**Exhibit10.34**

 

****

** **

**AMENDEDAND RESTATED CREDIT AGREEMENT**

** **

made and entered intoas of November 5, 2009by and among

 

**NEENAHPAPER, INC.,CERTAIN SUBSIDIARIES OF NEENAH PAPER, INC.**,as joint and several borrowers,

** **

**CERTAINSUBSIDIARIES OF NEENAH PAPER, INC.**,as guarantors,

** **

**EACHOF THE FINANCIAL INSTITUTIONS WHICH ISA SIGNATORY HERETO ORWHICH MAY FROM TIME TO TIMEBECOME A PARTY HERETO**,

** **

**JPMORGANCHASE BANK, N.A.**,as Agent for such Financial Institutions

** **

**JPMORGANCHASE BANK, N.A., TORONTO BRANCH**,as Canadian Collateral Agent for such Financial Institutions

** **

**BANKOF AMERICA, N.A.,**as Syndication Agent

** **

and

 

**J.P.MORGAN SECURITIES INC. and BANC OF AMERICA SECURITIES LLC****,******as Joint Lead Arrangers and Joint Bookrunners

 

----

 

**INDEX TO CREDIT AGREEMENT**

 
| ** ** | ** **                                                              | **Page No.**                                    |
|------------|-------------------------------------------------------------------------|------------------------------------------------------|
|       |                                                                    |                                                 |   |
| 1.         | Definitions                                                             | 2                                                    |
|       | 1.1                                                                     | Certain Defined Terms                                | 2 |
|       | 1.2                                                                     | Accounting Terms and Determinations                  | 42 |
|       | 1.3                                                                     | UCC Changes                                          | 43 |
|       | 1.4                                                                     | Joint and Several Obligations; Borrowers’ Agent | 43 |
|       |                                                                    |                                                 |   |
| 2.         | Loans; Letters of Credit; Notes; Payments;  Prepayments; Interest Rates | 43                                                   |
|       | 2.1                                                                     | Commitments                                          | 43 |
|       | 2.2                                                                     | Loans                                                | 44 |
|       | 2.3                                                                     | Commitment Fees                                      | 46 |
|       | 2.4                                                                     | Termination and Reductions of Revolving Commitments  | 47 |
|       | 2.5                                                                     | Mandatory and Voluntary Prepayments                  | 47 |
|       | 2.6                                                                     | Notes; Payments; Accounts                            | 49 |
|       | 2.7                                                                     | Application of Payments and Prepayments              | 50 |
|       | 2.8                                                                     | Interest Rates for Loans                             | 52 |
|       | 2.9                                                                     | Special Provisions Applicable to LIBOR Borrowings    | 54 |
|       | 2.10                                                                    | Letters of Credit                                    | 57 |
|       | 2.11                                                                    | Swingline Loans                                      | 62 |
|       | 2.12                                                                    | Pro-Rata Treatment                                   | 65 |
|       | 2.13                                                                    | Sharing of Payments, Etc.                            | 66 |
|       | 2.14                                                                    | Recapture                                            | 66 |
|       | 2.15                                                                    | Increase of Revolving Commitments                    | 67 |
|       | 2.16                                                                    | Defaulting Lenders                                   | 68 |
|       |                                                                    |                                                 |   |
| 3.         | Collateral                                                              | 69                                                   |
|       | 3.1                                                                     | Security Documents                                   | 69 |
|       | 3.2                                                                     | Filing and Recording                                 | 69 |
|       | 3.3                                                                     | Special Cash Collateral Account                      | 70 |
|       |                                                                    |                                                 |   |
| 4.         | Conditions                                                              | 70                                                   |
|       | 4.1                                                                     | All Loans                                            | 70 |
|       | 4.2                                                                     | First Loan or Letter of Credit                       | 71 |
|       | 4.3                                                                     | Post-Closing Deliveries                              | 75 |
|       |                                                                    |                                                 |   |
| 5.         | Representations and Warranties                                          | 76                                                   |
|       | 5.1                                                                     | Organization                                         | 76 |
|       | 5.2                                                                     | Financial Statements                                 | 76 |
|       | 5.3                                                                     | Enforceable Obligations; Authorization               | 76 |
|       | 5.4                                                                     | Other Debt                                           | 77 |
|       | 5.5                                                                     | Litigation                                           | 77 |
|       | 5.6                                                                     | Taxes                                                | 77 |
|       | 5.7                                                                     | No Material Misstatements; Full Disclosure           | 78 |
|       | 5.8                                                                     | Subsidiaries and Offshore Entities                   | 78 |

 

i

----

 
|   | 5.9                   | Representations by Others                                                                | 78     |
|--------|-----------------------|------------------------------------------------------------------------------------------|--------|
|   | 5.10                  | Permits, Licenses, Etc.                                                                  | 78     |
|   | 5.11                  | ERISA                                                                                    | 79     |
|   | 5.12                  | Title to Properties; Possession Under Leases                                             | 79     |
|   | 5.13                  | Assumed Names                                                                            | 80     |
|   | 5.14                  | Investment Company Act                                                                   | 80     |
|   | 5.15                  | Public Utility Holding Company Act                                                       | 80     |
|   | 5.16                  | Agreements                                                                               | 80     |
|   | 5.17                  | Environmental Matters                                                                    | 80     |
|   | 5.18                  | No Change in Credit Criteria or Collection Policies                                      | 81     |
|   | 5.19                  | Solvency                                                                                 | 82     |
|   | 5.20                  | Status of Receivables and Other Collateral                                               | 83     |
|   | 5.21                  | Transactions with Related Parties                                                        | 83     |
|   | 5.22                  | Intellectual Property                                                                    | 83     |
|   | 5.23                  | [RESERVED]                                                                               | 84     |
|   | 5.24                  | Canadian Pension and Benefit Plan Matters                                                | 84     |
|   | 5.25                  | Related Businesses                                                                       | 84     |
|   | 5.26                  | Material Leasehold Properties                                                            | 84     |
|   | 5.27                  | Security Interests                                                                       | 84     |
|   | 5.28                  | [RESERVED]                                                                               | 85     |
|   | 5.29                  | Deposit Accounts                                                                         | 85     |
|   |                  |                                                                                     |   |
| 6.     | Affirmative Covenants | 85                                                                                       |
|   | 6.1                   | Businesses and Properties                                                                | 85     |
|   | 6.2                   | Taxes                                                                                    | 86     |
|   | 6.3                   | Financial Statements and Information                                                     | 86     |
|   | 6.4                   | Inspections; Field Examinations; Inventory Appraisals  and Physical Counts               | 88     |
|   | 6.5                   | Further Assurances                                                                       | 90     |
|   | 6.6                   | Books and Records                                                                        | 90     |
|   | 6.7                   | Insurance                                                                                | 90     |
|   | 6.8                   | ERISA                                                                                    | 91     |
|   | 6.9                   | Use of Proceeds                                                                          | 92     |
|   | 6.10                  | Borrowers; Guarantors; Joinder Agreements                                                | 92     |
|   | 6.11                  | Notice of Events                                                                         | 93     |
|   | 6.12                  | Environmental Matters                                                                    | 94     |
|   | 6.13                  | End of Fiscal Year                                                                       | 94     |
|   | 6.14                  | Pay Obligations and Perform Other Covenants                                              | 94     |
|   | 6.15                  | Collection of Receivables; Application of  Receivables Proceeds                          | 95     |
|   | 6.16                  | Receivables and Other Collateral Matters                                                 | 96     |
|   | 6.17                  | Agreements                                                                               | 97     |
|   | 6.18                  | Hedging Strategy                                                                         | 97     |
|   | 6.19                  | Canadian Pension Plans; Canadian Benefit Plans                                           | 97     |
|   | 6.20                  | Conforming Leasehold Interests; Matters Relating to  Additional Real Property Collateral | 98     |

 

ii

----

 
| 7.     | Negative Covenants                       | 100                                                                  |
|--------|------------------------------------------|----------------------------------------------------------------------|
|   | 7.1                                      | Indebtedness                                                         | 100 |
|   | 7.2                                      | Liens                                                                | 103 |
|   | 7.3                                      | Contingent Liabilities                                               | 105 |
|   | 7.4                                      | Mergers, Consolidations and Dispositions and  Acquisitions of Assets | 105 |
|   | 7.5                                      | Nature of Business                                                   | 109 |
|   | 7.6                                      | Transactions with Related Parties                                    | 109 |
|   | 7.7                                      | Investments, Loans                                                   | 110 |
|   | 7.8                                      | ERISA Compliance                                                     | 110 |
|   | 7.9                                      | Trade Credit Extensions                                              | 111 |
|   | 7.10                                     | Change in Accounting Method                                          | 111 |
|   | 7.11                                     | Redemption, Dividends, Stock Issuance, Distributions  and Payments   | 111 |
|   | 7.12                                     | Fixed Charge Coverage Ratio                                          | 112 |
|   | 7.13                                     | Sale of Receivables                                                  | 112 |
|   | 7.14                                     | Sale and Lease-Back Transactions                                     | 112 |
|   | 7.15                                     | Change of Name or Place of Business                                  | 113 |
|   | 7.16                                     | Restrictive Agreements                                               | 113 |
|   | 7.17                                     | Tax Classification                                                   | 113 |
|   | 7.18                                     | Deposit Accounts                                                     | 113 |
|   | 7.19                                     | Organizational Documents; Tax Sharing Agreements                     | 114 |
|   | 7.20                                     | Limitation on Indebtedness of Offshore Entities                      | 114 |
|   |                                     |                                                                 |   |
| 8.     | Events of Default and Remedies           | 114                                                                  |
|   | 8.1                                      | Events of Default                                                    | 114 |
|   | 8.2                                      | Remedies Cumulative                                                  | 117 |
|   |                                     |                                                                 |   |
| 9.     | The Agent; the Canadian Collateral Agent | 117                                                                  |
|   | 9.1                                      | Appointment, Powers and Immunities                                   | 117 |
|   | 9.2                                      | Reliance                                                             | 118 |
|   | 9.3                                      | Defaults                                                             | 119 |
|   | 9.4                                      | Rights as a Lender                                                   | 119 |
|   | 9.5                                      | Indemnification                                                      | 119 |
|   | 9.6                                      | Non-Reliance on Agent and Other Lenders                              | 120 |
|   | 9.7                                      | Failure to Act                                                       | 120 |
|   | 9.8                                      | Resignation or Removal of Agent                                      | 120 |
|   | 9.9                                      | Syndication Agent; Joint Lead Arrangers; Joint  Bookrunners          | 121 |
|   |                                     |                                                                 |   |
| 10.    | Miscellaneous                            | 121                                                                  |
|   | 10.1                                     | No Waiver                                                            | 121 |
|   | 10.2                                     | Notices                                                              | 121 |
|   | 10.3                                     | Governing Law                                                        | 122 |
|   | 10.4                                     | Survival; Parties Bound                                              | 122 |
|   | 10.5                                     | Counterparts                                                         | 122 |
|   | 10.6                                     | Limitation of Interest                                               | 122 |
|   | 10.7                                     | Survival                                                             | 123 |
|   | 10.8                                     | Captions                                                             | 123 |
|   | 10.9                                     | Expenses, Etc.                                                       | 123 |

 

iii

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|   | 10.10 | Indemnification                                                                 | 123 |
|--------|-------|---------------------------------------------------------------------------------|-----|
|   | 10.11 | Amendments, Waivers, Etc.                                                       | 124 |
|   | 10.12 | Successors and Assigns                                                          | 125 |
|   | 10.13 | Entire Agreement                                                                | 129 |
|   | 10.14 | Severability                                                                    | 129 |
|   | 10.15 | Disclosures                                                                     | 129 |
|   | 10.16 | Capital Adequacy                                                                | 129 |
|   | 10.17 | Taxes                                                                           | 131 |
|   | 10.18 | Waiver of Claim                                                                 | 134 |
|   | 10.19 | Right of Setoff                                                                 | 134 |
|   | 10.20 | Waiver of Right to Jury Trial                                                   | 134 |
|   | 10.21 | Additional Provisions Regarding Collection of  Receivables and other Collateral | 135 |
|   | 10.22 | Bank Product Obligations                                                        | 137 |
|   | 10.23 | Construction                                                                    | 140 |
|   | 10.24 | Joint and Several Obligations                                                   | 140 |
|   | 10.25 | USA Patriot Act                                                                 | 140 |
|   | 10.26 | Judgment                                                                        | 140 |
|   | 10.27 | Jurisdiction; Service of Process                                                | 141 |
|   | 10.28 | Confidentiality                                                                 | 141 |
|   | 10.29 | No Fiduciary Duty/Conflicts                                                     | 142 |

 

**LIST OF EXHIBITS ANDSCHEDULES**

 
| Exhibit A | -      | Form of Revolving Credit Note                 |
|----------------|--------|----------------------------------------------------|
| Exhibit B | -      | Form of Swingline Note                        |
| Exhibit C | -      | Form of Term Note                             |
| Exhibit D | -      | Form of Compliance Certificate                |
| Exhibit E | -      | Form of Request for Extension of Credit       |
| Exhibit F | -      | Form of Rate of Section Notice           |
| Exhibit G | -      | Form of Borrowing Base Compliance Certificate |
| Exhibit H | -      | Form of Receivables Report                    |
| Exhibit I | -      | Form of Inventory Designation Report          |
| Exhibit J | -      | Form of Solvency Certificate                  |
| Exhibit K | -      | Form of Canadian Guaranty                     |
| Exhibit L | -      | Form of Perfection Certificate                |
| Exhibit M | -      | Form of US Patent Security Agreement          |
| Exhibit N | -      | Form of US Trademark Security Agreement       |
| Exhibit O | -      | Form of US Copyright Security Agreement       |
| Exhibit P | -      | Form of Assignment And Acceptance             |
| Exhibit Q | -      | Form of Commitment Increase Agreement         |
| Exhibit R | -      | Form of New Lender Agreement                  |
|           |   |                                               |
| Schedule 1.1A  | -      | Revolving Credit Commitments                       |
| Schedule 1.1B  | -      | Material Leasehold Properties                      |
| Schedule 1.1C  | -      | Equipment Component                                |

 

iv

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| Schedule 1.1D     | - | Quarterly Equipment Component Amortization Amount                               |
|-------------------|---|---------------------------------------------------------------------------------|
| Schedule 1.1E     | - | Quarterly Real Estate Component Amortization Amount                             |
| Schedule 1.1F     | - | Real Estate Component                                                           |
| Schedule 1.4      | - | Responsible Officers of Neenah                                                  |
| Schedule 2.10(a)  | - | Existing Letters of Credit                                                      |
| Schedule 4.2(n)   | - | Access Agreement and Waivers, Subordinations or Landlord and  Warehouse Waivers |
| Schedule 4.2(r)-1 | - | List of Closing Date Mortgaged Properties                                       |
| Schedule 4.2(r)-2 | - | List of Endorsements                                                            |
| Schedule 5.3      | - | Governmental Authorization                                                      |
| Schedule 5.5      | - | Material Litigation                                                             |
| Schedule 5.8      | - | Subsidiaries, Jurisdictions of Foreign Qualification; Capitalization            |
| Schedule 5.10     | - | Permits, Licenses, Etc.                                                         |
| Schedule 5.12(b)  | - | Real Property Leases                                                            |
| Schedule 5.13     | - | Assumed Names                                                                   |
| Schedule 5.16     | - | Indebtedness                                                                    |
| Schedule 5.17     | - | Environmental Matters                                                           |
| Schedule 5.22     | - | Intellectual Property                                                           |
| Schedule 5.27     | - | Financing Statements                                                            |
| Schedule 5.29     | - | Deposit Accounts                                                                |
| Schedule 7.2      | - | Liens                                                                           |
| Schedule 7.6      | - | Permitted Affiliated Transactions                                               |

 

v

----

 

**LIST OF DEFINED TERMS**

 
|                                  | **Page No.** |
|---------------------------------------|--------------|
|                                  |         |
| $                                     | 42           |
| 10 percent shareholder                | 133          |
| Act                                   | 140          |
| Additional Mortgage                   | 98           |
| Additional Mortgage Policies          | 99           |
| Additional Mortgaged Property         | 98           |
| Additional Mortgages                  | 98           |
| Additional Senior Indenture           | 2            |
| Additional Senior Note Documents      | 2            |
| Additional Senior Notes               | 2            |
| Adjusted LIBOR Rate                   | 2            |
| Affiliate                             | 2            |
| Agent                                 | 1            |
| Agreement                             | 1            |
| Alternate Base Rate                   | 3            |
| Alternate Base Rate Borrowing         | 3            |
| Annual Audited Financial Statements   | 3            |
| Annualized Basis                      | 4            |
| Applicable Commitment Fee Percentage  | 4            |
| Applicable Lending Office             | 4            |
| Applicable Margin                     | 4            |
| Applications                          | 5            |
| Approved Fund                         | 5            |
| Assignment and Acceptance             | 127          |
| Availability                          | 5            |
| bank                                  | 133          |
| Bank Product Amount                   | 6            |
| Bank Products                         | 6            |
| Borrower                              | 1            |
| Borrowers                             | 1            |
| Borrowers’ Agent                 | 7            |
| Borrowing Base                        | 7            |
| Borrowing Base Compliance Certificate | 7            |
| Borrowing Base Deficiency             | 7            |
| Business Day                          | 7            |
| Business Entity                       | 7            |
| Canadian Benefit Plans                | 8            |
| Canadian Collateral Agent             | 8            |
| Canadian Dollars                      | 8            |
| Canadian Licenses                     | 8            |
| Canadian Pension Plans                | 8            |
| Canadian Subsidiary                   | 8            |
| Capital Expenditures                  | 8            |

 

vi

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| Capital Lease Obligations         | 8   |
|-----------------------------------|-----|
| Cash Dividends                    | 8   |
| Cash Officer                      | 8   |
| Cdn.$                             | 8   |
| Change of Control                 | 8   |
| Closing Date                      | 9   |
| Closing Date Mortgage             | 73  |
| Closing Date Mortgage Policy      | 73  |
| Closing Date Mortgaged Property   | 73  |
| Closing Date Mortgages            | 73  |
| Code                              | 9   |
| Collateral                        | 9   |
| Collection Account                | 9   |
| Commitment                        | 10  |
| Commitment Fee                    | 46  |
| Commitment Increase Agreement     | 10  |
| Commitment Percentage             | 10  |
| Compliance Certificate            | 10  |
| Concentration Limit               | 10  |
| Consequential Loss                | 10  |
| Consolidated                      | 11  |
| Contingent Obligation             | 11  |
| Contribution Agreement            | 11  |
| Controlled Account                | 11  |
| controlled foreign corporation    | 133 |
| Copyrights                        | 24  |
| Credit Parties                    | 11  |
| Current Sum                       | 11  |
| Default                           | 16  |
| Default Rate                      | 11  |
| Defaulting Lender                 | 12  |
| Designated Timber Agent           | 137 |
| Disbursement/Pass-Through Account | 113 |
| Discontinued Operations           | 12  |
| Disposition                       | 12  |
| Dollar                            | 12  |
| dollars                           | 42  |
| Domestic Lending Office           | 12  |
| Domestic Subsidiary               | 12  |
| Dominion Event                    | 95  |
| Dominion Termination Event        | 95  |
| EBITDA                            | 13  |
| Eligible Assignee                 | 13  |
| Eligible Equipment                | 13  |
| Eligible Inventory                | 14  |
| Eligible Real Estate              | 14  |

 

vii

----

 
| Eligible Receivables                      | 14  |
|-------------------------------------------|-----|
| Environmental Claim                       | 15  |
| Environmental Law                         | 15  |
| Environmental Liabilities                 | 15  |
| Environmental Permit                      | 16  |
| Equipment                                 | 16  |
| Equipment Component                       | 16  |
| ERISA                                     | 16  |
| ERISA Affiliate                           | 16  |
| Event of Default                          | 16  |
| Excess Interest Amount                    | 16  |
| Excluded Foreign Subsidiary               | 16  |
| Existing Credit Agreement                 | 1   |
| Existing Indebtedness                     | 1   |
| Existing Lenders                          | 1   |
| Existing Letters of Credit                | 16  |
| Extended Facility Letter of Credit        | 62  |
| Federal Funds Effective Rate              | 17  |
| Financial Officer                         | 17  |
| FinCo                                     | 17  |
| Fixed Charge Coverage Ratio               | 17  |
| Flood Hazard Property                     | 18  |
| Foreign Lender                            | 18  |
| GAAP                                      | 18  |
| Governmental Authority                    | 18  |
| Grantor                                   | 18  |
| guarantor                                 | 11  |
| Guarantors                                | 18  |
| Guaranty                                  | 18  |
| Hazardous Substance                       | 19  |
| Hedging Obligation Amount                 | 19  |
| Hedging Obligations                       | 19  |
| Hedging Obligations Aggregate Amount      | 19  |
| Highest Lawful Rate                       | 19  |
| Indebtedness                              | 19  |
| Indemnifiable Tax                         | 131 |
| Indenture Cap                             | 20  |
| Ineligible Inventory                      | 20  |
| Ineligible Receivables                    | 22  |
| Initial Pledged Inter-Company Loan        | 24  |
| Intellectual Property                     | 24  |
| Intellectual Property Security Agreements | 84  |
| interest                                  | 122 |
| Interest Expense                          | 25  |
| Interest Option                           | 52  |
| Interest Options                          | 52  |

 

viii

----

 
| Interest Payment Dates                 | 25  |
|----------------------------------------|-----|
| Interest Period                        | 25  |
| Inventory                              | 25  |
| Investment                             | 26  |
| IRS                                    | 26  |
| Issuing Bank                           | 26  |
| ITA                                    | 26  |
| Joinder Agreement                      | 26  |
| JPMorgan                               | 1   |
| Judgment Currency                      | 140 |
| Kimberly-Clark                         | 26  |
| LC Collateral Account                  | 62  |
| Leasehold Property                     | 26  |
| Legal Requirement                      | 26  |
| Lender                                 | 1   |
| Lender or Lenders                      | 26  |
| Lender Party                           | 26  |
| Lenders                                | 1   |
| Letter of Credit Advances              | 27  |
| Letter of Credit Exposure Amount       | 27  |
| Letters of Credit                      | 26  |
| LIBOR Borrowing                        | 27  |
| LIBOR Lending Office                   | 27  |
| LIBOR Rate                             | 27  |
| Lien                                   | 27  |
| Loan Documents                         | 28  |
| Loans                                  | 28  |
| Material Adverse Effect                | 28  |
| Material Lease                         | 28  |
| Material Leasehold Property            | 28  |
| Mill Properties                        | 28  |
| Monthly Unaudited Financial Statements | 28  |
| Mortgage                               | 29  |
| Mortgaged Property                     | 29  |
| Mortgages                              | 29  |
| Neenah Germany                         | 29  |
| Net Income                             | 29  |
| Net Recovery Value Percentage          | 30  |
| New Lender                             | 68  |
| New Lender Agreement                   | 30  |
| Non-Reporting Lender Party             | 6   |
| Notes                                  | 30  |
| Notice of Default                      | 119 |
| Nova Scotia Woodlands                  | 30  |
| NP International                       | 30  |
| NP International HoldCo                | 30  |

 

ix

----

 
| Obligation Currency                                 | 140 |
|-----------------------------------------------------|-----|
| Obligations                                         | 30  |
| Obligees                                            | 137 |
| Offshore Entities                                   | 31  |
| Organizational Documents                            | 31  |
| Original Closing Date                               | 1   |
| Other Tax                                           | 131 |
| Parent                                              | 1   |
| Parties                                             | 31  |
| Patents                                             | 24  |
| PBGC                                                | 31  |
| Perfection Certificate                              | 32  |
| Permitted Affiliate Transactions                    | 32  |
| Permitted Investment Securities                     | 32  |
| Permitted Overadvances                              | 46  |
| Person                                              | 33  |
| Plan                                                | 33  |
| Pledged Cash                                        | 33  |
| Pledged Inter-Company Loan                          | 33  |
| Pledged Inter-Company Note                          | 33  |
| PPSA (Nova Scotia)                                  | 33  |
| primary obligations                                 | 11  |
| primary obligor                                     | 11  |
| Prime Rate                                          | 33  |
| Principal Office                                    | 34  |
| Prior Term Loan Agreement                           | 34  |
| Prohibited Transaction                              | 34  |
| Proper Form                                         | 34  |
| Property                                            | 34  |
| PUHCA                                               | 80  |
| purpose credit                                      | 92  |
| Quarterly Equipment Component Amortization Amount   | 34  |
| Quarterly Real Estate Component Amortization Amount | 34  |
| Quarterly Unaudited Financial Statements            | 34  |
| Rate Selection Date                                 | 34  |
| Rate Selection Notice                               | 52  |
| Reaffirmation Agreement                             | 35  |
| Real Estate Component                               | 35  |
| Real Property Asset                                 | 35  |
| Receivables                                         | 35  |
| Refinancing Indebtedness                            | 35  |
| Reg U                                               | 92  |
| Register                                            | 128 |
| Regulation D                                        | 36  |
| Regulatory Change                                   | 36  |
| Related Obligations                                 | 137 |

 

x

----

 
| Reportable Event                               | 36  |
|------------------------------------------------|-----|
| Request for Extension of Credit                | 36  |
| Required Lenders                               | 36  |
| Requirements of Environmental Law              | 36  |
| Reserves                                       | 36  |
| Responsible Officer                            | 36  |
| Revolving Commitment                           | 36  |
| Revolving Commitment Increase Notice           | 67  |
| Revolving Credit Alternate Base Rate Borrowing | 37  |
| Revolving Credit LIBOR Borrowing               | 37  |
| Revolving Credit Notes                         | 37  |
| Revolving Exposure                             | 37  |
| Revolving Loans                                | 37  |
| Scheduled Principal Payments                   | 37  |
| Security Agreements                            | 37  |
| Security Documents                             | 38  |
| Senior Note Documents                          | 38  |
| Senior Note Indenture                          | 38  |
| Senior Notes                                   | 38  |
| Settlement                                     | 64  |
| Settlement Date                                | 64  |
| Special Cash Collateral Account                | 39  |
| Standby Letters of Credit                      | 39  |
| Statutory Reserves                             | 39  |
| Stock                                          | 39  |
| Subordinated Indebtedness                      | 39  |
| Subsidiary                                     | 39  |
| Swingline Exposure                             | 39  |
| Swingline Lender                               | 40  |
| Swingline Loan                                 | 62  |
| Swingline Loans                                | 40  |
| Swingline Note                                 | 40  |
| Synthetic Lease                                | 40  |
| Tax                                            | 131 |
| Term Lenders                                   | 40  |
| Term Loan Alternate Base Rate Borrowing        | 40  |
| Term Loan Commitment                           | 40  |
| Term Loans                                     | 40  |
| Term Notes                                     | 40  |
| Termination Date                               | 40  |
| Timberland Properties                          | 41  |
| Title Company                                  | 41  |
| Total Commitment                               | 41  |
| Total Revolving Commitment                     | 41  |
| Trade Letters of Credit                        | 41  |
| Trademarks                                     | 24  |

 

xi

----

 
| Tri-Party Agreements         | 41 |
|------------------------------|----|
| UCC                          | 41 |
| Unpledged Inter-Company Loan | 41 |
| Unused Commitment            | 41 |

 

xii

----

 

**AMENDED AND RESTATED CREDITAGREEMENT**

** **

THIS AMENDED AND RESTATEDCREDIT AGREEMENT (together with all amendments, modifications and supplementshereto and restatements hereof, this “**Agreement**”)is made and entered into effective as of November 5, 2009, by and amongNeenah Paper, Inc., a Delaware corporation (“**Parent**”), each subsidiary of Parent listed as a “Borrower”on the signature pages hereto (together with Parent, each a “**Borrower**” and collectively, the “**Borrowers**”), each subsidiary of Parentlisted as a “Guarantor” on thesignature pages hereto, each of the financial institutions which is asignatory hereto or which may from time to time become a party hereto(individually, a “**Lender**”and collectively, the “**Lenders**”),JPMorgan Chase Bank, N.A. (“**JPMorgan**”),as agent for the Lenders (in such capacity, together with its successors insuch capacity, the “**Agent**”),and JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian collateral agent forthe Lenders.

 

WITNESSETH:

 

WHEREAS, the Borrowers, Neenah Paper Company of Canada, theAgent, the Canadian Collateral Agent and each of the financial institutions aparty thereto as lenders (“**Existing Lenders**”),are parties to that certain Credit Agreement dated as of November 30, 2004(the “**Original Closing Date**”), pursuantto which Existing Lenders provided certain loans and extensions of credit tothe Borrowers (such Credit Agreement, as heretofore amended, the “**Existing Credit Agreement**” and allIndebtedness arising pursuant to the Existing Credit Agreement, the “**Existing Indebtedness**”); and

 

WHEREAS, subject to the conditions precedent set forthherein, the parties hereto desire to amend and restate the Existing CreditAgreement in its entirety in the form of this Agreement, and Borrowers desireto obtain Loans (a) to refinance the Existing Indebtedness, and (b) forother purposes permitted herein; and

 

WHEREAS, after giving effect to the amendment and restatementof the Existing Credit Agreement pursuant to the terms hereof, the CommitmentPercentage of each Lender hereunder will be as set forth on Schedule 1.1Ahereto; and

 

NOW, THEREFORE, in consideration of the premises, therepresentations, warranties, covenants and agreements contained herein, andother good and valuable consideration, the receipt and adequacy of which arehereby acknowledged, and subject to the satisfaction of each conditionprecedent contained in Section 4.2 hereof, the Existing CreditAgreement shall be amended and restated as of the Closing Date in the form ofthis Agreement.  It is the intention ofthe Borrowers, Guarantors, the Agent, the Canadian Collateral Agent andLenders, and such parties hereby agree, that this Agreement supersedes andreplaces the Existing Credit Agreement in its entirety, and that (a) suchamendment and restatement shall operate to renew, amend and modify certain ofthe rights and obligations of the parties under the Existing Credit Agreementas provided herein, but shall not act as a novation thereof, and (b) theLiens securing the “Obligations” under and as defined in the Existing CreditAgreement shall not be extinguished, but shall be carried forward and shallsecure such obligations and Indebtedness as renewed, amended, restated andmodified hereby.  The parties heretofurther agree as follows:

 

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1.             Definitions

 

1.1           Certain DefinedTerms.  Unless a particular word orphrase is defined therein or the context otherwise requires, capitalized wordsand phrases used in the other Loan Documents have the meanings providedbelow.  As used in this Agreement, thefollowing terms shall have the following meanings:

 

“**AdditionalMortgage**” shall have the meaning specified for such term in Section 6.20(b)(A).

 

“**Additional Mortgage Policies**” shall have the meaningspecified for such term in Section 6.20(b)(F).

 

“**Additional Mortgaged Property**” shall have the meaningspecified for such term in Section 6.20(b).

 

“**AdditionalSenior Indenture**” shall mean a trust indenture between theParent and a financial institution serving as trustee thereunder, havingcovenants (but not necessarily economic terms) substantially consistent withthose in the Senior Note Indenture (and if relating to senior subordinatedAdditional Senior Notes, having subordination provisions customary for similarfinancings and satisfactory to the Agent and its counsel).

 

“**AdditionalSenior Note Documents**” shall mean any and all agreements,instruments and other documents pursuant to which the Additional Senior Noteshave been or will be issued or otherwise setting forth the terms of theAdditional Senior Notes, the Additional Senior Indenture and the obligationswith respect thereto, including any guaranty agreements, bank productagreements or hedging agreements related thereto, all ancillary agreements asto which any agent, trustee or lender is a party or a beneficiary and all otheragreements, instruments, documents and certificates executed in connection withany of the foregoing, in each case as such agreement, instrument or otherdocument may be amended, restated, supplemented, refunded, replaced orotherwise modified from time to time in accordance with the terms thereof.

 

“**AdditionalSenior Notes**” shall mean any senior unsecured or seniorsubordinated unsecured Indebtedness issued by the Parent as permitted pursuantto Section 7.1(m) pursuant to an Additional Senior Indenture.

 

“**Adjusted LIBOR Rate**” shall mean, with respect to any LIBORBorrowing for any Interest Period, an interest rate per annum (rounded upwards,if necessary, to the next 1/16 of 1%) equal to the sum of (a) the productof (i) the LIBOR Rate in effect for such Interest Period and (ii) StatutoryReserves and (b) the Applicable Margin.

 

“**Affiliate**” of any Person shall mean any other Person whichcontrols or is controlled by or under common control with such Person.  For purposes of this definition, “control”(including “controlled by” and “under common control with”) means thepossession, directly or indirectly, of the power to direct or cause thedirection of the management or policies of such Person through the ownership ofsecurities or by contract.  Withoutlimiting the generality of the foregoing, control of the right to vote of tenpercent (10%) or more of all voting securities of a Person or beneficialownership of ten percent (10%) of the outstanding equity interests in such

 

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Person shall be deemed to be control for purposes ofcompliance with the provisions of Section 7.6 hereof.  The Credit Parties and Kimberly-Clark shallnot be deemed to be under common control for purposes hereof solely due to thefact that Parent and Kimberly-Clark have common shareholders.

 

“**Agent**” shall have the meaning specified in the preamble tothis Agreement.

 

“**Alternate Base Rate**” shall mean, for any day, a rate perannum (rounded upwards to the nearest 1/16 of 1%) equal to the sum of (a) thegreatest of (i) the Prime Rate (computed on the basis of the actual numberof days elapsed over a 360-day year) in effect on such day, (ii) theFederal Funds Effective Rate (computed on the basis of the actual number ofdays elapsed over a 360-day year) in effect for such day plus 1⁄2 of 1%,and (iii) the Adjusted LIBOR Rate (determined without regard to clause (b) inthe definition thereof) for a one month Interest Period on such day (or if suchday is not a Business Day, the immediately preceding Business Day) plus2.50%, and (b) the Applicable Margin. For purposes of this Agreement, any change in the Alternate Base Ratedue to a change in the Prime Rate, Federal Funds Effective Rate or the AdjustedLIBOR Rate shall be effective on the effective date of such change in the PrimeRate, Federal Funds Effective Rate or the Adjusted LIBOR Rate,respectively.  If for any reason theAgent shall have determined (which determination shall be conclusive andbinding, absent manifest error) that it is unable to ascertain the FederalFunds Effective Rate or the Adjusted LIBOR Rate for any reason, including theinability or failure of the Agent to obtain sufficient quotations in accordancewith the terms hereof, the Alternate Base Rate shall be determined withoutregard to clause (a)(i) and/or (a)(iii), as applicable, until thecircumstances giving rise to such inability no longer exist.

 

“**Alternate Base Rate Borrowing**” shall mean, as of any date,that portion of the principal balance of the Loans bearing interest at theAlternate Base Rate as of such date.

 

“**Annual Audited Financial Statements**” shall mean (a) theannual financial statements of the Parent and its Subsidiaries, including allnotes thereto, which statements shall include, on a Consolidated basis, abalance sheet as of the end of such fiscal year and a statement of operations,a retained earnings statement and a statement of cash flows for such fiscalyear, all setting forth in comparative form the corresponding figures from theprevious fiscal year and accompanied by a report and opinion of independentcertified public accountants with Deloitte & Touche LLP or anaccounting firm of national standing reasonably acceptable to the Agent, whichreport shall not contain any qualification (and be without comment as to theaccountants’ opinion whether such Person is a “going concern” or can continueto be a “going concern”), except that such report may contain qualificationwith respect to new accounting principles mandated by the Financial AccountingStandards Board (or its successor organization), and shall state that suchfinancial statements, in the opinion of such accountants, present fairly, inall material respects, the financial position of such Person as of the datethereof and the results of its operations and cash flows for the period coveredthereby in conformity with GAAP and (b) annual consolidating financialstatements of the Credit Parties and their Subsidiaries containing a balancesheet as of the end of such fiscal year and a statement of operations for suchfiscal year prepared in reasonable detail. Such statements shall be accompanied by a certificate of suchaccountants that in making the appropriate audit and/or investigation inconnection with such report and opinion, such accountants did not become awareof any Default or Event of Default

 

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with respect to a breach of Section 7.12, or ifin the opinion of such accountant any such Default or Event of Default existswith respect to a breach of Section 7.12, a description of thenature and status thereof.

 

“**Annualized Basis**” shall mean, withrespect to the components of the Fixed Charge Coverage Ratio for the first fiscalquarter ending following the Closing Date (the first such fiscal quarter beingthe fiscal quarter in which the Closing Date occurs), each such component ofthe Fixed Charge Coverage Ratio during the three fiscal quarters ending December 31,2009, divided by 0.75;

 

provided, that the cashInterest Expense paid on the Senior Notes shall be $4,148,437.50 during thefirst fiscal quarter ending December 31, 2009 (regardless of when suchexpense is actually paid); provided, further, that the Borrowers shallprovide the Agent with the calculation of the Annualized Basis in form andsubstance reasonably satisfactory to the Agent.

 

“**Applicable Commitment Fee Percentage**” shall mean, withrespect to any Commitment Fee, a rate per annum of (a) 0.50% at all timeswhile the Term Loan is outstanding, and (b) at all times after the TermLoan has been paid in full in cash, (1) 0.75% if the aggregate amount ofthe Lenders’ average Unused Commitments for the calculation period is greaterthan fifty percent (50%) of the Total Revolving Commitment, and (2) 0.50%if the aggregate amount of the Lenders’ average Unused Commitments for thecalculation period is less than or equal to fifty percent (50%) of the TotalRevolving Commitment.

 

“**Applicable Lending Office**” shall mean, with respect toeach Lender, such Lender’s Domestic Lending Office in the case of an AlternateBase Rate Borrowing and such Lender’s LIBOR Lending Office in the case of aLIBOR Borrowing.

 

“**Applicable Margin**” shall mean, (a) with respect toany Term Loans bearing interest at the Adjusted LIBOR Rate, 4.25% and for anyTerm Loans bearing interest at the Alternate Base Rate, 2.75%, and (b) withrespect to any Revolving Loan, the applicable rate per annum determined inaccordance with the remainder of this definition.  As of the end of each fiscal quarter of theCredit Parties, commencing with the quarter ending December 31, 2009, theApplicable Margin for Revolving Loans shall be adjusted upward or downward, asapplicable, to the respective percentages shown in the schedule below based onAvailability, tested on an average daily basis for the most recently completedfiscal quarter of the Credit Parties. For purposes hereof, any such adjustmentin the respective amounts of the Applicable Margin, whether upward or downward,shall be effective ten (10) Business Days after the Borrowing BaseCompliance Certificate of the Credit Parties and their Subsidiaries withrespect to the final month of such fiscal quarter has been delivered to andreceived by the Agent in accordance with the terms of Section 6.3(i) hereof;provided, however, if any such Borrowing Base ComplianceCertificate is not delivered in a timely manner as required under the terms of Section 6.3(i) hereof,the Applicable Margin for Revolving Loans from the date such Borrowing BaseCompliance Certificate was due until ten (10) Business Days after Agentand Lenders receive the same will be the applicable rate per annum set forthbelow in Category 1; provided further, that the Applicable Marginfrom and after the Closing Date and continuing until the first upward ordownward adjustment of the Applicable Margin for Revolving Loans, ashereinabove provided, shall be at least the applicable rate per annum set forthbelow in Category 2; provided further,

 

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that upon the sale or other disposition of (i) NeenahPaper FR, LLC’s facility located in Ripon, California the Applicable Margin forRevolving Loans set forth in the grid below will be reduced by 0.25% and (ii) allof the Nova Scotia Woodlands the Applicable Margin for Revolving Loans setforth in the grid below will be reduced by 0.25%.

 
| **Availability**                                                             | ** ** | **Per Annum Percentage  for Revolving Credit  LIBOR Borrowings** | ** ** | **Per Annum Percentage  for Revolving Credit  Alternate Base Rate  Borrowings** | ** ** |
|------------------------------------------------------------------------------|------------|------------------------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|
| Category 1:  Less than $25,000,000                                           |       | 4.00                                                             | %          | 2.50                                                                            | %          |
| Category 2:  Less than $70,000,000, but greater than or equal to $25,000,000 |       | 3.75                                                             | %          | 2.25                                                                            | %          |
| Category 3:  Greater than or equal to $70,000,000                            |       | 3.50                                                             | %          | 2.00                                                                            | %          |

 

“**Applications**” shall mean all applications and agreementsfor Letters of Credit, or similar instruments or agreements, in Proper Form,now or hereafter executed by any Person in connection with any Letter of Creditnow or hereafter issued or to be issued under the terms hereof at the requestof the Borrower’s Agent.

 

“**Approved Fund**” shall mean any Person (other than a naturalperson) that is engaged in making, purchasing, holding or investing in bankloans and similar extensions of credit in the ordinary course of its businessand that is administered or managed by (a) a Lender, (b) an Affiliateof a Lender or (c) an entity or an Affiliate of an entity that administersor manages a Lender.

 

“**Assignment and Acceptance**” shall have the meaningspecified in Section 10.12(c) hereof.

 

“**Availability**” shall mean at any time (a) the lesserat such time of (i) the Total Revolving Commitment (as such amount mayhave been reduced or increased in accordance with the provisions of thisAgreement) and (ii) (A) the Borrowing Base as of such time, less(B) all applicable Reserves, less (b) the sum of thefollowing:

 

(i)            theaggregate amount of each Lender’s Current Sum at such time;

 

(ii)           theaggregate amount of due and payable interest outstanding under the Loans atsuch time; and

 

(iii)          all otheroutstanding Obligations hereunder or any other Loan Documents which are pastdue and payable at such time, including without limitation, Commitment Fees,fees related to any Letters of Credit, and legal fees and other amounts payableunder Section 10.9 hereof.

 

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“**Bank Product Amount**” shall mean, with respect to any BankProduct at any time, the applicable Credit Party’s or Subsidiary’s net paymentobligation with respect to such Bank Product as of the end of the precedingcalendar month (or other period as provided herein), as determined utilizingthe methodology agreed to with respect to such Bank Product between theapplicable Lender Party and Credit Party and reported to the Agent pursuant tothe terms hereof.  In the event that noBank Product Amount is reported as provided herein for any Bank Product for anyperiod, the Agent may use the most recently reported Bank Product Amount forsuch Bank Product, as adjusted in the Agent’s reasonable credit judgment.

 

“**Bank Products**” shall mean any of the following a LenderParty provides to, or enters into with, a Credit Party or Subsidiary of aCredit Party:

 

(a)           anyarrangement with respect to Hedging Obligations (other than any arrangementwith respect to Hedging Obligations secured by a Lien pursuant to Section 7.2(m));

 

(b)           anydeposit, lockbox or other cash management arrangement; or

 

(c)           any othercommercial bank product, service or agreement pursuant to which a Credit Partyor Subsidiary of a Credit Party may be indebted or owe obligations to a Lenderor one of its Affiliates, including, without limitation, credit cards forcommercial customers (including, without limitation, “commercial credit cards”,E-Payables and purchasing cards), stored value cards and treasury managementservices (including, without limitation, controlled disbursement, automatedclearinghouse transactions, returned items, overdrafts and interstatedepository network services);

 

providedthat for any of the foregoing to be included as a “BankProduct” hereunder:  (a) except inthe case of Bank Products provided by or owing to JPMorgan Chase Bank, N.A. orany of its Affiliates, the applicable Lender Party and Borrowers’ Agent musthave provided the Agent written notice of: (i) the existence of such Bank Product and (ii) themethodology agreed upon by the Lender Party and the applicable Credit Party orSubsidiary to determine, from time to time, the Bank Product Amount and, withrespect to Bank Products constituting Hedging Obligations, the HedgingObligation Amount, (b) the applicable Credit Party must otherwise bepermitted to enter into such arrangement under this Agreement or must not berestricted from entering into such arrangement under this Agreement (includingin each case Section 7.1 hereof), and (c) the applicableLender Party must remain a Lender Party; providedfurther, thateach Lender Party other than JPMorgan Chase Bank, N.A. and its Affiliates shallnotify the Agent in writing, as soon as available and in any event withinfifteen (15) days after the end of each calendar month (or at morefrequent intervals, and with such reporting dates, as the Agent may require inits discretion), of the Bank Product Amount and, with respect to Bank Productsconstituting Hedging Obligations, the Hedging Obligation Amount, in respect ofits Bank Products as of the end of such calendar month (or other interval), andany Lender Party that fails to make such notification by the last day of themonth in which due (or, with respect to any interval more frequent thanmonthly, within 10 Business Days of the date when due) and any Affiliatethereof (each, a “**Non-Reporting Lender Party**”)shall be subject to the provisions of Section 2.7(d) withrespect to Bank Products owed to Non-Reporting Lender Parties.

 

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“**Borrower**” or “**Borrowers**”shall have the respective meanings specified in the preamble of this Agreement.

 

“**Borrowers’ Agent**” shall mean Neenah Paper, Inc., inits capacity as agent for the Borrowers and the other Credit Parties, as morefully described in Section 1.4(b).

 

“**Borrowing Base**” shall mean, as of any date, the amount ofthe then most recent computation of the Borrowing Base, determined bycalculating the amount equal to the following:

 

(a)           85% of EligibleReceivables; plus

 

(b)           the lesserof (i) 75% of the value of Eligible Inventory (valued at the lower of costor fair market value), and (ii) 85% of the applicable Net Recovery ValuePercentage of Eligible Inventory; plus

 

(c)           theEquipment Component; plus

 

(d)           the RealEstate Component; plus

 

(e)           thePledged Cash (if any) held in the Special Cash Collateral Account.

 

The Borrowing Base at any timeshall be determined by reference to the most recent Borrowing Base ComplianceCertificate delivered to the Agent pursuant to Section 6.3(i) subjectto immediate adjustment as a result of (i) reductions in the EquipmentComponent, including those resulting from the Quarterly Equipment Component Amortization Amount, (ii) reductions in the Real Estate Component,including those resulting from the Quarterly Real Estate ComponentAmortization Amount, and (iii) reductions in the amount of Pledged Cashheld in the Special Cash Collateral Account based on the amount specified asPledged Cash in the most recently delivered Borrowing Base ComplianceCertificate.

 

“**Borrowing Base Compliance Certificate**” shall mean acertificate completed in the form of Exhibit G attached hereto andsigned by a Responsible Officer of the Borrowers’ Agent.

 

“**Borrowing Base Deficiency**” occurs if at any time the totalRevolving Exposure exceeds the Borrowing Base then in effect.

 

“**Business Day**” shall mean a day when the principal officein New York City of the Agent is open for business and the Lenders’ ApplicableLending Offices are generally open for business; provided, however,that with respect to LIBOR Borrowings, Business Day shall mean aBusiness Day on which transactions in dollar deposits between lenders may becarried on in the London eurodollar interbank market.

 

“**Business Entity**” shall mean corporations, partnerships,joint ventures, joint stock associations, business trusts, limited liabilitycompanies, unlimited liability companies, and other business entities.

 

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“**Canadian Benefit Plans**” shall mean all material employeebenefit plans of any nature or kind whatsoever that are not Canadian PensionPlans and are maintained or contributed to by any Credit Party having employeesin Canada.

 

“**Canadian Collateral Agent**” shall mean JPMorgan Chase Bank,N.A., Toronto Branch, in its capacity as Canadian collateral agent for, and onbehalf of, the Lenders hereunder, and any successor in such capacity.

 

“**Canadian Dollars**” and the sign “**Cdn.$**” shall mean lawful currency ofCanada.

 

“**Canadian Licenses**” shall have the meaning specified forsuch term in Section 5.10.

 

“**Canadian Pension Plans**” shall mean each plan which isconsidered to be a pension plan for the purposes of any applicable pensionbenefits standards statute and/or regulation in Canada or a registered pensionplan under the ITA established, maintained or contributed to by any CreditParty for its employees or former employees, but shall not mean the CanadianPension Plan that is maintained by the Government of Canada or the QuebecPension Plan that is maintained by the Government of Quebec.

 

“**Canadian Subsidiary**” shall mean any Subsidiary of a CreditParty that is created or organized under the laws of Canada or a province orterritory of Canada.

 

“**Capital Expenditures**” shall mean, with respect to anyPerson for any period, all capital expenditures of such Person, on aConsolidated basis, for such period (including without limitation, theaggregate amount of Capital Lease Obligations incurred during such period whichare required to be capitalized and reported as a liability on the consolidatedbalance sheet of such Person), determined in accordance with GAAP, consistentlyapplied.

 

“**Capital Lease Obligations**” shall mean the obligations of aPerson to pay that portion of rent or other amounts constituting payments ofprincipal under a lease of (or other agreement conveying the right to use) realand/or personal Property which obligations are required to be classified andaccounted for as a capital lease on a balance sheet of such Person under GAAP(including Statement of Financial Accounting Standards No. 13 of theFinancial Accounting Standards Board, as amended), providedthatfor purposes of this Agreement, the amount of such obligations shall be onlythe capitalized amount thereof, determined in accordance with GAAP (includingsuch Statement No. 13).

 

“**Cash Dividends**” shall mean, with respect to any Person forany period, all cash dividend payments actually made on any Stock of suchPerson for such period.

 

“**Cash Officer**” shall mean, with respect to any Person, anyperson holding the title of “cash manager”, “cash officer” or any like title ofsuch Person.

 

“**Change of Control**” shall mean (a) the acquisition ofownership, directly or indirectly, beneficially or of record, by any Person orgroup (within the meaning of the Securities Exchange Act of 1934 and the rules ofthe Securities and Exchange Commission thereunder as in effect on the date ofthis Agreement), of Stock representing more than 30% of the aggregate ordinary votingpower represented by the issued and outstanding Stock of the Parent; (b) occupationof a

 

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majority of the seats (other than vacant seats) on the boardof directors of the Parent by Persons who were neither (i) nominated bythe board of directors of the Parent nor (ii) appointed by directors sonominated; (c) the Parent shall cease to have beneficial ownership (asdefined in Rule 13d-3 under the Exchange Act), directly or indirectly, of100% of the aggregate voting power of the Stock of each other Credit Party,free and clear of all Liens (other than any Liens granted under the LoanDocuments and Liens permitted under Section 7.2), except to theextent resulting from a transaction specifically permitted under Section 7.4;(d) (i) any Credit Party consolidates or amalgamates with or mergesinto another entity or conveys, transfers or leases all or substantially all ofits property and assets to another Person except in a transaction specificallypermitted under Section 7.4, or (ii) any entity consolidatesor amalgamates with or merges into any Credit Party in a transaction pursuantto which the outstanding voting Stock of such Credit Party is reclassified orchanged into or exchanged for cash, securities or other property, other thanany such transaction described in this clause (ii) in which either (A) inthe case of any such transaction involving the Parent, no Person or group(within the meaning of Section 13(d)(3) of the Exchange Act) has,directly or indirectly, acquired beneficial ownership of more than 30% of theaggregate outstanding ordinary voting Stock of the Parent, or (B) in thecase of any such transaction involving a Credit Party other than the Parent,the Parent has beneficial ownership, directly or indirectly, of 100% of theaggregate voting power of all Stock of the resulting, surviving or transfereeentity; (e) any “Change of Control” (or any similar term) as set forth inthe Senior Note Indenture or any Additional Senior Indenture; or (f) theParent shall cease to have the beneficial ownership, directly or indirectly, of100% of the Stock of FinCo, free and clear of all Liens (other than any Liensgranted under the Loan Documents and Liens permitted under Section 7.2).

 

“**Closing Date**” shall mean the date on which the conditionsspecified in Section 4.2 are satisfied (or waived in accordancewith Section 10.11).

 

“**Closing Date Mortgage Policy**” shall have the meaningspecified for such term in Section 4.2(r).

 

“**Closing Date Mortgaged Property**” shall have the meaningspecified for such term in Section 4.2(r).

 

“**Closing Date Mortgages**” shall have the meaning specifiedfor such term in Section 4.2(r).

 

“**Code**” shall mean the Internal Revenue Code of 1986, asamended, as now or hereafter in effect, together with all regulations, rulingsand interpretations thereof or thereunder by the Internal Revenue Service.

 

“**Collateral**” shall mean all collateral and security asdescribed in the Security Documents.

 

“**Collection Account**” shall mean a deposit account of aCredit Party or any of its Subsidiaries into which payments on account ofReceivables of the Credit Parties are received, including through (a) associatedlockbox addresses and (b) accounts related to foreign exchange conversionand similar purposes pursuant to arrangements acceptable to the Agent.

 

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“**Commitment**” shall mean, as to any Lender, the obligationof such Lender subject to the terms and conditions of this Agreement to makeTerm Loans in a principal amount not exceeding such Lender’s Term LoanCommitment, and to make Revolving Loans and incur liability for the Letter ofCredit Exposure Amount and the Swingline Loans in an aggregate principal amountat any one time outstanding up to, but not exceeding, the amount set forth assuch Lender’s Revolving Commitment.  Theinitial amount of each Lender’s Commitment is set forth on Schedule 1.1Aattached hereto, as each may be adjusted from time to time pursuant to otherprovisions of this Agreement, and Commitments shall mean all such Commitmentsof the Lenders, as so adjusted.

 

“**Commitment Fee**”, with respect to any Revolving Lender,shall have the meaning assigned to it in Section 2.3.

 

“**CommitmentIncrease Agreement**” shall mean a Commitment Increase Agreemententered into by a Revolving Lender in accordance with Section 2.15(c) andaccepted by the Agent in the form of Exhibit Q attached hereto, orany other form approved by the Agent.

 

“**Commitment Percentage**” shall mean, with respect to anyLender, (a) with respect to Revolving Loans, Letter of Credit ExposureAmount or Swingline Exposure, (i) prior to the termination of the TotalRevolving Commitment, the ratio, expressed as a percentage, of such Lender’sRevolving Commitment to the Total Revolving Commitment, and (ii) after thetermination of the Total Revolving Commitment, the ratio, expressed as apercentage, of the amount of such Revolving Lender’s outstanding RevolvingLoans and its portion of the Letter of Credit Exposure Amount and the SwinglineExposure to the aggregate amount of all outstanding Revolving Loans and thetotal Letter of Credit Exposure Amount and the Swingline Exposure, and (b) withrespect to the Term Loans, a percentage equal to a fraction of the numerator ofwhich is such Term Lender’s outstanding principal amount of the Term Loans andthe denominator of which is the aggregate outstanding amount of the Term Loansof all Term Lenders; providedthat when a Defaulting Lender shallexist, any such Defaulting Lender’s Commitment shall be disregarded in thecalculation in both clauses (a) and (b) hereof, subject to Section 10.11hereof.

 

“**Compliance Certificate**” shall mean a certificatesubstantially in the form of Exhibit D attached hereto.

 

“**Concentration Limit**” shall mean, with respect to anyaccount debtor owing any Receivables to any Credit Party, the maximum amount ofReceivables from such account debtor which may be included as EligibleReceivables, expressed as a percentage of the total amount of Receivables owingto the Credit Parties by all account debtors, which percentage shall be (a) seventeenand one-half percent (17.5%), or (b) such other percentage for theapplicable account debtor as determined by the Agent from time to time in theAgent’s reasonable credit judgment.

 

“**Consequential Loss**” shall mean, with respect to (a) theBorrowers’ payment of principal of or interest on a LIBOR Borrowing on a dayprior to the last day of the applicable Interest Period, (b) the Borrowers’failure to borrow or convert a LIBOR Borrowing on the date specified by theBorrowers’ Agent for any reason, or (c) any cessation of the AdjustedLIBOR Rate to apply to the Loans or any part thereof pursuant to Section 2.9hereof, in each case

 

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whether voluntary or involuntary, any loss, expense, penalty,premium or liability incurred by any of the Lenders, the Canadian CollateralAgent or the Agent as a result thereof, including without limitation any lossof anticipated profit or any interest paid by any of the Lenders to lenders offunds borrowed by it to make or carry the Loans and any other costs andexpenses sustained or incurred in liquidating or employing deposits from thirdparties acquired to effect or maintain the Loans.

 

“**Consolidated**” shall mean, for any Person, as applied toany financial or accounting term, such term determined on a consolidated basisin accordance with GAAP (except as otherwise required herein) for such Personand all Subsidiaries thereof.

 

“**Contingent Obligation**” shall mean, as to any Person (the “**guarantor**”), any obligation of suchguarantor guaranteeing the payment or performance of any Indebtedness, leases,dividends or other obligations (collectively “**primary obligations**”) of any other Person (the “**primary obligor**”), whether directly orindirectly, including without limitation any obligation of such guarantor (a) topurchase any such primary obligation or other property constituting direct orindirect security therefor, (b) assume or contingently agree to become orbe secondarily liable in respect of any such primary obligation, (c) toadvance or supply funds (i) for the purchase or payment of any suchprimary obligation or (ii) to maintain working capital or equity capitalfor the primary obligor or otherwise to maintain the net worth or solvency ofthe primary obligor, (d) to purchase property, securities or servicesprimarily for the purpose of assuring the owner of any such primary obligationof the ability of the primary obligor to make payment of such primary obligation,or (e) otherwise to assure or hold harmless the owner of such primaryobligation against loss in respect thereof; provided, however, thatthe term “Contingent Obligation” shall not include endorsements of checks orother negotiable instruments in the ordinary course of business.

 

“**Contribution Agreement**” shall mean any ContributionAgreement executed by and among the Credit Parties and their Subsidiaries, asthe same may be amended, modified, supplemented, restated and joined inpursuant to a Joinder Agreement, from time to time.

 

“**Controlled Account**” shall mean a deposit account(including a Collection Account) of any Credit Party that is subject to aTri-Party Agreement.

 

“**Copyrights**” shall have the meaning specified for such termin the definition of “Intellectual Property.”

 

“**Credit Parties**” shall mean the Borrowers and theGuarantors.

 

“**Current Sum**” shall mean on any day, as to a particularRevolving Lender, the sum of (a) the outstanding principal balance of suchRevolving Lender’s Revolving Credit Note on such day plus (b) theproduct of (i) such Revolving Lender’s Commitment Percentage times (ii) thesum of the Letter of Credit Exposure Amount and the Swingline Exposure on suchday.

 

“**Default Rate**” shall mean, on any day, as follows:  (a) with respect to principal which isoutstanding under any Note, the sum of the Interest Option otherwise applicablethereto on such day plus two percent per annum (it being understood bythe Borrowers that if any such applicable Interest Option is based on the AdjustedLIBOR Rate, the Default Rate with respect to

 

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the applicable principal amount shall only be calculated withreference to the applicable Adjusted LIBOR Rate until the Interest Periodapplicable thereto expires, and upon the expiration of such applicable InterestPeriod, the Default Rate for such applicable principal amount shall be computedon the basis of the Alternate Base Rate for such day plus two percentper annum), and (b) with respect to accrued interest, fees and otherObligations (other than past due principal outstanding under any Note), the sumof the Alternate Base Rate for such day plus two percent per annum.

 

“**DefaultingLender**” means any Lender, as determined by the Agent, that has (a) failedto fund any portion of its Loans or participations in Letters of Credit orSwingline Loans within three Business Days of the date required to be funded byit hereunder, (b) notified the Borrowers, the Agent, the Swingline Lenderor any Lender in writing that it does not intend to comply with any of itsfunding obligations under this Agreement or has made a public statement to theeffect that it does not intend to comply with its funding obligations underthis Agreement or under other agreements in which it commits to extend credit, (c) failed,within three Business Days after request by the Agent, to confirm that it willcomply with the terms of this Agreement relating to its obligations to fundprospective Loans and participations in then outstanding Letters of Credit andSwingline Loans, (d) otherwise failed to pay over to the Agent or anyother Lender any other amount required to be paid by it hereunder within threeBusiness Days of the date when due, unless the subject of a good faith dispute,or (e) (i) become or is insolvent or has a parent company that hasbecome or is insolvent or (ii) become the subject of a bankruptcy orinsolvency proceeding, or has had a receiver, conservator, trustee or custodianappointed for it, or has taken any action in furtherance of, or indicating itsconsent to, approval of or acquiescence in any such proceeding or appointmentor has a parent company that has become the subject of a bankruptcy orinsolvency proceeding, or has had a receiver, conservator, trustee or custodianappointed for it, or has taken any action in furtherance of, or indicating itsconsent to, approval of or acquiescence in any such proceeding or appointment.

 

“**Discontinued Operations**” shall mean, as of any day,operations of any Credit Party or any of their Subsidiaries which have beendiscontinued, and which, as of such day, have been fully terminated, disposedof or liquidated.

 

“**Disposition**”shall mean the sale, transfer, lease or other disposition (including pursuantto a merger resulting in the subject Property no longer being owned by a CreditParty) of any Property.

 

“**Dollar**”and the sign “**$**” shall mean lawful money ofthe United States of America.

 

“**Domestic Lending Office**” shall mean, with respect to anyLender, the office of such Lender specified as its “Domestic Lending Office”opposite its name on the signature pages hereof, or such other office ofsuch Lender as such Lender may from time to time specify in writing to theBorrowers’ Agent and the Agent.

 

“**Domestic Subsidiary**” shall mean any Subsidiary of anyBorrower that is organized and domiciled in the United States of America.

 

“**Dominion Event**” shall have the meaning assigned to suchterm in Section 6.15(a).

 

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“**Dominion Termination Event**” shall have the meaningassigned to such term in Section 6.15(a).

 

“**EBITDA**” shall mean, with respect to any Person for anyperiod, the sum of (a) Net Income, (b) Interest Expense, (c) depreciationand amortization expense (excluding depreciation and amortization applicable toDiscontinued Operations as of such period), and (d) federal, state andlocal income or franchise taxes, in each case of such Person for such period,computed and calculated, without duplication, on a Consolidated basis and inaccordance with GAAP, consistently applied.

 

“**Eligible Assignee**” shall mean (a) a Lender, (b) anAffiliate of a Lender, (c) an Approved Fund, or (d) any othercommercial lender, finance company, insurance company, financial institution orfund reasonably acceptable to the Agent and the Borrowers’ Agent; provided,however, that if an Event of Default has occurred which has notbeen waived or cured, such approval by the Borrowers’ Agent shall not berequired.

 

“**Eligible Equipment**” shall mean Equipment of a Credit Partywhich meets all of the following specifications; providedthatsuch specifications may be revised from time to time by the Agent to accountfor events, conditions, contingencies and risks that the Agent becomes actuallyaware of after the Closing Date that, in the Agent’s reasonable creditjudgment, could adversely affect any Equipment or the Agent’s (or the CanadianCollateral Agent’s, as applicable) interest therein:

 

(a)           one of theCredit Parties has good title to such Equipment;

 

(b)           suchCredit Party has the right to subject such Equipment to a Lien in favor of theAgent (or the Canadian Collateral Agent, as applicable); such Equipment issubject to a first priority perfected Lien in favor of the Agent (or theCanadian Collateral Agent, as applicable) for the ratable benefit of the LenderParties and is free and clear of all other Liens of any nature whatsoever(except for Liens permitted under Section 7.2(e) other thancontested Liens);

 

(c)           the fullpurchase price for such Equipment has been paid by the Credit Parties;

 

(d)           suchEquipment is located on premises (i) owned by one of the Credit Parties,which premises are subject to a first priority perfected Lien in favor of theAgent (or the Canadian Collateral Agent, as applicable), or (ii) leased byone of the Credit Parties with respect to which the Agent (or the CanadianCollateral Agent, as applicable) has received an executed landlord’s waiver orsubordination agreement from the owner of such leased facility pursuant towhich such owner waives or subordinates any Lien it may claim against suchEquipment pursuant to a written waiver or subordination and access agreementacceptable to the Agent (or the Canadian Collateral Agent, as applicable)acting reasonably in all respects;

 

(e)           suchEquipment is in good working order and condition (ordinary wear and tearexcepted) and is used or held for use by the Credit Parties in the ordinarycourse of business of the Credit Parties;

 

(f)            suchEquipment is not subject to any agreement which restricts the ability of theCredit Parties to use, sell, transport or dispose of such Equipment or whichrestricts the Agent’s

 

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(or the Canadian Collateral Agent’s, as applicable) abilityto take possession of, sell or otherwise dispose of such Equipment; and

 

(g)           suchEquipment does not constitute “fixtures” under the applicable laws of thejurisdiction in which such Equipment is located.

 

“**Eligible Inventory**” shall mean all raw materials, rolledand uncut or sheeted paper, or finished goods Inventory of the Credit Partieswhich complies with all of the following requirements:  (a) such Inventory is owned by andrecorded on the books and records of the applicable Credit Party in theordinary course of business; (b) such Inventory is valued in accordancewith GAAP at the lower of fair market value or cost; and (c) suchInventory does not otherwise constitute Ineligible Inventory.  Standards of eligibility and Reserves forEligible Inventory may be fixed and revised from time to time by the Agent inits reasonable credit judgment based on events, conditions or othercircumstances that the Agent becomes actually aware of after the OriginalClosing Date that, in the Agent’s reasonable credit judgment, adversely affector could reasonably be expected to adversely affect Eligible Inventory.

 

“**Eligible Real Estate**” shall mean Real Property Assetswhich meet all of the following specifications; providedthatsuch specifications may be revised from time to time by the Agent in itsreasonable credit judgment to account for events, contingencies and risks thatthe Agent becomes actually aware of after the Closing Date that, in the Agent’sreasonable credit judgment, could adversely affect the Real Property Asset orthe Agent’s (or the Canadian Collateral Agent, as applicable) interest therein:

 

(a)           one of theCredit Parties is the record owner of and has good fee title to such RealProperty Asset;

 

(b)           suchCredit Party has the right to subject such Real Property Asset to a Lien in favorof the Agent (or the Canadian Collateral Agent, as applicable) for the ratablebenefit of the Lender Parties; such Real Property Asset is subject to a firstpriority perfected Lien in favor of the Agent (or the Canadian CollateralAgent, as applicable) for the ratable benefit of the Lender Parties and is freeand clear of all other Liens of any nature whatsoever (except for Lienspermitted under Section 7.2(e) other than contested Liens, andLiens permitted under Section 7.2(f), Section 7.2(j), Section 7.2(o),Section 7.2(p) and Section 7.2(q));

 

(c)           such RealProperty Asset is not subject to any agreement or condition which couldrestrict or otherwise adversely effect the Agent’s (or the Canadian CollateralAgent, as applicable) ability to sell or otherwise dispose of such RealProperty Asset; and

 

(d)           suchparcel of real property shall comply with all the requirements for a ClosingDate Mortgaged Property set forth in Section 4.2(s).

 

“**Eligible Receivables**” shall mean, as at any date ofdetermination thereof, all Receivables of the Credit Parties which comply withall of the following requirements:  (a) allpayments due on the Receivable have been billed and invoiced in a timelyfashion and in the normal course of business; (b) no payment isoutstanding on the Receivable for more than one hundred (100) days afterthe date of invoice (except for Receivables fully insured or backed by a letterof credit in all respects acceptable to the Agent in its reasonable discretion)or more than

 

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sixty (60) days past due; and (c) the Receivablesdo not otherwise constitute Ineligible Receivables.  Standards of eligibility and Reserves forEligible Receivables may be fixed and revised from time to time by the Agent inits reasonable credit judgment based on events, conditions or othercircumstances that the Agent becomes actually aware of after the OriginalClosing Date that, in the Agent’s reasonable credit judgment, adversely affector could reasonably be expected to adversely affect the EligibleReceivables.  Additionally, incalculating Eligible Receivables, each of the following shall be excluded (tothe extent the same are otherwise included in Eligible Receivables):  (i) unpaid sales, excise or similartaxes owed by any of the Credit Parties (to the extent the same are included inReceivables); and (ii) returns, discounts, claims, credits and allowancesof any nature asserted or taken by account debtors of any of the CreditParties.

 

“**Environmental Claim**” shall mean any third party (includingany Governmental Authority) action, lawsuit, claim or proceeding (includingclaims or proceedings at common law) which seeks to impose or alleges anyliability for (a) pollution or contamination by, or releases or threatenedreleases of, Hazardous Substances into the air, surface water, ground water orland or the clean-up, abatement, removal, remediation or monitoring of suchpollution, contamination or Hazardous Substances; (b) generation,recycling, reclamation, handling, treatment, storage, disposal ortransportation of Hazardous Substances; (c) exposure to HazardousSubstances; (d) the safety or health of employees or other Persons inconnection with any of the activities specified in any other subclause of thisdefinition; or (e) the manufacture, processing, distribution in commerce,presence or use of Hazardous Substances. An “Environmental Claim” includes a common law action, as well as aproceeding to issue, modify or terminate an Environmental Permit to the extentthat such a proceeding attempts to redress violations of the applicable permit,license, or regulation as alleged by any Governmental Authority.

 

“**Environmental Law**” shall mean all requirements imposed byany law (including The Resource Conservation and Recovery Act, TheComprehensive Environmental Response, Compensation, and Liability Act, theClean Water Act, the Clean Air Act, any state analogues of any of theforegoing, and any comparable Canadian federal or provincial law), rule,regulation, or order of any Governmental Authority now or hereafter in effectthat relate to (a) pollution, protection or clean-up of the air, surfacewater, ground water or land; (b) solid, liquid or gaseous waste orHazardous Substance generation, recycling, reclamation, release, threatenedrelease, treatment, storage, disposal or transportation; (c) exposure ofPersons or property to Hazardous Substances; (d) the manufacture,presence, processing, distribution in commerce, use, discharge, releases,threatened releases, or emissions of Hazardous Substances into the environment;(e) the storage of any Hazardous Substances; or (f) occupationalhealth and safety

 

“**Environmental Liabilities**” shall mean all liabilitiesarising from any Environmental Claim, Environmental Permit or Requirements ofEnvironmental Law, at law or in equity, and whether based on negligence, strictliability or otherwise, including: remedial, removal, response, abatement, restoration (including naturalresources), investigative, or monitoring liabilities, personal injury anddamage to property, natural resources or injuries to persons, and any otherrelated costs, expenses, losses, damages, penalties, fines, liabilities andobligations, and all costs and expenses necessary to cause the issuance,reissuance or renewal of any Environmental Permit reasonably necessary for theconduct of any material aspect of the

 

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business of any Credit Party or any of their Subsidiaries,including attorney’s fees and court costs. Environmental Liability shall mean any one of them.

 

“**Environmental Permit**” shall mean any permit, license,approval or other authorization under any applicable law, regulation and otherrequirement of any Governmental Authority relating to pollution or protectionof health or the environment, including laws, regulations or other requirementsrelating to emissions, discharges, releases or threatened releases ofpollutants, contaminants, Hazardous Substances or toxic materials or wastesinto ambient air, surface water, ground water or land, or otherwise relating tothe manufacture, processing, distribution, recycling, presence, use, treatment,storage, disposal, transport, or handling of wastes, pollutants, contaminantsor Hazardous Substances.

 

“**Equipment**” shall mean (a) any machinery or equipmentand (b) any other Property classified as “equipment” under the UCC.

 

“**EquipmentComponent**” shall have the meaning specified for such term on Schedule1.1C.

 

“**ERISA**” shall mean the Employee Retirement Income SecurityAct of 1974, as amended from time to time, and all rules, regulations, rulingsand interpretations adopted by the Internal Revenue Service or the Departmentof Labor thereunder.

 

“**ERISA Affiliate**” shall mean any trade or business (whetheror not incorporated) which together with any Credit Party or any Subsidiary ofany Credit Party would be treated as a single employer under the provisions ofTitle I or Title IV of ERISA following the Closing Date.

 

“**Event of Default**” shall mean any of the events specifiedin Section 8.1 hereof, provided there has been satisfied anyrequirement in connection with any such event for the giving of notice or thelapse of time, or both, and “**Default**”shall mean any of such events, whether or not any such requirement for the givingof notice, or the lapse of any applicable grace or curative period (if any), orboth, has been satisfied.

 

“**Excess Interest Amount**” shall have the meaning attributedto such term in Section 2.14 hereof.

 

“**ExcludedForeign Subsidiary**” has the meaning assigned to such term in Section 6.10.

 

“**ExistingCredit Agreement**” shall have the meaning specified in therecitals of this Agreement.

 

“**ExistingIndebtedness**” shall have the meaning specified in the recitalsof this Agreement.

 

“**ExistingLenders**” shall have the meaning specified in the recitals ofthis Agreement.

 

“**ExistingLetters of Credit**” shall mean the letters of credit issued underthe Existing Credit Agreement that are outstanding on the Closing Date.

 

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“**Extended Facility Letter of Credit**” shall have the meaningattributed to such term in Section 2.10(j) hereof.

 

“**Federal Funds Effective Rate**” shall mean, for any day, arate per annum equal to the weighted average of the rates on overnight Federalfunds transactions with members of the Federal Reserve System arranged byFederal funds brokers, as published on the next succeeding Business Day by theFederal Reserve Bank of New York, or, if such rate is not so published for anyday which is a Business Day, the average of the quotations for the day of suchtransactions received by the Agent from three Federal funds brokers ofrecognized standing selected by it.

 

“**Financial Officer**” shall mean, with respect to any Person,the chief financial officer, principal accounting officer, treasurer orcontroller of such Person.

 

“**FinCo**”shall mean Neenah Paper International Finance Company B.V., a company formedunder the laws of the Netherlands, all of whose issued and outstanding Stock isowned by the Parent or another Credit Party.

 

“**Fixed Charge Coverage Ratio**” shall mean, with respect toany Person and without duplication, the ratio of (i) EBITDA less (A) CapitalExpenditures not funded by Indebtedness permitted by Section 7.1(c) orSection 7.1(m); less (B) loans, advances andInvestments (other than the Pledged Inter-Company Loans so long as an UnpledgedInter-Company Loan in an equal amount is made substantially contemporaneouslytherewith) made to Persons that are not Credit Parties, less (C) cashpayments of federal, state, provincial and local income or franchise taxes, plus(D) principal and interest payments paid in cash on the PledgedInter-Company Note, plus (E) Cash Dividends and other distributionswith respect to Stock held by a Credit Party to the extent received in cash bya Credit Party from any Person that is not a Credit Party, to (ii) the sumof (A) cash Interest Expense, plus (B) Scheduled PrincipalPayments, plus (C) Cash Dividends, plus (D) theQuarterly Equipment Component Amortization Amount per three calendar monthperiod in respect of scheduled reductions, if any, of the Equipment Componentas set forth in clause (a) of the definition of Equipment Component, plus(E) the Quarterly Real Estate Component Amortization Amount per threecalendar month period in respect of scheduled reductions, if any, of the RealEstate Component as set forth in clause (a) of the definition of RealEstate Component.

 

All components of the Fixed ChargeCoverage Ratio shall be determined for the applicable Person on a Consolidatedbasis, without duplication and for the four (4) most recent consecutivefiscal quarters of the applicable Person ending on or prior to the date ofdetermination; provided, that (1) the results of operationof the Offshore Entities and their subsidiaries, including, without limitation,Neenah Germany and its subsidiaries, shall be excluded in the calculation ofFixed Charge Coverage Ratio (except as provided in clause (i)(B) above),(2) for the first four (4) fiscal quarters ended following the ClosingDate (the first such fiscal quarter being the fiscal quarter in which theClosing Date occurs), the Scheduled Principal Payments shall be calculated on apro forma basis as if principal payments on the Term Loans commenced on April 30,2009 and continued at the end of each third calendar month thereafter, and anyScheduled Principal Payments made under the Prior Term Loan Agreement shall beexcluded, (3) for the first four (4) fiscal quarters ended followingthe Closing Date (the first such fiscal quarter being the fiscal quarter inwhich the Closing Date occurs), the Quarterly

 

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Equipment Component Amortization Amount and the QuarterlyReal Estate Component Amortization Amount shall be calculated on a pro formabasis as if such amortization commenced on April 30, 2009 and continued atthe end of each third calendar month thereafter, and (4) for the firstfiscal quarter ended following the Closing Date (the first such fiscal quarterbeing the fiscal quarter in which the Closing Date occurs), the Fixed ChargeCoverage Ratio shall be determined on an Annualized Basis.

 

“**Flood Hazard Property**” shall mean a Mortgaged Property theimprovements on which are located in an area designated by the Federal EmergencyManagement Agency (or any Canadian equivalent, as applicable) as having specialflood or mud slide hazards and requiring either the Credit Party or Agent (orthe Canadian Collateral Agent, as applicable) to purchase special floodinsurance.

 

“**Foreign Lender**” shall mean, as to a particular CreditParty, any Agent or any Lender that is organized under the laws of ajurisdiction other than the jurisdiction in which such Credit Party islocated.  For purposes of this definition,the United States of America, each state thereof and the District of Columbiashall be deemed to constitute a single jurisdiction.

 

“**GAAP**” shall mean, as to a particular Person, thoseprinciples and practices (a) which are recognized as such by the FinancialAccounting Standards Board or successor organization, and (b) which areconsistently applied (or with respect to which any change in principles andpractice mandated by the Financial Accounting Standards Board or successororganization are disclosed in writing to the Agent) for all periods after thedate of this Agreement in a manner consistent with the manner in which suchprinciples and practices were applied to the most recent audited financialstatements of the relevant Person furnished to the Agent and the Lenders priorto the Closing Date (or with respect to which any change in principles andpractice mandated by the Financial Accounting Standards Board or successororganization are disclosed in writing to the Agent).

 

“**Governmental Authority**” shall mean the United States ofAmerica, Canada, any state of the United States or province of Canada, and anypolitical subdivision of any of the foregoing, any foreign governmental orsupranational authority, and any agency, instrumentality, department,commission, board, bureau, central bank, authority, court or other tribunal, ineach case whether executive, legislative, judicial, regulatory oradministrative, having jurisdiction over the Agent, the Canadian CollateralAgent, any of the Lenders, any Credit Party, any Subsidiary of any CreditParty, or their respective Property.

 

“**Grantor**” shall mean any Grantor, Assignor, Pledgor orDebtor, as such terms are defined in any of the Security Documents.

 

“**Guarantors**” shall mean Neenah Paper Company of Canada andeach Subsidiary added as a guarantor pursuant to Section 6.10.

 

“**Guaranty**” shall mean each and every guaranty of theObligations from time to time executed and delivered to the Canadian CollateralAgent by any Guarantor, as amended, supplemented, modified, joined in pursuantto a Joinder Agreement and restated from time to

 

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time, each substantially in the form of Exhibit K(with appropriate changes based upon the local law of the applicable province).

 

“**Hazardous Substance**” shall mean any hazardous or toxicwaste, substance or product or material defined as or regulated as “hazardous”or “toxic” from time to time by any Requirements of Environmental Law,including solid waste (as defined under The Resource Conservation and Recovery Actor its regulations, as amended from time to time), petroleum and anyconstituent thereof, and any radioactive materials and waste; provided,however, the words “Hazardous Substance” shall not mean or include any suchHazardous Substance used, generated, manufactured, stored, disposed of orotherwise handled in normal quantities in the ordinary course of business incompliance with all applicable Environmental Laws, or such that may benaturally occurring in any ambient air, surface water, ground water, landsurface or subsurface strata.

 

“**Hedging Obligations**” shall mean, with respect to anyPerson, any and all obligations of such Person, whether absolute or contingentand howsoever and whensoever created, arising, evidenced or acquired (includingall renewals, extensions and modifications thereof and substitutions therefor),under (a) any and all agreements, devices or arrangements designed toprotect at least one of the parties thereto from the fluctuations of interestrates, exchange rates or forward rates applicable to such party’s assets,liabilities or exchange transactions, including, but not limited to,dollar-denominated or cross-currency interest rate exchange agreements, forwardcurrency exchange agreements, interest rate cap or collateral protectionagreements, forward rate currency or interest rate options, puts and warrants,commodity (including pulp) futures, forwards, swaps and options, and (b) anyand all cancellations, buy backs, reversals, terminations or assignments of anyof the foregoing.

 

“**Hedging Obligation****Amount**”shall mean, with respect to any Hedging Obligation, the “derivative riskequivalent” (or equivalent figure) for such Hedging Obligation as of the end ofthe preceding calendar month (or other period as provided herein), being afigure calculated to provide an exposure measure for derivative obligationscomparable with that of loans, in each case calculated based upon a methodologyreported to the Agent in accordance with the terms hereof and acceptable to theAgent in its reasonable credit judgment. In the event that no Hedging Obligation Amount is reported as providedherein for any Hedging Obligation for any period, the Agent may use the mostrecently reported Hedging Obligation Amount for such Hedging Obligation, asadjusted in the Agent’s reasonable credit judgment.

 

“**Hedging Obligations Aggregate Amount**” shall mean at anytime, with respect to Hedging Obligations constituting Bank Products hereunder,an amount equal to the sum at such time of all Hedging Obligation Amountsassociated with all such Hedging Obligations.

 

“**Highest Lawful Rate**” shall mean, with respect to the Agentor any Lender, the maximum nonusurious rate of interest permitted to be chargedby, as applicable, the Agent or such Lender under applicable laws (if any) ofthe United States or any state from time to time in effect.

 

“**Indebtedness**” shall mean, as to any Person, withoutduplication:  (a) all indebtednessof such Person for borrowed money; (b) any other indebtedness which isevidenced by a bond,

 

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debenture or similar instrument or upon which interestcharges are traditionally paid; (c) all Capital Lease Obligations of suchPerson; (d) all obligations of such Person for the deferred purchase priceof Property or services (except current trade accounts payable arising in theordinary course of business and current accrued expenses, not the result ofborrowing, arising in the ordinary course of business); (e) allreimbursement obligations of such Person in respect of outstanding letters ofcredit, acceptances and similar obligations created for the account of suchPerson; (f) all indebtedness, liabilities, and obligations secured by anyLien on any Property owned by such Person even though such Person has notassumed or has not otherwise become liable for the payment of any suchindebtedness, liabilities or obligations secured by such Lien, but only to theextent of the value of the Property subject to such Lien (or, if less, theamount of the underlying indebtedness, liability or obligation); (g) netliabilities of such Person in respect of Hedging Obligations (calculated on abasis satisfactory to the Agent and in accordance with accepted practice); (h) allobligations of such Person under conditional sale or other title retentionagreements relating to property acquired by such Person; (i) allobligations of such Person to pay rent or other amounts under any SyntheticLease; (j) all Indebtedness of another entity to the extent such Person isliable therefor (including any partnership in which such Person is a generalpartner and including any unlimited liability corporation) to the extent suchPerson is liable therefor as a result of such Person’s ownership interest in orother relationship with such entity, except to the extent the terms of suchIndebtedness provide that such Person is not liable therefor; and (k) allContingent Obligations of such Person with respect to Indebtedness of others; provided,that such term shall not mean or include (i) any Indebtedness inrespect of which monies sufficient to pay and discharge the same in full(either on the expressed date of maturity thereof or on such earlier date assuch Indebtedness may be duly called for redemption and payment) shall bedeposited with a depository, agency or trustee acceptable to the Agent in trustfor the payment thereof, or (ii) any operating leases entered into in theordinary course of business (to the extent such operating leases do notconstitute Capital Lease Obligations or Synthetic Leases).

 

“**Indemnifiable Tax**” shall have the meaning attributed tosuch term in Section 10.17(a)(i) hereof.

 

“**IndentureCap**” shall mean the maximum aggregate principal amount ofIndebtedness permitted under Credit Facilities (as defined in the Senior NoteIndenture and any Additional Senior Indenture) pursuant to any limitation orrestriction set forth in the Senior Indenture, any other Senior Note Documentor any Additional Senior Note Documents, as the same may be amended, restated,waived or otherwise modified from time to time; provided, thatParent may characterize its Indebtedness under the covenants set forth underthe Senior Indenture, any other Senior Note Document or any Additional SeniorNote Documents which limit Indebtedness in any manner permitted thereunder, asapplicable, which may maximize the amount of the Indenture Cap.

 

“**Ineligible Inventory**” shall mean, as at any date ofdetermination thereof, any Inventory of any Credit Party which does not complywith all of the following requirements:

 

(a)           suchInventory is Collateral hereunder and is subject to a first priority perfectedLien in favor of the Agent (or the Canadian Collateral Agent, as applicable)for the ratable

 

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benefit of the Lender Parties and is free and clear of allother Liens of any nature whatsoever (except for Liens permitted under Section 7.2(e) otherthan contested Liens);

 

(b)           suchInventory meets all applicable laws and standards imposed by any GovernmentalAuthority having regulatory authority over it;

 

(c)           suchInventory is in good condition, is not returned, shopworn, defective, damaged,obsolete, or broke inventory, and is currently usable or saleable in the normalcourse of business of the applicable Credit Party;

 

(d)           suchInventory is not “slow moving”;

 

(e)           suchInventory is not work-in-process Inventory (other than rolled and uncut orsheeted paper), is not scrap or remnants Inventory, is not stores and is notpackaging or shipping supplies or materials;

 

(f)            such Inventorymust not be in transit and must be housed or stored in the United States orCanada at either (i) a real Property location either owned or leased by aCredit Party; so long as such leased facility is covered by a landlord’s waiveror subordination agreement received by the Agent (or the Canadian CollateralAgent, as applicable) from the owner of such leased facility pursuant to whichsuch owner waives or subordinates any Lien it may claim against such Inventory,whether contractual or statutory, to the Lien in favor of the Agent (or theCanadian Collateral Agent, as applicable) against such Inventory pursuant to awritten waiver or subordination and access agreement acceptable to the Agent(or the Canadian Collateral Agent, as applicable) in all respects, or (ii) apublic warehouse facility utilized by a Credit Party, so long as such warehousefacility is covered by a warehousemen’s waiver or subordination and accessagreement received by the Agent (or the Canadian Collateral Agent, asapplicable) from the operator of such warehouse facility pursuant to which suchoperator waives or subordinates any Lien it may claim against such Inventory,whether contractual or statutory, to the Lien in favor of the Agent (or theCanadian Collateral Agent, as applicable) against such Inventory andacknowledges that it holds and controls such Inventory for the benefit of theAgent (or the Canadian Collateral Agent, as applicable) for purposes ofperfecting the Agent’s (or the Canadian Collateral Agent’s, as applicable) Lientherein pursuant to a written waiver or subordination agreement reasonablyacceptable to the Agent (or the Canadian Collateral Agent, as applicable) inall respects;

 

(g)           suchInventory is not in the possession of or control of any bailee (other than awarehouseman as described above) or any agent or processor for or customer ofany Credit Party or any of their Subsidiaries, unless such bailee, agent orprocessor has executed and delivered to the Agent (or the Canadian CollateralAgent, as applicable) an access/subordination agreement in form and substancereasonably acceptable to the Agent (or the Canadian Collateral Agent, asapplicable) subordinating any Lien it may claim in such Inventory andacknowledging that it holds and controls such Inventory for the benefit of theAgent (or the Canadian Collateral Agent, as applicable) for purposes ofperfecting the Agent’s (or the Canadian Collateral Agent’s, as applicable) Lientherein;

 

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(h)           suchInventory must be adequately insured to the reasonable satisfaction of theAgent (or the Canadian Collateral Agent, as applicable) pursuant to insurancecoverage required by this Agreement and the Security Documents;

 

(i)            suchInventory must not be on consignment;

 

(j)            suchInventory is not letterhead, watermarked, or styled in a manner for aparticular purchaser, unless covered by a purchase order under which thepurchaser has unconditionally agreed to take delivery;

 

(k)           suchInventory does not constitute seedlings;

 

(l)            suchInventory has neither been sold nor is subject to a Lien, claim or right of anyperson other than the Credit Parties or the Agent (or the Canadian CollateralAgent, as applicable) (except for Liens permitted under Section 7.2(e) otherthan contested Liens); and

 

(m)          the Agenthas not deemed such Inventory ineligible because the Agent in its reasonablecredit judgment considers such Inventory to be unmarketable or the valuethereof to be impaired or its ability to realize such value to be insecure.

 

Notwithstanding anything to thecontrary contained in this Agreement or any other Loan Document, no Inventorypurchased or otherwise acquired through any acquisition or other investmentpermitted hereunder after the Closing Date shall be included within theBorrowing Base for purposes hereof unless and until the Agent shall haveconducted a field examination (which shall be conducted within a reasonabletime (in the Agent’s judgment) after Borrower’s request at the Borrowers’ costand expense) of the applicable books, records and operations for the assets orSubsidiary so acquired in order to reasonably satisfy the Agent that theInventory so acquired generally satisfies the above-described standards ofeligibility.

 

“**Ineligible Receivables**” shall mean, as at any date ofdetermination thereof, any Receivables of any Credit Party which do not complywith all of the following requirements:

 

(a)           theReceivable has been created by the applicable Credit Party in the ordinarycourse of business from a completed, outright and lawful sale of goods,pursuant to which ownership has passed to the applicable account debtor on anabsolute sales basis, or from the rendering of services by or on behalf of theapplicable Credit Party and is deemed “earned” under the applicable servicecontract or other agreement or arrangement between the applicable Credit Partyand the applicable account debtor;

 

(b)           theReceivable is Collateral hereunder and is subject to a first priority perfectedLien in favor of the Agent (or the Canadian Collateral Agent, as applicable)for the ratable benefit of the Lender Parties and is free and clear of allother Liens of any nature whatsoever (except for Liens permitted under Section 7.2(e) otherthan contested Liens);

 

(c)           thepayments due on 50% or more of all billed Receivables owing to the applicableCredit Party by the applicable account debtor are less than 100 days pastthe date of invoice (except for Receivables fully insured or backed by a letterof credit in all respects

 

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acceptable to the Agent in its reasonable discretion) andless than 60 days from the due date thereof;

 

(d)           theReceivable constitutes an “account” within the meaning of the UCC;

 

(e)           theReceivable does not arise out of a bill and hold, ship-in-place, guaranteedsale, sale-and-return, consignment, progress billing, promotional (includingsamples), C.O.D. or cash in advance arrangement;

 

(f)            theReceivable is not subject to any setoff, contra, offset, deduction, dispute,charge back, credit, counterclaim or other defense arising out of thetransactions represented by the Receivable or independently thereof; provided,however, that in each case regarding an undisputed liquidatedsum, such Receivable is an Ineligible Receivable only to the extent of suchundisputed liquidated sum, and in each case regarding a disputed sum or claim,such Receivable is an Ineligible Receivable only to the extent of the sum oramount claimed by the party adverse to the applicable Credit Parties);

 

(g)           theapplicable account debtor has finally accepted the goods or services from thesale out of which the Receivable arose and has not (i) objected to suchaccount debtor’s liability thereon, (ii) rejected any of such services orgoods or (iii) returned or repossessed any of such goods, except for goodsreturned in the ordinary course of business for which, in the case of goodsreturned, goods of equal or greater value have been shipped in return;

 

(h)           theapplicable account debtor is not any Governmental Authority, unless suchaccount debtor is the United States of America or Canada (or any agency,instrumentality, department or other political subdivision thereof) and therehas been compliance satisfactory to the Agent in all respects with the U.S. FederalAssignment of Claims Act or, as applicable, the Canadian FinancialAdministration Act or any applicable provincial legislation;

 

(i)            theapplicable account debtor is not an Affiliate of any Credit Party or any oftheir Subsidiaries;

 

(j)            theapplicable account debtor must have its principal place of business locatedwithin the United States or Canada, except for Receivables fully insured orbacked by a letter of credit in all respects acceptable to the Agent in itsreasonable discretion;

 

(k)           the Receivableis not evidenced by a promissory note or other instrument or by chattel paper;

 

(l)            theReceivable complies with all material Legal Requirements (including withoutlimitation, all usury laws, fair credit reporting and billing laws, fair debtcollection practices and rules, and regulations relating to truth in lendingand other similar matters);

 

(m)          theReceivable is in full force and effect and constitutes a legal, valid andbinding obligation of the applicable account debtor enforceable in accordancewith the terms thereof;

 

(n)           theReceivable is denominated in and provides for payment by the applicable accountdebtor in U.S. dollars or Canadian dollars, except for Receivables fullyinsured or

 

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backed by a letter of credit denominated in U.S. dollars orCanadian dollars and in all other respects acceptable to the Agent in itsreasonable discretion;

 

(o)           theReceivable has not been and is not required to be charged or written off asuncollectible in accordance with GAAP;

 

(p)           theReceivable is not due from an account debtor located in a jurisdiction (e.g.,New Jersey, Minnesota and West Virginia or any Canadian province) whichrequires such Credit Party, as a precondition to commencing or maintaining anaction in the courts of that jurisdiction, either to (i) receive acertificate of authority to do business and be in good standing in suchjurisdiction; or (ii) file a notice of business activities report orsimilar report with such jurisdiction’s taxing authority, unless (x) suchCredit Party has taken one of the actions described in clauses (i) or(ii); or (y) the failure to take one of the actions described in eitherclause (i) or (ii) may be cured retroactively by such CreditParty at its election; and

 

(q)           the creditstanding of the applicable account debtor in relation to the amount of creditextended has not become unsatisfactory to the Agent in its reasonablediscretion, except for Receivables fully insured or backed by a letter ofcredit in all respects acceptable to the Agent in its reasonable discretion.

 

In addition to the forgoing, thetotal amount of Receivables owing to the Credit Parties by an account debtor inexcess of such account debtor’s Concentration Limit of the total amount of Receivablesowing to the Credit Parties by all account debtors shall also constitute “IneligibleReceivables” for purposes hereof, unless such Receivables exceeding suchaccount debtor’s Concentration Limit are fully backed or secured by a letter ofcredit acceptable to the Agent in its reasonable discretion.  Notwithstanding anything to the contrarycontained in this Agreement or any other Loan Document, no Receivablespurchased or otherwise acquired through any acquisition or other investmentpermitted hereunder after the Closing Date shall be deemed to constituteEligible Receivables for purposes hereof unless and until the Agent shall haveconducted a field examination (which shall be conducted within a reasonabletime (in the Agent’s judgment) after Borrower’s request at the Borrowers’ costand expense) of the applicable books, records and operations for the assets orSubsidiary so acquired in order to satisfy the Agent that the Receivables soacquired generally satisfy the above-described standards of eligibility.

 

“**Initial Pledged Inter-Company Loan**” shall mean thatcertain loan advance in the amount of $135,000,000 made by NP InternationalHoldCo to FinCo, which loan advance to FinCo is evidenced by the PledgedInter-Company Note.

 

“**Intellectual Property**” shall mean all U.S. and foreign (a) patents,patent applications, patent disclosures, and all related continuations,continuations-in-part, divisionals, reissues, re-examinations, substitutions,and extensions thereof (“**Patents**”),(b) trademarks, service marks, trade names, domain names, logos, slogans,trade dress, and other similar designations of source or origin, together withthe goodwill symbolized by any of the foregoing (“**Trademarks**”), (c) copyrights and copyrightablesubject matter (“**Copyrights**”),(d) rights of publicity, (e) moral rights and rights of attributionand integrity, (f) computer programs (whether in source code, object code,or other form), databases, compilations and data, technology supporting the

 

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foregoing, and all documentation, including user manuals andtraining materials, related to any of the foregoing, (g) trade secrets andall confidential information, know-how, inventions, proprietary processes,formulae, models, and methodologies, (h) all rights in the foregoing andin other similar intangible assets, (i) all applications and registrationsfor the foregoing, and (j) all rights and remedies against infringement,misappropriation, or other violation thereof.

 

“**Intellectual Property Security Agreement**” shall have themeaning attributed to such term in Section 5.27 hereof.

 

“**Interest Expense**” shall mean, with respect to any Personfor any period, the interest expense of such Person, on a Consolidated basis,during such period determined in accordance with GAAP, consistently applied,and shall in any event include, without limitation, (a) the amortizationor write-off of debt discounts, (b) the amortization of all debt issuancecosts, commissions and other fees payable in connection with the incurrence ofIndebtedness to the extent included in interest expense, and (c) theportion of payments under Capital Lease Obligation allocable to interestexpense.

 

“**Interest Option**” shall have the meaning specified in Section 2.8(a) hereof.

 

“**Interest Payment Dates**” shall mean (a) for AlternateBase Rate Borrowings (other than Swingline Loans), (i) the last BusinessDay of each calendar month prior to the Termination Date, and (ii) theTermination Date; (b) for LIBOR Borrowings, (i) last Business Day ofeach calendar month prior to the end of the applicable Interest Period and (ii) atthe end of the applicable Interest Period; and (c) for Swingline Loans, (i) thelast Business Day of each calendar month prior to the earlier to occur of theTermination Date or the date such Swingline Loans are required to be paid withproceeds of Revolving Loans in accordance with Section 2.11(c), and(ii) the earlier to occur of the Termination Date or the date suchSwingline Loans are required to be paid with proceeds of Revolving Loans inaccordance with Section 2.11(c).

 

“**Interest Period**” shall mean the period commencing on thedate of the applicable LIBOR Borrowing and ending on the numericallycorresponding day (or, if there is no numerically corresponding day, on thelast day) in the calendar month that is one (1), two (2) orthree (3) months thereafter, as the Borrower’s Agent may elect inaccordance herewith; provided, however, that (a) ifan Interest Period would end on a day that is not a Business Day, such InterestPeriod shall be extended to the next succeeding Business Day, unless such nextsucceeding Business Day would fall in the next calendar month, in which casesuch Interest Period shall end on the next preceding Business Day, (b) noInterest Period shall end later than the Termination Date, and (c) interestshall accrue from and including the first day of an Interest Period to, butexcluding, the last day of such Interest Period.

 

“**Inventory**” shall mean all inventory, goods and merchandisenow owned and hereafter acquired by any Credit Party, wherever located, to befurnished under any contract of service or held for sale or lease, all returnedgoods, raw materials, other materials and supplies of any kind, nature ordescription which are or will be used or consumed in the business of any CreditParty or any of their Subsidiaries or used in connection with the packing,shipping, advertising, selling

 

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or finishing of such goods, merchandise and such otherpersonal property, and all documents of title or other documents representingany of them.

 

“**Investment**” shall mean the purchase or other acquisitionof any securities or Indebtedness of, or the making of any loan, advance,extension of credit or capital contribution to (or the transfer of Propertyhaving the effect of any of the foregoing), or the incurring of any ContingentObligation in respect of the Indebtedness of, any Person (in each case otherthan accounts receivable arising in the ordinary course of business).

 

“**IRS**” shall mean the United States Internal RevenueService.

 

“**IssuingBank**” shall mean the Agent, in its capacity as the issuer of anyLetter of Credit pursuant to this Agreement. The terms “Agent” and “Issuing Bank” may be used interchangeably forsuch purpose.

 

“**ITA**” shall mean the Income Tax Act (Canada), as the samemay, from time to time, be in effect.

 

“**Joinder Agreement**” shall mean any agreement, in ProperForm, executed by a Subsidiary of a Credit Party from time to time in accordancewith Section 6.10 hereof, pursuant to which such Subsidiary joinsin the execution and delivery of (a) this Agreement or a Guaranty, (b) theContribution Agreement, or (c) any other Loan Document.

 

“**JPMorgan**” shall mean JPMorgan Chase Bank, N.A., togetherwith its successors and assigns.

 

“**Kimberly-Clark**” shall mean Kimberly-Clark Corporation, aDelaware corporation.

 

“**LCCollateral Account**” shall have the meaning specified for suchterm in Section 2.10(k).

 

“**Leasehold Property**” shall mean any leasehold interest ofany Credit Party as lessee under any lease of a Real Property Asset.

 

“**Legal Requirement**” shall mean any law, statute, ordinance,decree, requirement, order, judgment, rule, regulation (or interpretation ofany of the foregoing) of, and the terms of any license or permit issued by, anyGovernmental Authority.

 

“**Lender or Lenders**” shall have the meaning specified in thepreamble of this Agreement.  Unless thecontext otherwise requires, the term “Lenders” shall include the SwinglineLender.

 

“**Lender Party**” shall mean the Agent, the CanadianCollateral Agent, any Lender, or any of their respective Affiliates orbranches.

 

“**Letters of Credit**” shall mean Standby Letters of Creditand Trade Letters of Credit.  Letter ofCredit shall mean any one of the Standby Letters of Credit or Trade Letters ofCredit and shall include the Existing Letters of Credit.

 

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“**Letter of Credit Advances**” shall mean all sums which mayfrom time to time be paid by any and all of the Revolving Lenders pursuant toany and all of the Letters of Credit, together with all other sums, fees,reimbursements or other obligations which may be due to the Agent or any of theRevolving Lenders pursuant to any of the Letters of Credit.

 

“**Letter of Credit Exposure Amount**” shall mean at any timethe sum of (a) the aggregate undrawn amount of all Letters of Creditoutstanding at such time plus (b) the aggregate amount of allLetter of Credit Advances for which the Revolving Lenders have not beenreimbursed and which remain unpaid at such time.  The Letter of Credit Exposure Amount of anyRevolving Lender at any time shall be its Commitment Percentage of theaggregate Letter of Credit Exposure Amount at such time.

 

“**LIBOR Borrowing**” shall mean, as of any date, that portionof the principal balance of the Loans bearing interest at the Adjusted LIBORRate as of such date and having the same Interest Period.

 

“**LIBOR Lending Office**” shall mean, with respect to anyLender, the office of such Lender specified as its “LIBOR Lending Office”opposite or below its name on the signature pages hereof, or (if no suchoffice is specified, its Domestic Lending Office), or such other office of suchLender as such Lender may from time to time specify in writing to the Borrower’sAgent and the Agent.

 

“**LIBOR Rate**” shall mean, with respect to any LIBORBorrowing for any Interest Period, an interest rate per annum equal to the rateappearing on Reuters Screen LIBOR01 Page (or, if no such page exists,on any successor or substitute page providing rate quotations comparableto those currently provided on such page of the Reuters Service, asdetermined by the Agent from time to time for purposes of providing quotationsof interest rates applicable to dollar deposits in the London interbank market)at approximately 11:00 a.m., London time, two Business Days before thecommencement of such Interest Period as the composite offered rate for dollardeposits approximately equal in principal amount to the Agent’s portion of suchLIBOR Borrowing and for a maturity equal to the applicable InterestPeriod.  In the event that such rate isnot available at such time for any reason, then the “LIBOR Rate” with respectto such LIBOR Borrowing for such Interest Period shall be the average interestrate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) at whichdollar deposits approximately equal in principal amount to the Agent’s portionof such LIBOR Borrowing and for a maturity equal to the applicable InterestPeriod are offered to the Agent in the London interbank market at approximately11:00 a.m., London time, two Business Days before the commencement of suchInterest Period.

 

“**Lien**” shall mean, with respect to any asset of any Person,(a) any mortgage, pledge, debenture, charge, encumbrance, securityinterest, collateral assignment or other lien or restriction of any kind onsuch asset, whether based on common law, constitutional provision, statute orcontract, (b) the interest of any vendor or a lessor under any conditionalsale agreement, title retention agreement or capital lease relating to suchasset, (c) in the case of securities, any purchase option, call or similarright of a third party with respect to such securities, or (d) any otherright of or arrangement with any creditor to have such creditor’s claim

 

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satisfied out of such assets, or the proceeds therefrom,prior to the general creditors of such Person owning such assets.

 

“**Loan Documents**” shall mean this Agreement, the Notes, theApplications, the Security Documents, the Guaranties, the ContributionAgreement, the Joinder Agreements, the Letters of Credit, all instruments,certificates and agreements now or hereafter executed and delivered to theAgent, the Canadian Collateral Agent and/or the Lenders in connection with orpursuant to any of the foregoing (including without limitation, any fee letterbetween the Agent, JPMorgan and/or any of its Affiliates and any Borrowerrelating to the transactions contemplated by this Agreement), and allamendments, modifications, renewals, extensions, increases and rearrangementsof, and substitutions for, any of the foregoing.

 

“**Loans**” shall mean the Term Loans, the Revolving Loans andthe Swingline Loans.  Loan shall mean anyone of the Term Loans, Revolving Loans or the Swingline Loans.

 

“**Material Adverse Effect**” shall mean a material adverseeffect on (a) the business, assets, prospects, operations, financial orother condition of the Credit Parties and their Subsidiaries taken as a whole, (b) theability of the Credit Parties, taken as a whole, to perform their obligationsunder the Loan Documents, (c) the validity or enforceability of thisAgreement, any of the Notes or any other Loan Documents or the rights orremedies of the Agent, the Canadian Collateral Agent or the Lenders hereunderor thereunder, or (d) the validity or enforceability of the Agent’s Lien(or the Canadian Collateral Agent’s Lien, as applicable) on any materialportion of the Collateral or the priority of such Lien.

 

“**Material Lease**” shall mean any lease agreement withrespect to a Material Leasehold Property.

 

“**Material Leasehold Property**” shall mean (a) theLeasehold Properties listed on Schedule 1.1B and (b) aLeasehold Property of material value as Collateral or of material importance tothe operations of the Credit Parties.

 

“**Mill Properties**” shall mean those Mortgaged Properties inrespect of which paper mill operations are conducted or where structures arelocated that are integral to such operations. Mill Property shall mean one of such Mill Properties.

 

“**Monthly Unaudited Financial Statements**” shall mean thefinancial statements of the Credit Parties and their Subsidiaries, includingall notes thereto, which statements shall include (a) a balance sheet asof the end of the respective calendar month, (b) a statement of operationsfor such respective calendar month and for the fiscal year to date, subject tonormal year-end adjustments, all setting forth in comparative form thecorresponding figures for the corresponding period of the preceding fiscal yearand (c) a statement of cash flows for the fiscal year to date, subject tonormal year-end adjustments, setting forth in comparative form thecorresponding figures in the corresponding period of the preceding fiscal year,all prepared in reasonable detail and in accordance with GAAP and certified bya Responsible Officer of Borrower’s Agent as fairly and accurately presentingin all material respects the financial condition and results of operations ofthe Credit Parties and their Subsidiaries, on a Consolidated basis, at thedates and for the periods indicated therein subject to normal year-end adjustments.

 

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The Monthly Unaudited Financial Statements for the CreditParties and their Subsidiaries shall be prepared on a Consolidated andconsolidating basis, the parties recognizing that such consolidating statementswill be prepared in accordance with GAAP only to the extent normal andcustomary.

 

“**Mortgage**” shall mean (a) a security instrument(whether designated as a deed of trust, an equitable mortgage, a debenture, adeed to secure debt, a mortgage, a leasehold mortgage, a leasehold deed oftrust, a leasehold deed to secure debt, an assignment of leases and rents or byany similar title) executed and delivered by any Credit Party in such form asmay be approved by the Agent (or the Canadian Collateral Agent, as applicable),in each case with such changes thereto as may be recommended by the Agent’s (orthe Canadian Collateral Agent’s, as applicable) local counsel based on locallaws or customary local practices, and (b) at the Agent’s (or the CanadianCollateral Agent, as applicable) option, in the case of an Additional MortgagedProperty, an amendment to an existing Mortgage, in form satisfactory to theAgent (or the Canadian Collateral Agent, as applicable), adding such AdditionalMortgaged Property to the Real Property Assets encumbered by such existingMortgage, in either case as such security instrument or amendment may beamended, supplemented or otherwise modified from time to time.  “**Mortgages**”means all such instruments, including the Closing Date Mortgages and anyAdditional Mortgages.

 

“**Mortgaged Property**” shall mean a Closing Date MortgagedProperty or an Additional Mortgaged Property, as the case may be.

 

“**NeenahGermany**” shall mean Neenah Germany GmbH (formerly known asFiberMark Beteiligungs GmbH) and Neenah Services GmbH & Co. KG.(formerly known as FiberMark Services GmbH & Co. KG.), collectively.

 

“**Net Income**” shall mean, with respect to any Person for anyperiod, net income of such Person for the applicable calculation period determinedin accordance with GAAP; provided, that there shall not beincluded in such calculation of net income (without duplication) (a) anyextraordinary gains or losses (including in connection with the sale orwrite-up of assets), (b) any nonrecurring gains or losses, (c) anygains or losses from dispositions of property or assets, other thandispositions of Inventory and Equipment in the ordinary course of business, andthe tax consequences thereof, (d) the net income or loss of any otherPerson that is not a Subsidiary of such Person for whom net income is beingcalculated (or is accounted for by such Person by the equity method ofaccounting), (e) the net income (or loss) of any other Person acquired by,or merged with, such Person for whom net income is being calculated or any ofits Subsidiaries for any period prior to the date of such acquisition, (f) thenet income of any Subsidiary of such Person for whom net income is beingcalculated to the extent that the declaration or payment of dividends or similardistributions by such Subsidiary of such net income is not at the timepermitted by operation of the terms of its charter, certificate ofincorporation or formation or other constituent document or any agreement orinstrument or Legal Requirement applicable to such Subsidiary, all asdetermined in accordance with GAAP, (g) any non-cash non-recurringimpairment charges with respect to a writedown of the carrying amount of theConsolidated assets of the Credit Parties acquired after the Closing Date(either through direct asset purchase or as part of the acquisition of all orsubstantially all of the Stock of another Person) based on the impairment ofsuch assets, pursuant to the provisions of Section 7.4(f) andany benefits

 

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(including tax benefits) resulting from such writedown, (h) anynon-cash compensation expense realized for grants of performance shares, stockoptions or other rights to officers, directors and employees, provided thatsuch shares, options or other rights can be redeemed at the option of theholder only for capital stock of such Person, (i) with respect to theCredit Parties, to the extent deducted in the calculation of Net Income, anynon-recurring charges or other expenses (determined in accordance with GAAP andas reflected in the Company’s financial statements produced from time to timepursuant to Sections 6.3(a) and 6.3(b)) related to therestructuring, permanent closure or Disposition of Neenah Paper FR, LLC’sfacility in Ripon, California, which non-recurring charges or other expenses,for purposes of this definition, shall not exceed $18,000,000 in the aggregate($10,900,000 of such amount being cash charges or expenses and $7,100,000 ofsuch amount being non-cash charges or expenses) during the term of thisAgreement; and (j) amounts actually paid in cash to the IRS by the CreditParties during such period as a result of the Credit Parties’ repayment of taxrefunds received by the Credit Parties in connection to their 2005 tax return,which amount shall not exceed $7,000,000 during the term of this Agreement.

 

“**Net Recovery Value Percentage**” shall mean the “netrecovery value percentage” under an orderly liquidation scenario for theInventory, Equipment, or Real Property Assets of any Credit Party, asspecifically set forth and described in the most recent appraisal of theInventory, Equipment, or Real Property Assets of the applicable Credit Partyreceived by the Agent pursuant to the provisions of Section 6.4hereof (or with regard to work-in-process Inventory, gross recovery valuepercentage as set forth in such an appraisal and as discounted by the Agent inits reasonable credit judgment).

 

“**NewLender**” has the meaning assigned to such term in Section 2.15(d).

 

“**NewLender Agreement**” means a New Lender Agreement entered into by aNew Lender in accordance with Section 2.15(d) and accepted bythe Agent in the form of Exhibit R attached hereto, or any otherform approved by the Agent.

 

“**Non-Reporting Lender Party**” shall have the meaningspecified for such term in the definition of “Bank Products”.

 

“**Notes**” shall mean the Revolving Credit Notes, the TermNotes and the Swingline Note.  Note shallmean any one of such promissory notes.

 

“**Nova Scotia Woodlands**” shall mean the Timberland Propertieslocated in Nova Scotia, Canada, comprising approximately 500,000 acres.

 

“**NPInternational**” shall mean Neenah Paper International, LLC, aDelaware limited liability company and a wholly owned Subsidiary of NPInternational HoldCo.

 

“**NPInternational HoldCo**” shall mean Neenah Paper InternationalHolding Company, LLC, a Delaware limited liability company and a wholly ownedSubsidiary of the Parent.

 

“**Obligations**” shall mean, without duplication, allobligations, liabilities and Indebtedness of the Credit Parties with respect to(a) the Security Documents and all other Loan Documents, including withoutlimitation, (i) the principal of and interest on the Loans and (ii)

 

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the payment or performance of all other obligations,liabilities and Indebtedness of the Credit Parties to the Agent, the CanadianCollateral Agent and the Lenders hereunder, under the Notes, under the Lettersof Credit, under the Applications or under any one or more of the other LoanDocuments, including all fees, costs, expenses and indemnity obligationshereunder and thereunder, and (b) all obligations and liabilities of theCredit Parties and/or any of their Subsidiaries now or hereafter owing toJPMorgan Chase Bank, N.A. or any other Lender Party under any BankProduct.  The Obligations includeinterest (including interest that accrues or that would accrue but for thefiling of a bankruptcy case by a Credit Party or any of its Subsidiaries, whetheror not such interest would be an allowable claim under any applicablebankruptcy or other similar proceeding) and other obligations accruing orarising after (a) commencement of any case under any bankruptcy or similarlaws by or against any Credit Party or any of their Subsidiaries (or that wouldaccrue or arise but for the commencement of any such case) or (b) thepersonal liability of the Credit Parties or any of their Subsidiaries for theObligations shall be discharged or otherwise cease to exist by operation of lawor for any other reason.

 

“**Obligee**” and “**Obligees**”shall have the meanings assigned to such terms in Section 10.22.

 

“**OffshoreEntities**” shall mean FinCo, Neenah Germany, each direct orindirect subsidiary of Neenah Germany and their respective successors andassigns.

 

“**Organizational Documents**” shall mean, with respect to acorporation, the certificate of incorporation, articles of incorporation andbylaws of such corporation; with respect to a limited partnership, the limitedpartnership agreement and certificate of limited partnership of such limitedpartnership; with respect to a joint venture, the joint venture agreementestablishing such joint venture; with respect to a limited liability company,the articles of organization or certificate of formation and regulations orlimited liability company agreement of such limited liability company;  with respect to an unlimited liabilitycompany, the memorandum of association and articles of association and thecertificate of incorporation of such company; and with respect to a trust, theinstrument establishing such trust; in each case including any and allmodifications thereof as of the date of the Loan Document referring to suchOrganizational Document and any and all future modifications thereof.

 

“**OriginalClosing Date**” shall have the meaning specified in the recitalsof this Agreement.

 

“**Other Tax**” shall have the meaning attributed to such termin Section 10.17(a)(ii) hereof.

 

“**Parent**” shall have the meaning specified in the preambleto this Agreement.

 

“**Parties**” shall mean all Persons other than the Agent, theCanadian Collateral Agent and any Lender executing any Loan Documents.

 

“**Patents**” shall have the meaning specified for such term inthe definition of “Intellectual Property.”

 

“**PBGC**” shall mean the Pension Benefit Guaranty Corporation.

 

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“**Perfection Certificate**” shall mean a certificate in theform of Exhibit L attached hereto or any other form approved by theAgent, completed and supplemented with the schedules and attachmentscontemplated thereby, and duly executed by each Credit Party.

 

“**Permitted Affiliate Transactions**” shall mean any of thefollowing:  (a) transactions betweenCredit Parties; (b) transactions between Offshore Entities, (c) customarydirectors’ fees, customary directors’ indemnifications and similar arrangementsfor officers and directors of the Credit Parties and the Offshore Entitiesentered into in the ordinary course of business, together with any paymentsmade under any such indemnification arrangements; provided, thatany of the foregoing owed to directors and officers of the Offshore Entitiesare only payable and paid by the Offshore Entities; (d) customary andreasonable loans, advances and reimbursements to officers, directors andemployees of the Credit Parties and Offshore Entities for travel,entertainment, moving and other relocation expenses, in each case made in theordinary course of business provided, that any of the foregoingowed to officers, directors and employees of the Offshore Entities are onlypayable and paid by the Offshore Entities; (e) the incurrence ofintercompany Indebtedness permitted pursuant to Sections 7.1(f) and7.1(n) hereof and Contingent Obligations permitted pursuant to Section 7.1(g) hereof,(f) employment agreements and arrangements entered into with directors,officers and employees of the Credit Parties or the Offshore Entitles in theordinary course of business; provided, that any obligations underany of the foregoing owed to directors, officers and employees of the OffshoreEntities are only obligations of the Offshore Entities and are only paid by theOffshore Entities; and (g) other transactions, contracts or agreementsexisting on the Closing Date and which are set forth on Schedule 7.6attached hereto, together with any renewals and extensions of such existingtransactions, contracts or agreements, so long as such renewals and extensionsare upon terms and conditions substantially identical to the terms andconditions set forth in such existing transactions, contracts and agreements(or otherwise no less favorable to the Credit Parties, as applicable), and suchother transactions, contracts or agreements with respect to the OffshoreEntities entered into after the Closing Date, which (i) either (A) containterms and conditions substantially similar to those transactions, contracts andagreements listed on Schedule 7.6 attached hereto or (B) aretransactions, contracts or agreements customarily entered into by publiccompanies for the provision of administrative services to their relatedcompanies (including, without limitation, legal, accounting, treasury, tax,human resources, billing and collection, accounts payable, risk management,compliance and other similar administrative services), and (ii) have beenapproved by the Agent in its reasonable discretion.  Where any costs, expenses, fees or otherpayments to directors, officers or employees described herein are required tobe made by, or to be obligations solely of, Offshore Entities, such amounts maybe either paid directly by the Offshore Entities, or paid by any Credit Partyand reimbursed in cash by Offshore Entities in the ordinary course of businesswhich, in any event, shall not be longer than 60 days after such paymentis made.  In the event such costs,expenses, fees or other payments relate both to the Credit Parties and to oneor more Offshore Entities, the Parent shall be entitled to make a reasonable,good faith allocation of such amounts as between the affected Credit Parties,on the one hand, and the affected Offshore Entities on the other.

 

“**Permitted Investment Securities**” shall mean each of thefollowing, to the extent the same is pledged as additional Collateral hereunderand is subject to a first priority perfected Lien in favor of the Agent (or theCanadian Collateral Agent, as applicable) for the ratable benefit of the LenderParties:  (a) readily marketable,direct obligations of the United States of America or 

 

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Canada or any agency or wholly-owned corporation thereofwhich are backed by the full faith and credit of the United States or Canada,maturing within one (1) year after the date of acquisition thereof, (b) certificatesof deposit, commercial paper (if rated no lower than A-1/P-1) or othershort-term direct obligations of (i) JPMorgan or (ii) any otherdomestic financial institution having capital and surplus in excess of$5,000,000,000, maturing within six months after the date of acquisitionthereof, (c) money market mutual funds having aggregate assets in excessof $5,000,000,000, and (d) other Investments mutually agreed to in writingby the Borrowers’ Agent and the Agent.

 

“**Permitted Overadvance**” shall have the meaning specified inSection 2.2(h) hereof.

 

“**Person**” shall mean any individual, corporation, businesstrust, unincorporated organization or association, partnership, joint venture,limited liability company, unlimited liability company, Governmental Authorityor any other form of entity.

 

“**Plan**” shall mean any plan subject to Title IV of ERISA andmaintained by any Credit Party for employees of any Credit Party or of anymember of a “controlled group of corporations”, as such term is defined in theCode, of which the Borrower, any of its Subsidiaries or any ERISA Affiliate itmay acquire from time to time is a part, or any such plan to which theBorrower, any of its Subsidiaries or any ERISA Affiliate is required tocontribute on behalf of its employees.

 

“**PledgedCash**” shall mean, on any date, the aggregate amount of cash ondeposit in the Special Cash Collateral Account on such date.

 

“**PledgedInter-Company Loan**” shall mean, collectively, the InitialPledged Inter-Company Loan and subsequent advances under the inter-companyrevolving line of credit from NP International HoldCo to FinCo, evidenced bythe Pledged Inter-Company Note, which line of credit shall be used to provideFinCo with funds to finance, by means of Unpledged Inter-Company Loans, theactivities of NP International and, to the extent permitted under thisAgreement, any non-U.S., non-Canadian subsidiaries of NP International fromtime to time.

 

“**PledgedInter-Company Note**” shall mean that certain promissory note,dated as of October 3, 2006, by FinCo to NP International HoldCo, andwhich evidences the Pledged Inter-Company Loan.

 

“**PPSA (Nova Scotia)**” shall mean the Personal PropertySecurity Act (Nova Scotia), as amended from time to time.

 

“**Prime Rate**” shall mean the rate of interest per annumpublicly announced from time to time by JPMorgan, or its successor financialinstitution, if any, at its principal office in New York City as its prime ratein effect at such time.  Without noticeto any Credit Party or any other Person, the Prime Rate shall changeautomatically from time to time as and in the amount by which said prime rateshall fluctuate, with each such change to be effective as of the date of eachchange in such prime rate.  THE PRIMERATE IS A REFERENCE RATE AND DOES NOT NECESSARILY REPRESENT THE LOWEST OR BESTRATE ACTUALLY CHARGED BY JPMORGAN OR SUCH SUCCESSOR FINANCIAL INSTITUTION TOANY OF ITS CUSTOMERS.  JPMORGAN OR SUCHSUCCESSOR FINANCIAL INSTITUTION MAY

 

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MAKE COMMERCIAL LOANS OR OTHER LOANS AT RATES OF INTEREST AT,ABOVE AND BELOW THE PRIME RATE.

 

“**Principal Office**” shall mean the principal office in NewYork City of the Agent, or such other place as the Agent may from time to timeby notice to the Borrowers’ Agent designate.

 

“**PriorTerm Loan Agreement**” shall mean that certain Term Loan Agreementdated March 30, 2007, as amended, among Parent, certain subsidiaries ofParent and JPMorgan.

 

“**Prohibited Transaction**” shall mean any non-exempttransaction set forth in Section 406 of ERISA or Section 4975 of theCode.

 

“**Proper Form**” shall mean in form and substance satisfactoryto the Agent (or the Canadian Collateral Agent, as applicable) as of the timeof delivery and execution.

 

“**Property**” shall mean any interest in any kind of propertyor asset, whether real, personal or mixed, tangible or intangible.

 

“**QuarterlyEquipment Component Amortization Amount**” shall have the meaningspecified for such term on Schedule 1.1D.

 

“**QuarterlyReal Estate Component Amortization Amount**” shall have themeaning specified for such term on Schedule 1.1E.

 

“**Quarterly Unaudited Financial Statements**” shall mean thefinancial statements of the Credit Parties and their Subsidiaries, includingall notes thereto, which statements shall include (a) a balance sheet asof the end of the respective fiscal quarter, as applicable, (b) astatement of operations for such respective fiscal quarter, as applicable, andfor the fiscal year to date, subject to normal year-end adjustments, allsetting forth in comparative form the corresponding figures for thecorresponding period of the preceding fiscal year and (c) a statement ofcash flows for the fiscal year to date, subject to normal year-end adjustments,setting forth in comparative form the corresponding figures in thecorresponding period of the preceding fiscal year, all prepared in reasonabledetail and in accordance with GAAP and certified by a Responsible Officer ofBorrower’s Agent as fairly and accurately presenting in all material respectsthe financial condition and results of operations of the Credit Parties andtheir Subsidiaries, on a Consolidated basis, at the dates and for the periodsindicated therein, subject to normal year-end adjustments.  The Quarterly Unaudited Financial Statementsfor the Credit Parties and their Subsidiaries shall be prepared on aConsolidated and consolidating basis, the parties recognizing that suchconsolidating statements will be prepared in accordance with GAAP only to theextent normal and customary.

 

“**Rate Selection Date**” shall mean that Business Day which is(a) in the case of an Alternate Base Rate Borrowing, the date of suchborrowing, or (b) in the case of a LIBOR Borrowing, the date three (3) BusinessDays preceding the first day of any proposed Interest Period for such LIBORBorrowing.

 

“**Rate Selection Notice**” shall have the meaning specified inSection 2.8(b)(i) hereof.

 

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“**ReaffirmationAgreements**” means the Second Amendment to Security Agreement(Personal Property) and Reaffirmation Agreement entered into by the CreditParties (other than Guarantor) and the Agent, the First Amendment to PledgeAgreement and Reaffirmation Agreement entered by the Credit Parties (other thanGuarantor) and the Agent, the First Amendment to Guaranty and ReaffirmationAgreement entered into by Guarantor, the First Amendment to Patent SecurityAgreement and Reaffirmation Agreement entered into by the Credit Parties (otherthan Guarantor) and the Agent, the First Amendment to Trademark SecurityAgreement and Reaffirmation Agreement entered into by the Credit Parties (otherthan Guarantor) and the Agent, and the First Amendment to Copyright SecurityAgreement and Reaffirmation Agreement entered into by the Credit Parties (otherthan Guarantor) and the Agent, in each case dated as of the date hereof.

 

“**Real EstateComponent**” shall have the meaning specified for such term on Schedule1.1F.

 

“**Real Property Asset**” shall mean, at any time ofdetermination, any fee ownership or leasehold interest of any Credit Party inor to any real Property.

 

“**Receivables**” shall mean and include all of the accounts,instruments, documents, chattel paper and general intangibles of the CreditParties, whether secured or unsecured, whether now existing or hereaftercreated or arising, and whether or not specifically assigned to the Agent forthe ratable benefit of the Lender Parties.

 

“**Refinancing Indebtedness**” shall mean any Indebtedness ofthe Credit Parties or any of their Subsidiaries issued in exchange for, or thenet proceeds of which are used to extend, refinance, renew, replace, defease orrefund, other Indebtedness of such Person, provided, that:

 

(a)           theprincipal amount of such Refinancing Indebtedness does not exceed the sum of (i) thethen outstanding principal amount of the Indebtedness so extended, refinanced,renewed, replaced, defeased or refunded, and (ii) the reasonable andcustomary transactional costs and expenses incurred by the Credit Parties inconnection with incurring such Refinancing Indebtedness;

 

(b)           theinterest rate or rates to accrue under such Refinancing Indebtedness do notexceed the interest rate or rates then accruing on the Indebtedness soextended, refinanced, renewed, replaced, defeased or refunded;

 

(c)           thematurities, amortization schedules, covenants, defaults, remedies,subordination provisions (with respect to any Subordinated Indebtedness),collateral security provisions (or absence thereof) and other terms of suchRefinancing Indebtedness are in each case, as determined by the Agent in itssole discretion, substantially the same as, or more favorable to the applicableCredit Party and/or Subsidiary as those in the Indebtedness so extended,refinanced, renewed, replaced, defeased or refunded; and

 

(d)           no Defaultor Event of Default has occurred and is continuing or would result from theissuance or origination of such Refinancing Indebtedness.

 

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“**Regulation D**” shall mean Regulation D of the Board ofGovernors of the Federal Reserve System from time to time in effect and shallinclude any successor or other regulation relating to reserve requirementsapplicable to member Lenders of the Federal Reserve System.

 

“**Regulatory Change**” shall mean, with respect to any Lender,any change on or after the date of this Agreement in any Legal Requirement(including Regulation D) or the adoption or making on or after such dateof any Legal Requirement applying to Agent or a class of Lenders including suchPerson under any Legal Requirement (whether or not having the force of law) byany Governmental Authority charged with the interpretation or administrationthereof.

 

“**Related Obligations**” shall have the meaning assigned tosuch term in Section 10.22.

 

“**Reportable Event**” shall mean a “reportable event” asdefined in Section 4043(c) of ERISA, excluding those for which theprovision for 30-day notice to the PBGC has been waived by regulation.

 

“**Request for Extension of Credit**” shall mean a writtenrequest for extension of credit substantially in the form of Exhibit Eattached hereto.

 

“**Required Lenders**” shall mean Lenders having greater than50% of the aggregate amount of the outstanding Term Loans, Revolving Loans,Letter of Credit Exposure Amount, Swingline Exposure and, prior to thetermination of the Total Revolving Commitment, Unused Commitment; and providedfurther, however, if only two (2) Lenders are then partiesto this Agreement, Required Lenders shall mean both of such Lenders.  Notwithstanding anything in this Agreement tothe contrary, no Defaulting Lender shall be taken into account for any purposein determining whether the Required Lenders have authorized or taken any actioncontemplated in this Agreement or any of the other Loan Documents, subject to Section 10.11hereof.

 

“**Requirements of Environmental Law**” shall mean allrequirements imposed by any Environmental Law. Requirement of Environmental Law shall mean any one of them.

 

“**Reserves**” shall mean any and all reserves established bythe Agent, in its reasonable credit judgment and without duplication, withrespect to the Borrowing Base or in accordance with any express provision ofthis Agreement or any other Loan Document (including, without limitation, suchreserves as may be necessary in any jurisdiction with respect to priming liensof any Governmental Authority or any pension authority) for purposes ofreducing the Borrowers’ ability to utilize any portion of the Borrowing Base.

 

“**Responsible Officer**” shall mean, with respect to anyPerson, the president, chief financial officer, treasurer, controller, orgeneral counsel of such Person.

 

“**RevolvingCommitment**” means, with respect to each Revolving Lender, thecommitment, if any, of such Revolving Lender to make Revolving Loans and toacquire participations in Letters of Credit, Permitted Overadvances andSwingline Loans hereunder, expressed as an amount representing the maximumpossible aggregate amount of such Revolving Lender’s Revolving Exposurehereunder, as such commitment may be reduced or increased from time to timepursuant to (a) Sections 2.4 and 2.15 and (b) assignmentsby or to such Revolving Lender pursuant to Section 10.12.  The initial amount of each Revolving Lender’sRevolving

 

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Commitment is set forth on Schedule 1.1A hereto,or in the Assignment and Acceptance or New Lender Agreement pursuant to whichsuch Revolving Lender shall have assumed its Revolving Commitment, as applicable.  The initial aggregate amount of the RevolvingLenders’ Revolving Commitments is $100,000,000.00.

 

“**RevolvingCommitment Increase Notice**” shall have the meaning specified forsuch term in Section 2.15(a).

 

“**Revolving Credit Alternate Base Rate Borrowing**” shallmean, as of any date, that portion of the principal balance of the RevolvingLoans bearing interest at the Alternate Base Rate as of such date.

 

“**Revolving Credit LIBOR Borrowing**” shall mean, as of anydate, that portion of the principal balance of the Revolving Loans bearinginterest at the Adjusted LIBOR Rate as of such date.

 

“**Revolving Credit Notes**” shall mean the promissory notes,each substantially in the form of Exhibit A attached hereto, of theBorrowers evidencing the Revolving Loans, payable to the order of therespective Revolving Lenders in the amount of said Revolving Lender’s RevolvingCommitment, and all renewals, extensions, modifications, rearrangements andreplacements thereof and substitutions therefor.  Revolving Credit Note shall mean any of suchpromissory notes.

 

“**RevolvingExposure**” means, with respect to any Revolving Lender at anytime, the sum of the outstanding principal amount of such Revolving Lender’sRevolving Loans and its Letter of Credit Exposure Amount and an amount equal toits Commitment Percentage of the aggregate principal amount of Swingline Loansat such time, plus an amount equal to its Commitment Percentage of theaggregate principal amount of Permitted Overadvances outstanding at such time.

 

“**RevolvingLenders**” shall mean, as of any date of determination, Lendershaving a Revolving Commitment.

 

“**Revolving Loans**” shall mean the Revolving Loans madepursuant to Section 2.1 hereof, including any PermittedOveradvances.  Revolving Loan shall meanone of such Revolving Loans.

 

“**Scheduled Principal Payments**” shall mean, with respect toany Person for any period, the aggregate amount of regularly scheduled paymentsof principal, if any, in respect of funded Indebtedness (including theprincipal component of any payments in respect of Capital Lease Obligations)paid or required to be paid by such Person and its consolidated Subsidiariesduring such period, excluding (i) principal payments under the UnpledgedInter-Company Loan, but solely to the extent an equal principal payment is madesubstantially contemporaneously thereafter by FinCo on a Pledged Inter-CompanyLoan, and (ii) resulting, substantially contemporaneous payments under thePledged Inter-Company Loan.

 

“**Security Agreements**” shall mean (a) the Security Agreement(Personal Property) dated as of the Original Closing Date, between the CreditParties (other than the Guarantor) and the

 

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Agent, for the ratable benefit of the Lender Parties,covering all Receivables, Inventory and all other tangible and intangiblepersonal Property of such Credit Parties more particularly described therein,as the same may thereafter be or have been joined in by a Credit Party pursuantto a Joinder Agreement, (b) the debentures dated as of the OriginalClosing Date, each granted by the Guarantor in favor of the Canadian CollateralAgent, for the ratable benefit of the Lender Parties, covering the Collateralreferred to therein of the Guarantor, in each case as more particularly describedtherein, as the same may thereafter be or have been joined in by a Credit Partypursuant to a Joinder Agreement, (c) the Pledge Agreement dated as of theOriginal Closing Date, between the Credit Parties named therein and the Agent,for the ratable benefit of the Lender Parties, covering (i) all issued andoutstanding Stock in each of the Borrowers’ Domestic Subsidiaries and, to theextent set forth therein, Canadian Subsidiaries, and (ii) 65% of allissued and outstanding Stock in each of the Borrower’s non-DomesticSubsidiaries (other than Canadian Subsidiaries), (d) the transfer andassignment of insurance dated as of the Original Closing Date, by Neenah PaperCompany of Canada in favor of the Canadian Collateral Agent, (e) any andall other security agreements, pledge agreements, collateral assignments(including without limitation assignments of insurance), assignments ofcontract rights or agreements, assignments or pledges of stock or partnershipinterests, or other similar documents now or hereafter executed in favor of theAgent (or the Canadian Collateral Agent, as applicable), for the ratablebenefit of the Lender Parties, as security for the payment or performance ofany and/or all of the Obligations, and (f) any amendment, modification, restatementor supplement of all or any of the above-described agreements and assignments,including, without limitation, the Reaffirmation Agreements.

 

“**Security Documents**” shall mean the Security Agreements,all related financing statements and any and all other agreements, IntellectualProperty Security Agreements, Mortgages, debentures, deeds of trust, chattelmortgages, Tri-Party Agreements, guaranties, assignments of income, standbyagreements, subordination agreements, undertakings and other instruments andfinancing statements now or hereafter executed and delivered as security forthe payment and performance of the Obligations, as any of them may from time totime be amended, modified, restated or supplemented.

 

“**Senior Note Documents**” shall mean any and all agreements,instruments and other documents pursuant to which the Senior Notes have been orwill be issued or otherwise setting forth the terms of the Senior Notes, theSenior Note Indenture and the obligations with respect thereto, including any guarantyagreements, bank product agreements or hedging agreements related thereto, allancillary agreements as to which any agent, trustee or lender is a party or abeneficiary and all other agreements, instruments, documents and certificatesexecuted in connection with any of the foregoing, in each case as suchagreement, instrument or other document may be amended, restated, supplemented,refunded, replaced or otherwise modified from time to time in accordance withthe terms thereof.

 

“**Senior Notes**” shall mean the 7-3/8% senior notes of theParent due 2014, issued pursuant to the Senior Note Indenture.

 

“**Senior Note Indenture**” shall mean the Indenture, dated as November 30,2004, between Parent, the subsidiaries of the Parent party thereto, and TheBank of New York Trust Company, N.A., as Trustee.

 

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“**Settlement**” shall have the meaning specified for such termin Section 2.11(f).

 

“**Settlement Date**” shall have the meaning specified for suchterm in Section 2.11(f).

 

“**SpecialCash Collateral Account**” shall mean that certain deposit accountidentified as such on Schedule 5.29, established or to beestablished with JPMorgan Chase Bank, N.A. or one of its Affiliates, into whichthe Borrowers deposit certain proceeds received by them from the Disposition ofProperty pursuant to Section 2.7(d); provided that such depositaccount is subject to an account control agreement and/or such other SecurityDocuments required by the Agent, each in form and substance satisfactory to theAgent, pursuant to which the Agent has (i) been granted a first priorityLien on and security interest in such account and all cash held from time totime therein and (ii) sole control over the amounts held from time to timetherein, and which is otherwise maintained as provided in Section 3.3.

 

“**Standby Letters of Credit**” shall mean all standby lettersof credit issued by the Agent for the account or liability of any Borrowerpursuant to the terms set forth in this Agreement and shall include all standbyletters of credit which are Existing Letters of Credit.

 

“**Statutory Reserves**” shall mean a fraction (expressed as adecimal), the numerator of which is the number one and the denominator of whichis the number one minus the aggregate of the maximum reserve percentage(including without limitation, any marginal, special, emergency or supplementalreserves) expressed as a decimal, established by the Board of Governors of theFederal Reserve System of the United States and any other banking authority towhich any Lender is subject with respect to the Adjusted LIBOR Rate forEurocurrency Liabilities (as defined in Regulation D), including withoutlimitation, those reserve percentages imposed under Regulation D.

 

“**Stock**” shall mean as to a Business Entity, all capitalstock, partnership interests, membership interests or other indicia of equityrights issued by such Business Entity from time to time.

 

“**Subordinated Indebtedness**” shall mean, with respect to anyCredit Party or any of their Subsidiaries, Indebtedness subordinated in rightof payment to such Credit Party’s or such Subsidiary’s monetary Obligations onterms satisfactory to and approved in writing by the Agent and the RequiredLenders, in their reasonable credit judgment, so long as all other termsthereof (including without limitation, regularly scheduled payments andfinancial and negative covenants) are satisfactory to and approved in writingby the Agent and the Required Lenders, in their reasonable credit judgment.

 

“**Subsidiary**” shall mean, as to a particular parent BusinessEntity, any Business Entity (excluding any Offshore Entity) of which more thanfifty percent (50%) of the Stock issued by such Business Entity is at the timedirectly or indirectly owned by such parent Business Entity or by one or moreof its Affiliates (other than an Offshore Entity).

 

“**Swingline Exposure**” shall mean, at any time, the aggregateprincipal amount of all Swing Loans outstanding at such time.

 

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“**Swingline Lender**” shall mean JPMorgan or any other Lenderthat becomes the Agent, in each case in its capacity as the Swingline Lenderhereunder.

 

“**Swingline Loans**” shall mean the Swingline Loans madepursuant to Section 2.11(a) hereof.  Swingline Loan shall mean any one of suchSwingline Loans.

 

“**Swingline Note**” shall mean the promissory note,substantially in the form of Exhibit B attached hereto, of theBorrowers evidencing the Swingline Loans, payable to the order of the SwinglineLenders in the original principal amount of $15,000,000, and all renewals,extensions, modifications, rearrangements and replacements thereof andsubstitutions therefor.

 

“**Synthetic Lease**” shall mean any lease of (or otherarrangement conveying the right to use) real or personal property, or acombination thereof, which lease or other arrangement is required or ispermitted to be classified and accounted for as an operating lease under GAAPbut which is intended by the parties thereto for tax, bankruptcy, regulatory,commercial law, real estate law and all other purposes as a financingarrangement.

 

“**Tax**”shall have the meaning attributed to such term in Section 10.17(a)(iii) hereof.

 

“**TermLenders**” means, as of any date of determination, Lenders havinga Term Loan Commitment.

 

“**Term LoanAlternate Base Rate Borrowing**” shall mean, as of any date, thatportion of the principal balance of the Term Loans bearing interest at theAlternate Base Rate as of such date.

 

“**Term LoanCommitment**” means (a) as to any Term Lender, the aggregatecommitment of such Term Lender to make Term Loans as set forth in Schedule 1.1Ahereto or in the most recent Assignment and Assumption executed by such TermLender and (b) as to all Term Lenders, the aggregate commitment of allTerm Lenders to make Term Loans, which aggregate commitment shall be$40,000,000 on the date of this Agreement. After advancing the Term Loan, each reference to a Term Lender’s TermLoan Commitment shall refer to that Term Lender’s Commitment Percentage of theTerm Loans.

 

“**TermLoans**” means the Term Loans extended by the Term Lenders to theBorrowers on the Closing Date pursuant to Section 2.1(2) hereof.

 

“**TermNotes**” shall mean the promissory notes, each substantially inthe form of Exhibit C attached hereto, of the Borrowers evidencingthe Term Loans, payable to the order of the respective Term Lenders in theamount of said Term Lender’s Term Loan Commitment, and all renewals,extensions, modifications, rearrangements and replacements thereof andsubstitutions therefor.  Term Loan Noteshall mean any of such promissory notes.

 

“**Termination Date**” shall mean the earliest of (a) November 30, 2013,(b) any date that the Total Commitment is terminated in full by theBorrowers pursuant to Section 2.4 hereof, and (c) any date theTermination Date is accelerated or the Total Commitment is terminated by theAgent pursuant to Section 8.1 hereof.

 

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“**Timberland Properties**” shall mean that portion of theClosing Date Mortgaged Properties other than the Mill Properties.

 

“**Title Company**” shall mean (a) with respect to theMortgaged Properties located in the United States, First American TitleInsurance Company and (b) with respect to the Mortgaged Properties locatedin Canada, First Canadian Title Insurance Company, Ltd., or in each case one ormore other title insurance companies reasonably satisfactory to the Agent.

 

“**Total Commitment**” shall mean, on any day, the aggregate ofall of the Lenders’ Commitments on such day. As of the Closing Date, the Total Commitment is $140,000,000.

 

“**Total Revolving Commitment**” shall mean, on any day, theaggregate of all of the Revolving Lenders’ Revolving Commitments on suchday.  As of the Closing Date, the TotalRevolving Commitment is $100,000,000.

 

“**Trade Letters of Credit**” shall mean all trade ordocumentary letters of credit issued by the Agent for the account or liabilityof any Borrower pursuant to the terms set forth in this Agreement and shallinclude all trade or documentary letters of credit which are Existing Lettersof Credit.

 

“**Trademarks**” shall have the meaning specified for such termin the definition of “Intellectual Property.”

 

“**Tri-Party Agreements**” shall collectively mean tri-partyagreements, in Proper Form, to be executed and delivered by and among the Agent(or the Canadian Collateral Agent, as applicable), the Credit Parties requiredby the Agent (or the Canadian Collateral Agent, as applicable) and theapplicable financial institutions described in Schedule 5.29attached hereto, together with all modifications and/or replacements thereofwhich are approved in writing by the Agent (or the Canadian Collateral Agent,as applicable), for purposes of (a) evidencing control by the Agent (orthe Canadian Collateral Agent, as applicable) in one or more deposit accounts(including Collection Accounts) maintained by the applicable Credit Partieswith any such specified financial institution, in the case of the Agent, forpurposes of perfection of the Agent’s Lien in such deposit accounts for theratable benefit of the Lender Parties, and (b) with respect to depositaccounts constituting Collection Accounts, facilitating the collection ofReceivables in accordance with the terms of Section 6.15 hereof.

 

“**UCC**” shall mean the Uniform Commercial Code as in effectfrom time to time in the State of New York.

 

“**UnpledgedInter-Company Loan**” shall mean the inter-company loans made fromtime to time by FinCo to NP International for the purpose of financing the 2006acquisition of Neenah Germany and the activities of NP International and anynon-U.S., non-Canadian subsidiaries of NP International from time to time.

 

“**Unused Commitment**” shall mean, as to a particularRevolving Lender, the daily difference of such Revolving Lender’s RevolvingCommitment on such day less the Current Sum applicable to such RevolvingLender on such day.

 

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1.2           Accounting Termsand Determinations.  Except wherespecifically otherwise provided:

 

(a)           The symbol “**$**” and the word “**dollars**” shall mean lawful money of theUnited States of America, and symbol “**Cdn.$**”and the words “**Canadian Dollars**”shall mean lawful money of Canada.

 

(b)           Any accounting termnot otherwise defined shall have the meaning ascribed to it under GAAP.  If any Credit Party is required after theClosing Date to implement any change(s) in its accounting principles andpractice as a result of any changes in GAAP mandated by the FinancialAccounting Standards Board or successor organization, and if such change(s) resultin any material change in the method of calculation of the Fixed ChargeCoverage Ratio, then for all periods after the date of implementation of suchchange(s) until one or more appropriate amendments of this Agreementaddressing such change(s) in GAAP are negotiated, executed and deliveredby the parties hereto in a form acceptable to all such parties, the FixedCharge Coverage Ratio shall be calculated hereunder utilizing GAAP as in effectprior to such change(s).

 

(c)           Unless otherwiseexpressly provided, any accounting concept and all financial covenants shall bedetermined on a Consolidated basis, and financial measurements shall becomputed without duplication.

 

(d)           Wherever the term “including”or any of its correlatives appears in the Loan Documents, it shall be read asif it were written “including (by way of example and without limiting thegenerality of the subject or concept referred to)”.

 

(e)           Wherever the word “herein”or “hereof” is used in any Loan Document, it is a reference to that entire LoanDocument and not just to the subdivision of it in which the word is used.

 

(f)            References in anyLoan Document to Section numbers are references to the Sections of suchLoan Document.

 

(g)           References in anyLoan Document to Exhibits, Schedules, Annexes and Appendices are to theExhibits, Schedules, Annexes and Appendices to such Loan Document, and theyshall be deemed incorporated into such Loan Document by reference.

 

(h)           Any term defined inthe Loan Documents which refers to a particular agreement, instrument ordocument shall also mean, refer to and include all modifications, amendments,supplements, restatements, renewals, extensions and substitutions of the same; provided,that nothing in this subsection shall be construed to authorize any suchmodification, amendment, supplement, restatement, renewal, extension orsubstitution except as may be permitted by other provisions of the LoanDocuments.

 

(i)            Unless otherwiseexpressly stated in any Loan Document, all times of day used in the LoanDocuments mean local time in New York, New York.

 

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(j)            Defined terms maybe used in the singular or plural, as the context requires.

 

1.3           UCC Changes.  All terms used herein which are defined inthe UCC shall, unless otherwise defined herein, have the meanings ascribed tothem in the UCC both as in effect on the date of this Agreement and ashereafter amended.

 

1.4           Joint and SeveralObligations; Borrowers’ Agent.

 

(a)           All obligations ofthe Borrowers hereunder shall be joint and several.  Any notice, request, waiver, consent or otheraction made, given or taken by any Borrower shall bind all of the Borrowers.

 

(b)           Each of the CreditParties hereby authorizes the Parent and each of the Responsible Officers ofthe Parent listed on Schedule 1.4 hereto or otherwise designated bythe Parent from time to time as provided below, to act as agent for all of theCredit Parties, and to execute and deliver on behalf of any Credit Party suchnotices, requests, waivers, consents, certificates, and other documents, and totake any and all actions, required or permitted to be delivered or taken by theCredit Parties hereunder. The Credit Parties may replace any of the ResponsibleOfficers listed in Schedule 1.4 hereto or add any additionalResponsible Officers by the delivery of a written notice by the Parent to theAgent specifying the names of each new Responsible Officer and the offices heldby each such Person.  Each Credit Partyhereby agrees that any such notices, requests, waivers, consents, certificatesand other documents executed, delivered or sent by the Parent or anyResponsible Officer of the Parent and any such actions taken by the Parent orany Responsible Officer of the Parent shall bind each Credit Party.

 

2.             Loans;Letters of Credit; Notes; Payments; Prepayments; Interest Rates.

 

2.1           Commitments.  Subject to the terms and conditions hereof,each Lender, severally and not jointly, agrees to make (1) Revolving Loansto the Borrowers from time to time on and after the Closing Date until, but notincluding, the Termination Date, in an aggregate principal amount at any onetime outstanding (including such Lender’s Commitment Percentage of the Letterof Credit Exposure Amount and the Swingline Exposure at such time) up to, butnot exceeding, such Lender’s Revolving Commitment, and (2) a Term Loan tothe Borrowers, on the Closing Date, in an amount equal to such Lender’s TermLoan Commitment by making immediately available funds available to the Agent’sdesignated account, not later than 10:00 a.m. Chicago time.  Notwithstanding the foregoing, the aggregateprincipal amount of the Revolving Loans outstanding at any time shall notexceed the lesser of (a) the Indenture Cap, and (b) (i) thelesser at such time of (A) the Total Revolving Commitment and (B) (1) theBorrowing Base as of such time less (2) all applicable Reserves, less(ii) the aggregate Letter of Credit Exposure Amount and Swingline Exposureat such time less (iii) the aggregate amount of the items specifiedin clauses (b)(ii) and (b)(iii) of the definition of “Availability.”  Subject to the conditions herein, any suchRevolving Loan prepaid prior to the Termination Date may be reborrowed as anadditional Revolving Loan by the Borrowers pursuant to the terms of thisAgreement.  Amounts prepaid or repaid inrespect of Term Loans may not be reborrowed.

 

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2.2           Loans.

 

(a)           Subject to Sections 4.1and 4.2 hereof, (i) all Revolving Loans shall be advanced and maderatably by the Revolving Lenders in accordance with the Revolving Lenders’respective Revolving Commitments; and (ii) the Term Loans shall be made onthe Closing Date by the Lenders upon the execution of this Agreement.  The Term Loans shall amortize as set forth inSection 2.6 hereof.

 

(b)           When requesting aRevolving Loan hereunder, the Borrowers shall give the Agent notice of arequest for a Loan in accordance with Section 4.1(a) hereof; provided,however, no notice of a request for a Revolving Loan in accordance with Section 4.1(a) hereofshall be required to be presented by the Borrowers to the Agent if a check,wire transfer request or other item issued by any Borrower shall be presentedfor payment against any controlled disbursement account maintained with theAgent in connection with the account or accounts established and maintained bythe Agent for the purposes of deposits and collections of Receivables inaccordance with Section 6.15(a) hereof, and the Agent shallthen cause the Lenders (subject to the settlement delay provisions of Section 2.2(f) hereof)to make a Revolving Loan for the purpose of crediting said controlleddisbursement account in an amount sufficient to permit such check, wiretransfer request or other item to be honored if (i) such Revolving Loan isto be made prior to the Termination Date, (ii) the Availability would beequal to or greater than zero after giving effect to such Revolving Loan, and,if applicable, the resulting payment of any Obligations to be contemporaneouslypaid with the proceeds of such requested Revolving Loan, and (iii) noDefault or Event of Default shall have occurred which is then continuing.  Each such Revolving Loan advanced for thepurpose of crediting any such controlled disbursement account shall be deemedto be a Revolving Credit Alternate Base Rate Borrowing until a Rate SelectionNotice is otherwise properly presented for such Revolving Credit Alternate BaseRate Borrowing converting such borrowing to a Revolving Credit LIBORBorrowing.  Notwithstanding anything tothe contrary contained in Section 2.11, if any request for a Loanin accordance with Section 4.1(a) hereof requests RevolvingLoans in the form of Alternate Base Rate Borrowings, the Agent may make aSwingline Loan available to the Borrowers in an aggregate amount not to exceedthe amount of such requested Revolving Loans, and the aggregate amount of thecorresponding requested Revolving Loans shall be reduced accordingly by theprincipal amount of such Swingline Loan. Except as otherwise provided in the settlement delay provisions of Section 2.2(f) hereof,the Agent shall promptly advise the Lenders of any notice of a request for aLoan (other than a Swingline Loan) given pursuant to Section 4.1(a) orof any such Revolving Loan advanced for purposes of crediting any such controlleddisbursement account and of each Lender’s portion of a requested borrowing(based on such Lender’s Commitment Percentage).

 

(c)           Except as otherwiseprovided or specified in the settlement delay provisions of Section 2.2(f) below,each Lender shall make its Revolving Loans available on the proposed datesthereof by causing its Applicable Lending Office to pay the amount required tothe Agent at the Principal Office in immediately available funds not later than1:00 p.m., and the Agent shall as soon as practicable, but in no eventlater than 5:00 p.m. on such date, credit the amount so received to ageneral deposit account designated and maintained by the applicableBorrower.  If a requested Revolving Loanshall not occur on the Closing Date or any date specified by the Borrowers asset forth in the applicable Request for Extension of Credit, as the case maybe, because all of the conditions for such Revolving Loan set forth herein orin any of

 

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theother Loan Documents shall not have been met, the Agent shall return theamounts so received from the Lenders in respect of such requested RevolvingLoan to the applicable Lenders as soon as practicable.

 

(d)           The obligations ofthe Lenders hereunder are several and not joint; therefore, notwithstandinganything herein to the contrary:  (i) noRevolving Lender shall be required to make Revolving Loans at any one timeoutstanding in excess of such Lender’s Revolving Commitment and no Term Lendershall be required to make Term Loans at any time after the Closing Date and inan amount in excess of such Term Lender’s Term Loan Commitment; (ii) if aRevolving Lender fails to make a Revolving Loan as and when required hereunderand the Borrowers subsequently make a repayment on the Revolving Loans, suchrepayment shall be shared among the non-defaulting Revolving Lenders inaccordance with the respective Commitment Percentages until each non-defaultingRevolving Lender has received its Commitment Percentage of all of theoutstanding Revolving Loans, after which the balance of such repayment shall beapplied against such Defaulting Lender’s Commitment Percentage of theoutstanding Revolving Loans; and (iii) the failure of any Revolving Lenderto make any Revolving Loan or any payment in respect of its participation inSwingline Loans and Letter of Credit Advances shall not in itself relieve anyother Revolving Lender of its obligation to lend hereunder (provided, thatno Lender shall be responsible for the failure of any other Lender to make aLoan such other Lender is obligated to make hereunder).

 

(e)           The Revolving Loansmade by the Lenders on any date and the Swing Loans made by the SwinglineLender shall be in integral multiples of $25,000; provided, however,that the LIBOR Borrowings made on any date shall be in minimum aggregateprincipal amounts of $3,000,000, with any increases over such minimal amountbeing in integral aggregate multiples of $1,000,000.

 

(f)            The arrangementsbetween the Agent and the Lenders with respect to making and advancing theRevolving Loans and making payments under Letters of Credit shall be handled onthe following basis:  no less than once aweek, the Agent will provide each Lender with a statement showing, for theperiod of time since the date of the most recent of such statements previouslyprovided, the aggregate principal amount of new Revolving Loans made to theBorrowers, the aggregate amount of new Letter of Credit Advances which have notbeen reimbursed, the aggregate face amount of new Letters of Credit issued forthe account of the Borrowers, the aggregate principal amount of new SwinglineLoans made to the Borrowers, the amount of remittances and payments actuallycollected and applied by the Agent to reduce the outstanding principal balanceof the Revolving Loans, to reduce the outstanding principal balance of theSwingline Loans and to reimburse Letter of Credit Advances during such periodand the outstanding principal balances of the Revolving Loans and the SwinglineLoans and the aggregate Letter of Credit Exposure Amount outstanding at the endof such period.  If a Revolving Lender’spro-rata share (based on such Revolving Lender’s Commitment Percentage) of theRevolving Loans and the unreimbursed Letter of Credit Advances made during suchperiod exceeds such Revolving Lender’s pro-rata share of remittances andpayments applied to reduce the Revolving Loans and reimburse Letter of CreditAdvances during such period, the difference will be paid and made available insame day funds by such Revolving Lender to the Agent, and if such RevolvingLender’s pro-rata share (based on such Revolving Lender’s CommitmentPercentage) of remittances and payments applied to reduce the Revolving Loans

 

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andreimburse Letter of Credit Advances during such period exceeds such RevolvingLender’s pro-rata share (based on such Revolving Lender’s CommitmentPercentage) of the Revolving Loans and the unreimbursed Letter of CreditAdvances made during such period, the difference will be paid and madeavailable in same day funds by the Agent to such Revolving Lender.

 

(g)           The Agent shallrender to the Borrowers’ Agent each month a statement of the Borrowers’ accountof all transactions of the type described in Section 2.2(f) hereof,and all payments applied to the Term Loans, which shall be deemed to be correctand accepted by and be binding upon the Borrowers unless the Agent receives awritten statement of the Borrowers’ exceptions to such account statement withinthirty (30) days after such statement was rendered to the Borrowers’Agent.

 

(h)           Notwithstandinganything to the contrary set forth in this Section 2.2 or in anyother provision of this Agreement, the Agent, on its own initiative and in itssole discretion, but for the ratable benefit of the Lenders, may extendRevolving Loans or issue Letters of Credit in excess of Availability(collectively “**Permitted Overadvances**”)in an aggregate amount at any one time not exceeding $5,000,000 upon and subjectto the following terms:  (i) noPermitted Overadvances shall be in excess of (A) the Total RevolvingCommitment, less (B) the aggregate Revolving Loans, Letter ofCredit Exposure Amount and Swingline Exposure at such time (excluding suchPermitted Overadvances) less (C) the aggregate amount of the itemsspecified in clauses (b)(ii) and (b)(iii) of the definition of “Availability”;(ii) no Permitted Overadvances shall be outstanding for more than thirty(30) consecutive days; and (iii) no more than two (2) PermittedOveradvances can be extended by the Agent during any 180 consecutive dayperiod.  The extension of any PermittedOveradvance shall not operate as a waiver of any Default or Event of Default.

 

2.3           Commitment Fees.  In consideration of each Revolving Lender’sRevolving Commitment, the Borrowers agree to pay to the Agent for the accountof each Revolving Lender a commitment fee (each a “**Commitment Fee**”) (computed on the basisof the actual number of days elapsed in a year composed of 360 days, subjectto the terms of Section 10.6 hereof) in an amount equal to theproduct of (a) the Applicable Commitment Fee Percentage times (b) suchRevolving Lender’s average Unused Commitment for the applicable calculationperiod; provided, however, that such Revolving Lender’spro rata share of the Swingline Exposure shall be disregarded for purposes ofcalculating such Revolving Lender’s Unused Commitment for Commitment Feepurposes, except in respect of the Swingline Lender, whose Unused Commitmentfor Commitment Fee purposes shall be reduced by the Swingline Exposure.  The Commitment Fee shall be due and payablein arrears (i) on the last Business Day of each month prior to theTermination Date, and (ii) on the Termination Date, with each CommitmentFee to commence to accrue as of the date of this Agreement and to be effectiveas to any reduction in the Total Revolving Commitment pursuant to Section 2.4(a) belowas of the date of any such decrease, and each Commitment Fee shall cease toaccrue (except with respect to interest at the Default Rate on any unpaidportion thereof) on the Termination Date. All past due Commitment Fees shall bear interest at the Default Rate andshall be payable upon demand by the Agent.

 

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2.4           Termination andReductions of Revolving Commitments.

 

(a)           Upon at leastfive (5) Business Days’ prior irrevocable written notice to the Agent, theBorrowers may at any time in whole permanently terminate, or from time to timein part permanently reduce (except as noted below), the Total RevolvingCommitment ratably among the Revolving Lenders in accordance with the amountsof their Revolving Commitments; provided, however, thatthe Total Revolving Commitment shall not be reduced at any time to an amountless than the aggregate of each Revolving Lender’s Current Sum outstanding atsuch time; provided, further, that the Borrowers shall notat any time reduce the Total Revolving Commitment pursuant to this Section 2.4(a) toan amount less than $75,000,000, except pursuant to a permanent termination inwhole thereof.  Each partial reduction ofthe Total Revolving Commitment shall be in a minimum of $5,000,000, or anintegral multiple of $1,000,000 in excess thereof.

 

(b)           To effect thepayment of any and all Commitment Fees and all other Obligations outstandingand owing hereunder or under any other Loan Documents, subject to theprovisions of Sections 2.1 and 4.1 hereof, the Agent may,but shall not be obligated to, cause the Revolving Lenders to make a RevolvingLoan or request that the Swingline Lender make a Swingline Loan if (i) suchRevolving Loan or Swingline Loan, as applicable, is to be made prior to theTermination Date, (ii) the Availability would be equal to or greater thanzero after giving effect to such Revolving Loan or Swingline Loan, asapplicable, and the resulting payment of Commitment Fees to becontemporaneously paid with the proceeds of such Loan, and (iii) noDefault or Event of Default shall have occurred which is then continuing.  The inability of the Agent to cause thepayment of any such Commitment Fees or other Obligations in accordance with thepreceding sentence shall not in any way whatsoever affect the Credit Parties’obligation to otherwise pay such amounts in accordance with the applicableterms hereof or of any other Loan Documents.

 

2.5           Mandatory andVoluntary Prepayments.

 

(a)           If the CurrentSum applicable to a Revolving Lender at any time exceeds such Revolving Lender’sRevolving Commitment, the Agent shall notify the Borrowers’ Agent of suchexcess amount (such notice being permitted to be given orally and need not bein writing) and the Borrowers shall immediately make a prepayment on suchRevolving Lender’s Revolving Credit Note or otherwise reimburse such RevolvingLender for Letter of Credit Advances or cause one or more Swingline Loans to beprepaid or one or more Letters of Credit to be canceled and surrendered in anamount sufficient to reduce such Revolving Lender’s Current Sum to an amount nogreater than such Revolving Lender’s Revolving Commitment.  Any prepayments required by thissubparagraph (a) shall be applied to outstanding Revolving CreditAlternate Base Rate Borrowings up to the full amount thereof before suchprepayments are applied to outstanding Revolving Credit LIBOR Borrowings(together with any Consequential Loss resulting from such prepayment).

 

(b)           The Borrowersshall make prepayments of the Revolving Loans and the Swingline Loans from timeto time so that the Availability equals or exceeds zero at all times.  Specifically, if the Availability at any timeis less than zero (except for the existence of a Permitted Overadvance), theAgent shall notify the Borrowers’ Agent of the deficiency (such 

 

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noticebeing permitted to be given orally and need not be in writing) and theBorrowers shall immediately make a prepayment on the Revolving Credit Notes orotherwise reimburse the Agent for Letter of Credit Advances or cause one ormore Swingline Loans to be prepaid or one or more Letters of Credit to becanceled and surrendered in an amount sufficient to cause the Availability tobe at least equal to zero (except for the existence of a PermittedOveradvance).  Any prepayments requiredby this subparagraph (b) shall be applied to outstanding RevolvingCredit Alternate Base Rate Borrowings up to the full amount thereof before suchprepayments are applied to outstanding Revolving Credit LIBOR Borrowings(together with any Consequential Loss resulting from such prepayment).  The Borrowers shall make prepayments of theTerm Loans with the proceeds from the sale of Nova Scotia Woodlands, whichproceeds shall be applied in accordance with Section 2.7(d).

 

(c)           In addition tothe mandatory prepayments required by Sections 2.5(a) and 2.5(b) above,the Borrowers shall have the right, at their option, to prepay any of the Loansin whole at any time or in part from time to time, without premium or penalty,except as otherwise provided in this Section 2.5 or of Section 2.9(a),2.9(b) or 2.9(c) hereof.  Each prepayment of Swingline Loans, RevolvingCredit Alternate Base Rate Borrowings or Term Loan Alternate Base RateBorrowings may be made in any amount, and such prepayments shall be appliedagainst the Revolving Credit Notes, the Swingline Note or the Term Notes, asapplicable.  Prepayments under thissubparagraph (c) shall be subject to the following additionalconditions:

 

(i)            In giving notice ofprepayment as hereinafter provided, the Borrowers shall specify, for thepurpose of paragraphs (ii) and (iii) immediately following, themanner of application of such prepayment as between Alternate Base RateBorrowings and LIBOR Borrowings and as between Swingline Loans, Revolving Loansand Term Loans; provided, that in no event shall any LIBORBorrowing be partially prepaid such that less than $3,000,000 remainsoutstanding.

 

(ii)           Prepayments applied to anyLIBOR Borrowing may be made on any Business Day, provided, that (A) theBorrowers shall have given the Agent at least three (3) Business Days’prior irrevocable written or telecopied notice of such prepayment (other thanautomatic payments of Revolving Loans with proceeds from Receivables inaccordance with the terms of Section 6.15(b), for which no priornotice of prepayment shall be required), specifying the principal amount of theLIBOR Borrowing to be prepaid, the particular LIBOR Borrowing to which suchprepayment is to be applied and the prepayment date; and (B) if suchprepayment is made on any day other than the last day of the Interest Periodcorresponding to the LIBOR Borrowing to be prepaid, the Borrowers shall payupon demand directly to the Agent for the account of the applicable Lenders theConsequential Loss as a result of such prepayment.

 

(iii)          Prepayments applied to anyAlternate Base Rate Borrowing may be made on any Business Day, provided,that with respect thereto (other than automatic payments of RevolvingLoans with proceeds from Receivables in accordance with the terms of Section 6.15(b),for which no prior notice of prepayment shall be required), the Borrowers shallhave given the Agent prior irrevocable written notice or notice by telephone(which is to be promptly confirmed in writing) of any such prepayment on the 

 

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Business Day of such prepayment, specifying theprincipal amount of the Alternate Base Rate Borrowing to be prepaid.

 

(d)           If any noticeof any prepayment has been given, the principal amount specified in suchnotice, together with (in the case of any prepayment of a LIBOR Borrowing)interest thereon to the date of prepayment and any resulting ConsequentialLoss, shall be due and payable on such prepayment date.

 

2.6           Notes;Payments; Accounts.

 

(a)           Subject to theprovisions of Section 10.12 hereof relating to replacement andsubstitution of the Notes, (i) all Revolving Loans made by a RevolvingLender to the Borrowers shall be evidenced by a single Revolving Credit Notedated as of the Closing Date, delivered and payable to such Revolving Lender ina principal amount equal to such Revolving Lender’s Revolving Commitment as ofthe Closing Date, (ii) all Term Loans made by a Term Lender to theBorrowers shall be evidenced by a single Term Note dated as of the ClosingDate, delivered and payable to such Term Lender in a principal amount equal tosuch Term Lender’s Term Loan Commitment as of the Closing Date, and (iii) allSwingline Loans made by the Swingline Lender to the Borrowers shall beevidenced by a single Swingline Note dated as of the Closing Date, deliveredand payable to the Swingline Lender in a principal amount equal to $15,000,000.

 

(b)           The outstandingprincipal balance of each and every Revolving Loan, as evidenced by theRevolving Credit Notes, shall mature and be fully due and payable on theTermination Date.  The outstandingprincipal balance of each and every Swingline Loan, as evidenced by theSwingline Note, shall mature and be fully due and payable on the earlier tooccur of the Termination Date or the date such Swingline Loans are required tobe paid with proceeds of Revolving Loans in accordance with Section 2.11(c).  The Borrowers shall make installment paymentsof principal on the Term Loans every three months in the principal amount of$1,250,000.00 commencing on April 30, 2010, and continuing on the lastBusiness Day of each July, October, January and April thereafter,until the Term Loans have been paid in full. Tothe extent not previously paid, all unpaid Term Loans shall be paid infull in cash by the Borrowers on the Termination Date.

 

(c)           Subject to Section 10.6hereof, the Borrowers hereby agree to pay accrued interest on the unpaidprincipal balance of the Loans on the Interest Payment Dates, commencing withthe first of such dates to occur after the date of this Agreement.  After the Termination Date, accrued andunpaid interest on the Term Loans, the Revolving Loans and the Swingline Loansshall be payable on demand.

 

(d)           To effectpayment of accrued interest owing on the Loans as of the Interest PaymentDates, subject to the provisions of Sections 2.1 and 4.1hereof, the Agent may, but shall not be obligated to, cause the RevolvingLenders to make a Revolving Loan or request that the Swingline Lender make aSwingline Loan to pay in full the amount of accrued interest owing and payableon the Loans as of the respective Interest Payment Date, if (i) suchRevolving Loan or Swingline Loan, as applicable, is to be made prior to theTermination Date, (ii) the Availability would be equal to or greater thanzero after giving effect to such Revolving Loan or 

 

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SwinglineLoan, as applicable, and the resulting payment of accrued interest to becontemporaneously paid with the proceeds of such Loan, and (iii) noDefault or Event of Default shall have occurred which is then continuing.  The inability of the Agent to cause a paymentof any accrued interest owing on the Loans on any Interest Payment Date inaccordance with the preceding sentence shall not in any way whatsoever effectthe Credit Parties’ obligation to otherwise pay such amounts in accordance withthe applicable terms hereof or any other Loan Documents.

 

(e)           The Agent shallmaintain accounts in which it shall record (i) the amount of each Loanmade hereunder, the type of each Loan made hereunder, and the Interest Periodapplicable thereto, (ii) the amount of any principal or interest due andpayable or to become due and payable from the Borrowers to each Lenderhereunder and (iii) the amount of any sum received by the Agent hereunderfor the account of the Lenders and each Lender’s share thereof.

 

(f)            The entriesmade in the accounts maintained pursuant to paragraph (e) of this Section shallbe prima facie evidence of the existence and amounts of the obligationsrecorded therein; providedthat the failure of the Agent tomaintain such accounts or any error therein shall not in any manner affect theobligation of the Borrowers to repay the Loans in accordance with the terms ofthis Agreement.

 

2.7           Application ofPayments and Prepayments.

 

(a)           Except asotherwise provided in Sections 2.5(a) and 2.5(b) hereof,prepayments on the Revolving Credit Notes shall be applied to payment of theaggregate unpaid principal amounts of the Revolving Credit Notes, with thebalance of any such prepayments, if any, being applied to accruedinterest.  Payments of accrued intereston each Revolving Credit Note in accordance with Section 2.6(c) hereofshall be applied to the aggregate accrued interest then outstanding under theRevolving Credit Notes, while payment by the Borrowers of the aggregateprincipal amount outstanding under the Revolving Credit Notes on theTermination Date shall be applied to principal.

 

(b)           Except asotherwise provided in Sections 2.5(a) and 2.5(b) hereof,prepayments on the Term Notes shall be applied to payment of the aggregateunpaid principal amounts of the Term Notes in inverse order of maturity, withthe balance of any such prepayments, if any, being applied to accruedinterest.  Payments of accrued intereston each Term Note in accordance with Section 2.6(c) hereofshall be applied to the aggregate accrued interest then outstanding under theTerm Notes, while payment by the Borrowers of the aggregate principal amountoutstanding under the Term Notes on the Termination Date shall be applied toprincipal.

 

(c)           Except asotherwise provided in Sections 2.5(a) and 2.5(b) hereof,prepayments on the Swingline Note shall be applied to payment of the aggregateunpaid principal amount of the Swingline Note, with the balance of any suchprepayments, if any, being applied to accrued interest.  Payments of accrued interest on the SwinglineNote in accordance with Section 2.6(c) hereof shall be appliedto the aggregate accrued interest then outstanding under the Swingline Note,while payment by the Borrowers of the aggregate principal amount outstandingunder the Swingline Note on the Termination Date shall be applied to principal.

 

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(d)           All paymentsremitted to the Agent and all such payments not relating to principal orinterest of specific Loans, or not constituting payment of specific fees orother specific Obligations, and all proceeds of Collateral received by theAgent (or the Canadian Collateral Agent, as applicable), shall be applied,ratably, subject to the provisions of this Agreement, first, to pay anyfees, indemnities or expense reimbursements then due to the Agent or theCanadian Collateral Agent from the Borrowers; second, to pay any fees orexpense reimbursements then due to the Lenders from the Borrowers; third,to pay interest due in respect of all Swingline Loans; fourth, to payinterest due in respect of all Revolving Loans and Term Loans; fifth, topay or prepay principal of the Swingline Loans; sixth, to pay or prepayprincipal of the Revolving Loans, the Term Loans and unpaid reimbursementobligations in respect of Letters of Credit, and thereafter to serve as cashcollateral to be held by the Agent to secure the Letter of Credit ExposureAmount; seventh, to the payment of any other Obligation due to theAgent, the Canadian Collateral Agent or any Lender (excluding any amountsrelating to Obligations under any Bank Product); eighth, to the paymentof any Obligations under any Bank Product (excluding any amounts relating toObligations under any Bank Product owed to any Non-Reporting Lender Party); andninth, to the payment of any Obligations under any Bank Product owed toany Non-Reporting Lender Party. Notwithstanding anything to the contrary contained in this Agreement,unless so directed by the Borrowers, or unless an Event of Default has occurredand is continuing, neither the Agent nor any Lender shall apply any paymentswhich it receives to any LIBOR Borrowing, except (i) on the expirationdate of the Interest Period applicable to any such LIBOR Borrowing, or (ii) inthe event, and only to the extent, that there are no outstanding Alternate BaseRate Borrowings and the Borrowers have consented to such application.  Notwithstanding anything to the contrarycontained in this Agreement, unless an Event of Default has occurred and iscontinuing, all proceeds from the sale of Nova Scotia Woodlands shall beapplied first, to pay or prepay the outstanding principal of the TermLoans and then, to the Special Cash Collateral Account.  Notwithstanding anything to the contrarycontained in this Agreement, unless an Event of Default has occurred and iscontinuing, all proceeds from the sale of Neenah Paper FR, LLC’s facilitylocated in Ripon, California shall be deposited in the Special Cash CollateralAccount; providedthat, if such sale would result in a BorrowingBase Deficiency, then such proceeds shall be applied, first, to prepaythe outstanding principal of the Revolving Loans in an amount sufficient toeliminate such Borrowing Base Deficiency, and second, as otherwiseprovided in this sentence.

 

(e)           Except for anysettlement delay provided or specified in Section 2.2(f) hereof,each payment or prepayment received by the Agent hereunder or under any Notefor the account of a Lender shall be paid promptly to such Lender, inimmediately available funds.  If theAgent fails to send to any Lender the product of such Lender’s CommitmentPercentage, times the aggregate amount of any such payment or prepaymentreceived by the Agent for the account of all the Lenders by the close ofbusiness on the date such payment was deemed received by the Agent inaccordance with Section 2.7(f) below, the Agent shall pay to suchLender interest on such Lender’s pro-rata portion of such payment timelyreceived by the Agent from such date of receipt by the Agent to the date thatsuch Lender receives its pro-rata portion of such payment, such interest toaccrue at the Federal Funds Effective Rate and to be payable upon writtenrequest from such Lender.

 

(f)            Other thanautomatic payments of Obligations with proceeds from Receivables in accordancewith the terms of Section 6.15(b), all sums payable by theBorrowers 

 

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tothe Agent hereunder or pursuant to the Notes or any of the other Loan Documentsfor its own account or the account of the Canadian Collateral Agent or theLenders shall be payable in United States dollars in immediately availablefunds not later than 1:00 p.m. on the date such payment or prepayment isdue and shall be made without set-off, counterclaim or deduction of anykind.  Any such payment or prepaymentreceived and accepted by the Agent after 1:00 p.m. shall be considered forall purposes (including the payment of interest, to the extent permitted bylaw) as having been made on the next succeeding Business Day.  All such payments or prepayments shall bemade at the Principal Office.  If anypayment or prepayment becomes due and payable on a day which is not a BusinessDay, then the date for the payment thereof shall be extended to the nextsucceeding Business Day and interest shall be payable thereon at the thenapplicable rate per annum during such extension.

 

(g)           If any Lendershall fail to make any payment required to be made by it hereunder, then theAgent may, in its sole discretion (notwithstanding any contrary provisionhereof), apply any amounts thereafter received by the Agent for the account ofsuch Lender to satisfy such Lender’s obligations hereunder until all such unsatisfiedobligations are fully paid.

 

2.8           Interest Ratesfor Loans.

 

(a)           Subject to Section 10.6hereof, the Loans shall bear interest on their respective outstanding principalbalances at the Alternate Base Rate; provided, that (i) allprincipal outstanding, whether then due and payable, after the occurrence of anEvent of Default which has not been cured to the satisfaction of the Agent andthe Required Lenders or waived in writing by the Agent and the Required Lendersshall bear interest at the Default Rate, which shall be due and payable upondemand, (ii) past due principal and interest shall bear interest at theDefault Rate, which shall be payable on demand, and (iii) subject to theprovisions hereof, the Borrowers shall have the option of having all or anyportion of the principal balances from time to time outstanding under the Loans(other than Swingline Loans) bear interest until their respective maturities ata rate per annum equal to the Adjusted LIBOR Rate (together with the AlternateBase Rate, individually herein called an “**InterestOption**” and collectively called “**Interest Options**”). The records of the Agent, with respect to Interest Options, InterestPeriods and the amounts of Loans to which they are applicable shall be bindingand conclusive, absent manifest error. Interest on the Loans shall be calculated at the Alternate Base Rate,except where it is expressly provided pursuant to this Agreement that theAdjusted LIBOR Rate is to apply.

 

(b)           The Borrowersshall have the right to designate or convert their Interest Options inaccordance with the provisions hereof. Provided no Default or Event of Default has occurred and is continuing,and subject to the provisions of the last sentence of Subsection 2.8(a) hereinaboveand the provisions of Section 2.9 hereof, the Borrowers may electto have the Adjusted LIBOR Rate apply or continue to apply to all or anyportion of the principal balances of the Loans. Each change in Interest Options shall be a conversion of the rate ofinterest applicable to the specified portion of the Loans, but such conversionalone shall not change the outstanding principal balance of the Loans.  The Interest Options shall be designated orconverted in the manner provided below:

 

(i)            The Borrowers’ Agent shallgive the Agent notice by telephone, promptly confirmed by written notice (the “**Rate Selection Notice**”) substantiallyin the

 

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form of Exhibit F hereto.  Each such telephone and written notice shallspecify the amount and type of borrowings which are the subject of thedesignation; the amount and type of borrowings into which such borrowings areto be converted or for which an Interest Option is designated; the proposeddate for the designation or conversion (which, in the case of conversion ofLIBOR Borrowings, shall be the last day of the Interest Period applicablethereto) and the Interest Period or Periods, if any, selected by theBorrowers.  Such notice by telephoneshall be irrevocable and shall be given to the Agent no later than theapplicable Rate Selection Date.  If (A) anew Revolving Loan is to be a Revolving Credit LIBOR Borrowing, (B) anexisting Revolving Credit LIBOR Borrowing is maturing at the time that a newRevolving Loan is being requested and the Borrowers are electing to have suchexisting portion of the outstanding principal balance of the Revolving Loansgoing forward bear interest at the same Interest Option and for the sameInterest Period as the new Revolving Loan, or (C) a portion of a RevolvingCredit Alternate Base Rate Borrowing is to be converted so as to bear interestat the same Interest Option and for the same Interest Period as the newRevolving Loan, then the Rate Selection Notice shall be included in the Requestfor Extension of Credit applicable to the new Revolving Loan, which shall begiven to the Agent no later than the applicable Rate Selection Date.

 

(ii)           No more than eight (8) LIBORBorrowings and corresponding Interest Periods shall be outstanding at any onetime.  Each LIBOR Borrowing shall be in aminimum aggregate principal amount of at least $3,000,000, with any increasesover such minimum amount being in integral aggregate multiples of $1,000,000.

 

(iii)          Principal included in anyborrowing shall not be included in any other borrowing which exists at the sametime.

 

(iv)          Each designation orconversion shall occur on a Business Day.

 

(v)           Except as provided in Section 2.9hereof, no LIBOR Borrowing shall be converted on any day other than the lastday of the applicable Interest Period.

 

(vi)          The Agent shall promptlyadvise the Lenders of any Rate Selection Notice given pursuant to this Section 2.8and of each Lender’s pro-rata portion of such designation or conversionhereunder.

 

(c)           All interestand fees (including the Commitment Fee, but excluding any prepayment fee owingpursuant to Section 2.4 hereof) will be computed on the basis of ayear of 360 days and actual days elapsed (including the first day butexcluding the last day) occurring in the period for which payable.

 

(d)           For the purposeof complying with the Interest Act (Canada), it is expressly stated that:

 

(i)            where interest is calculatedpursuant hereto at a rate based on a 360 day or a 365 day period, theyearly rate or percentage of interest to which such rate is equivalent is suchrate multiplied by the actual number of days in the year (365 or 366, as thecase may be) divided by 360 or 365, as the case may be; and

 

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(ii)           the rates of interest andthe Applicable Margin and other rates specified in this Agreement are nominalrates and not effective rates or yields, and the parties hereto acknowledgethat there is a material distinction between the nominal and effective rates ofinterest, that they are capable of making the calculations necessary to comparesuch rates and that the principle of deemed reinvestment of interest shall notapply to any calculations of interest hereunder.

 

(e)           No Lien underany Loan Document on any Real Property Asset in Canada of any Credit Partyshall secure any interest payable at the Default Rate, providedthatthis Section 2.8(e) shall not affect the Lien on such CanadianReal Property Asset with respect to any other Obligation, nor shall this Section 2.8(e) affectthe secured status of interest payable at the Default Rate with respect to anyother Collateral.

 

2.9           SpecialProvisions Applicable to LIBOR Borrowings.

 

(a)           If, after thedate of this Agreement, the adoption of any applicable Legal Requirement or anychange in any applicable Legal Requirement or in the interpretation oradministration thereof by any Governmental Authority or compliance by the Agentor any Lender with any request or directive (whether or not having the force oflaw) of any Governmental Authority shall at any time make it unlawful orimpracticable for any Lender to permit the establishment of or to maintain anyLIBOR Borrowing, the commitment of the Lenders to establish or maintain theAdjusted LIBOR Rate affected by such adoption or change shall forthwith be canceledand the Borrowers shall forthwith, upon demand by the Agent to the Borrowers’Agent, (i) convert the Adjusted LIBOR Rate with respect to which suchdemand was made to the Alternate Base Rate; (ii) pay all accrued andunpaid interest to date on the amount so converted; and (iii) pay anyamounts required to compensate the Agent and the Lenders for any additionalcost or expense which the Agent or any Lender may incur as a result of suchadoption of or change in such Legal Requirement or in the interpretation oradministration thereof and any Consequential Loss which the Agent, the CanadianCollateral Agent or any Lender may incur as a result of such conversion to theAlternate Base Rate.  If, when the Agentso notifies the Borrowers’ Agent, the Borrowers have given a Rate SelectionNotice specifying one or more borrowings of the type with respect to which suchdemand was made but the selected Interest Period or Interest Periods has notyet begun, such Rate Selection Notice shall be deemed to be of no force andeffect, as if never made, and the balance of the Loans specified in such RateSelection Notice shall bear interest at the Alternate Base Rate until adifferent available Interest Option shall be designated in accordance herewith.

 

(b)           If, after thedate of this Agreement, the adoption of any applicable Legal Requirement or anychange in any applicable Legal Requirement or in the interpretation oradministration thereof by any Governmental Authority or compliance by the Agentor any Lender with any request or directive (whether or not having the force oflaw) from any Governmental Authority shall at any time as a result of anyportion of the principal balance of the Loans being maintained on the basis ofthe Adjusted LIBOR Rate:

 

(i)            subject any Lender to anytax (including any United States interest equalization tax), levy, impost,duty, charge, fee, or any deduction or withholding for any tax, levy, impost,duty, charge or fee on or from the payment due under any LIBOR

 

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Borrowing or other amounts due hereunder, other than(A) Indemnifiable Taxes and Other Taxes (as to which Section 10.17shall govern) or (B) income taxes and franchise taxes in lieu of incometaxes imposed on the applicable Lender by the jurisdiction (or any politicalsubdivision thereof) under which such Lender is organized or maintains alending office; or

 

(ii)           change the basis of taxationof payments due from the Borrowers to the Agent or any Lender under any LIBORBorrowing (otherwise than by a change in the rate of taxation of the overallnet income of the Agent or such Lender); or

 

(iii)          impose, modify, increase ordeem applicable any reserve requirement (excluding that portion of any reserverequirement included in the calculation of the Statutory Reserves), specialdeposit requirement or similar requirement (including state law requirementsand Regulation D) imposed, modified, increased or deemed applicable by anyGovernmental Authority against assets held by the Agent or any Lender, oragainst deposits or accounts in or for the account of the Agent or any Lender,or against loans made by the Agent or any Lender, or against any other funds,obligations or other Property owned or held by the Agent or any Lender; or

 

(iv)          impose on the Agent or anyLender any other materially restrictive or limiting condition regarding anyLIBOR Borrowing;

 

and the result of any of theforegoing is to increase the cost to any Lender of agreeing to make or ofmaking, renewing or maintaining such borrowing on the basis of the AdjustedLIBOR Rate, or reduce the amount of principal or interest received by anyLender, then, upon demand by such Lender, the Borrowers shall pay to suchLender, from time to time as specified by such Lender, additional amounts whichshall compensate such Lender for such increased cost or reduced amount.  Such Lender will promptly notify theBorrowers’ Agent in writing of any event, upon becoming actually aware of it,which will entitle any Lender to additional amounts pursuant to thisparagraph.  Such Lender’s determinationof the amount of any such increased cost, increased reserve requirement orreduced amount shall be conclusive and binding, absent manifest error, providedthat the calculation thereof and reason therefore is certified and isset forth in reasonable detail in such certification by such Lender.

 

The Borrowers shall have theright, if any Lender issues any notice referred to in the preceding paragraph,upon three (3) Business Days’ notice to the Agent, either (A) to repayin full (but not in part) any borrowing with respect to which such notice wasgiven, together with any accrued interest thereon, or (B) to convert theAdjusted LIBOR Rate in effect with respect to such borrowing from such Lenderto the Alternate Base Rate; provided, that any such repayment orconversion shall be accompanied by payment of (x) the amount required tocompensate the appropriate Lender or Lenders for the increased cost or reducedamount referred to in the preceding paragraph; (y) all accrued and unpaidinterest to date on the amount so repaid or converted; and (z) anyConsequential Loss which may be incurred as a result of such repayment orconversion.  Additionally, if any Lenderissues any notice referred to in the preceding paragraph, the Borrowers shallalso have the corresponding rights in Section 10.16(c).

 

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(c)           If for anyreason with respect to any Interest Period the Agent shall have determined(which determination shall be conclusive and binding upon the Borrowers)that:  (i) the Agent is unablethrough its customary general practices to determine a rate at which the Agentis offered deposits in United States dollars by prime banks in the Londoninterbank market, in the appropriate amount for the appropriate period, or byreason of circumstances affecting the London interbank market generally, theAgent is not being offered deposits for the applicable Interest Period and inan amount equal to the amount of the Agent’s pro-rata portion of any LIBORBorrowing requested by the Borrowers, or (ii) the Adjusted LIBOR Rate willnot adequately and fairly reflect the cost to any Lender of making andmaintaining any LIBOR Borrowing hereunder for any proposed Interest Period,then the Agent shall give the Borrowers’ Agent notice thereof explaining inreasonable detail the circumstances giving rise to such notice, and thereupon, (A) anyRate Selection Notice previously given by the Borrowers designating an AdjustedLIBOR Rate which has not commenced as of the date of such notice from the Agentshall be deemed for all purposes hereof to be of no force and effect, as if nevergiven, and (B) until the circumstances giving rise to such notice from theAgent no longer exist, each Rate Selection Notice requesting an Adjusted LIBORRate shall be deemed a request for an Alternate Base Rate Borrowing, and eachoutstanding LIBOR Borrowing then in effect shall be converted, without anynotice to or from the Borrowers, upon the termination of the Interest Periodthen in effect to an Alternate Base Rate Borrowing.

 

(d)           The Borrowershereby agree (without duplication of any other indemnity obligation hereunder)to indemnify the Agent, the Canadian Collateral Agent and each of the Lendersagainst and hold each of them harmless from any Consequential Loss which it mayincur or sustain as a consequence of (i) any prepayment (mandatory or optional)of any LIBOR Borrowing, (ii) any acceleration of the Loans or exercise ofremedies upon an Event of Default that results in the repayment or conversionof any LIBOR Borrowing, or any increase in the cost of maintaining any LIBORBorrowing, or (iii) any failure by the Borrowers to convert or to borrowany LIBOR Borrowing on the date specified by the Borrowers.  This indemnity shall survive termination ofthe Commitment and this Agreement.  Acertificate as to any additional amounts payable to the Agent, the CanadianCollateral Agent or any Lender pursuant to this paragraph, detailing the basistherefor and submitted by the Agent, the Canadian Collateral Agent or suchLender to the Borrowers’ Agent shall be conclusive and binding upon theBorrowers, absent manifest error, provided the calculation thereof is set forthin reasonable detail in such notice.

 

(e)           If theBorrowers request quotes of the Adjusted LIBOR Rate for different InterestPeriods being considered for election by the Borrowers, the Agent will usereasonable efforts to provide such quotes to the Borrowers promptly.  However, all such quotes provided shall berepresentative only and shall not be binding on the Agent or any Lender, norshall they be determinative, directly or indirectly, of any Adjusted LIBOR Rateor any component of any such rate, nor will the Borrowers’ failure to receiveor the Agent’s failure to provide any requested quote or quotes either (i) excuseor extend the time for performance of any obligation of the Borrowers or forthe exercise of any right, option or election of the Borrowers or (ii) imposeany duty or liability on the Agent or any Lender.  If the Borrowers request a list of theBusiness Days in any calendar month, the Agent will use reasonable efforts toprovide such list promptly.  However, anysuch list provided shall be understood to identify only those days which theAgent believes in good faith at the time such list is prepared will be theBusiness Days for 

 

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suchmonth.  The Agent shall not have anyliability for any failure to provide, delay in providing, error or mistake inor omission from, any such quote or list.

 

(f)            With respect toany Lender having a LIBOR Lending Office which differs from its DomesticLending Office, all Loans advanced by such Lender’s LIBOR Lending Office shallbe deemed to have been made by such Lender and the obligation of the Borrowersto repay such Loans shall nevertheless be to such Lender and shall be deemedheld by such Lender, to the extent of such portions of the Loan, for theaccount of such Lender’s LIBOR Lending Office.

 

(g)           Notwithstandingany provision of this Agreement to the contrary, each Lender shall be entitledto fund and maintain its funding of all or any part of the Loans hereunder inany manner it sees fit, it being understood, however, that for the purposes ofthis Agreement, all determinations hereunder shall be made as if such Lenderhad actually funded and maintained its portion of each LIBOR Borrowing duringeach Interest Period for the Loans through the purchase of deposits having amaturity corresponding to such Interest Period and bearing an interest rateequal to the LIBOR Rate for such Interest Period.

 

(h)           The Borrowers’obligation to pay increased costs and Consequential Loss with regard to eachLIBOR Borrowing as specified in this Section 2.9 hereof shall, inaccordance with Section 10.7, survive termination of thisAgreement.

 

2.10         Letters ofCredit.

 

(a)           Subject to theterms and conditions contained herein, the Borrowers shall have the right toutilize a portion of the Revolving Commitment from time to time prior to theTermination Date to obtain from the Agent one or more Letters of Credit for theaccount of the Borrowers in such amounts and in favor of such beneficiaries asthe Borrowers from time to time shall request; provided, that inno event shall the Agent have any obligation to issue any Letter of Credit if (i) theface amount of such Letter of Credit, plus the Letter of Credit ExposureAmount at such time would exceed $10,000,000, (ii) the face amount of suchLetter of Credit would exceed Availability, (iii) such Letter of Creditwould have an expiry date beyond the earlier to occur of (A) five (5) BusinessDays prior to the scheduled Termination Date (subject to Section 2.10(j)),(B) with respect to Standby Letters of Credit, one full year after theissuance date of such Standby Letter of Credit, or (C) with respect toTrade Letters of Credit, one hundred eighty (180) days after the issuance dateof such Trade Letter of Credit, (iv) such Letter of Credit is not in aform and does not contain terms satisfactory to the Agent in its reasonablecredit judgment, (v) the Borrowers have not executed and delivered suchApplications and other instruments and agreements relating to such Letter ofCredit as the Agent shall have reasonably requested, (vi) an Default orEvent of Default has occurred and is continuing, or (vii) such Letter ofCredit is not being issued or has not been issued in connection withtransactions occurring in the ordinary course of business of the Credit Partiesor any of their Subsidiaries.  EachLetter of Credit may be issued for the account of or used by the Borrowers orany of their Subsidiaries that are Credit Parties, but the Credit Parties shallhave full liability for each Letter of Credit. The Existing Letters of Credit, all of which are identified on Schedule2.10(a), shall be deemed to have been issued under this Agreement.  The above limitations on the tenor of any Letterof Credit issued (or in the case of Existing Letters of Credit deemed issued)hereunder shall not be deemed to be violated by the inclusion in such Letter ofCredit of an “evergreen clause”

 

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providingfor the automatic renewal of such Letter of Credit for successive periods notexceeding one year in each instance, absent notice to the beneficiary and theaccount party of the Issuing Bank’s election not to renew such Letter of Creditat least thirty (30) days prior to the then effective expiry date of suchLetter of Credit.

 

(b)           If requestingthe issuance of any Letter of Credit, the Borrowers’ Agent on behalf of theBorrowers shall give at least three (3) Business Days’ prior writtennotice to the Agent, at its Domestic Lending Office, which written notice shallbe the requisite Application for a Letter of Credit on the Agent’s customaryform.  In accordance with the provisionsof Section 2.2(f) hereof, the Agent shall periodically notify eachLender that a Letter of Credit has been requested in the amount reflected insuch Application and inform such Lender of the amount of its pro-rata portionof such proposed Letter of Credit (based upon such Lender’s CommitmentPercentage).

 

(c)           Simultaneouslywith the Agent’s issuance and delivery of any Letter of Credit, the Agent shallbe deemed, without further action, to have sold to each Revolving Lender, andeach such Revolving Lender shall be deemed, without further action by any partyhereto, to have purchased from the Agent, a participation interest (whichparticipation shall be nonrecourse to the Agent) equal to such other RevolvingLender’s Commitment Percentage at such time in such Letter of Credit and all ofthe Letter of Credit Exposure Amount related to such Letter of Credit.  Each Revolving Lender acknowledges and agreesthat its obligation to acquire participations in each Letter of Credit, as wellas its obligation to make the payments specified in this Section 2.10and the right of the Agent to receive the same in the manner specified herein,are absolute and unconditional and shall not be affected by any circumstancewhatsoever, including without limitation, the occurrence and continuance of aDefault or Event of Default hereunder, and that each such payment shall be madewithout any offset, abatement, withholding or reduction whatsoever.

 

(d)           The Borrowerspromise to repay, to the order of the Agent, the amount of all Letter of CreditAdvances.  To effect repayment of anysuch Letter of Credit Advance, the Agent shall automatically satisfy suchLetter of Credit Advance (subject to the terms and conditions of Sections 2.1and 4.1 hereof) by causing the Revolving Lenders to make a RevolvingLoan or the Swingline Lender to make a Swingline Loan if (i) such Letterof Credit Advance is (and such Revolving Loan or Swingline Loan, as applicable,is to be) made prior to the Termination Date, (ii) the Availability wouldbe equal to or greater than zero after giving effect to such Revolving Loan orSwingline Loan, as applicable, and the resulting repayment of such Letter ofCredit Advance to be contemporaneously paid with the proceeds of such Loan, and(iii) no Default or Event of Default shall have occurred which is thencontinuing, and any such Revolving Loan or Swingline Loan shall bear interestpursuant to Section 2.8(a) at the Alternate Base Rate.  If any Letter of Credit Advance cannot be sosatisfied, such Letter of Credit Advance shall be considered for all purposesas a demand obligation owing by the Borrowers to the Agent, and each suchLetter of Credit Advance shall bear interest from the date thereof at theDefault Rate, without notice of presentment, demand, protest or otherformalities of any kind (said past due interest on such Letter of Credit Advancebeing payable on demand).  Theunavailability of a Revolving Loan or Swingline Loan to effect repayment of anysuch Letter of Credit Advance in accordance with the second sentence of this Section 2.10(d) shallnot in any way whatsoever affect the Borrowers’ obligation to pay each Letterof Credit Advance on 

 

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demandand to pay interest at the Default Rate on the amount of such unreimbursedLetter of Credit Advance.  Except for anysettlement delay provided in Section 2.2(f), the Agent will pay toeach Revolving Lender such Revolving Lender’s Commitment Percentage of allamounts received from the Borrowers by the Agent, if any, for application, inwhole or in part, against the Letter of Credit Advances in respect to anyLetter of Credit, but only to the extent such Revolving Lender has made itsfull pro-rata payment of each drawing under the Letter of Credit to which suchLetter of Credit Advance relates.  Allrights, powers, benefits and privileges of this Agreement with respect to theRevolving Loans, all security therefor (including the Collateral) andguaranties thereof (including the Guaranties) and all restrictions, provisionsfor repayment or acceleration and all other covenants, warranties, representationsand agreements of the Borrowers contained in this Agreement with respect to theRevolving Loans shall apply to such Letter of Credit Advances.

 

(e)           Inconsideration of the issuance of each Letter of Credit pursuant to theprovisions of this Section 2.10, the Borrowers agree to pay(subject to Section 10.6 hereof) to the Agent for the ratablebenefit of the Revolving Lenders a letter of credit fee (computed on the basisof the actual number of days elapsed in a year composed of 360 days) in an amountequal to the product of (i) the Applicable Margin in effect for RevolvingCredit LIBOR Borrowings for the applicable period times (ii) theundrawn amount of the applicable Letter of Credit, with each letter of creditfee to commence to accrue as of the date of issuance of such Letter of Creditand to be effective as to any reductions in the undrawn amount of such Letterof Credit as of the date of any such reduction (whether resulting from paymentsthereunder by the Agent, by agreement of the beneficiary thereunder orautomatically by the terms of the Letter of Credit).  Such letter of credit fee shall be due andpayable, in arrears, on the last Business Day of each calendar month and on theTermination Date.

 

(f)            The Borrowershereby agree to pay to the Agent for the Agent’s sole benefit a fronting feeequal to 0.25% on the face amount of each Letter of Credit issuedhereunder.  Fronting fees shall bepayable to the Agent at its Principal Office in immediately available funds onthe date of issuance of such Letter of Credit. Notwithstanding anything to the contrary contained herein, no frontingfees shall be due and payable with respect to the Existing Letters of Credit.All past due fronting fees shall bear interest at the Default Rate and shall bepayable upon demand by the Agent.  TheBorrowers also hereby agree to pay to the Agent for the Agent’s sole benefitany and all other issuance, administrative, amendment, negotiation, payment andother normal and customary fees which are charged by the Agent in connectionwith the issuance or negotiation of any of Letter of Credit and thepresentation or payment of any draw under any such Letter of Credit, with allof such amounts being due and payable to the Agent upon demand.

 

(g)           The obligationsof the Borrowers under this Agreement in respect of the Letters of Credit andall Letter of Credit Advances are absolute, unconditional and irrevocable, andshall be paid strictly in accordance with the terms of this Agreement, underall circumstances whatsoever, including the following circumstances:

 

(i)            any lack of validity orenforceability of this Agreement, any Letter of Credit or any Loan Document;

 

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(ii)           any amendment or waiver ofdefault under or any consent to departure from the terms of this Agreement orany Letter of Credit without the express prior written consent of the Agent;

 

(iii)          the existence of any claim,set-off, defense or other right which any beneficiary or any transferee of anyLetter of Credit (or any entities for whom any such beneficiary or any suchtransferee may be acting), or any Person (other than the Agent or the Lenders)may have, whether in connection with this Agreement, the Letters of Credit, thetransactions contemplated hereby or any unrelated transaction;

 

(iv)          any statement, draft,certificate, or any other document presented under any Letter of Credit provingto be forged, fraudulent, invalid or insufficient in any respect or anystatement therein being untrue or inaccurate in any respect whatsoever; provided,that the Agent will examine each document presented under each Letter ofCredit to ascertain that such document appears on its face to comply with theterms thereof; and

 

(v)           any other circumstance orhappening whatsoever, whether or not similar to any of the foregoing.

 

In the event that anyrestriction or limitation is imposed upon or determined or held to beapplicable to the Agent, any Revolving Lender or any Credit Party by, under orpursuant to any Legal Requirement now or hereafter in effect or by reason ofany interpretation thereof by any Governmental Authority, which in therespective sole judgment of the Agent or any Revolving Lender would prevent anyRevolving Lender from legally incurring liability under a Letter of Creditissued or proposed to be issued hereunder, then the Agent shall give promptwritten notice thereof to the Borrowers’ Agent, whereupon the Agent shall haveno obligation to issue any additional Letters of Credit then or at any timethereafter.  In addition, if as a resultof any Regulatory Change which imposes, modifies or deems applicable (x) anytax, reserve, special deposit or similar requirement against any Letters ofCredit issued or participated to by any Revolving Lender; (y) any fee,expense or assessment against the Letters of Credit issued by the Agent or anyLender for deposit insurance, or (z) any other charge, expense orcondition which increases the actual cost to the Agent or any Revolving Lenderof issuing or maintaining such Letters of Credit, or reduces any amountreceivable by the Agent or any Revolving Lender hereunder in respect of anyLetter of Credit or any participation therein (which increase in cost, orreduction in amount receivable, shall be the result of the Agent’s or suchRevolving Lender’s reasonable allocation of the aggregate of such increases orreductions resulting from such event), then the Borrowers (subject to Section 10.6hereof) shall pay to the Agent or such Revolving Lender, upon demand and fromtime to time, amounts sufficient to compensate such Person for each suchincrease from the effective date of such increase to the date of demandtherefor.  Each such demand shall beaccompanied by a certificate setting forth in reasonable detail the calculationof the amount then being demanded in accordance with the preceding sentence andeach such certificate shall be conclusive absent manifest error.

 

(h)           THE BORROWERSHEREBY INDEMNIFY AND HOLD HARMLESS EACH LENDER, THE AGENT AND THE CANADIANCOLLATERAL AGENT FROM AND AGAINST ANY AND ALL CLAIMS AND DAMAGES, LOSSES,LIABILITIES,

 

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COSTSOR EXPENSES WHICH SUCH LENDER, THE AGENT OR THE CANADIAN COLLATERAL AGENT MAY INCUR(OR WHICH MAY BE CLAIMED AGAINST SUCH LENDER, THE AGENT OR THE CANADIANCOLLATERAL AGENT BY ANY PERSON WHATSOEVER) IN CONNECTION WITH THE EXECUTION ANDDELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE TO PAY UNDER ANY LETTER OFCREDIT, INCLUDING ANY CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSESWHICH THE AGENT, THE CANADIAN COLLATERAL AGENT OR SUCH LENDER, AS THE CASE MAY BE,MAY INCUR (WHETHER INCURRED AS A RESULT OF, ITS OWN NEGLIGENCE OROTHERWISE) BY REASON OF OR IN CONNECTION WITH THE FAILURE OF ANY OTHER LENDER(WHETHER AS A RESULT OF ITS OWN NEGLIGENCE OR OTHERWISE) TO FULFILL OR COMPLYWITH ITS OBLIGATIONS TO THE AGENT, THE CANADIAN COLLATERAL AGENT OR SUCHLENDER, AS THE CASE MAY BE, HEREUNDER (BUT NOTHING HEREIN CONTAINED SHALLAFFECT ANY RIGHTS THE BORROWERS MAY HAVE AGAINST SUCH DEFAULTING LENDER); PROVIDED,THAT THE BORROWERS SHALL NOT BE REQUIRED TO INDEMNIFY ANY LENDER, THEAGENT OR THE CANADIAN COLLATERAL AGENT FOR ANY CLAIMS, DAMAGES, LOSSES,LIABILITIES, COSTS OR EXPENSES TO THE EXTENT, BUT ONLY TO THE EXTENT, THAT THESAME ARE DETERMINED BY A FINAL JUDICIAL DECISION TO HAVE BEEN CAUSED BY (i) THEWILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE PARTY SEEKING INDEMNIFICATION OR (ii) SUCHLENDER’S, THE AGENT’S OR THE CANADIAN COLLATERAL AGENT’S (AS THE CASE MAY BE)FAILURE TO PAY UNDER ANY LETTER OF CREDIT AFTER THE PRESENTATION TO IT OF AREQUEST REQUIRED TO BE PAID UNDER APPLICABLE LAW.  NOTHING IN THIS SECTION 2.10(h) ISINTENDED TO LIMIT THE OBLIGATIONS OF THE BORROWERS UNDER ANY OTHER PROVISION OFTHIS AGREEMENT.

 

(i)            Subject to thesettlement delay procedures of Section 2.2(f), the Agent shall givetelephonic or facsimile notice to the Revolving Lenders of the receipt andamount of any draft presented under any Letter of Credit and the date on whichpayment thereon will be made, and each of the Revolving Lenders shall, by 1:00 p.m.on the date such payment is to be made under such Letter of Credit, pay inimmediately available funds, an amount equal to the product of (i) suchRevolving Lender’s Commitment Percentage times (ii) the amount ofsuch payment to be made by the Agent to the beneficiary under such Letter ofCredit.  Any Revolving Lender failing totimely deliver its requisite portion of any such payment shall deliver the sameto the Agent as soon as possible thereafter, together with interest on suchamount for each day from the due date for such payment to the date of paymentby such Revolving Lender to the Agent of such amount at a rate of interest perannum equal to the Federal Funds Effective Rate for such period.  Each Revolving Lender hereby absolutely andunconditionally assumes, as primary obligor and not as a surety, and agrees topay and discharge, and to indemnify and hold the Agent harmless from liabilityand respect of, such Revolving Lender’s pro-rata share (based on such RevolvingLender’s Commitment Percentage) of any amounts owing by such Revolving Lenderto the Agent in accordance with the immediately preceding sentence.  Nothing herein shall be deemed to require anyRevolving Lender to pay to the Agent any amount as reimbursement for anypayment made by the Agent to acquire (discount) for its own account prior tomaturity thereof any acceptance created under a Letter of Credit.

 

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(j)            Notwithstandingthe contrary provisions of Section 2.10(a)(iii)(A), Letters ofCredit may be issued with expiry dates later than the fifth Business Day priorto the scheduled Termination Date upon the terms and conditions set forth inthis Section 2.10(j) (any such Letter of Credit, an “**Extended Facility Letter of Credit**”).  No Extended Facility Letter of Credit shallhave an expiry date later than one (1) year after the scheduledTermination Date.  From the datethirty (30) days prior to the scheduled Termination Date and at all timesthereafter when any Extended Facility Letters of Credit are outstanding, theBorrower shall maintain cash collateral in a special purpose collateral accountin the name of the Borrower, but subject to the sole dominion and control ofthe Agent, in an amount not less than 110% of the aggregate Letter of CreditExposure Amount relating to all Extended Facility Letters of Credit thenoutstanding.

 

(k)           CashCollateralization.  If any Eventof Default shall occur and be continuing, on the Business Day that the Borrowers’Agent receives notice from the Agent or the Required Lenders (or, if thematurity of the Loans has been accelerated, Revolving Lenders with Letter ofCredit Exposure Amount representing greater than 50% of the total Letter ofCredit Exposure Amount) demanding the deposit of cash collateral pursuant tothis paragraph, the Borrowers shall deposit in an account with the Agent, inthe name of the Agent and for the benefit of the Revolving Lenders (the “**LC Collateral Account**”), an amountin cash equal to 110% of the Letter of Credit Exposure Amount as of such date plusaccrued and unpaid interest thereon; providedthat the obligationto deposit such cash collateral shall become effective immediately, and suchdeposit shall become immediately due and payable, without demand or othernotice of any kind, upon the occurrence of any Event of Default with respect toany Borrower described in clause (o) or (p) of Section 8.1.  Such deposit shall be held by the Agent ascollateral for the payment and performance of the Obligations.  The Agent shall have exclusive dominion andcontrol, including the exclusive right of withdrawal, over such account and theBorrowers hereby grant the Agent a security interest in the LC CollateralAccount.  Other than any interest earnedon the investment of such deposits, which investments shall be made at theoption and sole discretion of the Agent and at the Borrowers’ risk and expense,such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate insuch account.  Moneys in such accountshall be applied by the Agent to reimburse a Revolving Lender for Letter ofCredit Advances for which it has not been reimbursed and, to the extent not soapplied, shall be held for the satisfaction of the reimbursement obligations ofthe Borrowers for the Letter of Credit Exposure Amount at such time or, if thematurity of the Loans has been accelerated (but subject to the consent ofRevolving Lenders with Letter of Credit Exposure Amount representing greaterthan 50% of the total Letter of Credit Exposure Amount), be applied to satisfyother Obligations.  If the Borrowers arerequired to provide an amount of cash collateral hereunder as a result of theoccurrence of an Event of Default, such amount (to the extent not applied asaforesaid) shall be returned to the Borrowers within three Business Days afterall such Events of Default have been cured or waived.

 

2.11         Swingline Loans.

 

(a)           Subject to theterms and conditions hereof, the Swingline Lender may, in its sole discretion,make loans for the Swingline Lender’s own account (each a “**Swingline Loan**”) to the extent the samewould otherwise have been available to the Borrowers under the RevolvingCommitment in an aggregate principal amount at any one time outstanding up to,but not exceeding, $15,000,000; provided, however, that atno time shall the Swingline Lender make 

 

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anySwingline Loan to the extent that, after giving effect to such Swingline Loan,the aggregate amount of each Lender’s Current Sum at such time would exceed theTotal Revolving Commitment; and providedfurther, however,that the Swingline Lender shall not make any Swingline Loan if any Eventof Default exists of which the Swingline Lender has actual knowledge.  Each Swingline Loan shall be a RevolvingCredit Alternate Base Rate Borrowing and shall in any event mature no laterthan the Termination Date.  Subject tothe conditions herein and within the limits set forth in the first sentence ofthis paragraph, any Swingline Loan prepaid prior to the Termination Date may bereborrowed as an additional Swingline Loan by the Borrowers pursuant to theterms of this Agreement; provided that the Swingline Lender shall not berequired to make a Swingline Loan to refinance an outstanding Swingline Loan;and provided further that such refinance restriction shall not apply withrespect to any “Swingline Loan” under the Existing Credit Agreement outstandingon the Closing Date.

 

(b)           To request aSwingline Loan, the Borrowers’ Agent shall notify the Agent of such request bytelephone (confirmed by telecopy), not later than 1:00 p.m., on the day ofa proposed Swingline Loan.  Each suchnotice shall be irrevocable and shall specify the requested date (which shallbe a Business Day) and amount of the requested Swingline Loan.  The Agent will promptly advise the SwinglineLender of any such notice received from the Borrowers’ Agent, and subject tothe terms of this Agreement, the Swingline Lender may make a Swingline Loanavailable to the Borrowers by means of a credit to the general deposit accountof the Borrowers specified in such request with the Swingline Lender by 5:00 p.m.on the requested date of such Swingline Loan.

 

(c)           The SwinglineLender may demand at any time that each Revolving Lender pay to the Agent, forthe account of the Swingline Lender, in the manner provided below, suchRevolving Lender’s Commitment Percentage of all or a portion of the outstandingSwingline Loans, which demand shall be made through the Agent, shall be inwriting and shall specify the outstanding principal amount of Swingline Loansdemanded to be paid.  The Agent shallforward notice of each such demand to each Revolving Lender on the day suchdemand is received by the Agent (except that any such notice or demand receivedby the Agent after 2:00 p.m. on any Business Day or any such demandreceived on a day that is not a Business Day shall not be required to beforwarded to the Revolving Lenders by the Agent until the next succeedingBusiness Day), together with a statement prepared by the Agent specifying theamount of each Revolving Lender’s Commitment Percentage of the aggregateprincipal amount of the Swingline Loans stated to be outstanding in such noticeor demanded to be paid pursuant to such demand, and, notwithstanding whether ornot the conditions precedent set forth in Sections 4.1 or 4.2shall have been satisfied (which conditions precedent the Revolving Lendershereby irrevocably waive), each Revolving Lender shall, before 11:00 a.m.on the Business Day next succeeding the date of such Revolving Lender’s receiptof such notice, make available to the Agent, in immediately available funds,for the account of the Swingline Lender, the amount specified in suchstatement.  Upon such payment by aRevolving Lender, such Revolving Lender shall, except as provided in Section 2.11(d) below,be deemed to have made a Revolving Loan to the Borrowers in the amount of suchpayment.  The Borrowers agree that allsuch Revolving Loans so deemed made shall be deemed to have been requested bythem and direct that all proceeds thereof shall be used to repay the SwinglineLoans to the Swingline Lender, and the Agent shall use such funds received fromthe Revolving Lenders to repay the Swingline Loans to the SwinglineLender.  To the extent that any RevolvingLender fails to make such payment 

 

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availableto the Agent for the account of the Swingline Lender, the Borrowers shall repaysuch Swingline Loan on demand.

 

(d)           Upon theoccurrence of any Event of Default described in Sections 8.1(n) through8.1(s) each Revolving Lender shall acquire, without recourse orwarranty, an undivided participation in each Swingline Loan otherwise requiredto be repaid by such Revolving Lender pursuant to Section 2.11(c) above,which participation shall be in a principal amount equal to such RevolvingLender’s Commitment Percentage of such Swingline Loan, by paying to theSwingline Lender on the date on which such RevolvingLenderwouldotherwisehavebeenrequiredtomakeapaymentinrespectofsuchSwinglineLoanpursuanttoSection2.11(c)above, inimmediately available funds, an amount equal to such Revolving Lender’sCommitment Percentage of such Swingline Loan. If all or part of such amount is not in fact made available by suchRevolving Lender to the Swingline Lender on such date, the Swingline Lendershall be entitled to recover any such unpaid amount on demand from suchRevolving Lender together with interest accrued from such date at the FederalFunds Effective Rate for the first Business Day after such payment was due andthereafter at the rate of interest then applicable to Alternate Base RateBorrowings.

 

(e)           From and afterthe date on which any Revolving Lender (i) is deemed to have made aRevolving Loan pursuant to Section 2.11(c) above with respectto any Swingline Loan or (ii) purchases an undivided participationinterest in a Swingline Loan pursuant to Section 2.11(d) above, theSwingline Lender shall promptly distribute to such Revolving Lender suchRevolving Lender’s Commitment Percentage of all payments of principal of andinterest received by the Swingline Lender on account of such Swingline Loanother than those received from a Revolving Lender pursuant to Sections 2.11(c)or 2.11(d) above.

 

(f)            The Agent, onbehalf of the Swingline Lender, shall request settlement (a “**Settlement**”) with the Revolving Lenders on at least a weeklybasis or on any date that the Agent elects, by notifying the Revolving Lendersof such requested Settlement by facsimile, telephone, or e-mail no later than12:00 noon on the date of such requested Settlement (the “**SettlementDate**”).  Each RevolvingLender (other than the Swingline Lender, in the case of the Swingline Loans)shall transfer the amount of such Revolving Lender’s Commitment Percentage ofthe outstanding principal amount of the applicable Swingline Loan with respectto which Settlement is requested to the Agent, to such account of the Agent asthe Administrative Agent may designate, not later than 2:00 p.m. on suchSettlement Date.  Settlements may occurduring the existence of a Default and whether or not the applicable conditionsprecedent set forth in Section 4.1 have then been satisfied.  Such amounts transferred to the Agent shallbe applied against the amounts of the Swingline Lender’s Swingline Loans and,together with Swingline Lender’s Commitment Percentage of such Swingline Loan,shall constitute Revolving Loans of such Revolving Lenders, respectively.  If any such amount is not transferred to theAgent by any Revolving Lender on such Settlement Date, the Swingline Lendershall be entitled to recover such amount on demand from such Revolving Lendertogether with interest thereon as specified in Section 2.12(b).

 

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2.12         Pro-RataTreatment.

 

(a)           Except to theextent otherwise provided herein (including without limitation, as specified inSections 2.2(f), 2.10(b) and 2.12(c) hereof):  (i) each borrowing from the RevolvingLenders under Section 2.1 hereof shall be made, each payment ofCommitment Fees shall be made and applied for the account of the RevolvingLenders, and each termination or reduction of the Revolving Commitments of theRevolving Lenders under Section 2.4 hereof shall be applied,pro-rata, according to each Revolving Lender’s Commitment Percentage; (ii) eachpayment or prepayment by the Borrowers of principal of or interest on Loans(other than Swingline Loans) shall be made to the Agent for the account of theLenders pro-rata in accordance with the respective unpaid principal amounts ofsuch Loans held by such Lenders, and amounts payable with respect to SwinglineLoans shall be paid only to the Swingline Lender; (iii) the RevolvingLenders (other than the Agent in its capacity as a Revolving Lender) shallpurchase from the Agent participations in the Letters of Credit to the extentof their respective Commitment Percentages upon issuance by the Agent of eachLetter of Credit as otherwise provided for herein, and (iv) the RevolvingLenders (other than the Swingline Lender) shall purchase from the SwinglineLender participations in the Swingline Loans to the extent of their respectiveCommitment Percentages upon request by the Swingline Lender as otherwiseprovided for herein.

 

(b)           Except for anysettlement delay provided or specified in Section 2.2(f), unlessthe Agent shall have been notified in writing by any Revolving Lender prior tothe date of a proposed Loan that such Revolving Lender will not make the amountthat would constitute such Revolving Lender’s Commitment Percentage of suchRevolving Loan on such date available to the Agent at the Principal Office, theAgent may assume that such Revolving Lender has made such amount available tothe Agent on such date, and the Agent may, in reliance upon such assumption andsubject to the terms and conditions of this Agreement, make such amountavailable to the Borrowers by depositing the same, in immediately availablefunds, in a general deposit account maintained by the Borrowers and designatedby the Borrower’s Agent in the applicable Request for Extension of Credit.  Any Revolving Lender failing to timelydeliver its requisite portion of such Revolving Loan shall deliver the same tothe Agent as soon as possible thereafter, together with interest on such amountfor each day from the due date for such payment to the date of payment by suchRevolving Lender to the Agent of such amount at a rate of interest per annumequal to the Federal Funds Effective Rate for such period.  In addition, the Borrowers hereby agree thatupon demand by the Agent, the Borrowers shall reimburse the Agent for any suchamount which any Revolving Lender has failed to timely deliver to the Agent,but which the Agent may have previously made available to the Borrowers inaccordance with the other provisions of this Section 2.12(b).  If a requested Revolving Loan shall not occuron any date specified by the Borrowers as set forth in the applicable Requestfor Extension of Credit because all of the conditions for such Revolving Loanset forth herein or in any of the other Loan Documents shall have not been met,the Agent shall return the amounts so received from the Revolving Lenders inrespect of such requested Revolving Loan to the applicable Revolving Lenders assoon as practicable.

 

(c)           Notwithstandingany provision to the contrary contained in this Section 2.12 or inany other provision hereof, each Revolving Lender shall only receive interest 

 

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uponand a portion of the Commitment Fee paid hereunder based upon the amount offunds actually advanced by such Revolving Lender to Borrowers from time totime.

 

2.13         Sharing ofPayments, Etc.  The CreditParties agree that, in addition to (and without limitation of) any right ofset-off, bankers’ lien or counterclaim a Lender may otherwise have, each Lendershall be entitled, at its option, to offset balances held by it for the accountof any of the Credit Parties at any of its offices against any principal of orinterest on any of such Lender’s Loans to the Borrowers hereunder, suchRevolving Lender’s Commitment Percentage of the Letter of Credit ExposureAmounts or the Swingline Exposure, or any other Obligation of the CreditParties owing to any such Lender under any of the Loan Documents regardless ofwhether such offset balances are then due to the Credit Parties, in which caseit shall promptly notify the Borrowers’ Agent and the Agent thereof, provided,that such Lender’s failure to give such notice shall not affect thevalidity thereof.  If a Lender shallobtain payment (other than the Swingline Lender obtaining payment of all or anyportion of a Swingline Loan) of any principal of or interest on any Loan madeby it under this Agreement, any Letter of Credit Exposure Amount, any SwinglineExposure or other obligation then due to such Lender under any Loan Document,through the exercise of any right of set-off (including, without limitation,any right of set-off or lien granted under Section 10.19 hereof),banker’s lien, counterclaim or similar right, or otherwise, it shall promptlypurchase from the other Lenders participations in the Loans made by, the Letterof Credit Exposure Amount or the Swingline Exposure of, or the otherobligations of the Credit Parties hereunder or thereunder of, the other Lendersin such amounts, and make such other adjustments from time to time as shall beequitable to the end that all the Lenders shall share the benefit of suchpayment (net of any expenses which may be incurred by such Lender in obtainingor preserving such benefit) pro-rata in accordance with their respectiveCommitment Percentages.  To such end allthe Lenders shall make appropriate adjustments among themselves (by the resaleof participations sold or otherwise) if such payment is rescinded or mustotherwise be restored.  The CreditParties agree, to the fullest extent they may effectively do so underapplicable law, that any Lender so purchasing a participation in the Loans madeby, Letter of Credit Exposure Amount or the Swingline Exposure of, or otherobligations hereunder of, the other Lenders may exercise all rights of set-off,bankers’ lien, counterclaim or similar rights with respect to suchparticipation as fully as if such Lender were a direct holder of said Loans,Letter of Credit Exposure Amount, Swingline Exposure or other obligations inthe amount of such participation. Nothing contained herein shall require any Lender to exercise any suchright or shall affect the right of any Lender to exercise, and retain thebenefits of exercising, any such right with respect to any other indebtednessor obligation of the Credit Parties.

 

2.14         Recapture.  If on any Interest Payment Date the Agentdoes not receive for the account of one or more Lenders payment in full ofinterest computed at the Alternate Base Rate and/or the Adjusted LIBOR Rate, asapplicable (computed without regard to any limitation by the Highest LawfulRate), because the Alternate Base Rate and/or the Adjusted LIBOR Rate, asapplicable (so computed), exceeds or has exceeded the Highest Lawful Rateapplicable to such Lenders, the Borrowers shall pay to the Agent for theaccount of such Lenders, in addition to interest otherwise required, on eachInterest Payment Date thereafter, the Excess Interest Amount (calculated as ofeach such subsequent Interest Payment Date); provided, that in noevent shall the Borrowers be required to pay, for any computation period,interest at a rate exceeding the Highest Lawful Rate applicable to such Lendersduring such period.  As used herein, theterm “**Excess Interest Amount**”shall mean, on any day, the amount by which (a) the amount of all 

 

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interestwhich would have accrued prior to such day on the outstanding principal of theNotes of the applicable Lender (had the Alternate Base Rate and/or the AdjustedLIBOR Rate, as applicable, at all times been in effect without limitation bythe Highest Lawful Rate applicable to such Lender) exceeds (b) theaggregate amount of interest actually paid to the Agent for the account of suchLender on its Notes on or prior to such day.

 

2.15         Increase ofRevolving Commitments.

 

(a)           If no Defaultor Event of Default or Material Adverse Effect shall have occurred and becontinuing, the Borrowers may at any time prior to the Termination Date requestone or more increases of the Revolving Commitments by notice to the Agent inwriting of the amount of such proposed increase (each such notice, a “**Revolving Commitment Increase Notice**”);provided, however, that, (i) the Revolving Commitmentof any Revolving Lender may not be increased without such Revolving Lender’sconsent, (ii) the aggregate amount of the Revolving Commitments as soincreased shall not exceed $150,000,000, and (iii) the RevolvingCommitments may not be increased without the consent of the Agent (whichconsent shall not be unreasonably withheld or delayed).  Any such Revolving Commitment Increase Noticedelivered with respect to any proposed increase in the Revolving Commitmentsmust offer each Revolving Lender an opportunity to subscribe for its CommitmentPercentage (with respect to the existing Revolving Commitments (prior to suchincrease)) of the increased Revolving Commitments.  The Agent shall, within five (5) BusinessDays after receipt of a Revolving Commitment Increase Notice, notify eachLender of such request.  Each RevolvingLender desiring to increase its Revolving Commitment shall notify the Agent inwriting no later than ten (10) Business Days after receipt of notice fromthe Agent.  Any Revolving Lender thatdoes not notify the Agent within the time period specified above that it willincrease its Revolving Commitment will be deemed to have rejected suchoffer.  Any agreement by a Lender toincrease its Revolving Commitment shall be irrevocable.

 

(b)           If any proposedincrease in the Revolving Commitments is not fully subscribed by the existingRevolving Lenders pursuant to the procedure outlined in clause (a) preceding,the Borrowers may, in their sole discretion, but with the consent of the Agentas to any Person that is not at such time a Revolving Lender (which consentshall not be unreasonably withheld or delayed), offer to any existing RevolvingLender or to one or more additional banks or financial institutions theopportunity to participate in all or a portion of such unsubscribed portion ofthe Revolving Commitments, by notifying the Agent; provided, thatthe Revolving Commitment of any New Lender shall not be less than $15,000,000and shall be in an integral multiple of $5,000,000.  Promptly and in any event within five (5) BusinessDays after receipt of notice from the Borrowers of their desire to offer suchunsubscribed commitments to certain existing Revolving Lenders or to theadditional banks or financial institutions identified therein, the Agent shallnotify such proposed lenders of the opportunity to participate in all or aportion of such unsubscribed portion of the increased Revolving Commitments.

 

(c)           Any existingRevolving Lender that accepts the Borrowers’ offer to increase its RevolvingCommitment shall execute a Revolving Commitment Increase Agreement with theBorrowers, the Guarantors and the Agent, whereupon such Lender shall be boundby, and entitled to the benefits of, this Agreement with respect to the fullamount of its Revolving Commitment as so increased.

 

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(d)           Any additionalbank or financial institution which is not an existing Revolving Lender andwhich accepts the Borrowers’ offer to participate in the increased RevolvingCommitments shall execute and deliver to the Agent, the Borrowers and theGuarantors a New Lender Agreement setting forth its Revolving Commitment(subject to the limitations on the amounts thereof set forth herein), and uponthe effectiveness of such New Lender Agreement such bank or financialinstitution (a “**New Lender**”)shall become a Revolving Lender for all purposes and to the same extent as iforiginally a party hereto and shall be bound by and entitled to the benefits ofthis Agreement, and the signature pages hereof shall be deemed to beamended to add the name of such New Lender.

 

(e)           Upon anyincrease in the Revolving Commitments pursuant to this Section 2.15,Schedule 1.1A shall be deemed amended to reflect the RevolvingCommitment of each Revolving Lender (including any New Lender) as therebyincreased.

 

2.16         DefaultingLenders.

 

Notwithstanding anyprovision of this Agreement to the contrary, if any Lender becomes a DefaultingLender, then the following provisions shall apply for so long as such Lender isa Defaulting Lender:

 

(a)           if anySwingline Exposure or Letter of Credit Exposure Amount exists at the time aLender becomes a Defaulting Lender then:

 

(i)            all or any part of suchSwingline Exposure and Letter of Credit Exposure Amount shall be reallocatedamong the non-Defaulting Lenders in accordance with their respective CommitmentPercentages but only to the extent (x) the sum of all non-DefaultingLenders’ Revolving Exposures plus such Defaulting Lender’s SwinglineExposure and Letter of Credit Exposure Amount does not exceed the total of allnon-Defaulting Lenders’ Commitments and (y) the conditions set forth in Section 4.1are satisfied at such time; and

 

(ii)           if the reallocationdescribed in clause (i) above cannot, or can only partially, beeffected, the Borrowers shall within one Business Day following notice by theAgent (x) first, prepay such Swingline Exposure and (y) second, cashcollateralize such Defaulting Lender’s Letter of Credit Exposure Amount (aftergiving effect to any partial reallocation pursuant to clause (i) above)in accordance with the procedures set forth in Section 2.10(k) forso long as such Letter of Credit Exposure Amount is outstanding; and

 

(iii)          if the Letter of CreditExposure Amount of the non-Defaulting Lenders is reallocated pursuant to this Section 2.16(a),then the fees payable to the Revolving Lenders pursuant to Section 2.3and Section 2.9(e) shall be adjusted in accordance with suchnon-Defaulting Lenders’ Commitment Percentages.

 

(b)           so long as any RevolvingLender is a Defaulting Lender, the Swingline Lender shall not be required tofund any Swingline Loan and the Agent shall not be required to issue, amend orincrease any Letter of Credit, unless it is satisfied that the related exposurewill be 100% covered by the Revolving Commitments of the non-Defaulting Lendersand/or cash

 

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collateralwill be provided by the Borrowers in accordance with Section 2.15(a),and participating interests in any such newly issued or increased Letter ofCredit or newly made Swingline Loan shall be allocated among non-DefaultingLenders in a manner consistent with Section 2.15(a)(i) (andDefaulting Lenders shall not participate therein).

 

(c)           In the eventthat the Agent, the Borrower, and the Swingline Lender each agrees that aDefaulting Lender has adequately remedied all matters that caused such Lenderto be a Defaulting Lender, then the Swingline Exposure and Letter of CreditExposure Amount of the Lenders shall be readjusted to reflect the inclusion ofsuch Revolving Lender’s Revolving Commitment and on such date such RevolvingLender shall purchase at par such of the Revolving Loans of the other RevolvingLenders (other than Swingline Loans) as the Agent shall determine may benecessary in order for such Revolving Lender to hold such Revolving Loans inaccordance with its Commitment Percentage.

 

3.             Collateral.

 

3.1           SecurityDocuments.  The Loansand all other Obligations shall be secured by the Collateral and the Agent (orthe Canadian Collateral Agent, as applicable) and the Lenders are entitled tothe benefits thereof.  The applicableCredit Parties shall duly execute and deliver the Security Documents, allconsents of third parties necessary to permit the effective granting of theLiens created thereby (subject only to Liens permitted under Section 7.2hereof), and other documents, consistent with the terms of this Agreement andthe other Loan Documents, as may be reasonably required by the Agent (or theCanadian Collateral Agent, as applicable) to grant to the Agent (or theCanadian Collateral Agent, as applicable), for the ratable benefit of theLender Parties, a valid, perfected and enforceable first priority Lien on andsecurity interest in the Collateral (subject only to the Liens permitted under Section 7.2hereof), including without limitation, any and all original stock certificates,stock transfer powers, assignments and other documents and instrumentsnecessary or desirable under the laws of any applicable jurisdiction withregard to the Stock covered by any Security Agreement.

 

3.2           Filing andRecording.  The CreditParties shall, at their sole cost and expense, cooperate with the Agent (or theCanadian Collateral Agent, as applicable) in causing all financing statements,Intellectual Property Security Agreements and other Security Documents pursuantto this Agreement to be duly recorded and/or filed or otherwise perfected inall places necessary or desirable in the Agent’s (or the Canadian CollateralAgent, as applicable) discretion to perfect the Liens of the Agent (or theCanadian Collateral Agent, as applicable), and the Credit Parties shall takesuch other actions as the Agent (or the Canadian Collateral Agent, asapplicable) may reasonably request, in order to perfect and protect the Liensof the Agent (or the Canadian Collateral Agent, as applicable), for the ratablebenefit of the Lender Parties, in the Collateral.  The Credit Parties, to the extent permittedby law, hereby authorize the Agent (and the Canadian Collateral Agent, asapplicable) to file any financing statement in respect of any Lien createdpursuant to the Security Documents which may at any time be required to perfectsuch Liens or which, in the reasonable opinion of the Agent (or the CanadianCollateral Agent, as applicable), may at any time be desirable, although thesame may have been executed only by the Agent (or the Canadian CollateralAgent, as applicable) or, at the option of the Agent (or the CanadianCollateral Agent, as applicable), to sign such financing statement on behalf ofthe applicable Credit Parties (to the extent that execution by them isnecessary or desirable in the 

 

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Agent’s(or the Canadian Collateral Agent’s, as applicable) discretion), and file thesame, and the Credit Parties hereby irrevocably designate each of the Agent andthe Canadian Collateral Agent, as applicable, their respective agents,representatives and designees as its agent and attorney-in-fact for thispurpose.  In the event that anyre-recording or refiling thereof (or the filing of any statements ofcontinuation or assignment of any financing statement) is required to protectand preserve such Lien, the Credit Parties shall, at the Credit Parties’ costand expense, cause the same to be recorded and/or refiled at the time and inthe manner requested by the Agent (or the Canadian Collateral Agent, asapplicable).

 

3.3           Special CashCollateral Account.  All amountson deposit from time to time in the Special Cash Collateral Account shallconstitute part of the Collateral hereunder and shall not constitute payment ofthe Obligations until applied thereto as hereinafter provided.  Any income received with respect to amountsfrom time to time on deposit in the Special Cash Collateral Account, includingany interest, shall be deposited in the Collection Account.  The Agent shall at all times have control andcomplete dominion over the Special Cash Collateral Account and all amounts ondeposit therein; provided, however, that the Borrowers may, upon the writtenrequest of Borrowers’ Agent delivered to the Agent, from time to time withdrawand use the requested funds (a) to pay, prepay or repay Obligations inrespect of the Revolving Loans, and (b) and, subject to obtaining theAgent’s prior written consent, for any other purpose not hereinprohibited.  The Agent agrees that itwill not unreasonably withhold, delay or condition such consent so long as (A) Availability,as determined by the Agent, is not less than $35,000,000 at the time of andimmediately after giving effect to such withdrawal and application of funds,and (B) Borrowers have not made a request (that was approved by the Agent)to withdraw Pledged Cash pursuant to clause (b) of this Section withinthe immediately preceding thirty (30) days. Any use of Pledged Cash by the Borrowers other than as permitted in theforegoing provisions of this Section shall require the consent of theRequired Lenders only.

 

4.             Conditions.

 

4.1           All Loans.  The obligation of each Lender to make anyLoan (other than a Swingline Loan, which shall be governed exclusively by theterms of Section 2.11) and the obligation of the Agent to issue anyLetter of Credit is subject to the satisfaction of the following conditions:

 

(a)           the Agent shallhave received the following, all of which shall be duly executed and in ProperForm:  (i) in the case of a Loan,other than a Revolving Loan for the purposes described in Sections 2.2(b),2.4(b), 2.6(d) and 2.10(d),

 

(A)          with respect to each AlternateBase Rate Borrowing, Agent shall have received by no later than 1:00 p.m.on the applicable Rate Selection Date, telephonic notice from the Borrowers’Agent of the proposed date and amount of such Loan, and by no later than 2:00 p.m.on the applicable Rate Selection Date, a Request for Extension of Credit,signed by a Responsible Officer or Cash Officer of the Borrowers’ Agent (or anyperson designated in writing by a Responsible Officer or Cash Officer of theBorrowers’ Agent), and

 

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(B)           with respect to each LIBORBorrowing, Agent shall have received by no later than 12:00 noon on theapplicable Rate Selection Date, telephonic notice from the Borrowers’ Agent ofthe proposed date and amount of such Loan, and no later than 1:00 p.m. onthe applicable Rate Selection Date, a Request for Extension of Credit, signedby a Responsible Officer or Cash Officer of the Borrowers’ Agent (or any persondesignated in writing by a Responsible Officer or Cash Officer of the Borrowers’Agent),

 

or (ii), in the case ofissuance of a Letter of Credit (other than the Existing Letters of Credit), (A) acompleted Application (as may be required by the Agent) signed by a ResponsibleOfficer or Cash Officer of the Borrowers’ Agent (or any person designated inwriting by a Responsible Officer or Cash Officer of the Borrowers’ Agent) by12:00 noon three (3) Business Days prior to the proposed date ofissuance of such Letter of Credit; (B) payment of the first letter ofcredit fee as and by the time required in Section 2.10 of thisAgreement; and (C) such other Applications, certificates and otherdocuments as the Agent may reasonably require;

 

along with, in each case,such financial information as the Agent may require to substantiate compliancewith all financial covenants contained herein by the Borrowers (or, asapplicable, to demonstrate that compliance with any such financial covenant isnot then required) if the Agent believes at such time that any of the financialcovenants contained herein are then applicable and that the Borrowers are notthen in compliance therewith;

 

(b)           allrepresentations and warranties of the Borrowers and any other Person set forthin this Agreement and in any other Loan Document shall be true and correct inall material respects with the same effect as though made on and as of suchdate, except for (i) those representations and warranties which relate toa specified date, which shall be true and correct as of such date and (ii) thosechanges in such representations and warranties otherwise permitted by the termsof this Agreement;

 

(c)           there shallhave occurred no Material Adverse Effect, after giving effect to the requestedLoan(s) or Letter(s) of Credit;

 

(d)           no Default orEvent of Default shall have occurred and be continuing;

 

(e)           if requested bythe Agent, it shall have received a certificate executed by the FinancialOfficer or other Responsible Officer of each Credit Party as to the compliancewith subparagraphs (b) through (d) above;

 

(f)            the making ofsuch Loan or the issuance of such Letter of Credit, shall not be prohibited by,or subject the Agent, the Canadian Collateral Agent or any Lender to, anypenalty or onerous condition under any Legal Requirement; and

 

(g)           the Borrowersshall have paid all legal fees and expenses of the type described in Section 10.9hereof for which invoices have been presented through the date of such Loan orthe issuance of such Letter of Credit.

 

4.2           First Loan orLetter of Credit.  In additionto the matters described in Section 4.1 hereof, the obligation ofany Lender to make the Term Loans, the initial Revolving Loan or the 

 

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obligationof the Agent to issue the first Letter of Credit is subject to the receipt bythe Agent of each of the following, on or before November 30, 2009 (exceptas otherwise specifically provided in any Loan Document, including Schedule4.3), in Proper Form:

 

(a)           the Notesexecuted by the Borrowers;

 

(b)           theReaffirmation Agreements executed by the Credit Parties, as applicable;

 

(c)           a certificateof corporate resolutions and incumbency executed by the Secretary or anAssistant Secretary of each Borrower dated as of the date of this Agreement,authorizing (i) each Borrower’s entering into the transactionscontemplated hereby and (ii) the delivery by each Borrower of the LoanDocuments to be executed and delivered by such Borrower;

 

(d)           a certificateof corporate resolutions and incumbency executed by the Secretary or anAssistant Secretary of the Guarantor, dated as of the date of this Agreement,authorizing the Guarantor to (i) enter into the transactions contemplatedhereby and (ii) deliver the Loan Documents to be executed and delivered bythe Guarantor;

 

(e)           certifiedcopies of the Organizational Documents of each Credit Party;

 

(f)            certificatesfrom the Secretary of State or other appropriate public official as to thecontinued existence and good standing of each Credit Party in its applicablejurisdiction of formation, dated within thirty (30) days of the Closing Date,together, if requested by the Agent, with confirmation by telephone or telecopy(where available) on the Closing Date from such official(s) as to suchmatters;

 

(g)           certificatesfrom the appropriate public officials of those jurisdictions where the natureof each Borrower’s business makes it necessary or desirable to be qualified todo business as a foreign corporation, which jurisdictions are set forth on Schedule 5.8,as to the good standing and qualification as a foreign corporation (as may beappropriate) of the Credit Parties, dated within sixty (60) days of the ClosingDate;

 

(h)           the financialstatements described in Section 5.2 hereof, together with anymanagement letters, if any, received for such financial statements;

 

(i)            the most recentschedule and aging of Receivables of the Credit Parties (dated within thirty(30) days of the Closing Date);

 

(j)            a copy of theAgent’s field examination of the books and records of the Credit Parties andtheir Subsidiaries and the results of such field examination;

 

(k)           favorable legalopinions (i) from Bryan Cave LLP, outside counsel for the Credit Parties, (ii) McInnesCooper, special Nova Scotia counsel to the Credit Parties, (iii) Foley &Lardner LLP, special Michigan and Wisconsin counsel to the Credit Parties, (iv) BryanCave LLP, special California counsel to the Credit Parties, (v) Bryan CaveLLP, special German counsel to the Credit Parties in connection with the pledgeof certain Stock in Neenah Germany,

 

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(vi) HouthoffBuruma London B.V., special Dutch counsel to the Credit Parties in connectionwith the pledge of certain Stock in FinCo, and (vii) internal counsel tothe Credit Parties, each dated the Closing Date, each addressed to the Agent,the Canadian Collateral Agent and the Lenders and acceptable in all respects tothe Agent in its reasonable credit judgment;

 

(l)            certificates ofinsurance satisfactory to the Agent in all respects evidencing the existence ofall insurance required to be maintained by the Credit Parties pursuant to Section 6.7of this Agreement and all other terms of the Security Documents;

 

(m)          the applicableCredit Parties, JPMorgan and the applicable financial institutions listed in Schedule 5.29attached hereto shall have entered into the Tri-Party Agreements;

 

(n)           accessagreements and waivers or subordinations of landlord and warehouseman’s liens(whether statutory or contractual) held by any owner of each real propertylocation leased and any operator of each public warehouse location utilized byany Credit Party set forth on Schedule 4.2(n), in each casereasonably satisfactory to the Agent;

 

(o)           evidencesatisfactory to the Agent that no Material Adverse Effect shall have occurredsince December 31, 2008;

 

(p)           a certificateof a Responsible Officer of the Credit Parties in the form of Exhibit Jannexed hereto certifying on behalf of the Credit Parties as to the solvency ofthe Credit Parties and their Subsidiaries after giving effect to the funding ofthe Term Loans and any initial Revolving Loans and related matters set forth inSection 5.19;

 

(q)           the PerfectionCertificate, dated the Closing Date, substantially in the form of Exhibit Lhereto, duly executed by each Credit Party;

 

(r)            (i) a fullyexecuted (and, where required, notarized) Mortgage or amendment to Mortgage(each a “**Closing Date Mortgage**”and, collectively, the “**Closing DateMortgages**”), in proper form for recording in the applicablejurisdiction, encumbering each Real Property Asset owned in fee as of theClosing Date and listed on Schedule 4.2(r)-1 (each such Real PropertyAsset, a “**Closing Date Mortgaged Property**”);(ii) with respect to each Closing Date Mortgaged Property located in theUnited States, such surveys or surveyor or owner certificates as the Agent mayreasonably require; (iii) in the case of each Material Leasehold Propertyexisting as of the Closing Date copies of all leases between any Credit Partyand any landlord or tenant, and any modifications, supplements or amendmentsthereto; (iv) (A) evidence reasonably acceptable to the Agent as towhether any Closing Date Mortgaged Property that is a Mill Propertyowned by the Credit Parties is a Flood Hazard Property, and (B) if thereare any such Flood Hazard Properties, evidence that the applicable Credit Partyhas obtained flood hazard insurance as required by law with respect to eachFlood Hazard Property in reasonable amounts approved by the Agent, or evidencereasonably acceptable to the Agent that such insurance is not available; (v) (A) anALTA loan title insurance policy (or the Canadian equivalent or an endorsementin Proper Form to any existing ALTA loan title insurance policy issued bythe Title Company in favor of the Agent) or unconditional commitment therefor(a “**Closing Date Mortgage Policy**”)issued by the Title Company with respect to each Closing 

 

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DateMortgaged Property owned by any Credit Party, in an amount not less than theappraised fair market value of such Closing Date Mortgaged Property, insuringfee simple title to the Closing Date Mortgaged Property vested in such CreditParty and assuring the Agent (or the Canadian Collateral Agent, as applicable)that the Closing Date Mortgage creates a valid and enforceable first priorityLien on such Closing Date Mortgaged Property, subject only to any standard orother exceptions as may be reasonably acceptable to the Agent and which appearas exceptions on Schedule B to the applicable Closing Date MortgagePolicy, which Closing Date Mortgage Policy (1) shall include endorsements(to the extent available) for customary matters reasonably requested by theAgent (or the Canadian Collateral Agent, as applicable), including, but notlimited to, those endorsements listed on Schedule 4.2(r)-2 and (2) shallprovide for affirmative insurance and such reinsurance as may be reasonable andcustomary and as the Agent may reasonably request, all of the foregoing in formand substance reasonably satisfactory to the Agent; and (B) evidencesatisfactory to the Agent that such Credit Party has (1) delivered to theTitle Company all certificates and affidavits required by the Title Company inconnection with the issuance of the Closing Date Mortgage Policy and (2) paidto the Title Company or to the appropriate Governmental Authorities allexpenses and premiums of the Title Company in connection with the issuance ofthe Closing Date Mortgage Policy and all recording and stamp taxes (includingmortgage recording taxes, fees and other charges and intangible taxes) payablein connection with recording the Closing Date Mortgage in the appropriate realestate records; (vi) copies of all recorded documents listed as exceptionsto title or otherwise referred to in the Closing Date Mortgage Policy and anyother such documents as Agent shall reasonably request; (vii) appraisals,together with reliance letters where applicable, concerning each Closing DateMortgaged Property owned by the Credit Parties from one or more independentreal estate appraisers reasonably satisfactory to the Agent, which appraisalsshall set forth the Net Recovery Value Percentage of such Closing DateMortgaged Property and be in form, scope and substance reasonably satisfactoryto the Agent and shall satisfy the requirements of any applicable laws andregulation; and (viii) evidence reasonably satisfactory to the Agent thatthere are no material taxes, levies, duties, imposts, deductions, charges(including water and sewer charges), withholdings, assessments or impositionsof any kind which have been due and payable for more than thirty (30) days withrespect to such Closing Date Mortgaged Property (to the extent the same are notaddressed by endorsements provided under a Closing Date Mortgage Policy),except those for which extensions have been obtained and except for those whichhave been disclosed to the Agent and which are being contested in good faithand by appropriate proceedings if adequate reserves with respect thereto aremaintained in accordance with GAAP;

 

(s)           a copy of theCredit Parties’ hedging policies for protection against fluctuations in thevalue of dollars relative to Canadian Dollars, which hedging policies shall bereasonably satisfactory to the Agent;

 

(t)            Availability asof the Closing Date, as determined by the Agent, shall not be less than$35,000,000 after giving effect to the Term Loans and the application of theproceeds thereof, the initial Revolving Loan made or to be made, and theExisting Letters of Credit and after payment of fees and expenses for suchtransactions; and

 

(u)           all other LoanDocuments and any other instruments or documents consistent with the terms ofthis Agreement and relating to the transactions contemplated hereby

 

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asthe Agent may reasonably request, executed by the applicable Credit Parties orany other Person required by the Agent;

 

and subject to the furtherconditions that, at the time of the Term Loan and the initial Revolving Loan, (i) theownership, corporate structure, solvency and capitalization of the CreditParties and their Subsidiaries shall be satisfactory to the Lenders in allrespects; (ii) the Agent, the Canadian Collateral Agent and the Lendersshall have had the opportunity, if they elect, to examine the books of accountand other records and files of the Credit Parties and their Subsidiaries and tomake copies thereof, and to conduct a preclosing audit which shall include,without limitation, verification of Eligible Receivables, Eligible Inventory,Eligible Equipment and Eligible Real Estate, verification of satisfactorystatus of customer and supplier accounts, payment of payroll taxes and accountspayable and formulation of an opening Borrowing Base as of the Closing Date(with the results of such examination and audits to have been satisfactory tothe Agent, the Canadian Collateral Agent and the Lenders in all respects); (iii) allsuch actions as the Agent or the Canadian Collateral Agent shall reasonablyrequire to perfect the Liens created pursuant to the Security Documents shallhave been taken, including without limitation, (A) the delivery to theAgent (or the Canadian Collateral Agent, as applicable) of all Property withrespect to which possession is necessary or desirable for the purpose ofperfecting such Liens, (B) with respect to Collateral covered by theSecurity Agreements, the filing of appropriately completed and duly executedUniform Commercial Code, PPSA (Nova Scotia) or other applicable financingstatements, (C) with respect to all Collateral constituting Stock in anyCredit Party or any of their Subsidiaries, delivery to the Agent (or theCanadian Collateral Agent, as applicable) of original stock certificates andstock transfer powers with regard to all of the applicable Stock, and (D) withrespect to all Collateral consisting of Intellectual Property, the recording ofappropriate documents in the U.S. Patent and Trademark Office, the U.S. Libraryof Congress, the United States Copyright Office, the Canadian IntellectualProperty Office, and any domain name registry, as applicable; (iv) theAgent (or the Canadian Collateral Agent, as applicable) shall also havereceived evidence reasonably satisfactory to it that the Liens created by theSecurity Documents constitute first priority Liens (except for any Liensexpressly provided for in Sections 7.2(a), 7.2(c), 7.2(d),7.2(e) and 7.2(f) below), including without limitation,satisfactory Uniform Commercial Code, PPSA (Nova Scotia) or other applicablesearch reports and satisfactory authorizations to file releases of Liens ortermination statements with respect to any existing prior Liens to be released;(v) the terms, conditions and amount of all Indebtedness of each CreditParty shall be acceptable to the Agent; (vi) the Borrowers shallcontemporaneously pay on the Closing Date all fees owed to the Agent, theCanadian Collateral Agent and the Lenders by the Borrowers under this Agreementor under any commitment letters or fee letters entered into between theBorrowers or any of its Affiliates and JPMorgan or any of its Affiliates,including without limitation, reasonable legal fees and expenses described in Section 10.9or otherwise for which invoices have been presented; and (vii) all otherlegal matters incident to the transactions herein contemplated shall bereasonably satisfactory to counsel (including Canadian counsel) for the Agentand the Canadian Collateral Agent and respective counsel for each of theLenders.

 

4.3           Post-ClosingDeliveries.  Borrowersshall deliver or cause to be delivered to the Agent each of the items set forthon Schedule 4.3, in each case on or before the date specified in suchSchedule for such item or prior to such later date as the Agent may determineand agree to in writing in its sole discretion. Borrowers’ failure to deliver each such item on or before the 

 

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datespecified (as such date may be extended by the Agent in writing in its solediscretion) shall constitute an immediate Event of Default.

 

5.             Representations and Warranties.

 

To induce the Agent, theCanadian Collateral Agent and the Lenders to enter into this Agreement, theCredit Parties represent and warrant to the Agent, the Canadian CollateralAgent and the Lenders, as of the date of this Agreement and as of the date anyLoan is made hereunder or any Letter of Credit is issued hereunder, as follows:

 

5.1           Organization.  Each Credit Party and each of their thenexisting Subsidiaries are duly organized, validly existing and in good standingunder the laws of the jurisdiction of its incorporation or formation; has allpower and authority to own its respective Property and assets and to conductits respective businesses as presently conducted; and is duly qualified to dobusiness and in good standing in each and every state or provincialjurisdiction where its respective business requires such qualification, exceptfor those jurisdictions in which the failure to qualify and/or be in goodstanding does not cause a Material Adverse Effect to occur.

 

5.2           FinancialStatements.

 

(a)           TheConsolidated financial statements of the Credit Parties and their Subsidiariesdelivered to the Agent and the Lenders in connection with this Agreement,including without limitation, the monthly unaudited financial statements datedas of August 31, 2009, fairly present, in accordance with GAAP, theConsolidated financial condition and the results of operations of the CreditParties and their Subsidiaries as of the dates and for the periods indicated,subject to the qualifications with respect to the pro forma financialstatements of the Credit Parties and their Subsidiaries set forth therein.  No Material Adverse Effect has occurred sinceDecember 31, 2008.

 

(b)           The CreditParties have heretofore furnished to the Agent, for each month from theprojected Closing Date through December 31, 2010, and thereafter for eachcalendar year through the term of this Agreement, projected income statements,balance sheets and cash flows of the Credit Parties and their Subsidiaries, ona Consolidated basis, together with one or more schedules demonstratingprospective compliance with all financial covenants contained in thisAgreement, such projections disclosing all material assumptions made by theCredit Parties in formulating such projections. The projections are based upon estimates and assumptions which theCredit Parties believe are reasonable in light of the conditions which existedas of the time the projections were made, have been prepared on the basis ofthe material assumptions stated therein and reflect as of the date of thisAgreement and the Closing Date an estimate believed reasonable by the CreditParties as to the results of operations and other information projectedtherein.

 

5.3           EnforceableObligations; Authorization.  The Loan Documents are legal, valid andbinding obligations of the Credit Parties to the extent they are party thereto,enforceable in accordance with their respective terms, except as may be limitedby bankruptcy, insolvency, reorganization, moratorium or other similar lawsaffecting creditors rights generally and by general equitable principlesincluding remedies of specific performance and injunction.  The 

 

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execution,delivery and performance of the Loan Documents have all been duly authorized byall necessary corporate, and if necessary shareholder or member, action; arewithin the power and authority of the applicable Credit Parties; do not andwill not contravene or violate any material Legal Requirement or theOrganizational Documents of any Credit Party; do not and will not result in thebreach of, or constitute a default under, any material agreement or instrumentby which any Credit Party or any material portion of its Property is bound oraffected; and do not and will not result in the creation of any Lien upon anyProperty of any Credit Party except as expressly contemplated herein ortherein, and do not and will not result in any default, noncompliance,suspension, revocation, impairment, forfeiture or non-renewal of any permit,license, authorization or approval applicable to the operations or any of theProperty of any Credit Party that could reasonably be expected to have aMaterial Adverse Effect.  Except asotherwise set forth on Schedule 5.3, all necessary consents andapprovals of any Governmental Authority and all other requisite materialpermits, registrations and consents have been obtained for the delivery andperformance of the Loan Documents.

 

5.4           Other Debt.  Neither any Credit Party nor any OffshoreEntity is in default in the payment of any other Indebtedness or under anyagreement, mortgage, deed of trust, security agreement or lease to which it isa party, the result of which has, or could reasonably be expected to have, aMaterial Adverse Effect.

 

5.5           Litigation.  Except as set forth on Schedule 5.5attached hereto, there is no litigation, administrative proceeding orinvestigation pending or, to the knowledge of any Credit Party, threatenedagainst, nor any outstanding judgment, order or decree affecting, any CreditParty or any Offshore Entity before or by any Governmental Authority orarbitral body which individually or in the aggregate have, or could reasonablybe expected to have, a Material Adverse Effect. No Credit Party is knowingly in material default with respect to anymaterial judgment, writ, rule, regulation, order or decree of any GovernmentalAuthority binding on it or its Property. No Offshore Entity is knowingly in material violation with respect toany material judgment, writ, rule, regulation, order or decree of anyGovernmental Authority binding on it or its Property, which violationindividually or in the aggregate with all other such violations have, or couldreasonably be expected to have, a Material Adverse Effect.

 

5.6           Taxes.  Each Credit Party and each Offshore Entityhas filed all federal, provincial, state, local or foreign income, franchiseand other material tax returns required to have been filed and paid all taxesshown thereon to be due, except those for which extensions have been obtainedand except for those which are being contested in good faith and by appropriateproceedings if adequate reserves with respect thereto are maintained inaccordance with GAAP.  No federal incometax returns of any Credit Party or Offshore Entity have been audited by theInternal Revenue Service, the Canada Revenue Agency, the Netherlands nationaltax authority (Belastingdienst) or the German national tax authority(Bundesfinanzhof), the determination under which could reasonably be expectedto have a Material Adverse Effect.  NoCredit Party or Offshore Entity, as of the Closing Date, requested or beengranted any extension of time to file any federal tax return.  No Credit Party or Offshore Entity has, as ofthe Closing Date, requested or been granted any extension of time to file anystate, provincial, local or foreign tax return, other than extensions withrespect to tax liabilities where such Credit Party’s or Offshore Entity’sfailure to pay such tax liabilities would not have a Material AdverseEffect.  Except for any tax sharingagreement entered into and delivered to the Agent pursuant to the 

 

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termshereof, no Credit Party or Offshore Entity is a party to, or has any materialobligation under, any tax sharing arrangement with any Person.  Each Guarantor is, and has been at all timessince its creation or organization, classified as a disregarded entity forUnited States federal tax purposes.

 

5.7           No MaterialMisstatements; Full Disclosure.  No report, financial statement, exhibit,schedule or other written information prepared and furnished by or on behalf ofany Credit Party to the Agent, the Canadian Collateral Agent or any Lender inconnection with this Agreement or any other Loan Documents contains anymaterial misstatement of fact or omits to state any material fact necessary tomake the statements therein, in the light of the circumstances under which theywere made, not misleading.  As of theClosing Date, each Credit Party has disclosed to the Agent all agreements,instruments and corporate or other restrictions to which it is subject, and allother matters known to it, that, individually or in the aggregate, couldreasonably be expected to result in a Material Adverse Effect.  There is no contingent liability or fact thatcould reasonably be expected to have a Material Adverse Effect which has notbeen specifically set forth in the Parent’s public filings with the Securitiesand Exchange Commission filed on or prior to the Closing Date, or in a schedulehereto.

 

5.8           Subsidiariesand Offshore Entities.  Asof the Closing Date, no Credit Party has any Subsidiaries or any othermajority, or material minority ownership interests in any other Person otherthan as listed on Schedule 5.8 attached hereto.  Except as expressly indicated on Schedule 5.8attached hereto, as of the Closing Date, each of the Subsidiaries and OffshoreEntities listed on Schedule 5.8 is wholly-owned by the Credit Partyor other Person indicated on such schedule. As of the Closing Date, respectively, of Schedule 5.8 setforth (a) the jurisdiction of incorporation or organization of eachSubsidiary of any Credit Party and each Offshore Entity, and (b) thepercentage of each Credit Party’s, any of its Subsidiaries’ or such otherPerson’s (as indicated thereon) ownership of the Stock of each Subsidiary ofany Credit Party and each Offshore Entity.

 

5.9           Representationsby Others.  Allrepresentations and warranties made by or on behalf of any Credit Party or anyof its Subsidiaries in any Loan Document shall constitute representations andwarranties of each Credit Party hereunder.

 

5.10         Permits,Licenses, Etc.  (a) NeenahPaper Company of Canada owns, possesses or has the benefit of all licenses andpermits from Governmental Authorities required in order to conduct its businessor operations in Canada, the failure of which to have would have a materialadverse effect on its ability to conduct such business or operations in Canada(each, a “**Canadian License**” andcollectively, the “**Canadian Licenses**”),and (b) each Credit Party owns, possesses or has the benefit of all othermaterial permits, licenses (including Intellectual Property licenses) andIntellectual Property rights which are required (i) to conduct itsrespective business or (ii) for the operation and use of each RealProperty Asset owned in fee and each Material Leasehold Property; provided,that if Neenah Paper Company of Canada is not operating or has disposedof (in accordance with the terms of this Agreement) the Property with respectto which a Canadian License was obtained, it shall not be required to own,possess or have the benefit of such Canadian License, nor shall it be requiredto own, possess or have the benefit of any other permits, licenses andIntellectual Property rights which would otherwise be required to own oroperate such facility or other Property; provided, furtherthatthe Credit Parties shall be required 

 

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tocomply in all material respects with all Legal Requirements (including, withoutlimitation, Environmental Laws) related to the continued ownership (but not theoperation) of any Property located in Canada so long as such Property is ownedby a Credit Party.  Except as set forthin Schedule 5.10, there are no material permits and licenses oragreements held by or issued to any Credit Party pertaining to or in connectionwith any part of the business or operations in Canada of such Credit Party; providedthat such schedule may be updated by the Credit Parties from time totime to reflect the changes not otherwise prohibited by the Loan Documents, solong as any permit, license or agreement added thereto is subject to the Lienof the Agent (or the Canadian Collateral Agent, as applicable), if such Liencan be obtained using commercially reasonable efforts, pursuant to the LoanDocuments.

 

5.11         ERISA.  No Reportable Event has occurred with respectto any Plan which could reasonably be expected to result in any material liability.  Each Plan complies in all material respectswith all applicable provisions of ERISA, and each Credit Party or each ERISAAffiliate have filed all reports required by ERISA and the Code to be filedwith respect to each Plan.  The CreditParties do not have any knowledge of any event which could reasonably beexpected to result in a liability of any Credit Party or any ERISA Affiliate tothe PBGC other than for applicable premiums. No failure to meet the minimum funding standard (as described in Section 302of ERISA and Section 412 of the Code), whether or not waived, exists withrespect to any Plan.  No event hasoccurred and no condition exists that could reasonably be expected toconstitute grounds for a Plan to be terminated under circumstances which wouldcause the Lien provided under Section 4068 of ERISA to attach to anyProperty of any Credit Party or any ERISA Affiliate.  No event has occurred and no condition existsthat could reasonably be expected to cause the Lien provided under Section 303of ERISA or Section 430 of the Code to attach to any Property of anyCredit Party or any ERISA Affiliate.

 

5.12         Title toProperties; Possession Under Leases.

 

(a)           The CreditParties have good and insurable (or, with respect to Real Property Assets ownedin fee and located in Canada, marketable) title to or, in the case of the NovaScotia Woodlands Trust Lands (if any), beneficial title to, or a validleasehold interest in, all of their respective material Property shown on thebalance sheet referred to in Section 5.2(b) for the CreditParties and their Subsidiaries or, if applicable, the most recent Consolidatedbalance sheet for the Credit Parties and their Subsidiaries provided under theterms of Section 6.3(a), 6.3(b) or 6.3(c) andall material Property acquired since the date of such respective balancesheets, except for such Property as is no longer used or useful in the conductof their respective businesses or as have been disposed of in the ordinarycourse of business or otherwise in accordance with this Agreement, and exceptfor minor defects in title that do not interfere with the ability of any CreditParty or any of their Subsidiaries to conduct their respective businesses asnow conducted.  All such assets andProperty are free and clear of all Liens other than those permitted by Section 7.2hereof.

 

(b)           The CreditParties (and to the knowledge of the Credit Parties, each of the Credit Parties’predecessors in interest under said leases) have complied in all materialrespects with all obligations under all Material Leases to which any of them isa party and under which any of them is in occupancy, except wherenon-compliance does not affect such Credit Party’s use or occupancy thereof, asapplicable, and all Material Leases are in full force and effect, and 

 

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eachof the Credit Parties, as applicable, enjoy peaceful and undisturbed possessionunder all such Material Leases.  Schedule 5.12(b)attached hereto sets forth each lease in existence as of the date of thisAgreement and the Closing Date of real Property of any Credit Party, and uponthe request of the Agent, the Credit Parties will provide the Agent withcomplete and correct copies of all of such leases of real Property then ineffect.  As of the date of this Agreementand the Closing Date, there are no Material Leasehold Properties other thanthose in clause (a) of the definition thereof.

 

5.13         Assumed Names.  As of the date of this Agreement and theClosing Date, no Credit Party is currently conducting its business under anyassumed name or names, except as set forth on Schedule 5.13attached hereto.

 

5.14         InvestmentCompany Act.  No CreditParty, nor any of its Subsidiaries, is an investment company within the meaningof the Investment Company Act of 1940, as amended, or, directly or indirectly,controlled by or acting on behalf of any Person which is an investment company,within the meaning of said Act.

 

5.15         Public UtilityHolding Company Act.  No CreditParty, nor any of its Subsidiaries, is a “public utility company,” or an “affiliate”or a “subsidiary company” of a “public utility company,” or a “holding company,”as such terms are defined in the Public Utility Holding Company Act of 2005, asamended (“**PUHCA**”).  No Credit Party, nor any of its Subsidiaries,is an “affiliate” or a “subsidiary company” of an unregistered, non-exempt “holdingcompany” as such terms are defined in PUHCA.

 

5.16         Agreements.  Schedule 5.16 attached hereto isa complete and correct list, as of the date of this Agreement and the ClosingDate, of (a) other than the Loan Documents, all credit agreements orindentures for borrowed money and capitalized leases to which any Credit Partyis a party and all Property of the Credit Parties subject to any Lien securingsuch Indebtedness or capitalized lease obligation, (b) each letter ofcredit and guaranty to which any Credit Party is a party, (c) all othermaterial instruments in effect as of the date of this Agreement providing for,evidencing, securing or otherwise relating to any Indebtedness for borrowedmoney of any Credit Party (other than the Indebtedness hereunder), and (d) allobligations of any Credit Party to issuers of appeal bonds issued for accountof any Credit Party, in each case other than the Loan Documents.  The Borrowers shall, upon, request by theAgent, deliver to the Agent and the Lenders a complete and correct copy of allsuch credit agreements, indentures, capitalized leases, letters of credit,guarantees and other instruments described in Schedule 5.16 orarising after the date of this Agreement, including any modifications orsupplements thereto, as in effect on the date of this Agreement.

 

5.17         EnvironmentalMatters.

 

(a)           No materialaspect of the business of any Credit Party or any of their Subsidiariesrequires any Environmental Permit which has not been obtained and which is notnow in full force and effect.

 

(b)           Except asdescribed in Schedule 5.17(b), each Credit Party and each of theirSubsidiaries is in material compliance with all limitations, restrictions,conditions, 

 

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standards,prohibitions, requirements, obligations, schedules and timetables contained inany applicable Requirement of Environmental Law or Environmental Permit reasonablynecessary to the conduct of any material aspect of the business of any CreditParty or any of their Subsidiaries.

 

(c)           Each CreditParty and each of their Subsidiaries (i) has obtained and maintained ineffect all Environmental Permits, (ii) along with their respectiveProperties (whether leased or owned) has been and is in material compliancewith all applicable Requirements of Environmental Law and Environmental Permitsexcept as described in Schedule 5.17(c)(ii), (iii) along withtheir respective Properties (whether leased or owned) is not subject to anymaterial (A) Environmental Claims or (B) Environmental Liabilities,in either case direct or contingent arising from or based upon any act,omission, event, condition or circumstance occurring or existing on or prior tothe date of this Agreement, except as set forth in any of the environmentalassessments or studies described on Schedule 5.17(c)(iii), or asdisclosed on Schedule 5.17(c)(iii), and (iv) except asdescribed in Schedule 5.17(c)(iv), has not received individually orcollectively any written notice from any Governmental Authority of any materialviolation or alleged material violation of any Requirements of EnvironmentalLaw or Environmental Permit or any written notice of any material EnvironmentalClaim in connection with their respective Properties.

 

(d)           Except asdescribed in Schedule 5.17(d), no Credit Party nor any of theirSubsidiaries has actual knowledge of any material violation of any applicableRequirements of Environmental Law and Environmental Permits by, or of anymaterial Environmental Claims or Environmental Liabilities arising against, anyof the prior owners or operators and predecessors in interest with respect toany of the Credit Parties’ or any of their Subsidiaries’ respective Property.

 

(e)           Except asdescribed in Schedule 5.17(e), no Credit Party nor any of theirSubsidiaries has any actual knowledge of the presence or release of anyHazardous Substance at any of their respective Properties in quantities orunder circumstances that under applicable Requirements of Environmental Lawcould require remedial action having a Material Adverse Effect.

 

(f)            Except asdescribed in Schedule 5.17(f), no Credit Party nor any of theirSubsidiaries has any actual knowledge of any facts or circumstances, includingproposed or anticipated changes in applicable Requirements of Environmental Lawthat would materially increase the cost of maintaining compliance or otherwiseresult in a Material Adverse Effect.

 

(g)           The mattersdisclosed in Schedule 5.17 (other than those described in Schedule 5.17(f))could not reasonably be expected to result in a Material Adverse Effect.

 

5.18         No Change inCredit Criteria or Collection Policies.  There has been no material adverse change incredit criteria or collection policies concerning Receivables of any CreditParty since July 31, 2004, which has had or which is likely to have aMaterial Adverse Effect.

 

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5.19         Solvency.

 

(a)           The value ofthe assets of each Credit Party (including contribution rights from otherCredit Parties), based on a fair valuation thereof, is not less than the amountthat will be required to be paid on or in respect of the probable liability onthe existing debts and other liabilities (including contingent liabilities) ofsuch Credit Party, as they are expected to become absolute and mature.  The value of the assets of each of theSubsidiaries of the Credit Parties (including contribution rights from otherCredit Parties), based on a fair valuation thereof, is not less than the amountthat will be required to be paid on or in respect of the probable liability onthe existing debts and other liabilities (including contingent liabilities) ofeach such Subsidiary, as they are expected to become absolute and mature.

 

(b)           The assets ofeach Credit Party do not constitute unreasonably small capital for such CreditParty to carry out its business as now conducted and as proposed to beconducted including the capital needs of such Credit Party, taking into account(i) the nature of the business conducted by such Credit Party, (ii) theparticular capital requirements of the business conducted by such Credit Party,(iii) the anticipated nature of the business to be conducted by suchCredit Party in the future, and (iv) the projected capital requirementsand capital availability of such current and anticipated business.  The assets of each of the Subsidiaries ofeach Credit Party do not constitute unreasonably small capital for suchSubsidiary to carry out its business as now conducted and as proposed to beconducted, including the capital needs of each such Subsidiary, taking intoaccount (A) the nature of the business conducted by such Subsidiary, (B) theparticular capital requirements of the business conducted by such Subsidiary, (C) theanticipated nature of the business to be conducted by such Subsidiary in thefuture, and (D) the projected capital requirements and capitalavailability of such current and anticipated business.

 

(c)           No Credit Party,nor any of their Subsidiaries, intends to incur debts beyond its ability to paysuch debts as they mature (taking into account the timing and amounts of cashto be received by each such Credit Party and Subsidiary and the timing andamounts to be payable on or in respect of debt of each such Credit Party andSubsidiary, as applicable).  The cashflow of each such Credit Party and Subsidiary, after taking into account allanticipated uses of the cash of each such Credit Party and Subsidiary, shouldat all times be sufficient to pay all such amounts on or in respect of debt ofeach such Credit Party and Subsidiary when such amounts are anticipated to berequired to be paid.

 

(d)           The CreditParties do not believe that final judgments against any of them or any of theirSubsidiaries in actions for money damages presently pending, if any, will berendered at a time when, or in an amount such that, the applicable Credit Partyor Subsidiary will be unable to satisfy any such judgments promptly inaccordance with their terms (taking into account the maximum reasonable amountof such judgments in any such actions and the earliest reasonable time at whichsuch judgments might be rendered).  Thecash flow of each such Credit Party and Subsidiary, as applicable, after takinginto account all other anticipated uses of the cash of each such Credit Partyand Subsidiary, as applicable (including the payments on or in respect of debtreferred to in subparagraph (c) of this Section 5.19),should at all times be sufficient to pay all such judgments promptly inaccordance with their terms (taking into account the maximum reasonable amountof such judgments in any such actions and the earliest reasonable time at whichsuch judgments might be rendered).

 

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5.20         Status ofReceivables and Other Collateral.  Each Credit Party represents and warrantsthat (a) each Credit Party is and shall be the sole owner, free and clearof all Liens except in favor of the Agent (or the Canadian Collateral Agent, asapplicable) or otherwise permitted under Section 7.2 hereunder, ofand fully authorized to sell, transfer, pledge and/or grant a security interestin all of the Collateral (other than Excluded Collateral, as defined in theapplicable Security Documents) owned by such Credit Party, and (b) eachReceivable reported by the Credit Parties as an Eligible Receivable meets therequirements of the definition of Eligible Receivable, each item of Inventoryreported by the Credit Parties as Eligible Inventory meets the requirements ofthe definition of Eligible Inventory, each item of Eligible Equipment reportedby the Credit Parties as Eligible Equipment meets the requirements of thedefinition of Eligible Equipment, each Real Property Asset reported by theCredit Parties as Eligible Real Estate meets the requirements of the definitionof Eligible Real Estate.

 

5.21         Transactionswith Related Parties.  Any and alltransactions, contracts, licenses, or other agreements existing on the date ofthis Agreement and the Closing Date which have been entered into by and amongany Credit Party and any Affiliate, officer, or director of any Credit Party(other than Permitted Affiliate Transactions), have been entered into and madeupon terms and conditions not less favorable to the applicable Credit Partiesthan those terms which could have been obtained from wholly independent andunrelated sources.

 

5.22         IntellectualProperty.  Schedule 5.22hereto sets forth a true, accurate and complete listing, as of the date of thisAgreement, of all Patents, Trademarks and Copyrights that are the subject ofregistrations or applications in any state, federal, or foreign IntellectualProperty registry or any domain name registry and all Intellectual Propertylicenses thereof, of the Credit Parties as of the date of this Agreement andthe Closing Date, showing as of the date of this Agreement and the Closing Datethe owner, the jurisdiction of registry, the registration or applicationnumber, and the date of registry thereof. The Credit Parties are the sole and exclusive owners of (and the currentrecord owners of) all the registrations and applications listed on Schedule 5.22.  Except as set forth on Schedule 5.22,the conduct of the respective businesses (including the products and services)of the Credit Parties as currently conducted does not, in any material respect,infringe, misappropriate, or otherwise violate any person’s IntellectualProperty rights, and there has been no such claim asserted or threatened in thepast three (3) years against any of the Credit Parties.  To the knowledge of the Credit Parties, noPerson is infringing, misappropriating, or otherwise violating any IntellectualProperty owned, used, or held for use by the Credit Parties in the conduct oftheir respective businesses, and no such claims have been asserted orthreatened against any Person by the Credit Parties in the past three (3) years.  Except as created or permitted under the LoanDocuments, no Lien exists with respect to the interest of any Credit Party inany such Intellectual Property or licenses to Intellectual Property, and noCredit Party has transferred or subordinated any interest it may have in suchIntellectual Property or licenses to Intellectual Property.  The Credit Parties shall, from time to timeas necessary to keep such schedule updated in all material respects (but nomore often than quarterly, except in the event that the Credit Parties acquirematerial Intellectual Property through the acquisition of, or merger or consolidationwith, any Person, or acquisition of material assets of any Person), deliver tothe Agent an updated Schedule 5.22 to this Agreement, together witha certificate of an authorized officer of the Borrowers’ Agent certifying thatthe information set forth on such schedule is true, correct and complete as ofsuch date.  The execution and delivery ofthis Agreement and the other Loan Documents, and the 

 

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consummationof the transactions contemplated hereby and thereby, will not result in theloss or impairment of or payment of any additional amounts with respect to, norrequire the consent of any other person in respect of, the Credit Parties’rights to own, use, or hold for use any of the Intellectual Property as owned,used, or held for use in the conduct of the business as currently conducted.

 

5.23         **[RESERVED]**

 

5.24         CanadianPension and Benefit Plan Matters.  No Credit Party (a) has a CanadianPension Plan or Canadian Benefit Plan or (b) any material obligations orliabilities under a Canadian Pension Plan or Canadian Benefit Plan.

 

5.25         RelatedBusinesses.  As of thedate of this Agreement and the Closing Date, the Credit Parties are engaged inthe businesses of producing and selling paper products.  These operations require financing on a basissuch that the credit supplied can be made available from time to time toBorrowers, as required for the continued successful operation of Borrowers andthe other Credit Parties taken as a whole. Borrowers have requested the Lenders to make credit available hereunderfor the purposes set forth in Section 6.9 and generally for thepurposes of financing the operations of Borrowers and the other CreditParties.  Each Borrower and each otherCredit Party expects to derive benefit (and the board of directors of eachBorrower and other Credit Party has determined that such Borrower or otherCredit Party may reasonably be expected to derive benefit), directly orindirectly, from a portion of the credit extended by Lenders hereunder, both inits separate capacity and as a member of the group of companies, since thesuccessful operation and condition of each Borrower and each other Credit Partyis dependent on the continued successful performance of the functions of thegroup as a whole.  Each Credit Partyacknowledges that, but for the agreement of each of the other Credit Parties toexecute and deliver this Agreement, the Agent and the Lenders would not havemade available the credit facilities established hereby on the terms set forthherein.

 

5.26         MaterialLeasehold Properties.  No CreditParty is in default in any material respect under any lease with respect to anyMaterial Leasehold Property, and to the knowledge of any Credit Party, no otherparty thereto is in default under any such lease.

 

5.27         SecurityInterests.  Each of theSecurity Documents creates in favor of the Agent (or the Canadian CollateralAgent, as applicable), for the benefit of the Agent (or the Canadian CollateralAgent, as applicable) and the Lenders, a legal, valid and enforceable securityinterest in the Collateral secured thereby. Upon the filing of the Uniform Commercial Code financing statements andthe other personal property security financing statements described in Schedule 5.27and, to the extent governed by United States or Canadian federal law, asapplicable, upon the recording of a patent security agreement in the form of Exhibit Mhereto, a trademark security agreement in the form of Exhibit Nhereto and a copyright security agreement in the form of Exhibit Ohereto (the “**Intellectual PropertySecurity Agreements**”), in the United States Patent and TrademarkOffice, the United States Copyright Office and the Canadian IntellectualProperty Office, as applicable, such security interests in and Liens on theCollateral granted thereby that may be perfected by such aforementioned filingsor recordings shall be perfected, first priority security interests (subject,as to priority, only to Liens permitted under Section 7.2 that, asa matter of law (including, without limitation, the priority rules of the

 

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UniformCommercial Code and the applicable personal property security legislation),would be prior to the Liens of the Collateral Agent (or the Canadian CollateralAgent, as applicable), and no further recordings or filings are or will berequired in connection with the creation, perfection or enforcement of suchsecurity interests and Liens, other than (a) the filing of continuationstatements or financing change statements in accordance with applicable law, (b) therecording of the Intellectual Property Security Agreements in the United StatesPatent and Trademark Office, the United States Copyright Office and theCanadian Intellectual Property Office, as applicable, with respect toafter-acquired U.S. Patent, Trademark and Copyright applications and registrationsand (c) the recordation of appropriate evidence of the security interestin the appropriate foreign registry with respect to all foreign IntellectualProperty.

 

5.28         **[RESERVED]**

 

5.29         DepositAccounts.  Eachdeposit account of the Credit Parties (including each Collection Account) islisted on Schedule 5.29 attached hereto, and each CollectionAccount is specified as such on such Schedule; providedthat suchschedule may be updated by the Credit Parties from time to time when the CreditParties add or remove deposit accounts in accordance with this Agreement.  Each deposit account of the Credit Parties(including each Collection Account), including each deposit account listed on Schedule 5.29or established pursuant to Section 7.18, is a Controlled Account(except with respect to the accounts referred to in Section 7.18(c) tothe extent provided therein).

 

6.             AffirmativeCovenants.

 

Each Credit Party covenantsand agrees with the Agent, the Canadian Collateral Agent and the Lenders thatprior to the termination of this Agreement, each Credit Party will perform andobserve each and all of the following covenants:

 

6.1           Businesses andProperties.  At alltimes:  (a) do or cause to be doneall things reasonably necessary to obtain, preserve, renew and keep in fullforce and effect the rights, licenses, permits, franchises, and IntellectualProperty material to the conduct of its businesses; (b) maintain andoperate such businesses in the same general manner in which they are presentlyconducted and operated, with such changes as such Credit Party deems prudent oras otherwise permitted by this Agreement; (c) comply in all materialrespects with all material Legal Requirements applicable to such businesses andthe operation thereof, whether now in effect or hereafter enacted (includingwithout limitation, all material Legal Requirements relating to public andemployee health and safety and all Environmental Laws); and (d) maintain,preserve and protect all Property material to the conduct of such businesses andkeep such Property in good repair, working order and condition, and from timeto time make, or cause to be made, all needful and proper repairs, renewals,additions, improvements and replacements thereto reasonably necessary in orderthat the business carried on in connection therewith may be properly conductedat all times.  Notwithstanding theforegoing provisions of this Section 6.1, the Credit Parties shallnot be required to comply with the requirements of clauses (a), (b) or(d) of this Section 6.1 with respect to any Properties(whether or not Mortgaged Properties) (i) at which operations shall havebeen permanently discontinued and (ii) to the extent the Board ofDirectors of the Parent shall have determined that the preservation andmaintenance of such Properties and the rights, licenses and permits related tosuch Properties, as applicable, are no 

 

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longerdesirable in the conduct of the business of the Credit Parties and theirSubsidiaries, taken as a whole, and that the loss thereof is not adverse in anymaterial respect to the Lenders, or that the preservation or maintenancethereof is not necessary in connection with any transaction permitted under theLoan Documents. With respect to any Properties at which operations arepermanently discontinued, the Credit Parties will take customary and prudentsteps to secure such Properties from unauthorized Persons and to make or causeto be made repairs and replacements necessary to prevent the development ofhazardous safety conditions at such Properties.

 

6.2           Taxes.  Pay and discharge promptly when due allmaterial taxes, assessments and governmental charges or levies imposed upon itor upon its income or profits or in respect of its Property before the sameshall become delinquent or in default, as well as all lawful claims for labor,materials and supplies or otherwise, which, if unpaid, might give rise to Liensupon such Property or any part thereof (except as otherwise permitted by Section 7.2hereof), unless being diligently contested in good faith by appropriateproceedings and as to which adequate reserves in an amount not less than theaggregate amount secured by such Liens have been established in accordance withGAAP; provided, however, that such contested amountsgiving rise to such Liens shall be immediately paid upon commencement of anyprocedure or proceeding to foreclose any of such Liens unless the same shall bevalidly stayed by a court of competent jurisdiction or a surety bond, which issatisfactory in all respects to the Agent (or the Canadian Collateral Agent, asapplicable), is delivered to the Agent (or the Canadian Collateral Agent, asapplicable) for the ratable benefit of the Lender Parties in an amount no lessthan such contested amounts.  TheGuarantors shall make or obtain records or documents that meet the requirementof paragraphs 274(4)(a) to (c) of the ITA with respect to allsuch transactions and arrangements.

 

6.3           FinancialStatements and Information.  Furnish to the Agent each of the following,which may be furnished via electronic means acceptable to the Agent and, in thecase of the materials described in clause (h)(ii) of this Section,by first class U.S. mail:

 

(a)           as soon asavailable and in any event within ninety (90) days after the end of each fiscalyear of the Credit Parties, Annual Audited Financial Statements of the CreditParties and their Subsidiaries;

 

(b)           as soon asavailable and in any event within forty-five (45) days after the end of eachfiscal quarter (that is not also the end of a fiscal year) of the CreditParties, Quarterly Unaudited Financial Statements of the Credit Parties andtheir Subsidiaries;

 

(c)           as soon asavailable and in any event within thirty (30) days after the end of the month,Monthly Unaudited Financial Statements of the Credit Parties and theirSubsidiaries;

 

(d)           concurrently with the financial statements providedfor in Subsections 6.3(a), 6.3(b) and 6.3(c) hereof,(i) a Compliance Certificate, signed by a Responsible Officer of theBorrowers’ Agent setting forth, among other things, in the case of a ComplianceCertificate delivered in connection with Subsections 6.3(a) and6.3(b), reasonably detailed calculations of the Fixed Charge CoverageRatio calculated as of the end of such fiscal year or fiscal quarter, asapplicable; provided, that if the Fixed Charge Coverage Ratio isnot 

 

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beingtested as of such fiscal quarter or fiscal year end date pursuant to Section 7.12,such calculation of the Fixed Charge Coverage Ratio shall still be delivered,but may be delivered in a separate certificate, which certificate shall bedelivered as soon as available and in any event within fifteen (15) days afterthe delivery of the Compliance Certificate delivered pursuant to this Subsection6.3(d) for the end of such fiscal year or fiscal quarter end, and provided,further, that, (A) in no event shall the delivery of a FixedChange Coverage Ratio calculation be deemed to imply that Section 7.12is then being tested, such testing to be determined strictly in accordance withthe express terms of Section 7.12, and (B) failure to providea calculation of the Fixed Charge Coverage Ratio at times and for periods whenthe Fixed Charge Coverage Ratio is not being tested pursuant to Section 7.12shall not, in and of itself, constitute a Default or an Event of Default, and (ii) awritten certificate in Proper Form, identifying each Subsidiary which isotherwise required by the provisions of Section 6.10 hereof tobecome a Guarantor at the request of the Agent, but which has not yet done soas of the date of such certificate, and providing an explanation of the reasonswhy each such Subsidiary is not a Guarantor, signed by a Responsible Officer ofthe Borrowers’ Agent;

 

(e)           as soon asavailable and in any event within five (5) Business Days after the date ofissuance thereof (if any such management letter is ever issued), any managementletter prepared by the independent public accountants who reported on the financialstatements provided for in Subsection 6.3(a) above, withrespect to the internal audit and financial controls of the Credit Parties andtheir Subsidiaries;

 

(f)            from any datewhen Availability is less than $25,000,000 (and until such time thereafter whenAvailability has exceeded $35,000,000 for sixty (60) consecutive days) or uponthe occurrence and during the continuation of a Default or Event of Default,within two (2) Business Days after the end of each week, a Receivablesreport in the form of Exhibit H setting forth the sales,collections and total customer debits and credits for the Credit Parties, on aConsolidated basis, for such week, certified by a Responsible Officer of theBorrowers’ Agent; provided, however, from any date when Availabilityis less than $25,000,000 (and until such time when Availability has exceeded$35,000,000 for sixty (60) consecutive days) or upon the occurrence and duringthe continuation of a Default or Event of Default, Agent may, in itsdiscretion, require such reports on a basis more frequently than weekly;

 

(g)           from any datewhen Availability is less than $25,000,000 (and until such time thereafter whenAvailability has exceeded $35,000,000 for sixty (60) consecutive days) or uponthe occurrence and during the continuation of a Default or Event of Default,within two (2) Business Days after the end of each week, an Inventorydesignation report in the form of Exhibit I, certified by aResponsible Officer of the Borrowers’ Agent; provided, however,from any date when Availability is less than $25,000,000 (and until such timewhen Availability has exceeded $35,000,000 for sixty (60) consecutive days) orupon the occurrence and during the continuation of a Default or Event ofDefault, Agent may, in its discretion, require such reports on a basis morefrequently than weekly;

 

(h)           as soon asavailable, and in any event postmarked (in the case of (ii) below) withinfifteen (15) days after the end of each calendar month, (i) Receivableagings and reconciliations, accounts payable agings and reconciliations,lockbox statements and all other schedules, computations and other information,all in reasonable detail, as may be reasonably 

 

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requiredor requested by the Agent with regard to the Credit Parties and theirSubsidiaries, all certified by a Responsible Officer of the Borrowers’ Agent,and (ii) copies of all monthly accounts statements for each depositaccount covered by a Tri-Party Agreement;

 

(i)            as soon asavailable and in any event within fifteen (15) Business Days after the end ofeach calendar month, (A) a certificate setting forth the calculation ofthe Indenture Cap as of the end of such calendar month (in form and substancereasonably acceptable to the Agent), and (B) a Borrowing Base ComplianceCertificate;

 

(j)            as soon asavailable and in any event within thirty (30) days prior to the commencement ofeach fiscal year of the Credit Parties, management-prepared Consolidated andconsolidating financial projections of the Credit Parties and theirSubsidiaries for the immediately following three (3) fiscal years (settingforth such projections on both an annual basis and on a monthly basis for theupcoming fiscal year and on an annual basis only for the two (2) fiscalyears thereafter), such projections to be prepared and submitted in such formatand detail as reasonably requested by the Agent; and

 

(k)           such otherinformation relating to the financial condition, operations and businessaffairs of the Credit Parties or any of their Subsidiaries as from time to timemay be reasonably requested by the Agent.

 

Notwithstanding thedelineation of specified time periods above in this Section 6.3 forthe applicable information, the Agent reserves the right to require the applicableinformation be furnished to the Agent, the Canadian Collateral Agent and theLenders on a more frequent basis, as determined by the Agent in itsdiscretion.  All collateral reports ofeach Credit Party, including each Guarantor, shall be prepared in a mannercompatible with the Borrowers’ reporting procedures.

 

6.4           Inspections;Field Examinations; Inventory Appraisals and Physical Counts.

 

(a)           Upon reasonablenotice (which may be telephonic notice), at all reasonable times during (solong as no Default or Event of Default has occurred and is continuing) regularbusiness hours and as often as the Agent (or the Canadian Collateral Agent, asapplicable) may reasonably request, permit any authorized representativedesignated by the Agent (or the Canadian Collateral Agent, as applicable),including, without limitation any consultant engaged by the Agent (or theCanadian Collateral Agent, as applicable), together with any authorizedrepresentatives of any Lender desiring to accompany the Agent (or the CanadianCollateral Agent, as applicable), to visit and inspect the Properties andrecords of the Credit Parties and their Subsidiaries and to make copies of, andextracts from, such records and permit any authorized representative designatedby the Agent (or the Canadian Collateral Agent, as applicable) (together withany accompanying representatives of any Lender) to discuss the affairs,finances and condition of the Credit Parties and their Subsidiaries with theappropriate Financial Officer and such other officers as the Credit Partiesshall deem appropriate and the Credit Parties’ independent public accountants,as applicable.

 

(b)           The Agent (orthe Canadian Collateral Agent, as applicable) and any consultant of the Agent(or the Canadian Collateral Agent, as applicable) shall each have the 

 

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rightto examine (and any authorized representatives of any Lender shall have theright to accompany the Agent (or the Canadian Collateral Agent, as applicable)during any such examination), as often as the Agent (or the Canadian CollateralAgent, as applicable) may request, the existence and condition of theReceivables, books and records of the Credit Parties and to review theircompliance with the terms and conditions of this Agreement and the other LoanDocuments, subject to governmental confidentiality requirements.  The Agent (or the Canadian Collateral Agent,as applicable) shall also have the right to verify with any and all customersof the Credit Parties the existence and condition of the Receivables, as oftenas the Agent (or the Canadian Collateral Agent, as applicable) may require,without prior notice to or consent of any Credit Party.  Without in any way limiting the foregoing,the Agent (or the Canadian Collateral Agent, as applicable) shall have theright to (i) conduct field examinations of the Credit Parties’ operationsat the Borrowers’ expense as often as the Agent (or the Canadian CollateralAgent, as applicable) may request and (ii) to order and obtain anappraisal of the Inventory, Equipment and Real Property Assets of the CreditParties by an appraisal firm satisfactory to the Agent (or the CanadianCollateral Agent, as applicable) as often as the Agent (or the CanadianCollateral Agent, as applicable) may request (subject to the proviso at the endof this clause (b)).  Without in anyway limiting the foregoing, the Credit Parties agree to cooperate and to causetheir Subsidiaries to cooperate in all respects with the Agent (or the CanadianCollateral Agent, as applicable) and its representatives and consultants inconnection with any and all inspections, examinations and other actions takenby the Agent or any of its representatives or consultants pursuant to this Section 6.4.  The Credit Parties hereby agree to promptlypay, upon demand by the Agent (or the Canadian Collateral Agent, as applicable,or the applicable Lender, if appropriate), any and all reasonable fees andexpenses incurred by the Agent (or the Canadian Collateral Agent, asapplicable) or, during the continuance of any Default or Event of Default, anyLender, in connection with any inspection, examination or review permitted bythe terms of this Section 6.4 (including without limitation thefees of third party appraisers, accountants, attorneys and consultants); provided,however, that so long as no Default or Event of Default iscontinuing, the Borrowers shall only be obligated to pay for (x) two (2) fieldexaminations per each twelve (12)-month period following the Closing Date, (y) two(2) appraisals of Inventory during each twelve (12)-month period after theClosing Date, and (z) at Agent’s discretion, up to one (1) appraisalof Equipment and Real Property Assets during each twelve (12)-month periodafter the Closing Date (other than the initial field examinations andappraisals for any Receivables, Inventory, Equipment and/or Real PropertyAssets acquired through an acquisition or other Investment permitted under theterms of this Agreement, it being agreed that the Borrowers shall be obligatedto pay for each such initial field examination and/or appraisal, as applicable,conducted with respect to each such acquisition or Investment).  For avoidance of doubt, the Propertyinspection rights granted to the Agent and the Lenders in this Section 6.4,do not include the Property of the Offshore Entities.

 

(c)           At the Agent’s(or the Canadian Collateral Agent’s, as applicable) request, not morefrequently than once during any consecutive twelve month period if no Defaultor Event of Default then exists at the time of such request by the Agent (orthe Canadian Collateral Agent, as applicable), and as frequently as requestedby the Agent (or the Canadian Collateral Agent, as applicable) after theoccurrence of any Default or Event of Default which has not been cured orwaived in writing by the Agent and the Required Lenders, the Credit Partiesshall conduct, at their own expense, a physical count of their Inventory andpromptly supply the Agent (or the Canadian Collateral Agent, as applicable) witha copy of such counts accompanied by a 

 

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reportof the value (based on the lower of cost or market value) of suchInventory.  Additionally, the CreditParties shall promptly provide the Agent (or the Canadian Collateral Agent, asapplicable) with copies of any other physical counts of the Credit Parties’Inventory which are conducted by the Credit Parties after the Closing Date.

 

6.5           FurtherAssurances.  Uponrequest by the Agent (or the Canadian Collateral Agent, as applicable),promptly execute and deliver any and all other and further agreements andinstruments and take such further action as may be reasonably requested by theAgent (or the Canadian Collateral Agent, as applicable) to (a) cure anydefect in the execution and delivery of any Loan Document or more fully todescribe particular aspects of the Credit Parties’ or any of their Subsidiaries’agreements set forth in the Loan Documents or so intended to be, (b) tocarry out the provisions and purposes of this Agreement and the other LoanDocuments, and (c) grant, preserve, protect and perfect the first priorityLiens created or intended to be created by the Security Documents in theCollateral.  Upon written request of theAgent, promptly cause a first priority perfected security interest or pledge tobe granted to the Canadian Collateral Agent, for the ratable benefit of theLender Parties, in all of the Stock of Neenah Paper Company of Canada, togetherwith such related certificates, legal opinions and documents as the Agent mayreasonably require, each in Proper Form. Upon written request by the Agent, promptly furnish the Agent with athen current listing of all assumed names that any Credit Party is then utilizingin conducting their respective businesses. Promptly furnish the Agent with notice of any transfer of IntellectualProperty to another Credit Party and promptly execute and deliver any and allother and further agreements and instruments as may be reasonably requested bythe Agent in connection therewith.

 

6.6           Books andRecords.  Maintain financial records andbooks in accordance with accepted financial practice and GAAP.

 

6.7           Insurance.

 

(a)           Maintain theinsurance required by this Section 6.7 at all times by financiallysound and reputable insurers (or, to the extent consistent with prudentbusiness practice, a program of self-insurance approved by the Agent, suchapproval not to be unreasonably withheld).

 

(b)           Maintaininsurance, to such extent, on such of its Properties and against suchliabilities, casualties, risks and contingencies, including fire and otherrisks insured against by extended coverage, employee liability and businessinterruption, at least as is customary with companies similarly situated and inthe same or similar businesses, and subject to deductibles that are no greaterthan are customary with such companies, provided, however, thatsuch insurance shall insure the Property of the Credit Parties and each oftheir Subsidiaries against all risk of physical damage, including withoutlimitation, loss by fire, explosion, theft, fraud and such other casualties asmay be reasonably satisfactory to the Agent, but in no event at any time in anamount less than the replacement value of the Collateral; provided, further,that from and after the permanent cessation of operations at any oftheir facilities (whether or not they are Mortgaged Properties) in accordancewith Section 6.1, the Credit Parties will not be required tomaintain property insurance with respect to the fixed assets comprising suchfacility unless such facilities are located on Eligible Real Property used inthe computation of the Borrowing Base or 

 

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suchinsurance is required by law, as determined by the Agent (the Credit Partiesagreeing to provide not less than five (5) Business Days’ advance noticeto Administrative Agent prior to the effective date of any cancellation ornon-renewal of such insurance).

 

(c)           Maintain infull force and effect worker’s compensation coverage and public liabilityinsurance against claims for personal injury or death or property damageoccurring upon, in, about or in connection with its operations and with the useof any Properties owned, occupied or controlled by any Credit Party or any oftheir Subsidiaries, in such amounts as the Agent shall reasonably deemnecessary.

 

(d)           Maintain suchother insurance as may be required by applicable law and furnish to the Agent,upon written request, full information as to the insurance carried.

 

(e)           All insurancecovering Property subject to a Lien in favor of the Agent (or the CanadianCollateral Agent, as applicable) for the benefit of the Lenders grantedpursuant to the Security Documents shall provide that, in the case of eachseparate loss, the full amount of insurance proceeds shall be payable to theAgent (or the Canadian Collateral Agent, as applicable), and all liabilityinsurance maintained by the Credit Parties shall name the Agent and theCanadian Collateral Agent as additional insured.  All such property and liability insuranceshall further provide for at least thirty (30) days’ (ten (10) days’with respect to cancellation for non-payment of premium or at the request ofthe insured) prior written notice to the Agent (and/or the Canadian CollateralAgent, as applicable) of the cancellation or substantial modificationthereof.  If any Credit Party fails tomaintain such insurance, the Agent (or the Canadian Collateral Agent, asapplicable) may arrange for such insurance, but at the Borrowers’ expense andwithout any responsibility on the Agent’s (or the Canadian Collateral Agent’s)part for obtaining the insurance, the solvency of the insurance companies, theadequacy of the coverage, or the collection of claims.  Upon the occurrence and during thecontinuance of an Event of Default, the Agent (or the Canadian CollateralAgent, as applicable) shall have the sole right, in the name of the Lenders,any Credit Party and its Subsidiaries, to file claims under any insurancepolicies, to receive, receipt and give acquittance for any payments that may bepayable thereunder, and to execute any and all endorsements, receipts,releases, assignments, reassignments or other documents that may be necessaryto effect the collection, compromise or settlement of any claims under any suchinsurance policies.  The Credit Partiesshall deliver certificates evidencing renewal of the insurance requiredhereunder and evidence that the premiums have been paid before termination ofany insurance policies required hereunder. Upon request, Debtors shall deliver certificates evidencing theinsurance required hereunder and copies of the underlying policies as they areavailable.

 

6.8           ERISA.  At all times: (a) make contributions to each Plan in a timely manner and in anamount sufficient to comply with the minimum funding standards requirements ofERISA; (b) immediately upon acquiring knowledge of (i) any ReportableEvent in connection with any Plan or (ii) any “**prohibited transaction**”, as such termis defined in Section 4975 of the Code, in connection with any Plan, thatcould reasonably be expected to result in the imposition of material damages ora material excise tax on any Credit Party or any Subsidiary thereof, furnishthe Agent a statement executed by a Responsible Officer of such Credit Party orSubsidiary setting forth the details thereof and the action which such CreditParty or Subsidiary proposes to take with respect thereto and, when known, anyaction taken by the Internal Revenue Service or 

 

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Departmentof Labor with respect thereto; (c) notify the Agent promptly upon receiptby any Credit Party or any Subsidiary thereof of any notice of the institutionof any proceedings or other actions which could reasonably be expected toresult in the termination of any Plan by the PBGC and furnish the Agent withcopies of such notice; (d) pay when due, or within any applicable graceperiod allowed by the PBGC, all required premium payments to the PBGC; (e) furnishthe Agent with copies of the annual report for each Plan filed with theInternal Revenue Service not later than ten (10) days after the Agentrequests such report; (f) furnish the Agent with copies of any request forwaiver of the funding standards or extension of the amortization periodsrequired by Sections 302 and 304 of ERISA or Sections 412 and 431 ofthe Code promptly after the request is submitted to the Secretary of theTreasury, the Department of Labor or the Internal Revenue Service, as the casemay be; and (g) pay when due all installment contributions required under Section 303of ERISA or Section 430 of the Code or within 10 days of a failure tomake any such required contributions when due furnish the Agent with writtennotice of such failure.

 

6.9           Use of Proceeds.  Subject to the terms and conditions containedherein, use the proceeds of the Loans (a) to finance ongoing workingcapital needs of the Credit Parties not otherwise prohibited herein; (b) forthe issuance of Letters of Credit for the account of the Credit Parties inaccordance with and subject to the terms of this Agreement; and (c) forgeneral corporate purposes of the Credit Parties in the ordinary course ofbusiness and to finance acquisitions permitted under Section 7.4; provided,that no proceeds of any Loan shall be used (w) for the purpose ofpurchasing or carrying directly or indirectly any margin stock as defined inRegulation U (“**Reg U**”) ofthe Board of Governors of the Federal Reserve System, (x) for the purposeof reducing or retiring any Indebtedness which was originally incurred topurchase or carry any such margin stock, (y) for any other purpose whichwould cause such Loan to be a “**purpose credit**”within the meaning of Reg U and (z) for any purpose which wouldconstitute a violation of Reg U or of Regulations T or X of the Boardof Governors of the Federal Reserve System or any successor regulation of anythereof or of any other rule, statute or regulation governing margin stock fromtime to time.  Following this transaction,no more than twenty-five percent (25%) (or such lesser percentage as may beestablished from time to time under Reg U or any successor statute) of theassets, of Borrowers and their Subsidiaries, subject to any restriction on saleor pledge, will consist of, or be represented by margin stock.

 

6.10         Borrowers;Guarantors; Joinder Agreements.  Promptly inform the Agent of the creation oracquisition of any Subsidiary of any Credit Party after the Closing Date and,within thirty (30) days after the written request of the Agent (or the RequiredLenders in the case of clause (b) below) delivered in accordance withSection 10.2 below, cause:

 

(a)           each suchSubsidiary (i) that is a Domestic Subsidiary to become a Borrower byexecution and delivery to the Agent, for the ratable benefit of the LenderParties, of a Joinder Agreement, and (ii) that is not a DomesticSubsidiary (other than an Excluded Foreign Subsidiary) to become a Guarantor byexecution and delivery to the Agent, for the ratable benefit of the LenderParties, of a Guaranty and/or a Joinder Agreement, as applicable;

 

(b)           a firstpriority perfected security interest to be granted to the Agent (or theCanadian Collateral Agent, as applicable), for the ratable benefit of theLender Parties, in all of the Stock of such Subsidiary owned by the CreditParties or any of their other Subsidiaries if such newly acquired or createdSubsidiary is a Domestic Subsidiary or is treated, for U.S. federal 

 

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taxpurposes, as an entity that is disregarded as an entity separate from its ownerwithin the meaning of Treas. Reg. § 301.7701-1, or if such newly acquiredor created Subsidiary is a foreign Subsidiary that is not disregarded as anentity separate from its owner within the meaning of Treas. Reg.§ 301.7701-1 (an “**Excluded ForeignSubsidiary**”), then cause not more than sixty-five percent (65%)of all issued and outstanding Stock of such Excluded Subsidiary to be pledgedas Collateral pursuant to the foregoing Stock pledge requirement;

 

(c)           each suchSubsidiary (other than an Excluded Foreign Subsidiary) to grant to the Agent(or the Canadian Collateral Agent, as applicable), for the ratable benefit ofthe Lender Parties, a security interest (subject only to (i) Liens permittedunder Section 7.2(e) as to Receivables, Inventory andPermitted Investment Securities, and (ii) Liens permitted under Section 7.2as to all other Collateral existing as of the date of acquisition by any CreditParty or any other Subsidiary thereof of such newly acquired Subsidiary, ifapplicable) in all accounts, inventory, equipment, furniture, fixtures, chattelpaper, documents, instruments, general intangibles and other tangible andintangible personal Property and all real Property owned at any time by suchSubsidiary and all products and proceeds thereof (subject to similar exceptionsas set forth in the Security Documents); and

 

(d)           cause suchSubsidiary to deliver to the Agent (or the Canadian Collateral Agent, asapplicable) such other Joinder Agreements, guaranties, contribution and set-offagreements, security agreements, pledge agreements, Tri-Party Agreements andother Loan Documents and such related certificates, Uniform Commercial Code,PPSA (Nova Scotia) and other customary lien search reports, legal opinions andother documents (including Organizational Documents) as the Agent (or theCanadian Collateral Agent, as applicable) may reasonably require, each in formand substance reasonably satisfactory to the Agent (or the Canadian CollateralAgent, as applicable), and to submit to a collateral audit conducted by anindependent audit firm designated by Agent (or the Canadian Collateral Agent,as applicable) and satisfactory to the Agent (or the Canadian Collateral Agent,as applicable) in its reasonable discretion;

 

provided, however,that any such Subsidiary that is an Excluded Foreign Subsidiary shallnot be required to become a Guarantor or grant any Liens hereunder; provided,further, that until such Subsidiary becomes a Guarantor or a Borrowerpursuant to the terms of this Agreement it shall not become a CreditParty.  To the extent reasonablyfeasible, all of the foregoing requirements shall be affected by the executionand delivery of a Joinder Agreement.

 

6.11         Notice ofEvents.  Notify the Agent within two (2) BusinessDays after any Responsible Officer of any Credit Party or any of theirSubsidiaries acquires knowledge of the occurrence of, or if any Credit Party orany of their Subsidiaries causes or intends to cause, as the case may be, anyof the following:  (a) theinstitution of any lawsuit, administrative proceeding or investigationaffecting any Credit Party or any of their Subsidiaries, including withoutlimitation any examination or audit by the IRS or the Canada Revenue Agency,the adverse determination under which could reasonably be expected to bematerial; (b) any development or change in the business or affairs of anyCredit Party or any of their Subsidiaries which has had or which is likely tohave, in the reasonable judgment of any Responsible Officer of the applicableCredit Parties, a Material Adverse Effect; (c) any Event of Default orDefault, together with a reasonably detailed statement by a Responsible Officeron behalf of the Borrowers’ Agent of the 

 

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stepsbeing taken to cure the effect of such Event of Default or Default; (d) theoccurrence of a default or event of default by any Credit Party or any of theirSubsidiaries under any agreement or series of related agreements to which it isa party, which default or event of default could reasonably be expected to havea Material Adverse Effect; (e) any written notice of any materialviolation by, or investigation of any Credit Party or any of their Subsidiariesin connection with any actual or alleged material violation of any LegalRequirement imposed by the Environmental Protection Agency, the OccupationalSafety Hazard Administration or any other Governmental Authority which has oris likely to have, in the reasonable judgment of any Responsible Officer of theapplicable Credit Parties, a Material Adverse Effect; and (f) anysignificant change in the accuracy of any material representations andwarranties of the Credit Parties or any of their Subsidiaries in this Agreementor any other Loan Document (including without limitation, the representationsand warranties in Section 5.20(b)).

 

6.12         EnvironmentalMatters.  Without limiting thegenerality of Section 6.1(c) hereof, (a) comply in allmaterial respects with all material limitations, restrictions, conditions,standards, prohibitions, requirements, obligations, schedules and timetablescontained in any applicable Requirement of Environmental Law, or EnvironmentalPermit; (b) obtain and maintain in effect all Environmental Permitsnecessary to the conduct of its business, except where the failure to do socould not reasonably be expected to have a Material Adverse Effect; and (c) keepits Property free of any Environmental Claims or Environmental Liabilities thatcould reasonably be expected to have a Material Adverse Effect.  In the event that any Credit Party or any oftheir Subsidiaries receives any such written demand or claim from any Personwith respect to any such Environmental Liabilities, the Credit Parties agree topromptly take action and thereafter diligently pursue the same to completion ina manner necessary to cause the applicable Environmental Liabilities to beremediated as soon as reasonably possible in accordance with all applicableRequirements of Environmental Law.  **EACH OF THE CREDIT PARTIES HEREBY INDEMNIFIES ANDAGREES TO HOLD THE AGENT, THE CANADIAN COLLATERAL AGENT AND THE LENDERSHARMLESS FROM AND AGAINST ANY AND ALL LIABILITY, LOSS, DAMAGE, SUIT, ACTION ORPROCEEDING ARISING OUT OF THEIR RESPECTIVE BUSINESSES OR THE BUSINESSES OF ANYOF THE OTHER CREDIT PARTIES OR ANY SUBSIDIARIES OF ANY OF THEM, PERTAINING TOANY ENVIRONMENTAL LIABILITIES, INCLUDING WITHOUT LIMITATION, CLAIMS OF ANYGOVERNMENTAL AUTHORITY OR ANY OTHER PERSON ARISING UNDER ANY REQUIREMENT OFENVIRONMENTAL LAW OR UNDER TORT, CONTRACT OR COMMON LAW; PROVIDED, THATTHE FOREGOING INDEMNITY SHALL NOT APPLY TO THE EXTENT, BUT ONLY TO THE EXTENT,THE APPLICABLE LIABILITY, LOSS, DAMAGE, SUIT, ACTION OR PROCEEDING ISDETERMINED BY A FINAL JUDICIAL DECISION TO HAVE BEEN CAUSED BY THE WILLFULMISCONDUCT OR GROSS NEGLIGENCE OF THE PARTY SEEKING INDEMNIFICATION.**

 

6.13         End of FiscalYear.  Cause each of its fiscal yearsand the fiscal years of each of its Subsidiaries to end on December 31st of the applicable year.

 

6.14         Pay Obligationsand Perform Other Covenants.  Make full and timely payment of theObligations, whether now existing or hereafter arising, as and when due andpayable, duly comply, and cause each of its Subsidiaries to duly comply, withall of the terms and covenants

 

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contained in this Agreement and in each of the other Loan Documents atall times and places and in the manner set forth therein, and except for thefiling of continuation and renewal statements and the making of other filingsby the Agent (or the Canadian Collateral Agent, as applicable) as secured partyor assignee, at all times take all actions necessary to maintain the Liens andsecurity interests provided for under or pursuant to this Agreement and theSecurity Documents as valid perfected first priority Liens on the Collateralintended to be covered thereby (subject only to other Liens expressly permittedby Section 7.2 hereof) and supply all information to the Agent (orthe Canadian Collateral Agent, as applicable) necessary for such maintenance.

 

6.15         Collection of Receivables; Application ofReceivables Proceeds.

 

(a)           At all times after (i) Availability is lessthan $25,000,000, or (ii) the occurrence of a Default or an Event ofDefault (any such time, until the occurrence of a Dominion Termination Event, a“**Dominion Event**”), and until suchtime when Availability has exceeded $35,000,000 for sixty (60) consecutive daysand no Default or Event of Default is continuing (a “**DominionTermination Event**”), the Borrowers shall cause all paymentsreceived by any Borrowers or any of their Subsidiaries (other than anyGuarantor, except as provided below) on account of Receivables of the Borrowers(whether in the form of cash, checks, notes, drafts, bills of exchange, moneyorders or otherwise) to be promptly deposited in the form received (but withany endorsements of the applicable Borrower or Subsidiary necessary for depositor collection, and if received in funds other than U.S. dollars, with sucharrangements for conversion to U.S. dollars as may be acceptable to the Agent)into one or more Collection Accounts of the Borrowers designated by theAgent.  Funds received in a CollectionAccount of a Borrower shall be subject to daily wire transfer to an accountdesignated by the Agent pursuant to arrangements with the applicable depositorythat are acceptable to the Agent, and in connection therewith, the Agent (orthe Canadian Collateral Agent, as applicable) and JPMorgan are irrevocablyauthorized to cause all collected funds on all Receivables received by the Agent(or the Canadian Collateral Agent, as applicable) or JPMorgan from whatevermeans, whether pursuant to any Tri-Party Agreement or otherwise, to be appliedby the Agent to reduce the outstanding balance of the Revolving Loans.  Upon the occurrence of a Dominion Event, andfrom time to time thereafter until a Dominion Termination Event as the Agentmay require, funds held in any other deposit account of any Borrower shall beremitted to the Agent, except as the Agent may permit to fund outstanding draftsor transfers or otherwise in its discretion; and until the occurrence of aDominion Termination Event, funds contained in any account of any Borrowershall be subject to withdrawal by the Agent only, as hereinafter provided,except as otherwise expressly authorized by the Agent.  Upon the occurrence of a Dominion Event, theBorrowers shall, at any time and from time to time upon request of the Agent,liquidate any Permitted Investment Securities held by them and remit theproceeds to the Agent.  Prior to theoccurrence of a Default or Event of Default, all remittances and payments thatare deposited with the Agent in accordance with this Section 6.15(a) willbe applied by the Agent on the same day received (or on the next Business Dayin the case of remittances and payments received after 11:00 a.m.) toreduce the outstanding balance of the Revolving Loans, subject to finalcollection in cash of the item deposited. After the occurrence of a Default or Event of Default, all remittancesand payments that are deposited with the Agent in accordance with this Section 6.15(a) willbe applied by the Agent in accordance with Section 2.7.  Upon the occurrence of a Dominion Event, anduntil the occurrence of a Dominion Termination Event, each Guarantor shall besubject to cash management arrangements (including with respect to 

 

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payments received on account of Receivables, short term investments andintercompany transfers of funds) pursuant to which funds in each such Guarantor’saccounts may be applied to reduce the outstanding balance of the RevolvingLoans acceptable to the Agent and the Canadian Collateral Agent, whether or notdemand has been made under the relevant Guaranty.  Upon the occurrence of a Dominion Event, ifany Credit Party, or any other Person acting for or in concert with the CreditParties, receives any monies, checks, notes, drafts or other payments relatingto or as proceeds of Receivables or other Collateral except as contemplated bythis Section 6.15(a), the Credit Parties shall, or shall cause suchPerson to, receive and hold such items in trust for, and as the sole andexclusive property of, the Agent and the Canadian Collateral Agent (for thebenefit of the Lender Parties) and, immediately upon receipt thereof, remit thesame (or cause the same to be remitted) in hand to or as directed by the Agent.

 

(b)           Until the occurrence of a Dominion Event, the CreditParties shall be required, and hereby agree, to promptly deposit Receivablepayments when received into any Controlled Account maintained by the CreditParties pursuant to the terms hereof and designated to the Agent as aCollection Account.  The Agent shall notdeliver any “sole control” activation notices under any Tri-Party Agreement untilthe occurrence of a Dominion Event.  Uponthe occurrence of a Dominion Event, all amounts in each Controlled Accountshall be subject to the provisions of Section 6.15(a), and none ofsuch Controlled Accounts shall be utilized for disbursement purposes, except asotherwise consented to by the Agent (or the Canadian Collateral Agent, asapplicable).

 

6.16         Receivables and Other Collateral Matters.  The Credit Parties shall maintain books andrecords pertaining to the respective Collateral owned by each of them indetail, form and scope as the Agent shall reasonably require, and concurrentlywith the delivery by any Credit Party to the Agent (or the Canadian CollateralAgent, as applicable) of any accounts receivable aging or any sales reportsummary hereunder, the Credit Parties will disclose to the Agent (or theCanadian Collateral Agent, as applicable) which Receivables, if any, arise outof contracts with the United States or Canada or any department, agency orinstrumentality thereof, and will, upon request from the Agent (or the CanadianCollateral Agent, as applicable), use commercially reasonable efforts toexecute or cause to be executed any instruments and take any steps required bythe Agent (or the Canadian Collateral Agent, as applicable) in order that allmonies due or to become due under any such contract shall be assigned to theAgent (or the Canadian Collateral Agent, as applicable) and notice thereofgiven under the Federal Assignment of Claims Act or any equivalent Canadianstatute.  The Credit Parties will,promptly after any Responsible Officer of any of them learns thereof, report tothe Agent any material loss or destruction of, or substantial damage to, anyportion or component of the Collateral with fair market value in excess of$500,000, and any other matters materially affecting the value, enforceabilityor collectability of any of the Collateral with fair market value in excess of$500,000.  If any amount payable under orin connection with any Receivable is evidenced by a promissory note or otherinstrument, as such terms are defined in the Uniform Commercial Code (or, whereapplicable, or the PPSA (Nova Scotia)), such promissory note or instrumentshall be promptly pledged, endorsed, assigned and delivered to the Agent (orthe Canadian Collateral Agent, as applicable) as additional Collateral.  The Credit Parties shall not redate, norallow any of their Subsidiaries to redate, any invoice or sale, or withoutwritten notice to the Agent, make or allow to be made sales on extended datingbeyond that customary in the industry. Finally, neither any 

 

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Credit Party, nor any of their Subsidiaries, shall be entitled topledge the Agent’s or any Lender’s credit on any purchases or for any purposewhatsoever.

 

6.17         Agreements.  The Credit Parties shall deliver or cause tobe delivered to the Agent copies of all tax sharing agreements and all materialemployment agreements, management fee agreements, loan agreements, notes andother documentation evidencing any Indebtedness of the Borrower or anySubsidiary not delivered or provided prior to the Closing Date.

 

6.18         Hedging Strategy.  The Credit Parties will enter into andmaintain Hedging Obligations permitted hereunder in accordance with and as determinedby the hedging policies referred to in Section 4.2(s), with suchchanges thereto as may be reasonably acceptable from time to time to the Agent.

 

6.19         Canadian Pension Plans; Canadian Benefit Plans.

 

(a)           For each existing, or hereafter adopted, CanadianPension Plan and Canadian Benefit Plan, the Credit Parties shall operate andadminister, in all respects, such plans in compliance with applicable laws andthe terms of such plans and shall maintain all necessary governmental approvalswhich are material in respect of the operation of the Canadian Pension Plans orCanadian Benefit Plans and in a timely fashion comply with and perform in allmaterial respects all of their obligations under and in respect of suchCanadian Pension Plans or Canadian Benefit Plans, including under any fundingagreements and all applicable laws (including any fiduciary, funding,investment and administration obligations).

 

(b)           All employer and employee payments, contributionsand premiums required to be remitted, paid to or in respect of each CanadianPension Plan or Canadian Benefit Plan shall be remitted or paid by the CreditParties in a timely fashion in accordance with the terms thereof, any fundingagreements and all applicable laws.

 

(c)           The Credit Parties shall deliver to the Lenders (i) ifrequested by the Lenders, copies of each annual return and other return, reportor valuation with respect to each Canadian Pension Plan as filed with anyapplicable Governmental Authority; (ii) promptly after receipt thereof, acopy of any material direction, order, notice, ruling or opinion that theCredit Parties may receive from any applicable Governmental Authority withrespect to any Canadian Pension Plan; (iii) notification within thirty(30) days of any increases having a cost to the Credit Parties in excess of$1,000,000 per annum in the aggregate, in the benefits of any existing CanadianPension Plan or Canadian Benefit Plan, or the commencement of contributions toany such plan to which the Credit Parties were not previously contributing; (iv) promptlyafter the occurrence thereof, notice of any default or violation under anyCanadian Pension Plan or Canadian Benefit Plan or applicable law or any suit,action, claim or proceeding commenced or threatened in respect of any CanadianPension Plan or Canadian Benefit Plan or the assets of either that might resultin any liability, payment or tax, fine or penalty; (v) promptly after theoccurrence thereof, notice of any change in the funding or contributionrequirements for any Canadian Pension Plan or Canadian Benefit Plan from thatdisclosed in Schedule 5.24, which could reasonably be expected,whether taken individually or in the aggregate, to have a Material AdverseEffect; and (vi) any notice or proposal to terminate or wind up, in wholeor in part, any Canadian Pension Plan that could result in any increase incosts or contributions, liability, 

 

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payment, fine or penalty or which could reasonably be expected to havea Material Adverse Effect.

 

6.20         Conforming Leasehold Interests; Matters Relating toAdditional Real Property Collateral.

 

(a)           If any Credit Party acquires any Material LeaseholdProperty after the Closing Date, the Credit Party shall use commerciallyreasonable efforts to cause the landlord with respect to such MaterialLeasehold Property to execute and deliver to the Agent waivers orsubordinations of any and all landlord rights (whether statutory orcontractual) held by such landlord with respect to any Collateral located onsuch Material Leasehold Property.

 

(b)           From and after the Closing Date, in the event that (i) anyCredit Party acquires any Material Leasehold Property or any fee interest inany Real Property Asset, or (ii) at the time any Person becomes a Subsidiary(other than a Subsidiary that is not required to become a Borrower orGuarantor), such Person owns or holds any fee interest in any Real PropertyAsset, excluding any such Real Property Asset the encumbering of which requiresthe consent of any then-existing senior lienholder, where the Credit Partiesare unable to obtain such senior lienholder’s consent (any such non-excludedReal Property Asset described in the foregoing clause (i) or (ii) beingan “**Additional Mortgaged Property**”),such Credit Party shall deliver to the Agent (or the Canadian Collateral Agent,as applicable), as soon as reasonably practicable after such Person acquiressuch Additional Mortgaged Property, the following (subject to Section 6.20(c)):

 

(A)          Additional Mortgages.  A fully executed (and where required,notarized) Mortgage (or, in the discretion of the Agent (or the CanadianCollateral Agent, as applicable), an amendment to an existing Mortgage) (eachan “**Additional Mortgage**”and, collectively, the “**AdditionalMortgages**”), in proper form for recording in the applicablejurisdiction, encumbering the interest of such Credit Party in such AdditionalMortgaged Property, and the Agent (or the Canadian Collateral Agent, asapplicable) shall have the right in its sole discretion to record suchAdditional Mortgage;

 

(B)           Surveys.  With respect to each Additional MortgagedProperty located in the United States or constituting a Mill Property, suchsurveys or surveyor certificates as the Agent may reasonably require;

 

(C)           Deeds.  Copies of all deeds by which such CreditParty received title with respect to each Additional Mortgaged Property that isa fee interest in a Real Property Asset;

 

(D)          Leases.  Copies of all leases between any Credit Partyand any landlord or tenant with respect to any Material Leasehold Property,including any and all modifications, supplements, and amendments thereto.

 

(E)           Matters Relating to FloodHazard Properties.  (1) Evidenceas to whether any Additional Mortgaged Property that is located in the UnitedStates or is a Mill Property is a Flood Hazard Property and (2) if anysuch 

 

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Additional MortgagedProperty is a Flood Hazard Property, evidence that the applicable Credit Partyhas obtained flood insurance as required by law with respect to each such FloodHazard Property in amounts reasonably approved by the Agent, or evidencereasonably acceptable to the Agent that such insurance is not available;

 

(F)           Title Insurance.  (1) If required by the Agent, ALTA mortgageetitle insurance policies (or the Canadian equivalent, as applicable) orunconditional commitments therefor (the “**AdditionalMortgage Policies**”) issued by the Title Company with respect tothe Additional Mortgaged Property, in an amount not less than the fair marketvalue of the Additional Mortgaged Property, or such lesser amount as may bereasonably satisfactory to the Agent, insuring fee simple title or leaseholdtitle, as applicable, to each such Additional Mortgaged Property vested in suchCredit Party and assuring the Agent that such Additional Mortgage creates avalid and enforceable first priority Lien on such Additional MortgagedProperty, subject only to any standard or other exceptions as may be reasonablyacceptable to the Agent and which appear as exceptions on Schedule B tothe applicable Additional Mortgage Policy, which Additional Mortgage Policy (a) shallinclude endorsements (to the extent available) for customary matters reasonablyrequested by the Agent, including, but not limited to, those endorsementslisted on Schedule 4.2(r) and (b) shall provide foraffirmative insurance and such reinsurance as may be reasonable and customaryand as the Agent may reasonably request, all of the foregoing in form andsubstance reasonably satisfactory to the Agent; and (2) evidencereasonably satisfactory to the Agent that such Credit Party has (a) deliveredto the Title Company all certificates and affidavits required by the TitleCompany in connection with the issuance of the Additional Mortgage Policy and (b) paidto the Title Company or to the appropriate Governmental Authorities allexpenses and premiums of the Title Company in connection with the issuance ofthe Additional Mortgage Policy and all recording and stamp taxes (includingmortgage recording taxes, fees and other charges and intangible taxes) payablein connection with recording the Additional Mortgage in the appropriate realestate records;

 

(G)           Copies of Documents Relatingto Title Exceptions.  Copies ofall recorded documents listed as exceptions to title or otherwise referred toin each Additional Mortgage Policy;

 

(H)          Opinions of Counsel.  (1) A favorable opinion of counsel(which counsel shall be reasonably satisfactory to the Agent), as to the dueauthorization, execution and delivery by such Credit Party of such AdditionalMortgage and such other matters as the Agent may reasonably request, and (2) anopinion of counsel (which counsel shall be reasonably satisfactory to theAgent) in the state or province in which such Additional Mortgaged Property islocated with respect to the enforceability of the form of Additional Mortgagesto be recorded in such state or province and such other reasonable andcustomary matters (including without limitation any matters governed by thelaws of such 

 

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state regarding personalproperty security interests in respect of any Collateral) as the Agent mayreasonably request, in each case in form and substance reasonably satisfactoryto the Agent;

 

(I)            Environmental Audit.  If required by the Agent, reports and otherinformation in form, scope and substance reasonably satisfactory to the Agentand prepared by environmental consultants reasonably satisfactory to the Agentand accompanied by reliance letters where applicable, concerning anyEnvironmental Claims or Environmental Liabilities to which any Credit Party maybe subject with respect to such Additional Mortgaged Property; and

 

(J)            Taxes.  Evidence reasonably satisfactory to the Agent(or the Canadian Collateral Agent, as applicable) that there are no outstandingmaterial taxes, levies, duties, imposts, deductions, charges (including waterand sewer charges), withholdings, assessments or impositions of any kind whichhave been due and payable for more than thirty (30) days with respect to suchAdditional Mortgaged Property, except to the extent that any such matters arebeing contested in accordance with the terms of Section 6.2.

 

(c)           In the case of the acquisition in any transaction orseries of related transactions by any Credit Party of one or more AdditionalMortgaged Properties having an acquisition price of $250,000 or less in theaggregate, the applicable Credit Party shall not be required to deliver theitems set forth in Section 6.20(b)(ii)(I) with respect to suchAdditional Mortgaged Properties, and the remaining items required to bedelivered for such Additional Mortgaged Properties pursuant to  Section 6.20(b) shall bedelivered quarterly, thirty (30) days after the end of each fiscal quarter forall such Additional Mortgaged Properties acquired during such fiscal quarter; provided,however, that in the event that the Credit Parties acquire (i) anysuch properties in any quarter having an acquisition price in excess of$2,000,000 in the aggregate, or (ii) any such property that is or isexpected to be material to its operations, the applicable Credit Parties shalldeliver such remaining items to the Agent (or the Canadian Collateral Agent, asapplicable) as soon as reasonably practicable thereafter.

 

7.             Negative Covenants.

 

TheCredit Parties covenant and agree with the Agent and the Lenders that prior tothe termination of this Agreement, the Credit Parties will not do any of thefollowing:

 

7.1           Indebtedness.  Create, incur, suffer or permit to exist, orassume or guarantee, directly or indirectly, or become or remain liable withrespect to any Indebtedness, whether direct, indirect, absolute, contingent, orotherwise, except the following:

 

(a)           Indebtedness to the Lenders and the Agent pursuanthereto;

 

(b)           Indebtedness secured by Liens permitted by Section 7.2hereof;

 

(c)           Purchase money Indebtedness (including the amount ofany Capital Lease Obligations required to be capitalized and included as aliability on the consolidated balance sheet of the Credit Parties and theirSubsidiaries incurred to finance Capital Expenditures) 

 

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including under conditional sales agreements and other title retentionarrangements but excluding purchase money Indebtedness incurred in respect ofInventory; providedthat the aggregate amount of such purchasemoney Indebtedness incurred during any fiscal year of the Credit Parties shallnot exceed $5,000,000;

 

(d)           Other liabilities existing on the date of this Agreementand set forth on Schedule 5.16 attached hereto, with no renewals,extensions, modifications or increases thereof being permitted, unless the sameconstitutes Refinancing Indebtedness;

 

(e)           Current accounts payable and unsecured currentliabilities (including current accrued expenses), not the result of borrowings,to vendors, suppliers, landlords, lessors and persons providing services, forexpenditures on ordinary trade terms for goods and services normally requiredby the Credit Parties or any of their Subsidiaries in the ordinary course ofbusiness;

 

(f)            (i) Indebtedness of any Credit Party to anyother Credit Party, and (ii) the Unpledged Inter-Company Loans, but onlyto the extent that there are corresponding Pledged Inter-Company Loans then outstandingwith at least an equal aggregate outstanding balance, provided, that,in case of both clause (i) and (ii), no such Indebtedness may becancelled, compromised or otherwise discounted in any respect without thewritten consent of the Required Lenders;

 

(g)           Contingent Obligations of a Credit Party withrespect to (i) Indebtedness of another Credit Party that is permittedhereunder or (ii) Indebtedness of an Offshore Entity that is permittedunder  Section 7.20;

 

(h)           Current and deferred taxes and other assessments andgovernmental charges (to the extent permitted by  Section 7.2(e) hereof);

 

(i)            Customary and prudent Hedging Obligations enteredinto in the ordinary course of business with the Agent, any Lender or any oftheir respective Affiliates for the sole purpose of protecting the CreditParties and their Subsidiaries against fluctuations in interest rates, currencyexchange rates, commodity (including pulp) prices and similar risks, so long assuch Hedging Obligations are not speculative in nature and are incurred in thenormal course of business and consistent with industry practices, and, withrespect to Hedging Obligations constituting Bank Products;

 

(j)            Refinancing Indebtedness, to the extent the samerelates to any Indebtedness permitted by Sections 7.1(c) and 7.1(d) hereof;

 

(k)           Indebtedness incurred in connection with thefinancing of environmental remediation or Capital Expenditures made to acquire,develop, construct, install, equip or replace existing Equipment, in each caseonly to the extent (i) such Equipment is primarily intended to establish,maintain or improve the compliance by such Credit Party with applicableEnvironmental Law (including, as is necessary to maintain certain licenses orpermits held by the Credit Parties and required in the conduct of theirbusinesses), (ii) such Indebtedness does not exceed $30,000,000 in theaggregate at any time outstanding, (iii) such Indebtedness (A) isloaned by or guaranteed by a Governmental Authority or government-sponsoredentity and is 

 

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interest-free or at a below-market interest rate, (B) is subjectto customary intercreditor arrangements acceptable to the Agent in its solediscretion, and (C) is secured only by Liens permitted by Section 7.2(l);

 

(l)            unsecured letters of credit issued by any thirdparty for the account of any Credit Party, providedthat at notime shall the sum of the Letter of Credit Exposure Amount plus theoutstanding face amount of all letters of credit issued pursuant to this Section 7.1(l) plusthe drawn and unreimbursed amount of such letters of credit exceed $20,000,000;

 

(m)          Senior unsecured Indebtedness, and/or seniorsubordinated unsecured Indebtedness, evidenced by Additional Senior Notes, provided,that (i) the sum of the outstanding principal amount of allAdditional Senior Notes and the Senior Notes shall not exceed $375,000,000, and(ii) upon the incurrence of any Additional Senior Notes, the Fixed ChargeCoverage Ratio for the Borrowers and their Subsidiaries (after giving effect tothe incurrence of the Additional Senior Notes) shall be greater than 1.15 to1.00 for the most recently completed four quarter period, assuming that forpurposes of calculating the Fixed Charge Coverage Ratio for such period (calculatedon a pro forma basis in a manner reasonably acceptable to the Agent) suchIndebtedness was incurred on the first day of such applicable period;

 

(n)           other Indebtedness in an aggregate amount not toexceed $10,000,000 at any one time outstanding;

 

provided, however,that notwithstanding the foregoing, in no event shall the Credit Partiesenter into any Hedging Obligation constituting Bank Products at any time whenthe Hedging Obligations Aggregate Amount exceeds $20,000,000, or which wouldcause the Hedging Obligations Aggregate Amount to exceed $20,000,000immediately after the incurrence thereof.

 

**The Credit Parties, the Agent, the Canadian Collateral Agent and theLenders agree that, notwithstanding anything contained in Section 7.1(f) orin any other provision contained in this Agreement which may appear to be tothe contrary, any and all Indebtedness permitted by Section 7.1(f) hereof(together with any and all Liens from time to time securing the same aspermitted by Section 7.2 hereof) is hereby made and at all timeshereafter shall be inferior and subordinate in all respects to the Obligationsfrom time to time owing to the Agent or any Lender pursuant hereto and to anyLien against any Collateral from time to time now or hereafter securing any ofsuch Obligations pursuant to the terms hereof and the Security Documents.  Additionally, the Credit Parties, the Agent,the Canadian Collateral Agent and the Lenders agree that, notwithstandinganything contained in any provision of this Agreement, any and all contractual,statutory or constitutional Liens which may now or hereafter held by any CreditParty against any Property of any other Credit Party or any of theirSubsidiaries as a result of any intercompany lease or sublease by such CreditParty to such other Credit Party or Subsidiary of any real Property owned orleased by the lessor or sublessor Credit Party are, and at all times hereaftershall be, inferior and subordinate in all respects to any Lien now or hereafterheld by the Agent (or the Canadian Collateral Agent, as applicable), for theratable benefit of the Lender Parties, against any Collateral as security forany of the Obligations pursuant to the terms hereof and the SecurityDocuments.  The Credit Parties**

 

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**agree to execute and deliver on their own behalf, and to cause to beexecuted and delivered by and on behalf of their Subsidiaries, any and allsubordination agreements, in form and content reasonably acceptable to theAgent, which the Agent may hereafter require to further evidence thesubordination of the Indebtedness permitted by Section 7.1(f) above,the Liens permitted by Section 7.2 and any such contractual,statutory or constitutional landlord’s Liens held by any Credit Party.**

 

7.2           Liens.  Create or suffer to exist any Lien upon anyof its Property (including without limitation, real property assets andpersonal property assets, including Stock in its Subsidiaries) now owned orhereafter acquired, or acquire any Property upon any conditional sale or othertitle retention device or arrangement or any purchase money security agreement;provided, however, that the Credit Parties may create orsuffer to exist:

 

(a)           Liens in effect on the date of this Agreement andwhich are described on Schedule 7.2 attached hereto, provided,that the Property covered thereby does not increase in scope and suchLiens may not be renewed and extended (other than continuation filings orsimilar filings to maintain the effectiveness of any such Lien), unless suchrenewal and extension is with respect to Refinancing Indebtedness permitted by Section 7.1(j) above;

 

(b)           Liens against the Collateral in favor of the Agent(or the Canadian Collateral Agent, as applicable) as security for theObligations;

 

(c)           Liens incurred and pledges and deposits made in theordinary course of business in connection with workers’ compensation,unemployment insurance, old-age pensions and other social security benefits(not including any lien described in Section 430(k) of the Code);

 

(d)           Liens imposed by law, such as carriers’,warehousemen’s, mechanics’, materialmen’s, processors’ and vendors’ liens andother similar liens, incurred in good faith in the ordinary course of businessand securing obligations which are incurred in the ordinary course of businessand are not overdue for a period of more than thirty (30) days or whichare being contested in good faith by appropriate, diligently pursuedproceedings as to which the Credit Parties or any of their Subsidiaries, as thecase may be, shall, to the extent required by GAAP, consistently applied, haveset aside on its books adequate reserves;

 

(e)           Liens securing the payment of taxes, assessments andgovernmental charges or levies, that are not delinquent, are permitted by Section 6.2hereof, or are being diligently contested in good faith by appropriateproceedings and as to which adequate reserves have been established inaccordance with GAAP; provided, however, that a Reserveagainst Availability will be established in an amount equal to the aggregateamount of any and all such federal, state, provincial or local taxes which arebeing diligently contested;

 

(f)            Zoning restrictions, easements, licenses,reservations, provisions, covenants, conditions, waivers, restrictions on theuse of property or minor irregularities of title (and with respect to leaseholdinterests, mortgages, obligations, liens and other encumbrances incurred,created, assumed or permitted to exist and arising by, through or under alandlord or owner of the leased property, with or without consent of thelessee) which do not in the 

 

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aggregate materially detract from the value of its property or assetsor materially impair the use thereof in the operation of its business;

 

(g)           Liens securing the performance of bids, tenders,leases, contracts (other than for the repayment of borrowed money), statutoryobligations, surety, customs and appeal bonds and other obligations of likenature, incurred as an incident to and in the ordinary course of business,including without limitation security given in the ordinary course of businessto a public utility, a municipality, or a governmental or other publicauthority where required by such utility, municipality or governmental orpublic authority in connection with the operations of any Credit Party, in eachcase in an amount not to exceed $5,000,000 and not secured by Inventory orReceivables;

 

(h)           Purchase money Liens securing the Indebtednesspermitted by Section 7.1(c) above, provided, as aresult of the creation of any such Lien, (i) no Default or Event ofDefault shall have occurred, (ii) the principal amount of such Lien doesnot exceed 100% of the purchase price of the asset acquired with such permittedIndebtedness plus accrued interest on such Indebtedness plusprotective advances made by the holder of such permitted Indebtedness, and (iii) suchLien shall not apply to any other Property other than the asset acquired withsuch purchase money Indebtedness;

 

(i)            Liens in favor of any Credit Party securing anyIndebtedness permitted pursuant to Section 7.1(f)(i) hereof;

 

(j)            Liens arising from judgments, orders, or otherawards not constituting an Event of Default;

 

(k)           Liens upon Property (i) acquired by the CreditParties after the Closing Date, (ii) purchased in whole or in substantialpart (in no event less than 75% of the aggregate purchase price) with proceedsof Indebtedness permitted pursuant to Section 7.1(k) hereof, whichLiens secure only such Indebtedness, and (iii) which Property, in thereasonable discretion of the Agent, can be readily removed from the facility onwhich it is located at a commercially reasonable cost and without any damage(other than de minimus damage) or impairment (other than de minimus impairment)of the use, functionality or value of such facility;

 

(l)            all rights reserved to or vested in any GovernmentalAuthority by the terms of any lease, franchise, grant or permit held by anyCredit Party or by any statutory provision to terminate any such lease,license, franchise, grant or permit or to require annual or periodic paymentsas a condition of the continuation thereof, or to distrain against or to obtaina Lien on any Property of any Credit Party in the event of failure to make suchannual or other periodic payments;

 

(m)          Liens upon cash in an amount not to exceed$5,000,000 at any time to secure Hedging Obligations;

 

(n)           rights of tenants, subtenants, licensees or otherparties in possession, if any, but only (i) as tenants or licensees orotherwise to the extent of their possessory rights or interests and (ii) solong as such rights do not, in the aggregate, materially detract from the value

 

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of the Properties of the Credit Parties or materially impair the usethereof in the operation of the business of the Credit Parties;

 

(o)           with respect to any lease of any Leasehold Propertyentered into in accordance with the terms hereof, the rights of the landlord tosuch leased property and the terms and conditions contained in thecorresponding lease, but only so long as such Credit Party is current withrespect to payment of all rent and other amounts due to such landlord undersuch lease;

 

(p)           any encumbrance for which adequate title insuranceis provided against losses that may be suffered by the Agent (or the CanadianCollateral Agent, as applicable) and the Lenders, which insurance is reasonablyacceptable to the Agent (or the Canadian Collateral Agent, as applicable); and

 

(q)           other Liens securing the payment of obligations,other than Indebtedness or Hedging Obligations, in an amount not to exceed$5,000,000 at any time outstanding; provided, that such Liens arenot upon Inventory, Receivables, Eligible Equipment, Eligible Real Estate,Timberland Properties or Deposit Accounts;

 

Provided, however,notwithstanding anything contained above in this Section 7.2 to thecontrary, if any of the permitted Liens are of the type that are beingcontested in good faith by appropriate proceedings as to the Credit Parties,the Indebtedness giving rise to such contested Lien(s) must be immediatelypaid upon commencement of any foreclosure process or proceeding with respect tosuch Lien(s) unless the same shall be effectively stayed or a surety bondor title insurance with respect thereto (which is reasonably satisfactory inall respects to the Agent), is posted.

 

7.3           Contingent Liabilities.  Create, incur, suffer or permit to exist,directly or indirectly, any Contingent Obligations, other than:

 

(a)           The Obligations of each Guarantor to the Agent, theCanadian Collateral Agent and the Lenders under the terms of any Guaranty;

 

(b)           Any Contingent Obligations of the Credit Partiesunder any Hedging Obligations permitted by Section 7.1(i) above;

 

(c)           The guarantees by the Credit Parties of anyobligations of any other Credit Party that are not prohibited by this Agreementor of any Indebtedness of any other Credit Party if such Indebtedness soguaranteed is permitted under the terms of Section 7.1 above; and

 

(d)           The guarantees by any Credit Party of Indebtednesscreated, incurred or existing pursuant to the terms of Section 7.20hereof, provided, that, at all times any such guaranty is ineffect the maximum amount of such guaranteed Indebtedness shall be deemed to bean Investment in an Offshore Entity on the date such guaranty is entered into,and any such Investment must be permitted under Section 7.7 hereof(whether through one or a combination of the clauses thereof so long as suchamounts aggregate to such maximum amount).

 

7.4           Mergers, Consolidations and Dispositions andAcquisitions of Assets.  Inany single transaction or series of related transactions, directly orindirectly:

 

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(a)           Wind up its affairs, liquidate or dissolve;

 

(b)           Be a party to any merger or consolidation;

 

(c)           (i) Sell, convey, lease, transfer or otherwisedispose of all or any portion of the Property (except for the sale of Inventoryin the ordinary course of business) of any Credit Party, or agree to take anysuch action, or (ii) permit any Offshore Entity to sell, convey, lease,transfer or otherwise dispose of all or any substantial portion of the Property(except for the sale of Inventory in the ordinary course of business) of suchOffshore Entity, or permit any Offshore Entity to agree to take any suchaction;

 

(d)           Sell, assign, pledge, transfer or otherwise disposeof, or in any way part with control of, any Stock of any of its Subsidiaries orof any Offshore Entity or any Indebtedness or obligations of any character ofany of its Subsidiaries or of any Offshore Entity, or permit any suchSubsidiary or Offshore Entity to do so with respect to any Stock of any othersubsidiary or any Indebtedness or obligations of any character of any CreditParty, any of their Subsidiaries or any Offshore Entity, or permit any of theirSubsidiaries or any of the Offshore Entities to dissolve or liquidate, or toissue any additional Stock other than to the Credit Parties or, solely withrespect to Neenah Germany’s subsidiaries, to Neenah Germany or one of itsdirectly or indirectly wholly owned subsidiaries;

 

(e)           Take any board of director or shareholder actionwith a view toward dissolution, liquidation or termination; or

 

(f)            Purchase or otherwise acquire, directly orindirectly, in a single transaction or a series of related transactions, all ora substantial portion of the assets of any Person or any shares of Stock of, orsimilar interest in, any Person;

 

provided, howeverthat notwithstanding the foregoing, any of the following describedactions may be undertaken, so long as no Default or Event of Default thenexists or would exist immediately after giving effect to the applicable event:

 

(1)           any Subsidiary of any CreditParty may merge or consolidate with any Credit Party or any other Subsidiary ofany Credit Party, provided, that if (i) one or more of theentities so merging or consolidating was a Borrower, and if the survivingentity is not yet a Borrower, such surviving entity must be a wholly-ownedDomestic Subsidiary and such surviving entity shall simultaneously with suchmerger, execute and deliver to the Agent a Joinder Agreement with respect tothis Agreement, together with all requested Security Documents, as required atsuch time by the Agent, appropriately completed in Proper Form, and (ii) oneor more of the entities so merging or consolidating was a Guarantor (and solong as none of the entities was a Borrower, in which event clause (i) shallapply), and if the surviving entity is not yet a Guarantor, such survivingentity must be a wholly-owned Canadian Subsidiary and such surviving entityshall simultaneously with such merger, execute and deliver to the Agent aGuaranty or a Joinder 

 

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Agreement, together with allrequested Security Documents, as required at such time by the Agent,appropriately completed in Proper Form;

 

(2)           any of the Credit Parties’Subsidiaries may sell, lease, transfer or otherwise dispose of any of itsassets to a Credit Party or any other wholly-owned Subsidiary of the Borrower, provided,that if (i) the entity selling, leasing, transferring or otherwisedisposing of its assets is a Borrower, and if the entity to whom the sale,lease, transfer or other disposition was made is not a Borrower, such entitymust be a wholly-owned Domestic Subsidiary and such entity shall simultaneouslywith such lease, transfer or disposition, execute and deliver to the Agent aJoinder Agreement, together with all requested Security Documents, as requiredat such time by the Agent, appropriately completed in Proper Form, and (ii) theentity selling, leasing, transferring or otherwise disposing of its assets is aGuarantor, and if the entity to whom the sale, lease, transfer or otherdisposition was made is not a Borrower or a Guarantor, such entity must be awholly-owned Canadian Subsidiary and such entity shall simultaneously with suchlease, transfer or disposition, execute and deliver to the Agent a Guaranty ora Joinder Agreement, together with all requested Security Documents, asrequired at such time by the Agent, appropriately completed in Proper Form;

 

(3)           any Subsidiary may bedissolved or liquidated, so long as such dissolution or liquidation results inall assets of such Subsidiary being owned by a Credit Party or a wholly-ownedSubsidiary; provided, that if (i) the entity dissolving orliquidating is a Borrower, and if the entity to whom all assets of suchdissolving or liquidating entity are transferred is not yet a Borrower, suchentity must be a wholly-owned Domestic Subsidiary and such entity shallsimultaneously with such transfer execute and deliver to the Agent a JoinderAgreement, together with all requested Security Documents, as required at suchtime by the Agent, appropriately completed in Proper Form, and (ii) theentity dissolving or liquidating is a Guarantor, and if the entity to whom allassets of such dissolving or liquidating entity are transferred is not yet aBorrower or a Guarantor, such entity must be a wholly-owned Canadian Subsidiaryand such entity shall simultaneously with such transfer execute and deliver tothe Agent a Guaranty or a Joinder Agreement, together with all requestedSecurity Documents, as required at such time by the Agent, appropriatelycompleted in Proper Form;

 

(4)           (A) any of the CreditParties may (ii) sell Inventory in the ordinary course of business, (iii) sell,exchange or otherwise dispose of Permitted Investment Securities in theordinary course of business; (iv) terminate, surrender or sublease a leaseof real Property in the ordinary course of business; (v) sell or otherwisedispose of equipment and fixtures that are obsolete, worn out or no longerneeded in the business of the Credit Parties; (vi) sell, exchange, lease,transfer or otherwise dispose of 

 

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(in each case for reasonablyequivalent value) Neenah Paper FR, LLC’s facility located in Ripon,California;  (vii) sell, exchange,lease, transfer or otherwise dispose of (in each case for reasonably equivalentvalue) Nova Scotia Woodlands so long as the net cash proceeds (i.e., grossproceeds net of reasonable and customary out-of-pocket transaction costs andexpenses incurred by the Credit Parties in connection with such transaction)received in readily available funds by the Credit Parties upon the consummationof such disposition are not less than $65,000,000; provided, thatthe net cash proceeds received in connection therewith at any time are contemporaneouslyapplied in accordance with Section 2.7(c); (viii) sell,exchange, lease, transfer or otherwise dispose of (in each case for reasonablyequivalent value) real Property having a fair market value not to exceed the sumof (1) $2,000,000 for all such transactions in the aggregate in anycalendar year; plus (2) the excess (if any) of $2,000,000 over theamount of dispositions pursuant to this clause (A) (viii) consummatedin the immediately preceding calendar year; and (ix) sell or otherwise disposeof, for fair and adequate consideration any other equipment and fixtures havinga fair market value not to exceed $1,000,000 in the aggregate during the periodfrom the Closing Date through the Termination Date; providedthat,upon the occurrence and during the continuation of a Dominion Event, all netproceeds of any and all of the foregoing shall be paid to the Agent forapplication in accordance with Section 2.7; and (B) any of theOffshore Entities may (i) sell, exchange or otherwise dispose of marketableinvestments in which their cash is invested in the ordinary course of business;(ii) terminate, surrender or sublease a lease of real Property in theordinary course of business; (iii) sell or otherwise dispose of equipmentand fixtures that are obsolete, worn out or no longer needed in the business ofthe Offshore Entities; (iv) in the case of Neenah Germany and itssubsidiaries, assign their accounts receivable, or any portion thereof, tosecure a line of credit in the maximum principal amount of €15,000,000; and (v) sellor otherwise dispose of, for fair and adequate consideration, any otherequipment and fixtures having a fair market value not to exceed €1,500,000 inthe aggregate during the period from the Closing Date through the TerminationDate;

 

(5)           (i)  to the extent anyCollateral is sold or otherwise permanently disposed of as permitted by this Section 7.4,such Collateral shall be sold or otherwise disposed of free and clear of theLiens of the Security Documents and the Agent (or the Canadian CollateralAgent, as applicable) shall take such actions, including executing and filingappropriate releases, as are appropriate in connection therewith, and noapproval of any of Lenders shall be required therefor, and (ii) to theextent any Collateral is leased as permitted by this Section 7.4,the Parent or the applicable Credit Party may request that the Agent (or theCanadian Collateral Agent, as applicable) enter into a subordination,non-disturbance and attornment agreement in form and substance acceptable to 

 

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the related lessee and tothe Agent or the Canadian Collateral Agent, as applicable (and no approval ofany of the Lenders shall be required therefor) and the Agent or the CanadianCollateral Agent may require the delivery of Security Documents, includingwithout limitation, a collateral assignment of lease, in form and substancereasonably acceptable to it; and

 

(6)  the Credit Partiesmay purchase or otherwise acquire all or a substantial portion of the assets ofone or more Persons, or any shares of Stock of, or similar interest in, anyPerson; provided, that, (i) such transaction or series oftransactions is not otherwise prohibited hereunder, (ii) the CreditParties comply with the requirements hereof, including without limitation Section 6.19and Section 6.20, in connection with such transaction or series oftransactions, (iii) the aggregate purchase price (including mergerconsideration, if applicable) paid by the Credit Parties in such transaction orseries of transactions does not exceed $80,000,000 in any twelve month periodor $150,000,000 in the aggregate, (iv) the Availability immediately aftergiving effect to the completion of any such transaction and any series oftransactions shall not be less than $45,000,000 on a pro forma basis (and theBorrowers shall provide the Agent with a pro forma calculation in form andsubstance reasonably satisfactory to the Agent) which includes allconsideration given in connection with such transaction or series oftransactions as  having been paid in cashat the time of the initial completion of any such transaction or series oftransactions, and (vi) the Fixed Charge Coverage Ratio for the Borrowersand their Subsidiaries (after giving effect to such transaction or series oftransactions) shall be greater than 1.15 to 1.00 for the most recentlycompleted four quarter period assuming that for purposes of calculating theFixed Charge Coverage Ratio for such period (calculated on a pro forma basis ina manner acceptable to the Agent) such transaction or series of transactionsoccurred on the first day of such applicable period.

 

7.5           Nature of Business.  Materially change the nature of its businessor enter into any business which is substantially different from the businessin which it is engaged as of the Closing Date, except for entry into relatedbusinesses that do not in the aggregate substantially change the overallcomposition of the Credit Parties’ or the Offshore Entities respective businesses;providedthat the Credit Parties shall not be required to remainin the timber or pulp business.

 

7.6           Transactions with Related Parties.  Except for any Permitted AffiliateTransactions and other transactions specifically permitted by Section 7.4or 7.7, enter into any other transaction, contract, license or agreementof any kind with any Affiliate, officer or director of any Credit Party or anyof their Subsidiaries, unless such transaction, contract or agreement is madeupon terms and conditions not less favorable to such Person than those whichcould have been obtained from wholly independent and unrelated third parties.

 

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7.7           Investments, Loans.  Make, directly or indirectly, any Investmentin or loan or advance to any Person, or make any commitment to make such loan,advance or Investment, except:

 

(a)           Stock of any Domestic Subsidiary or any Guarantoracquired or issued in accordance with the other provisions of this Agreement,including without limitation, the provisions of Section 6.10 above,or Stock of any other Subsidiary with the prior written consent of the Agent;

 

(b)           Permitted Investment Securities;

 

(c)           loans otherwise permitted by the provisions of Section 7.1(f) above;

 

(d)           loans to employees of any Credit Party made in theordinary course of business, so long as the aggregate amount of all such loansoutstanding at any time does not exceed $500,000;

 

(e)           loans or advances to, or Investments in, any CreditParty;

 

(f)            loans or capital contributions to Neenah MenashaWater and Power Company not to exceed $500,000 in any twelve (12)-month period;

 

(g)           loans, advances or Investments in FinCo in anaggregate amount not to exceed €250,000 at any time outstanding;

 

(h)           Pledged Inter-Company Loans, but solely to theextent an Unpledged Inter-Company Loan in an equal amount is made promptlythereafter and remains outstanding unless reduced in connection with asubstantially contemporaneous reduction of the Pledged Inter-Company Loans;

 

(i)            guarantees by one or more Credit Parties ofIndebtedness of an Offshore Entity that is permitted under Section 7.20and for which Reserves equal to the amount of such guaranteed Indebtedness havebeen established and are being maintained with respect to Availability; and

 

(j)            Other loans, advances or Investments not covered byclauses (a) through (i) above, in any aggregate amount not toexceed $15,000,000 at any time outstanding.

 

7.8           ERISA Compliance.

 

(a)           At any time engage in any Prohibited Transactionwith respect to a Plan which could reasonably be expected to result in amaterial liability; or permit any Plan to be terminated in a manner which couldresult in the imposition of a Lien on any Property of any Credit Party or anyof their Subsidiaries pursuant to ERISA.

 

(b)           Engage in any transaction in connection with whichany Credit Party or any Subsidiary thereof would or could reasonably beexpected to be subject to either a material 

 

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civil penalty assessed pursuant to the provisions of Section 502of ERISA or a material tax imposed under the provisions of Section 4975 ofthe Code.

 

(c)           Terminate any Plan in a “distress termination” underSection 4041 of ERISA, or take any other action which could reasonably beexpected to result in a material liability of any Credit Party or anySubsidiary thereof to the PBGC.

 

(d)           Fail to make payment when due of all amounts which,under the provisions of any Plan, any Credit Party or any Subsidiary thereof isrequired to pay as contributions thereto, or, with respect to any Plan, fail tosatisfy the minimum funding standard (as described in Section 302 of ERISAand Section 412 of the Code, whether or not waived, with respect thereto.

 

(e)           Adopt an amendment to any Plan restricted by Section 436of the Code.

 

7.9           Trade Credit Extensions.  Extend credit to customers other than normaland prudent extensions of trade credit for goods and services in the ordinarycourse of business.

 

7.10         Change in Accounting Method.  Make or permit any change in accountingmethod or financial reporting practices except as may be required by GAAP, asin effect from time to time.

 

7.11         Redemption, Dividends, Stock Issuance, Distributionsand Payments.  At anytime:

 

(a)           Redeem (whether as a result of mandatory or optionalredemption obligations or rights), purchase, retire or otherwise acquire,directly or indirectly, any shares of its Stock, any warrants or other similarinstruments issued by any Credit Party or any Subsidiary thereof or set asideany amount for any such purpose;

 

(b)           Declare or pay, directly or indirectly,  any dividend, except (i) dividends paidto a Credit Party which is a direct parent of the Credit Party paying adividend, (ii) non-cash dividends paid to the holders of any Stock of theParent in the form of additional Stock of the Parent, and (iii) CashDividends to the holders of any Stock of the Parent, so long as (A) noDefault or Event of Default exists on the date that the applicable CashDividend is declared or paid, or would result from the payment thereof, (B) theaggregate amount of such Cash Dividends paid during any twelve (12)-monthperiod does not exceed $10,000,000 in the aggregate, (C) such CashDividend is legally declared and payable, (D) the Borrowers shall have proforma Availability of at least $25,000,000 on the date of such payment and, onan average basis, for the sixty (60)-day period before the payment of suchdividends, in each case after giving effect to such payment, and (E) Borrower’sAgent shall have (x) given the Agent at least five (5) Business Daysprior written notice specifying the amount and date of such proposed CashDividend and, (y) if required by the Agent, submitted a certificate of aResponsible Officer setting forth reasonably detailed calculationsdemonstrating compliance with the required Availability test described aboveand certifying that the other conditions set forth in this clause (b) havebeen satisfied;

 

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(c)           Make any other distribution of any Property, cash,securities or a combination thereof, with respect to (whether by reduction ofcapital or otherwise) any shares of its Stock except as permitted in Section 7.11(b) above;

 

(d)           Set apart any money for a sinking fund or otheranalogous fund for any dividend or other distribution on its Stock or for anyredemption, purchase, retirement, or other acquisition of any of its Stock; or

 

(e)           Redeem (whether as a result of mandatory or optionalredemption obligations or rights), purchase, defease or retire for value, ormake any principal payment on, any Subordinated Indebtedness, prior to the TerminationDate (other than any non-cash conversion to equity and any principal paymentson Indebtedness permitted under Section 7.1(f)); provided, thateach principal payment made with respect to an Unpledged Inter-Company Loanmust substantially coincide with a principal payment in the same amount under aPledged Inter-Company Loan, such that, after the initial advance on theUnpledged Inter-Company Loan, the outstanding balance of the PledgedInter-Company Loans and the Unpledged Inter-Company Loans remain equal at alltimes (after giving effect to any such substantially contemporaneous principalpayment).

 

7.12         Fixed Charge Coverage Ratio.

 

Permitthe Fixed Charge Coverage Ratio of the Borrowers and their Subsidiaries to beless than 1.1 to 1.0 as of the last day of any fiscal quarter for the fourquarter period ending on such day, such ratio to be tested with respect to themost recently ended fiscal quarter on any date from time to time on whichAvailability falls below $20,000,000, and on the last day of each fiscalquarter ending thereafter, in each case until such time when Availability hasexceeded $35,000,000 for sixty (60) consecutive days and no Default or Event ofDefault is continuing.

 

7.13         Sale of Receivables.  Sell,assign, discount, transfer or otherwise dispose of any Receivables, promissorynotes, drafts or trade acceptances or other rights to receive payment held byit, with or without recourse.

 

7.14         Sale and Lease-Back Transactions.  (a) Enter into any arrangement, directlyor indirectly, with any Person whereby any Credit Party shall sell or transferany Property, real or personal, which is used or useful in its business,whether now owned or hereafter acquired, and thereafter rent or lease suchProperty or other Property which such Credit Party intends to use forsubstantially the same purpose or purposes as the Property being sold ortransferred, except for the sale of Property, the aggregate value of which doesnot exceed $5,000,000 during the term of this Agreement, so long as (i) noDefault or Event of Default then exists or would exist immediately after givingeffect to such sale, and (ii) upon the occurrence and during thecontinuation of a Dominion Event, the net proceeds of such sale are used toprepay Revolving Loans pursuant to Section 2.5, or (b) causeany Offshore Entity to enter into any arrangement, directly or indirectly, withany Person whereby any Offshore Entity shall sell or transfer any Property,real or personal, which is used or useful in its business, whether now owned orhereafter acquired, and thereafter rent or lease such Property or otherProperty which such Offshore Entity intends to use for substantially the samepurpose or purposes as the Property being sold or transferred, except for thesale of Property, the aggregate value of which does not, 

 

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during the term of this Agreement, when added to the aggregate amountof all Indebtedness of the Offshore Entities (other than FinCo) at any timeoutstanding, exceed €50,000,000.

 

7.15         Change of Name or Place of Business.  Permit any Credit Party to change itsaddress, name, identity, type of organization, corporate structure (e.g. bymerger, consolidation, change in corporate form or otherwise), jurisdiction oforganization, location of its chief executive office or principal place ofbusiness or the place it keeps its material books and records, unless theBorrowers’ Agent has (a) notified the Agent and the Canadian CollateralAgent of such change in writing at least ten (10) Business Days before theeffective date of such change, (b) taken such action, reasonablysatisfactory to the Agent (or the Canadian Collateral Agent, as applicable), tohave caused the Liens against all Collateral in favor of the Agent (or the CanadianCollateral Agent, as applicable) for the ratable benefit of the Lender Partiesto be at all times fully perfected and in full force and effect and (c) deliveredsuch certificates of Governmental Authorities as the Agent (or the CanadianCollateral Agent, as applicable) may require substantiating such change.

 

7.16         Restrictive Agreements.  Other than as provided in this Agreement, theSenior Note Documents and the Additional Senior Note Documents (but only to theextent the conditions and restrictions in the Additional Senior Note Documentsare no more restrictive than those restrictions and conditions in the SeniorNote Documents), directly or indirectly (a) agree to restrict or condition(i) the payment of any dividends or other distributions to any CreditParty; (ii) the payment of any Indebtedness owed to any Credit Party; (iii) themaking of any loans or advances to any Credit Party; or (iv) the transferof any of its properties or assets to any Credit Party, or (b) cause anyOffshore Entity to agree to restrict or condition the payment of any dividendsor other distributions to any Offshore Entity or to any Credit Party to theextent such condition or restrictions would prohibit the distribution ofamounts necessary to pay the interest accruing on the Unpledged Inter-CompanyLoans.

 

7.17         Tax Classification.  Elect, without the prior consent of theAgent, a different classification for United States federal tax purposes thanthe classification that such Credit Party, or such Subsidiary, as the case maybe, had when such Person became a party to this Agreement or any other LoanDocument.

 

7.18         Deposit Accounts.  (a) Establish any additional depositaccounts for any purpose (i) which are not listed on Schedule 5.29(as updated from time to time pursuant to the terms hereof) and (ii) unlesssuch additional deposit accounts are Controlled Accounts; (b) allow any ofParent’s foreign exchange accounts identified in Schedule 5.29, eachwith Bank of America, N.A., to remain open or to be reopened, or to hold anyfunds of any Credit Party, unless such foreign exchange accounts are covered bya Tri-Party Agreement containing arrangements satisfactory to the Agent withrespect to such accounts, or (c) allow (i) the aggregate balance ofone or more accounts heretofore or hereafter established in the ordinary courseof business as part of the administration of employee benefits or othercorporate-related service matters and not subject to a Tri-Party Agreement toexceed $100,000 or (ii) allow any account referred to as a “**Disbursement/Pass-Through Account**”on Schedule 5.29 (as in effect on the Closing Date) to have apositive balance of funds of any Credit Party (except as specifically providedin such Schedule as in effect on the Closing Date) unless such account is subjectto a Tri-Party Agreement.

 

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7.19         Organizational Documents; Tax Sharing Agreements.  Modify any of their Organizational Documentsin a manner that is adverse to the Lenders; or enter into any tax sharingagreement that is, or modify any tax sharing agreement in a manner that is,adverse to the Lenders.

 

7.20         Limitation on Indebtedness of Offshore Entities.  Permit (a) FinCo to create, incur,assume or suffer to exist Indebtedness other than the Pledged Inter-CompanyLoans, and (b) the Offshore Entities (other than FinCo) to create, incur,assume or suffer to exist Indebtedness in excess of €50,000,000 at any timeoutstanding.

 

8.             Events of Default andRemedies.

 

8.1           Events of Default.  If any of the following events shall occurand be continuing, then the Agent (or the Canadian Collateral Agent, asapplicable) may (and, if directed by the Required Lenders, shall), by writtennotice (or facsimile notice) to the Borrowers’ Agent, take any or all of the followingactions at the same or different times:  (i) acceleratethe Termination Date and declare the Loans, all Letter of Credit Advances, theCommitment Fees and all other Obligations then outstanding to be, and thereuponthe Loans, said Letter of Credit Advances, the Commitment Fees and all otherObligations shall forthwith become, immediately due and payable, withoutfurther notice of any kind, notice of intention to accelerate, presentment anddemand or protest, or other notice of any kind all of which are herebyexpressly waived by each Credit Party; (ii) terminate all or any portionof the Commitments and any obligation to issue any additional Letters ofCredit; (iii) demand that the Credit Parties provide the Agent, for theratable benefit of the Lender Parties, and the Credit Parties jointly andseverally agree upon such demand to, provide cash collateral in an amount equalto 110% of the aggregate Letter of Credit Exposure Amount then outstanding,pursuant to Section 2.10(k); and (iv) exercise any and allother rights pursuant to the Loan Documents or available under applicable law:

 

(a)           The Credit Parties or any of their Subsidiariesshall fail to pay or prepay (i) any Obligation (other than RelatedObligations) constituting principal, as and when due and payable, whether atthe due date thereof (by acceleration, lapse of time or otherwise) or at anydate fixed for prepayment thereof in accordance with the other provisions ofthe Loan Documents, (ii) any Obligation (other than Related Obligations)constituting interest or fees within two Business Days of the time such amountis due as and when due and payable, or (iii) any other Obligations (otherthan Related Obligations) within five (5) Business Days of the time suchamount is due and payable; or

 

(b)           Any Credit Party or any Offshore Entity (i) shallfail to pay when due, or within any applicable period of grace, any otherIndebtedness (excluding Indebtedness outstanding hereunder) in excess of$5,000,000 in principal amount unless such payment is being contested in goodfaith (by appropriate proceedings) and adequate reserves have been providedtherefor, or (ii) shall default (beyond any applicable grace and curativeperiods) in any other manner with respect to any other Indebtedness (excludingIndebtedness outstanding hereunder) in excess of $5,000,000 in principal amountif the effect of any such default or event of default shall be to accelerate orto permit the holder of any such other Indebtedness, at its option, toaccelerate the maturity of such Indebtedness prior to the stated maturitythereof; or

 

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(c)           Any representation or warranty made or deemed madeby any Credit Party in connection with any Loan Document or in any certificate,report, notice or financial statement furnished at any time in connection withthis Agreement shall prove to have been incorrect, false or misleading in anymaterial respect when made or deemed to have been made; or

 

(d)           Except as provided in Section 8.1(e) or8.1(f) below, Default shall occur in the punctual and completeperformance or observance of any covenant, condition or agreement to beobserved or performed on the part of any Credit Party or any of theirSubsidiaries pursuant to the terms of any provision of this Agreement or anyother Loan Document, and such Default remains uncured fifteen (15) BusinessDays after the earlier to occur of (i) the Agent giving written notice ofsuch Default to the Borrowers’ Agent or (ii) any Responsible Officer ofany Credit Party or any of their Subsidiaries acquired actual knowledge of theexistence of such Default; or

 

(e)           Default shall occur in the punctual and completeperformance or observance of any covenant, condition or agreement to beobserved or performed on the part of any Credit Party or any of theirSubsidiaries pursuant to the terms of Section 6.3 or 6.11hereof (other than Sections 6.3(f) through Section 6.3(i) andsuch Default remains uncured for two (2) Business Days; or

 

(f)            Default shall occur in the punctual and completeperformance or observance of any covenant, condition or agreement to beobserved or performed on the part of any Credit Party or any of theirSubsidiaries pursuant to the terms of Section 6.2, Sections 6.3(f) through6.3(i), Section 6.9, Sections 7.1 through Section 7.20hereof; or

 

(g)           Final judgment or judgments (or any decree ordecrees for the payment of any fine or any penalty) for the payment of anuninsured money award in excess of $2,000,000 in the aggregate shall berendered against any Credit Party or any Offshore Entity and the same shallremain undischarged and unpaid for a period of thirty (30) days during whichexecution shall not be effectively stayed or bonded; or

 

(h)           Any Credit Party or any of their Subsidiaries shallhave concealed, removed, or permitted to be concealed or removed, any part ofits Property, with intent to hinder, delay or defraud its creditors or any ofthem, or made or suffered a transfer of any of its Property which is or couldreasonably be expected to be fraudulent under any bankruptcy, fraudulentconveyance or similar law; or

 

(i)            Any of the following shall occur where suchoccurrence could reasonably be expected to result in any materialliability:  (i) a Reportable Eventshall have occurred with respect to a Plan; (ii) the filing by any CreditParty, any ERISA Affiliate, or an administrator of any Plan of a notice ofintent to terminate such Plan under the provisions of Section 4041 ofERISA; (iii) the receipt of notice by any Credit Party, any ERISAAffiliate or an administrator of a Plan that the PBGC has institutedproceedings to terminate (or appoint a trustee to administer) such a Plan; (iv) anyother event or condition exists which might, in the opinion of the Agent,constitute grounds under the provisions of Section 4042 of ERISA for thetermination of or the appointment of a trustee to administer any Plan by thePBGC; (v) a Plan shall fail to maintain a minimum funding standardrequired by Section 412 of the Code for any plan year or a waiver of 

 

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standard is sought or granted under the provisions of Section 412(c) ofthe Code; (vi) any Credit Party or any ERISA Affiliate has incurred, or islikely to incur, a liability under the provisions of Section 4062, 4063,4064 or 4201 of ERISA; (vii) any Credit Party or any ERISA Affiliate failsto pay the full amount of an installment required under Section 430(j) ofthe Code; or (viii) any Prohibited Transaction involving any Plan; or

 

(j)            This Agreement, any Note, any of the SecurityDocuments or any other Loan Document, or any material provision thereof, shallfor any reason cease to be, or shall be asserted by any Credit Party not to be,a legal, valid and binding obligation of any Credit Party, enforceable inaccordance with its terms, or the Lien purported to be created by any of theSecurity Documents shall for any reason cease to be, or be asserted by anyCredit Party not to be, a valid, first priority perfected Lien against anymaterial portion of the Collateral (except to the extent otherwise permittedunder this Agreement or any of the Security Documents); or

 

(k)           Any Credit Party or any of its Subsidiaries which isa party to any Tri-Party Agreement fails to perform and observe, and/or causeto be performed and observed, all material covenants, provisions and conditionsto be performed, discharged and observed by such Credit Party or Subsidiaryunder the terms of any Tri-Party Agreement; or

 

(l)            Any financial institution (other than JPMorgan)which is a party to any Tri-Party Agreement fails to perform and observe,and/or cause to be performed and observed, all material covenants, provisionsand conditions to be performed, discharged and observed by such financialinstitution under the terms of any Tri-Party Agreement and such failure remainsuncured (or such defaulting financial institution and applicable Tri-PartyAgreement is not replaced by the Credit Parties with a substitute financialinstitution and replacement Tri-Party Agreement both reasonably acceptable tothe Agent) five (5) Business Days after the Agent gives written notice ofsuch failure to the Borrowers’ Agent; or

 

(m)          A Change of Control shall occur.

 

Inaddition, if any of the following events shall occur, then (i) the Loans,the Letter of Credit Advances, the Commitment Fees and all other Obligationsthen outstanding and payable hereunder shall automatically, without demand,presentment, protest, notice of intent to accelerate, notice of acceleration orother notice to any Person of any kind, all of which are hereby expresslywaived by each Credit Party, become immediately due and payable and (ii) allCommitments and further obligations to issue any additional Letters of Creditshall be immediately and automatically terminated:

 

(n)           Any Credit Party or any of their Subsidiaries or anyOffshore Entity shall commence a voluntary proceeding seeking liquidation,reorganization, or other relief with respect to itself or its debts under anybankruptcy, insolvency, or other similar law now or hereafter in effect orseeking the appointment of a trustee, receiver, liquidator, custodian, or othersimilar official of it or a substantial part of its property or shall consentto any such relief or to the appointment of or taking possession by any suchofficial in an involuntary case or other proceeding commenced against it orshall make a general assignment for the benefit of creditors or shall generallyfail to pay its debts as they become due or shall take any corporate action toauthorize any of the foregoing; or

 

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(o)           An involuntary proceeding shall be commenced againstany Credit Party or any of their Subsidiaries or any Offshore Entity seekingliquidation, reorganization, or other relief with respect to it or its debtsunder any bankruptcy, insolvency, or other similar law now or hereafter in effector seeking the appointment of a trustee, receiver, liquidator, custodian, orother similar official for it or a substantial part of its property, and suchinvoluntary proceeding shall remain undismissed and unstayed for a period of60 days; or

 

(p)           Any involuntary order shall be entered in anyproceeding against any Credit Party or any of their Subsidiaries or anyOffshore Entity decreeing the dissolution, liquidation or split-up thereof, andsuch order shall remain in effect for sixty (60) days; or

 

(q)           Any Credit Party or any of their Subsidiaries or anyOffshore Entity shall admit in writing its inability to pay its debts as theybecome due; or

 

(r)            Any Credit Party or any of their Subsidiaries shallsuffer any writ of attachment or execution or any similar process to be issuedor levied against it or any substantial part of its Property which is notreleased, stayed, bonded or vacated within thirty (30) days after its issue orlevy; or

 

(s)           Any court shall order a meeting of the creditors, orany class of creditors that includes any of the Lender Parties on account ofany of the Obligations, of any Credit Party or any of their Subsidiaries, orany Credit Party or any of their Subsidiaries shall request or apply for anysuch order, or take any corporate action to authorize any such request orapplication.

 

8.2           Remedies Cumulative.  No remedy, right or power conferred upon theAgent, the Canadian Collateral Agent or any Lender is intended to be exclusiveof any other remedy, right or power given hereunder or now or hereafterexisting at law, in equity, or otherwise, and all such remedies, rights andpowers shall be cumulative.

 

9.             The Agent; theCanadian Collateral Agent.

 

9.1           Appointment, Powers and Immunities.  Each Lender hereby irrevocably appoints andauthorizes the Agent to act as its agent hereunder and under the Letters ofCredit and the other Loan Documents with such powers as are specificallydelegated to the Agent by the terms hereof and thereof, together with suchother powers as are reasonably incidental thereto.  Each Lender hereby irrevocably appoints andauthorizes the Canadian Collateral Agent to act as its agent hereunder and theother Loan Documents with such powers as are specifically delegated to the CanadianCollateral Agent by the terms hereof and thereof, together with such otherpowers as are reasonably incidental thereto. Each Lender hereby irrevocably appoints and authorizes the Agent to actas its agent under the Letters of Credit which the Agent has issued with suchpowers as are specifically delegated to the Agent by the terms hereof andthereof, together with such other powers as are reasonably incidentalthereto.  The Agent or the CanadianCollateral Agent may each perform any and all of their respective duties andexercise their respective rights and powers by or through any one or moresub-agents appointed by either the Agent or the Canadian Collateral Agent inits reasonable credit judgment.  Theexculpatory, indemnity, and expense reimbursement provisions of the LoanDocuments shall apply to any such sub-agent in such capacity.  The Agent (which such term as used in this Section 9,shall, in each case, (a) include 

 

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references to the Canadian Collateral Agent, mutatis mutandis, and (b) includereference to its (and the Canadian Collateral Agent’s) Affiliates and its own(and the Canadian Collateral Agent’s) and its (and the Canadian CollateralAgent’s) Affiliates’ officers, directors, employees’ and agents (including anysub-agents)) (i) shall not have duties or responsibilities except thoseexpressly set forth in this Agreement, the Letters of Credit and the other LoanDocuments, and shall not by reason of this Agreement or any other Loan Documentbe a trustee for any Lender; (ii) shall not be responsible to any Lenderfor any recitals, statements, representations or warranties contained in thisAgreement, the Letters of Credit or any other Loan Document, or in anycertificate or other document referred to or provided for in, or received byany of them under, this Agreement, the Letters of Credit or any other LoanDocument, or for the value, validity, effectiveness, genuineness,enforceability or sufficiency of this Agreement, the Letters of Credit or anyother Loan Document or any other certificate or document referred to orprovided for herein or therein or any property covered thereby or for anyfailure by any Party or any other Person (other than the Agent) to perform anyof its obligations hereunder or thereunder; (iii) shall not be required toinitiate or conduct any litigation or collection proceedings hereunder or underthe Letters of Credit or any other Loan Document except to the extent requestedby the Required Lenders, providedthat the Agent shall not berequired to take any action which exposes the Agent to personal liability orwhich is contrary to this Agreement or any other Loan Documents or applicablelaw, and (iv) shall not be responsible for any action taken or omitted tobe taken by it hereunder or under the Letters of Credit or any other LoanDocument or any other document or instrument referred to or provided for hereinor therein or in connection herewith or therewith, INCLUDING PURSUANT TO ITSOWN NEGLIGENCE, except to the extent it is determined by a final judicialdecision that such act or omission constituted its own gross negligence orwillful misconduct.  The Agent may employagents and attorneys-in-fact and shall not be responsible for the negligence ormisconduct of any such agents or attorneys-in-fact selected by them withreasonable care.  Without in any waylimiting any of the foregoing, each Lender acknowledges that the Agent shallnot have any greater responsibility in the operation of the Letters of Creditthan is specified in the Uniform Customs and Practice for Documentary Credits(1993 Revision, International Chamber of Commerce Publication No. 500 orany successor publication).  In anyforeclosure proceeding concerning any collateral for the Notes, each holder ofa Note if bidding for its own account or for its own account and the accountsof other Lenders is prohibited from including in the amount of its bid anamount to be applied as a credit against its Note or the Notes of the otherLenders, instead such holder must bid in cash only.  However, in any such foreclosure proceeding,the Agent may (but shall not be obligated to) submit a bid for all Lenders(including itself) in the form of a credit against the Notes of all of theLenders, and the Agent or its designee may (but shall not be obligated to),with the consent of the Required Lenders, accept title to such collateral forand on behalf of all Lenders.  The Agentmay perform any and all its duties and exercise its rights and powers by orthrough any one or more sub-agents appointed by the Agent in its reasonablecredit judgment.

 

9.2           Reliance.  The Agent shall be entitled to rely upon anycertification, notice or other communication (including any thereof bytelephone, telex, telegram or cable) believed by it to be genuine and correctand to have been signed or sent by or on behalf of the proper Person orPersons, and upon advice and statements of legal counsel (which may be counselfor the Credit Parties), independent accountants and other experts selected bythe Agent.  As to any matters notexpressly provided for by this Agreement, the Letters of Credit or any otherLoan Document, the 

 

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Agent shall in all cases be fully protected in acting, or in refrainingfrom acting, hereunder and thereunder in accordance with instructions of theRequired Lenders, and any action taken or failure to act pursuant thereto shallbe binding on all of the Lenders.

 

9.3           Defaults.  The Agent shall not be deemed to haveknowledge of the occurrence of a Default or Event of Default unless it hasreceived notice from a Lender or the Borrowers’ Agent specifying such Defaultor Event of Default and stating that such notice is a “**Notice of Default**.”  In the event that the Agent receives such anotice of the occurrence of a Default or Event of Default, the Agent shall giveprompt notice thereof to the Lenders (and shall give each Lender prompt noticeof each such non-payment).  The Agentshall (subject to Section 9.7 hereof) take such action with respectto such Default or Event of Default as shall be directed by the RequiredLenders and within its rights under the Loan Documents and at law or in equity,providedthat, unless and until the Agent shall have receivedsuch directions, the Agent may (but shall not be obligated to) take suchaction, or refrain from taking such action, permitted or within its rightsunder any of the Loan Documents or under applicable law with respect to suchDefault or Event of Default.

 

9.4           Rights as a Lender.  With respect to its Commitment, the Loans andany Letter of Credit Exposure Amount, the Agent in its capacity as a Lenderhereunder shall have the same rights and powers hereunder as any other Lenderand may exercise the same as though it were not acting as the Agent, and theterm “**Lender**” or “**Lenders**” shall, unless the contextotherwise indicates, include the Agent in its individual capacity.  The Agent may (without having to accounttherefor to any Lender) accept deposits from, lend money to and generallyengage in any kind of banking, trust, letter of credit, agency or otherbusiness with any Credit Party (and any of their Affiliates) as if it were notacting as the Agent, and the Agent may accept fees and other consideration fromany Credit Party (in addition to the fees heretofore agreed to between theapplicable Credit Parties and the Agent) for services in connection with thisAgreement or otherwise without having to account for the same to the Lenders.

 

9.5           Indemnification.  **The Lenders agree toindemnify the Agent (to the extent not reimbursed under Section 2.9(d),Section 2.10(h), Section 6.12, Section 10.9or Section 10.10 hereof, but without limiting the obligations ofthe applicable Credit Parties under said Section 2.9(d), Section 2.10(h),Section 6.12, Section 10.9 or Section 10.10),ratably in accordance with their respective Commitments, for any and allliabilities, obligations, losses, damages, penalties, actions, judgments,suits, costs, expenses or disbursements of any kind and nature whatsoever(INCLUDING THE CONSEQUENCES OF THE NEGLIGENCE OF SUCH INDEMNIFIED PERSON, butexcluding any act or omission to the extent the same is determined by a finaljudicial decision to have been caused by or resulted from the gross negligenceor willful misconduct of such indemnified person) which may be imposed on,incurred by or asserted against the Agent in any way relating to or arising outof this Agreement, the Letters of Credit or any other Loan Document or anyother documents contemplated by or referred to herein or therein or the transactionscontemplated hereby or thereby (including the costs and expenses which theapplicable Credit Parties are obligated to pay under Section 2.9(d),Section 2.10(h), Section 6.12, Section 10.9or Section 10.10 hereof but excluding, unless a Default or Event ofDefault has occurred and is continuing, normal administrative costs andexpenses incident to the performance of its agency duties hereunder) or theenforcement of any of the terms hereof**

 

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**or thereof or of any such other documents, INCLUDING THE NEGLIGENCE OFSUCH INDEMNIFIED PERSON, but excluding any act or omission to the extent thesame is determined by a final judicial decision to have been caused by orresulted from the gross negligence or willful misconduct of such indemnifiedperson.  The obligations of the Lendersunder this Section 9.5 shall survive the termination of thisAgreement and the repayment of the Indebtedness arising in connection with thisAgreement.**

 

9.6           Non-Reliance on Agent and Other Lenders.  Each Lender agrees that it has receivedcurrent financial information with respect to the Credit Parties and the otherParties and that it has  independentlyand without reliance on the Agent or any other Lender and based on such documentsand information as it has deemed appropriate, made its own credit analysis ofthe Credit Parties and the other Parties and decision to enter into thisAgreement and that it will, independently and without reliance upon the Agentor any other Lender, and based on such documents and information as it shalldeem appropriate at the time, continue to make its own analysis and decisionsin taking or not taking action under this Agreement or any of the other LoanDocuments.  The Agent shall not berequired to keep itself informed as to the performance or observance by anyParty of this Agreement, the Letters of Credit or any of the other LoanDocuments or any other document referred to or provided for herein or thereinor to inspect the properties or books of the Credit Parties or any Party.  Except for notices, reports and otherdocuments and information expressly required to be furnished to the Lenders bythe Agent, under the Letters of Credit or the other Loan Documents, the Agentshall not have any duty or responsibility to provide any Lender with any creditor other information concerning the affairs, financial condition or business ofthe Credit Parties or any other Party (or any of their Affiliates) which maycome into the possession of the Agent.

 

9.7           Failure to Act.  Except for action expressly required of theAgent hereunder, under the Letters of Credit and under the other LoanDocuments, the Agent shall in all cases be fully justified in failing orrefusing to act hereunder and thereunder unless it shall receive furtherassurances to its satisfaction by the Lenders of their indemnificationobligations under Section 9.5 hereof against any and all liabilityand expense which may be incurred by it by reason of taking or continuing totake any such action.

 

9.8           Resignation or Removal of Agent.  Subject to the appointment and acceptance ofa successor Agent as provided below, the Agent may resign at any time by givingnotice thereof to the Lenders and the Borrowers’ Agent, and the Agent may beremoved at any time with or without cause by the Required Lenders.  Upon any such resignation or removal, theRequired Lenders shall have the right to appoint a successor Agent reasonablyacceptable to the Borrowers.  If nosuccessor Agent shall have been so appointed by the Required Lenders and shallhave accepted such appointment within 30 days after the retiring Agent’s givingof notice of resignation or the Required Lenders’ removal of the retiringAgent, then the retiring Agent may, on behalf of the Lenders, appoint asuccessor Agent reasonably acceptable to the Borrowers; provided, however,that if an Event of Default has occurred which has not been waived orcured to the satisfaction of the Agent and the Required Lenders, the Borrowers’approval of a successor Agent shall not be required.  Any successor Agent shall be a Lender whichhas an office in the United States with a combined capital and surplus of atleast $2,000,000,000, and any successor Canadian Collateral Agent shall be anAffiliate of such a Lender.  Upon theacceptance of any appointment as Agent hereunder by a successor Agent, 

 

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such successor Agent shall thereupon succeed to and become vested withall the rights, powers, privileges and duties of the retiring Agent, and theretiring Agent shall be discharged from its duties and obligationshereunder.  Such successor Agent shallpromptly specify by notice to the Borrowers’ Agent and the Lenders its officefor the purpose of any notices and payments hereunder.  After any retiring Agent’s resignation orremoval hereunder as Agent, the provisions of this Section 9 shallcontinue in effect for its benefit in respect of any actions taken or omittedto be taken by it while it was acting as the Agent.

 

9.9           Syndication Agent; Joint Lead Arrangers; JointBookrunners.  Anysyndication agent, joint lead arranger or joint bookrunner appointed inconnection with the Loan Documents or the transactions contemplated thereby, inits capacity as such, shall have no rights, powers, duties or responsibilities,and no rights, powers, duties or responsibilities shall be read into thisAgreement or any other Loan Document or otherwise exist on behalf of or againstany such syndication agent, joint lead arranger or joint bookrunner, in itscapacity as such (in each case without prejudice to the rights, powers, dutiesor responsibilities of any such Person in its capacity as a Lender, Agent,Canadian Collateral Agent, or otherwise as a Party to any Loan Document, otherthan in its capacity as syndication agent, joint lead arranger or jointbookrunner).  If any such syndicationagent, joint lead arranger or joint bookrunner resigns from such capacity, nosuccessor syndication agent, joint lead arranger or joint bookrunner, as applicable,shall be appointed.

 

10.           Miscellaneous.

 

10.1         No Waiver.  No waiver of any Default or Event of Defaultshall be deemed to be a waiver of any other Default or Event of Default.  No failure to exercise and no delay on thepart of the Agent, the Canadian Collateral Agent or any Lender in exercisingany right or power under any Loan Document or at law or in equity shall operateas a waiver thereof, nor shall any single or partial exercise of any such rightor power, or the abandonment or discontinuance of steps to enforce any suchright or power, preclude any further or other exercise thereof or the exerciseof any other right or power.  No courseof dealing between the Credit Parties and the Agent or any Lender shall operateas a waiver of any right or power of the Agent or any Lender.  No notice to or demand on any Credit Party orany other Person shall entitle the Credit Parties or any other Person to anyother or further notice or demand in similar or other circumstances.

 

10.2         Notices.  Except as otherwise expressly permittedhereunder or under any other Loan Document, all notices under the LoanDocuments shall be in writing and either (a) delivered to the intendedrecipient, (b) sent via overnight courier, or (c) sent by facsimile(promptly confirmed by mail, except for any notice pursuant to Section 4.1(a) hereofwhich need not be confirmed by mail), in each case to the intended recipient atthe “Address for Notices” specified below its name on the signature pages hereof;or, as to any Lender who is a signatory hereto, at such other address as shallbe designated by such Lender in a notice to the Borrowers’ Agent and the Agentgiven in accordance with this Section 10.2 or to such other addressas a party may designate in a notice given in accordance with the provisions ofthis Section 10.2.  TheBorrowers’ Agent may change its address for purposes hereof by providingwritten notice of such address change to the Lenders and the Agent inaccordance with the provisions of this Section 10.2, with any suchchange in address only being effective ten (10) Business Days after suchchange of address has been deemed given in accordance with the provisionshereof.  

 

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Notices shall be deemed to have been given (whether actually receivedor not) when delivered (or, if sent via overnight courier, on the next BusinessDay after the date sent); provided, however, that thenotices required or permitted by Sections 2.2(b) and 4.1(a) hereofshall be effective only when actually received by the Agent.

 

10.3         Governing Law.  UNLESS OTHERWISE SPECIFIED THEREIN, EACH LOANDOCUMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THESTATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONALBANKS.

 

10.4         Survival; Parties Bound.  All representations, warranties, covenantsand agreements made by or on behalf of the Credit Parties in connectionherewith shall survive the execution and delivery of the Loan Documents andshall not be affected by any investigation made by any Person.  The term of this Agreement shall be until thetermination or lapse of all Commitments, the final maturity of each Note, thepayment of all amounts due under the Loan Documents, and the return of alloutstanding Letters of Credit (or the cash collateralization of all outstandingLetters of Credit in an amount equal to 110% of the aggregate Letter of CreditExposure Amount then outstanding).

 

10.5         Counterparts.  This Agreement may be executed in severalidentical counterparts, and by the parties hereto on separate counterparts, andeach counterpart, when so executed and delivered, shall constitute an originalinstrument, and all such separate counterparts shall constitute but one and thesame instrument.

 

10.6         Limitation of Interest.  The Credit Parties and the Lenders intend tostrictly comply with all applicable laws, including applicable usury laws, ifany.  Accordingly, the provisions of thisSection 10.6 shall govern and control over every other provision ofthis Agreement or any other Loan Document which conflicts or is inconsistentwith this Section, even if such provision declares that it controls.  As used in this Section, the term “**interest**” includes the aggregate of allcharges, fees, benefits or other compensation which constitute interest underapplicable law, provided, that, to the maximum extent permittedby applicable law, (a) any non-principal payment shall be characterized asan expense or as compensation for something other than the use, forbearance ordetention of money and not as interest, and (b) all interest at any timecontracted for, reserved, charged or received shall be amortized, prorated,allocated and spread, in equal or in unequal parts during the full term of theLoans and the Commitments so that interest for the entire term does not exceedthe Highest Lawful Rate.  In no eventshall the Borrowers or any other Person be obligated to pay, or the Agent orany Lender have any right or privilege to reserve, receive or retain, (y) anyinterest in excess of the maximum amount of nonusurious interest permittedunder the laws of the United States or of any state, if any, which areapplicable to the Agent or such Lender, respectively, or (z) totalinterest in excess of the amount which the Agent or such Lender could lawfullyhave contracted for, reserved, received, retained or charged had the interestbeen calculated for the full term of the Loans at the Highest Lawful Rate, ifany, applicable to the Agent or such Lender. None of the terms and provisions contained in this Agreement or in anyother Loan Document which directly or indirectly relate to interest shall everbe construed without reference to this Section 10.6, or beconstrued to create a contract to pay any Lender for the use, forbearance ordetention of money at an interest rate in excess of the Highest Lawful Rateapplicable to such Lender.  If the termof 

 

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any Loans or the Notes is shortened by reason of acceleration ofmaturity as a result of any Default or Event of Default or by any other cause,or by reason of any required or permitted prepayment, and if for that (or anyother) reason the Agent or any Lender at any time is owed or receives (and/orhas received) interest in excess of interest calculated at the Highest LawfulRate applicable to the Agent or such Lender, then and in any such event all ofany such excess interest owed to or received by the Agent or such Lender shallbe canceled automatically as of the date of such acceleration, prepayment orother event which produces the excess, and, if such excess interest has beenpaid to the Agent or such Lender, it shall be credited protantoagainst the then-outstanding principal balance of the Borrowers’ obligations tothe Agent or such Lender, effective as of the date or dates when the eventoccurs which causes it to be excess interest, until such excess is exhausted orall of such principal has been fully paid and satisfied, whichever occursfirst, and any remaining balance of such excess shall be promptly refunded toits payor.

 

10.7         Survival.  The obligations of the Borrower under Sections 2.3,2.9, 2.10(h), 10.9, 10.10 and 10.17 hereofshall survive the repayment of the Loans and all other Obligations, thetermination of the Commitments and the cancellation or expiration of theLetters of Credit.

 

10.8         Captions.  The headings and captions appearing in theLoan Documents have been included solely for convenience and shall not beconsidered in construing the Loan Documents.

 

10.9         Expenses, Etc.  The Borrowers agree to pay or reimburse ondemand of the Agent the following:  (a) thereasonable fees and expenses of Vinson & Elkins LLP, counsel to theAgent, or any other legal counsel (including Canadian counsel) engaged by theAgent or the Canadian Collateral Agent in connection with (i) thepreparation, execution and delivery of this Agreement (including the exhibitsand schedules hereto) and the Loan Documents and the making of the Loans andthe issuance of Letters of Credit hereunder and (ii) any modification,supplement or waiver of any of the terms of this Agreement, the Letters ofCredit or any other Loan Document; (b) all out-of-pocket costs andexpenses (including attorneys’ fees) of the Lenders, the Agent and the CanadianCollateral Agent, or any of them, in connection with any Default or Event ofDefault or the enforcement of this Agreement, the Letters of Credit or anyother Loan Documents; (c) all transfer, stamp, documentary or othersimilar taxes, assessments or charges levied by any governmental or revenueauthority in respect of this Agreement, any Letter of Credit or any other LoanDocument or any other document referred to herein or therein; (d) allout-of-pocket costs, expenses, taxes, assessments and other charges incurred bythe Agent or the Canadian Collateral Agent in connection with any filing,registration, recording or perfection of any security interest contemplated bythis Agreement, any other Loan Document or any document referred to herein ortherein, and the cost of title insurance; and (e) reasonable expenses ofdue diligence incurred by the Agent prior to or as of the Closing Date.

 

10.10       Indemnification.  **The Borrowers agree toindemnify the Agent, the Canadian Collateral Agent, the Lenders and eachAffiliate thereof and their respective directors, officers, employees, partnersand agents from, and hold each of them harmless against, any and all losses,liabilities (including Environmental Liabilities), claims, costs (includingEnvironmental Claims) or damages to which any of them may become subject,insofar as such losses, liabilities, claims, costs or damages arise out of orresult from any (a) actual or proposed use by any Credit Party of theproceeds of any extension of credit (whether a**

 

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**Loan or a Letter of Credit) by any Lender hereunder, (b) breach byany Credit Party of this Agreement or any other Loan Document, (c) violationby any Credit Party or any of their Subsidiaries of any law, rule, regulationor order including any Requirements of Environmental Law, (d) Liens orsecurity interests granted on any Property pursuant to or under the LoanDocuments, to the extent resulting from any Hazardous Substance located in, onor under any such Property, (e) ownership by the Lenders, the Agent or theCanadian Collateral Agent of any Property following foreclosure under the LoanDocuments, to the extent such losses, liabilities, claims, costs or damagesarise out of or result from any Hazardous Substance, located in, on or undersuch Property prior to or at the time of such foreclosure, including losses,liabilities, claims, costs or damages which are imposed upon Persons under lawsrelating to or regulating Hazardous Substances, solely by virtue of ownership, (f) anyLender, the Agent or the Canadian Collateral Agent being deemed an operator ofany such Property by a court or other regulatory or administrative agency ortribunal or other third party, to the extent such losses, liabilities, claims,costs or damages arise out of or result from any Hazardous Substance,petroleum, petroleum product or petroleum waste located in on or under suchProperty at or prior to any foreclosure thereon under the Loan Document, or (g) investigation,litigation or other proceeding (including any threatened investigation orproceeding) relating to any of the foregoing, and the Borrowers agree toreimburse the Agent, the Canadian Collateral Agent and each Lender, and eachAffiliate thereof and their respective directors, officers, employees,partners, counsel and agents, upon demand for any out-of-pocket expenses(including reasonable legal fees) and costs incurred in connection with anysuch investigation or proceeding, AND WHETHER ANY SUCH LOSS, LIABILITY, CLAIMOR DAMAGE RESULTS FROM THE NEGLIGENCE OF ANY SUCH INDEMNIFIED PERSON; butexcluding any such losses, liabilities, claims, costs, damages or expensesincurred by a Person or any Affiliate thereof or their respective directors,officers, employees, partners, counsel or agents to the extent the same isdetermined by a final judicial decision to have been caused by or resulted fromthe gross negligence or willful misconduct of such Person, Affiliate, director,officer, employee, partner, counsel or agent. No party hereto, nor any other Person indemnified hereunder, shall beliable for any damages arising from the use by others of information or othermaterials obtained through electronic, telecommunications or other informationtransmission systems or for any special, indirect, consequential or punitivedamages in connection with the Loan Documents or the transaction contemplatedthereby.**

 

10.11       Amendments, Waivers, Etc.  No amendment, modification or waiver of anyprovision of this Agreement, the Notes or any other Loan Document, nor any consentto any departure by the Credit Parties or any of their Subsidiaries, nor by theAgent, the Canadian Collateral Agent or any Lenders therefrom, shall in anyevent be effective unless the same shall be agreed or consented to in writingby the Required Lenders and the Borrowers, and each such waiver or consentshall be effective only in the specific instance and for the specific purposefor which given; provided, that no such amendment, waiver orconsent shall, unless consented to in writing by each affected Lender(excluding a Defaulting Lender except with respect to clause (a)), do any ofthe following:  (a) increase theTotal Commitment or any Commitment of any such Lender  or subject the Agent, the Canadian CollateralAgent or any such Lender to any additional obligations; (b) reduce theprincipal of, or interest on, any Loan, any Letter of Credit Exposure Amount orany fee hereunder (provided, that any waiver of Default Rateinterest shall

 

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not be considered a reduction of interest); (c) waive or postponeany scheduled date fixed for any payment of principal of, or interest on, anyLoan, any Letter of Credit Exposure Amount or any fee or other sum to be paidhereunder; (d) change the percentage of any of the Commitments or of theaggregate unpaid principal amount of any of the Loans, any Letter of CreditExposure Amount, or the number of Lenders which shall be required for theLenders or any of them to take any action under this Agreement; (e) increaseany of the applicable Borrowing Base advance rates or sublimits; (f) changeany provision contained in Sections 2.2(d), 2.2(e), 2.7,2.11, 10.9(b) or 10.10 hereof or this Section 10.11or Section 10.16 hereof; (g) release the Borrowers from liabilityfor any of the Obligations; (h) release any Guarantor from any Guaranty; (i) otherthan as expressly permitted by this Agreement, release any Collateral for anyof the Obligations if the value of such Collateral (excluding the value of allother Collateral released pursuant to  Section 7.4(f)(4) or 10.21(f) hereof)exceeds $2,000,000 in the aggregate, as reasonably determined by the Agent; (j) changeany of the definitions of “**Obligations**”or “**Required Lenders**” containedherein; or (k) change any of the definitions of “**Eligible Equipment**,” “**Eligible Inventory**,” “**Eligible Real Estate**,” “**Eligible Receivables**,” “**Ineligible Receivables**,” or “**Ineligible Inventory**” contained herein, ifthe effect of any such change would be to materially increase the BorrowingBase, and providedfurtherthat nothing in this Section 10.11shall affect, limit or restrict the Agent’s right to establish, fix, reduce,increase or otherwise revise any standards of eligibility for any itemsincluded within the Borrowing Base or any Reserves, from time to time inaccordance with other provisions of this Agreement and subject to thelimitations set forth herein.  Anythingin this Section 10.11 to the contrary notwithstanding, noamendment, waiver or consent shall be made with respect to Section 9without the written consent of the Agent and the Canadian Collateral Agent, andno amendment, waiver or consent shall amend, modify or otherwise affect therights or duties of the Swingline Lender hereunder without the prior writtenconsent of the Swingline Lender. Notwithstanding any contrary provision hereof, if any Lender (a) failsto consent to any of the above-described items requiring the unanimous consentof the Lenders when such consent has been agreed to by the Agent and theRequired Lenders, (b) is a Defaulting Lender hereunder, or (c) requestscompensation under Section 2.9(d) and/or Section 10.16,the Agent or the Borrowers shall be entitled to cause such non-consentingLender to be replaced hereunder by an Eligible Assignee in compliance with allrelevant provisions of Section 10.12 hereof without payment of anyprepayment or termination fee. In such event, such non-consenting Lender agreesto abide by the relevant provisions of Section 10.12 hereof inconnection with the replacement of such non-consenting Lender by the EligibleAssignee secured by the Agent or the Borrowers. Notwithstanding the foregoing right of the Borrowers to replace a Lenderthat requests compensation under Section 2.9(d) and/or Section 10.16,the Borrowers shall continue to be obligated to pay such Lender all amountsowing under Section 2.9(d) and/or Section 10.16for the period such Lender remains a Lender hereunder.  Notwithstanding the foregoing right of theBorrowers to replace any such non-consenting Lender, neither the Agent nor anyLender shall have any obligation to the Borrowers to find or locate anysubstitute lender or lenders to replace any such non-consenting Lender.

 

10.12       Successors and Assigns.

 

(a)           This Agreement shall be binding upon and inure tothe benefit of the Credit Parties, the Agent, the Canadian Collateral Agent andthe Lenders and their respective successors and permitted assigns, providedthat the undertaking of the Lenders hereunder to 

 

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make Loans to the Borrowers and to issue Letters of Credit for theaccount of the Borrowers shall not inure to the benefit of any successor of theBorrowers, other than a successor expressly permitted by the terms of thisAgreement. The Borrowers may not assign or transfer any of their rights orobligations hereunder without the prior written consent of all of the Lenders(and any attempted assignment or transfer by the Borrowers without such consentshall be null and void), and no Lender may assign or otherwise transfer itsrights or obligations hereunder except in accordance with this Section 10.12.  Nothing in this Agreement, expressed orimplied, shall be construed to confer upon any Person (other than (i) theparties hereto, their respective successors and assigns permitted hereby, (ii) anyparticipant of a Lender (to the extent provided in subparagraph (b) below),and (iii) to the extent expressly set forth herein, the Affiliates of theAgent and each of the Lenders) any legal or equitable right, remedy or claimunder or by reason of this Agreement.

 

(b)           Each Lender may sell participations to any Person inall or part of any Loan, or all or part of its Notes, the Letter of CreditExposure Amount, the Swingline Exposure or Commitments, to another bank orother entity, in which event, without limiting the foregoing, the provisions ofSections 10.10 and Section 10.16 shall inure to thebenefit of each purchaser of a participation and the pro-rata treatment ofpayments, as described in Section 2.12, shall be determined as ifsuch Lender had not sold such participation. In the event any Lender shall sell any participation:  (i) the Borrowers, the Agent, theCanadian Collateral Agent and the other Lenders shall continue to deal solelyand directly with such selling Lender in connection with such selling Lender’srights and obligations under the Loan Documents (including the Note(s) heldby such selling Lender), (ii) such Lender shall retain the sole right andresponsibility to enforce the obligations of the Borrowers relating to theLoans, Letter of Credit Exposure Amount and Swingline Exposure, including theright to approve any amendment, modification or waiver of any provision of thisAgreement other than (and then only if expressly permitted by the applicableparticipation agreement) amendments, modifications or waivers with respect to (1) anyreduction of fees payable hereunder to the Lender, (2) any reduction ofthe amount of principal or the rate of interest payable on, or the dates fixedfor the scheduled repayment of principal of, the Loans and other sums to bepaid to the Lenders hereunder, and (3) any postponement of any date forthe payment of any amount payable in respect of the Loans of such Lender, and (iii) theBorrowers agree, to the fullest extent they may effectively do so underapplicable law, that any participant of a Lender may exercise all rights ofset-off, bankers’ lien, counterclaim or similar rights with respect to suchparticipation as fully as if such participant were a direct holder of Loans ifsuch Lender has previously given notice of such participation to the Borrowers.

 

(c)           Each Lender may assign to one or more Lenders orEligible Assignees all or a portion of its interests, rights and obligationsunder this Agreement (including all or a portion of its Commitment and the sameportion of the related Loans at the time owing to it, the related Note or Notesheld by it and its Letter of Credit Exposure Amount); provided, however,that, (i) the Agent and the Borrowers must give their respectiveprior written consent, which consent will not be unreasonably withheld,conditioned or delayed (except that the Borrowers’ consent to any suchassignment shall not be required if (A) such assignment is to a Lender, anAffiliate of a Lender or an Approved Fund or (B) an Event of Default hasoccurred which has not been waived or cured to the satisfaction of the Agentand the Required Lenders), (ii) the aggregate amount of the applicableCommitment, Loans, Letter of Credit Exposure Amount and 

 

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Swingline Exposure (without duplication) of the assigning Lendersubject to each such assignment (determined as of the date the Assignment andAcceptance (as defined below) with respect to such assignment is delivered tothe Agent) shall in no event be less than $5,000,000 (except for certainexceptions approved by the Borrowers and the Agent) and shall be in an amountthat is an integral multiple of $1,000,000 (unless all of the assigning Lender’sapplicable Commitment, Loans, Letter of Credit Exposure Amount and SwinglineExposure is being assigned); (iii) the aggregate amount of the applicableCommitment and/or Loans of the assigning Lender immediately after each partialassignment must be at least $5,000,000 (except for certain exceptions approvedby the Borrowers and the Agent) and shall be in an amount which is an integralmultiple of $1,000,000; provided, however, that upon theoccurrence and during the continuance of any Event of Default, any Lender shallbe entitled to assign to one or more Lenders or Eligible Assignees all of suchassigning Lender’s Commitment, Loans, Letter of Credit Exposure Amount andSwingline Exposure in accordance with the other terms of this Section 10.12;and (iv) the parties to each such assignment shall execute and deliver tothe Agent, for its acceptance and recording in its records, and to theBorrowers’ Agent, for its acceptance on behalf of the Borrowers if theBorrowers’ approval of such assignment is otherwise required under the terms ofthis Section 10.12, an Assignment and Acceptance in substantiallythe form of Exhibit P annexed hereto, or in such other form as maybe approved by the Agent (each an “**Assignmentand Acceptance**”) with blanks appropriately completed, togetherwith any Note or Notes subject to such assignment and a processing andrecordation fee of $3,500 (for which the Borrowers shall have noliability).  Upon such execution,delivery, acceptance and recording, from and after the effective date specifiedin each Assignment and Acceptance, which effective date shall be at least five (5) BusinessDays after the execution thereof, unless a shorter period of time may be agreedto by the Agent in its sole and absolute discretion, (A) the assigneethereunder shall be a party hereto and, to the extent provided in suchAssignment and Acceptance, have the rights and obligations of a Lenderhereunder and (B) the Lender thereunder shall, to the extent provided insuch assignment, be released from its obligations under this Agreement (and, inthe case of an Assignment and Acceptance covering all or the remaining portionof an assigning Lender’s rights and obligations under this Agreement, suchLender shall cease to be a party hereto).

 

(d)           By executing and delivering an Assignment andAcceptance, the Lender assignor thereunder and the assignee thereunder confirmto and agree with each other and the other parties hereto as follows:  (i) other than the representation andwarranty that it is the legal and beneficial owner of the interest beingassigned thereby free and clear of any adverse claim, such Lender assignormakes no representation or warranty and assumes no responsibility with respectto any statements, warranties or representations made in or in connection withany Loan Document or the execution, legality, validity, enforceability,genuineness, sufficiency or value of any Loan Document or any other instrumentor document furnished pursuant thereto; (ii) such assignor Lender makes norepresentation or warranty and assumes no responsibility with respect to thefinancial condition of the Credit Parties or any of their Subsidiaries or theperformance or observance by the Credit Parties of any of their obligationsunder any of the Loan Documents; (iii) such assignee confirms that it hasreceived a copy of this Agreement and the other Loan Documents, together withcopies of the financial statements of the Credit Parties previously deliveredin accordance herewith and such other documents and information as it has deemedappropriate to make its own credit analysis and decision to enter into suchAssignment and Acceptance; (iv) such assignee confirms that it will keepconfidential all information with 

 

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respect to the Credit Parties furnished to it by the Credit Parties,such assignor Lender, the Agent or the Canadian Collateral Agent (other thaninformation generally available to the public or otherwise available to theAgent on a non-confidential basis or otherwise permitted pursuant to the termsof this Agreement); (v) such assignee will, independently and withoutreliance upon the Agent, the Canadian Collateral Agent, such assignor Lender orany other Lender and based on such documents and information as it shall deemappropriate at the time, continue to make its own credit decisions in taking ornot taking action under the Loan Documents; (vi) such assignee appointsand authorizes the Agent to take such action as agent on its behalf and toexercise such powers under the Loan Documents as are delegated to the Agent bythe terms hereof, together with such powers as are reasonably incidentalthereto; and (vii) such assignee agrees that it will perform in accordancewith their terms all obligations that by the terms of the Loan Documents arerequired to be performed by it as a Lender.

 

(e)           The Agent, acting for this purpose as an agent ofthe Borrowers, shall maintain at its office a copy of each Assignment andAcceptance delivered to it and a register containing the names and addresses ofthe Lenders and the Commitments of, and principal amount of the Loans owing to,and the Letter of Credit Exposure Amount and Swingline Exposure of, each Lenderfrom time to time (the “**Register**”).  The entries in the Register shall be conclusive,in the absence of manifest error, and the Borrowers, the Agent, the CanadianCollateral Agent and the Lenders shall treat each person the name of which isrecorded therein as a Lender hereunder for all purposes of the Loan Documents.  Such records shall be available forinspection by the Borrowers, the Canadian Collateral Agent or any Lender at anyreasonable time and from time to the upon reasonable prior notice.

 

(f)            Upon its receipt of an Assignment and Acceptanceexecuted by an assigning Lender and the assignee thereunder together with theNote(s) subject to such assignment, the written consent to such assignmentand the fee payable in respect thereto, the Agent shall, if such Assignment andAcceptance has been completed with blanks appropriately filled, (i) acceptsuch Assignment and Acceptance, (ii) record the information containedtherein in the Register and (iii) give prompt notice thereof to theBorrowers and the Lenders. Contemporaneously with the receipt by the Borrowers of such Assignmentand Acceptance and the surrendered Note(s), the Borrowers, at their ownexpense, shall execute and deliver to the Agent in exchange for the surrenderedNote(s), a new Note or Notes payable to the order of such assignee in an amountequal to the applicable Commitment, Loans, Letter of Credit Exposure Amount andSwingline Exposure (without duplication) assumed by it pursuant to suchAssignment and Acceptance and, if the assigning Lender has retainedCommitments, Loans, Letter of Credit Exposure Amount and/or Swingline Exposurehereunder, a new Note or Notes to the order of the assigning Lender in anamount equal to the applicable Commitment, Loans, Letter of Credit ExposureAmount and/or Swingline Exposure retained by it hereunder.  Such new Notes shall be in an aggregateprincipal amount equal to the aggregate principal amount of such surrenderedNote(s), shall be dated the effective date of such Assignment and Acceptanceand shall otherwise be in substantially the form of the surrendered Note(s).  Such surrendered Note shall be markedcanceled and returned to the Borrowers’ Agent.

 

(g)           Any Lender may, in connection with any assignment orparticipation or proposed assignment or participation pursuant to this Section 10.12,disclose to the assignee or participant or proposed assignee or participant,any information relating to the Credit Parties 

 

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and/or any Subsidiary of the Credit Parties furnished to such Lender byor on behalf of the Credit Parties or such applicable Subsidiary, so long assuch assignee or participant or proposed assignee or participant confirms thatit will keep confidential all information with respect to the Credit Partiesfurnished to it by the Credit Parties, such assignor Lender, the Agent or theCanadian Collateral Agent (other than information generally available to thepublic or otherwise available to the Agent on a non-confidential basis orotherwise permitted pursuant to the terms of this Agreement).

 

(h)           Notwithstanding anything herein to the contrary, anyLender may at any time pledge or assign a security interest in all or anyportion of its rights under this Agreement to secure obligations of suchLender, including without limitation, any pledge or assignment to secure obligationsto a Federal Reserve Bank, and this Section shall not apply to any suchpledge or assignment of a security interest; providedthat nosuch pledge or assignment of a security interest shall release a Lender fromany of its obligations hereunder or substitute any such pledgee or assignee forsuch Lender as a party hereto.

 

10.13       Entire Agreement.  This Agreement and the other Loan Documentsembody the entire agreement and understanding among the Credit Parties, theAgent, the Canadian Collateral Agent and the Lenders relating to the subjectmatter hereof and supersede all prior proposals, agreements and understandingsrelating to the subject matter hereof. Any conflict between the provisions of this Agreement and the provisionsof any other Loan Documents shall be governed by the provisions of thisAgreement.  The Credit Parties certifythat they are relying on no representation, warranty, covenant or agreementexcept for those set forth in this Agreement and the other Loan Documents ofeven date herewith.

 

10.14       Severability.  If any provision of any Loan Documents shallbe invalid, illegal or unenforceable in any respect under any applicable law,the validity, legality and enforceability of the remaining provisions shall notbe affected or impaired thereby.

 

10.15       Disclosures.  Every reference in the Loan Documents todisclosures of the Borrower or other Credit Parties to the Agent and theLenders in writing, to the extent that such references refer to disclosures ator prior to the execution of this Agreement, shall be deemed strictly to referonly to written disclosures delivered to the Agent and the Lenders in anorderly manner prior to or concurrently with the execution hereof.

 

10.16       Capital Adequacy.  Without duplication of the provisions of Section 2.9:

 

(a)           If after the date of this Agreement, any Lendershall have determined that the adoption or effectiveness (regardless of whetherpreviously announced) after the date of this Agreement of any applicable LegalRequirement or treaty regarding capital adequacy, or any change therein afterthe date of this Agreement, or any change in the interpretation oradministration thereof by any Governmental Authority or comparable agencycharged with the interpretation or administration thereof after the date of thisAgreement, or compliance by any Lender with any request or directive regardingcapital adequacy made or adopted after the date of this Agreement (whether ornot having the force of law) of any such Governmental Authority, has or wouldhave the effect of increasing the cost of, or reducing the rate of return onthe capital of such Lender (or any holding company of which such Lender is apart) as a consequence of its 

 

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obligations hereunder or under any Letter of Credit or its Note to alevel below that which such Lender or holding company could have achieved butfor such adoption, change or compliance by an amount deemed by such Lender tobe material, then from time to time, upon demand by such Lender (with a copy tothe Agent) in the form of a certificate stating the cause of such demand andreasonably detailed calculations therefor, the Borrowers (subject to Section 10.6hereof) agree to pay to such Lender such additional amount or amounts as willcompensate such Lender or holding company for such reduction.

 

(b)           The certificate of any Lender setting forth suchamount or amounts as shall be necessary to compensate such Lender or itsholding company as specified in Section 10.16(a) above (andsetting forth the calculation thereof in reasonable detail) shall be conclusiveand binding, absent manifest error.  TheBorrowers shall pay such Lender the amount shown as due on any such certificatewithin five (5) Business Days after such Lender delivers such certificate.  In preparing such certificate, such Lendermay employ such assumptions and allocations of costs and expenses as it shallin good faith deem reasonable and may use any reasonable averaging andattribution method.

 

(c)           If any Lender requests compensation from theBorrowers under this Section 10.16 or under Sections 2.9(b) or10.17, then at any time within 120 days after receipt by theBorrowers’ Agent of the certificate from such Lender regarding thecircumstances and calculation of the applicable compensation so requested, theBorrowers shall have the right to seek and obtain one or more substitutelenders approved by the Agent (which approval shall not be unreasonablywithheld so long as each such substitute lender is an Eligible Assignee) to replacesuch Lender hereunder in compliance with all relevant provisions of Section 10.12hereof.  In such event, the Agent or theBorrowers shall be entitled to cause such Lender so requesting compensation tobe replaced hereunder by an Eligible Assignee in compliance with all relevantprovisions of Section 10.12 hereof without payment of anyprepayment or termination fee, and, any such Lender so requesting compensationagrees to abide by the relevant provisions of Section 10.12 hereofin connection with the replacement of such non-consenting Lender by theEligible Assignee secured by the Agent or the Borrowers.  Contemporaneously with the replacement ofsuch Lender hereunder with one or more such substitute lenders, the Borrowersshall cause such substitute lender(s) to pay in full, as the purchaseprice for such assignment, the Obligations owed to such replaced Lender,including all accrued, unpaid interest thereon and any Consequential Loss owingby the Borrowers to such replaced Lender as a result of such payment.  Notwithstanding the foregoing terms andprovisions of this Section 10.16, (i) the Borrowers shallremain obligated to make timely payment of the additional compensation setforth in the certificate presented to the Borrowers by such replaced Lender underthe terms of Section 10.16(b) above for the periods prior tothe applicable replacement date, and (ii) neither the Agent nor any Lendershall have any obligation to the Borrowers to find or locate any substitutelender or lenders to replace any Lender requesting compensation from theBorrowers under this Section 10.16.

 

(d)           Failure or delay on the part of any Lender Party todemand compensation pursuant to this Section 10.16 or under Sections 2.9(b) or10.17 shall not constitute a waiver of such Lender Party’s right todemand such compensation; providedthat the Borrower shall not berequired to compensate any Lender Party pursuant to any such section for anyincreased costs or reductions incurred more than one hundred eighty(180) days prior to the date that such Lender 

 

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Party (or the Agent on behalf of such Lender Party) notifies theBorrower of the circumstance giving rise to such increased costs or reductionsand of such Lender Party’s intention to claim compensation therefor; providedfurtherthat, if the circumstance giving rise to such increasedcosts or reductions arises with retroactive effect, then the one hundred eighty(180)-day period referred to above shall be extended to include the period ofretroactive effect thereof.

 

10.17       Taxes.

 

(a)           As used in this Section 10.17, thefollowing terms shall have the following meanings:

 

(i)            “**Indemnifiable Tax**” means any Tax, butexcluding, in any case, any Tax that (A) would not be imposed in respectof a payment to a Lender or a holder of any of the Notes under this Agreement,under the Notes held by such holder, under any Letter of Credit or under any ofthe other Loan Documents except for a present or former connection between thejurisdiction of the Governmental Authority imposing such Tax and such holder(or a shareholder or other Person with an interest in such holder), including aconnection arising from such holder’s (or shareholder of such holder or suchother Person) being or having been a citizen or resident of such jurisdiction,or being or having been organized, present or engaged in a trade or business insuch jurisdiction, or having or having had a permanent establishment or fixedplace of business in such jurisdiction, but excluding a connection arisingsolely from such Lender or holder having executed, delivered, performed itsobligations or received a payment under, or enforced, this Agreement, the Notesheld by such holder, any Letter of Credit or any other Loan Documents, or (B) isan income or franchise tax imposed on net income, net profits or gross receiptsby any Governmental Authority of a jurisdiction with respect to which anyLender, a holder of any of the Notes, an issuer of any Letter of Credit or arecipient of any payment under this Agreement or any of the other LoanDocuments has a present or former connection, including a connection arisingfrom such holder’s, issuer’s or recipient’s, as the case may be (or ashareholder or other Person with an interest in such holder, issuer orrecipient, as the case may be), being or having been a citizen or resident ofsuch jurisdiction, or being or having been organized, present or engaged in atrade or business in such jurisdiction, or having or having had a permanentestablishment or fixed place of business in such jurisdiction, but excluding aconnection arising solely from such Lender, holder, issuer, or recipient, asthe case may be, having executed, delivered, performed its obligations orreceived a payment under, or enforced, this Agreement, the Notes held by suchholder, any Letter of Credit or any other Loan Documents.

 

(ii)           “**Other Tax**” means any present or futurerecording, stamp, documentary, excise, transfer, sales, property or similartax, levy, impost, duty, charge, assessment or fee arising from any paymentmade under this Agreement, any Note, any Letter of Credit or any other LoanDocument or from the execution, delivery or enforcement of any Loan Document.

 

(iii)          “**Tax**” means any present or future tax,levy, impost, duty, charge, assessment or fee of any nature (including interestthereon and penalties and additions thereto) that is imposed by anyGovernmental Authority in respect of a payment to a 

 

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holder of any of the Notesunder this Agreement, under the Notes or under any of the other Loan Documents.

 

(b)           If any Credit Party is required by any applicableLegal Requirement to make any deduction or withholding for or on account of anyTax from any payment to be made by it under this Agreement, under the Notes,under any Letter of Credit or under any other Loan Documents, then the CreditParty shall (A) promptly notify the applicable Lender, the holder of Notesor other relevant Persons hereunder that is entitled to such payment of suchrequirement to so deduct or withhold such Tax, (B) pay to the relevantGovernmental Authorities the full amount required to be so deducted orwithheld, (C) promptly forward to such Lender, holder or other relevantPerson an official receipt (or certified copies thereof), or otherdocumentation reasonably acceptable to such holder or other relevant Person,evidencing such payment to such Governmental Authorities and (D) if suchTax is an Indemnifiable Tax, pay to such Lender, holder or other relevantPerson, in addition to whatever net amount of such payment is paid to suchholder or other relevant Person, such additional amount as is necessary toensure that the total amount actually received by such holder or other relevantPerson (free and clear of Indemnifiable Tax imposed on or with respect to suchadditional amount) will equal the full amount of the payment such holder orother relevant Person would have received had no such deduction or withholdingbeen required.

 

(c)           In addition, the relevant Credit Party or CreditParties shall pay any Other Taxes to the relevant Governmental Authority inaccordance with applicable law.

 

(d)           Without duplication of the Credit Parties’obligations on account of Indemnifiable Taxes and Other Taxes pursuant to Sections 10.17(b) and10.17(c), the Credit Parties shall indemnify the Agent and each Lender,within ten (10) Business Days after written demand therefor, for the fullamount of any Indemnifiable Taxes or Other Taxes paid by the Agent or suchLender, as the case may be, on or with respect to any payment by or on accountof any obligation of the Credit Parties under this Agreement, any Note, anyLetter of Credit or any other Loan Document (including Indemnifiable Taxes orOther Taxes imposed or asserted on or attributable to amounts payable underthis Section 10.17) and any penalties, interest and reasonableexpenses arising therefrom or with respect thereto, whether or not suchIndemnifiable Taxes or Other Taxes were correctly or legally imposed or assertedby the relevant Governmental Authority. A certificate as to the amount of such payment or liability, describingthe requested amounts in reasonable detail, delivered to the Credit Parties bya Lender, or by the Agent on its own behalf or on behalf of a Lender, shall beconclusive absent manifest error.

 

(e)           Each Lender or holder of a Note shall, upon requestby the Credit Parties, take requested measures to mitigate the amount ofIndemnifiable Tax required to be deducted or withheld from any payment made bythe Credit Parties under this Agreement, under the Notes or under any otherLoan Documents if such measures can, in the sole and absolute opinion of suchLender or holder, be taken without such Person suffering any economic, legal,regulatory or other disadvantage (provided, however, thatno such Person shall be required to designate a funding office that is notlocated in the United States of America).

 

(f)            Any Foreign Lender that is entitled to an exemptionfrom or reduction of the deduction, withholding or payment of an IndemnifiableTax or Other Tax under the law of 

 

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the United States or the jurisdictions in which the Credit Parties arelocated (or any political subdivision thereof), or any treaty to which any suchjurisdiction is a party, with respect to payments under this Agreement, underany Note, under any Letter of Credit or under any other Loan Document shalldeliver to the Credit Parties and the Agent, at the time or times prescribed byapplicable law, such properly completed and executed documentation prescribedby applicable law or reasonably requested by the Credit Parties as will permitsuch payments to be made without deduction or withholding or at a reduced rate.  Without limiting the generality of theforegoing, in the event that the relevant Credit Party is resident for taxpurposes in the United States, any Foreign Lender shall deliver to the CreditParty and the Agent (in such number of copies as shall be requested by therecipient) on or prior to the date on which such Foreign Lender becomes aLender under this Agreement (and from time to time thereafter upon the requestof the Credit Parties or the Agent, but only if such Foreign Lender is legallyentitled to do so), whichever of the following is applicable:

 

(i)            duly completed copies of IRSForm W-8BEN claiming eligibility for benefits of an income tax treaty towhich the United States is a party,

 

(ii)           duly completed copies of IRSForm W-8ECI,

 

(iii)          in the case of a ForeignLender claiming the benefits of the exemption for portfolio interest undersection 881(c) of the Code, (x) a certificate to the effect thatsuch Foreign Lender is not (A) a “**bank**”within the meaning of section 881(c)(3)(A) of the Code, (B) a “**10 percent shareholder**” of the CreditParty within the meaning of section 881(c)(3)(B) of the Code, or (C) a“**controlled foreign corporation**”described in section 881(c)(3)(C) of the Code and (y) dulycompleted copies of IRS Form W-8BEN, or

 

(iv)          any other form prescribed byapplicable law as a basis for claiming exemption from U.S. federal income taxwithholding duly completed together with such supplementary documentation asmay be prescribed by applicable law,

 

inall cases properly completed and duly executed by such Foreign Lender claimingcomplete exemption from withholding of U.S. federal income tax on all paymentsby the Credit Parties under this Agreement, under any Note, under any Letter ofCredit or under any other Loan Document. The Credit Parties shall not be required to pay additional amounts toany Foreign Lender pursuant to this Section 10.17 to the extentthat the obligation to pay such additional amounts would not have arisen butfor the failure of such Foreign Lender to comply with this clause (f) (unlesssuch failure is due to a change in treaty, law or regulation, or anyinterpretation or administration thereof by any Governmental Authority,occurring after the date on which a form, certificate or other documentoriginally was required to be provided).

 

(g)           Each Lender and each Note holder agrees that if, inits good faith opinion, it has subsequently recovered or received a permanentnet tax benefit with respect to any amounts of Taxes (i) previously paidby it and as to which it has been indemnified by or on behalf of the Borrowersor (ii) previously deducted by the Credit Parties (including, withoutlimitation, any Indemnifiable Taxes deducted from any additional amounts paidunder clause (b) above), the relevant Lender or Note holder, as thecase may be, shall reimburse the Credit Parties 

 

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to the extent of the amount of any such recovery or permanent net taxbenefit (but only to the extent of any indemnity payments made, or additionalamounts paid, by or on behalf of the Credit Parties under this Section 10.17with respect to the Taxes giving rise to such recovery or tax benefit); provided,however, that the Credit Parties, upon the request of the Lenderor Note holder, as the case may be, agree to repay to such Lender or Noteholder, as the case may be, the amount paid over to the Credit Parties(together with penalties, interest or other charges), in the event such Lenderor Note holder is required to repay such amount to the relevant Governmental Authority.

 

10.18       Waiver of Claim.  Each Borrower hereby waives and releases theAgent, the Canadian Collateral Agent and all Lenders from any and all claims orcauses of action which the Borrowers or any of them may own, hold or claim inrespect of any of the Agent, the Canadian Collateral Agent or any Lenders as ofthe date of this Agreement.

 

10.19       Right of Setoff.  The Lender Parties each are hereby authorizedat any time and from time to time during the existence of an Event of Defaultor a Dominion Event, without notice to any Credit Party (any such notice beingexpressly waived by the Credit Parties by their execution of the applicableLoan Documents), to setoff and apply any and all deposits (general or special,time or demand, provisional or final, whether or not such setoff results in anyloss of interest or other penalty, and including without limitation allcertificates of deposit) at any time held, and any other funds or property atany time held, and other Indebtedness at any time owing by the Agent, theCanadian Collateral Agent or such other Lender Party to or for the credit orthe account of any such Credit Party against any and all of the Obligationsirrespective of whether or not Agent, the Canadian Collateral Agent or suchother Lender Party shall have made any demand under this Agreement, the Notesor any other Loan Document.  Each CreditParty (by their execution of the applicable Loan Documents) also hereby grantsto Agent, the Canadian Collateral Agent and each of the other Lender Parties a securityinterest in and hereby transfers, assigns, sets over, and conveys to the Agent,the Canadian Collateral Agent and to each of the other Lender Parties, assecurity for payment of all Obligations, all such deposits, funds or propertyof such Credit Party or Indebtedness of the Agent, the Canadian CollateralAgent or any other Lender Party to any such Credit Party.  Should the right of the Agent, the CanadianCollateral Agent or any other Lender Party to realize funds in any manner setforth hereinabove be challenged and any application of such funds be reversed,whether by court order or otherwise, the Lenders shall make restitution orrefund to the applicable Credit Parties pro rata in accordance with theirrespective Commitment Percentages.  EachLender agrees to promptly notify the Borrowers’ Agent and the Agent after anysuch setoff and application by it or any of its Affiliates, providedthatthe failure to give such notice will not affect the validity of such setoff andapplication.  The rights of the Agent,the Canadian Collateral Agent and the other Lender Parties under this Section arein addition to other rights and remedies (including without limitation otherrights of setoff) which the Agent, the Canadian Collateral Agent or the otherLender Parties may have.  This Section issubject to the terms and provisions of Section 2.12 hereof.

 

10.20       Waiver of Right to Jury Trial.  EXCEPT AS PROHIBITED BY APPLICABLE LAW, EACHPARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY INRESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR INCONNECTION WITH THIS AGREEMENT, THE

 

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NOTES, ANY OF THE OTHER LOAN DOCUMENTS OR ANY TRANSACTIONS EVIDENCEDTHEREBY.

 

10.21       Additional Provisions Regarding Collection ofReceivables and other Collateral.

 

(a)           Each Credit Party (by its execution of theapplicable Loan Documents) hereby designates and constitutes the Agent or theAgent’s designee (or the Canadian Collateral Agent or its designee, asapplicable) as each Credit Party’s attorney-in-fact with power to endorse eachsuch Credit Party’s name upon any notes, acceptances, checks, drafts, moneyorders or other evidence of payment of any Receivables or any other Collateralthat may come into its possession; to sign or endorse such Credit Party’s nameon any invoice, bill of lading or other title or ownership documents relatingto any Receivables or Inventory, drafts against any customers of any CreditParty, assignments and verifications of Receivables and, upon the occurrenceand during the continuance of any Event of Default, notices to customers of anyCredit Party; to send verifications of Receivables; and to notify the U.S.Postal Service authorities to change the address for delivery of mail addressedto any Credit Party to such address as the Agent (or the Canadian CollateralAgent, as applicable) may designate at any time after the occurrence of anyEvent of Default which is continuing. All acts of said attorney or designee are hereby ratified and approvedby each Credit Party (by its execution of the applicable Loan Documents), andsaid attorneys or designee shall not be liable for any acts of omission orcommission, for any error of judgment or for any mistake of fact or law, providedthat the Agent or its designee (or the Canadian Collateral Agent or itsdesignee, as applicable) shall not be relieved of liability to the extent it isdetermined by a final judicial decision that its act, error or mistakeconstituted gross negligence or willful misconduct.  The power of attorney granted under thissubparagraph is coupled with an interest and is irrevocable until all of theObligations are paid in full and this Agreement and the Commitments areterminated.

 

(b)           The Agent (or the Canadian Collateral Agent, asapplicable), without notice to or consent of any Credit Party, at any timeafter the occurrence and during the continuation of an Event of Default:  (i) may sue upon or otherwise collect,extend the time of payment of, or compromise or settle for cash, credit orotherwise upon any terms, any of the Receivables or any instruments orinsurance applicable thereto and/or release any account debtor thereon; (ii) isauthorized and empowered to accept or direct shipments of Inventory and acceptthe return of the goods represented by any of the Receivables; and (iii) shallhave the right to receive, endorse, assign and/or deliver in its name or thename of any Credit Party any and all checks, drafts and other instruments forthe payment of money relating to the Receivables, and each Credit Party (by itsexecution of the applicable Loan Documents) hereby waives notice ofpresentment, protest and non-payment of any instrument so endorsed.

 

(c)           Nothing herein contained shall be construed toconstitute any Credit Party as agent of the Agent or the Canadian CollateralAgent for any purpose whatsoever, and neither the Agent nor the CanadianCollateral Agent shall be responsible or liable for any shortage, discrepancy,damage, loss or destruction of any part of the Collateral wherever the same maybe located and regardless of the cause thereof (except to the extent it isdetermined by a final judicial decision that the Agent’s or a Lender’s act oromission constituted gross negligence of willful conduct).  The Agent, the Canadian Collateral Agent andthe Lenders shall not, under any circumstances or in any event whatsoever, haveany liability for any error or omission or delay of 

 

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any kind occurring in the settlement, collection or payment of any ofthe Receivables or any instrument received in payment thereof or for any damageresulting therefrom (except to the extent it is determined by a final judicialdecision that the Agent’s or such Lender’s error, omission or delay constitutedgross negligence or willful misconduct). The Agent, the Canadian Collateral Agent and the Lenders do not, byanything herein or in any assignment or otherwise, assume any of any CreditParty’s obligations under any contract or agreement assigned to the Agent, theCanadian Collateral Agent or the Lender, and the Agent, the Canadian CollateralAgent and the Lenders shall not be responsible in any way for the performanceby any Credit Party of any of the terms and conditions thereof.

 

(d)           Upon the occurrence and during the continuation ofany Event of Default:  (i) if any ofthe Receivables includes a charge for any tax payable to any governmental taxauthority, the Agent (or the Canadian Collateral Agent, as applicable) ishereby authorized (but in no event obligated) in its discretion to pay theamount thereof to the proper taxing authority for the account of any Credit Partyand to charge any Credit Party’s account therefor; and (ii) the Borrowersshall notify the Agent (or the Canadian Collateral Agent, as applicable) if anyReceivables include any tax due to any such taxing authority and, in theabsence of such notice, the Agent (or the Canadian Collateral Agent, asapplicable) shall have the right to retain the full proceeds of suchReceivables and shall not be liable for any taxes that may be due from anyCredit Party by reason of the sale and delivery creating such Receivables.

 

(e)           Upon the occurrence and continuation of any Event ofDefault, the Agent (or the Canadian Collateral Agent, as applicable) may at anytime and from time to time employ and maintain in the premises of any CreditParty a custodian selected by the Agent (or the Canadian Collateral Agent, asapplicable) who shall have full authority to do all acts necessary to protectthe Agent’s, the Canadian Collateral Agent’s and the Lenders’ interests and toreport to the Agent (or the Canadian Collateral Agent, as applicable)thereon.  Each Credit Party (by itsexecution of the applicable Loan Documents) hereby agrees to cooperate with anysuch custodian and to do so whatever the Agent (or the Canadian CollateralAgent, as applicable) may reasonably request to preserve the Collateral.  All costs and expenses incurred by the Agent(or the Canadian Collateral Agent, as applicable) by reason of the employmentof the custodian shall be added to the Obligations and may be charged to anyCredit Party’s account.

 

(f)            The Lenders hereby irrevocably authorize the Agent(or the Canadian Collateral Agent, as applicable), at its option and in itsdiscretion, to release any Lien granted to or held by the Agent (or theCanadian Collateral Agent, as applicable) upon any Collateral (i) upontermination of the Total Commitment and payment in full in cash andsatisfaction (or cash collateralization pursuant to the terms of the LoanDocuments) of all Loans, any Letter of Credit Exposure Amount, and all otherObligations which have matured and which the Agent (or the Canadian CollateralAgent, as applicable) has been notified in writing are then due and payable; or(ii) constituting property being sold or disposed of in the ordinarycourse of any Credit Party’s business and in compliance with the terms of thisAgreement and the other Loan Documents (with respect to which the Agent (or theCanadian Collateral Agent, as applicable) may rely conclusively on anycertificate of any Credit Party, without further inquiry); or (iii) constitutingproperty in which the Credit Parties owned no interest at the time the Lien wasgranted or at any time thereafter; or (iv) if approved, authorized orratified in writing by the Lenders.  Uponrequest by the Agent (or the Canadian Collateral Agent, as applicable) at anytime, the Lenders 

 

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will confirm in writing the Agent’s (or the Canadian Collateral Agent’s,as applicable) authority to release particular types or items of Collateralpursuant to this Section 10.21(f).

 

(g)           Without in any manner limiting the Agent’s (or theCanadian Collateral Agent’s, as applicable) authority to act without anyspecific or further authorization or consent by the Lenders (as set forth in Section 10.21(f)),each Lender agrees to confirm in writing, upon request by the Agent (or theCanadian Collateral Agent, as applicable), the authority to release Collateralconferred upon the Agent (or the Canadian Collateral Agent, as applicable)under Section 10.21(f).  Uponreceipt by the Agent (or the Canadian Collateral Agent, as applicable) ofconfirmation from the Lenders of its authority to release any particular itemor types of Collateral, and upon prior written request by any Credit Party, theAgent (or the Canadian Collateral Agent, as applicable) shall (and is herebyirrevocably authorized by the Lenders to) execute such documents as may benecessary to evidence the release of the Liens granted to the Agent (or theCanadian Collateral Agent, as applicable) for the benefit of the Lenders uponsuch Collateral; provided, however, that (i) theAgent (or the Canadian Collateral Agent, as applicable) shall not be requiredto execute any such document on terms which, in the Agent’s (or the CanadianCollateral Agent’s, as applicable) opinion, would expose the Agent (or theCanadian Collateral Agent, as applicable) to liability or create anyobligations or entail any consequence other than the release of such Lienswithout recourse or warranty, and (ii) such release shall not in any mannerdischarge, affect or impair the Obligations or any Lien upon (or obligations ofany Credit Party in respect of) all interests in the Collateral retained by anyCredit Party.

 

(h)           So long as Neenah Paper Company of Canada owns theNova Scotia Woodlands or other Timberland Properties located in Canada whichare pledged as Collateral from time to time hereunder, the Canadian CollateralAgent may from time to time appoint a sub-agent pursuant to Section 9.1(the “**Designated Timber Agent**”)for the purpose of facilitating sales, exchanges or other dispositions ofTimberland Properties permitted by Section 7.4(f)(4)(vi) andnot otherwise prohibited hereby.  Anysuch Designated Timber Agent shall have the authority to act on behalf of (andsubject to the control of), the Canadian Collateral Agent pursuant to the termsand conditions of Sections 10.21(f) and 10.21(g) torelease any Lien granted to or held by the Canadian Collateral Agent upon anyCollateral sold, exchanged, or otherwise disposed of pursuant to Section 7.4(f)(4)(vi).  Subject to the terms and conditions of Sections 10.21(f) and10.21(g) and the other applicable terms and conditions of the LoanDocuments, the Agent, the Canadian Collateral Agent, and any Designated TimberAgent shall act promptly upon any request from the Borrowers’ Agent(accompanied by a certificate referred to in Section 10.21(f)(ii) andsuch information and documentation as may be reasonably necessary to effectsuch release) to execute such documents as may be reasonably necessary torelease any Lien granted to or held by the Agent (or the Canadian CollateralAgent, as applicable) upon any such Collateral pursuant to any such sale,exchange, or disposition.

 

10.22       Bank Product Obligations.

 

(a)           The term “**Obligations**,”as defined and used in this Agreement, includes all Obligations under all BankProducts of any Credit Party or any of their Subsidiaries (collectively, “**Related Obligations**”) to the Agent,JPMorgan, the Canadian Collateral Agent, or any other Lender Party (each an “**Obligee**” and, collectively, the “**Obligees**”).  Accordingly, the 

 

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benefit of the Loan Documents and of the provisions of this Agreementrelating to the Collateral shall extend to and be available in respect of theRelated Obligations solely on the condition and understanding, as among theAgent and all Obligees, that (i) the Related Obligations shall be entitledto the benefit of the Loan Documents and the Collateral to the extent expresslyset forth in this Agreement and the other Loan Documents and to such extent theAgent (or the Canadian Collateral Agent, as applicable) shall hold, and havethe right and power to act with respect to, any Guaranty and the Collateral onbehalf of and as agent for the Obligees, but the Agent and the CanadianCollateral Agent are otherwise acting solely as agent for the Lenders and shallhave no fiduciary duty, duty of loyalty, duty of care, duty of disclosure orother obligation whatsoever to any Obligee, (ii) all matters, acts andomissions relating in any manner to the Guaranty, the Collateral, or theomission, creation, perfection, priority, abandonment or release of any Lien,shall be governed solely by the provisions of this Agreement and the other LoanDocuments and no separate Lien, right, power or remedy shall arise or exist infavor of any Obligee under any separate instrument or agreement or in respectof any Related Obligation, (iii) each Obligee shall be bound by allactions taken or omitted, in accordance with the provisions of this Agreementand the other Loan Documents, by the Agent, the Canadian Collateral Agent andthe Required Lenders, each of whom shall be entitled to act at its solediscretion and exclusively in its own interest given its own Commitments and itsown interest in the Loans, Letter of Credit Obligations and other Obligationsto it arising under this Agreement or the other Loan Documents, without anyduty or liability to any other Obligee or as to any Related Obligation andwithout regard to whether any Related Obligation remains outstanding or isdeprived of the benefit of the Collateral or becomes unsecured or is otherwiseaffected or put in jeopardy thereby, (iv) no Obligee (except the Agents,the Canadian Collateral Agent and the Lenders, to the extent set forth in thisAgreement) shall have any right to be notified of, or to direct, require or beheard with respect to, any action taken or omitted in respect of the Collateralor under this Agreement or the Loan Documents and (v) no Obligee shall exerciseany right of setoff, banker’s lien or similar right except to the extent suchright is exercised in compliance with Section 2.13.

 

(b)           The Borrowers hereby irrevocably and unconditionallyguarantee to each of the Obligees the full and prompt payment and performanceof any and all Related Obligations to each Obligee.  Such guaranty shall be an absolute,continuing, irrevocable, and unconditional guaranty of payment and performance,and not a guaranty of collection, and the Borrowers shall remain liable on itsobligations hereunder until the payment and performance in full of the RelatedObligations.  No set-off, counterclaim,recoupment, reduction, or diminution of any obligation, or any defense of anykind or nature which any Credit Party or any of their Subsidiaries may haveagainst any Obligee or any other party shall be available to, or shall beasserted by, any Credit Party against any Obligee or any subsequent holder ofthe Related Obligations or any part thereof or against payment of the RelatedObligations or any part thereof.

 

(c)           If any Credit Party becomes liable for anyobligations or indebtedness owing by any Subsidiary of any Credit Party to anyObligee by endorsement or otherwise, other than under this Section 10.22,such liability shall not be in any manner impaired or affected hereby, and therights of each Obligee shall be cumulative of any and all other rights that anyObligee may ever have against the Borrower.

 

(d)           In the event of default by any Subsidiary of anyCredit Party in payment or performance of any of the Related Obligations, orany part thereof, when any part of the Related 

 

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Obligations becomes due, whether by its terms, by acceleration, upondemand or otherwise, the Borrowers shall promptly pay the amount due thereon tothe applicable Obligee without notice or demand in dollars and it shall not benecessary for any Obligee, in order to enforce such payment by the Borrowers,first to institute suit or exhaust its remedies against any Subsidiary of anyCredit Party or any others liable on such Related Obligations, or to enforceany rights against any collateral which shall ever have been given to securesuch Related Obligations.  Notwithstandinganything to the contrary contained in this Section 10.22, theCredit Parties hereby irrevocably subordinate to the prior and defeasiblepayment in full of the Related Obligations, any and all rights the Borrowersmay now or hereafter have under any agreement or at law or in equity (including,without limitation, any law subrogating the Borrowers to the rights of any ofthe Obligees) to assert any claim against or seek contribution, indemnificationor any other form of reimbursement from any Subsidiary of any Credit Party orany other party liable for payment of any or all of the Related Obligations forany payment made by any Borrower under or in connection with this Section 10.22or otherwise.

 

(e)           The Borrowers hereby agree that their obligationsunder this Section 10.22 shall not be released, discharged,diminished, impaired, reduced, or affected for any reason or by the occurrenceof any event, including, without limitation, one or more of the followingevents, whether or not with notice to or the consent of any Borrower:  (i) the taking or accepting ofcollateral as security for any or all of the Related Obligations or therelease, surrender, exchange, or subordination of any collateral now orhereafter securing any or all of the Related Obligations; (ii) any partialrelease of the liability of any Borrower hereunder or any other Credit Partyunder the Loan Documents, or the full or partial release of any other guarantorfrom liability for any or all of the Related Obligations; (iii) anydisability of any Credit Party or any of their Subsidiaries, or thedissolution, insolvency, or bankruptcy of any Credit Party, any of theirSubsidiaries, any guarantor or any other party at any time liable for thepayment of any or all of the Related Obligations; (iv) any renewal,extension, modification, waiver, amendment, or rearrangement of any or all ofthe Related Obligations or any instrument, document, or agreement evidencing,securing, or otherwise relating to any or all of the Related Obligations; (v) anyadjustment, indulgence, forbearance, waiver, or compromise that may be grantedor given by any Obligee to any Credit Party, any of their Subsidiaries, or anyother party ever liable for any or all of the Related Obligations; (vi) anyneglect, delay, omission, failure, or refusal of any Obligee to take orprosecute any action for the collection of any of the Related Obligations or toforeclose or take or prosecute any action in connection with any instrument,document, or agreement evidencing, securing, or otherwise relating to any orall of the Related Obligations; (vii) the unenforceability or invalidityof any or all of the Related Obligations or of any instrument, document, oragreement evidencing, securing, or otherwise relating to any or all of theRelated Obligations; (viii) any payment by any Credit Party, anySubsidiary of any Credit Party or any other party to any Obligee is held toconstitute a preference under applicable bankruptcy or insolvency law or if forany other reason any Obligee is required to refund any payment or pay the amountthereof to someone else; (ix) the settlement or compromise of any of theRelated Obligations; (x) the non-perfection of any security interest orlien securing any or all of the Related Obligations; (xi) any impairment of anycollateral securing any or all of the Related Obligations; (xii) the failure ofany Obligee to sell any collateral securing any or all of the RelatedObligations in a commercially reasonable manner or as otherwise required bylaw; (xiii) any change in the corporate existence, structure, or ownership ofany Credit Party or any of their Subsidiaries; or 

 

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(xiv) any other circumstance which might otherwise constitute a defenseavailable to, or discharge of, any Credit Party or any of their Subsidiaries.

 

(f)            The Borrowers hereby waive promptness, diligence,notice of any default under the Related Obligations, demand of payment, noticeof acceptance of this Agreement, presentment, notice of protest, notice ofdishonor, notice of the incurring by any Subsidiary of any Credit Party ofadditional obligations or indebtedness, and all other notices and demands withrespect to the Related Obligations and this Agreement.

 

10.23       Construction.  The Borrowers, each other Credit Party, theAgent, the Canadian Collateral Agent and each Bank acknowledge that each ofthem has had the benefit of legal counsel of its own choice and has beenafforded an opportunity to review this Agreement and the other Loan Documentswith its legal counsel and that this Agreement and the other Loan Documentsshall be construed as if jointly drafted by the parties hereto.

 

10.24       Joint and Several Obligations.  Notwithstanding anything to the contrarycontained herein or in any other Loan Documents (but giving effect to Section 1.4(a)),the Borrowers acknowledge that they and the Guarantors are jointly andseverally responsible for their respective agreements, covenants,representations, warranties and obligations contained and set forth in thisAgreement or in any other Loan Document to which the applicable Party is aparty.

 

10.25       USA Patriot Act.  Each Lender hereby notifies the CreditParties that pursuant to the requirements of the USA Patriot Act(Title III of Pub. L. 107-56 (signed into law October 26,2001)) (the “**Act**”), it isrequired to obtain, verify and record information that identifies the CreditParties, which information includes the name and address of the Credit Partiesand other information that will allow such Lender to identify the CreditParties in accordance with the Act.

 

10.26       Judgment.  The specification under the Loan Documents ofDollars and payment in New York City is of the essence.  The Credit Parties’ obligations hereunder andunder the other Loan Documents to make payments in Dollars (the “**Obligation Currency**”) shall not bedischarged or satisfied by any tender or recovery pursuant to any judgmentexpressed in or converted into any currency other than the Obligation Currency,except to the extent that such tender or recovery results in the effectivereceipt by the Lender Parties of the full amount of the Obligation Currencyexpressed to be payable to the Lender Parties under this Agreement or the otherLoan Documents.  If, for the purpose ofobtaining or enforcing judgment in any court, it is necessary to convert intoor from any currency other than the Obligation Currency (such other currencybeing hereinafter referred to as the “**JudgmentCurrency**”) an amount due in the Obligation Currency, the rate ofexchange used shall be that at which the Lender Parties could, in accordancewith normal banking procedures, purchase Dollars with the Judgment Currency onthe Business Day preceding that on which final judgment is given.  The obligation of the Credit Parties inrespect of any such sum due from it to the Lender Parties hereunder shall,notwithstanding any judgment in such Judgment Currency, be discharged only tothe extent that, on the Business Day immediately following the date on whichthe Lender Parties receive any sum adjudged to be so due in the JudgmentCurrency, the Lender Parties may, in accordance with normal banking procedures,purchase Dollars with the Judgment Currency. If the Dollars so purchased are less than the sum originally due to theLender Parties in Dollars, the Credit 

 

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Parties agree, as a separate obligation and notwithstanding any suchjudgment, to indemnify the Lender Parties against such loss, and if the Dollarsso purchased exceed the sum originally due to the Lender Parties in Dollars,the Lender Parties agree to remit to the Credit Parties such excess.

 

10.27       Jurisdiction; Service of Process.  Each Credit Party hereby irrevocably andunconditionally submits, for itself and its property, to the nonexclusivejurisdiction of the Supreme Court of the State of New York sitting in New YorkCounty and of the United States District Court of the Southern District of NewYork, and any appellate court from any thereof, in any action or proceedingarising out of or relating to any Loan Document, or for recognition orenforcement of any judgment, and each of the parties hereto hereby irrevocablyand unconditionally agrees that all claims in respect of any such action orproceeding may be heard and determined in such New York State or, to the extentpermitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any suchaction or proceeding shall be conclusive and may be enforced in otherjurisdictions by suit on the judgment or in any other manner provided bylaw.  Nothing in this Agreement or anyother Loan Document shall affect any right that any Lender Party may otherwisehave to bring any action or proceeding relating to this Agreement or any otherLoan Document against any Credit Party or its properties in the courts of anyjurisdiction.  Each Credit Party herebyirrevocably and unconditionally waives, to the fullest extent it may legallyand effectively do so, any objection which it may now or hereafter have to thelaying of venue of any suit, action or proceeding arising out of or relating tothis Agreement or any other Loan Document in any court referred to in thisSection.  Each of the parties heretohereby irrevocably waives, to the fullest extent permitted by law, the defenseof an inconvenient forum to the maintenance of such action or proceeding in anysuch court.  Each party to this Agreementirrevocably consents to service of process in the manner provided for noticesin Section 10.2.  Nothing inthis Agreement or any other Loan Document will affect the right of any party tothis Agreement to serve process in any other manner permitted by law.

 

10.28       Confidentiality.  Each of the Agent, the Issuing Bank and theLenders agrees to maintain the confidentiality of the Information (as defined below),except that information may be disclosed (a) to its and its Affiliates’directors, officers, employees and agents, including accountants, legal counseland other advisors (it being understood that the Persons to whom suchdisclosure is made will be informed of the confidential nature of suchinformation and instructed to keep such Information confidential), (b) tothe extent requested by any regulatory authority, (c) to the extentrequested by any rating agency or market data collector (it being understoodthat the Persons to whom such disclosure is made will be informed of theconfidential nature of such information and instructed to keep itconfidential), (d) to the extent required by law or by any subpoena orsimilar legal process, (e) to any other party to this Agreement, (f) inconnection with the exercise of any remedies hereunder or any suit, action orproceeding relating to this Agreement or any other Loan Document or theenforcement of rights hereunder or thereunder, (g) subject to an agreementcontaining provisions substantially the same as those of this Section, to (i) anyassignee of, or any prospective assignee of, any of its rights or obligationsunder this Agreement or (ii) any actual or prospective counterparty (orits advisors) to any swap or derivative transaction relating to the CreditParties and their obligations, (h) with the consent of the Borrowers or (i) tothe extent such Information (i) becomes publicly available other than as aresult of a breach of this Section or (ii) becomes available to theAgent, the Issuing Bank or any Lender on a nonconfidential basis from a sourceother than the Borrowers.  For thepurposes of this Section, “Information” means all information received from theCredit Parties relating to any 

 

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of the Credit Parties, the Offshore Entities, their respectivesubsidiaries or their respective businesses, other than any such informationthat is available to the Agent, the Issuing Bank or any Lender on a non-confidentialbasis prior to disclosure by the Borrowers; providedthat, in thecase of information received from the Borrowers after the date hereof, suchinformation is clearly identified at the time of delivery as confidential.  Any Person required to maintain theconfidentiality of Information as provided in this Section shall beconsidered to have complied with its obligation to do so if such Person hasexercised the same degree of care to maintain the confidentiality of suchInformation as such Person would accord to its own confidential information.

 

EACHLENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN THIS SECTION 10.28FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLICINFORMATION CONCERNING THE CREDIT PARTIES AND THEIR RELATED PARTIES AND AFFILIATES, OR THEIR RESPECTIVE SECURITIES,AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OFMATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIALNON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW,INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

ALLINFORMATION, INCLUDING REQUESTS FOR WAIVERS, CONSENTS AND AMENDMENTS, FURNISHEDBY THE CREDIT PARTIES, THE AGENT OR THEIR RESPECTIVE RELATED PARTIES ANDAFFILIATES, PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILLBE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLICINFORMATION ABOUT THE CREDIT PARTIES AND THEIR RELATED PARTIES AND AFFILIATESOR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE CREDIT PARTIES AND THE AGENTTHAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHOMAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLICINFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW,INCLUDING FEDERAL AND STATE SECURITIES LAWS.

 

10.29       No Fiduciary Duty/Conflicts.  The Lender Parties may have economicinterests that conflict with those of Borrowers, their stockholders and/ortheir Affiliates.  Borrowers agree thatnothing in the Loan Documents or otherwise will be deemed to create anadvisory, fiduciary or agency relationship or fiduciary or other implied dutybetween any Lender Party, on the one hand, and Borrowers, their stockholders ortheir affiliates, on the other.  TheCredit Parties acknowledge and agree that (i) the transactionscontemplated by the Loan Documents (including the exercise of rights andremedies hereunder and thereunder) are arm’s-length commercial transactionsbetween the Lenders Parties, on the one hand, and Borrowers, on the other, and (ii) inconnection therewith and with the process leading thereto, (x) no LenderParty has assumed an advisory or fiduciary responsibility in favor of anyBorrower, its stockholders or its Affiliates with respect to the transactionscontemplated hereby (or the exercise of rights or remedies with respectthereto) or the process leading thereto (irrespective of whether any LenderParty has advised, is currently advising or will advise any Borrower, itsstockholders or its Affiliates on other matters) or any other obligation toBorrowers except the obligations expressly set forth in 

 

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the Loan Documents and (y) each Lender Party is acting solely asprincipal and not as the agent or fiduciary of any Borrower, its management,stockholders, creditors or any other Person. Each Borrower acknowledges and agrees that each Borrower has consultedits own legal and financial advisors to the extent it deemed appropriate andthat it is responsible for making its own independent judgment with respect tosuch transactions and the process leading thereto.  Borrower agrees that it will not claim thatany Lender Party has rendered advisory services of any nature or respect, orowes a fiduciary or similar duty to such Borrower, in connection with suchtransaction or the process leading thereto.

 

(Signature Pages Follow)

 

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IN WITNESS WHEREOF, theparties hereto have executed this Agreement as of the date first set forthabove.

 
|   | NEENAH PAPER, INC.,                         |
|--------|---------------------------------------------|
|   | as a Borrower                               |
|   |                                        |   |
|   | By:                                         | **/s/ BONNIE C. LIND** |
|   | Name:                                       | Bonnie C. Lind |
|   | Title:                                      | Sr. Vice President, CFO and Treasurer |
|   |                                        |   |
|   | Address for Notices:                        |
|   | 3460 Preston Ridge Road, Suite 600     |
|   | Alpharetta, Georgia 30005                   |
|   | Attention: General Counsel                  |
|   | Facsimile: 678-518-3283                     |
|   |                                        |
|   | With a copy to:                             |
|   | Bryan Cave LLP                              |
|   | One Atlantic Center — Fourteenth Floor |
|   | 1201 West Peachtree Street, NW              |
|   | Atlanta, Georgia 30309-3488                 |
|   | Attention: Robert C. Lewinson               |
|   | Facsimile: 404-420-0623                     |
|   |                                        |
|   | NEENAH PAPER MICHIGAN, INC.,                |
|   | as a Borrower                               |
|   |                                        |
|   | By:                                         | **/s/ BONNIE C. LIND** |
|   | Name:                                       | Bonnie C. Lind |
|   | Title:                                      | Sr. Vice President, CFO and Treasurer |
|   |                                        |   |
|   | NPCC HOLDING COMPANY, LLC                   |
|   | as a Borrower                               |
|   |                                        |   |
|   | By:                                         | Neenah Paper, Inc., as its sole member |
|   |                                        |   |
|   | By:                                         | **/s/ BONNIE C. LIND** |
|   | Name:                                       | Bonnie C. Lind |
|   | Title:                                      | Sr.  Vice President, CFO and Treasurer |

 

SignaturePage to Amended and Restated Credit Agreement

 

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|   | NEENAH PAPER INTERNATIONAL HOLDING COMPANY, LLC, as a Borrower |
|--------|----------------------------------------------------------------|
|   |                                                           |   |
|   | By:                                                            | Neenah Paper, Inc., as its sole member |
|   |                                                           |   |
|   | By:                                                            | **/s/ BONNIE C. LIND** |
|   | Name:                                                          | Bonnie C. Lind |
|   | Title:                                                         | Sr. Vice President, CFO and Treasurer |
|   |                                                           |   |
|   |                                                           |
|   | NEENAH PAPER INTERNATIONAL, LLC, as a Borrower                 |
|   |                                                           |   |
|   | By:                                                            | Neenah Paper International Holding Company, LLC, as its sole member |
|   |                                                           |   |
|   |                                                           | By: | Neenah Paper, Inc., as its sole member |
|   |                                                           |   |
|   | By:                                                            | **/s/ BONNIE C. LIND** |
|   | Name:                                                          | Bonnie C. Lind |
|   | Title:                                                         | Sr. Vice President, CFO and Treasurer |
|   |                                                           |   |
|   |                                                           |   |
|   | NEENAH PAPER FVC, INC, as a Borrower                           |
|   |                                                           |   |
|   | By:                                                            | **/s/ BONNIE C. LIND** |
|   | Name:                                                          | Bonnie C. Lind |
|   | Title:                                                         | Sr. Vice President, CFO and Treasurer |
|   |                                                           |   |
|   |                                                           |   |
|   | NEENAH PAPER FR, LLC, as a Borrower                            |
|   |                                                           |   |
|   | By:                                                            | **/s/ BONNIE C. LIND** |
|   | Name:                                                          | Bonnie C. Lind |
|   | Title:                                                         | Sr. Vice President, CFO and Treasurer |
|   |                                                           |   |
|   |                                                           |
|   | NEENAH PAPER COMPANY OF CANADA, as a Guarantor                 |
|   |                                                           |   |
|   | By:                                                            | **/s/ BONNIE C. LIND** |
|   | Name:                                                          | Bonnie C. Lind |
|   | Title:                                                         | Sr. Vice President, CFO and Treasurer |

 

SignaturePage to Amended and Restated Credit Agreement

 

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|   | JPMORGAN CHASE BANK, N.A.,                    |
|--------|-----------------------------------------------|
|   | as a Lender, as Agent and as Swingline Lender |
|   |                                          |   |
|   | By:                                           | **/s/ JEFF A. TOMPKINS** |
|   | Name:                                         | Jeff A. Tompkins |
|   | Title:                                        | Vice President |
|   |                                          |   |
|   | Address for Notices:                          |
|   | 2200 Ross Avenue, 9th Floor TX 2921           |
|   | Dallas, Texas 75201                           |
|   | Attention: Jeff A. Tompkins                   |
|   | Facsimile: 214-965-2594                       |
|   |                                          |
|   | With a copy to:                               |
|   | Vinson & Elkins LLP                  |
|   | 2001 Ross Avenue, Suite 3700             |
|   | Dallas, Texas 75201                           |
|   | Attention: Erec R. Winandy                    |
|   | Facsimile: 214-999-7756                       |
|   |                                          |
|   |                                          |
|   | JPMORGAN CHASE BANK, N.A.,                    |
|   | TORONTO BRANCH,                               |
|   | as Canadian Collateral Agent                  |
|   |                                          |   |
|   | By:                                           | **/s/ DAN C. HOWAT** |
|   | Name:                                         | Dan C. Howat |
|   | Title:                                        | Senior Vice President |
|   |                                          |   |
|   | Address for Notices:                          |
|   | c/o JPMorgan Chase Bank, N.A., as Agent       |
|   | 2200 Ross Avenue, 9th Floor TX 2921           |
|   | Dallas, Texas 75201                           |
|   | Attention: Jeff A. Tompkins                   |
|   | Facsimile: 214-965-2594                       |
|   |                                          |
|   | With a copy to:                               |
|   | Vinson & Elkins, L.L.P.              |
|   | 2001 Ross Avenue, Suite 3700             |
|   | Dallas, Texas 75201                           |
|   | Attention: Erec R. Winandy                    |
|   | Facsimile: 214-999-7756                       |

 

SignaturePage to Amended and Restated Credit Agreement

 

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|   | BANK OF AMERICA, N.A., |
|--------|------------------------|
|   | as a Lender            |
|   |                   |   |
|   | By:                    | **/s/ DENNIS LOSIN** |
|   | Name:                  | Dennis Losin |
|   | Title:                 | Senior Vice President |
|   |                   |   |
|   | Address for Notices:   |
|   |                   | Bank of America, N.A. |
|   |                   | 300 Galleria Parkway, Suite 800 |
|   |                   | Atlanta, GA 30339 |
|   | Attention:             | Senior Portfolio Manager |
|   | Facsimile:             | 404-607-3277 |

 

SignaturePage to Amended and Restated Credit Agreement

 

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|   | UBS AG, Stamford Branch, |
|--------|--------------------------|
|   | as a Lender              |
|   |                     |   |
|   | By:                      | **/s/ MARY E. EVANS** |
|   | Name:                    | Mary E. Evans |
|   | Title:                   | Associate Director |
|   |                     |   |
|   | By:                      | **/s/ IRJA R. OTSA** |
|   | Name:                    | Irja R. Otsa |
|   | Title:                   | Associate Director |
|   |                     |   |
|   | Address for Notices:     |
|   |                     | 677 Washington Blvd. |
|   |                     | Stamford, CT 06901 |
|   | Attention:               | Daniel Goldenberg |
|   | Facsimile:               | 203-719-3888 |

 

SignaturePage to Amended and Restated Credit Agreement

 

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|   | GOLDMAN SACHS LENDING PARTNERS LLC, as a Lender |
|--------|-------------------------------------------------|
|   |                                            |   |
|   | By:                                             |   | **/s/ DENIS P. COLEMAN III** |
|   | Name:                                           |   | Denis P. Coleman III |
|   | Title:                                          |   | Authorized Signatory |
|   |                                            |   |
|   | Address for Notices:                            |
|   |                                            | 6032 Connection Drive |
|   |                                            | Dallas, TX 75062 |
|   | Attention:                                      | Ray Garcia |
|   | Facsimile:                                      | 212-357-4597 |

 

SignaturePage to Amended and Restated Credit Agreement

 

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