as trustee (the “Trustee”), (a) the due and punctual
payment of the principal of, premium and Special Interest, if any, and interest
on, the Notes, whether at maturity, by acceleration, redemption or otherwise,
the due and punctual payment of interest on overdue principal of and interest on
the Notes, if any, if lawful, and the due and punctual performance of all other
obligations of the Issuer to the Holders or the Trustee all in accordance with
the terms of the Indenture and (b) in case of any extension of time of payment
or renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of the Guarantors to the Holders of Notes and to the Trustee
pursuant to the Note Guarantee and the Indenture are expressly set forth in
Article 10 of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Note Guarantee.

Capitalized terms used but not defined herein have the meanings given to them in
the Indenture.

 

[NAME OF GUARANTOR(S)]

By:

 

 

Name:

 

Title:

 

 

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EXHIBIT F

[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of
                    , 200    , among                                  (the
“Guaranteeing Subsidiary”), a subsidiary of Abitibi-Consolidated Company Of
Canada (or its permitted successor), a company amalgamated under the laws of the
province of Quebec, Canada (the “Issuer”) or Abitibi-Consolidated Inc., (or its
permitted successor), duly amalgamated under laws of Canada (the “Issuer”), the
Issuer, the other Guarantors (as defined in the Indenture referred to herein)
and WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee under the Indenture
referred to below (the “Trustee”).

W I T N E S S E T H

WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an
indenture (the “Indenture”), dated as of April 1, 2008 providing for the
issuance of 15.5% Senior Notes due 2010 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company’s Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the “Note Guarantee”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to
execute and deliver this Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall
have the meanings assigned to them in the Indenture.

2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to provide
an unconditional Guarantee on the terms and subject to the conditions set forth
in the Note Guarantee and in the Indenture including but not limited to Article
10 thereof.

4. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer,
employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as
such, shall have any liability for any obligations of the Company or any
Guaranteeing Subsidiary under the Notes, any Note Guarantees, the Indenture or
this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of the Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the SEC that such a waiver is against public policy.

5. NEW YORK LAW TO GOVERN. THIS SUPPLEMENTAL INDENTURE, THE INDENTURE, THE NOTE,
AND THE NOTE GUARANTEES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND THEREUNDER SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
CONFLICTS OF LAW PRINCIPLES INSOFAR AS SUCH PRINCIPLES WOULD DEFER TO THE
SUBSTANTIVE LAWS OF SOME OTHER JURISDICTION.

 

F-1

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6. COUNTERPARTS. The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.

7. EFFECT OF HEADINGS. The Section headings herein are for convenience only and
shall not affect the construction hereof.

8. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this Supplemental Indenture
or for or in respect of the recitals contained herein, all of which recitals are
made solely by the Guaranteeing Subsidiary and the Company.

 

F-2

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed and attested, all as of the date first above written.

Dated:                     , 20    

 

[GUARANTEEING SUBSIDIARY] By:  

 

Name:   Title:   ABITIBI-CONSOLIDATED COMPANY OF CANADA By:  

 

Name:   Title:   ABITIBI-CONSOLIDATED INC. By:  

 

Name:   Title:   [EXISTING GUARANTORS] By:  

 

Name:   Title:   WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee By:  

 

  Authorized Signatory

 

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